Sustainability in Ocean Freight
Measures in maritime shipping to reduce greenhouse gas emissions at EU and global level
Sea transport worldwide has increased continuously over the past decades. Around 90 percent of world trade takes place by sea , with around a third of global shipping movements having their destination or departure port in the EU. Like all modes of transport, maritime shipping also has an impact on the environment, climate and health. That is why there are numerous activities, particularly at European and international levels, to counter these effects. Maritime shipping is responsible for almost 3% of global annual CO 2 emissions . The World Shipping Association ICS has therefore declared its goal for maritime shipping to be climate-neutral by 2050 .
At EU level, in recent months both the European Parliament and the European Council have finalized and formally adopted three important pieces of legislation aimed at decarbonizing the maritime sector: ETS Directive (ETS2) , Alternative Fuels Infrastructure Regulation (AFIR) and Fuel EU Maritime .
At the global level, at a meeting of the Committee for the Protection of the Marine Environment (MEPC 80) in early July 2023 , the member states of the International Maritime Organization ( IMO ) adopted the IMO Strategy 2023 to reduce greenhouse gas emissions from ships, which aims to achieve the targets to combat to increase harmful emissions.
The European Freight Forwarders Association CLECAT has explained the agreements reached and the effects on the shipping industry in more detail in a good overview, excerpts of which we are happy to provide to you:
1.1.) Inclusion of emissions from maritime transport in the EU emissions trading system:
From January 2024, the EU Emissions Trading System (EU ETS) will be extended to cover CO2 emissions from all large ships (with a gross tonnage (GT) of 5,000 or more) calling at EU ports, regardless of their flag. Emissions from maritime transport will be included in the overall ETS cap, which will be gradually reduced over time. This reduction ensures that all sectors under the ETS contribute to the EU’s climate goals.
purchase and use EU emission allowances for every ton of reported CO2 emissions (or CO2 equivalents) . The responsibility for monitoring compliance lies with the managing authorities of the Member States.
The European freight forwarders association CLECAT fundamentally welcomes the agreement, as it will finally introduce the polluter pays principle in the shipping sector .
The main components of the policy are as follows:
- The scope of application includes ships with 5,000 GT and more . Ships between 400 and 5000 GT fall under the MRV (Monitoring, Reporting, Verification) Regulation. The Commission will examine the possible extension of the scope of the ETS to ships over 400 GT in 2026.
- The ETS will cover all emissions from journeys within the EU and also cover 50 percent of emissions from journeys to or from destinations outside the EU . If the IMO decides on a global, market-based measure, the Commission must review the directive. This review will aim to ensure consistency and avoid carbon double charging.
- A three-year introductory phase was also agreed upon , during which shipping companies must surrender emissions certificates as follows: 40 percent of verified emissions in 2024, 70 percent in 2025 and 100 percent in 2026.
- The scope has been expanded to include greenhouse gases beyond CO2 , including nitrous oxide and methane. In addition, the legislation takes into account geographical specificities and introduces transitional provisions for small islands, ice class vessels, outermost voyages and public service obligations.
CLECAT called for increased measures to address the potential risk of carbon leakage and the competitive disadvantage of EU ports close to non-EU ports (such as those in North Africa or Turkey). These EU ports could experience a decrease in traffic volumes due to the implementation of the ETS. A mechanism was then agreed to exempt non-EU ports near the EU borders, which are mainly active in transshipment, from being classified as “ports of call”. This approach aims to reduce the risk of carbon leakage and reduced competitiveness of EU ports. Accordingly, on August 21, the Commission published the implementing regulation containing a list of ports designated as neighboring container transshipment ports . According to the Commission, the ports of East Port Said (Egypt) and Tanger Med (Morocco) have met these criteria. In order to ensure the effective functioning of the EU ETS, the implementing regulation will apply from January 1, 2024.
1.2.) Alternative Fuels Infrastructure Regulation (AFIR):
The main objectives of the AFIR in relation to the maritime sector are:
- Ensuring a sufficient infrastructure network for charging or refueling ships with alternative fuels;
- to offer alternative solutions so that ships do not have to keep their engines running at berth;
Specifically, in accordance with Article 9 of the Regulation, Member States must ensure that a minimum level of shore-based power supply is provided for sea container ships in TEN-T maritime ports . To achieve this, Member States must ensure by 31 December 2029 that both TEN-T core ports and TEN-T total ports with more than 100 annual calls by sea container ships of more than 5 000 GT (on average the last three years) are equipped to provide shore-based power supply for at least 90 percent of all port calls of these ships in the relevant seaport.
In addition, Article 10 provides that by 31 December 2024, all ports in the TEN-T core network will have at least one shore-based power supply facility for inland waterway vessels and by December 2029, in all ports in the TEN-T comprehensive network, at least one shore-based power facility Power supply
inland waterway vessels is set up. Finally, an ” adequate number” of refueling points for liquefied natural gas (LNG, bio-LNG, etc.) must be set up in the ports of the TEN-T core network by December 31, 2024 .
Member States must enforce AFIR , update their national policy frameworks and resubmit them by January 2025. Instead, both sea and inland ports must invest in shore power supply (also referred to as “ on-shore power supply ” ( OPS )) infrastructure . AFIR will indirectly help ship operators to meet Fuel EU Maritime requirements, as the inclusion of provisions for OPS and renewable and low carbon fuel (RLF) infrastructure will prove useful in achieving this objective.
The legislation introduces new rules for sustainable marine fuels , the main aim of which is to reduce greenhouse gas emissions and promote decarbonization in maritime transport .
From 2025, ships with a gross tonnage of 5,000 or more (with possible expansion in the future) will have to gradually reduce their greenhouse gas share in energy consumption. The target is a reduction of 2 percent by 2025, 6 percent by 2030, 14.5 percent by 2035, 31 percent by 2040, 62 percent by 2045 and 80 percent by 2050, compared to the value of 91.16 Grams of CO2 per MJ in 2020. Greenhouse gases recorded include carbon (CO2), methane (CH4) and nitrogen oxide (N2O).
The scope of Fuel EU Maritime is consistent with the scope of the ETS. The regulation covers 100 percent of the energy used for journeys between two EU ports of call and at berth, and 50 percent of the energy used for journeys between an EU port and a destination outside the EU. The same protections as in the ETS Directive also apply to Fuel EU Maritime to prevent circumvention strategies and the leakage of CO2 emissions. Therefore, a port of call would be excluded if it is within 300 nautical miles of an EU port and if the proportion of containers transshipped exceeds 65 percent of the total container traffic in the port in question.
In addition , the legislation requires container ships to cover all their electricity needs through OPS by 2030 while docked in major EU ports. These provisions have been adapted to the AFIR to ensure both supply (installation of OPS in ports) and demand (vessels requiring connection to OPS).
If ships fail to meet the required annual limits, sanctions will be imposed , calculated by auditors based on the amount and cost of low-carbon fuel that should have been used to comply with the requirements. However, the legislation offers some flexibility to shipping companies, e.g. B. the ability to transfer or borrow excess quantities from one year to another, as well as the ability to spread compliance across multiple vessels.
2.) Developments on a global level:
2 .1.) 2023 Revised IMO strategy to reduce greenhouse gas emissions (GHG) in international shipping:
The IMO’s GHG Strategy for 2023 represents a significant and thorough revision compared to the original 2018 Strategy as it aims to reduce GHG emissions from international shipping.
The goals of the IMO GHG strategy for 2023 are as follows:
- Reducing the carbon footprint of ships by continually improving the energy efficiency of new ships.
- Reducing the overall carbon footprint of international shipping .
- Increased adoption of technologies , fuels and energy sources that produce zero or almost zero greenhouse gas emissions .
- The common goal is to reduce greenhouse gas emissions from international shipping to zero.
In addition, the strategy sets out the expectations for the sector and the development of future policies. The goal is to reduce greenhouse gas emissions by at least 20 percent by 2030 (the goal is 30 percent) and by 70 percent by 2040 (the goal is 80 percent) compared to 2008 levels .
Finally, the revised strategy sets the goal of achieving net zero emissions as soon as possible by 2050 . This is a significant step forward from the 2018 strategy, which envisaged reducing shipping emissions by just 50 percent within the same time frame.
The revised strategy also highlights the importance of adopting technologies, fuels and/or energy sources that produce zero or almost zero greenhouse gas emissions, with the aim of using at least 5 percent and 10 percent of the energy used by the shipping sector by 2030. This approach facilitates early investment in sustainable solutions and ensures they are ready for rapid scale-up from 2030.
3.) Effects of EU emissions trading on sea freight costs:
The costs of including shipping in the EU emissions trading will then be a further “ surcharge ” component of sea freight rates by the beginning of 2024 at the latest . The cost of these pollution rights in container shipping depends, among other things, on the shipping area, the ship’s route and the type of container.
We will continue to publish new information on the topic of “ Measures in maritime shipping to reduce greenhouse gas emissions” regularly at NAVIS Aktuell .
