EU to levy port carbon tax from January 2024

The European Union plans to include ships heading to European ports into the Carbon Emissions Trading System (ETS) program from January 1, 2024, which is estimated to bring US$3.6 billion in carbon emissions offsets to Europe in 2024. That is to say, shipping companies must purchase carbon offsets for the carbon emissions produced by ships sailing between two EU ports; if ships travel between EU and non-EU ports, they must bear 50% of the carbon emission costs.

However, seven EU countries, including Spain and Italy, recently wrote to the European Commission calling for the suspension of the plan to prevent shipping companies from avoiding European routes and shifting trade to the nearby port of Tangier in Morocco or Said in Egypt. Port and other Mediterranean ports, both of which are less than 300 nautical miles from the EU coast. According to the latest valuation by a shipping consultancy, assuming a carbon price of 90 euros per ton, the estimated ETS cost for a container ship sailing between Europe and Asia in 2024 will be as high as 810,000 euros. Although ETS is expensive, according to reports, container leader Maersk's profits last year were as high as US$30 billion. The bills generated by ETS are actually only a drop in the bucket compared with international shipping revenue, so it may have little impact on terminal prices. However, some EU countries on the Mediterranean coast, including Portugal, Greece, Cyprus and other countries, have publicly stated that the ETS calculation that will take effect in 2024 may transfer carbon emissions to other regions around the world, and companies may take longer routes to avoid calling at EU ports. This may even increase greenhouse gas emissions.