Guiding EU policy until 2029

Every five years, the president of the European Council leads EU leaders in deciding the bloc’s strategic agenda for half a decade after elections. The Agenda sets the political strategy of the European Commission at the beginning of the new term and sends a signal about the EU’s priorities, both internally and externally.

Over the past five years, the EU’s influence on international shipping has been steadily strengthened by regulations aimed at improving the industry’s environmental performance, dwarfing the IMO’s efforts in some areas. Regulatory changes in the EU have significant implications for EU businesses, have implications for businesses trading in and out of the bloc, and are informative for stakeholders assessing possible future global regulatory changes.

Ahead of the EU’s five-year outlook, the World Shipping Council (WSC) has published its own recommendations on EU policy priorities for 2024-2029, reflecting urgent strategic issues for its membership: the global container shipping industry.

Summarizing its concerns, the Security Council called on the EU to:

Take a leading role in ensuring global regulations on greenhouse gas (GHG) reductions and actively implement the EU Green Deal to accelerate the decarbonization of the maritime industry internally.
Intensify efforts to secure maritime supply chains against illicit trade and geopolitical threats, increasing the safety of seafarers and the resilience of trade routes.

Facilitating maritime trade by removing customs and administrative barriers, ensuring streamlined and efficient trade to enhance European competitiveness.

Global regulatory systems

The WSC’s first goal is to help the EU negotiate global agreements at the IMO by 2025 – the deadline set in the IMO’s own revised greenhouse gas strategy, which will require the support of member states at the MEPC 83 conference in spring 2025. The association said that the EU’s own net zero economy ambitions depend on its leadership at the IMO to push through global agreements, including a pricing mechanism and greenhouse gas fuel standards.

It also highlighted an internal EU priority: aligning the EU Emissions Trading Scheme (ETS) and FuelEU maritime rules on a ‘well to sleep’ basis. Currently, emission factors under the EU ETS are based on the tank-to-wake principle and only take into account emissions resulting from the combustion of fuel on board. Emissions from fuel production or emissions from well to reservoir are only relevant for biofuels. The upcoming FuelEU Maritime regulation will apply from good weather. Proponents of the well-to-woke approach say it prevents emissions from being transferred to mining operations and provides a more accurate understanding of the true environmental impact of fuel use.

“WSC stands ready to assist the European Commission in reviewing the Emissions Trading Scheme to best take into account the use of renewable and low-emission marine fuels on a life cycle basis,” WSC said.

The period 2024-2029 is of particular importance in the field of maritime regulations. With the first IMO landmark milestone approaching in 2030 – by which time the global regulator will target a 20% reduction in overall greenhouse gas emissions from ships and the adoption of at least 5% of zero-GHG fuels – the upcoming EU term will have to ensure that the bloc’s initial assumptions contribute to achieving the ultimate goal of decarbonizing the maritime industry by 2050.

Linking future challenges to land, the World Security Council has called for prioritizing the production of renewable marine fuel to ensure supplies for dual-fuel ships. “Renewable fuels are essential scale through fleet investment to deliver a Green Deal in maritime transport targets have been achieved and maritime decarbonisation achieved by 2050.”

Financing concerns

After a failed attempt to divert EU ETS funds to a special Ocean Fund under the EU Innovation Fund, revenues from the maritime industry will be allocated to the Innovation Fund and certain amounts will remain intended to support the energy transformation in shipping.

EU ETS revenue forecasts predict that approximately 38% of shipping revenues will be invested in decarbonizing the sector.

The World Conference proposed that these EU ETS funds could be better spent on financing decarbonisation: “EU ETS revenues can accelerate the use ecological fuels, covering the cost differences between them conventional and alternative fuels, more clearly supporting the production and supply of renewable fuels,” it said.

Similar doubts were raised about the allocation of funds funds from any future IMO economic measurements, the form of which is still under discussion. During MEPC 81, WSC presented its own green balance mechanism, which it believes encourages the use of green fuels by reducing the price gap compared to fossil fuels.

Under the program, ships using fossil fuels pay fees to the Ecological Balance Fund, which pays rewards to ships using green fuels. The lower the emissions of a fuel from start to wake-up, the greater the reward it provides under the green balance mechanism, encouraging investment in the greenest fuels available. The proposal includes annual calculations of fees and rewards based on fuel price and availability, with the emissions reductions required to achieve price-equalizing payments increasing year on year.

Security and trade facilitation

In addition to suggestions on environmental protection, the Environment Council suggested that the EU strengthen its partnership in solving problems drug trafficking through the EU ports alliance, moving from commitment to action. There is also a desire for closer cooperation on sanctions compliance and responding to geopolitical risks.

There were more detailed instructions on this subject trade facilitation, where the WSC has identified opportunities to effectively connect market stakeholders and reduce trade barriers. Full implementation of the EU Maritime Single Window System (EMSWe) would reduce inefficiencies, simplify reporting and reduce the administrative burden placed on the industry by the many different national reporting requirements.

“The significant efforts of the European Commission, “Member States, EMSA and industry are needed both before and after implementation to ensure that EMSWe realizes its full potential to enhance the competitiveness of EU maritime trade,” the WSC said.

EU prospects

The Strategic Agenda 2019-2024 indicates the extent to which EU action is guided by the Council five-year plan. Of the four priorities of the previous agenda, two were strongly reflected in the bloc’s activities during this period: building a climate-neutral, green, fair and social Europe and promoting European interests and values on the global stage.

An early leak of a working document for an upcoming strategic program could indicate a change in direction block if its contents are reflected in the final version. Although the document was still a work in progress, it contained no mention of ecological or environmental issues and focused strongly on European strength, security and prosperity, reflecting the geopolitical environment changed by the war in Europe.

Want more? take a look at Hellada’s maritime report for 2024 for all popular topics.