CE Delft reports on potential impacts of ETS extension

The port says the extension of the ETS to shipping must take into account potential evasive behaviour and its impact on the competitive position of EU seaports compared to non-EU ports.

This can be achieved by adding an extra port call just outside of the EU, removing some or all EU ports from the schedule and feedering to these ports from a non-EU port or changing the order of the ports in the existing schedule such that a port close to the EU is the first port of call in the EU region.

Based on these options, CE Delft has investigated the cost-benefit analysis for five scenarios of potential port evasion. The cost-benefit analysis is based on various costs, e.g. fuel costs and port call costs, including the ETS price based on a low/average/high estimate.

The study demonstrates that when an extra port such as Felixstowe (United Kingdom) is added on the China-Europe route, there are potentially 18 scenarios in which port evasion can be cost-efficient for ships. This is already the case with an average ETS price of €67. In case of a port shift from Algeciras (Spain) to Tangier (Morocco), the evasion of the EU ETS is profitable in 27 of the 36 scenarios that were studied.

CE Delft concludes that evasive behaviour is realistic, even when the ETS price is relatively low (compared to the extra costs of a port call, fuel costs, operational costs, etc.). However, this does not apply to all shipping lines. For example, capacity constraints in non-EU ports also plays a role in limiting possibilities to evade the EU ETS, at least in the short term.

Overall, the study concluded that the impact of evasive behaviour on European seaports is likely to be limited, because all cargo destined for the EU will still need to be unloaded in European seaports. The evasive behaviour will therefore mostly affect the transhipment activities in European seaports.

The Port of Rotterdam is asking European policymakers to conduct a broad impact assessment into the effects of a shipping ETS on European ports before including shipping in the EU ETS. It says that more sustainable shipping can only be achieved if shipping actually pays for the pollution it causes.

The report is available here.