Environmental responsibility, competitive sustainability

Malta continues to intensify its efforts to work with the European Commission, other Mediterranean EU Member States, and maritime sector stakeholders to find a balanced solution that addresses greenhouse gas emissions effectively while ensuring fair competition and sustaining the competitiveness of Maltese businesses.

While being one of the most energy-efficient modes of transport, maritime transport also presents a significant challenge in terms of greenhouse gas emissions. It is projected that global emissions from this sector could increase by up to 130% from 2008 levels by 2050. In 2018, global shipping emissions amounted to 1,076 million tonnes of CO2, contributing around 2.9% of global emissions from human activities.

Recognising the urgency of addressing this issue, Malta has consistently advocated for comprehensive action. However, Malta has been cautioning against regional approaches – particularly within the European Union – due to potential complications, especially in the Mediterranean. Consequently, the Maltese government has championed global measures to tackle these emissions. This stance was evident when Malta supported the International Maritime Organisation (IMO)’s decision, last July, to set new greenhouse gas reduction targets and develop measures by 2025 to achieve these goals.

In contrast, earlier this year, the EU took a regional approach when amending the Directive on the Emission Trading Scheme (ETS). This amendment extends the EU’s emissions trading scheme to the maritime sector, effective from 1st January 2024. Under this system, shipping lines, regardless of their flag, will be required to buy allowances through a Cap-and-Trade system to cover their emissions. These allowances will be auctioned and will apply to cargo ships and passenger vessels over 5,000 gross tonnage.

The allowances will cover:

– 100% of emissions from ships traveling between EU ports.

– 100% of emissions at berth in EU ports.

– 50% of emissions for ships travelling between an EU port and a non-EU port.

There will be exemptions for maintenance and emergency situations.

A spokesperson for the Ministry for Transport, Infrastructure and Capital Projects told The Journal that, while the ETS aims to reduce emissions by making them costly, thereby encouraging innovation, there are concerns. “The Mediterranean, with its mix of EU and non-EU ports, might see a rerouting of shipping to avoid EU ports and the associated costs of ETS. Malta has been vocal about these risks, emphasising the impact on competitiveness, particularly for island states, and the potential negative effects on EU transhipment hubs.”

The spokesperson added that Malta has taken proactive steps, including commissioning a socio-economic impact study, consulting the Malta Freeport, and collaborating with other EU Member States to propose additional measures against carbon leakage. These efforts have led to modifications in the ETS text, balancing the burden on transshipment ports inside and outside the EU.

“However, challenges remain, particularly regarding the ETS’s implementation in the Mediterranean maritime sector,” the spokesperson pointed out. “Recent efforts by Minister for Transport, Infrastructure and Capital Projects, Aaron Farrugia, and other Maltese officials highlight Malta’s ongoing commitment to addressing these challenges at various international and EU forums. Malta, along with countries like Italy, Portugal, Greece, Cyprus, and Belgium, is urging the European Commission to monitor the situation and discuss potential solutions to the competitive imbalance that might arise from the ETS.”

Meanwhile, the Maltese Government continues to intensify its efforts to work with the European Commission, other Mediterranean EU Member States, and maritime sector stakeholders. The goal is to find a balanced solution that addresses greenhouse gas emissions effectively while ensuring fair competition and sustaining the competitiveness of Maltese businesses.

“Malta remains committed to protecting its maritime connectivity, which is vital for maintaining access to global supply chains and avoiding unnecessary price increases and higher import costs,” said the spokesperson for the Ministry for Transport, Infrastructure and Capital Projects.

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