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Liberian Registry hits out at proposed EU ETS shipping extension

The world’s second-largest vessel registering service opposes what it sees as European overreach

The Liberian Registry has warned that a proposal made by the European Parliament to extend the EU emissions trading system (ETS) not just to shipping in EU waters but to all journeys made to and from the EU will distort the global maritime sector. 

“We understand the need for efforts to lower greenhouse gas (GHG) emissions, and continue to push for a cleaner environment, as well as a more efficient maritime industry,” says its COO, Alfonso Castillero.     

“However, at least for international shipping, it is vital we work toward one set of requirements established by the IMO, avoiding the creation of a fractured system of regional requirements that reach beyond their own waters, and assuring a unified global effort to confront this important issue.”

Should the EU move to include shipping in its EU ETS framework, Liberia prefers that it apply only to the territorial waters of EU member states and does not extend any further internationally. “If applied extraterritorially beyond intra-EU voyages, [it] will distort the global market situation because it will cover voyages not only within the EU, but also voyages to and from the EU,” warns Castillero.   

"For international shipping, it is vital we work toward one set of requirements established by the IMO, avoiding the creation of a fractured system" Castillero, Liberian Registry

But the African nation insists it is not spoiling for a fight. “Like many other IMO member states, we remain committed to working with the EU on a collaborative effort to address the environmental challenges posed by GHG emissions.”

Undermining emission reductions

Liberia shares the concerns of the World Shipping Council (WSC) that a unilateral EU ETS scheme would undermine other efforts to reduce shipping’s global GHG emissions, including an industry associations’ proposal to the IMO for the establishment of an International Maritime Research and Development Board, funded by the industry, to accelerate the introduction of low and zero-carbon technologies and fuels for shipping.

“While the EU ETS has been described as a ‘regional’ system, bringing international shipping into that system using the monitoring, reporting and verification (MRV) scope [of existing ETS legislation] would, in effect, regulate the operation of ships on several of the world’s seas and oceans, including on the high seas and in waters adjacent to non-EU nations,” says Castillero.   

And taxation costs incurred from an ETS will be distributed to the supply and value chains, which will have a genuine impact on the costs of ocean transport, argues the Registry. In effect, by using the EU’s existing MRV regulation, financial charges would be applied to voyages that “in some cases stretch halfway around the world”.  And it estimates that over half of the emissions in scope would result from voyages outside of EU waters.

Moreover, by bringing all voyages into and out of EU ports into scope, the ETS would then also capture emissions associated with cargoes that are trans-shipped via the EU but are not EU imports or exports. This would, argues the Registry, have a particularly disproportionate effect on developing countries, a key concern to Liberia, and open up “the very real prospect of trade and tax retaliation on a global scale”.

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