Sustainable taxonomy in the maritime sector: publication of a study establishing criteria for the concept of “sustainable economic activity”

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As part of the objectives of the European Green Deal, the European Union has adopted the Taxonomy Regulation encouraging climate-compatible investments. The European Commission has published a study to determine the criteria to be taken into account in the maritime sector.

In accordance with the European Union's ecological objectives, defined in particular in the European Green Deal, the Union encourages initiatives to reduce greenhouse gas emissions by at least 55% by 2030 and achieve carbon neutrality by 2050.

In order to encourage financial investments in climate-compatible activities, the European Union adopted in June 2020 the Taxonomy Regulation which makes it possible to classify ecologically sustainable activities on the basis of precise criteria. It is up to the European Commission to identify the technical screening criteria for each of the objectives set out in the Regulation by economic sector.

As regards the maritime sector, the European Commission is aware that a single measure will not achieve the expected level of reduction in greenhouse gas emissions. The Commission will therefore propose several corrective measures, including Sustainable taxonomy, in addition to the current work of the International Maritime Organization (IMO).

In this context, the Commission commissioned a recently published study from COWI and CE Delft, (the summary of which can be consulted at this link) in order to determine under which conditions economic activities in this sector can be considered as sustainable, and so defining more clearly the concept of “sustainable economic activity”. The study also assesses the various decarbonisation pathways in the maritime sector and takes stock of emerging technologies and ongoing developments at European and global level.

The taxonomy of the European Union distinguishes between economic activities where CO2 emissions are very low and those which can only consist of transition activities. This is the case for the majority of activities in the maritime sector as there are few low carbon solutions for this industry.

For these reasons, according to the study, the selection criteria retained must be limited in time, until 2025, and be replaced by different criteria as from 2026. The technical screening criteria are also differentiated to take into account the diversity of the maritime transport sector, which is illustrated both by the variety of ships types and sizes, and by operations, trade patterns or business models.

The criteria proposed up to 2025 focus on facilitating carbon neutral activities for the ecological transition of maritime transport. They aim to encourage research and development projects on alternative fuels and infrastructure. The criteria also take into account the distinction between modernisation of existing equipment, by improving energy efficiency, and new construction. Thus, the proposed criteria include not only the renovation of  vessels to reduce fuel consumption by at least 10%, the level of direct CO2 emissions, but also hybrid vessels and vessels used to enable the modal shift of freight transport currently transported by land. For this last criterion, in order to ensure that the investment does not constitute “greenwashing”, only vessels with proven modal transport potential would be eligible.

The study anticipates that these criteria will be strengthened over the years to take account of technological developments, allowing innovative cleaner technologies to become standard. The criteria to be applied beyond 2025 will therefore have to take these developments into account and will have to reinforce the transitions already started. In this regard, the study proposes in particular that in addition to the criteria related to energy performance calculated at the time of the ship’s design by means of the EEDI (the energy efficiency design index), an operational criterion be introduced to encourage operational means of reducing emissions after construction, thus focusing on the actual emissions of the vessel.

The results of the study contributed to the development of the technical screening criteria for climate mitigation and other EU environmental objectives, which were included in the EU Taxonomy Climate Delegated Act, a draft version of which was adopted in April 2021 (currently only available in English) and which is expected to be formally adopted by Member States very soon.

Note that the definition of “sustainable economic activity” has also been clarified for the air transport sector. For this sector, the Commission also relied on the results of a study, commissioned from Steer, to determine which criteria must be taken into account to establish the specific activities that may be considered as sustainable (see our article of 17 May 2021).