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21. November 2022


EU ETS must be truly green

The ETS must reflect the whole climate footprint of emissions from fuels to be a truly green regulation. This is the message from Danish Shipping in an open letter to EU's decision makers co-signed by organisations from both the energy and shipping sector

The final and crucial details in the Europeans Commission’s proposal on the inclusion of shipping in the Emission Trading System, ETS, are about to be set in stone as the EU institutions are approaching a political agreement. Together with other organisations representing energy and shipping, Danish Shipping are now once again trying to push the regulation in the greenest direction possible. 

In an open letter sent to key Members of the European Parliament as well as Member State negotiators, the signatories emphasize the importance of considering the full climate impact of the new green fuels from extraction at the source to combustion on board the ship.

The signatories include Methanol Institute, World Shipping Council, Swedish Shipowners’ Association, Royal Association of Netherlands Shipowners, and the Renewable Hydrogen Coalition. 

“We find it crucial that the ETS regulation genuinely drives reductions and uptake of new green fuels.  To this end the fuels need to be assessed on a life-cycle basis, LCA, or so-called Well-to-Wake perspective which considers the full climate impact from extraction to refining and finally combustion in the ships’ engine,” says Maria Skipper Schwenn, Director of Climate, Environment and Security at Danish Shipping.

In other words, for the ETS to promote green fuels which are key for the green transition, it is key that it distinguishes between fossil and green fuels by rewarding the fuels with the lowest climate footprint during the production phase – not just the emissions from the ship itself.

The issue becomes very apparent when looking at future fuels such as methanol and ammonia. Unless LCA is included, the ETS will not distinguish whether methanol is produced as a clean electro fuel (e-methanol) or on a fossil basis i.e., green vs. black methanol. They both emit CO2 emissions at combustion, but e-methanol reuse CO2 in the production of new e-methanol. Hence e-methanol has no climate footprint in a life cycle approach. In addition, green fuels are significantly more expensive, and without LCA the ETS would discourage investments in green fuels.

“First and foremost, we are not being honest to ourselves or the climate if we reward something that is not truly green. However, at this very moment decisionmakers from the EU have the possibility to make the right choice and ensure the right steppingstones for future investment paths,” says Maria Skipper Schwenn.

The open letter is sent to representatives of the European Parliament, the Council, and the Commission in the tripartite meetings on the legislative proposal on the initiative of Danish Shipping.

Read the open letter below.