On December 8th, 2021, 12 organizations of the Waterborne and intermodal transport sectors[1] called for consistency between “Fit for 55” proposals and for a real appraisal regarding the risks of competitiveness loss resulting from proposals such as ETS and CBAM.

Now that we are getting closer to the legislative process, the risks and opportunities around the “Fit for 55” proposals become more tangible and concrete topics for discussion. Hence, the important role of institutional stakeholders and their “listening skills” to enhance the texts and mitigate negative effects for EU maritime industries.

The EU Commission seeks to phase out allowances for various sectors covered by the EU ETS that are more than others subject to international competition and hence carbon leakage and proposes to apply a carbon levy to imports in those sectors instead.

The rationale behind this approach is welcomed as it incentivizes sectors to reduce their emissions by eliminating free allowances while it protects them from carbon leakage by introducing a levy on imports based on their carbon content.

In December, the 12 associations already called on the Commission to take a similar approach when it comes to ports and ships, i.e., to push sectors to reduce emissions while addressing the risk of carbon leakage.

With the EU ETS Directive proposal, the maritime sector will need to progressively surrender allowances for half of the emissions on extra-EU voyages. At the same time, FuelEU Maritime will impose GHG intensity limits to half of the energy consumed on extra-EU voyages.

This application of FuelEU and EU ETS to extra-EU traffic calling or departing from EU ports, could probably make routes towards and calls at non-EU ports in, for example, the UK, Russia or the Maghreb more attractive from a financial point of view. This way the competitiveness of the EU maritime sector would be harmed, without actually reaching emission reductions. Even worse, EU logistics chains could be negatively impacted.

Evasive port calls at neighboring non-EU ports could seriously jeopardize the effectiveness of the maritime ETS, as it would not reduce total shipping emissions. It could even increase overall emissions by extending the duration of ships’ voyages seeking to avoid EU ports to call non-EU ones.

The proposed monitoring clause in the Commission proposal does not constitute an efficient solution as it is an ex-post assessment of the effects once the potential harm to EU ports would have already happened.

It is therefore indispensable to proceed differently and evaluate first the effects of the proposed provisions regarding the current geographical scope and the risks of business leakage, along with the cumulated impact of all Fit for 55-proposals.

In the context of CBAM, it will be equally important to carefully minimize any impacts of the current proposal on the competitiveness of European industries exposed to global competition.

It is a positive signal that the EU ETS Directive proposal mentions that part of the revenues raised by the auctioning of allowances should flow to the Innovation Fund and cover investments aimed at decarbonizing the maritime transport sector, such as sustainable alternative fuels or zero-emissions propulsion technologies. Similarly, it would be welcomed that parts of the revenues collected via penalties under the FuelEU Maritime Regulation will flow to support “common projects aimed at the rapid deployment of renewable and low carbon fuels in the maritime sector”.

The 12 associations which co-signed the joint position paper last December, however, would like an even clearer commitment of EU policy makers through a guarantee that the funds raised via FuelEU Maritime and the EU ETS will be used to green the maritime transport sector, which includes investments into port infrastructure and, if necessary, superstructure as well.
Source: FEPORT