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Ships calling at EU ports may have to pay millions more euros in carbon fees, as Brussels plans to close a loophole that lets vessels cut their emissions bill by making stopovers just outside the bloc.
Vessels sailing to the EU from outside the bloc must buy carbon allowances covering half their emissions for the journey. But officials are concerned that ships from far-flung ports are cutting bills without reducing emissions by stopping at ports near EU member countries, and then counting only the shorter final leg into the bloc.
Brussels plans to tighten the rules by including traffic to North African, Middle Eastern and potentially UK ports in its emissions trading system. The rules currently bring in about €7bn-€9bn each year, according to ECSA, the European shipowners’ association.
EU officials said they wanted to expand a list of non-EU ports counted under the scheme as part of a broader revision of the overall carbon-pricing scheme due this month. This would “reduce the risk of evasion”, said one.
But it risks stoking tension with trading partners in countries such as Egypt, Morocco, Jordan and the UK who could see their ports affected by the change.
One diplomat said that the European Commission’s decision was overdue. “We made a list of ports but it has ended up being small. We need to add to them.”
The measure, which is not yet finalised, is set to form part of a broader review of the bloc’s emissions trading system due on July 17. The review is set to ease emissions rules for businesses and includes moves to expand carbon costs to flights departing the EU and slow down the phaseout of allowances for industry.
The ETS review aims to align the scheme with a target to reduce carbon emissions to 90 per cent of 1990 levels in 2040.
ECSA said this week that approximate annual revenues under the current maritime ETS system would be €7.65bn assuming a carbon price of €85 a tonne of CO₂ emitted or €9bn if costs reached €100 a tonne.
The Commission has already included Tanger Med in Morocco and Port Said in Egypt but officials said they were looking to tweak criteria to tackle evasion around the Mediterranean and potentially the UK.
One Commission official said that ports in areas such as Morocco, Jordan or others were set to be included but that UK ports “should not be as much of a concern”, given plans to link the UK and EU emissions trading systems.
Industry sources have warned that ships are exploiting the loopholes by loading or unloading cargo in ports neighbouring the bloc and then making their final trip into the union.
“A vessel is paying roughly €300,000 per call so what liners decided to do is not to come directly to the European port but to stop at the nearby non-EU ports to benefit from the 50 per cent ETS rules,” said Alberto Rossi, secretary-general of the Italian shipowners’ association Assarmatori.
Another issue was vessels bringing non-EU goods to EU ports for transshipment — where they are moved to different ships before being taken on to their final destination outside the bloc.
Rossi said that transshipment services were also moving to north Africa to evade ETS costs, impacting jobs and potentially giving EU countries less control over their supply chains.
Assarmatori has proposed that all emissions associated with transshipment cargoes are exempted.
The European People’s Party, the influential centre-right political grouping that is the largest in the European parliament, has proposed excluding EU ports that risk losing business due to transshipment from ETS costs. This could include European ports in the Mediterranean in Italy and Spain.
One of the officials added that they were also looking into the transshipment issue but no decision had been made.
Shipowners have been lobbying for more of the revenues raised by the ETS to be returned to the industry as subsidies to boost the use of green fuels. Only 5 per cent of ETS revenues are expected to go back to the maritime sector to decarbonise, ECSA said.
