Towards EU Emissions Cap for All Transport Modes?



Towards EU Emissions Cap for All Transport Modes?

Authors

R Kok, J Gille, ECORYS, NL

Description

Abstract

Towards EU emissions cap for all transport modes?

The EU Emissions Trading Scheme (EU-ETS) was launched on the 1st of January 2005. During the first (2005-2007) and second EU-ETS trading period (2008-2012), about 10,000 large stationary industrial plants in the EU have been and will be required to buy and sell permits to release carbon dioxide into the atmosphere.

According to statistics from the International Energy Agency (IEA) the EU-25 total CO2 emissions by aviation and shipping increased by 60% and 32%, respectively, in the period 1990-2002. In the third trading period (2013-2020), the aviation sector will also be included in the EU-ETS in order to reduce EU CO2 emissions and meet its Kyoto greenhouse gas (GHG) commitments. In 2007 the EU announced plans to start including the maritime shipping sector into the EU-ETS, aimed at tackling the shipping industry?s rapidly growing contribution to climate change.

This paper explores the parallels and differences between the aviation and maritime shipping subsectors with respect to the inclusion into EU-ETS. The design parameters and options of the inclusion of maritime shipping in the EU-ETS could have large impacts on the competitive positions of EU seaport regions. Analysis of several ports illustrates how their competitive position can be affected by several EU-ETS design options to include maritime shipping. The results of the analysis can be used to select the best design of this trading scheme in 2010.

The case study will elaborate on the following elements:
? Analysis of the characteristics of the ships that are encountered in European seaports.
? Analysis of the design options with respect to the inclusion of the EU maritime shipping into the EU-ETS. The design options are related to the ship characteristics in order to assess the impact for EU seaports.
? Investigation of options to recycle back the revenues from EU-ETS auctions to the maritime shipping sector.
? Presenting a strategic outlook for the EU-ETS design on the inclusion of the maritime shipping sector of which negotiations will be starting in 2010.

In the first step, ports characteristics are analysed such as port dues and the composition of the ship fleet in each port in terms of types of vessels, age of vessels, technologies used in the vessels and the size of the vessels. In the second step, the ETS design parameters are linked to the individual port characteristics of step 1. Important design parameters are for instance the coverage of climate impacts, the geographical scope of the scheme, definition of the trading entity, allocation rules and distribution of the emission allowances, and the allocation method itself. The two major issues for the member states and the seaports are firstly revenues from allowance auctions and secondly a weakened competitive position of one or more seaports. Also the scope for evasion (carbon leakages) is discussed with respect to the design of the EU-ETS for maritime shipping.

The third step considers the options to recycle back the revenues generated by the trading system. By investing these back into the maritime sector, additional environmental gains and/or competitive advantages might be realised. This can be in the form of retributions, adjustments of port charges, subsidies or taxation schemes. All options of course need to meet legal requirements as regards state aid. Last but not least the study investigates the possible options of allocating entities to Member States and how to involve non-EU shipping operators.

Finally, the findings for the maritime shipping sector are compared with the choices already made for the aviation industry. Parallels and differences are identified and structural competitive impacts of both sectors compared.

Publisher

Association for European Transport