EU states ask Brussels to reconsider shipping emissions charges

The EU is planning to charge ships entering their waters for emissions. However, major European shipping nations oppose the plan. They say the policy will divert maritime traffic away from the EU.

Seven EU member states, such as Spain and Italy, have written a letter to the European Commission. They want the option to delay including the shipping industry in the EU’s Emission Trading Scheme (ETS) from January. In the letter, it was stated that this move could drive business away from European port cities while providing limited environmental benefits.

Ministers warned that the ETS regime, starting in 2024, may lead to emissions being shifted elsewhere and greenhouse gas levels increasing due to longer routes that avoid EU ports.
They said that it could have “serious impact” on the import and export sector and on investments in ports.

In order to tax shipping emissions within Brussels’ limited jurisdiction, shipowners will be required to purchase credits for each tonne they emit on trips between two EU ports as well as for half their emissions when shipments are made between an EU and non-EU port.

All emissions will be covered by 2026.

The current price in Europe is around €80 per tonne. Lloyd’s List (the shipping news and analysis company) has estimated that the total tax revenue from the ETS coverage of shipping could be more than €11bn per year if the EU Carbon Price remains between €80-€90 per tonne CO2.

It said that the MSC Grandiosa cruise ship was most likely to be hit with the highest ETS bill. The cruise liner MSC Grandiosa could be hit with an annual bill of €11mn in 2026.

The Greek, Portuguese, Cypriot, Croatian, and Maltese ministers said they might use “loopholes” to redirect trade to non-EU Mediterranean ports like Tanger Med in Morocco or Port Said in Egypt in order to avoid paying extra.
Brussels has adopted rules to prevent evasion by these two Mediterranean ports, because they are located less than 300 nautical miles from EU shores. However, the ministers have said that this is “not enough”.

The ministers asked the commission to make a public announcement with an “engagement to address with tangible measures” the risks for the EU’s port associated with the introduction of the levy.

Experts in the fields of environmental and trade have refuted ministers’ claims that trade has been lost.

Philip Damas from Drewry’s supply chain advisor stated that there is a “possibility,” but it is “low.” The level of risk will vary depending on the profit potential compared to the cost of extra port stops.
Tristan Smith, an energy and shipping researcher at University College London,, said that “carbon leakage” into countriesoutsidef the EU is “real”. He disagreed with the idea of adding more ports outside the EU, besides Port Said and Tanger Med, to the scheme. He believed that this would just transfer the risk to other ports.
The commission stated that the law contains measures to prevent evasion. Brussels will “monitor the effects closely and, if necessary, make adjustments”.