When a group of protesters stood in front outside the European Parliament in Brussels on February 19 demanding the EU regulate shipping emissions, the Green MEP joined them in chanting “IMO is too slow, EU should run the show” and “EU sort your ship out”.

Criticising the International Maritime Organization for sluggish action on emissions is not exactly new for the European Parliament. But beyond spirited demonstrations, Ms Paulus and the policies she backs could prove to be big news for shipping.

Unsurprisingly, Ms Paulus advocates the inclusion of shipping in the EU Emissions Trading System, the bloc’s cap and trade scheme. The European Commission also wants to include shipping in the ETS. The move is broadly opposed by global shipping industry interests. 

But her recent draft proposal on shipping emissions reporting in the EU goes beyond that: she wants ships of 5,000 gross tonnes and above that use EU ports to slash their carbon intensity by 2030 by at least 40% compared with 2018 — 10 years ahead of the IMO’s baseline for the same target. 

This would affect almost 12,000 ships.

Ms Paulus, an experienced chemist with a long career in the pharmaceutical industry who was elected as an MEP for the first time last year, said she sympathised with shipping industry concerns on the emergence of a dual regulatory regime.

But she also touted the EU’s influence on IMO policy in the past, claiming the development of the EU MRV pushed the IMO to develop its own data collection system.

“Unfortunately, the IMO has a track record of trying not to rush, trying to not to be too far reaching with anything,” she said.

With 174 member states, the IMO prides itself in consensus-building, close coordination and honest compromises.

But for Ms Paulus, who attended an IMO meeting last year, the feeling was the global regulator’s approach is largely ineffective.

Trying to convince the “last climate denier” will not get you anywhere, she argued.

“I think it has always been the same in climate politics. You have to have some ambitious people stepping forward and then inviting others to follow,” she said.

She also questioned decision-making within the IMO, alleging that in most cases decisions are made by the largest flag states, whose delegates are often representatives from companies rather than government officials.

“You have this very curious situation where industry is regulating industry. And of course they are not trying to be very ambitious,” she said.

The charge is a familiar one, as the IMO has come under accusations of undue corporate influence in the past, both due to the presence of companies in national delegations and the industry organisations that participate in talks.

Ms Paulus did agree with the industry’s repeated claim that shipping is the most environmentally friendly mode of transport. In her opinion, though, more needs to be done.

“As we have a climate emergency, we cannot wait for the IMO to think of another 10 years what they maybe could do until 2050,” she said. 

The makings of a medical remedy

Ms Paulus’ proposal has to go through a lot of scrutiny, negotiations and amendments. 

The European Parliament will consider it and agree on any changes later in the year before sending it to the Council, where governments will deliberate and probably request its own changes, likely kicking off a familiar process of compromise.

Ms Paulus acknowledged different governments in the EU have different views and stakes in the matter.  

Some are unequivocal about them; Greek shipping minister Giannis Plakiotakis told the audience at an event during European Shipping Week that the IMO is the only competent authority to regulate shipping emissions and that an ETS would be neither viable nor workable. 

When the ETS was being discussed back in 2017, the EU agreed to temporarily leave shipping outside of the scheme, giving the IMO until 2023 to adopt a sufficient global decarbonisation measure.

A few months later in London in April 2018, the IMO was recording one of its most far-reaching policies, with the adoption of an initial greenhouse gas strategy. The strategy and its target will be revised in 2023.

But things have developed rapidly since then. New reports have made arguments that the targets of the Paris Agreement would not be sufficient to prevent irreversible climate change and that the damage done to crucial areas such as the Polar regions are even greater than originally thought. 

In this distressed climate, Ms Paulus questioned why the EU should not be raising its own ambitions, arguing it is both the right thing to do and the way to accelerate research and development in decarbonisation technologies.

She likened the situation to her years of experience working as a quality manager at a hospital in Germany; doctors developed plans on treating patients based on certain assumptions about the recovery they would make.

“The next day the patient develops a fever of 41 degrees. Do they [doctors] stick to the plan? No, they don’t. They do emergency measures. And that is what we have to do in our really life-threatening situation. I think people have not quite grasped what this climate emergency really means,” she said.

With her own proposal targeting the minimum 40% reduction in carbon intensity by 2030, she expressed hope that the goal will not need to be elevated in the future.

A direct payment to the fund

The EU’s ETS has suffered from problems over the years including, pushing emissions onto other regions and questionable use of free allowances.

One aspect shipping companies are especially worried about is the administrative burden that comes with getting involved in emissions permit trading.

Ms Paulus acknowledged that this a substantial issue for shipping companies. She said they would be able to pay their ETS payments directly into a maritime decarbonisation fund that would handle the money.

The fund would use least 30% of the revenues to finance maritime decarbonisation projects in the EU.

Rejecting her proposals for this levy, shipping groups questioned why the benefits of such a fund would only be reaped by EU shipowners when foreign-owned vessels would be paying too.

“In my view, it is a measure for the European ports and it should be a fund for the European industry,” Ms Paulus said in response.

For the maritime emissions rapporteur, paying into the fund is the cost of using EU ports — and of contributing to Europe’s battle against climate change.

As for the remainder of the fees, these would not be used for decarbonisation endeavours. It would be up to governments to decide what to do with the cash raised from this levy.

“Part of the money will probably have to go to the member states that are responsible for the conduct of the ETS, as they have to provide the regulatory authorities and technical measures,” Ms Paulus said.

The rest of the funds would be used within the EU budget, providing “desperately needed” resources, she added.

Ms Paulus said that because her proposal does not discriminate based on the flag being used and applies to all companies, industry interests have expressed to her that they could live with that.

Industry players who reject the idea of imposing an ETS have suggested that carbon leakage could be an issue. They explain that the EU rules would force ships to emit elsewhere. Rather than complying, ships would alter their routes and use non-EU ports to reduce their emissions count.

But Ms Paulus argued that fuel costs, the extra time and the need to deliver products in timely fashion to customers would prevent this scenario from happening.

“I do not see, for example Russia, developing enough refining capacity to replace Rotterdam Harbour,” she said.