Fit for 55 package discussed during BPO’s Board meeting

Baltic Ports Organization’s (BPO) Board gathered today during an online session. Among the discussed topics were some of the points of the “Fit for 55” package, introduced earlier this year by the European Commission (EC), that the Organization believes need to be addressed in order to assure that the proposal is fit for purpose.

The BPO welcomes and supports the overall climate goals and the initiatives put forward by the European Commission. Greening of the transport sector is an important task, one that needs to remain in focus if the goals are to be achieved.

Keeping that in mind, the “Fit for 55” package is set to greatly influence the shape and future of the transport industry, including the port and shipping sectors. Therefore, it requires a more involved dialogue between the policymakers and the European ports and maritime sector. It is paramount to the continuous competitiveness of the sector, that this cooperation be tightened during the next steps of the legislative process.

There are a number of items included in the package that require further consideration and discussion. The two proposals within the package, linked directly to how not only the Baltic, but all European ports will compete with their foreign counterparts, are the addition of shipping to EU’s Emission Trading System (ETS) and the revision of the Energy Taxation Directive.

Inclusion of shipping in the ETS

Under the EU plan, shipping is set to be added to EU’s ETS gradually from 2023 and phased in over a three-year period. Ship owners will have to buy permits under the ETS when their ships pollute or otherwise face possible bans from EU ports. In addition to ships sailing only within the EU, the proposals will also cover 50% of emissions from international voyages starting or ending in the port of EU Member State.

The above may lead to changes in shipping patterns due to the possibility of evasive port calls or transshipment. For example, the close proximity of non-EU ports, which are not subject to European regulations, can directly affect the Baltic ports if the costs resulting from including shipping in the ETS are not carefully calculated.

Kimmo Naski, Chairman, BPO, offered the following comment after the meeting, "The Baltic ports are strongly supporting clean measures to improve the environment and climate. However a number of ports have expressed their severe concern over the inclusion of shipping in the ETS. Environmental goals need to be weighed also against the costs of implementation of the tools meant to achieve them and the diverse nature of all ports. A lack of careful consideration of all of the arguments may result in the industry having to bear the costs without actually achieving the goals set before it. This could lead to a significant decrease in the overall competitiveness of the European port sector.”

Removal of tax exemptions on marine fuels

The other point of concern is the aforementioned revision of the Energy Taxation Directive, which proposes to remove tax exemption on bunker fuels sold within and for use in the European Economic Area (EEA).

The proposal put forward by the Commission intends to remove tax exemptions on aviation and marine fuels in 2023. That price difference would make bunker prices in the EEA ports less competitive, potentially eliminating current price advantages of taking bunkers in EEA ports and cause a shift in bunker demand away from EEA ports, which could also lead to operators moving their services outside the EU.

Similarly to the uncertainties surrounding the inclusion of maritime transport in the ETS, this is another point that requires careful consideration and further analysis.

The way forward

There is no ideal solution to the goal of greening the maritime industry, just as the whole process can't be considered a sprint. It is a marathon, which will require not only policies to be put forward, but also extensive planning on part of the affected industries. In order to achieve this goal, open and transparent dialogue between the industry representatives and the policymakers will be absolutely crucial.

The Baltic Ports Organization is ready to engage in this dialogue and work together with its Members, other bodies making up the maritime transport ecosystem in Europe, as well as the European Commission, Council and Parliament and other EU representatives. Combating climate change is and always will be a team effort.

A recently published statement regarding BPO’s stance on the contents of the “Fit for 55” package offers further insights related to the above topics. It also includes comments on other proposals that are part of the package, such as the obligation to provide on-shore power (OPS) facilities to berthing vessels by the ports and coordination issues linked to legislative work on the package in context of other EU policies.

The full statement can be found under the following link.