What are the Fit for 55’s targeted measures to reduce GHGs from shipping in Europe? How will it impact the maritime industry?
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THE EUROPEAN LEGISLATIVE PACKAGE PROPOSAL FOR REDUCING EU GREENHOUSE GAS (GHG) EMISSIONS BY 55% BY 2030
The EU Green Deal is the EU’s pledge to achieve a green economy. It sets two critical targets for GHG reduction:
- A 2030 deadline to reduce emissions by 55% compared to a 1990 baseline
- A 2050 deadline for carbon neutrality
WHAT IS FIT FOR 55?
The Fit for 55 package is the proposed framework for transforming the Green Deal into reality. These measures are the most ambitious legislation the EU has ever set forth to combat climate change and create a sustainable economy. It will include both revisions to existing regulations and new measures, goals and tools.
HOW DOES FIT FOR 55 IMPACT THE MARITIME INDUSTRY?
Fit for 55’s legislative proposals span all sectors of the European economy, including shipping and the industry’s upstream suppliers. Should Fit for 55 be adopted, companies that operate in EU waters will need to be agile and responsive. Action in Europe may also spur the IMO to accelerate its own legislation and adopt more aggressive targets. Familiarity with Fit for 55 and its provisions, therefore, benefits the whole maritime industry.
WHAT ARE THE KEY MEASURES IN FIT FOR 55?
Fit for 55 is still subject to change and discussion but will likely result in a combination of several measures: carbon pricing, rules and targets.
Carbon pricing discourages using carbon-based fuels while promoting alternative energies. It does this by translating the external costs of GHG emissions into monetary values.
New rules will ensure the production and uptake of alternative fuels and fast-track development of new technologies by clarifying deadlines for transitioning fuel sources.
Targets establish common principles between member states, reducing barriers, stimulating investments and driving cost reductions in renewable energy technologies.
As mentioned above, these measures apply to all sectors of the economy, but proposals affecting the maritime industry are detailed below.
WHICH FIT FOR 55 PROPOSALS IMPACT THE MARITIME SECTOR?
- The EU Emissions Trading System (EU ETS)
This has been revised to disincentivize GHG emissions from shipping in EU waters.
- FuelEU Maritime
This is a proposal to encourage the production and uptake of sustainable alternative fuels.
- The Alternative Fuels Infrastructure Regulation (AFIR)
This has been revised to ensure that EU member states adopt equally ambitious GHG reduction targets and to facilitate the roll-out of low-carbon fuels.
- The Energy Taxation Directive (ETD)
This has been revised to disincentivize the use of fossil fuels and include the maritime industry.
- The Renewable Energy Directive (RED)
This has been amended to adopt new renewable energy share and GHG emissions targets.
It is not believed that the Market Stability Reserve (MSR) or the Carbon Border Adjustment Mechanism (CBAM) will directly impact the maritime sector.