Jonathan Saul and Kate Abnett

LONDON/BRUSSELS – The European Commission’s proposals for shipping to the bloc’s carbon marketplace include exclusions of small commercial and military ships that could leave unregulated millions of tonnes CO2 emissions, according to a NGO study.

Nearly 3% global CO2 emissions are caused by shipping, as 90% of international trade is carried out via sea. The EU has not yet imposed pollution fees on the shipping industry.

Proposals made in July 2021 suggested that shipping be included to the European Union Emissions Trading System. This would occur over three years and is intended to encourage emissions reductions from this sector.

A study by environmental group Transport & Environment (T&E) said that the proposals, which will be negotiated in Brussels this year, exclude ships below 5,000 GT (gross tonnage), which include small offshore supply ships that service the oil and gas industries. The exemption would not apply to fishing and military vessels.

T&E said the loopholes would mean that some 25.8 million tonnes of CO2 would not fall under the ETS, meaning that roughly 20% of the 130 million tonnes emitted annually by shipping in the bloc would be excluded.

Jacob Armstrong, sustainable shipping officer at T&E, said the proposals were “based on arbitrary loopholes” and would let “too many heavily polluting vessels off the hook”.

He said, “The EU must reconsider its shipping laws.”

According to a European Commission official, the threshold of 5,000 GT is intended “to minimize administrative burden for businesses”, particularly for small- and medium-sized firms “without jeopardizing our objective to capture the vast majority greenhouse gas emissions from this sector”.

Peter Liese, the European Parliament’s lead negotiator on the ETS reforms, told Reuters that he was looking at the issue raised by T&E ahead of negotiations on the policy.

Officials from the Commission stated that their proposal aligned to the existing regulations on monitoring, reporting and verifying (MRV), emissions from marine transport.

The 2015 MRV regulation revealed that ships above 5,000 GT accounted to approximately 55% of vessels which called into EU ports. They also emitted around 90% of related gases.

ETS permits will require shipowners to purchase permits when ships pollute.