The requested measure concerns mainly the EU's environment and climate change policy. To the extent that it will help to reduce the burning of bunker fuels on board the vessels in ports, the measure will contribute to the objective of improving local air quality and reducing noise. In its Article 13, Directive 2008/50/EC on Ambient Air Quality requires Member States to ensure that the levels of several air pollutants are kept below the limit values, target values and other air quality standards established in the Directive are respected. Those obligations require Member States to find solutions to problems such as ship emissions at berth in ports where this is relevant and it is conceivable that in ports where these problems exist the use of shore-side electricity is encouraged as one element of the overall air quality strategy. The use of shore-side electricity is also encouraged under Directive (EU) 2016/802 regulating the sulphur content in marine fuels. That would also contribute to comply with nitrogen deposition requirements pursuant to Directive 92/43/EEC on the conservation of natural habitats and of wild fauna and flora. In this regards, the Danish authorities expect that local emissions of air pollutants (NOx, SOx, PM10, PM2.5) from on-board electricity generation on cruise ships could be reduced significantly, and up to 90 %, given that some auxiliary power and back-up power systems cannot be turned off.

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. Under these circumstances, it can be justified not to penalize the less-polluting alternative of shore-side electricity by allowing Denmark 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.

The Danish authorities have not observed considerable changes in the ship owners’ choice of ports linked to the availability of shore-side electricity facilities. Presently mainly ferries and fishing vessels make use of the shore-side electricity. In addition, the Danish authorities mention, that cargo ships use shore-side electricity to a certain extent, but especially when they are in port for a longer period of time. The Danish authorities mention, that there are not yet facilities in the Danish ports for large ships, such as cruises or container ship, that use shoreside electricity.

As the scheme will reduce ships' costs, it will affect trade between Member States. The impact is estimated as minimal, however, as passengers' wishes and the destination of cargoes will determine whether ships call in Danish ports.

Furthermore, the Danish authorities consider the scheme as competition-neutral, because access to shore-side electricity will be open to all vessels that meet the above conditions and call in Danish ports regardless of their flag without leading to a more advantageous tax treatment of national economic operators over their competitors from other EU Member States.

The restriction to apply the reduced rate of taxation to supplies of shore-side electricity of at least 380 V to vessels could be regarded as a distortion of the market. However, in practice there is no supply of shore-side electricity of less than 380 Volt to commercial vessels, electricity of this voltage is only supplied to small pleasure crafts.

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 timeframe for which it is proposed to prolong 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.