The green rule can cost market share

This article is part of In conversation about sustainable finance & emission reduction systems, a new series by Diego Balverde. You’re reading volume 28 of the Ports Efficiency Systems: the money inside the port series. Here is volume 27

Prologue

Europe faces a problem that cannot be solved by choosing between competitiveness and decarbonisation because it needs both. If it reduces territorial emissions by destroying industrial activity, moving transshipment away, or sending investment toward ports located immediately outside its jurisdiction, it may improve one emissions account without necessarily reducing the impact of the overall system. If it permanently protects infrastructure from environmental costs, it will delay energy investment that eventually becomes unavoidable and expose its companies to technologies, fuels, and supply chains developed elsewhere first. The real challenge is to impose environmental discipline without giving away the market that finances it.

This tension is no longer theoretical. In July 2026, the European Sea Ports Organisation acknowledged that the Commission’s maritime EU ETS review proposal itself addressed the carbon-leakage and business-leakage concerns that European ports had raised for years. ESPO welcomed recognition of distortions in competition between EU ports and neighbouring non-EU hubs, while calling for a full assessment to ensure that new measures do not become so complex that they create additional evasion possibilities. In May, the organisation had warned that the combination of 100% ETS coverage on voyages between EU ports and 50% treatment of relevant incoming and outgoing voyages could affect calls and transshipment decisions.

The risk exists because Europe does not compete against an abstraction. It competes against real, capitalised, deep, connected, increasingly industrial ports. Tanger Med handled 11,106,164 TEUs in 2025, an 8.4% year-on-year increase, while continuing to expand capacity. The Moroccan complex combines transshipment with automotive production, agribusiness, manufacturing, logistics, and international connectivity to more than 180 ports. During the Middle East disruptions of 2026, its position at Gibraltar again demonstrated the economic value of being simultaneously close to Europe and outside selected European regulatory structures.

Europe’s answer should not be to prevent that port from growing. Nor should it attempt to defend every tonne through protective regulation. It should ensure that Rotterdam, Antwerp-Bruges, Hamburg, Valencia, Algeciras, Barcelona, Marseille, Gioia Tauro, Piraeus, and the rest of the European network can absorb climate regulation while increasing productivity, power availability, industry, technology, and value per tonne.

A green rule that ignores competitiveness can become an unintended subsidy to the competitor. An industrial policy that ignores carbon can become an unintended subsidy to obsolescence. The efficient port has to prevent both mistakes.

Regulation competes too

Rules do not exist outside markets. They alter relative costs and therefore alter decisions. Maritime EU ETS, FuelEU Maritime, AFIR, CBAM, monitoring obligations, and future energy requirements constitute a framework designed to reduce emissions and accelerate technological change. A shipping company, however, does not compare the political objective of one regulation with the political objective of another jurisdiction. It compares the cost of each route.

That calculation includes fuel, allowances, energy intensity, insurance, time, geopolitical risk, vessel utilisation, congestion, terminal charges, rail availability, inland transport, and predictability. When a European port adds regulatory cost while maintaining waiting time, expensive electricity, congestion, and poor connections, it loses competitiveness through accumulation. Carbon may not be the principal cause. It becomes the final layer on a structure that was already too expensive.

This requires separating two concepts that are often mixed together. Carbon leakage occurs when activity or emissions move without the global system obtaining the full intended reduction. Business leakage occurs when traffic, investment, or commercial services change location. They can occur together, but not necessarily. A shipping company can move its transshipment hub without relocating industry. A factory can move while final cargo continues to enter Europe. A route can lengthen in response to a regulatory differential and consume more fuel.

This is why the Union introduced specific protection against evasive calls at neighbouring container transshipment ports. Tanger Med and East Port Said are identified because they meet criteria concerning proximity, high transshipment share, and lack of equivalent measures. The mechanism prevents an artificial intermediate call from changing the point from which the ETS-covered voyage is calculated.

The measure is rational, but it cannot resolve every competitive difference. A port does not need to exist solely to evade the ETS in order to gain market share. It can win because it is faster, cheaper, deeper, more flexible, industrially integrated, or better supplied with energy. If European regulation then increases the differential further, the effect accumulates.

Tanger Med demonstrates the problem. Morocco did not build an isolated terminal waiting to divert European vessels. It built a port-industrial platform. In 2025 the complex exceeded 11.1 million TEUs and expansion is being reinforced by additional national projects. Nador West Med is scheduled to begin operations in the second half of 2026 with industrial and energy infrastructure, including LNG-related capacity, while Dakhla is being developed as another major Atlantic gateway with associated industrial activity. Europe is therefore competing against a strategy. It needs another strategy in response.

The Commission appears to recognise that dimension in the European Ports Strategy adopted on 4 March 2026. EU ports handle approximately 74% of the Union’s external trade, 3.4 billion tonnes of goods, and support more than 423,000 direct jobs. The strategy combines competitiveness, innovation, digitalisation, energy transition, security, and finance because these dimensions can no longer be treated separately.

Real green competitiveness begins when every additional regulatory euro forces the system to find an additional euro of productivity, energy savings, capacity, or revenue. If regulation only adds cost, the asset loses.

Europe cannot export its industry

The port problem becomes larger when cargo is connected to a factory. A terminal can lose a call and potentially recover it years later. When a region loses an entire industrial ecosystem, rebuilding it is far more difficult.

Steel, aluminium, fertilisers, chemicals, refining, automotive, batteries, machinery, food processing, and energy production depend on complicated combinations of logistics, electricity, land, water, talent, regulation, and capital. Ports are central because they can either reduce or amplify those costs.

A European manufacturer does not remain because a government asks for industrial patriotism. It remains when energy, productivity, market access, infrastructure, finance, and security make production economically rational. If electricity is structurally more expensive, logistics times are longer, industrial land is scarce, and each investment requires years of permitting, adding climate costs without solving those weaknesses can accelerate a relocation decision that was already under consideration. Carbon therefore has to become industrial-efficiency policy.

A port capable of supplying competitive electricity, BESS, rail connectivity, storage, water, heat, multiple fuels, carbon capture, traceability, and maritime access can offset part of the regulatory burden. A factory does not evaluate the terminal tariff alone. It evaluates the ecosystem.

This explains why energy transition can protect industrial activity rather than export it. A steel producer near a port can import ore or intermediate products, access lower-intensity electricity, integrate hydrogen where it becomes economically viable, capture residual CO₂, and export a product with lower carbon exposure. A fertiliser plant can combine transition gas, hydrogen, storage, and new molecules. A refinery can evolve into biofuels, synthetic fuels, hydrogen, electricity, and carbon capture. A battery manufacturer can use imported minerals and chemicals, BESS, grid capacity, and export logistics. The port becomes an industrial-defence platform.

This requires abandoning an excessively narrow view of transition. Not every existing asset should be closed and replaced. Many should be converted. Tanks, pipelines, berths, substations, workshops, liquid terminals, refineries, and networks can carry enormous value when adapted to new energy combinations. The speed of that conversion will determine how much European capital becomes stranded and how much remains productive.

A green rule can destroy market share when it forces assets out before a competitive substitute exists. It can protect market share when it forces retirement of equipment that consumes too much, produces too little, and maintains a cost structure that can no longer be defended. The difference lies in design.

Energy is the competitive defence

The major bottleneck of the next port phase will not be carbon in the abstract. It will be energy.

FuelEU Maritime progressively reduces the greenhouse-gas intensity of energy used by covered shipping. From 2030, covered containerships and passenger ships at berth in relevant AFIR ports will need to connect to OPS or use qualifying zero-emission technologies. From 2035, the obligation extends to such vessels in any EU port that has developed OPS capacity. Regulation is therefore creating electricity demand before many ports possess all the infrastructure required to serve it.

The problem is not solved by buying sockets. It requires grid capacity. Substations. Transformers. Cables. Firm supply. BESS. EMS software. Power contracts. Generation. Safety systems. Competitive tariffs. And coordination with vessels whose electrical loads can be enormous.

OPS supplied with expensive power can satisfy regulation while still damaging competitiveness. A system that requires major grid reinforcement but is used only a few hours each week can generate weak returns. A system combining grid access, storage, industrial demand, local generation, and flexibility services can become an energy asset with multiple revenue streams. That is the approach Europe needs.

The same BESS absorbing the peak created by a vessel can serve cranes, reefers, workshops, buildings, and industrial customers. It can charge during lower-price periods, discharge when electricity is expensive, provide backup, reduce contracted peaks, and participate in electricity services where markets allow. Investment stops being justified only by maritime decarbonisation. It becomes justified by the entire port energy system.

This will become even more important across maritime fuels. Methanol, ammonia, LNG and bio-LNG, biofuels, hydrogen, synthetic fuels, and electricity will compete across different shipping segments. Each vector has different risks, storage requirements, costs, and infrastructure.

European ports should not attempt to build everything simultaneously. They should build optionality. A modular terminal is worth more than an irreversible bet. A convertible pipeline may be worth more than infrastructure optimised for one molecule. An anchor-user agreement is worth more than an optimistic forecast. Reserved land beside the quay may be worth more than a prematurely built tank. Capital should follow verified demand.

BalGreen can turn that logic into planning by first measuring actual demand and energy losses, then selecting the package with the highest return, and expanding only when contracts prove utilisation. DOIX.IO should verify use, consumption, intensity, availability, and savings.

The objective is not to become the port announcing the largest amount of technology. It is to become the port where every energy asset works.

Solutions and market opportunities

The first solution is a Competitiveness Leakage Index measuring calls, transshipment, freight, energy, ETS exposure, productivity, employment, industrial investment, and rail utilisation together. When a port loses cargo, the system must distinguish whether the cause is carbon, congestion, price, geopolitics, draught, connectivity, or a combination. Without that separation, public policy risks subsidising the wrong problem.

The second opportunity is a verifiable European Port Cost Stack. Each route should show total cost from ship to factory: freight, regulation, terminal, electricity, waiting, rail, road, storage, finance, and inventory. DOIX.IO can turn this architecture into dynamic comparisons against Tanger Med, East Port Said, and other competitors. Europe’s response should be based on knowing exactly where each euro is lost.

The third solution is efficiency before subsidy. Before asking public authorities to offset ETS-related cost, ports should demonstrate which operating losses remain recoverable. Vessel waiting, empty repositioning, redundant moves, cranes, lighting, tractors, yard congestion, and rail failures often contain savings obtainable with less CAPEX than major expansion.

The fourth opportunity lies in BESS as competitive infrastructure. Port batteries can support OPS, reduce peaks, arbitrage electricity, protect critical loads, and improve resilience. Correct sizing should compare storage against grid reinforcement, peak charges, interruptions, and regulatory cost rather than battery price alone.

The fifth solution is to develop multi-energy ports with contractual discipline. Before constructing large methanol, ammonia, or hydrogen capacity, ports should secure demand through agreements with carriers, producers, and industries. Modular phases allow expansion with the market and reduce stranded-asset risk.

The sixth opportunity is to transform refineries and fossil terminals into flexibility platforms. Conventional fuels will continue serving the transition while biofuels, hydrogen derivatives, synthetic fuels, and CO₂ services expand. Infrastructure capable of progressive migration can preserve capital, employment, and industrial knowledge.

The seventh solution lies in industrial power contracts. Ports, utilities, generators, and manufacturers can coordinate PPAs, grid capacity, storage, and demand profiles. A factory obtaining stable, predictable energy beside a port has less reason to locate production outside Europe.

The eighth opportunity is a new generation of carbon and energy competitive zones, not based on environmental exemptions but on infrastructure making compliance cheaper. Industrial districts where power, traceability, BESS, rail, storage, and CO₂ services already exist can compensate for higher wages or regulatory obligations elsewhere.

The ninth solution is to measure and finance avoided regulatory cost. When intervention reduces fuel, EUAs, FuelEU intensity, or exposed operating time, a monetary saving exists. DOIX.IO establishes the baseline and verifies performance. BalGreen can structure finance around part of the recovered loss.

The tenth opportunity is OPS as a Service. Instead of requiring every terminal to finance all infrastructure independently, platforms can fund, operate, and charge for electrical capacity as it is used. The model can combine contracts with carriers, utilities, port authorities, and storage providers.

The eleventh solution is rail guarantees for industrial cargo. Port competitiveness does not end at the quay. Manufacturers can contract guaranteed slots toward factories or dry ports, reducing road exposure and variability. Efficient rail protects margins, lowers inventory needs, and reduces emissions simultaneously.

The twelfth opportunity lies in energy repowering of existing terminals. Electrical upgrades, variable-speed drives, energy recovery, motors, hybrid or electric cranes, automation, and predictive maintenance can recover productivity before complete asset replacement.

The thirteenth solution is a Port Industrial Retention Score. TEUs are insufficient. Ports and governments should know how many industrial jobs depend on each gateway, which factories can relocate, what energy they consume, what logistics margins exist, and what investment they need in order to remain competitive.

The fourteenth opportunity lies in carbon capture, storage, and transport. Some European industries will continue producing residual emissions after major efficiency gains. Ports can develop shared infrastructure aggregating CO₂ and reducing the unit cost of handling it. The service protects existing industry while creating a new maritime chain.

The fifteenth solution is a no stranded CAPEX policy. Every new energy asset should demonstrate future compatibility, potential users, conversion options, and residual value. The objective is not to predict the winning fuel perfectly. It is to prevent a wrong hypothesis from destroying capital.

The sixteenth opportunity lies in green premium logistics for customers that receive genuine financial value from a lower-intensity chain. Selected exporters can access contracts, financing, or buyers requiring measurable performance. Ports should charge for the evidence and service they create rather than giving an expensive improvement away.

The seventeenth solution is joint port energy procurement. Terminals and industrial users can aggregate demand to negotiate electricity, flexibility, or fuels at greater scale. Energy cooperation can reduce costs that individual operators cannot optimise independently.

The eighteenth opportunity is competitive intelligence on external ports. Europe needs to observe not only tariffs, but new plants, energy capacity, industrial zones, depth, connections, incentives, and contracts being built across Morocco, Egypt, Turkey, the Gulf, and West Africa. Market share is lost years before it appears in statistics, when the competitor makes the investment decision.

The nineteenth solution is to use concessions to reward profit per tonne, not volume per hectare alone. An operator generating more margin, consuming less energy, achieving better utilisation, and supporting more industrial activity with the same cargo volume can create greater economic value than one chasing low-margin tonnes.

The twentieth opportunity integrates the complete architecture: DOIX.IO measures the competitive gap; BalGreen designs the operating and energy solution; implementation reduces loss; DOIX.IO verifies recovered margin; financial structuring converts part of that margin into investment capacity. Climate policy then stops depending exclusively on public subsidy and begins financing itself through recovered productivity.

Analysis

The first problem is political because no authority wants to acknowledge that environmental regulation can generate commercial leakage. Yet denying the risk does not protect the environment. It makes correction harder. ESPO has repeatedly asked that maritime EU ETS be assessed through its actual impact on emissions and activity, and the 2026 European review shows that the issue is now institutionally recognised. The useful debate is not whether carbon should have a price, but how to prevent part of the signal from becoming relocation alone.

The second tension is that neighbouring ports are not standing still. Tanger Med does not compete only through different regulation. It competes through capacity, productivity, geography, and industrial integration. Nador West Med will add another Mediterranean platform. North Africa also possesses renewable potential, land, and proximity to European markets. Assuming that the only competitive advantage of these ports is lower carbon cost would be a major strategic error.

The third issue is who absorbs transition cost. If the carrier pays ETS, the terminal pays for electrification, the utility funds grid reinforcement, and the manufacturer receives part of the benefit, no single investment may appear sufficiently attractive. Contracts therefore need to share both value and risk.

The fourth tension concerns timing. Europe cannot wait until 2030 to discover that insufficient electrical capacity exists for OPS. Nor should it build oversized assets today that remain empty for years. Investment needs to anticipate demand while expanding through stages.

The fifth question is industrial. How much additional cost can a European factory absorb before relocating? There is no universal answer. It depends on margin, energy, automation, market proximity, and logistics. Horizontal policy alone is therefore insufficient. Ports need to understand the actual industries within their hinterlands.

The sixth debate concerns subsidies. Public support for early infrastructure can be rational when coordination failures or externalities exist. Using subsidy permanently to preserve a system that remains inefficient is not. Public money should purchase transformation rather than freeze the previous structure.

The final issue defines Europe’s strategy: does Europe want to preserve volume or value? Some low-margin flows may move. The objective should not be to win every container at any cost. It should be to protect the flows, industries, energy systems, and services generating greater productivity, employment, and autonomy.

Conclusion

My reading is that Mediterranean port competition will become significantly harder during the second half of this decade. Tanger Med already operates at a scale no European port can treat as peripheral. Morocco is adding industrial depth, energy infrastructure, and new gateways. Egypt has an extraordinary geographic position around Suez. Turkey continues expanding industrial and logistics capacity. Gulf capital is acquiring and developing infrastructure across multiple corridors. Europe’s green regulation arrives precisely while its competitors are investing.

Europe still retains extraordinary advantages when used correctly: a market of more than four hundred million consumers, sophisticated industry, capital, institutions, technology, rail infrastructure, and an exceptional concentration of ports. Those advantages are not automatic.

The next major differential will be the price and availability of electricity. A port unable to supply competitive megawatts will struggle to electrify operations, deliver OPS, develop hydrogen-related infrastructure, expand BESS, or retain energy-intensive industry. Port policy will become grid policy.

The second differential will be CAPEX speed. Terminals need faster permitting and construction. A competitor developing an energy terminal in four years can secure contracts before a European port requiring eight years to deliver comparable capacity.

The third will be modularity. Maritime energy will remain divided between electricity, biofuels, LNG and derivatives, methanol, ammonia, and other solutions. The port capable of evolving without rebuilding itself each time the dominant technology changes will win.

The fourth will be industrial integration. A port retaining a factory has greater strategic value than one gaining one additional transshipment call. Governments will increasingly measure port contribution through jobs, energy investment, production, and critical supply chains rather than tonnes alone.

The fifth will be data. Ports need to know why cargo is being lost before responding. Without granular information, they will attribute congestion to regulation or energy problems to foreign competition.

The sixth will be performance-linked finance. Europe’s port transition requires too much capital to rely on subsidies alone. Energy savings, lower delays, recovered capacity, reduced regulatory exposure, and new revenue must become financeable cash flows.

For the reader, the opportunity will not lie in choosing between green ports and competitive ports. That distinction will disappear. There will be ports capable of using transition to reduce their structural cost and ports that simply add another layer of CAPEX to an inefficient system. The first group will attract energy, industry, and capital. The second will spend years explaining why it lost market share.

The green rule can cost market share.

Inefficiency costs far more.

illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

The world needs sustainability knowledge. At illuminem, no interest group or shareholder can influence our work. Thank you for supporting our mission to make high-quality and independent sustainability information free for all. Every contribution helps. Thank you for donating today.