The Daily View: This is about hard cash
INTERNATIONAL efforts to secure a Net-Zero Framework may be on life support until October, but EU regulation already in place has at least offered shipping some degree of certainty when it comes to green fuel investment.
The demand is there. Both FuelEU and ReFuelEU are legally binding laws, and while the climate lobby may have to play a defensive strategy for a while, Europe still has a pro-Green Deal majority until 2029.
But forget the political rhetoric and climate ambition for the moment — this is about hard cash.
EU Emissions Trading System revenues from maritime-related emissions are projected to generate €10bn ($11.8bn) annually by 2030, and where that revenue goes matters materially to a lot of people.
Climate regulation and voluntary agreements may be in retreat right now, but not when it comes to ETS revenues, and certainly not in the EU.
Scrapping decarbonisation regulation means scrapping the magic money pot, which, given the budget black hole in Brussels and the need to dramatically up defence spending, is fiscally impossible.
But how much of that money will end up in shipping projects has been a contentious debate behind the scenes.
What’s good for EU shipping is not necessarily going to play well inside the IMO, or some parts of the European bureaucracy for that matter.
Those brave and optimistic few still holding out for a NZF deal in October will want to downplay any accusations that the EU is unfairly taxing low-income countries and taking the money for its own advantage.
But European shipowners have been trying to direct the national ETS revenues to fund the uptake of clean maritime fuels and clean maritime technologies. Without a clear EU mandate, that is unlikely to happen in a sufficiently meaningful way and maritime revenues will inevitably leak elsewhere.
So the fact that early drafts of the EU’s maritime strategy seem to confirm both that ETS revenues will be directed into maritime decarbonisation, and the EU will align its regulation with the IMO if it manages to pull off a deal in October, is significant and meaningful.
The detail of how those two pledges are eventually aligned, however, is not going to be easy. The devil, inevitably, is going to be found in the detail. And while the broad strategy is likely to be welcomed when the final version is formally unveiled next month, we are some way off any certainty of who gets what money yet.
Richard Meade,
Editor-in-chief, Lloyd’s List
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