ETS Maritime: Why A Cargo-Based Measure Will Efficiently Allow Member States To Better Protect Ports From Carbon Leakage While Incentivising Shipping To Decarbonise

ETS Maritime, a proposal to extend emissions trading to international voyages, was first introduced over five years ago. However, port stakeholders raised concerns about evasion risks due to the extra-territorial application of the European Union’s carbon pricing mechanism. These worries were only partially addressed in the final text that came into effect in May 2023. The directive now includes a list of neighboring container transhipment ports excluded from its definition of "port of call."

The world has changed since 2021, and the strategic role of ports in areas such as military mobility and as energy hubs has become more apparent. FEPORT is pleased that this recognition is reflected in the EU Commission’s proposal and amendments proposed by Members of the European Parliament. The revision of the ETS text provides an opportunity to implement efficient measures that safeguard ports from business leakage.

There are three potential anti-evasion measures under discussion: a distance-based measure, an exemption for some EU ports, and a cargo-based measure. FEPORT’s Secretary General, Ms Lamia Kerdjoudj, is not convinced by the first two proposals. The distance-based measure encourages shipping companies to reduce port calls, while the exemption favours specific ports, potentially creating an uneven playing field in the internal market.

The cargo-based measure, on the other hand, focuses on the destination of the cargo, ensuring no favourable treatment based on routes or port calls. It targets the most at-risk volumes, namely containers not destined for the EU market.

FEPORT advocates for strengthening the cargo-based measure by applying it to inbound voyages too. This measure will enable Member States to better protect ports from carbon leakage while incentivizing shipping to decarbonise, preserving the integrity and rationale of the anti-evasion measures. FEPORT urges institutional stakeholders to support this approach, emphasizing that it is robust in terms of substance and certain in terms of its real impact.