Steering EU policy to 2029

Every five years, the president of the European Council heads EU leaders in deciding the bloc’s strategic agenda for the half-decade term following European elections. The agenda guides the political strategy of the European Commission as it starts a new term, serving as a signal of the EU’s priorities, both internally and externally.

Over the past five years, the influence of the EU on international shipping has been steadily reinforced by regulations aimed at improving the environmental performance of the industry, overshadowing efforts at the IMO in some areas. Regulatory developments at the EU are significant to companies in the EU, consequential to those trading to and from the bloc, and informative to stakeholders appraising possible future global regulatory movements.

Ahead of the EU’s five-year outlook, the World Shipping Council (WSC) published its own Recommendations for EU Policy Priorities 2024-2029, reflecting the pressing strategic matters for its membership: the global container shipping industry.

Summarising its concerns, the WSC urged the EU to:

Facilitate maritime commerce by addressing customs and administrative barriers, ensuring streamlined, efficient trade to enhance European competitiveness.

Global Regultory Regimes

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

An internal priority was also underlined for the EU: the alignment of the EU Emissions Trading System (ETS) and FuelEU Maritime regulations on a well-to-wake basis. Currently, the emissions factors for the EU ETS are on a tank-to-wake basis, only considering emissions from burning the fuel on board. The emissions created during a fuel’s production, or well-to-tank emissions, are only a factor for biofuels. The coming FuelEU Maritime regulation will be on a well-to-wake basis. Proponents of the well-to-wake approach say it prevents the shift of emissions to upstream operations and gives a more accurate account of the true environmental impact of fuel use.

The 2024-2029 period has particular significance in the sphere of maritime regulation. With the first IMO indicative checkpoint approaching in 2030 – by which time the global regulator targets a 20% reduction in total GHG emissions from shipping and at least 5% adoption of zero- GHG fuels – the coming EU term will need to deliver the bloc’s initial contribution towards the eventual target of decarbonising the maritime industry by 2050.

Tying the challenges ahead back to land, the WSC called for renewable marine fuel production to be prioritised to ensure a supply for dual-fuel ships. “Renewable fuels must scale with fleet investment to ensure maritime Green Deal goals are met and to achieve maritime decarbonisation by 2050.”

Funding Concerns

After an unsuccessful attempt to direct EU ETS funds to a specific Ocean Fund within the EU’s Innovation Fund, revenues from the maritime industry will be allocated to the Innovation Fund and certain amounts will be earmarked for supporting the energy transition in shipping.

Forecasts of the revenue from the EU ETS predict around 38% of revenues from shipping will be invested in decarbonising the sector.

Similar concerns have been raised around the allocation of funds from any future IMO economic measurement, the form of which is still under discussion. The WSC put forward its own Green Balance Mechanism at MEPC 81, which it believes incentivises the adoption of green fuels by closing the price gap to fossil fuels.

Under the scheme, ships using fossil fuels pay fees into a green balance fund, which pays out rewards to ships using green fuels. The lower the well-to-wake emissions of a fuel, the greater reward it attracts under the Green Balance Mechanism, incentivising investment in the greenest fuels available. The proposal includes annual calculations of the fees and rewards, based on fuel price and availability, with the emissions reduction required to collect price-balancing payouts increasing annually.

Security and Trade Facilitation

Beyond its environmental suggestions, the WSC suggested the EU enhanced its partnership in tackling drug trafficking via the EU Ports Alliance, moving from commitments to action. Closer co-operation is also sought on sanctions compliance and reposing to geopolitical risks.

There were more specific instructions on the topic of trade facilitation, where the WSC identified opportunities to efficiently connect market stakeholders and reduce barriers to trade. Full implementation of the EU Maritime Single Window Environment (EMSWe) would cut inefficiencies, make reporting more straightforward, and reduce administrative burdens placed on the industry by multiple differing national reporting requirements.

“Considerable efforts by the European Commission, Member States and EMSA, together with industry, are needed both before and after implementation, to make sure the EMSWe delivers its full potential to boost the competitiveness of the EU’s maritime trade,” said the WSC.

EU Outlook

The 2019-2024 strategic agenda gives an indication to the extent to which EU actions are directed by the Council’s five-year plan. Of the four priorities in the previous agenda, two were strongly reflected in the bloc’s actions over the 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 the coming strategic agenda may indicate a change of direction for the bloc, if its contents are reflected in the final release. While still a work in progress, the document contained no mention of green issues or the environment, and a strong focus on European strength, security, and prosperity, reflecting a geopolitical environment changed by war in Europe.

Want more? Take a look at the Hellas Maritime Report 2024 for all the trending topics.