Ships calling at European ports will face a total carbon emissions bill of $3.6 billion next year, a figure that is estimated to rise as the EU steps up its efforts to combat climate change. Under the new regulation coming into force on January 1, ships entering and leaving EU ports will have to pay for their carbon pollution, affecting deliveries of everything from finished goods to liquefied natural gas. Although the bill costs billions, it represents only a fraction of the revenue from international shipping and is unlikely to have a major impact on the prices consumers ultimately pay for goods.
The global shipping industry spewed more than a billion tons of CO2 into the atmosphere in 2018 and runs almost exclusively on petroleum-derived fuels. The European Union’s plan is to decarbonise the sector to combat climate change, but there has been talk of how merchants and companies could exploit loopholes to avoid paying the fees. The cost of compliance with the ETS may currently be relatively small, but it will almost certainly be more expensive as shippers will only have to cover 40% of their emissions in 2024.
The EU aims to have shippers cover 70% of emissions in 2025 and 100% in 2026, with additional regulations for methane and nitrous oxide emissions. Despite the potential cost disadvantage of green fuels compared to fossil fuels, the EU is prepared to propose measures to counter evasion and preserve the integrity and effectiveness of the EU ETS.