Explanatory Memorandum to COM(2013)480 - Monitoring, reporting and verification of carbon dioxide emissions from maritime transport - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)480 - Monitoring, reporting and verification of carbon dioxide emissions from maritime transport. |
|---|---|
| source | COM(2013)480  |
| date | 28-06-2013 |
In December 2010, Parties of United Nations Framework Convention on Climate Change (UNFCCC) recognized that global warming must not exceed the temperatures experienced before the industrial revolution by more than 2˚ C. This is vital if the negative consequences of human interference with the climate system are to be limited. This long-term goal requires global greenhouse gas emissions to be reduced by at least 50% below 1990 levels by 2050.
Developed countries should reduce their emissions by 80 to 95% by 2050 compared to 1990 levels. In the medium term, the EU has committed to reduce its greenhouse gas emissions by 20% below 1990 levels by 2020, and by 30% if conditions are right. This commitment forms part of one of the EU's five headline targets in the Europe 2020 Strategy.[4] Additionally, both the European Council and the European Parliament have agreed that all sectors of the economy should contribute to reducing emissions. In the view of contributing to the EU 2020 Strategy, the 2011 Commission White Paper on Transport states that EU CO2 emissions from maritime transport should be reduced by 40% (if feasible 50%) from 2005 levels by 2050.
In 2010 the total CO2 emissions related to European maritime transport activities (including intra EU routes, incoming voyages to the EU and outgoing voyages from the EU) were estimated to be of the order of 180 Mt CO2. Despite of the introduction of minimum energy efficiency standards for certain categories of new ships ("Energy Efficiency Design Index", EEDI) by the International Maritime Organisation (IMO) in 2011[7], the emissions are expected to increase. Main driver is the still expected increased demand for maritime transport triggered by growth of world trade.
This projected growth is expected to happen despite the availibility of operational measures and existing technologies to reduce the specific energy consumption and CO2 emissions of ships by up to 75% (according to IMO figures). A significant part of these measures can be regarded as cost-effective as the reduced fuel costs ensure the pay-back of any operational or investment costs. This contradiction can be explained by the existence of market barriers for the uptake of such technologies and operational measures such as the lack of reliable information on fuel efficiency of ships or of technologies for retrofitting ships, lack of access to finance for investments into ship efficiency and split incentives as ship owners would not benefit from their investments into ship efficiency as fuel bills are paid by operators.
The projected increase of CO2 emissions from shipping is not in line with the EU objectives, leading to negative impacts on climate change. Furthermore, at the EU level, international maritime transport remains the only transport mode not included in the EU's greenhouse gas emissions reduction commitment which requires additional efforts from all other sectors.
The Council and the Parliament recalled an earlier commitment to take action in the Climate and Energy Package adopted on 23 April 2009: "in the event that no international agreement which includes international maritime emissions in its reduction targets through the International Maritime Organisation has been approved by Member States 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 in the Community reduction commitment, with the aim of the proposed act entering into force by 2013. Such a proposal should minimise any negative impact on the Community’s competitiveness while taking into account the potential environmental benefits."[8]
This deadline has passed without sufficient international action as the EEDI, despite its utility is not expected alone to deliver absolute emission reductions compared to base years if forecasted growth in traffic will be realised. Therefore, the Commission launched preparatory activities in view of addressing greenhouse gas emissions from international maritime transport.
Today, the precise amount of CO2 and other greenhouse gas emissions of EU-related maritime transport is not known due to the lack of monitoring and reporting of such emissions. The impact assessment and stakeholder consultation (see section 2) identified that a robust system for monitoring, reporting and verification (MRV) of greenhouse gas emissions from maritime transport is a prerequisite for any market-based measure or efficiency standard, whether applied at EU level or globally.
Furthermore, a robust MRV system should contribute to the removal of market barriers, in particular related to the lack of information on ship efficiency. Based on the results of the impact assessment, it is expected that by introducing MRV, greenhouse gas emisisons reductions of up to 2% compared to business-as-usual and aggregated net costs reduction of up to € 1.2 billion by 2030 could be achieved.
By introducing MRV as a first step, more time can be dedicated to the discussion and decision making on emission reduction targets, market-based measures and efficiency standards to achieve these reductions at minimum cost. This is particularly relevant for discussions at global level in the IMO.
Given the Commission's clear preference for measures taken at global level, the EU MRV should serve as example for the implementation of a global MRV with the aim to speed up the international discussions. In this context, relevant submissions to the IMO will be made when appropriate. Once a global system is decided, the proposed Regulation should be amended to align the EU MRV with the global system.
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATION
- The need to act on climate change and greenhouse gas emissions from ships
- Mandate for action at EU level
- Need for a staged approach to reduce greenhouse gas emisisons from maritime transport
- Stakeholder consultation
- Impact assessment
- Summary of the proposed action
- Legal basis
- Subsidiarity principle
- Proportionality principle
- 5. OPTIONAL ELEMENTS
In order to review the policy options mentioned in the second IMO greenhouse gas study 2009[9] and in the 2009 CE Delft study[10], a working group (WG6) was established under the European Climate Change Program II (ECCP). This group has also allowed formal technical stakeholder consultations and provided input for the external support, e.g. by narrowing down the policy options. Three two-day meetings with more than 100 participants from national administrations, from EU and international shipping associations and from other associations and NGOs were organized in 2011. The minutes, the background paper and the presentation of these meetings are available on the Commission’s website for public information[11].
Furthermore, the Commission established a High Level Platform, bringing together high level experts in the maritime transport sector, to enable a strategic discussion directly with Vice President Kallas and Commissioner Hedegaard. These meetings took place on the 3 February 2011, 28 June 2011 and 7 November 2011.
An online public consultation was held from 19 January to 12 April 2012, i.e. 12 weeks. A press release announced the launch of this public consultation. The public consultation was carried out using the “General principles and minimum standards for consultation of interested parties by the Commission”.
The consultation confirms that a global agreement in the IMO is perceived as the best long term option to achieve greenhouse gas emission reductions of the shipping sector. In the event of a European measure, there is general agreement that there should be a level playing field for all ships using European ports. It is also a largely shared view that any market-based measure or efficiency standard needs to be accompanied by transparent and robust monitoring of emissions. This monitoring should be established with the view of avoiding undue administrative burdens and ensure accurate reporting results. More results are published on the Commission's website[12].
Finally, another stakeholder meeting with 120 participants from industry, NGOs, Member States and third countries took place on 5 December 2012 focussing on the design of a MRV system in the EU. This meeting confirmed the need for MRV as no robust data on CO2 emission are available today. Several initiatives for monitoring and reporting of fuel consumption, CO2 emissions and energy efficiency already exist in the shipping sector. The participants widely agreed that MRV should be based on information required by international Conventions and already available on board of ships to reduce the administrative burden. The presentations and conclusions are published on the Commission's website[13].
The Impact Assessment analyses and compares several policy options for market-based measures and a MRV-only option. The main findings are the following:
– The key market barriers to the implementation of cost-effective abatement measures are:
(i) lack of reliable information on fuel efficiency of ships or of technologies available for retrofitting ships,
(ii) lack of access to finance for investments into ship efficiency
(iii) split incentives as ship owners would not benefit from their investments into ship efficiency as fuel bills, due to the structure of ship operations, are often paid by operators.
The removal of these market barriers will be key for the success of any particular measure.
– Significant emission reduction potentials exist for shipping through a range of technical and operational measures, which mainly aim to improve the energy efficiency of ships. The fuel cost savings associated with most of these technical or operational measures outweigh the expected costs.
– All policy options analysed offer net benefits in terms of environmental (reduction of CO2 and other emissions), economic (net cost savings for the maritime transport sector) and social impacts (less health problems due to lower SOX and particle emissions, creation of jobs).
– Two types of compensation funds – a contribution-based fund with given carbon price and a target-based fund with defined reduction target and indirect price setting – and a maritime emission trading system (ETS) could offer the highest benefits in terms of emission reductions and cost savings.
They are expected to best address the market barriers and result in emission reductions of around 10% by 2030 compared to 2005. Net cost savings for the shipping sector could be substantial in case market barriers could be completely removed (and may be up to € 12 billion in 2030 and in average up to € 5 billion per year). In particular there are substantial saving potentials by implementing existing fuel efficiency technologies at negative costs in this sector, and coupled with operational measures will further reduce CO2 emissions.
– The MRV only option would lead to more limited emission reductions estimated at up to 2% in 2030 (compared to the baseline) leading to cost reductions up to around € 1.2 billion in 2030 (in average about € 900 million per year). This will target the removal of market barriers related to the lack of information thanks to the generation of information on fuel consumption and raising awareness at management level for potential fuel cost savings. Costs of implementation are estimated at around € 26 million per year (when excluding ship below 5000 GT from the scope). Overall, the relative benefit/cost ratio of this option is very high.
The full results are presented in the impact assessment accompanying the proposal.
The main objective of this Regulation is to establish a European MRV system for CO2 emissions from ships as first step of a staged approach to reduce these emissions. In order to reduce the related administrative costs while ensuring robust results, simple and lean MRV requirements are proposed. The approach is therefore designed to make use of already existing data on board of ships to the fullest extent.
Accordingly the operational features of the proposed MRV system would be as follows:
– Focus on CO2 as predominant GHG emitted by ships and on other climate relevant information such as efficiency information to address market barriers for the uptake of cost-efficient mitigation measures and to align MRV with IMO discussion on efficiency standards for existing ships
– Calculate annual CO2 emissions based on fuel consumption and fuel type and energy efficiency using available data from log books, noon reports and bunker delivery notes
– Use existing structures and bodies of the maritime sector, in particular recognised organisations to verify emission reports and to issue documents for compliance
– Exclude small emitters (ships below 5000 GT) which represent about 40% of the fleet, but only 10% of the total emissions
In principle, the MRV system could also cover emissions of other greenhouse gases, climate forcers and air pollutants such as SOX and NOX. Such an integrated approach could deliver a broad range of relevant environmental information while making use of synergy effects to the benefits of the shipping sector and public authorities. However, the proposed lean MRV approach based on existing documents and equipment on board of ships could not be used to measure other emissions than CO2. Furthermore, the measurement equipment required for other emissions than CO2 cannot be considered as sufficiently reliable and commercially available for use at sea. Therefore, at this stage, the proposed MRV system should be implemented for CO2 emissions only. It would be appropriate to review this scope at later stage.
As regards the geographical scope for monitoring, the following routes will in principle be covered in a non-discriminatory manner for all ships regardless their flag:
– intra-EU voyages
– voyages from the last non-EU port to the first EU port of call (incoming voyages)
– voyages from an EU port to the next non-EU port of call (outgoing voyages)
The compliance cycle will be based on a standard approach. It is proposed to use a lean approach and to assign a limited number of tasks to the Commission which shall be assisted by the European Maritime Safety Agency (EMSA). Tasks related to the check of monitoring plans, emission reports, communication with ship owners and operators and the issuance of documents of compliance would be ensured by accredited third party verifiers. Such bodies which may include recognised bodies already have extensive experience and play an important role for maritime safety. Enforcement of the MRV obligations would be ensured by Member States, more concretely by Port State Authorities making use of the existing flag State and port State control mechanisms and of data published by the Commission.
The proposed MRV system could be converted into a global system with only limited adjustments as it uses internationally required documents and existing structures such as flag State and port State authorities and classification societies.
In order to facilitate the implementation of the proposed MRV system, more specific rules for verification and the accreditation of verifiers are needed. In addition, the description of the four monitoring methods and the determination of other climate relevant information such as efficiency indicators provided in Annex I and II of the proposed Regulation should be revised based on the scientific evidence and the development of international standards. For these purposes, the Commission should be empowered to adopt respective delegated acts.
To simplify the preparation of monitoring plans, reporting and verification of emissions and other climate relevant information, electronic templates shall be used. These templates shall be provided and adopted by the Commission based on implementing acts.
The steps of the MRV process are illustrated by the following figure.
The legal basis for the legislative proposal is Article 192 of the TFEU. The proposal pursues a legitimate objective within the scope of Article 191 of the Treaty on the Functioning of the European Union, namely, combating climate change. The purpose of the legislative proposal is to ensure that greenhouse gas emissions from ships are monitored and reported, and therefore to improve the availability of information for policy and decision making in the context of the Union’s climate change commitments and provide incentives for mitigation efforts. This objective cannot be achieved by less restrictive means than the legislative proposal.
For Union action to be justified, the subsidiarity principle must be respected.
(a) Transnational nature of the problem (necessity test)
The transnational nature of climate change and of maritime transport are important elements in determining whether Union action is necessary. National action alone would not suffice to meet the objectives set by the White Paper on Transport. It is therefore necessary for the Union to create an enabling framework to meet international and Union requirements, ensuring harmonised monitoring, reporting and verification of greenhouse gas emisisons from maritime transport.
(b) Effectiveness test (added value)
By reason of its effectiveness, taking action at Union level would produce clear benefits compared to action at Member State level. As the overarching climate change commitments are made at the Union level including the emissions reduction target for the maritime transport sector for 2050 as established by the White Paper on Transport, it is effective to also develop the required rules for MRV at this level. Moreover, this legal framework will ensure effectiveness by employing harmonised MRV for ship voyages between ports of different Member States which account for about 90% of port calls in EU Member States. Furthermore, acting at the EU level could avoid competitive distortion in the internal market by ensuring equal environmental constraints on ships calling into EU ports.
The proposal complies with the proportionality principle for the following reasons:
It does not go beyond what is necessary to achieve the objective to collect reliable data of greenhouse gas emissions from ships. Furthermore, the methodology for MRV of the proposed Regulation is based on information already today available on board of ships. No additional equipment will be required.
The proportionality of the proposed measure is also ensured by focussing on CO2 emissions representing about 98% of the greenhouse gas emissions of the shipping sector and on large ships above 5000 Gross Tons (GT). This excludes almost half of the about 19000 ships above 300 GT have called in EU ports in 2010[14] while still covering around 90% of the total emissions from ships.
As specified in the financial statement accompanying this Regulation, the Regulation will be implemented using the existing budget and will not have an impact on the multi-annual financial framework. Limited IT development costs for the necessary adjustment of an existing tool hosted and operated by EMSA of around 0.5 M€ are expected. EMSA's involvement depends on the respective ancillary task of the agency to be activated and approved by the EMSA Board.
Review/revision clause
The proposal includes a provision allowing the Commission to review this Regulation in the context of future international developments, in particular in case of the introduction of a global MRV system through the IMO. In such an event the proposed Regulation should be reviewed and if appropriate amended to align the provisions on MRV with the international system.