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Emissions trading hitting shipping to hike the price of ferry tickets

Tallinn Passenger Port.
Tallinn Passenger Port. Source: Siim Lõvi/ERR

Shippers say that price hikes are inevitable and hope that proceeds will go toward supporting more environmentally friendly solutions.

The emissions trading system obligates companies to pay a tax per every ton of CO2 emitted. Shipping companies will be taxed for 40 percent of total emissions from next year, which will grow to 70 percent from 2025 and 100 percent from 2026.

Baltic Sea shipper Tallink has calculated how much the new obligation might end up costing it.

CEO Paavo Nõgene said that because the fee is based on market prices, exact calculations are difficult, while the firm estimates it will have to part with €12 million next year.

"It also differs from one line to the next. We have put the additional cost estimate at €0.9 one-way on the Tallinn-Helsinki connection, while it's €2.5 between Tallinn and Stockholm," Nõgene said, adding that vehicle and freight tickets will also become more expensive. "Everyone will be able to share in this new national tax."

The CEO emphasized that Tallinn is investing in a greener fleet every year.

"MS Baltic Queen had its propeller screws replaced in September, which provided fuel savings of 13 percent," he said.

The shipping sector wants emissions trading proceeds to go toward helping the sector plot a more environmentally friendly course. A part of proceeds will go to the EU Innovation Fund that helps finance green tech research. How to use the rest will be up to Member States. The EU merely recommends channeling the money back into shipping.

While Estonia does not currently send all emissions trading proceeds back to affected sectors, Ministry of Climate Undersecretary Kaupo Läänerand said shipping could be an exception, even though no such decision has been made yet.

He said that while replacing propeller screws or finding other ways to reduce fuel consumption are appropriate measures now, companies will eventually have to replace ships' main propulsion systems. "I believe that is one reason the sector wants to see proceeds used to support reconstruction," Läänerand said.

But Paavo Nõgene is not convinced suitable technologies are ready.

"If we ask shipyards what they believe will be propelling ships in a decade's time, they say that they don't know. Changes are ongoing, while tax obligations are set to land before technological breakthroughs."

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Editor: Mait Ots, Marcus Turovski

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