IOBE: Implementation of measures to reduce emissions can increase the operating costs of domestic coastal shipping

“Climate policies proposed by the European Commission (Fit for 55” package) could increase the cost of operating domestic shipping by € 207 million in 2026 (compared to a non-implementation scenario) if not taken into account appropriate adaptation measures “.

This is pointed out in a study by the Foundation for Economic and Industrial Research – IOBE, entitled “Impact of the” Fit for 55 “package on passenger shipping and island Greece”, presented today, Thursday, April 14, 2022, at the event “Going to the Green Shore” “of the Association of Passenger Shipping Companies – SEEN.

IOBE proposes the possibility of a longer transitional period for the implementation of the measures in passenger shipping, facilitation of financing for the construction of a “green” fleet, redirection of revenues from the expansion of the Emissions Trading Scheme and the increase of fuel taxation after green actions in coastal shipping, but also accelerating the development of supply infrastructure with alternative fuels and electricity in the country’s ports.

According to the IOBE study, the implementation of the policies proposed by the European Commission can lead to an increase in ticket prices by about 30% and a reduction in ferry traffic by 28% in the same year.

The reduced activity of the sector and the lower number of visitors to the islands of the country can also lead to a reduction of GDP by more than 900 million euros in 2026, while in terms of employment the loss is estimated at 29,000 jobs in the entire Greek economy (island areas and mainland).

It is noted that the name “Fit for 55” refers to the EU’s goal of reducing clean greenhouse gas emissions by at least 55% by 2030. Under the European Green Agreement, the European climate legislation set the EU the binding goal of achieving climate neutrality by 2050.

Impact of the package on operating costs and demand for ferry services

According to IOBE, the implementation of the “Fit for 55” package is expected to lead to a significant increase in operating costs for the passenger shipping industry, in case the appropriate adjustments are not made to the fleet and the supporting infrastructure of the domestic passenger shipping. The biggest impact may come from the expansion of the carbon trading system (ETS), as in 2026 the obligation to purchase all emissions entails a total cost of 169 million euros.

Accordingly, the non-use of alternative fuel is estimated to lead to a burden of € 30 million in 2026 due to non-compliance with the Fuel EU Maritime target. The burden from the increase of fuel tax, which is estimated at 8.3 million euros in 2026, is smaller, but measurable.

Covering the extra cost, due to the “Fit for 55” package, raises ticket prices from 5% in 2023 to 30% in 2026, which is expected to lead to a decline in demand for ferry services.

The Institute for Industrial Research, taking into account the structure of coastal traffic per passenger category, estimates that the reduction in demand for coastal services due to the “Fit for 55” package will range from 4.8% in 2023 to 28.2% in 2026 compared to a non-implementation scenario of the beam.

As a result, the reduction of passenger ferry traffic is expected to reach 5.4 million passengers in 2026. Respectively, the decrease in the number of visitors to the country’s islands by domestic and foreign visitors using the ferry services is estimated to be close to 4 million. travelers in 2026.

In addition, revenue losses due to the “Fit for 55” package for businesses in the sector are expected to reach 183 million euros in 2026, while the loss of revenue for tourism businesses in island regions reaches almost one billion euros per year. 2026.