The Commission proposal for the extension of the application of the ETS Directive to the maritime transport sector

Genova - The European Commission presented the so-called "Fit for 55" package in July of this year. The package includes a series of proposals and initiatives aimed at ensuring that EU policies are in line with the objective of reducing emissions into the atmosphere by at least 55% set by the EU for 2030, with the ultimate aim of pursuing climate neutrality by 2050

di *Marco Manzione

Genova - The European Commission presented the so-called "Fit for 55" package in July of this year. The package includes a series of proposals and initiatives aimed at ensuring that EU policies are in line with the objective of reducing emissions into the atmosphere by at least 55% set by the EU for 2030, with the ultimate aim of pursuing climate neutrality by 2050. As is well known, these initiatives also concern the maritime transport sector. In particular, the “Fit for 55” package includes the revision of directive no. 2003/87 / EC (as already amended by Directive 2018/410), which establishes the trading of EU emissions quotas (hereinafter the "ETS Directive"), implemented in Italy (in its latest version) with the legislative decree n. 47 of 9 June 2020. The legislative initiative of the Commission intends to extend the scope of application of the ETS Directive also to sectors to which it was not previously applicable, among which the maritime transport sector stands out. The revision of the ETS Directive is not the only EU initiative concerning the reduction of greenhouse gas emissions from maritime transport: the other main proposal concerns the Fuel EU initiative which aims to increase the diffusion of alternative and renewable fuels, instrument which, obviously, goes to coordinate with the proposed amendment of the ETS Directive. 

Briefly, the ETS Directive established a greenhouse gas emissions trading system (ETS) in the European Union based on the "cap and trade" principle. In fact, a limit is introduced on the maximum quantity of emissions by the companies that are part of the system and, within this limit, the participating companies buy or sell emission allowances according to their needs. In fact, companies, whose emission quotas are not sufficient to cover the emissions produced, purchase the necessary emission quotas at auction or from other parties. Conversely, those who have emission quotas in excess of the emissions produced can sell them.

The impact assessment accompanying the Commission's legislative proposal revealed the choice to integrate maritime transport within the current system of the ETS Directive, while the possibility of creating an ad hoc ETS system for the maritime transport sector was discarded. 

The main elements of the Commission's proposal to revise the ETS Directive in relation to maritime transport are the following:

- the extension of the ETS Directive to maritime transport would apply not only to emissions deriving from intra-community voyages, but also to half of the emissions deriving from non-EU voyages and regardless of the ship's flag;
- the person responsible for the obligations imposed on the maritime sector by the ETS Directive would be the "shipping company", defined as the shipowner or other person who has assumed responsibility for the operation of the ship and who holds the Document of Compliance (DOC);
- the obligation to surrender allowances in the shipping sector would be introduced gradually from 2023 to 2025, with the obligation to surrender 100% of verified emissions only starting from 2026;
- in order to monitor, verify and communicate the emissions deriving from maritime transport activities, the rules already in force on the subject of verification and accreditation referred to in EU Regulation 2015/757 (which established the monitoring, communication and verification system carbon dioxide emissions generated by maritime transport (MRV system);
- in addition to the general rules of the ETS Directive on sanctions, expulsion orders may be issued against ships under the responsibility of a shipping company that does not fulfill its obligations under the ETS Directive, also providing for the issuance of a detention order administrative by the flag Member State (if applicable) and access refusal orders in ports under the jurisdiction of other Member States;
- for shipping companies registered in a Member State, the reference authority under the ETS Directive is the same Member State of registration. On the other hand, for non-EU shipping companies, the reference authority is the Member State in which the highest number of calls were registered in the previous two years of monitoring or, in the case of a first voyage, the Member State from which the shipping company started its first voyage;
- the Innovation Fund (ie the fund to which emission quotas are made available with the aim of supporting the innovation of low-emission process technologies) will also be able to support "innovative and pioneering technologies and infrastructures to decarbonise the maritime sector ".

Following the publication of the Commission's legislative proposal, the possibility was given to present feedback from stakeholders, up to 8 November 2021. Among the various replies filed, we note - in the maritime sector - those of the European Community Shipwoners' Association (ECSA), Intertanko and the Japanese Shipowners' Association.

ECSA criticized the choice to impute on the shipowner the obligations provided for by the revision of the ETS Directive relating to the maritime sector, which - according to him - should instead be charged directly to the person responsible for Tipi di traduzione Traduzione del testo Testo di origine 2174 / 5000 Risultati della traduzione r the ship's commercial choices in terms of fuel, routes and speed. In particular, ECSA recalls how it was the Commission proposal itself in its recital 20 that indicated that according to the "polluter pays" principle, the shipping company could, through a contractual agreement, "impute to the person who is directly responsible for decisions affecting the CO2 emissions of the responsible ship including compliance costs under this Directive ”. However, ECSA believes that there should be a legal obligation that requires that the responsibility fall on this subject, avoiding that this is left to mere private negotiation between the parties.

Intertanko criticized the definition of "shipping company", raising the critical issues that could arise in the case of technical managers who manage ships of different owners. It also expressed doubts about the way in which resources earmarked for the maritime sector are allocated within the Innovation Fund, indicating that most of the financial resources deriving from emissions from the maritime sector should be exclusively devoted to research and development aimed at neutrality. climate of the shipping sector.

Finally, the Japanese Shipowners' Association has criticized from the outset the choice of the European Union to intervene at a regional level in a global sector such as international maritime transport, which must be left to the exclusive guidance of the IMO. On this point, in the text of the proposal, the Commission indicates that it welcomed the recent progress made by the IMO on reducing emissions, but that these are considered insufficient and stresses that the EU regional initiative could be a source of inspiration for wider action within the IMO.

The Commission proposal has now been examined by the Council and Parliament. We will see if it will be modified before its final adoption, which does not seem, however, to be questioned.

*Lawyer, Partner of Dardani Studio Legale

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