Europe’s Ports Worried About Signs of Business Leakage Prior to ETS

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The European Sea Ports Organisation (ESPO) has raised concerns about carbon and business leakage due to the EU emission trading system (ETS). ESPO supports the ETS as a way to reduce emissions in the shipping sector but warns that ships may divert to non-EU ports to avoid the charges under the ETS. ESPO highlights a loophole in the current implementation of the ETS, where ships calling at EU transshipment ports are subject to charges for 100 percent of the journey, while ships calling at non-EU transshipment ports are only subject to charges for 50 percent of the journey. The European Commission is aware of these concerns and has held a public consultation on the list of non-EU neighboring ports that would fall under the “transshipment clause” introduced in the directive. ESPO is concerned that the EC’s solution to not consider calls at some transshipment ports as a “port of calls” is only a partial solution and raises questions about how transshipment ports are defined. ESPO believes that the ETS implementation must safeguard the competitiveness of European ports and prevent carbon and business leakage to non-EU ports.

ESPO is calling for continuous monitoring ahead of the ETS application date to detect rerouting and evasion movements that may already be happening. They also emphasize the need for ongoing monitoring rather than just periodic reports every two years. ESPO hopes for an open and constructive dialogue with the European Commission to address the adverse impacts and signal evasion at an early stage. They stress that once evasion is established and trading routes have changed, it will be difficult to reverse the negative developments. ESPO’s ultimate goal is to achieve the desired results from the implementation of the ETS while safeguarding the competitiveness of European ports and preventing carbon and business leakage.

In summary, ESPO is concerned about carbon and business leakage due to the EU ETS and highlights a loophole in the current implementation that may lead ships to divert to non-EU ports. They are calling for continuous monitoring and an open dialogue with the European Commission to address these concerns and ensure the competitiveness of European ports.

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