ESPO Position on the proposal for a Council Directive restructuring the Union framework for the taxation of energy products and electricity
The greening of the shipping sector is a priority. ESPO believes that tax incentives can be an important instrument to encourage the development and use of cleaner marine fuels and discourage the use of fossil marine fuels in Europe. In that regard, ESPO welcomes the review of Europe’s energy taxation policy. The ETD should serve to support the deployment and use of alternative fuels in Europe through a workable and future-proof legislative framework that provides legal and investment certainty for ports.
For ports it is important that a reviewed energy taxation policy is based on the polluter pays principle and effectively reduces shipping emissions, whilst delivering the energy transition of the shipping sector. This objective can be reached if clear rules are developed in view of exempting clean fuels and technologies from taxation. If the shipping sector can however circumvent the taxation on fossil fuels by bunkering in ports outside Europe, emission reductions will not be achieved, and indirectly port business might move outside Europe.
European ports call for a permanent EU-wide tax exemption for electricity provided to ships at berth (shore side electricity)
The ETD Commission proposal gives Member States the option to give a total or partial tax exemption to electricity directly supplied to vessels berthed in ports (Article 15, paragraph 5). Currently, Member States have to ask the Commission to apply such an exemption and if authorisation is given it counts for six years. By eliminating this burdensome procedure for the Member States, the Commission proposal is definitely a step in the right direction. However, ESPO believes that a stronger and clearer incentive in favour of shore side electricity should be given through an EU-wide permanent and total tax exemption for shore side electricity (SSE).
A tax on fossil marine fuels can be a strong tool to boost the energy transition, but circumvention of the policy must be avoided.
Article 15 of the ETD Commission proposal states that the tax on marine fuels will apply to ‘intra-EU waterborne navigation’, which means navigation between two ports located in the Union, including domestic navigation. Member States can unilaterally exempt or apply the same levels of taxation to extra-EU waterborne navigation. Since energy taxes in the EU are levied at the point of release of energy, in practice the tax for marine fuels will need to be paid when ships bunker in EU ports.
For all these reasons, ESPO asks the Commission to promote global measures aligned with the principle of polluter pays aimed at international maritime transport. Depending on the outcome of the impact assessment, policymakers should review Article 15 in such a way that only the share of marine fuels “used” for intra-EU voyages is subject to taxation, with a view of limiting the risk of evasion. ESPO would therefore suggest that taxation is applied on the fuel consumed during navigation rather than applying it to all fuel bunkered when a vessel will call on another port in the EU.
Last but not least, port managing bodies should not be made responsible for implementing the ETD taxation regime.