Tanger Med and Port Said included in EU ETS directive
The European Commission has included Tanger Med and Port Said, two pivotal transshipment hubs, in the European Union’s (EU) revamped carbon pricing regime for ships.
This latest update, however, brings a marked change in the way emissions are assessed, and it extends its reach beyond EU borders, heralding extra-territorial implications.
The move is being pursued as the EU aims to reduce the risk of evasive port calls by containerships to ports outside of the union and relocation of container transshipment activities to ports outside of the union.
Tanger Med and Port Said have been identified as neighboring container transshipment ports as they meet the stringent criteria, which mandates that the ports exceed 65% share of transshipment traffic in their total container flow during the most recent twelve-month period. Additionally, these ports must be situated outside the EU while remaining within a modest 300 nautical miles from an EU Member State’s jurisdiction.
The EU ETS directive for the maritime sector aims to address emissions in the shipping industry by introducing carbon tax to cover their emissions and encourage more sustainable practices.
According to the directive, shipping companies must surrender their initial allowances by 30 September 2025 for emissions reported in 2024. To ensure accountability for emissions, the EU ETS directive introduces a phased approach to emission allowance coverage.
Under this regulation, the allocation of carbon pricing is delineated as follows:
- 50% of emissions stemming from voyages between an EU port and a non-EU port, in both directions, will be subject to the EU ETS.
- Emissions from voyages between EU ports will face full 100% coverage.
- Likewise, emissions from ships berthed at EU ports will be entirely encompassed.
To determine which non-EU neighbouring ports will fall under this scope of the directive, a ‘transshipment clause’ was introduced and the European Commission recently conducted a public consultation on the matter.
That being said, the European Sea Ports Organisation (ESPO) has raised concerns about the potential for carbon and business leakage due to the current legislation’s limited scope.
While only a few neighbouring ports meet the high transshipment volume thresholds set by the legislation (65%), many ports and terminals across Europe have already developed or are expanding their transshipment capabilities. ESPO urged the European Commission to consider not only current volumes but also transshipment capacity in the various ports bordering the EU.
Under the current legislation, even if a call is made at a non-EU transshipment port, it is still economically advantageous for ships to prefer non-EU ports over EU transshipment ports. When a ship calls at an EU transshipment port, the emissions trading system (ETS) charges apply to 100% of the journey within the EU. In contrast, if a ship calls at a non-EU transshipment port, only 50% of the journey falls under the ETS charges, ESPO said.