As part of wider aims towards its carbon neutrality, proposals in the European Union’s Fit for 55 policy package will see increasing attention towards sectors like shipping and aviation. These areas have long been considered hard to abate. Key recommendations include: extension of the EU’s Emissions Trading System (ETS) to cover these sectors; the end of tax exemptions for marine fuels as part of changes to the Energy Tax Directive (ETD); the implementation of a greenhouse gas (GHG) intensity standard for maritime transport; and the introduction of the Directive of Deployment of Alternative Fuels Infrastructure. Now, Inge Vierth and colleagues at the Swedish Road and Transport Research Institute examine the possible effects of changes to the ETS and ETD on Swedish freight transport.
The researchers use a scenario-based modelling tool and commercial ship data from the Swedish Maritime Administration from 2019 to explore three cases. The main scenario looks at the current ETS and ETD proposals, in which the ETS is extended to include ships with a minimum of 5,000 gross tons while the ETD brings in taxes for different marine fuels. A low scenario considers an ETS extension only for intra-European Economic Area voyages and no taxes. A high scenario examines the same ETS and ETD proposals as the main scenario, except the minimum ship size is reduced to 400 gross tons. The results show that the proposals could lead to companies switching to smaller vessels that are not covered by the ETS, leading to carbon emissions not being captured as intended. Lowering the minimum vessel size leads to a shift to larger ships because of economies of scale under increased fuel costs. The research team suggest that policy should seek to include smaller ships within the ETS to avoid unintended consequences.
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