A ban on state subsidies to companies in the EU could stand in the way of European shipowners’ desire to fund their green transformation via the EU’s CO2 trading system, says EU Commission maritime transport director.
Magda Kopczynska is director for marine transport with the EU Commission. | Photo: /European Commission
Shipping companies’ desire to earmark three fourths of the future income from the European Union’s Emissions Trading System (ETS) for financing shipping’s green transformation, could prove difficult to fulfil in practice.
Thus warned Magda Kopczynska, director for maritime transport with the European Commission, Wednesday during the conference Decarbonizing Shipping II in Copenhagen, arranged by Danish Maritime, Danish Shipping and WPO.
The European Community Shipowners’ Association (ECSA) has proposed to establish an ”Ocean Fund,” which would receive 75% of the shipping industry’s future payments to the ETS – a proposal supported by the European Parliament’s environmental committee.
The money in the Ocean Fund, in ECSA’s view, should be earmarked for funding shipping’s green transformation, but such a transfer of funds into the industry could very well clash with the EU’s competition regulations, according to Kopczynska.
”I think we have to be careful when we say that the money should go back to the sector,” she said.
I think we have to be careful when we say that the money should go back to the sector
Magda Kopczynska, director for marine transport, EU Commission
She pointed out that, in practice, it might prove difficult to pay out public funds to the shipping sector without the scheme coming into conflict with the union’s competition rules, which fundamentally prohibit state subsidies going to single companies or industries in single countries.
”I can easily see companies and shipowners raise their heads” if competitors in other EU nations received funding to finance their green transformation, Kopczynska said.
Competition rules could be in the way
This proposal for the EU’s climate package Fit for 55, which is currently being negotiated, stipulates that shipping be included in the ETS, so that carriers will pay for their CO2 emissions in accordance with the forthcoming regulation going forward.
It’s these funds that ECSA suggests the EU system send back into the industry, so that the ETS income can cover part of carriers’ expenses tied to the green energy transition. In practice, meanwhile, European shipowners don’t always pursue the task of converting their fleets to sustainable operations with the most seriousness.
I can easily see companies and shipowners raise their heads
Magda Kopczynska, director for marine transport, EU Commission
This means that carriers which have chosen to invest in their own green transformation could end up contributing financially to that of competitors, which have opted not to invest in climate measures, via their payments to the ETS.
Such a practice might very well end up clashing with the EU’s competition rules, Kopczynska warned.
Moreover, payments to the ETS from carriers in non-EU countries might prove a challenge, she says, asking how these funds are meant to be sent back to the industry.
Balanced EU support for shipping
The industry’s proposal of an Ocean Fund is cause for furrowed brows not only within the EU Commission due to competition regulations – the proposal has also created a north-south conflict among European shipowners.
Association Danish Shipping is skeptical towards the proposal of an earmarked fund, and doubts that it will survive when the EU Parliament is to negotiate the legislative package with the union’s member states.
”If there is support for an earmarked fund, then it is so – but I don’t think it will be passed when the EU Parliament has to negotiate with the EU’s member states at a later point,” said Danish Shipping Director of Climate, Environment and Security Maria Skipper Schwenn to WPO on May 16.
Schwenn stressed that Danish Shipping would prefer that the funds from the ETS be spent on infrastructure, for example for the distribution of green fuels, which would benefit all carriers in the green transformation.
She warned against establishing a fund that, spending common money, would end up financing the green energy transition of carriers which themselves avoid investing in it.
”We are mostly concerned with the money being distributed in the right way in order to not end up favoring those who haven’t invested in any way in the green transition in recent years,” Schwenn said, adding:
”There needs to be balance, so those who have already been making investments are not forgotten.”
English edit: Jonas Sahl Hollænder
