The shipping industry under the EU Green Deal

Article  -  Tuesday, 1 October 2024

Goyal, S. and Llop, M. (2024): "The shipping industry under the EU Green Deal: An Input-Output impact analysis", Transportation Research Part A: Policy and Practice

In 2021, the European Commission unveiled the 'Fit for 55' package, part of the European Green Deal aimed at reducing greenhouse gas emissions by 55% by 2030 to achieve climate neutrality by 2050. Central to this initiative is extending the EU Emissions Trading System (EU ETS) to include the shipping industry, which contributes significantly to the EU's emissions. This paper examines the economic repercussions of three distinct implementation proposals with different rates of this new shipping policy using the Leontief price model, the environmental input-output (EIO) model, and the 2018 OECD Inter-Country Input-Output (ICIO) Table covering 45 sectors and EU's Top 10 Trading Countries. Results indicate a short-term economic-environmental trade-off, disproportionately affecting EU producers and non-EU consumers. We recommend a gradual policy implementation to allow economic stakeholders adequate adjustment time, thereby minimizing economic disruptions while advancing environmental objectives.

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