ESPO: EU-ETS creates both carbon and commercial “leakage”

May 30 ------ The European Sea Ports Organization (ESPO) has issued a statement highlighting how EU-ETS might be well-intentioned, but in practice it is hurting European ports’ competitiveness.

The European Commission is finalizing a proposal to review the EU Emissions Trading System (EU-ETS) Directive 2003/87/EC, which was extended to the maritime sector in January 2024, amid growing concern from Europe’s ports over its economic and competitive impact. However, according to ESPO, since the maritime ETS proposal was first introduced in 2021, port operators have warned that the system’s regional scope is creating both carbon and commercial “leakage.”

What is carbon leakage?

The term ‘carbon leakage’ refers to the transfer of CO2 emissions from one country to another when, due to strict climate policies, companies relocate their production to countries with weaker emission constraints. This can contribute to an increase in global greenhouse gas emissions.

Under the current framework, shipping is subject to a 100% emissions charge on voyages between EU ports and a 50% charge on incoming and outgoing international calls involving European ports. ESPO is now urging Brussels to use the upcoming review to address what it describes as unintended consequences of the policy and to restore competitiveness across Europe’s ports and short sea shipping sector.

According to the statement, the effects are already visible across the continent. While the most significant impact has been felt in major Mediterranean transshipment hubs, other European ports are also reporting changes in shipping call patterns, including reduced direct connectivity with key global markets such as Asia. Beyond shifting trade routes, port authorities warn of knock-on effects for infrastructure investment.

They say EU ports are seeing reduced terminal development activity, while neighboring non-EU ports are rapidly expanding capacity, potentially at Europe’s expense. ESPO has submitted a series of proposals to the Commission ahead of the review, calling for a globally aligned emissions framework as the long-term priority.

As explained by Isabelle Ryckbost, Secretary General, ESPO, the European Commission and Europe’s policy makers must finally draw the lessons of these first years of application. It is high time to act, as Europe’s Ports are key in realizing Europe’s energy transition and energy security goals and guaranteeing Europe’s military preparedness. "We cannot longer accept a policy that creates carbon leakage and risks to destroy the economic strength and competitiveness of strategically situated ports which we desperately need to realize Europe’s overall ambitions in terms of geopolitical and geo-economic resilience, energy transition and security," Isabelle Ryckbost highlighted.

In the interim, the organization is urging policymakers to reconsider the 65% transshipment threshold used to define excluded neighboring ports, resist expanding the scope of vessels covered, account more carefully for the impact on outermost EU regions, and allocate a larger share of ETS revenues back into maritime and port infrastructure.

Last but not least, the EU-ETS maritime is affecting negatively short sea shipping in certain countries, with clear examples of modal backshift to the road, which is excluded from ETS until 2028. “During decades, Europe has been pursuing a clear policy to move traffic away from road to maritime through its well-known concept of “Motorways of the Sea”. The current EU-ETS is doing everything to put short sea shipping cargo back on the motorway,” added Ryckbost. “The European Commission is currently making big efforts and developing new instruments to accelerate, reindustrialize, simplify and strengthen Europe’s competitiveness and resilience. But these efforts are a drop in the ocean for ports if the current EU-ETS maritime is not seriously reviewed," concluded Isabelle Ryckbost.

Source: safety4sea.com