Reducing GHG from international shipping

1

• Reducing GHG from international shipping a
  European perspective
• Shipping and the Environment GHG Emissions from
  Ships
• 2Oth May 2009Limassol
• Mark Major
• European Commission
• DG Environment

2
Structure

1. EU position
2. UNFCCC process
3. IMO Process
4. EU action on transport GHG
5. Aviation and EU-ETS
6. Preparation of EC measures
7. Conclusions

3
Environment Council Conclusions

• IS CONCERNED that emissions from international
  aviation and maritime transport represent growing
  sources of greenhouse gas emissions October
  2007
• CALLS UPON all Parties to agree clear,
  meaningful targets also for these sectors within
  the framework of a future global climate
  agreement for the post-2012 period - October 2007

4
Climate and Energy Directives (December 2008)

• The European Council has made a firm commitment
  to reduce the overall greenhouse gas emissions of
  the Community by at least 20 below 1990 levels
  by 2020, and by 30 provided that other developed
  countries commit themselves to comparable
  emission reductions
• By 2050, global greenhouse gas emissions should
  be reduced by at least 50 below their 1990
  levels.

5
Climate and Energy Directives (December 2008)

• All sectors of the economy should contribute to
  achieving these emission reductions, including
  international maritime shipping and aviation.
• Aviation is contributing to these reductions
  through its inclusion in the Community scheme.

6
Climate and Energy Directives (December 2008)

• In the event that no international agreement
  including international maritime emissions in its
  reduction targets through the IMO has been
  approved by the Member States and/or no such
  agreement through the UNFCCC has been approved by
  the Community by 31 December 2011, the Commission
  should make a proposal to include international
  maritime emissions according to harmonised
  modalities in the Community reduction commitment
  with the aim of its entry into force by 2013.
  Such proposal should minimise any negative impact
  on EU competitiveness, taking into account the
  potential environmental benefits
• IMO should agree measures in 2010, adopt in 2011
  measures should enter into force in 2013
• EU Legislation!!

7
UNFCCC negotiations

• Launched in December 2007 Bali Roadmap
• Comprehensive post 2012 Climate Change regime
• Scope
• Enhanced commitments / new commitments
• Mitigation
• More states
• Financing
• New gases,
• New sectors
• Adaptation
• Legal issues
• Response measures
• Flexible mechanisms
• Reporting
• MEM, G8

8
Negotiation tracks

• Kyoto Protocol and its review (AWG-KP)
• Long Term Co-Operative Action (AWG LCA)
• SBTA
• SBI
• Merging into one process during 2009

9
Global process - UNFCCC

• 29th March - 8th April, Bonn
• 2nd-12th June, Bonn
• 10th -14th August, Bonn
• 28th September 9th October, Bangkok
• 4th-10th November, Barcelona
• 7th-18th December 2009, Copenhagen
• Council WP International Environmental Issues
  (WIPIE) Expert Group Bunker Fuels (EGBF)

10
EU UNFCCC Submissions

• Parties should take action
• Targets
• IMO / ICAO should act by 2011
• Financing potential
• Maldives proposal
• India proposal

11
Global process - UNFCCC

• Mitigation from maritime (and aviation) very
  difficult topic
• Financing from maritime transport (Indian
  proposal)
• Key element of EU negotiation position (1/8) for
  Copenhagen 2009
• Global does not necessary mean 100 coverage
  (possible exclusions for small vessels, LDC,
  search and rescue etc.)
• UNFCCC agreement is only binding on states not
  other bodies e.g. IMO
• COP 15 - Will not deliver reduction measures

12
IMO Process

• Excellent report in 2000
• MEPC 55 MEPC 59 - WP
• No reporting
• Operational index voluntary
• Best Practice
• Management Plan
• Energy Efficiency Design Index formula
• Application?
• Legal instrument?
• What reductions
• Which vessels?

13
IMO Process

• Market Based Measures
• First discussion at MEPC 59
• ETS / Levy
• Link to carbon price
• Registry
• Reporting of fuel purchased / fuel used
• Port state control
• Economic incentive
• Offsetting gap
• Fund (destination / management)
• Differences

14
CBDR!

• Rio principle
• common but differentiated responsibilities and
  respective capabilities of states/countries.
• No more favourable treatment avoid
  distortions of competition between ships

15
USA developments

• Cap and Trade same as EU ETS
• - 83 by 2050
• Waxman-Markey Bill - includes bunker fuels
• Revenues in budget from 2012!
• NZ, AUS, Canada?

16
Possible EC action on maritime GHG emissions
17
Comprehensive action on transport

• All sectors need to make a contribution
• Comprehensive (and fair) approach
• EC action on transport GHG
• Aviation proposed 2006, agreed 2008
• Fuel Quality Directive proposed 2007, agreed 2008
• CO2 and cars proposed 2007, agreed 2008
• Car Labelling (under preparation)
• Heavy Duty Vehicles (under preparation)
• Maritime Transport (if required)

18
Regional action

• Sub optimal solution preference for global
  measures
• More difficult to design/implement than global
  action
• Less effective
• No distortion of competition
• Not disadvantage EU maritime interests
• Step towards global action

19
Inclusion of aviation activities in the EU
Emissions Trading Scheme
20
EU-ETS - Overview

• Applicable since 1 January 2005, for EU 25
• Permit requirement for CO2
• Mandatory caps on absolute emissions from around
  10,000 installations across EU
• Energy intensive sectors covered
• Covers currently around 2 billion tonnes of CO2
  emissions, around half of EUs total CO2
  emissions!
• Linking with other emissions trading systems
• Credits from emission-reducing projects in 178
  parties of KP useable

21
EU-ETS - Overview

• Market-based instrument which allows for most
  cost-effective and targeted environmental policy
  - no market intervention!
• EU ETS is driver for carbon market in 2007
  valued at around 40 billion (EU ETS 28
  billion)
• Cornerstone of Europes strategy to implement
  Kyoto Protocol - major structural element for the
  post-2012 climate strategy
• Flexibility to link to other mandatory schemes

22
Aviation in the EU-ETS - timeline

• European Commission Proposal 2006
• EP / Council agreement in 2008
• Legislation published 2009
• Obligations from 2010
• Signal of EU ambition / political will
• Aviation Global Deal BA/Air France/KLM/ Cathay
  Pacific/ Qatar etc. calling for UNFCCC coverage
  of aviation.

23
Aviation in the EU-ETS

• Legislation covers all flights to and from EU
  airports (plus Norway, Iceland and Lichtenstein)
• Excluded (de minimis) provision
• operators operating on average less than 2
  flights per day and
• operators with total annual emissions of less
  than 10,000 tonnes p.a.
• Small aircraft and certain flights excluded
• Scheme can be amended to take into account
  equivalent measures taken by other countries
• Allowances can be freely traded
• Aircraft operators can buy and use allowances
  from other sectors
• Limited use of CDM credits

24
Aviation in the EU-ETS

• Airlines will be required to monitor emissions
  from 2010
• Airlines can apply for a free allocation of
  allowances in 2011
• Airlines will be fully included in the scheme
  from 2012
• Total quantity of allowances allocated to the
  aviation sector equivalent to 97 of average
  annual emissions 2004-6 cap
• From 2013 the total quantity of allowances to be
  allocated will be equivalent to 95 of average
  annual emissions 2004-6 cap

25
Aviation in the EU-ETS

• Free allocation based on share of historic
  passenger/km performance
• Rewards operators who have efficient operations
• Based on historic data
• Allocation of operators to one Member State
• Equal treatment of all operators

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Aviation in the EU-ETS

• 15 of allowances auctioned
• Auctioning proceeds should be spent on tackling
  climate change in the EU and third countries
  (including low emission transport)µ
• MS must report on how they use revenues
• Aircraft operators must monitor and report
  emissions to competent authority
• Reports must be verified by an independent
  verifier
• Guidelines for the monitoring, reporting and
  verification of emissions from aviation being
  prepared

27
Preparation of EC proposal on GHG emissions from
ships
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Current status of EC work

• External technical support
• Contract started October 2008
• 12 months lead by CE Delft (NL)
• Scope of work
• Policy options,
• MAC,
• Impact analysis,
• Some stakeholder involvement (2009)
• Mode shift issue (separate contract)
• Inter Service Group within EC
• Formal stakeholder process (timing undecided)
• No decision on measures (possible package
  approach)
• Proposal ready for beginning of next Commission

29
EU Policy Options for further development

• 5 selected from long list of 27
• Detailed design and analysis in second stage of
  study
• Selection criteria Environmental effectiveness,
  cost effectiveness, legal analysis,
  implementability

30
EU Policy Options selected for further
development

• Selection
• Emissions trading, either (1) inclusion of
  shipping in the EU ETS or (2) emissions trading
  for shipping under a separate directive but
  linked to the EU ETS
• (3) An emission tax (levy) with hypothecated
  revenues.
• Mandatory (4) operational efficiency index or (5)
  design index.
• (6, 7)) A baseline and credit system, (8,9)
  including differentiated harbour dues, based on
  an operational efficiency indicator or a design
  index.
• A mixed 'package' of measures including
  operational improvements, technical improvements,
  speed reduction, voluntary actions, RD funding
  and subsidies to improve maritime infrastructure,
  ships and innovation.

31
European Commission - planning

• Formal consultation of stakeholders
• Impact assessment
• EC proposal (for new European Commission e.g.
  2010)
• EP and Council Decision 2 years
• Entry into force 1 year (e.g. 2013)

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Broad climate impact

• Black carbon especially in the Arctic (Albedo
  effect)
• Refrigerant gasses? Small but cost effective?

33
Some comments (1/2)

• GHG Reductions are possible (many with savings,
  others at reasonable cost)
• Very high energy efficient mode
• Customers and consumers want action
• No alternative (for majority of inter-continental
  freight)
• Possible regional mode shift to be avoided)
• Costs can be passed on to consumers
• Very marginal impact on demand

34
Some comments (2/2)

• Emissions need to peak in next decade
• Fairness - other EU sectors reducing since 2005
• Cost whatever target is agreed, starting late
  costs more
• Image - emissions from EU aviation activities
  capped below 2005 levels from 2012!
• Impact causing dangerous climate change
• Complexity designing and participating in
  multiple schemes
• Contributes to a negative image of shipping
• EU shipyards, EU equipment manufacturers
  leaders in related technology/systems
• Position of US (?)

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Conclusion

• All that is required is a fair contribution
• Win / win for shipping lost opportunity
• Prepare for a mixed solution UNFCCC / EU / IMO
• Maximise effort to help IMO adopt effective
  measures in next 2 years
• Engage non EU states in fostering a solution
• Global no action
• EC action being prepared
• No decision taken on EC measures

36

• Thank you for your attention
• Mark Major
• European Commission
• DG Environment
• B-1049
• Brussels, Belgium
• mark.major_at_ec.europa.eu
• 32 2 295 0927