Polluter pays
when held to account

By Serafeim Katsikas,
CTO at METIS Cyberspace Technology

Shipping contributes 3 percent to global CO2 emissions and, in the view of many, should therefore be held accountable under the ‘polluter pays’ principle for meeting internationally-agreed targets to cut greenhouse gasses. 

But responsibilities on pollution have become a matter of dispute between different shipowner groups following the recent proposal by MEP and European Parliament (EC) rapporteur Peter Liese to update Amendment 9 of the EU’s emissions trading system (ETS) draft. Part of the EU’s ‘Green Deal’ to cut pollution by 55% against 1990 levels by 2030 and reach net zero by 2050, Liese now proposes including maritime transport in the ETS by 2025 and setting up an R&D Ocean Fund from an auction of emissions to help shipping decarbonize.

In a significant move, Liese also proposes amending the ETS to include time charterers within the definition of the “responsible entity” and to require a legally binding clause in charter contracts to pass on costs from the owner to the charterer.

Shipping business

Dry bulk owner association Intercargo “cautiously welcomes” the new position, citing the way “regulators finally grasp some of the realities of our industry” by recognising “the need to establish a contractual requirement between the shipowner and commercial operator to pass on the costs”.  

However, liner shipping grouping The World Shipping Council (WSC) sees the amendments putting the EU Green Deal “at risk”, suggesting they would “corrupt the ETS”. They 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”, says WSC. According to a group which includes owners, operators and charterers, this would transform the ETS “to a system where the polluter-gets-paid”. 

Finding a bridge between these positions presents a major challenge. At METIS, we would once more counsel that using common metrics to assess the impact of any CO2-reduction scheme will surely help, given that fair points are being made on both sides.

Trading blows

For Intercargo, Chairman Dimitrios Fafalios comments: “Trading patterns within the dry bulk sector are diverse and dispersed. 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.”

For WSC, President and CEO John Butler argues: “Ship greenhouse gas emissions result from the combination of design technology, fuel consumed, and operational practices. It’s obvious, frankly, that one cannot decarbonise shipping without addressing the ship itself.” 

Perhaps common ground can be found by taking on board points from both side of the divide.

One is to concede to WSC’s view that a market incentive for technological change that cannot be applied to the shipowners who control the pace of shipboard technology innovation will – at least – slow down transition. The other may be to acknowledge with Intercargo that extending the pollution liability of shipping to include its chartering customers “will be easier said than done”.

Not easy, but not impossible. METIS stands ready to help owners, operators, fleet managers and charterers to base their evaluation of the options ahead on hard data.

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