EU member states, the European Parliament and the European Commission have come to a preliminary agreement on how to introduce shipping to the organisation's emissions trading system. File Image / Pixabay
An agreement has been reached among the European Union institutions that will see the shipping industry start to be charged for its GHG emissions from 2024.
EU member states, the European Parliament and the European Commission have come to a preliminary agreement on how to introduce shipping to the organisation's emissions trading system. The regulation is likely to be formalised in the coming days.
All ships over 5,000 GT in size will be included in the ETS, covering 100% of emissions from intra-EU voyages and 50% of emissions from voyages between EU ports and the rest of the world.
The system will be phased in over three years, with the system starting in 2024 with 40% of the costs due, 70% in 2025 and 100% from 2026 onwards.
The initiative is a major step towards charging the shipping industry for its GHG emissions and incentivising companies to order new tonnage running on alternative fuels and to install fuel-efficiency systems to reduce their bunker consumption.
The EU carbon price is currently around EUR 81/mt ($83.93/mt). With about three tonnes of CO2 emitted per tonne of bunker fuel consumed, this system would add about $100/mt to the bunker price for intra-EU voyages in 2024, $176/mt in 2025 and $252/mt from 2026.
The EU policy will also add pressure on the IMO to impose some form of carbon taxation at the global level. The UN body's Marine Environment Protection Committee is set to discuss proposals for this at a meeting in London next month.