The EU Emission Trading Scheme (ETS) applies in all European Union member states, the European Free Trade Association countries (Iceland, Liechtenstein and Norway), as well as Northern Ireland. It covers greenhouse gas emissions from around 10,000 installations in the energy sector and manufacturing industries as well as aircraft operators flying within the EU and departing to Switzerland and the United Kingdom.
From January 1, the EU ETS also covers emissions from maritime transport. All vessels above a certain cargo capacity are under the legal obligation to buy emissions ‘allowances’ to offset 40% of their carbon emissions when calling in at European ports. By 2027, the vessels will have to offset 100% of their carbon emissions.
Undoubtedly, the principle of this initiative is a good one, as it provides the citizens of the EU with a better environment, and it is also an efficient tool against climate change, which is not only a European Union issue, but a global one.
This is in line with the EU ‘Green Deal’, which is one of the main policies of the Union which Malta always supported, even though more work is to be done to reach established targets by the European Commission, which, in substance, is basically that of obtaining carbon neutrality by 2050.
This is undoubtedly an ambitious target. The same commission described the ETS initiative as “a cornerstone of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively”.
The commission’s timing on this initiative, however, is certainly a wrong one. When you have a European economy that has been struggling for a number of years in its competitiveness, especially when compared to other continents such as Asia, political wisdom dictates that EU economic growth, job opportunities and a better standard of living for its citizens is an absolute Union priority.
The environment is undoubtedly a priority as well but specific measures regarding climate change cannot be in conflict with the Union’s equally or more important priority for the EU to be a competitive economic player on a global level.
With this initiative currently in force, lucrative shipping and transhipment business will be diverted to other countries in the Mediterranean that are not tied to the same obligations, as are some important ports in North Africa, like, for example, the recent extensive project in Morocco called ‘Tangier Med’, which has become the largest port in Africa and is a strategic priority for the economic and social development of the North Morocco region.
Another important port which is not impacted by the ETS is that of Ambarli, Istanbul and others. This direct negative ETC impact has already been highlighted by maritime law expert Ann Fenech.
In addition to the Union’s competitiveness and the peril of loss of jobs, there will also be another direct impact on EU citizens. The cost of the ETS will undoubtedly be transferred to the end-consumer. This will lead to more inflation in Europe, in a scenario where we have recently seen protests in prominent nations like France, where citizens are struggling to cope with high energy prices and inflation, with a strong impact on small enterprises that are the backbone of the EU economy.
If necessary, the prime minister should also intervene and ensure that this issue is addressed at the European Council- Edward Zammit Lewis
There is, therefore, no doubt that what was recently stated by the Malta Maritime Forum is valid. I also agree with the MMF that there needs to be political maturity in this regard and that there should be a mature discussion on this issue.
After all, this should be what politics is about – a discussion on issues affecting people, our industries and businesses. The people who work and have businesses in this industry are very competent and dedicated individuals and companies that have believed in and invested heavily in this sector over the past 40 years.
Moreover, this leads to the fact that, in my opinion, this directive should have been treated with more reservation from the moment it began to be discussed. As a former minister responsible for European affairs and from my political experience, directives of this nature, being more technical than political, are usually negotiated in the early stages of the drafting of the directive, namely at ‘the COREPER level’.
In the maritime sector, Malta’s position has always been consistent in the sense that regulatory measures are to be taken at the level of the International Maritime Organisation, which establishes regulations for the sector on a global level.
This is because, for the global shipping and transhipment market to operate smoothly and for fair competition to exist, one has to have a level playing field.
I believe that we should always keep in mind, as Maltese citizens, that, wherever we are, charity begins at home. In our work, both technical and political, we must prioritise our national interest first and foremost.
Moreover, one may notice that European commissioners, whose loyalty is towards the EU and not towards their home country, still protect the interest of their own country in certain situations. This applied also to our MEPs.
It is useless, however, to cry over spilt milk. We now must believe in solutions. I personally find that there are three solutions to challenge the negative impacts of such a scheme.
1. The government is to immediately embark on an open, continuous and constructive dialogue with the European Commission allowing it to map adverse impacts, involving the expertise of the local industry players.
2. Address this issue on the Union’s agenda, at the level of the Council of Ministers in the formation of the Environment Council Configuration and the Transport, Telecommunications & Energy Configuration, and engage in meaningful discussions and make sure that appropriate decisions are taken.
3. If necessary, the prime minister should also intervene and collaborate decisively to ensure that this issue is addressed at the highest level – the European Council – in the coming months.