Report: Higher charges for the environmental impact of shipping

Ship rounding a headland.
A new VTI report suggests that the costs of shipping's environmental impact should be included in the fees to the Swedish Maritime Administration. Photo: Johannes Erlandsson/ Mostphotos

A new report from VTI proposes a radical change in the Swedish Maritime Administration’s fees for merchant shipping. The proposed change considers the environmental impact of shipping and would mean a substantial overall fee increase if it becomes a reality.

The current fee model has been criticised for the lack of a clear link between the fee and the services rendered and because the model comprises discounts that are inappropriate from an environmental point of view. It also lacks transparency and provides only weak incentives for shipping companies to reduce air pollution and other environmental impacts.

The new model presented in the report “New starting points for the Swedish Maritime Administration’s fees. The 2028 Fee Model” tries to remedy the shortcomings of the existing fee model. The proposal divides the fees into three different categories: pilot fees, fees for other services, and internalizing . The latter is to internalize society’s costs for air pollution and accidents caused by merchant shipping.

The internalizing of the external costs would mean that the total annual fees would increase sharply – from SEK 1.9 billion today to SEK 4.9 billion. The cost of air pollution from merchant shipping alone is estimated to be SEK 3.2 billion.

It can be added that the costs of carbon dioxide emissions lie outside of this and are managed within the EU’s “Fit for 55” climate programme, among other things by including shipping in the emissions trading system (EU ETS) from 2024.

“We were surprised that the numbers were so high. But unfortunately, shipping has only just begun its journey towards reduced emissions and is lagging far behind developments in road freight transport,” says senior analyst Inge Vierth, who wrote the report together with four colleagues.

Is such a large fee increase realistic?

“We understand that the proposed fee model is not something that can be implemented tomorrow. However, the model is theoretically correct if charging is to consider air pollution and safety and contribute to the achievement of the Swedish transport policy objectives. Today, the link between the environment and charges is weak.”

A basic idea of the report is that the internalizing fees should be paid at ship level according to the ‘polluter pays’ principle. This would increase incentives to reduce emissions and would mean, for example, that electric vessels would not pay fees for air pollution.

In order to increase acceptance, it is proposed that the state uses part of the internalizing fees to set up a fund similar to the EU Climate Fund. There, shipping companies will be able to apply for grants for investments and thereby recoup part of the increased fees they have paid.

“We also propose that the state take over the cost of icebreaking. In addition, the fees are streamlined so that merchant shipping – according to the ‘user pays’ principle – only pays for the services used. This should be welcomed by the business community as well as better transparency,” says Inge Vierth.

The report has been produced within the framework of the project “Fee model 2028 – how do we create competitive and sustainable shipping?” It was conducted by VTI, the Swedish Maritime Administration and the Ports of Sweden between January 2021 and January 2024. The project is funded by the Swedish Transport Administration.

Text: Mikael Sönne

Translation: CBG

The report (in Swedish): Nya utgångspunkter för Sjöfartsverkets avgifter. Avgiftsmodell 2028 (DIVA) External link.

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