The EU Emission Trading System Tax Regime and the Issue of Unfair Maritime Competition

This article starts by providing an updated literature review and the EU legislative framework concerning reducing carbon emissions in the maritime industry as part of the European Green Deal (EGD). It specifically examines the EU Emission Trading System (ETS) tax regime. This document then analyses the current factors influencing ships’ decisions to avoid stopping at hub ports and going to neighbouring Mediterranean countries, such as North Africa and Turkey. In the discussion section, this study presents various suggestions for updating EU laws or expediting the collection and analysis of data to prompt the Commission to take appropriate actions to prevent unfair competition between EU and non-EU ports. This study focuses on identifying the most effective solutions within the EU legislative framework to address the need for the Commission to take legitimate action to prevent ships from bypassing EU hub ports. These solutions can be further developed alongside initiatives at the International Maritime Organization (IMO), and certain provisions can be adjusted at the EU level. The IMO’s call for a carbon fee on bunkering exacerbates the existing challenges. Preventive measures must be implemented to control the diversion of shipping traffic from EU hub ports, ensure fair treatment of EU ports involved in transhipment, and prevent carbon leakage. Moreover, the recent Houthi attacks in the Red Sea have significantly increased shipping costs on the route around the Cape of Good Hope to Europe, necessitating increased allowances for traffic to and from Europe.