3 Carbon dioxide emissions from maritime
transport
| Committee's assessment
| Legally and politically important |
| Committee's decision | Not cleared from scrutiny
|
| Document details | Commission Communication and draft Regulation on reducing greenhouse gas emissions from shipping
|
| Legal base | Article 192(1) TEFU; co-decision; QMV
|
| Department | Transport
|
| Document numbers | (a) (35155), 11917/13, COM(13) 479
(b) (35147), 11851/13 + ADDs 1-4, COM(13) 480
|
Summary and Committee's conclusions
3.1 The EU's 2008 Climate and Energy Package does not extend to
international maritime transport, even though shipping accounts
for 4% of greenhouse gas emissions. This figure is expected to
increase significantly, and, as the Commission considers there
is a significant potential for reducing these emissions, it put
forward in June 2013 a Communication addressing this issue. This
suggested that, in the absence of a global market-based measure
under the auspices of the International Maritime Organisation
(IMO), the EU should look at ways in which emissions from ships
could be included within its reduction commitment, and in particular
at a system for their monitoring, reporting and verification.
3.2 That Communication was accompanied by a draft
Regulation, which seeks to establish such a system for emissions
of carbon dioxide from ships above 5,000 Gross Tonnage (GT)[3],
calling at EU Member States' ports; require these to be monitored
and reported on annually, using one of four monitoring methods;
and provide for emissions calculations to be based on fuel consumption,
using data already available.
3.3 We drew these documents to the attention of the
House on 4 September 2013, noting that the Government shared the
Commission's preference for taking action through the IMO, but
took the view that, if there was to be an EU regime, there should
be a flexible and non-prescriptive approach, which should focus
only on carbon dioxide emissions and on ships above 5,000 GT.
We commented that, whilst it seemed sensible to consider how international
shipping might be included in the EU's greenhouse gas emissions
commitment, the proposal could have important resource implications
for ship owners and operators, and we noted that the Government
would be seeking to establish what the costs of the proposal would
be (and whether the Regulation would result in an extension of
EU competence). We therefore decided to hold the two documents
under scrutiny, pending further information.
3.4 We have since received a number of updates from
the Government, the most recent being in a letter of 4 December
2014, in which we have been told that the trilogue discussions
have resulted in a text acceptable to the UK, with the measure
being workable and proportionate in terms of the burdens which
it imposes on industry, and, on the basis of the Commission's
estimates (with which the UK has "no reason to disagree"),
having a high benefit-cost ratio. In the light of this, we have
been asked to consider lifting scrutiny on the proposed Regulation
so as to enable the UK to vote in favour of a political agreement
at the Environment Council on 17 December.
3.5 As we have previously noted, it seems logical
to explore the possibility of addressing greenhouse gas emissions
from international shipping, and, given the current position within
the International Maritime Organisation, there also appear to
be good reasons for concentrating at this stage on an EU system
for monitoring, reporting and verification. To that extent, we
understand the Government's wish to vote in favour of the draft
Regulation, given in particular the changes which have been made
in the negotiations.
3.6 Having said that, there are two issues which
bear upon the Government's request that we should lift scrutiny.
First, as the Minister has suggested in his latest letter, we
have on more than one occasion asked about the cost implications
of the proposal for the UK, this being prompted by our having
been told in the original Explanatory Memorandum that officials
would be engaging with industry stakeholders in order to ascertain
this. Consequently, even if the Government is content with the
Commission's EU-wide figures, we would have expected it to have
provided some estimates of its own on the costs and benefits to
the UK (although we take the point that, as the Commission has
identified a high benefit-cost ratio for the proposal, it is likely
that this would also apply to the UK as well).
3.7 However, the Explanatory Memorandum also said
that the Government would be "considering whether the Regulation
would result in an extension of EU competence", but we cannot
recall having seen any reference to this in subsequent correspondence.
Consequently, we would be prepared to lift scrutiny for the next
week's Council only if the Government can assure us before then
that this concern has been addressed satisfactorily and indicate
the reasons for this conclusion.
Full details of
the documents: (a) Commission
Communication Integrating maritime transport emissions within
the EU's greenhouse gas emission policies: (35155), 11917/13,
COM(13) 479; (b) Draft Regulation on the monitoring, reporting
and verification of carbon dioxide emissions from maritime transport
and amending Regulation (EU) No. 525/2013: (35147), 11851/13 +
ADDs 1-4. COM(13) 480.
Background
3.8 Although the EU's 2008 Climate and Energy Package
establishes a comprehensive regulatory framework, its greenhouse
gas commitment does not extend to international maritime transport,
even though shipping accounts for 4% of such emissions, and this
figure is expected to increase significantly, despite the measures
taken by the IMO. The Commission suggests that there is a significant
potential for reducing these emissions through a range of technical
and operational measures, and it put forward in June 2013 a Communication
(document (a)) addressing this issue.
3.9 This noted that, although the steps taken by
the IMO were expected to deliver a significant improvement, more
needed to be done, but that discussions within the Organisation
on market-based measures had so far been inconclusive. It added
that, whilst the Commission had a strong preference for a global
approach, and that the EU was working with others to develop this,
it had in the meantime been looking at ways in which emissions
from ships could be included within the EU's own reduction commitment.
In particular, it identified three strands — implementing
a system for the monitoring, reporting and verification of emissions;
defining reduction targets; and the application of a market-based
measure — with the first of these being seen, not only as
the foundation of any approach, but as a useful step in its own
right, in providing owners with information to enable them to
take major investment decisions. It also noted that carbon dioxide
emissions in the sector were related to the amount and type of
fuel consumed, that information on consumption was already available
for most ships, and that a regional monitoring, reporting and
verification scheme based on fuel consumption would provide the
basis for a global scheme by identifying difficulties and best
practices.
3.10 The Communication was accompanied by a draft
Regulation (document (b)), which seeks to establish a European
monitoring, reporting and verification system for emissions from
ships of carbon dioxide (which account for 98% of greenhouse gas
emissions from the sector). This would apply (with certain limited
exceptions) to ships above 5,000 Gross Tonnage (GT), calling at
EU Member States' ports; require emissions to be monitored and
reported on an annual basis, using one of four monitoring methods[4];
provide for emissions calculations to be based on fuel consumption
and type, and energy efficiency, using data already available;
cover emissions during a ship's voyage from its last port of call
before arriving at the EU to the next port of call after leaving
it; and cover emissions from intra-EU voyages, and which occur
within a port of an EU Member State.
3.11 As we noted in our Report of 4 September 2013,
the Government shared the Commission's preference for tackling
emissions from ships through the IMO, and was also considering
whether the Regulation would result in an extension of EU competence.
However, it supported the decision not to proceed at this stage
with a market based measure, believing that further time should
be given for the global discussions and noting that, even if an
EU measure were to be confined to monitoring, reporting and verification,
it could give rise to concern within the IMO.
3.12 However, if there is to be an EU regime, the
Government supported a flexible and non-prescriptive approach;
considered that the proposal complies with the proportionality
principle by focusing only on carbon dioxide emissions and on
ships above 5,000 GT; and agreed that the proposal should apply
to all ships calling at EU Member States' ports. It also noted
the Commission's view that the monitoring, reporting and verification
of emissions would encourage ship owners and operators to improve
energy efficiency, resulting in fuel savings of 2% and perhaps
leading to annual cost reductions of up to €1.2 billion in
2030, whilst the total administrative burden for all ships over
5,000 GT would be €26.1 million a year (and that for public
authorities around €2.5 million per year). However, it added
that there was currently no indication of the costs for UK industry,
and that officials had begun engaging with stakeholders to ascertain
what these might be.
3.13 We commented that, since international shipping
was not covered by the EU's greenhouse gas emissions commitment,
it was logical to explore what might be done, particularly in
the light of the current lack of progress within the IMO, and
we noted that, although the Government preferred a more global
scheme, it was content in the meantime to see an EU measure concentrating
initially on monitoring, reporting and verification.
3.14 However, we said it was also clear that the
proposal could have important resource implications for ship owners
and operators, that some of the information they would be required
to provide had struck the Government as excessive, and that it
would be seeking to establish what the costs of the proposal would
be for the UK (and whether the Regulation would result in an extension
of EU competence). We therefore decided to hold the two documents
under scrutiny, pending further information.
Subsequent developments
3.15 We have since received a number of updates from
the Government. The first (on 24 June 2014) confirmed that the
UK's overall aim continued to be a practical and proportionate
Regulation compatible with ongoing work within the IMO; that the
majority of Member States took a similar view, and in particular
agreed that the scope should be limited to carbon dioxide and
to ships greater than 5,000 GT; and that there was substantial
support for the UK view that vessels (such as ferries) engaged
in short-sea shipping should be exempted from a requirement to
monitor on a "per voyage" basis. We were also told that,
although the European Parliament's Environment Committee had proposed
a number of unwelcome amendments, these had been rejected in a
plenary vote, thereby removing a major obstacle to a second reading
deal later in the year.
3.16 This was followed by a further letter on 18
November 2014, which said that, although agreement had been reached
within the Council on an acceptable text, further discussions
with the European Parliament had in fact revealed a number of
areas where it had taken an unhelpful position. These included
a reference to greenhouse gases other than carbon dioxide, an
explicit reference to EU market-based measures, the suspension
of monitoring when a ship is engaged in emergency activities,
the introduction of a methodology for monitoring which would use
modelling instead of actual data, and the inclusion of fish catching
and processing vessels. As the Government also indicated that
further trilogue negotiations were due to take place, our Chairman
said that we would at that stage simply await developments, but
he also asked for further information about the cost implications.
3.17 We have now received a letter of 4 December
2014 from the Minister of State at the Department for Transport
(Mr John Hayes) in which he reports that the Presidency has secured
a deal with the European Parliament's negotiators, as a result
of which:
· the
range of data to be monitored and reported is broad enough to
support discussions on data collection at a global level, whilst
ensuring that it minimises the additional burden on industry;
· ships
which make a very large number of voyages annually will not be
required to monitor on a 'per voyage' basis; and
· the
verification process is relatively simple, and not disproportionately
onerous and costly for the industry.
3.18 He adds that the main elements which were introduced
into the proposed deal as a result of the second trilogue were:
· a
biennial assessment, to be carried out by the Commission, of the
maritime transport sector's overall impact on the global climate
including through emissions not related to carbon dioxide;
· an extension
of the implementing act process to specify those parameters for
categories other than passenger ships, roll on-roll off ships
and container ships which might be revised in future;
· a further
specification of the scope for delegation which would enable the
Commission to refine some of the technical aspects of the methods
already included; and
· the
potential for issuing an expulsion order for ships which have
failed to comply with the monitoring and reporting requirements
after two (instead of three) consecutive reporting periods.
3.19 The Minister expects that a political agreement
on the proposed deal will be sought at the Environment Council
on 17 December, adding that the proposed deal, including the newly
introduced elements, meets the UK's aim of a Regulation which
is workable and proportionate in terms of the burdens which it
imposes on industry. In particular, as regards the cost, he says
that the UK has no reasons to disagree with the Commission estimate
quoted in our Report of 4 September 2013, which implies a high
benefit-cost ratio; that, because data already available can be
used, the Regulation will not impose large upfront costs on industry;
and that the measure is proportionate because pressure to extend
it to gases other than carbon dioxide and to vessels under 5,000
GT have been successfully resisted, and an exemption secured for
those making a large number of frequent voyages.
Previous Committee Reports
Thirteenth Report HC 83-xiii (2013-14), chapter 11
(4 September 2013).
3 The Commission says that these represent 55% of the
number of ships calling into EU ports, and 90% of related emissions. Back
4
The use of bunker fuel delivery notes; bunker fuel tank monitoring,
flow meters for applicable combustion processes, or direct emission
measurements. Back
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