The EU is marching ahead with its decarbonization regulations for the shipping industry — and our region’s transshipment flows may be impacted in the process. As of January 2026, the EU’s Emissions Trading System (ETS) on maritime effectively transitions to full enforcement, covering 100% of ships’ emissions.

The regulatory lay of the land: The ETS is effectively a carbon tax or a cap and trade system that requires shipping companies to purchase allowances for 100% of emissions generated on voyages within the EU and 50% on voyages to, or from, the bloc. This is different from the FuelEU Maritime, which is more of a mandate-driven set of rules that require cutting emissions by displacing dirtier fuels and raising energy efficiency. FuelEU Maritime entered into force in 2025 with a 2% emission reduction target — which is set to hit 6% in 2030 before rising gradually to reach 80% by 2050.

How does this impact our region? To prevent losing volumes to non-EU transhipment hubs and evasive rerouting — where ships may fake port calls outside Europe to reset their tax clock — the EU set up a list of high-risk neighboring container transhipment ports. Egypt’s East Port Said, alongside Morocco’s Tanger, are the only ports currently on that list.

But why these ports specifically? Both ports met the outlined regulatory requirements of having over 65% of their traffic classified as transhipment and being located within 300 nautical miles of an EU port.

What does this mean for East Port Said + Tanger? If a ship stops in East Port Said or Tanger while en route to, or from, the EU, the shipping line would still be required to account for 50% of the larger long-haul voyage. This might make the ports less attractive for transhipment routes, especially if other ports in the neighborhood can offer a haven.

DATA POINTS- East Port Said port is critical to our transhipment flows, with about 79% of Egypt’s total transshipment trade going through it as of 2024. The port’s container terminal — which currently boasts a 7 mn TEUs capacity after expansions — handled about 4 mn TEUs in 2024. For Morocco, transhipment is also critical for its ports industry, accounting for some 48% of the annual handled volumes in 2023.

Why does this matter? Well, there will be gainers and losers. Ports in Saudi Arabia, the UAE could emerge as natural breaks in a voyage, allowing shipping lines to reset their tax liability before heading to, or from, the EU. One possibility would be the emergence of other Egypt and Morocco-based container terminals, like Egypt’s Alexandria and Sokhna or Morocco’s Nador West Med (NWM), as alternatives to East Port Said and Tanger. In both scenarios, a blacklisted port’s transhipment volume could take a hit if shipping lines decide to reroute.

But there might be a silver lining, after all: These developments may also be good news for Egypt’s green bunkering ambitions despite growing headwinds. Starting this year, the ETS now requires shipping companies to account for nitrous and methane emissions, raising the cost of compliance for LNG-powered vessels that serve Europe. In that scenario, e-methanol — which Egypt already plans to produce in East Port Said and Morocco in NWM, could emerge as the biggest winner in the low-carbon fuels competition.

Why e-methanol? A single ship powered by e-methanol can offset enough emissions to bail out the penalties of 10 standard ships on the same trip, according to a report by Lloyd’s Register. Plus, upgrading ports’ infrastructure and vessels’ engines to handle methanol is a much easier task than other green fuels, like green hydrogen.

Tags: