Time is running out for Transport Malta and the transport ministry to address the potentially negative impact of fresh EU rules for the local maritime sector, according to the Malta Maritime Forum.

Their concerns relate to the European Union Emissions Trading System (ETS) Directive that will come into force as of 1 January 2024, which they described as “flawed” and say puts the shipping and transhipment industry at risk.

The forum held a progress meeting on 1 December, where stakeholders discussed business and carbon leakage issues due to design flaws in the directive’s implementation mechanisms.

The system is already in place for the aviation sector, falling under the remit of the EU package Fit for 55, which aims to reduce greenhouse emissions across the block by 55% by the end of 2030.

The idea is that carbon emissions can be reduced through a special tax that, from 1 January, will be extended to maritime vessels. Any ship with cargo capacities over a certain level must buy emission allowances to cover 40% of all emissions, which will increase to 100% by the end of 2023.

This could result in costs totalling tens of millions of euro per year per shipping carrier, forcing most companies to look at relocating to North African Mediterranean ports instead of European ones.

The forum’s Chairman, Godwin Xerri, Vice-Chairman Alex Montebello and CEO Kevin J Borg, explained how they had been engaged in relentless discussions with the government, opposition, industry associations, social partners and EU institutions.

Stakeholders fear many shipping companies will abandon Malta for countries where the levy does not apply, risking both local industry and the EU’s prized climate goals.

In November, the forum acknowledged the commendable climate and environment objectives behind the ETS but insisted the directive is incompatible with EU principles.

Act without delay

Xerri appealed for government agencies to act with determination and without delay, enacting the regulations and demanding higher standards from industry and all stakeholders.

He added there was a need to end the “unregulated and low standards prevailing in the industry today.”

He also insisted on the need for a dedicated maritime authority as only this approach can guarantee focus, fast response time, and short communication lines for the benefit of the industry and country.

“The bottlenecks that remain with an Authority responsible for all forms of transport,” Xerri added, referring to Transport Malta, “cannot be solved unless the responsibilities are divided using a re-organisation of resources or a de-merger”.