The measure would encourage the use of shore-side electricity to contribute to sustainable ports and sustainable shipping. It is in line with the EU policy ambitions. Deploying shore-side electricity in European ports is one of the proposed measures to achieve the ambitions targets set in the European Green Deal.

The measure is also likely to lead to a reduction of CO2 emissions to the extent that the electricity mix from the onshore grid, due to higher system efficiency and the difference in input fuels used, is less carbon intensive than the electricity produced on board by burning bunker fuels. In this regard, the Dutch authorities underlined that, while the actual saving of CO2 emissions depends on the quality of the electricity used, in the Dutch electricity mix, the estimated savings would be of between 28% and 67%, depending on the generator load, with this proportion set to rise in future.

Energy policy

The measure is in line with Directive 2014/94/EU on the deployment of alternative fuels infrastructure, which addresses the issue of installing shore-side electricity supply facilities in ports where there is demand for such facilities and the costs are not disproportionate to the benefits, including environmental benefits. It has also been recognised as an objective of common interest for the granting of State aid under Article 107(1) of TFEU.

It has to be recalled at this point that one important reason for the unfavourable competitive position of shore-side electricity lies in the fact that the alternative, i.e. electricity produced on board the vessels while in maritime ports, currently enjoys a full net tax exemption: not only is the bunker fuel burnt for generating the electricity exempt from taxation, which corresponds to the normal situation under Article 14(1)(a) of Directive 2003/96/EC, but also the electricity produced on board the vessels is itself exempt (cf. Article 14(1)(c) of Directive 2003/96/EC). Although the latter exemption could as such be considered difficult to reconcile with the environmental objectives of the Union, it mirrors considerations of practicability. In fact, taxation of the electricity produced on board would require a declaration by the ship owner -often established in a third country- or operator of the amount of electricity consumed. The declaration would furthermore have to determine the share of the electricity consumed in the territorial waters of the Member State where the tax is due. It would create a huge administrative burden for ship-owners to make such declarations for every Member States whose territorial waters are concerned. Analogous considerations apply to inland navigation and the optional tax treatment provided by Article 15(1)(f) of the Directive (actually implemented by the Netherlands). Under these circumstances, it can be justified not to penalize the less-polluting alternative of shore-side electricity by allowing the Netherlands to apply a reduced rate of taxation.

Transport policy

The measure is in line with Commission recommendation 2006/339/EC on the promotion of shore-side electricity for use by ships at berth in Union ports and with the Commission Communication Strategic goals and recommendations for the EU's maritime transport policy.

Internal market and fair competition

From the point of view of the internal market and fair competition, the measure only reduces the existing tax distortion between two competing sources of electricity for boats at berth, i.e. on board generation and shore-side electricity, caused by the tax exemption for bunker fuels.

As regards competition between vessel operators, it first has to be mentioned that there are currently few vessels that use shore-side electricity on a commercial basis. Significant distortions in competition could therefore only arise between vessels benefitting from the measure requested by changing to shore-side electricity and others that would continue to use on-board generation. Although precise cost projections depend crucially on the development of the oil price and are hence very difficult, the latest available assessments indicate that, overall, even a full tax exemption would in most cases not reduce operational costs of shore-side electricity below the costs of on-board generation and would therefore not, in any event, represent a significant competitive benefit for vessel operators using shore-side electricity as opposed to those using on-board generation. In the present case, a significant distortion of the above mentioned kind can all the less be expected since the Netherlands will respect the minimum level of taxation prescribed by Directive 2003/96/EC for electricity for business use.

Moreover, as already mentioned, the ship operators, receiving shore-side electricity taxed at the minimum level provided for in Directive 2003/96/EC, do not in principle gain an economic advantage over operators generating their own electricity on board because this electricity is exempted from taxation. A reduced rate for shore-side electricity will reduce the difference in the tax treatment of shore-side electricity and the (mineral) energy products used to generate electricity on board.

The electricity suppliers are liable for the energy tax and the sustainable energy surcharge (Opslag Duurzame Energie, ODE). In their energy tax declaration they directly apply the reduced rate. The direct beneficiaries are the operators of the installations supplying electricity to vessels at berth. It is expected that the operators will pass on all or part of the financial advantage to the users of the shore-side electricity, which are the owners of inland vessels and sea going ships. Existing users and their representatives will insist that port authorities have an interest in making shore-side electricity financially attractive for the users.

Furthermore, access to shore-side electricity will be available for the ships concerned regardless of their flag without leading to a more advantageous tax treatment of national economic operators over their competitors from other EU Member States.

Concerning competition between ports, it can be expected that any potential impact on trade between Member States, which could result if vessels alter their routes because of the possibility to consume shore-side electricity at a reduced tax rate, will be negligible. In a situation where, as stated above, the use of shore-side electricity is, at least in the short term, unlikely to become more economic than on-board generation in spite of the tax reduction, this tax reduction for shore-side electricity is also unlikely to significantly distort competition between ports by inducing vessels to change their itinerary according to the availability of this option. The Dutch authorities argue that the choice of ports depends on the cargo's destination rather than on the reduced costs of berthing caused by the tax reduction for shore-side electricity.

The timeframe for which it is proposed the authorization to apply a reduced tax rate, unless there will be significant changes in the current framework and situation, makes it unlikely that the analysis conducted in the preceding paragraphs will change before the date of expiry of the measure.