Would shippers benefit from evading the EU’s carbon market?

December 11, 2020

EU regulators have little to fear from shipping companies evading the bloc’s carbon market if it is applied to long-distance voyages, a new study shows. The shipping industry has warned that operators would make evasive port calls in neighbouring non-EU countries to avoid buying pollution permits for the whole voyage. But, at most, 7% of ships calling at EU ports would benefit from avoidance at today’s carbon price, according to an analysis by Transport & Environment (T&E).

To evaluate the risk of policy evasion under a future maritime ETS, the report performs a cost-benefit analysis of evasive port calls to determine the cost effectiveness from the shipowner’s perspective. The analysis is based on the case studies of three countries with major seaports in close proximity to a non-EEA port: Greece, Spain and the Netherlands. 

It does so for both a full and a semi-full scope ETS design to evaluate the risk of policy evasion under a future maritime ETS.

The key conclusions are:

  1. An evasive port call comes with new additional costs, including extra fuel, operational, port-call, and opportunity costs.
  2. Under a full scope ETS design, 6.7% of all voyages, representing 2.7Mt of emissions, would be tempted to evade at that CO2 price.
  3. Under a semi-full scope ETS design, it would not be in the financial interest of any ship to make a stopover in a non-EEA port in order to avoid paying the €30/tonne of CO2 compliance cost.
  4. In the case of ETS compliance, CO2 costs would add only a very small amount to the overall transport costs. For transporting a standard container (TEU) from Spain to Singapore under a semi-full scope ETS design, the CO2 costs would represent less than 1% of the overall transport costs.

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