Is the cumulative impact of the “Fit for 55” proposals on EU ports sufficiently assessed?
On December 8th, 2021, 12 organizations of the Waterborne and intermodal transport sectors[1] called for consistency between “Fit for 55” proposals and for a real appraisal regarding the risks of competitiveness loss resulting from proposals such as ETS and CBAM.
Now that we are getting closer to the legislative process, the risks and opportunities around the “Fit for 55” proposals become more tangible and concrete topics for discussion. Hence, the important role of institutional stakeholders and their “listening skills” to enhance the texts and mitigate negative effects for EU maritime industries.
The EU Commission seeks to phase out allowances for various sectors covered by the EU ETS that are more than others subject to international competition and hence carbon leakage and proposes to apply a carbon levy to imports in those sectors instead.
The rationale behind this approach is welcomed as it incentivizes sectors to reduce their emissions by eliminating free allowances while it protects them from carbon leakage by introducing a levy on imports based on their carbon content.
In December, the 12 associations already called on the Commission to take a similar approach when it comes to ports and ships, i.e., to push sectors to reduce emissions while addressing the risk of carbon leakage.
With the EU ETS Directive proposal, the maritime sector will need to progressively surrender allowances for half of the emissions on extra-EU voyages. At the same time, FuelEU Maritime will impose GHG intensity limits to half of the energy consumed on extra-EU voyages.
This application of FuelEU and EU ETS to extra-EU traffic calling or departing from EU ports, could probably make routes towards and calls at non-EU ports in, for example, the UK, Russia or the Maghreb more attractive from a financial point of view. This way the competitiveness of the EU maritime sector would be harmed, without actually reaching emission reductions. Even worse, EU logistics chains could be negatively impacted.
Evasive port calls at neighboring non-EU ports could seriously jeopardize the effectiveness of the maritime ETS, as it would not reduce total shipping emissions. It could even increase overall emissions by extending the duration of ships’ voyages seeking to avoid EU ports to call non-EU ones.
The proposed monitoring clause in the Commission proposal does not constitute an efficient solution as it is an ex-post assessment of the effects once the potential harm to EU ports would have already happened.
It is therefore indispensable to proceed differently and evaluate first the effects of the proposed provisions regarding the current geographical scope and the risks of business leakage, along with the cumulated impact of all Fit for 55-proposals.
In the context of CBAM, it will be equally important to carefully minimize any impacts of the current proposal on the competitiveness of European industries exposed to global competition.
It is a positive signal that the EU ETS Directive proposal mentions that part of the revenues raised by the auctioning of allowances should flow to the Innovation Fund and cover investments aimed at decarbonizing the maritime transport sector, such as sustainable alternative fuels or zero-emissions propulsion technologies. Similarly, it would be welcomed that parts of the revenues collected via penalties under the FuelEU Maritime Regulation will flow to support “common projects aimed at the rapid deployment of renewable and low carbon fuels in the maritime sector”.
The 12 associations which co-signed the joint position paper last December, however, would like an even clearer commitment of EU policy makers through a guarantee that the funds raised via FuelEU Maritime and the EU ETS will be used to green the maritime transport sector, which includes investments into port infrastructure and, if necessary, superstructure as well.
[1] “Fit for 55 proposals”: Joint Contribution of the Waterborne and intermodal transport organizations
16.12.2021 – EU Institutions’ joint priorities for 2021-2024
On the 16th of December, the European Parliament, the European Commission, and the Council of the European Union signed a Joint Declaration on EU legislative priorities for 2022.
Europe’s actions in the coming years will be guided by the legislative priorities set out in the Joint Declaration for 2022 and the Joint Conclusions on policy objectives and priorities for 2020-2024. The three institutions have agreed to deliver an ambitious political and legislative agenda for recovery and renewed vitality between now and 2024.
In 2022, the institutions will particularly focus on:
- implementing the European Green Deal,
- achieving a Europe fit for the digital age,
- delivering an economy that works for people,
- making Europe stronger in the world,
- promoting our European way of life, including when facing health crises,
- protecting and strengthening our democracy and defending common European values.
Moreover, they also committed:
- to work to eliminate all forms of discrimination and promote equal rights and opportunities for all,
- to the continued implementation of national recovery and resilience plans,
- to the implementation of the binding roadmap towards the introduction of new own resources in due time,
- to improve global access to COVID-19 vaccines,
- to strengthen the EU’s role as a global actor across all geographic areas, as well as bilateral and multilateral partnerships,
- to reinvigorate the accession process in the strategic interest of the Union, in accordance with the enhanced enlargement methodology.
Source: European Commission
20.12.2021 – Shipping ancillary services included in BEPS
On the 20th of December 2021, the OECD published detailed rules to assist in the implementation of a landmark reform to the international tax system, which will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.
The Pillar Two model rules provide governments a precise template for taking forward the two-pillar solution to address the tax challenges arising from digitalization and globalization of the economy agreed in October 2021 by 137 countries and jurisdictions under the OECD/G20 Inclusive Framework on BEPS.
The rules define the scope and set out the mechanism for the so-called Global Anti-Base Erosion (GloBE) rules under Pillar Two, which will introduce a global minimum corporate tax rate set at 15%. The minimum tax will apply to MNEs with revenues above EUR 750 million and is estimated to generate around USD 150 billion in additional global tax revenues annually.
While the model rules on the implementation of the global tax exclude international shipping income from the scope of BEPS Pillar Two, the definition of shipping income does not include income from inland transport, logistics and freight forwarding.
The GloBE rules provide for a coordinated system of taxation intended to ensure large MNE groups pay this minimum level of tax on income arising in each of the jurisdictions in which they operate. The rules create a “top-up tax” to be applied on profits in any jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum 15% rate.
Source: OECD
30.12.2021 – FMC issues Orders of Investigation into ONE and Wan Hai Lines
At the end of December 2021, the Ocean Network Express (“ONE”, a consortium of three large Japanese carriers) and the smaller Taiwanese independent Wan Hai Lines received Orders of Investigation from the Federal Maritime Commission (FMC). In each case, the complaint is laid out in the respective Order, with written responses required within 25 days.
These investigations would then lead to an actual hearing, within six months, presided over by an Administrative Law Judge (a Federally appointed Judge) handling FMC matters. The Judge has the power to impose monetary penalties on the “respondent” (the carriers, in this case), if a violation of the law (here, codified in the Shipping Act of 1984) has occurred.
The investigation into Wan Hai will look very closely into practices of carriers concerning the return of empty containers, and detention charges when the boxes are not turned back to the carriers. According to the FMC’s complaint, Wan Hai charged cargo interests for detention nearly two dozen times during the Spring of 2021, when the jammed-up terminals at southern California ports were unable to accept returns of containers.
Source: FMC
01.01.2022 – French Presidency kick off
On the 1st of January, France took over the rotating EU Council presidency for the first half of 2022 from Slovenia.
Having last held the position in 2008, the French Precedency put forward three main ambitions in its program:
- A more sovereign Europe.
- A new European model for growth.
- A humane Europe.
As stated in his speech on the 9th of December 2021, President Emmanuel Macron wants to use the French presidency to promote concrete environmental actions, such as introducing so-called “mirror clauses” to trade deals, setting an EU instrument to combat imported deforestation and speeding the EU carbon border adjustment mechanism. This last point is one of the French main concerns when it comes to the ecological transition and the priority will be the establishment of carbon pricing at the EU borders for imported products as a matter of economic and ecological efficiency.
Regarding the transport sector, the French Presidency intends to focus on the decarbonization of all transport modes. France intends to drive forward the EU’s flagship “Fit for 55” package and will work on the newly proposed “efficient and green mobility” legislative package, especially concentrating on the updates to the regulation on the trans-European transport network and on the revision of the Directive on Intelligent Transport Systems.
Source: French Presidency and European Commission
20.01.2022 – DG MOVE workshop on Flag State Directive/Port State Control Directive/Accident Investigation Directive
On the 20th of January, FEPORT Secretariat participated to the workshop organized by DG MOVE on the Impact Assessment studies on the Flag State Directive, the Port State Control Directive and the Accident Investigation Directive, to which FEPORT largely contributed.
Further to the work and targeted consultations carried out for the abovementioned three Impact Assessment studies carried out by the three consultants VVA, COWI and ECORYS, the Commission invited the relevant stakeholders to attend this planned consultation for a validation and final consultation meeting before finalizing the IA and taking next steps in finalizing the revision proposals.
The consultants thoroughly presented their studies, giving an overview of the consultation process and the possible policy measures.
The presentation on the revision of Directive 2009/18/EC establishing the fundamental principles governing the investigation of accidents in the maritime transport sector was especially interesting.
The study revealed three main problems with this Directive stemming from four main drivers:
- Problems:
- Accidents involving some categories of vessels are not investigated.
- AIBs lack clarity regarding all circumstances in which they must act and how they must act.
- Some AIBs cannot effectively and consistently report on and investigate marine accidents and casualties.
- Drivers:
- The Directive does not apply to certain vessels.
- Some definitions are not provided in the Directive or are not specific enough.
- References to outdated international and EU rules.
- AIBs do not dispose of adequate human and financial means and expected future use of new marine fuels will exacerbate the issue.
The consultants identified 15 policy measures identified at driver-level and grouped them into 3 policy options addressing all four drivers identified:
Policy option 1 – maximum flexibility
- Outdated references are removed or updated
- More guidance given on how to effectiveness of investigations could be further improved
- Focus on interpretative guidelines
Policy option 2 – strict legal regime, minimum flexibility
- Unclear or open-ended definitions are defined in the revised text
- Focus on harmonizing accident investigation throughout the EU
Policy option 3 – flexible where possible, strict where needed
- Some elements will be explicitly defined in a revised text, for others interpretative guidelines will be developed
The revised Directive is expected to positively affect maritime safety, as more lessons might be learned from the investigation of accidents, possibly preventing accidents from occurring and thus having an impact at social, environmental and economic level.
24.01.2022 – Sectoral Social Dialogue Committee Meeting
On the 24th of January, FEPORT Secretariat participated to the European Social Dialogue for Ports Committee hybrid meeting that took place at the Borschette Building.
In this framework, the Social Partners presented the Vessel Safety Inspection Checklist they elaborated throughout 2021 and which could be used by all types of terminals and for all types of cargo.
After the presentation, Social Partners asked the Commission for concrete action and for their checklist to be taken into account in the context of the revision of the Port State Control Directive and/or the Accident Investigation Directive.
2022 will be indeed a crucial year for the Social Dialogue for Ports as Social Partners hope that the Commission will propose a sustainable solution to the essential topic of safety of port workers on board of ships after years of discussions, consultations, interviews and input from their side.
24.01.2022 – MEP Karima Delli re-elected as TRAN Committee Chair
On the 24th of January, the TRAN Committee re-elected MEP Karima Delli as committee chair for the second half of the legislature.
FEPORT congratulates MEP Delli and her colleagues MEP István Ujhelyi, MEP Jens Gieseke, MEP Andriks Ameriks and MEP Jan-Christoph Oetjen, who were also re-elected as vice-chairs of the TRAN Committee.
FEPORT members look forward to continuing the good collaboration with MEP Delli and her team as well as with all the re-elected Chairs and Vice Chairs.
27.01.2022 – Commission adopts Guidelines on State aid for Climate, Environmental protection and Energy
On the 27th of January, the EU Commission formally adopted the new Guidelines on State Aid for Climate, Environmental protection and Energy (CEEAG)
The new Guidelines, which were already endorsed by the Commission in December 2021, will apply from the 27th of January 2022. The new rules involve an alignment with the EU objectives and targets set out in the European Green Deal, as well as with recent regulatory changes in the energy and environmental areas, including the Fit for 55 package.
The new rules aim at creating a flexible, fit-for-purpose framework to help Member States provide the necessary support to reach the European Green Deal objectives in a targeted and cost-effective manner. In this respect, they will help Member States meet their ambitious energy and climate targets, at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.
When it comes to relevance to port sector, the Guidelines cover aid for the acquisition or leasing of zero-emission terminal equipment as well as for retrofits. Moreover, it includes aid for the deployment of clean refuelling and recharging infrastructure, such as for maritime vessels.
Events supported by FEPORT
To know more, please follow the link.
FEPORT meetings
10.02.2022 Board of Directors – Brussels
23.02.2022 Port Policy Committee – Remote
14.04.2022 Board of Directors – Remote
26.04.2022 Social Affairs Committee – Brussels
03.05.2022 Environment, Safety and Security Committee – Brussels
18.05.2022 Customs and Logistics Committee – Brussels
19.05.2022 Port Policy Committee – Brussels
09-10.06.2022 Port Policy Committee – Brussels
08.09.2022 Board of Directors – Brussels
06.10.2022 Environment, Safety and Security Committee – Brussels
18.10.2022 Social Affairs Committee – Brussels
20.10.2022 Customs and Logistics Committee – Brussels
10.11.2022 Board of Directors – Remote
24.11.2022 Port Policy Committee – Brussels
Institutional meetings
02-03.02.2022 TRAN Committee Meeting – Brussels
02-03.02.2022 ECON Committee Meeting – Brussels
02-03.02.2022 ENVI Committee Meeting – Brussels
07.02.2022 TRAN Committee Meeting – Brussels
07.02.2022 ECON Committee Meeting – Brussels
10.02.2022 ENVI Committee Meeting – Brussels
14.02.2022 ENVI Committee Meeting – Brussels
28.02.2022 ECON Committee Meeting – Brussels
Other meetings
08-09.03.2022 CTAC Conference – London
09-10.04.2022 Shipping 4.0 – Naples-Genoa
24-27.05.2022 ETF Congress – Budapest
02-04.06.2022 UNIM GA – Saint-Malo
09.06.2022 Sectoral Social Dialogue Committee for Ports meeting – Brussels
28-30.06.2022 EuroMaritime Salon – Marseille
23.11.2022 Sectoral Social Dialogue Committee for Ports meeting – Brussels
FEPORT Newsletter - January 2022