Cyprus has interesting proposals for managing seafarer vaccinations, and giving incentives to shipowners under its flag who go beyond the required minimum on decarbonisation.
Cyprus is also playing a useful intermediary role between the shipping industry and the European Union as the EU plans to subject shipping to the Emission Trading Scheme (ETS), as an EU country with close links to the shipping industry and high levels of maritime expertise in the government.
We spoke to the top shipping government official Vassilios Demetriades, who is fairly new in his role, being appointed in July 2020.
Mr Demetriades had previously done a 5 year stint as policy officer in the Directorate General of Mobility and Transport of the European Commission, co-ordinating the EU maritime transport strategy and its revision as well as the EU’s external maritime transport relations.
Before that he was Head of the EU Affairs Unit at Cyprus' Ministry of Transport, Communications and Works, which was in charge of shipping and maritime policy at the time.
Mr Demetriades official title is “Shipping Deputy Minister”, due to Cyprus regulations which limit the number of “ministries” the government can have. So the government department which looks after shipping is formally called a “deputy ministry”.
Cyprus is working on a long term strategy for Cyprus shipping covering the next 10-20 years, Mr Demetriades said. “We will invite the shipping community to submit their proposals, ideas, suggestions. You will hear more from us by mid-March.”
Mr Demetriades sees his ultimate goal as to continue growing Cyprus shipping and further develop the maritime cluster and flag. This includes through continuous updating, simplification and modernisation of the legislative framework, quality improvements to the services, and strengthening collaboration across the public and private sectors.
Seafarer vaccination
In February 2021, Mr Demetriades wrote letters to the EU Transport and Health Commissioners and IMO Secretary-General, outlining a proposed program for seafarer vaccination.
It suggested that for vaccination purposes, the maritime industry should be split into short sea and deep sea.
According to the proposal, seafarers working on short sea shipping, such as where voyages start and end within Europe, should be included under national vaccination measures of the seafarer’s home country.
For deep sea vessels, each vessel should be considered a ‘bubble’ for Covid purposes, if they have not had any contact with anyone else for at least 2 weeks. This means that the ship itself can then be considered a Covid free zone and seafarers onboard should not be treated as a Covid risk.
The attention should go on seafarers who are “sitting on the bench”, to use a football analogy, he says. We need to ensure they are infection free before they come onboard, whether from quarantine, testing or vaccination.
There should be a co-ordinated global approach to ensure there is enough approved vaccines made available to seafarers in their country of residence, he said.
Since other countries have an interest in this, they could support seafarer home nations like the Philippines and India, perhaps by providing vaccines to the country with a stipulation that they should only be given to seafarers.
Since two doses of vaccine are required, it is more practical to vaccinate in seafarers’ home countries, rather than in ports they visit, because they do not visit the same ports regularly.
If seafarers need to go to special seafarers’ vaccination hubs, it would be a “logistics nightmare”, he said.
At the moment, many people are saying that seafarers need to be vaccinated, but we are a long way from a practical plan, he said.
“My fear is that towards the end of this year [2021] a big proportion of the population will get the vaccination, we will go slowly back to normal, then we will still be discussing about the seafarers, who is going to arrange their vaccinations, at which port.”
“I’m pleased to use the approach we are presenting to alert all these stakeholders and interested parties to discuss the way forward.”
Cyprus was one of the first countries worldwide that recognised seafarers as key workers and implemented a formal crew change process, Mr Demetriades says.
Green incentives
Cyprus’ Green Incentives program rewards vessels under the Cyprus flag which go beyond the minimum on decarbonisation, with a reduction in the tonnage tax they are required to pay.
The program starts for the 2021 fiscal year, and offers tax reductions of up to 30 per cent in total.
New vessels that have a better EEDI than is required will obtain a tonnage tax rebate of between 5 and 25 per cent.
Vessels using an alternative fuel (not LNG) and achieving CO2 emissions reductions of at least 20 per cent in comparison with traditional fuels will receive a rebate on annual tonnage tax of between 15 and 30 per cent.
Vessels which demonstrate a reduction of total fuel consumption in relation to the distance travelled, compared to the previous reporting period, under the IMO Data Collection System (DCS) are offered a rebate of 10 to 20 per cent.
Any vessel detained after a port state control inspection, or which violates any European Commission regulation related to environmental protection, or is in laid up condition during the calendar year, will not be eligible.
There are over 1,000 ocean going vessels under the Cyprus flag, with a total gross tonnage of over 24m.
The principal purpose of the Green Incentives Programme is to “show our commitment to the green transformation of the sector,” Mr Demetriades says.
Cyprus does not necessarily expect the programme to be a compelling reason in itself for ships to join the Cyprus flag, since reducing emissions beyond what is required will probably cost them money.
“As a maritime administration and as a maritime nation, we thought at this stage to come up with green incentives to give the message we are here to reward the shipowners that accelerate any investment on green transformation.”
“The decarbonisation path will not happen overnight. It needs a basket of measures, starting with development of cleaner fuels, energy efficient technologies, optimisation of ports and logistics, the use of digital technologies. There is a role for everybody in this decarbonisation path.”
“The reward is addressed to those that go beyond the existing regulatory framework, to early movers, innovative approaches.
“It is a live document, it could be amended.”
Cyprus is the second EU member state that provides these kinds of incentives, he says, the first is Portugal.
The reason that LNG fuelled ships are not covered is that “the whole idea of the incentives is to address decarbonisation,” he says.
“Our national position is to signal that LNG should continue to be supported and funded by the EU as an alternative fuel.”
Cyprus as a nation has interest in developing natural gas reserves around Cyprus, which could potentially be useful for marine fuel. “This is something we are exploring as the Cyprus government.”
Emission trading scheme
The European Union has signalled that it wants shipping to be covered by the Emission Trading Scheme, which also applies to heavy shore based industries in Europe, and to aviation.
It means that companies which emit CO2 have to pay for a sort of license to do it. Some of these licenses are given out free to emitting companies. They are traded at a price set by the market.
This is a very contentious issue in the shipping industry, where there are strong feelings that as a global industry, it needs global regulation, and any non-global rules add to the complexity.
But the reality is that the European Union wants to decarbonise faster than many other parts of the world, Mr Demetriades says. And nobody in the shipping industry, or even Cyprus itself, has power to stop this from happening.
For the maritime industry, “it is important not just to stick to the initial statement ‘shipping is global’ but to make this European emissions trading system workable to the greatest possible extent,” he said.
Cyprus can make a useful contribution by “signalling to Brussels the realities of the sector, and its need for certainty.”
“It is important [for us] to convey that message that we want to speak to the other side, breach the gap between the greens and the shipping world. Only when we bridge that gap, we are able to have a proposal that will serve the purpose and will not damage the global shipping industry.”
“We change a bit the way we brand shipping, we negotiate and we signal.”
The IMO has actually made a lot of progress on the issue, although you need to bear in mind that progress is very complex, with so many more different parties involved in the discussions, he said.
The EU move follows legislation to bring aviation into the Emission Trading Scheme. But the policy makers need to understand that shipping is a very different industry, Mr Demetriades says. “There are many [more] players. Shipowners, charterers, ports.”
“We are saying, [the EU] should clearly specify the geographical scope, clearly define each entity's obligation.”
The EU could ensure that any money paid for emission credits should then be spent on research and development of alternative fuels for shipping, and that shipping companies can trade credits with each other, he said.
Any scheme should be designed to be flexible, so it can be merged or aligned with any measure which IMO might introduce in future, he said.
“Cyprus will always be signalling how the shipping industry works, what are the dos and don'ts.”
“We need to strike a balance between maintaining the competitiveness of shipping and having a meaningful contribution to climate change.”
It is not yet determined in Brussels whether the emission trading scheme will apply only to short sea shipping within Europe, or international shipping. “We are all waiting for the proposal from Brussels, how it will be formulated,” he said.
The Cyprus government organised a webinar in December 2020 to contribute to the Commission’s public consultation, with involvement of shipowners, European Parliament members, and other organisations.