Representatives of businesses, researchers from different disciplines and policy-makers will come together at a conference, held on 24 and 25 August, entitled Implementing “Fit for 55” – The Right Logistics and Transport Infrastructure for a Net Zero-Carbon Future – The Nordics at the Helm?
During the two-day conference organised by the INTERTRAN research group together with the Finnish-Swedish Chamber of Commerce, participants will discuss the consequences of the EU’s proposed ‘Fit for 55’ package of legislative proposals on maritime transport, particularly in Finland and Sweden. The EU has committed to the target of reducing net greenhouse gas emissions by at least 55% by 2030. The ‘Fit for 55’ package contains a set of proposals to revise and update EU legislation to achieve the climate target.
“It’s clear that polluters will have to pay a high price, and the industry is now preparing its stance towards the proposal. The question is who will pay for the increased costs in practice and whether it is even possible to adjust operations to the stricter requirements so quickly,” says Ellen Eftestøl, Professor of Civil and Commercial Law at the Faculty of Law and INTERTRAN’s founder.
The complicated and unique regulation of shipping
The regulation of emissions from the shipping sector is complicated but interesting.
As climate change brings about global challenges, the aim has naturally been to resolve them through broad international agreements such as the Paris Agreement, which was signed as part of the UN system. However, international maritime transport has been excluded from the UN system, with the regulation of emissions from shipping coming under the aegis of the International Maritime Organization (IMO), which has committed to implementing the Paris Agreement in international maritime transport. Shipping accounts for approximately 3% of all global emissions.
Whereas the UN has followed the principle that rich countries bear more responsibility because they generate more emissions, the IMO’s policy has been that the same rules apply throughout the world. Their reasoning has been that this will prevent shipping companies from outflagging their vessels and registering them in countries with laxer rules.
Due to the IMO’s efforts to reduce emissions progressing slowly, the EU eventually decided to implement its own regulations because it would otherwise have risked failing to achieve its ambitious climate goals. The ‘Fit for 55’ package and other tools bring maritime transport under the EU’s emissions trading system. This means that emissions restrictions will be imposed, and industry actors assigned emissions quotas, which they can trade if necessary.
The ‘Fit for 55’ package and other tools bring maritime transport under the EU’s emissions trading system.”
An interesting legal point is that the EU’s proposed package on emission trading also applies to third countries.
“This means that EU regulations on emissions trading apply to maritime transport, say, from the EU to the United States. A major subject of debate has been whether it is legally possible to extend the system to emissions generated outside EU territory.”
Adopting an extensive climate package requires difficult compromises. The EU must strike a balance between the interests of its northern and southern member states.
Decisions on maritime transport are crucial for Finland, a country that geographically is practically a peninsula and, therefore, relies in many respects on shipping. Another factor relevant to Finland is its cold climate and the associated challenges. As a result, Finns have called for more permissive emissions regulations on ice class ships, that is, vessels with sufficient engine power and robustness to navigate in ice. Such vessels use more fuel and, hence, cause more emissions.
“But you can counter that argument by saying that cruise ships travelling in warmer climates need air conditioning on-board and must, therefore, be allowed their own exemptions,” points out Eftestøl to demonstrate the different interests that must be balanced in negotiations.
Useful research requires an understanding of the industry
Speakers on the first day of the conference will include mostly industry representatives, such as Per Westling, Managing Director of Stena RoRo AB, Annika Kroon, Head of Unit, Maritime Transport and Logistics, and Tiina Tuurnala, CEO of the Finnish Shipowners’ Association. The second day will focus on academic presentations.
Bringing together researchers and business representatives is typical for INTERTRAN.
“Many people worry that the industry will steer researchers if the two cooperate, but that’s not the case. Industry representatives are interested in sharing their perspective, and for us researchers, the more we know about what is happening in the business, the better. It’s a win-win situation,” says Eftestøl.
This attitude is key for maritime law because of the complexity of the sector. To give just one example, the different ways of calculating fuel emissions is almost a scholarly discipline in itself. Understanding the regulatory system as a lawyer is not enough. You also have to understand the day-to-day operations, which is why collaboration is necessary with both researchers from other disciplines and industry players.
Eftestøl sheds light on the issue by describing a visit made by INTERTRAN’s researchers and a group of Norwegian, Swedish and Finnish students to the Swedish Club, a marine insurance company.
“The company always uses both lawyers and engineers to handle claims of damage to a vessel. Engineers and sea captains do not understand the law, and lawyers do not grasp the practical side of things. So both perspectives are required to make the right decisions. We try to employ the same idea in our work.”