Kirja edastamine

To: Mr. Mart Võrklaev, Minister of Finance Brussels, 23 April 2024 Subject: Concerns related to the Review of the Energy Taxation Directive for international shipping Dear Minister Võrklaev, We are writing to you on behalf of the European Community Shipowners’ Associations (ECSA), InterFerry, Cruise Lines International Association (CLIA). We would like to draw your attention to our strong concerns as per below regarding the current compromise proposal of the Belgian presidency in Council on the revision of the Energy Taxation Directive. We would like to kindly request you to ensure that the Energy Taxation Directive upholds the exemption on maritime fuels and electricity provided to ships at berth. European shipping is a geopolitical asset and a success story for Europe. European companies control almost 40% of the global fleet, enabling the EU to remain connected to global trade and a leader in the international supply chains. European shipping operates in a highly competitive global market whilst at the same time it is a cornerstone of Europe’s economic and energy security. We welcome the increased climate ambition of the ‘Fit for 55’ climate package, recognising that the climate crisis is one of the greatest economic and environmental challenges our societies are facing. The inclusion of shipping in the Emission Trading System puts a price on carbon emissions and the FuelEU Maritime targets pave the way for the industry towards decarbonisation. However, removing the current tax exemption for fuel for maritime navigation as put forward under the current compromise proposal on the revision of the Energy Taxation Directive, will undermine the competitiveness of the European shipping industry and other EU-based industries such as fuel suppliers and cargo owners. Non-EU neighbouring countries have had in place a similar tax exemption for marine fuels and a possible change of the European tax regime will be detrimental for the competitiveness of the European industry at large. In particular, we would like to draw your attention to our concerns regarding the current compromise proposal for the review of the Energy Taxation Directive as follows: • International Legal Context and Global Competitiveness: Although the compromise proposal differs significantly from the initial European Commission proposal in 2021, the arguments supporting the exemption – as expressed in Recital 22 of the ETD currently in force – for fuel for navigation under article 14.1.c remain valid. The unchanged international legal context and the necessity for global competitiveness of the European shipping sector  make it imperative to retain this exemption. It is, and always has been, standard practice all over the world for ships to be able to obtain their fuels duty-free. This international norm is reflected in the International Convention on the Simplification and Harmonisation of Customs Procedures (the Kyoto Convention) of 1999. • Consistency and Technology Neutrality: The shipping industry considers that a revised Directive should take a technology neutral approach given the fact that clean alternative fuels are still under development. It is essential to ensure equal treatment of energy supplies to the shipping industry, irrespective of the fuel type. • Fiscal Implications and Environmental Efficiency: Refuelling outside Europe will lead to decreased fiscal income and negligible improvements in environmental efficiency. This concern is well substantiated by the CE Delft study on the phasing-out of excise tax exemption for maritime fuels at global, European and national level, commissioned by the Dutch Government. • Lack of Impact Assessment: The original Commission proposal lacks an impact assessment on both the economic and environmental aspects specifically for maritime fuels. Given the strategic importance of the shipping industry for the EU, a comprehensive impact assessment is crucial before deciding on the removal of the tax exemption. • Tax Exemption for All Energy Carriers: The Directive should include a tax exemption for all energy carriers to bridge the cost gap between traditional maritime fuels and clean alternative fuels and electricity. The revised text should focus on closing this gap, which currently impedes investments in and the uptake of cleaner technologies and fuels. • Adverse modal shift from sea to road: Modal shift to short sea shipping (maritime transport between European ports) has been identified as one of the policies contributing to the decarbonisation of the transport sector. In addition, the most recent discussions on the competitiveness of the European economy and the European Single market recognise that short sea shipping operations also fulfil a strategic role “in safeguarding the connectivity of islands, peripheral, and remote maritime regions. European ports remain critical infrastructure, serving as gateways to the Single Market” (Enrico Letta, Much More Than A Market Report, 2024). However, the current compromise proposal of the ETD will risk leading to an adverse modal shift from sea to road, by undermining the competitiveness of short sea shipping operations. In light of the aforementioned concerns, we would like to kindly request you to consider the shortcomings of the current compromise proposal and to ensure that the Energy Taxation Directive upholds the exemption on maritime fuels and electricity provided to ships at berth. The policy goals of EU-ETS and FuelEU Maritime to promote decarbonisation of the shipping sector are more fit for purpose in this respect and should be taken into account. The European policies should promote environmental sustainability, and foster investments in cleaner technologies by providing the current tax exemption for fuel and energy carriers (such as electricity used on board) for maritime navigation. For further explanation we attach our position paper. We very much look forward to your prompt action and we are available for further discussions or clarifications you may require. Yours sincerely, Sotiris Raptis Marie-Caroline Laurent Johan Roos Secretary general Secretary General Director Regulatory Affairs ECSA CLIA Europe Interferry The European Community Shipowners’ Associations (ECSA) is the voice of the European shipping industry. Founded in 1965, ECSA promotes the interests of 21 member associations of the EU and Norway, representing 39.5% of the global fleet. ECSA strives for a regulatory environment that fosters the international competitiveness of European shipping. Cruise Lines International Association (CLIA) is the world's largest cruise industry trade association, providing a unified voice for the industry as the leading authority of the global cruise community, with a membership comprising 55 cruise lines, including 294 ocean going cruise ships, representing 95% of the cruise sector. On behalf of its members, affiliates and partners, the organization supports policies and practices that foster a secure, healthy, and sustainable cruise ship environment, promoting positive travel experiences for millions of travellers who cruise annually. This year, CLIA forecasts that annual the number of passengers will reach 35 million passengers. The CLIA community includes the world's most prestigious ocean, river, and specialty cruise lines; a highly trained and certified travel agent community; and a widespread network of stakeholders, including ports & destinations, ship development, suppliers, and business services. For further information, please visit cruising.org or europe.cruising.org InterFerry is a highly respected shipping association representing the ferry industry world-wide. There are currently more than 260 member companies, representing more than 1,000 individuals from 40 countries. Our members include ferry operations of all types and sizes including RoPax, RoRo, Cruise Ferries, Fast Ferries, and Passenger-only Ferries. Brussels, 18 November 2021 The European Community Shipowners’ Associations welcomes the opportunity to comment on the Revision of the Energy Taxation Directive and would like to reiterate its position regarding the energy taxation directive. ECSA represents 19 national shipowners’ associations based in the EU and Norway. European shipowners control 39.5% of the global commercial fleet, contribute 149 billion euros per year to the EU GDP and provide 2 million Europeans with careers both on board and ashore. ECSA strives for a regulatory environment that fosters the international competitiveness of European shipping, to the benefit of the EU. ECSA welcomes the increased climate ambition of the ‘Fit for 55’ climate package published on 14 July, recognising that the climate crisis is one of the greatest humanitarian, economic and environmental challenges our societies are facing. However, European shipowners notice a lack of consistency among some of the proposals of the package which may undermine its environmental objectives and therefore urge for more coherence. On the Energy Tax Directive, removing the current tax exemption for fuel is not a consistent way forward. In response to the Commission consultation on the EU Green deal – Revision of the Energy Taxation Directive, ECSA wishes to reiterate the importance for the Directive to follow a technology neutral approach which should provide equal treatment of energy supplies to the shipping industry. ECSA is of the veiw that the arguments for the exemption for fuel for navigation under article 14.1.c remain valid, given the unchanged international legal context and need for global competitiveness of EU shipping. We would like to highlight that bunkering outside Europe remains a high risk leading to decreased fiscal income and no significant improvement in environmental efficiency. The Directive should also provide for a taxation exemption for all energy carriers in order to close the cost gap between traditional marine fuels and alternative fuels and electricity. The revised text should aim at closing the gap which hampers investments in and the uptake of cleaner technologies and fuels. For further details please see the attached position paper. vzw ECSA asbl, Boulevard du Régent, Regentlaan 43-44, 1000 Brussels, Belgium T +32 2 510 61 20 • [email protected] • www.ecsa.eu   Legal clarity all trips of merchant vessels being part of normal commercial operations should fall REVISION OF THE ENERGY under the exemption defined in article 14.1.c TAXATION DIRECTIVE Introductory Remarks Position paper by ECSA, CLIA Europe, ECSA together with CLIA, Interferry and EuDA Interferry and EuDA in response to the (the industry) wish to submit this joint paper public feedback exercise on the EU Green reiterating the shipping industry’s position with Deal – Revision of the Energy Taxation regards to the directive. We believe that the Directive launched by the European Energy Taxation Directive (ETD) can be Commission in March 2020 . This position instrumental to support the industry's use of paper is to provide detailed explanations new low- or zero carbon fuels, thereby to the responses given to the European supporting the decarbonisation of shipping. Commission’s questionnaire, therefore the answers given there should be read We appreciate the commitment of the EU to together with this explanatory note. lead the way in the fight against global The European shipping industry is warming. Shipping is committed to becoming dedicated to be at the heart of the green climate neutral as soon as possible in this future. century. At the same time, the industry believes that lifting the tax exemption will not Facilitating the transition towards a achieve the intended climate objectives being greener and more sustainable future claimed, as it will not stop most of the industry requires that the right tools are chosen from receiving tax free bunker fuel outside EU and calibrated in a way that it takes into waters. It will also negatively affect EU jobs and account environmental, social and business – intra EU shipping, bunkering economic sustainability. Hence, it companies and EU ports. safeguards the EU shipping industry’s competitive edge and its geopolitical Shipping is a global industry in need of global importance vis-a-vis global competitors. regulation in order to ensure a global level The Energy Taxation Directive has the potential playing field and avoidance of distortion of to encourage towards transition if it is based on competition. The industry believes net zero a technology neutral approach. emissions are achievable, provided that global solutions are implemented to operationalize the Key messages energy transition, and active steps are taken by the legislators to provide an enabling  The arguments for the exemption for framework to help facilitate the development of fuel for navigation under article 14.1.c new propulsion technologies and fuels, remain valid, given the unchanged including the required massive investment in international legal context and need bunkering infrastructure on a worldwide basis. for global competitiveness of EU shipping In view of the above, the revision of the Energy Taxation Directive should be seen as a means  Removing the disincentive for the of enabling this transition. greener option of using shore-side electricity is needed: a mandatory tax Technology neutral approach to encourage exemption would facilitate ships to towards transition significantly reduce CO2 and other air emissions as well as noise while in port Embracing the climate change objectives and the need to move to greener shipping through  Electricity supplied to the ship for the use of cleaner technologies, the industry charging batteries or for direct considers that the Directive should be updated consumption so engines can be with developments in new technologies that switched off should be subject to the have been or are being developed such as same tax treatment as fossil fuels 1 renewables and low carbon fuels etc. The context of the shipping industry has not current Directive is not providing equal changed since the Directive was adopted. The treatment of energy supplies to the shipping arguments remain equally valid today. industry thus hampering investments in and Imposing tax on bunkers sold/bought in EU the uptake of cleaner technologies, such as ports would significantly undermine the shore-side electricity, fuel cells, ammonia, competitiveness of EU businesses in world methanol, etc. Therefore, the industry markets. The capacity of ships’ bunker tanks advocates for a technology neutral approach so varies depending on the trades for which the that all energy supplied to sea going vessels ship was designed – but, typically, a ship will including a.o. cargo vessels, ferries, dredgers be capable of carrying sufficient bunkers for and service vessels to enable it to operate several weeks. If the EU were to impose tax on should be subject to the same tax treatment, bunkers supplied in European ports, the certain whether the energy is supplied as fuel or as practical consequence would be that deep-sea electricity. Therefore, a mandatory EU wide shipping would bunker even more outside taxation exemption for all energy carriers (i.e. Europe3 and only short sea shipping will be fuels and electricity, including shore-side) faced with higher bunker fuel prices. If the cost would provide a level playing field which would increase is not passed on to shippers, profit help close the cost gap between traditional margins of short sea shipping operators will be marine fuels and alternative fuels1 and reduced with less funds available for R&D for electricity. green technologies. If the increased fuel costs While, as explained above, the industry are passed on to shippers, shippers will look at completely endorses the approach that tax alternatives, mainly the much less efficient incentives should be used to enable the road transport leading to higher CO2 emissions. transition to a climate neutral EU and that the Many European citizens living on islands will revision of the ETD should be considered in this face higher transport costs, with a negative light, it is clear that providing incentives for effect on the social cohesion of Europe. All this alternative fuels and use of electricity on board will negatively affect EU business and society – are the proper way forward. Below are the intra EU shipping, bunkering companies and EU arguments in more detail why taxing bunker ports. This might also affect EU ports’ fuels in EU ports is not an effective way investments in LNG or shore power forward. infrastructure. Besides, the EU would raise only marginal new tax revenue. And most Exemption for fuel for navigation under importantly, it will not incentivise the much Article 14.1.c2 needed shift to alternative fuels necessary to decarbonise the shipping industry. The global nature of the industry necessitates global rather than regional It is, and always has been, standard practice all measures over the world for ships to be able to obtain their bunkers duty-free. This international The availability of tax-free bunkers and norm is reflected in the International lubricant oils in Europe is of great importance. Convention on the Simplification and Not only is this a reflection of an international Harmonisation of Customs Procedures (the norm but also it is essential for EU companies Kyoto Convention) 1999. The Convention to compete on the same footing as shipowners stipulates, in chapter 4 of Annex J, that ships and suppliers from outside the EU. The on international voyages shall be entitled to international legal and global competitiveness take on board fuel and lubricants, exempt from 1 Currently according to the Commission’s interpretation only the private pleasure craft, and electricity produced on board a craft. For the electricity produced on board (through for e.g. diesel generators) is purposes of this Directive ‘private pleasure craft’ shall mean any craft used exempted from energy taxation under Article 14(1)(c). It considers that the by its owner or the natural or legal person who enjoys its use either through current Directive does not cover electricity supplied to the ship. So for hire or through any other means, for other than commercial purposes and example electricity supplied to a battery-driven or a hybrid electric ship is in particular other than for the carriage of passengers or goods or for the normally subject to taxation. While we are aware that there are different supply of services for consideration or for the purposes of public authorities. possibilities to get a tax reduction or even a tax exemption for electricity, 3 Already now, the large majority of bunker ports are outside Europe. none of these options are specific to shipping or navigation. Russia, the UK and Gibraltar (after Brexit) and ports in the Mediterranean 2 Article 14.1.c: ‘energy products supplied for use as fuel for the purposes will take over business from EU bunker ports. of navigation within Community waters (including fishing), other than 2 duties and taxes. Article 14 of the Energy Electricity and Alternative Fuel as Ship Taxation Directive, provides the basis for the Fuel EU to conform to the global norm as stipulated in this international Convention. If it was Currently according to the Commission’s decided to impose tax on ships’ fuel, the EU interpretation only the electricity produced on would be acting in defiance of global norms and board (through for e.g. diesel generators) is Convention stipulations. exempted from energy taxation under Article 14(1)(c). It considers that the current Directive These arguments were recognized in the 2011 does not cover electricity supplied to the ship. Commission proposal that left the exemptions So for example electricity supplied to a battery- for international aviation and maritime driven or a hybrid electric ship is normally transport unchanged because of existing subject to taxation. international obligations and the risk of competitive distortions in the case of unilateral While we are aware that there are different actions from Member States. The arguments possibilities4 to obtain a tax reduction or even a remain equally valid today. tax exemption for electricity, none of these options are specific to shipping or navigation. Shore-side Electricity All energy supplied to sea-going vessels to The current procedures for favourable tax enable it to operate should be subject to the treatment for shore-side electricity under same tax treatment, whether the energy is Directive 2003/96/EC are cumbersome. A supplied as fuel or as electricity. lengthy procedure for application for Clarity and harmonisation of authorisation submitted to the Commission and interpretation of the current exemption is approved by the Council is required. The authorisation can only be for time-limited needed period of time, so renewal of authorisation Allow us to mention that we have also been would be required. advocating that a revised ETD should provide Running on electricity supplied from shore clarity of interpretation of the exemption in rather than on ships’ engines can significantly view of varying interpretation due to case law. reduce the volume of CO2, other air emissions We advocate that all merchant vessels that are and noise emitted by a ship while in port. It is operating for consideration – whether perverse that the tax treatment of the greener transporting passengers or cargo or travelling option should be less favourable. to a yard for maintenance or to another country to pick up a charter there - so all trips of A permanent arrangement would ensure much merchant vessels that are part of normal needed legal clarity and certainty for port and commercial operations should fall under the ship operators about the tax measures applied exemption in article 14.1.c and thus be tax for the purpose of promoting the use of shore- free. Dividing the fuel into part being tax free side electricity. and the part used for voyages for maintenance Therefore, in order to remove a disincentive for or empty voyages, being normal commercial the greener option of using shore-side operations, would also be not practically electricity, it would be important to create a implementable and lead to no sufficient mandatory tax exemption in a revised monetary gains to justify it. Moreover, to avoid Directive. market distortions the dredging sector needs harmonisation of treatment in the EU. We have also called for the voluntary exemption to become mandatory and thus moved from Article 15 to 14. 4 One option e.g. would be to extend a tax reduction to the minimum level If the electricity is from a renewable source of energy it can be exempted of taxation to electric or hybrid ships used for local passenger transport altogether (Article 15(1)(b)), etc. (Article 5 of the Directive). Another option would be for the ship to claim There is the possibility for Member States to request an authorisation to that it is energy-intensive business as defined in Article 17(1)(a) of the apply a reduced rate or even an energy tax exemption for electricity Directive, but it would have to meet the requirements stipulated thereof. supplied to a ship for the purpose of navigation on the basis of Article 19 of the Directive. The procedure is described in this provision. 3 To conclude ECSA represents the national shipowners’ associations of the EU, the UK and Norway. The shipping industry considers that a revised Founded in 1965, it promotes the interests of Directive should take a technology neutral European shipping so that the industry can best approach. Currently, it is not providing for the serve European and international trade in a equal treatment of energy supplies to the competitive and free business environment, to shipping industry. the benefit of both shippers and consumers. In view of the global nature of the industry and The European shipowners control 39.5% of the the importance of the move to greener global merchant fleet. shipping, a revised Directive should provide for CLIA EUROPE - Cruise Lines International a taxation exemption for all energy carriers Association (CLIA) is the world’s largest cruise (i.e. fuels and electricity) in order to close the industry trade association, providing a unified cost gap between traditional marine fuels and voice and leading authority of the global cruise alternative fuels and electricity. community. CLIA supports policies and The gap existing under the current Directive practices that foster a safe, secure, healthy and hampers investments in and the uptake of sustainable cruise ship environment for the cleaner technologies and fuels, such as shore- more than 25 million passengers who cruise side electricity, fuel cells, ammonia, methanol, annually and is dedicated to promote the cruise etc. travel experience. INTERFERRY represents the ferry industry world-wide, bringing together all the facets of 6 October 2020 a very diverse maritime segment, that transports billions of passengers and large amounts of goods over the world and which For more information, please contact: also shows significant versatility in terms of different business models and prevailing Katalin Dobranszky-Bartus regulatory frameworks. INTERFERRY is very Director – Financial and Fiscal Affairs, ECSA actively engaged with the IMO and vis-à-vis Regentlaan 43-44, 1000, Brussels, Belgium supranational bodies. Email: [email protected] EuDA - The European Dredging Association was founded in 1993 as a non-profit industry organisation for European dredging companies and related organisations to interface with the various European Union’s (“EU”) Institutions and also some International Organizations (such as IMO, HELCOM or ILO). The European dredging companies, members of EuDA, are world market leaders with about 80% share of the worldwide open dredging market. Although 70% of operations take place outside Europe, 90% of the returns flow back to Europe. 4 Saatja: "Estonian Shipowners" <[email protected]> Saaja: "Kristen Michal", "Keit Kasemets", "Kaupo Läänerand kliima", "Jaak Viilipus kliima", "MKM info", "Ahti Kuningas" Teema: FW: ECSA, InterFerry, CLIA letter on the revision of the Energy Taxation Directive Kuupäev: 2024-04-24 07:48 Tähelepanu! Tegemist on välisvõrgust saabunud kirjaga. Tundmatu saatja korral palume linke ja faile mitte avada. Tere Saadame teile edasi Euroopa Liidu Laevaomanike Assotsiatsiooni (ECSA ) pöördumise liikmesriikide finantsministrite poole seoses energia maksustamise direktiivi võimalike muudatustega. Lugupidamisega Jaan Kalmus nõunik Eesti Laevaomanike Liit. From: Marius Dejarnac <[email protected] <mailto:[email protected]> > Sent: Tuesday, April 23, 2024 3:39 PM To: [email protected] <mailto:[email protected]> Cc: [email protected] <mailto:[email protected]> ; Sotiris Raptis <[email protected] <mailto:[email protected]> >; Katalin Dobranszky <[email protected] <mailto:[email protected]> >; Enn Kreem <[email protected] <mailto:[email protected]> >; Johan ROOS <[email protected] <mailto:[email protected]> >; Nikos Mertzamidis <[email protected] <mailto:[email protected]> > Subject: ECSA, InterFerry, CLIA letter on the revision of the Energy Taxation Directive Dear Minister Võrklaev; On behalf of European Community Shipowners’ Associations (ECSA), InterFerry and Cruise Lines International Association (CLIA), please find attached a letter regarding the current compromise proposal of the Belgian presidency in Council on the revision of the Energy Taxation Directive. We stand at your disposal if you have any questions or if you need any further input. Best regards, Marius Dejarnac Policy Advisor Security, Taxation and Finance Bd. du Régent 43-44 1000 Brussels, Belgium +32 2 510 61 22 <mailto:[email protected]> [email protected] <http://www.ecsa.eu/> www.ecsa.eu <https://twitter.com/EU_shipping> <https://www.linkedin.com/company/eu-shipping/> <https://www.youtube.com/channel/UCm-2lDRmVJ4ILVeHrVyaGag> Transparency Register: 59004966537-01