When Climate Policies Collide: Balancing Carbon Pricing and Shipping Subsidies in Europe’s Green Transition

Marsh Wren

27-10-2025

“Wild is not chaos. Wild is rhythm unmeasured.”

In Kingfisherish Wandering [1]

© Wix

Europe’s ambition to become climate-neutral by 2050 has led to an expansion of its Emissions Trading System (EU ETS) into the maritime sector. But this landmark climate policy—intended to cut greenhouse gas emissions—may have unintended consequences for short-sea shipping (SSS), a key mode of sustainable freight transport [2-4]. A new study by Martínez-Moya, Feo-Valero, and Vega [5] in Transportation Research Part D: Transport and Environment explores how the coexistence of the EU ETS and Spain’s ECO-incentivo subsidy could shape transport choices between sea and road freight across the Spain–Northern Italy corridor.

Short-sea shipping, particularly roll-on/roll-off (Ro-Ro) routes, has been central to the EU’s efforts to reduce road congestion and emissions. However, the inclusion of maritime transport in the ETS raises costs for shipping firms—costs often passed on to customers. Using stated-preference data from 40 transport operators and a multiple discrete–continuous extreme value (MDCEV) model, the authors found that a full ETS rollout could increase shipping costs by up to €190 per shipment, potentially diverting 25% of maritime freight back to road transport. Such a shift risks increasing congestion, air pollution, and road accidents, undermining decades of sustainable transport progress.

Meanwhile, Spain’s ECO-incentivo—designed to encourage the use of maritime routes through financial subsidies—helps mitigate but not eliminate this effect. Although it slightly cushions cost increases for “mixed-strategy” operators who use both sea and road transport, the study reveals a “deadweight effect” [5]: most subsidies benefit companies already committed to short-sea shipping rather than attracting new participants. In essence, the ETS and ECO-incentivo pull in opposite directions, exposing the inefficiencies of uncoordinated policy design.

The study highlights a deeper challenge—how to integrate economic and environmental objectives without conflict. Through the lens of Nature Quotient (NQ), this dilemma reflects a society still learning to act coherently with nature’s systems [6,7]. Policies rooted in isolated economic logic—like carbon trading—must evolve toward relational coherence, recognizing interdependencies between environmental, social, and industrial well-being.

A high-NQ approach would transform decarbonization into a cooperative endeavor: aligning carbon pricing with incentives that nurture sustainability rather than competition between transport modes. This integration embodies the values of balance, awareness, and responsibility, strengthening both ecological integrity and social peace in Europe’s transition to a low-carbon economy [8].

References

[1] Nguyen MH. (2025). Kingfisherish Wandering. https://www.amazon.com/dp/B0FVLLLXNW/

[2] European Commission. (2021). Fit for 55: delivering the EU's 2030 Climate Target on the way to climate neutrality. European Commission.

[3] Christodoulou A, Cullinane K. (2024). The prospects for, and implications of, emissions trading in shipping. Maritime Economics & Logistics, 26(1), 168-184. https://doi.org/10.1057/s41278-023-00261-1

[4] Flodén J, et al. (2024). Shipping in the EU emissions trading system: implications for mitigation, costs and modal split. Climate Policy, 24(7), 969-987. https://doi.org/10.1080/14693062.2024.2309167

[5] Martínez-Moya J, Feo-Valero M, Vega A. (2025). Policy-mix to decarbonise transport: Emission Trading System and subsidies on short-sea-shipping demand. Transportation Research Part D: Transport and Environment, 149, 105042. https://doi.org/10.1016/j.trd.2025.105042

[6] Vuong QH, Nguyen MH. (2025). On Nature Quotient. Pacific Conservation Biology, 31, PC25028. https://doi.org/10.1071/PC25028

[7] Tran TT. (2025). Flying beyond didacticism: The creative environmental vision of ‘Wild Wise Weird’. Young Voices of Science. https://youngvoicesofscience.org/?p=1963

[8] Vuong QH, La VP, Nguyen MH. (2025). Informational entropy-based value formation: A new paradigm for a deeper understanding of value. Evaluation Review. https://doi.org/10.1177/0193841X251396210