The Shipping Industry is a solution-driven Industry and has been ever since people have used sea freight transportation of cargo across the world. The reason behind the sector’s business mentality is Shipping’s indispensable role in the prosperity and growth of individuals, other sectors of the economy, and countries in general. This value has also made Shipping strong-willed and more resilient to crises and challenges, as proved by the recent examples of the Covid-19 Pandemic crisis and the implications facing the war in Ukraine. The Shipping Industry has stepped up on both occasions with a proactive approach to safeguard the World Trade and Seafarers, ensuring minimum disruption of the supply chains, especially regarding the uninterrupted flow of food and medical supplies.
The Covid-19 Pandemic initiated a series of emergency actions, measures, and strategic initiatives as a response to severe disruption of operations, crew change crisis, closure of ports, and increase in freight rates. However, State and EU concrete supports are essential to overcome the difficulties that maritime transport continues to face as a result of both crises, especially with regard to crew changes and the complexities of the war in Ukraine.
Overall, the EU will need to assess the total impact of these crises on Europe’s economy, with particular focus on the key role of the Shipping Industry in the EU’s strategic autonomy and establish a solid plan to support companies based in the EU and that are exposed to international competition such as Shipping.
The Shipping Industry and the wider maritime sector continue also important efforts to transition to a Greener Industry by having an active role in the world’s sustainable development, in addition to its contribution to economic growth and prosperity. The way forward is through a well-coordinated approach and cooperation of all involved stakeholders and sectors of the Shipping Industry.
Although European shipowners have stated their preference for an international solution, they remain committed to working with the European regulators and making constructive proposals that will lead to a realistic and pragmatic formulation of proposals for the industry’s decarbonisation. A first optimistic step was the recent positions adopted by the Environment Committee (ENVI) of the European Parliament, on the revision of the EU Emissions Trading System (EU ETS) under the “Fit for 55” legislative package and especially the role of the commercial operator and the creation of a Shipping sector dedicated fund. The proper implementation of the ‘polluter pays’ principle in the EU ETS and as such, the entity that is responsible for the choice of fuel, route, cargo, and speed of the ship should pay for the ETS costs, is the only way, under the EU ETS, to address the right entity and to incentivise the uptake of further operational efficiency measures and cleaner fuels.
The EU Taxonomy initiative comes to add to this effort and as such, we believe it is important that Shipping is included in order to be eligible for EU Green financing opportunities. However, any taxonomy which facilitates the transition to a greener and more sustainable economy should be easy to implement and be based on knowledge, experience, and expertise of the sector, as well as, on scientific and objective criteria. It is vital that the criteria (i.e. approaches and thresholds) for the Shipping sector be developed in a manner that will facilitate the ability of finance providers to assess whether borrowers/relevant projects comply with such criteria. In this regard, it is also important that the technical screening criteria are not in conflict with existing IMO and EU legislation. At the same time, however, it is also essential that the criteria ensure that transition measures towards a greener economy are also acknowledged and accepted.
Cyprus, due to its wide membership and active participation in various regional and international Shipowners associations and organisations, such as the International Chamber of Shipping (ICS) and the European Community Shipowners’ Associations (ECSA), is able to follow and contribute substantially to discussions held at a high level, on a number of critical environmental regulatory issues that will have a profound impact on the future structure of the global Shipping Industry.
On a local level, Cyprus shipowners also advocate, through the Cyprus Shipping Chamber’s lobbying efforts, for the establishment of a specialised Financing Institution for the Shipping and Transport Sector, by the Cyprus Government through funding from regional and international financial institutions, which will focus exclusively on providing competitive finance for the purchase of ships or other forms of transport, thus, supporting the resident Industry’s “Green” Transformation efforts.
The Shipping sector is gradually entering a “new era” and progress is impossible without change. The fields of digitalisation and decarbonisation are interconnected in this process and must achieve a complex coupling. The digital and ecological transitions must go hand in hand with the digital and greener transition of Shipping. The level of readiness to adapt to these changes will give a competitive advantage to Shipping and stimulate dialogue among key stakeholders to move this essential agenda forward and accelerate the smooth and safe digital transformation of Shipping. It is vital though to maintain its competitiveness, economic value, and leading position globally.
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Chairman & CEO Lemissoler Navigation, President, European Community Shipowners’ Associations