On the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2015/757 and (EU) 2023/1805 to simplify and… streamline monitoring, reporting and verification and to align with revisions of the EU Emissions Trading System

The MRV proposal is a separate proposal mainly for legal reasons. The Legal Service of the Commission insisted to have it separate from the main ETS proposal. The main elements of the rules concerning shipping are addressed in the main proposal. The MRV proposal mainly adjusts the MRV accordingly. Anyhow because of limited space for the explanatory statement for the main report and for a better understanding of everything that is connected to shipping, the rapporteur uses the space for justification in MRV for giving a broader picture on ETS shipping.

Shipping is responsible for a significant share of greenhouse gas emissions in the EU (3-4%) and globally (2.9%). Not addressing these emissions - which was the situation in the European Union for a long time after introduction of the ETS for other sectors like steel and electricity and before the introduction of ETS for shipping - is not only incoherent when it comes to climate but has also counterproductive effect. When products like steel or cement are covered by the ETS and maritime emissions are not covered, it may be more attractive to bring products from outside the EU to Europe. Railway transport has been covered by the ETS form the beginning because most trains use electricity. It is bad for the environment and bad for the competitiveness of railway if shipping is not covered.

It is very important to continue the efforts to address shipping emissions at a global level. However, it is unfortunately not likely in the foreseeable future that the IMO will agree on an instrument that is in line with the Paris Agreement and the EU’s ambition. There has been a tremendous backlash, in particular, because the Trump administration blocked any progress including using extremely unfair instruments. They threatened to include the children of negotiators in consequences if delegations did not follow the administration’s negative line on any IMO agreement. Anyhow European institutions and Member States need to continue their efforts at international level (see the corresponding amendment in the amin ETS proposal). It is not reasonable to argue that EU ETS is no more necessary looking at the development at IMO. In the meantime, it is also reasonable and necessary to agree on bilateral agreements. The rapporteur strongly supports the European Commission’s approach to link the European Union’s and the United Kingdom’s emissions trading schemes which would be very important for avoiding any carbon leakage risk, for example, between Rotterdam, Antwerp and ports in the UK. The rapporteur is very happy that the main actors in the sector like ship owners and port associations are in principle in favour of the ETS for some years after long years of resistance.

The existing legislation includes not only shipping inside the European Union but also covers 50% of shipping from and to third countries. The existing legislation also for the first times introduces an earmarking of the Innovation Fund for a specific sector, which is the shipping sector. There are already measures against carbon leakage and port evasion in the current legislation. Under the current rules, ports outside the EU but less than 300 nautical miles away can be officially classified as “neighbouring container transhipment ports” if more than 65% of the containers handled by the port are for ‘transhipment’ (meaning containers are transferred from one ship to another). For determining if a voyage falls into the scope of ETS, such ports are disregarded and emissions are calculated as if the vessel had travelled directly to or from another port.

The Commission introduced further measures to protect the competitive situation of EU ports and avoid carbon leakage. The transshipment rate threshold is lowered to 50% making it easier to classify ports with elevated potential for diversion of transhipment activity. Ports with transshipment infrastructure within 150 nautical miles will be classified as “neighbouring container transhipment ports” as well. This will include a larger number of neighbouring ports and thus decrease the risk of carbon leakage. This list will be updated every year instead of every two years in order to be able to respond to a change in anti-evasion practices more quickly. New rules are also introduced for offshore activities to create a level-playing field. It has to be examined carefully if these measures are sufficient or should even be improved.

The Commission proposal reinforces a level-playing-field through a targeted extension of the scope of ETS to certain types of small vessels below 5.000 GT but not below 400 GT. The proposal also provides for a certain amount of allowances to be reserved and allocated to support least developed countries and small island states. This provision is of particular importance to get the support of these countries in the international negotiations and finally address the problem globally. And create a level-playing-field.

The rapporteur overall keeps the balance of the Commission proposal because he is convinced that it is the best possible way to address the challenges. Of course the rapporteur is open for improvements. The only change the rapporteur proposes to introduce is related to a lot of derogations that are in the current scheme. This includes reductions for voyages by ice class ships and derogations for passenger and ro-pax ships en route to small islands, for trips under transnational public service contract or a transnational public service obligation to islands and outermost regions. The Commission proposed to extend all these derogations until 2035. Stakeholders criticise that this doesn’t give them planning security. That is why the rapporteur suggests to extend all these derogations until 2040. However, until 2040 the derogations should be carefully phased-out. This will give predictability to all those involved as well as a clear timetable for the uptake of new climate friendly technologies.

Justification for the MRV proposal in the narrow sense

Amendments to the MRV Regulation and FuelEUMaritime Regulation are as follows. The proposal aims to deliver simplifications for operators complying with MRV, ETS and FEUM obligations by merging the relevant MRV compliance cycles and minimise existing duplication in the areas of divergence. The rest of the proposal mainly is a consequence of the changes in the main ETS file.

The rapporteur has no objection to the Commission proposal of MRV in the narrow sense and thus tables no amendments.

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that he included in his report input on matters pertaining to the subject of the file that she received, in the preparation of the draft report, from the following interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register, or from the following representatives of public authorities of third countries, including their diplomatic missions and embassies:

The list above is drawn up under the exclusive responsibility of the rapporteur.

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