European Port Groups Call for Efforts to Stop Port Evasion in EU ETS

port evasion under EU ETS — Port groups call for better monitoring to stop port evasion efforts to avoid costs in the EU ETS program

With the European Parliament expected to vote next Monday, March 13, on the revised EU Emissions Trading System (ETS), two of the largest organizations reporting European ports and companies operating in the ports are again raising concerns about shipping companies taking steps to avoid the regulations. Saying that they welcome the inclusion of the maritime sector in the scheme, the European Sea Ports Organisation (ESPO) and the Federation of European Private Port Companies and Terminals (FEPORT) are calling for further efforts to prevent evasive port calls and for the ETS to support ports in the conversion process.

“Evasion from the maritime EU ETS is a serious concern that continues to pose a threat to the credibility and robustness of the EU ETS. Early action is crucial as changes in port traffic and the reconfiguration of shipping routes are almost impossible to reverse once they occur,” the organizations write in a joint statement released on March 8. “More is needed to ensure monitoring and effective prevention of carbon and business leakage from EU ETS Maritime.”

As the rules were agreed to during the triparty conference, the ETS would phase in between 2024 and 2026 reducing the allowances and increasing the cost for shipping companies operating intra-EU voyages and in EU ports. There is a smaller percentage included for voyages between a port in the EU and a port outside the EU.

This ability to substitute EU ports for neighboring options or use transshipments the groups warn could lead to evasive port calls where shipping companies can avoid paying into the ETS by adding a call to a port outside the EU or by reconfiguring routes. Evasion tactics such as these the groups warn will “threaten the integrity of the ETS, leading to higher emissions from longer voyages whilst failing to push shipping companies to green their operations.”

These concerns are not new to the ETS initiative and the EU drafting committees included efforts to identify evasion tactics. The Commission intends to use AIS data and data from customs to help in identifying evasion efforts and the value of goods imported and exported through the ports.

“These indicators only identify evasion after it has taken place,” the organizations warn, They are calling for additional parameters that allow early detection warning “it will be very difficult to reverse the negative development,” after they are in place.

ESPO and FEPORT are supporting efforts to introduce a definition of the phase “port of call” in the implementation acts. They note that the effort would exclude stops in container transshipment ports neighboring the EU.

They are also saying the monitoring efforts should be widened to all ports and not just those where container transshipment exceeds 65 percent. They also call for more involvement of port authorities, terminal operators, and trade unions. Both the European Port Forum and European Sustainable Shipping Forum should also be consulted.

They say the focus should also be widened to the cumulative impacts on the Fit for 55 package. The impact of the current spike in energy prices on the competitive position of ports in the EU should be considered, as well as the trade and state aid policies of the EU’s competitors.

Taking that broader perspective, the groups are calling for a significant part of the ETS revenues to be invested in ports in the EU. The revenues, they write should be allocated to EU Member States based on port calls to ensure that investments in decarbonization can be made in locations where the emissions take place.