COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Integrating maritime transport emissions in the EU's greenhouse gas reduction policies 
Date: 2013-06-28
Institutions: European Commission
Subjects: greenhouse gas, maritime transport, reduction of gas emissions













EUR-Lex - 52013DC0479 - EN











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52013DC0479

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Integrating maritime transport emissions in the EU's greenhouse gas reduction policies /* COM/2013/0479 final */









1.           The need to act on maritime greenhouse
gas (GHG) emissions now 
The EU supports ambitious international
action to address climate change. Multilateralism and broad based cooperation
continue to be central for EU's climate policy. Consistent with this
international narrative the EU has implemented policies to facilitate its own
transition to a low carbon economy. The EU's 2008 Climate and Energy Package is
arguably the most comprehensive regulatory framework globally. It comprises of
different policy measures designed to facilitate the transition and has come to
inspire action by our partner countries. Taking timely economy wide action
remains a top priority of the EU in fighting climate change. 
At the EU level, international maritime
transport remains the only transport mode not included in the EU's GHG
emissions reduction commitment. GHG emissions from shipping account today for
4% of the EU GHG emissions. At the same time, GHG emissions from shipping are
expected to increase significantly in the future. According to the impact
assessment accompanying this Communication[1],
the CO2 emissions from maritime transport related to the EU, i.e.
emissions related to intra-EU routes, incoming and outgoing voyages, increased
by +48% between 1990 and 2008. In line with the growth projections of world
trade, EU-related emissions from shipping are expected to increase further by 51%
by 2050 compared to 2010-levels (+86% by 2050 compared to 1990-levels) despite
the adoption of minimum ship efficiency standards for new ships by the
International Maritime Organisation (IMO) in 2011[2]. 
Estimated CO2 emissions from maritime transport (EU
related[3][4] and globally[5], considering
EEDI)
At global level, emissions from maritime
transport accounts today for 3% of the global emissions, but are expected to represent
5% of the global emissions in 2050[6],
due to expected growth of the world economy and associated transport demand. This
increase is expected to happen despite the availability of operational measures
and existing technologies to reduce the specific energy consumption and CO2
emissions of ships by up to 75%[7].
Shipping is an essential link in the global
supply chain and it is a key sector for the EU economy. While shipping may
still be comparatively less polluting than other modes of transport,
technological advances elsewhere, overdependence on oil, and a strong call from
public opinion not only for CO2 emissions reductions but also for reductions in
pollutants (SOx, NOx, particles) and of the broader environmental footprint
(ballast water, waste separation) make a clear case for shipping not to stand
idle. IMO and industry are actively engaged but uptake of new technologies and
operational measures remains uneven. Encouraging further efficiency and
sustainability in the shipping sector through reduced fuel cost and better
serving customers' expectations will maintain its competitiveness: at global
level by ensuring the functioning of trade links, and at EU level through
continuous quality leadership.
The
case for action – Recent developments in the sector 
In the
shipping sector, CO2 emissions relate to fuel consumed. Reducing CO2 emissions
means reducing fuel consumption which in turn results in savings in fuel costs.
As long as the efficiency investments required can be covered by the resulting fuel
savings, the sector can earn money while addressing climate change. Such
savings are highly relevant in today's context. 
Fuel prices
have been erratic in the last years. They doubled between 2002 and 2005, then
tripled between 2005 and 2007, and fallen back to the 2005-level in 2008 just
to double again between 2008 and 2010[8].
Prices of heavy fuel oil are now around $650/t, i.e. 8 times more than the
average 1990 prices, and they are still expected to increase. Improvements in
fuel efficiency have been observed in many segments of the shipping sector only
since 2009 when the global economic crisis significantly reduced the profit
margin of the sector.
Several recent
studies[9]
have identified significant emission reduction potential for shipping through a
range of technical and operational measures, which mainly aim to improve the
energy efficiency of ships. With expected increase in future fuel prices, most
of these technical or operational measures are cost-efficient. The impact assessment
carried out in the context of this Communication identified progressively
increasing savings potential in the cost of fuel that add cumulatively up to € 56
billion between 2015 and 2030[10].

Research
shows that the uptake of these cost-efficient measures is often blocked by a
diverse range of market barriers, including a lack of reliable information, as
well as technical and market failures[11].
Technical barriers occur when ship-owners lack the confidence in the ability of
a solution to meet the cost reduction promised or to perform in the marine
environment. Market failure can be triggered, typically by split incentives in
the sector i.e. the party paying for the investment in an efficiency measure is
not the beneficiary of the associated fuel savings, or by lack of access to
private finance to invest in to low-carbon technologies. Overcoming these
market barriers would provide significant scope for encouraging the uptake of
cost effective measures without compromising profitability.
2.           International progress 
IMO started working on the reduction of GHG
in 1997 based on the principles of no-more-favourable-treatment and
non-discrimination enshrined in MARPOL and other IMO Conventions. The adoption
of amendments to the Annex VI of MARPOL[12]
for the prevention of air pollution from ships (the Energy Efficiency Design
Index (EEDI) and the Ship Energy Efficiency
Management Plan (SEEMP)) in July 2011 constitutes important progress. These
measures, and in particular the EEDI, are expected to deliver significant reduced
emissions increase compared to frozen-technology scenarios (by 23% by 2030
according to the IMO 2011 study). However, as confirmed by the 59th
Marine Environment Protection Committee (MEPC) of the IMO[13],
further action needs to be taken. 
Despite difficult discussions on
market-based measures to reduce GHG emissions from ships in the IMO, recent positive
developments in discussing a more gradual way forward, including on enhancing
efficiency measures put forward by the United States of America[14], have won backing among many States.
The Commission is actively engaged in these developments as they could provide
new opportunities to agree on efficiency standards for existing ships leading
to emission reductions and which could be later developed towards market-based
measures (MBMs). As first step, a robust monitoring, reporting and verification
(MRV) of emissions is foreseen. The EU is working closely with the US, Japan, Australia, Canada, Russia, Korea and others on the development of these efficiency
standards and of a global MRV scheme.
The IMO recognised that to achieve
necessary reductions, MBMs will also be needed in addition to the technical and
operational measures, which are discussed under different items of the MEPC
agenda. The Commission regards MBMs as cost-effective means as they provide the
necessary flexibility to the shipping sector. But discussions require time to
mature, especially considering that several complementary options are under
consideration at the IMO. In particular, since its
63rd sessions in 2012 the MEPC failed in delivering terms of
reference for a study assessing the impacts of proposed MBMs[15]. 
The EU has a strong preference for a global
approach led by the IMO, as the most appropriate international forum to
regulate emissions from shipping. Despite the slow pace of the IMO discussions
to date and the urgency to act to prevent negative consequences for the
climate, the EU will continue to engage in the international developments to
reduce GHG emissions from ships. It will continuously monitor progress and
consider future actions in the context of the UNFCCC agreement in 2015 and the
deliberations at the IMO. 
3.           Inclusion of maritime greenhouse gas
emissions in the EU's reduction commitment: A gradual approach 
The Union's climate and shipping policy
reinforces the commitment to global action ensuring effective "across the
board" emissions reductions (particularly since shipping related emissions
are expected to grow stronger in non-European regions) while at the same time
maintaining a global level playing field for the shipping industry.
The recent US initiative in the IMO
provides the ground for an effective stepwise approach addressing GHG emissions
of the shipping sector. In line with that, the EU foresees a gradual approach
of the inclusion of maritime GHG emissions in its commitments. 
For the inclusion of maritime GHG emissions
in the EU's reduction commitment, the gradual approach consisting of three
subsequent steps can be considered:
1.           Implementing a system for MRV
of emissions
2.           Definition of reduction
targets for the maritime transport sector 
3.           Application of a market
based measure (MBM).
A robust MRV system is the foundation for
implementation of any measure reducing GHG emissions of ships at EU or global
level and facilitates results based monitoring of progress. Therefore, its
implementation is useful, even without an MBM in place. 
Lack of awareness about costs, benefits and
return on investment regarding already available technologies seem to hinder
the introduction of such technologies on a larger scale. This kind of
information could provide useful insights into the performance of individual
ships, their associated operational costs and potential resale value for the
benefit of ship-owners, who would be better equipped to take decisions on major
investments and to obtain the corresponding finance. 
According to the results of the Impact
Assessment, the implementation of MRV provides – to some extent – environmental
and economic benefits of up to 2% reductions in annual GHG emissions and of up
to € 1.2 billion annual net savings for the sector in 2030 due to reduced fuel
bills. The predicted fuel cost savings are expected to outweigh the costs for
monitoring and reporting. An MRV system could also increase the pressure for
the removal of other market barriers, such as split of incentive between ship
owners and operators, by providing clarity on energy efficiency, emissions
sources and abatement potential.
The EU's approach is designed to actively
contribute to an agreement on global measures to reduce GHG emissions from
ships in the IMO (see section 1). It also allows for informed discussions in Europe on MBMs and reduction targets for the sector. Consistency will have to be ensured
with the development of 2030 climate change and energy policy framework. MRV
will also provide robust and comparable data to set emission reduction targets
and to assess the progress of maritime transport towards a low carbon economy. In
case of successful introduction of comparable policies at IMO level, the EU MRV
proposal can be integrated into a generalised MRV system.
3.1.        Implementing robust and
harmonised monitoring and reporting rules
The main objective of a system for MRV is
to provide reliable data on GHG emissions from maritime transport. The
implementation of a global MRV system should be a priority in IMO negotiations.
CO2 emissions in the shipping sector simply
relates to the amount and type of fuel consumed. Fuel consumption is already
available for almost all ships. Regulation 18 of MARPOL Annex V already makes
compulsory the availability of bunker delivery notes[16] for ships engaged in
international transport over 400 GT. So, the global fuel consumption of a ship
is already monitored.
However, the reporting and verification
process still need to be established. The reliability and the accessibility of
the information are key to ensure adequate information all over the supply chain
about the carbon performance of the shipping sector. Setting adequate reporting
and verification process will require technical work to ensure a limited
administrative burden on ship-owners, ship-managers and Flag States, while
providing a high accuracy and transparency of the information available.
In a longer term an integrated approach to
monitoring, addressing all air emissions, including SOx, NOx and PM, would
provide the necessary clarity for policy-makers to make informed and consistent
decisions across all pollutants, and for stakeholders to smoothly implement the
new requirements. In particular, a review of the MRV scheme could be carried
out at a later stage.
The current Commission proposal is for a fuel
consumption based MRV scheme to be started at regional level, with the aim of
serving as an example for a global scheme, pointing out the difficulties and
best practices. The proposed EU's MRV system feeds into the discussions at the
IMO, with the aim of speeding up the IMO process. In case of a successful move
to a comparable MRV at global level, the regional system will be aligned with
it, as appropriate.
Case
example: European experiences on fuel cost savings through monitoring and
reporting
Several
ship-owners and ship-operators operating different types of vessels (e.g. bulk
carriers, container vessels…) have already successfully implemented their own
MRV systems. Using electronic data collection tools, most existing information
on ship performance is gathered and checked by a third party. Thanks to these
systems, some companies already reduced their GHG emissions up to 25% compared
to 2007. Furthermore, such tools have also contributed to rethink general
monitoring processes, saving time of crews and operators for high value tasks.
For example, a company said that 45% of time is now spent on performance
optimisation instead of 5% before the implementation of the MRV system.
The primary objective of the EU climate
policy is to reduce GHG emissions, regardless if they are reduced through
energy efficiency improvement or fuel switch. However, to align with the
on-going discussion in the IMO, the proposed EU MRV regulation will initially include
a range of energy efficiency parameters. In case of later consensus on the use and
definition of these parameters, the currently proposed list should be adjusted
accordingly.
The proposed MRV system will not impose a
specific methodology for monitoring the CO2 emissions, as long as the selected
methodology and its uncertainties are reported. This approach allows ship-owners
and ship-managers to build on existing practises. Such a measure can be
introduced without jeopardising the objectives to cover the widely predominant
share of GHG emissions from maritime transport by limiting the application of
MRV rules to large ships of at least 5000 GT.
3.2.        Setting intermediary
reduction targets for the maritime transport sector
In December
2010, Parties of United Nations Framework Convention on Climate Change (UNFCCC)
recognized that global warming must not exceed the temperatures experienced
before the industrial revolution by more than 2˚ C[17]. This is vital if the
irreversible negative consequences of human interference with the climate
system are to be limited. This long-term goal requires global GHG emissions to
be reduced by at least 50% below 1990 levels by 2050[18]. 
Developed countries should reduce their
emissions by 80 to 95% by 2050 compared to 1990 levels[19]. In the medium term, the EU
has committed to reduce its GHG emissions by 20% below 1990 levels by 2020, and
by 30% in the context of a global deal. This commitment forms part of one of
the EU's five headline targets in the Europe 2020 Strategy.[20] The international maritime
transport is the only industrial sector and transport mode not covered by legislation
to deliver this reduction target. Additionally, both the European Council and
the European Parliament have agreed that all sectors of the economy should
contribute to reducing emissions[21].
For EU international maritime transport, the 2011 White Paper on Transport[22] established a reduction target
of 40% (if feasible 50%) by 2050 compared to 2005.
At the global level however, a well-defined
absolute emissions' reduction path by 2050 for maritime transport and intermediary
targets for the period between 2020 and 2050 still need to be considered to
ensure appropriate contribution of the sector to help meeting the 2˚ C
target. 
At the EU level, such discussions have to
be mindful of the broader 2030 climate change and energy policy framework and
should consider aspects such as the environmental effectiveness in particular
regarding the cumulative CO2 reductions, costs for the sector, the
development of emissions after 2005, possible new efficiency standards adopted
by the IMO as well as the availability and costs of today's and expected future
abatement technologies. In setting such targets the specificity of maritime
mitigation measures which result in no – or even negative – costs ('low hanging
fruits'), as identified i.e. in the IMO Second GHG study 2009, should be borne
in mind as they clearly speak in favour early action. Finally, the data
collected through the MRV system should also form an integral part of such
future decisions.
3.3.        Effective and efficient
market-based measures to reduce maritime GHG emissions 
The impact assessment demonstrates that
MBMs are effective and well suited means to achieve emission reductions from
maritime transport while providing economic benefits to the sector as a result
of the substantial fuel cost savings which are related to CO2 emission
reductions. 
An MBM can effectively remove the market
barriers, especially the split of incentives, e.g. by implementing the
polluter-pays principle. A MBM has the potential to overcoming market barriers
relating to the access to finance provided that potential revenues generated
are channelled to ensure the support of private finance to the sector.
Depending on the level of contribution or the target level, a MBM can create a
strong incentive to achieve economy-wide absolute emission reductions in a cost
effective way.
Looking from a regional context and taking
into account the IMO discussions, the Impact Assessment identified three
options out of the variants analysed as clearly the most promising MBMs to
address GHG emissions of maritime transport, notably:
1.           A Contribution based
compensation Fund under which a voluntary contribution (in €/tCO2)
would be paid into the fund. The contribution would be dependent on the
emissions by the ship covered by the regulation. This voluntary instrument can
only be successfully implemented if a complementary instrument (e.g. speed
limits, ETS, etc.) is set up and the fund participation is foreseen as a
voluntary opt-out from the complementary instrument[23].
2.           A target based
compensation fund based on establishing a unique target for all ships
covered by the regulation. A sector-wide entity[24] is taking over the
responsibility for ensuring compliance with the target. Each ship covered by
the regulation has to establish a contractual relationship with this entity to
ensure the achievement of the target. The contractual agreement would require
the payment of a membership fee, which supports investments in ship efficiency,
as well as provisions in case of collective overshooting of the target. 
3.           An Emissions Trading
System (ETS), which would mean each ship has to surrender allowances at the
end of the compliance period corresponding to its emissions of the previous
year. 
In this context, it is clear that the
discussion on current IMO proposals and their complementarity have to be
pursued. The precise design of any option would require further work and design
decisions to be taken[25].The
present proposal for an MRV is designed to be able to underpin any future
efficiency standards as well as a future MBM, on the basis of the options
currently discussed in the EU and at the IMO.
4.           Parallel Measures to remove market
barriers 
In 2009, the Commission adopted strategic
goals and recommendations for the EU maritime transport policy. The Commission
outlined as a key priority development a comprehensive and coherent approach to
reducing GHG emissions from international shipping. This is reinforced in the
2011 While Paper on Transport. As follow-up to the White Paper, the Commission
is developing a strategic framework for transport research, innovation and
deployment, for an integrated, efficient and environmentally friendly European
transport system.
The Commission remains committed to
consider how market barriers preventing the uptake of low carbon technologies can
be appropriately addressed. Following discussions with the European Parliament,
  Member States, industry and civil society stakeholders, the Commission may
prioritise areas for further analysis and future initiatives. In view of the
global nature of the sector, such work would be closely linked with efforts in
the IMO.
In particular, the IMO is considering the
potential need and design of a fuel consumption standard as well as the
possible development of a standard to measure hull and propeller performance.
To this end, the Commission and the Member States should actively work within the
IMO on these issues, and seek to extend the on-going standard development in
order to cover other key technological solutions.
Reducing GHG emission of maritime transport
relies to a significant degree on adequate land-based infrastructure. The
Commission already supports the development of such infrastructure, for example
for port electrification and alternative fuels such as LNG through financial
incentives and regulatory measures[26].
Future initiatives should in particular take account of the need to jointly
consider various emission types, for reasons of regulatory certainty as well as
legal and operational efficiency.
Many energy efficient technological
solutions for the maritime industry bear substantial upfront capital costs,
which may be difficult to engage during the current economic climate.
Innovative financing solutions – such an energy performance contracting - and
use of the EU investment support facilities available from the European
Investment Bank could provide useful tools to help ship-owners to shoulder the
initial cost.
Finally, while many technologies are
already available on the market, moving towards a low or even zero carbon
maritime transport requires substantial research efforts in the long term.
Under its flagship Framework Programme 7 (FP7), the Commission already provides
substantial funding towards development and deployment of technologies aimed at
reducing the fuel consumption and associated emissions of tomorrow's ships. The
proposed Horizon 2020 framework[27]
intends to continue and intensify these efforts.
5.           Conclusions and the way forward
The proposed gradual approach to address
GHG emissions from ships with a robust MRV system as the first step is aligned
with other measures proposed in the IMO context and take action to practical
rather than theoretical level. This proposal will feed into the discussions at
the IMO and can serve as a sample for a global scheme.
There is a clear need for all international
partners to enter into serious discussions and prove their willingness to
engage in the IMO process aimed at agreeing a global MBM and possible standards
addressing the operational efficiency of the existing fleet. To be credible,
this work must build on a robust global MRV scheme.
It is in the EU's interest to remain
consistent with its climate policy objectives and the ambition set forth in
this context. Accordingly, in the continued absence of an agreement the EU
should pursue further measures to include maritime transport into the economy
wide effort consistent with the Europe 2020 Strategy. The Commission invites
the European Parliament, Member States and all stakeholders to discuss the open
points identified in this Communication in view of possible future initiatives
of the EU for addressing GHG emissions from maritime transport.
[1]               Reference to IA
[2]               AEA Technology and others, 2013
[3]               EU related means CO2 emitted on routes from the last
port of call to an EU port and from an EU port to the next port of call,
including emissions within EU ports.
[4]               AEA Technology and others, 2013
[5]               Lloyds Register and DNV, 2012
[6]               Estimated CO2 emission reduction from introduction of
mandatory technical and operational energy efficiency measures for ships. Study
carried out by Lloyd's Register and DNV for IMO in 2011 and 4th IPCC
Assessment Report
[7]               Second IMO GHG study 2009
[8]               Vivid Economics
[9]               Second IMO GHG study 2009, CE Delft and others 2009,
DNV 2010, Ricardo-AEA and others 2012
[10]             discounted at 10% per year
[11]             Maddox Consulting, 2012
[12]             MARPOL Annex VI is related to air pollution from ships
[13]             Report from 59th MEPC meeting, paragraph
4.92
[14]             MEPC 65/4/19
[15]             4 instruments are under consideration: ETS, GHG Fund,
Port State Levy and Efficiency Incentive Scheme (EIS).
[16]             The bunker delivery note includes the name and IMO
number of the ship receiving the fuel, the port of bunkering, the marine bunker
supplier contact information, fuel quantity and density.
[17]             Decision 1/CP.16 of the Conference of Parties to the
UNFCCC (the "Cancún Agreements").
[18]             Based on the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change (IPCC).
[19]             Conclusions of the European Council of 29/30.10 2009
and European Parliament Resolution of 4.2 2009 (2008/2105(INI)).
[20]             COM(2010) 2020 final.
[21]             Directive 2003/87/EC and Decision 406/2009/EC
[22]             COM(2011) 144 final
[23]             This mechanism should be designed in such way that the
contribution based compensation fund remains in practise the primary
instrument. The Norwegian NOx fund is an example where a tax serves as such
complementary instrument. So, it can be assumed that the use of alternative
mechanisms will be marginal.
[24]             Such as an association or a public body
[25]             Decisions such as those on the
entity to be in charge of the collection of revenues to be recycled in the
sector, on ensuring wide-spread application, and on possible additional
incentive mechanisms 
[26]             COM(2013) 17 final, COM(2013) 18 final and SWD(2013) 4
final.
[27]             COM(2011) 809 final