EU plans to include ships traveling to European ports in the ETS program starting January 1, 2024, which is estimated to bring in US$3.6 billion in the form of carbon emission compensation for Europe in 2024. In other words, shipping companies will have to purchase carbon offsets for the emissions produced by ships traveling between two EU ports; for ships traveling between EU and non-EU ports, they will have to bear 50% of the emission fee.
However, seven EU countries, including Spain and Italy, have recently sent a letter to the European Commission calling for a suspension of the program to prevent shipping companies from avoiding European routes and shifting trade to nearby Mediterranean ports such as Tangier in Morocco, or Port Said in Egypt, which are less than 300 nautical miles from the EU coast. According to the latest estimates by Shipping Consultants, assuming a carbon price of €90 per ton, the ETS cost for a container shipping between Europe and Asia in 2024 is estimated to be as high as €810 thousand.
Despite the high cost of ETS, it is reported that Maersk, the container leader, made a profit of US$30 billion in 2022. The bill generated by ETS is only a drop in the bucket when compared with the revenue of international shipping, so it may not have much impact on the end price. However, some EU countries on the Mediterranean coast, including Portugal, Greece and Cyprus, have publicly said that the ETS program, which comes into effect in 2024, could shift carbon emissions to other parts of the world, and that companies may take longer routes to avoid stopping at EU ports, and may even increase greenhouse gas emissions as a result.