Dry Cargo Supports Polluter Pays Language in EU ETS Amendments

Bulker shippers support polluter pays in EU ETS
Bulk shippers are support the polluter pays language in the EU ETS proposal (file photo)

Published Feb 7, 2022 6:42 PM by The Maritime Executive

Dry cargo shipowners became the latest segment of the shipping industry to provide at least tepid support for the revisions proposed for the European Union’s ETS carbon program now being discussed at the European Commission. Reflecting how the dry bulk segment functions with vessels often controlled by charterers, INTERCARGO announced its acceptance of the proposed revision focusing on the polluter pays principle joining with the tanker association INTERTANKO but putting it diametrically opposed to the World Shipping Council that came out two weeks ago saying the latest amendments would corrupt the ETS.

The dry bulk association said that it “cautiously welcomed,” the recent proposal by German lawmaker Peter Liese to update the language in the draft to place the emphasis on the entity making the decision about the vessel’s operations. They said that Liese’s proposal provides long-overdue recognition that often the shipping company is not the commercial entity controlling the ship operation, and thus is not responsible for the resulting GHG emissions. They also said that they were in support of the amendments that call for the establishment of an Ocean Fund to finance R&D into maritime decarbonization and to fund R&D projects aimed at bridging the price gap between cleaner
and conventional fuels.

“Trading patterns within the dry bulk sector are diverse and dispersed,” said INTERCARGO Chairman, Dimitrios Fafalios in a written statement. “A significant share of the bulk carriers’ operation is administered by charterers, which not only take responsibility for purchasing the fuel but also take operational decisions that directly affect the CO2 emissions of the ship, such as speed of transit.”

The WSC however contents that “The proposed changed definition of responsible entity would corrupt the ETS. The proposed amendments are intended to shield shipowners from ETS costs and then provide them with front-of-line access to ETS revenues such as the Ocean Fund. This would corrupt the whole idea of the ETS, changing it from a polluter-pays policy to a system where the polluter-gets-paid, and vastly reduce its effectiveness.”

While saying that it was in support of the one element of the proposed changes, INTERCARGO noted that it overall still has reservations on the EU ETS as a whole. As an organization, they said they are still firmly committed to supporting the role of the IMO as the global forum and regulator for driving the elimination of all CO2 emissions from shipping worldwide.

INTERCARGO also joins with other sectors of the industry saying that more needs to be defined and requires supporting the concepts with specific actions. “Whilst the proposal recognizes the need to establish a contractual requirement between the shipowner and commercial operator to pass on the costs, it must be understood that this will be easier said than done,” concluded Fafalios.
The dry bulk sector’s support is significant as it is the largest sector in shipping in terms of the number of ships and deadweight. Dry bulk carriers account for 43 percent of the world fleet in tonnage and the organization reports that its sector can carry an estimated 55 percent of the global transport work.

The European Commission is continuing to discuss the proposed amendments to the ETS scheme. The final draft is expected to come up for a vote in June 2022.