Spain calls for close monitoring of ship movements amidst ‘carbon leakage’ fears

A closer monitoring of the consequences on European ports of the EU’s Emissions Trading Scheme extension is needed, according to Spain’s position expressed at Tuesday’s (18 June) Transport Council.

The ETS Directive puts a price on carbon emissions of Europe’s largest pollutants, and as of 2024, this includes emissions from maritime transport. This creates fear among some member states that ships will change their routes to stop at non-EU ports, allowing them to evade paying for these allowances.

If ships shift to ports outside the scope of the ETS, overall carbon emissions may not decrease—a phenomenon known as ‘carbon leakage’.  

Ahead of yesterday’s Transport Council, the Spanish Minister for Transport and Sustainable Mobility, Óscar Puente, stated that deviations in routes are already taking place, but given the current crisis in the Red Sea, it is currently difficult to measure the extent to which the ETS plays a role in these deviations.

According to the minister, monitoring the ports where carbon leakage may occur closely is crucial, as once traffic flows are diverted, they are unlikely to be reversed.

Concretely, the minister stressed that “we have (…) to see what redirections are taking place in the ports of southern Africa and in some ports of Great Britain”

During the meeting of transport ministers, Puente called for measures and expressed his concerns “as to the risks of carbon leakage, loss of competitiveness for our ports, and loss of control over European trade sovereignty because of a diversion of maritime routes to third countries to avoid these EU ETS costs”.

The main measures proposed by the Spanish delegation are not only a “detailed evaluation of maritime transport in the EU  ETS in the context of diversion of routes” but also an immediate review of the ETS Directive to explore options that would allow authorities to react to any identified route deviations, according to the document put forward by Spain in the Council.

Most member states, including Italy and Portugal, supported the Spanish initiative and agreed on the need to take action, including possible global rules to reduce emissions at the International Maritime Organisation (IMO) level.

In its intervention, Italy stressed that ” we have to make sure that we don’t come in too late with any corrective measures”.

While globally agreed-upon pricing solutions would eliminate the problem of carbon leakage, they have proven very challenging to establish in practice.

On the need for new measures under the ETS, Sweden and Denmark adopted a more cautious stance. Sweden argued against reopening the discussion “without any clear evidence that any route deviations are caused by the introduction of ETS,” although Sweden also defended the adoption of international rules to ensure a global playing field.

In contrast to the member states’ urgency, the European Commission found that it is “too soon to make any final preliminary conclusions on the impacts of ETS on maritime transport” but expressed its support for “a swift adoption of an economic mechanism to price shipping emissions at the level of the IMO.”

The Commission further clarified that it is already monitoring possible evasive behaviour, with conclusions in a report due at the end of 2024.

[Edited by Donagh Cagney/Alice Taylor]

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