7 January 2020

Priorities of the Port of Rotterdam for a European Green Deal

In 2018, the port industrial complex accounted for 18% of all Dutch carbon emissions, most of which by
far are industry-related. In line with national and international climate agreements (and primarily the
Paris agreement), our goal is a cut in carbon emissions of 49% by 2030 and 95% by 2050. The objective
for the port industrial area is to be virtually climate-neutral by 2050. This will require the simultaneous
reduction of emissions from maritime and hinterland transport flows through the port.

Industry and government authorities in Rotterdam are committed to evolving in a step-by-step approach
into a carbon-neutral industrial port cluster. The first step is to implement all the necessary efficiency
measures and to develop the infrastructure for the supply and re-use of surplus energy, residual heat,
CO₂ and steam, and the storage/use of captured CO₂. This first step depends on the realisation of new
infrastructure, including pipelines and cables. The second involves the transformation of the energy
system: industry will have to switch from oil and gas to electricity, and to blue and later green
hydrogen. This will require large supplies of affordable energy from sustainable sources. The third step
will be to replace fossil fuels and raw materials with renewable materials and feedstock such as
biomass, recycled materials, green hydrogen and CO₂.

Industry in the Rotterdam port area can deliver 25% of the reduction in carbon emissions needed to
achieve the Dutch carbon reduction objective of –49% in 2030. We estimate that the Rotterdam Carbon
Capture and Storage (CCS) project Porthos will be able to store 5 million tonnes of CO₂ from companies
in the port by 2030. The total capacity of the backbone infrastructure (10 million tonnes) exceeds the
capacity needed for industry in the port, and it can therefore also be used for carbon emissions from
industry in Belgium and in Germany. The European Project of Common Interest (PCI) CO₂ TransPorts
has been launched to establish the infrastructure for the large-scale transport and storage of CO₂ from
Rotterdam, Antwerp and North Sea Ports under the North Sea.

If the EU wants to increase its carbon reduction target to –55%, projects targeting the reduction
of emissions well before 2030 – such as Porthos and the large-scale production and utilisation
of hydrogen (H-Vision) – must acquire a prominent position in the European Green Deal. The EU
must endorse these projects and provide European funding and policy support since these pilot
projects have the potential be copied and applied throughout Europe.

A sustainable European industrial policy should include an integrated approach towards European
industry clusters and prioritize investments in energy infrastructure and -efficiency. The required
capacity for the exchange of CO₂, power and hydrogen within and between industrial clusters should be
determined at the EU level to enhance regional cooperation and coordinate the construction of pipelines
and cables across Europe. The companies in the port of Rotterdam are already well connected to other
industrial clusters (see figure 1). In order to become carbon neutral as soon as possible, we support the
revision of the European regulatory framework for energy infrastructure so that innovative technologies
and infrastructure, such as hydrogen networks and CCS are included and moreover are prioritised.

European funds should be steered towards large-scale investments in new energy infrastructure
in order to make optimal use of energy efficiency and enhanced connectivity. Also, a new EU
industrial strategy should include an integrated approach for large industrial energy clusters.

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Figure 1. Pipelines from Rotterdam to other industrial clusters and the hinterland

Under the European Green Deal, the European Commission is planning to develop a hydrogen strategy
in close cooperation with Northern African and sub-Saharan countries. The Port of Rotterdam has the
potential to become an important European hub for hydrogen imports, production and large-scale
industrial use: the port is favourably located, it has the required infrastructure and the industrial cluster
already has an established role in the corridor of liquid and gas energy carriers to the European
hinterland. Fifteen percent of European energy already passes through the Port of Rotterdam. The Port
of Rotterdam is now working with German industry in preparing the first part of a European hydrogen
corridor.

The Port of Rotterdam is also involved in preparations for the development of Europe’s largest green
hydrogen plant. This will be the first initiative in our 2GW Conversion Park. In collaboration with the BP
refinery in Rotterdam and Nouryon, we are working on a plant that will produce 45,000 tonnes of green
hydrogen annually and allow us to save 350,000 tonnes in carbon emissions. To achieve this, we need
a 250-Megawatt green power connection that will be scalable to at least 2 Gigawatts in order to make
full use of the potential of the conversion park.

The articles in the recently revised Renewable Energy Directive (REDII) that refer to hydrogen
production could present an obstacle to the establishment of Europe’s largest green hydrogen
plant if they are implemented or interpreted too strictly. We are calling for a revision of the REDII
rules for green hydrogen production or for tailor-made solutions in applying these rules so that
the hydrogen economy is not hindered but actively encouraged.

In terms of size and location, the Port of Rotterdam is well positioned strategically to develop into a
circular hub. Local industry, the logistics sector, a strong chemical cluster and the surrounding region
are all major consumers of raw materials and they generate a wide variety of waste flows. Chemical
recycling processes offer a sustainable alternative for waste incineration by converting plastic and mixed
waste into new raw materials for the chemical industry. We are working with Air Liquide, Nouryon and
Enerkem on the development of an advanced 'waste to chemicals' (W2C) plant in Rotterdam.

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This will be the first plant in Europe to use non-recyclable waste for the production of valuable chemicals.
For energy and transport fuels derived from biomass, waste and industrial gases, the recently revised
Renewable Energy Directive (REDII) provides a clear framework for stimulating the production of
energy and fuels from renewable sources by setting renewable energy targets in the transport and
energy sectors and by putting strong financial incentives into place. Europe does not have a framework
of this kind for renewable materials and this is hampering the development of renewable or bio-based
alternatives for fossil materials.

If the EU wants to make the circular economy work and encourage the sustainable re-use of
materials in both the industrial and chemical sectors, a framework for stimulating biobased and
renewable materials is indispensable and it should be part of a Circular Action Plan.

Four percent of all seaborne trade is shipped via the Port of Rotterdam. The Port of Rotterdam asked
the Wuppertal Institute to map out how freight transport via Rotterdam can contribute to the reduction
of carbon emissions. The Wuppertal study found that 87% of all carbon emissions in our logistics chain
are attributable to maritime shipping. Hinterland transport accounts for about 9% and emissions in the
port, including container handling, account for the remainder. The Port of Rotterdam is working towards
a zero emission port in 2050 and a 49% emission reduction between now and 2030. This not only
impacts the companies within our port industrial complex, but also ships entering and staying in our port.

In our view, an extension of the European Emissions Trading System (ETS) to include shipping is one
of a wide range of measures that should be investigated by the European Commission in order to have
a back-up instrument in place if the International Maritime Organization (IMO) does not adopt
sufficiently ambitious measures in 2023. The decarbonisation of shipping is expected to be too slow if
there are no strong financial incentives such as market-based measures in place at global or EU level.

The EU should work with stakeholders to investigate how market-based measures and pricing
can best be implemented at a European level without carbon leakage if the IMO does not put
forward ambitious measures in 2023. In addition, the introduction of a global carbon offset
scheme for shipping emissions above 2020 levels could help to curb growth of new emissions.

Ports, on the other hand, should be looking at how they can shape the next-generation incentives and
how they can use tariff differentiation for sea and inland port dues to promote supply chain
sustainability. In order to prevent an uneven playing field, it is vital for EU ports to collaborate on the
development of the next-generation incentives. The Port of Rotterdam will be taking the lead here.

In order to encourage the reduction of shipping emissions in the port, we are currently working on two
pilot projects for supplying shore-based energy to seagoing vessels. The first project is focusing on
gaining more experience with mobile shore power for seagoing vessels: power generation based on
hybrid battery technology, LNG and hydrogen. The second project will provide the crane vessels of
Heerema Marine Contractors with a 20MW green shore-power connection.

The climate efficiency (CO₂ reduction per euro) of shore power depends strongly on the local
circumstances of the port and type of vessel (cruise ships, ferries, container ships or crane vessels, to
name just a few). Onshore energy supplies - both fixed and mobile - should therefore be encouraged,
but only in sectors where there is demand (to make sure that installations will be used) and where
climate efficiency is high compared to other emission reduction measures (i.e. zero-emission fuels,
electric shipping, etc).

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To avoid stranded costs as zero-emission propulsion is also emerging (making shore power
redundant for certain ships at some points in time), the EU should boost the uptake and
deployment of low- and zero-emission fuels in Europe. A level playing field should be
established by exempting cleaner fuels and onshore energy supplies from energy taxation.

Progress is being made at the international level on improvements to the exchange of information
between parties in the logistics chain to allow Just in Time (JIT) sailing and operations. The JIT arrival
concept enables the ship master to base the speed decision on the correct information and adjust the
speed if necessary in order to arrive ‘Just In Time’ (i.e. when berth fairway and nautical services are
available). JIT arrival is not to be confused with concepts for slow steaming or compulsory speed limits.

The European Commission can help to promote the development of an ISO quality certificate for
ports and terminals to demonstrate compliancy with best industry practices, standards and
requirements in line with IMO short term measures to reduce emissions of shipping such as e.g.
Just In Time Arrivals and to improve safety of navigation.

The Port of Rotterdam is committed to making transport corridors and hinterland connections more
sustainable and efficient by increasing operational efficiency, delivering the infrastructure for the
deployment of alternative fuels and encouraging a modal shift to rail and inland waterway transport. If
more synergies are to be achieved in transport policies and the necessary innovations in infrastructure,
the Connecting Europe Facility must include more integrated calls for both the retrofitting of old
vehicles/vessels or the construction of new ones and infrastructure on a single corridor. In addition, the
cross-border impact of investments in port infrastructure should be recognized.

European financial instruments should address not only the physical activities in cross-border
projects covering two or more Member States but also the potential cross-border impact of
projects in ports in the TEN-T corridors.

Inland shipping
Inland shipping accounts for 38% of the Port of Rotterdam’s hinterland transport. We aim to increase
this share to 45% by 2030. The capacity of the inland waterways makes them a reliable alternative for
various specific freight segments that can relieve the pressure on overloaded road networks. The further
scale-up of digital information exchanges between the Port of Rotterdam and inland shipping terminals
makes the bundling of container freight possible: barge operators can use hubs to bundle containers
and make fixed calls at one or more deep-sea terminals in a regular service. Initiatives like this have
raised the volume of cargo transported by the waterways by 20% and cut the time spent in port by inland
vessels by 35%.

However, inland shipping is under pressure due to the increasing frequency of low and high water
levels resulting from climate change. The use of additional vessels, planning costs, storage costs and
even delivery problems – and the scarcity of certain products and raw materials – are all factors that
have pushed up transport costs, making inland shipping a less appealing transport mode. The optimal
use of inland shipping with a view to the expected growth of the container market requires not only
compliance with TEN-T requirements but also a smart replacement and maintenance policy for bridges,
locks and inland shipping terminals.

European action is required to make inland shipping future-proof. It should target depth
restrictions, bridge clearance heights for four-layer-high cube container shipping, river
management and retention basins on Europe’s inland waterways.

Rail freight transport

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Over 250 international rail connections run to and from Rotterdam. The transit times are short: cargo
arrives at the German border within three hours and at other European destinations within 24 hours.
We are working with the port community to expand the share of rail in European freight transport.
Rotterdam's ambition is to increase the market share of railways in the modal distribution of the port
from 11% in 2016 to 20% in 2030.

Figure 2. Rail connections from Rotterdam to European destinations

A more ambitious approach is needed to make cross-border rail freight transport not only competitive
but also robust and reliable. It is vital for the TEN-T rail freight corridors to focus on improving
interconnectedness between the Belgian, Dutch and German networks.

To promote the modal shift to rail and to reduce road congestion, the Port of Rotterdam is calling
for a higher priority for freight trains in capacity planning and improvements in the efficient use
of the existing rail infrastructure. We are also calling for an expansion of capacity on rail freight
corridors by increasing the length of the freight trains used to 740 metres so that rail transport
becomes more resilient and climate-efficient.

We are working with companies on a series of projects that should deliver up to 12 megatons in carbon
reductions by 2030. If we take into account the planned termination by 2030 of the use of coal for
electricity generation, then up to 40% of the national carbon reduction can be achieved in the
Rotterdam port area. The concentration of industry in Rotterdam, the direct proximity of end users of
heat, steam, CO₂, electricity and hydrogen, and the development of connecting energy infrastructure
provide us with unique opportunities to accelerate the energy transition and implement it cost-effectively
with a valuable multiplier: a secured public investment of 1 to 1.5 billion euros between now and
2030 will unlock private investment amounting to about 4 to 5 billion euros in climate projects.
The Port of Rotterdam is calling on the European Commission to make the most of this unique and
valuable opportunity. Not only to accelerate the industrial energy transition but also when it comes to
the sustainability of end-to-end supply chains and decarbonisation of the (maritime) transport sectors.

Kirsten Zondervan, European Affairs Manager (k.zondervan@portofrotterdam.com).