The overestimation of the ETS earns companies up to 60,000 euros each way on average
The Italian government, which harshly contested the EU directive, made a spectacular mistake
[28 Marzo 2024]
According to the new study “Profits uncontained. An analysis of container shipping ETS surcharges” published by Transport & Environment (T&E), «Maritime freight transport giants are exploiting the EU CO2 emissions market (ETS) to increase their profits».
The T&E report takes into consideration a sample of over 500 trips, coming from and going to the main European ports, and demonstrates how «In almost 90% of cases shipping companies are charging customers higher costs than those they pay supported to adapt to the EU ETS system”.
The report gives the example of the extreme case of the Danish company Maersk which, «Probably will make more than 300,000 euros in extra profits for a single trip».
Therefore, for T&E, «The economic compensation measures introduced with the ETS system would not be inducing companies to boycott European ports. Far from wanting to avoid the cost of their emissions, shipping companies seem to have found a way to benefit significantly from them.
The EU Directive provides for a gradual entry into force of the taxation mechanism: in 2024, ships will have to pay only 40% of their emissions, rising to 70% in 2025 and reaching 100% only in 2026. Southern European governments have contested the directive, arguing that the ETS could distance traffic trade from their ports, pushing companies to choose ports on the other side of the Mediterranean, in North Africa, excluded from compensation measures for climate-changing emissions. Instead, T&E’s analysis shows that “shipping companies are unlikely to evade the ETS, at least until they find a way to profit unjustifiably from it.” In fact, the ETS for maritime transport came into force on 1 January this year and the report reports that «Since that date, shipping companies have applied an “ETS surcharge” which is charged to the customer».
Carlo Tritto, policy manager of T&E Italia, declared: «Maritime transport giants are exploiting environmental measures for their own gain, charging customers a premium even higher than what they have to pay to comply with the ETS. It is paradoxical that a compensation measure for the damage caused to the climate becomes an opportunity for extra profit. All the governments of Southern Europe, including the Italian one, which raised strong objections to the extension of the ETS to sea transport, fearing to see the piers of their ports desertified, made a spectacular mistake. To date, reality shows that shipping companies are benefiting enormously from this measure.”
The T&E investigation examined 565 voyages of 80 different ships, 20 for each of the 4 largest European shipping companies: Maersk, MSC, CMA CGM and Hapag-Lloyd, and the association underlines that «The most evident case is that of Maersk: in a single voyage from China to Germany, the company will earn around 325,000 euros in extra profits, all deriving from the surcharge charged when the ETS came into force. For MSC, however, a trip from Europe to North America could yield €125,000 in extra profits. It is estimated that the average profits generated by this strategy are around 60,000 euros per route for Maersk, followed by MSC with 25,000 euros, Hapag Lloyd with 23,000 euros and CMA CGM with 14,000 euros.[1] While the profits generated per voyage are not always that high, for companies with hundreds of ships this surcharge mechanism could be worth millions of euros in additional profits every year.”
What also emerges from the report is that in reality the ETS has little influence on the cost of goods: «The costs of sea transport have only a marginal impact on the final costs of goods. This means that shipping companies can charge customers extra costs without causing too much fuss. As already shown in previous T&E studies, even the boldest climate measures would add only a few cents to the final price of most consumer goods, such as a bunch of bananas, a pair of sneakers or a television.”
Furthermore, i ETS costs are negligible when compared to the much higher surcharges charged due to the disruption to trade resulting from attacks by Houthi militiamen in the Red Sea. In a case analyzed by T&E on the routes from Asia to Europe managed by the French transport giant CMA CGM, «The surcharge attributable to the ETS is equal to less than 1% of the shipping price of a container, while that generated by conflicts in the Red Sea represents almost 18% of the total cost of that same container.”
Tritto adds: «Economies of scale give seaborne logistics the ability to easily absorb any turbulence in the costs of their operations. What occurred in the Red Sea is practically the worst possible scenario, but global trade was not affected. The financial weight of the ETS is small in comparison. The cost of CO2 credits is not an obstacle to the decarbonisation of shipping, since even the most ambitious environmental measures would add only pennies to the cost of most consumer goods.”“
However, T&E also highlights how Maersk – the worst performing company according to the study – has outlined ambitious plans for the production of alternative green fuels. In 2023, the Danish shipping giant launched the world’s first container ship powered by sustainable methanol and recently announced decarbonisation targets in line with science-based climate targets.
