MCESD discusses the challenges of the EU Emissions Trading Scheme in the maritime sector

During an MCESD meeting following a proposal from the Malta Employers’ Association (MEA), the potential impact of the EU’s Emission Trading System (ETS) on our country’s economy and competitiveness was considered and discussed. This scheme aims to regulate and reduce greenhouse gas emissions from maritime activities and could have significant effects on the maritime sector, especially in southern EU Mediterranean countries. Given the potential repercussions for the Malta Free Port and its effects on various economic sectors, including manufacturing and logistics, this issue is of utmost importance to Malta and was the subject of discussion between MCESD social partners.

The Minister for Transport, Infrastructure, and Capital Projects, Hon. Aaron Farrugia; the Parliamentary Secretary for Social Dialogue, Hon. Andy Ellul; and representatives from the Malta Freeport and the Malta Maritime Forum (MMF) attended the meeting.

Minister Farrugia provided an update to the social partners regarding the latest developments in the maritime sector. He noted the ongoing European discussions and the upcoming implementation of the ETS scheme, which will affect several nations, including Malta, starting in January 2024. He discussed Malta’s position and the ongoing discussions at the European level, emphasising the cooperation between the Maltese government and impacted European countries such as Portugal, Spain, Italy, Greece, and Cyprus.

The MMF representatives pointed out that while the European Shipowners’ Association supports emission reduction through technology, the ETS could affect cargo ship companies entering European ports like Malta. As a result, these companies may start redirecting to neighbouring African ports, which have recently made substantial investments and upgrades to their terminals. Challenges posed by changes in cargo ship routes and their economic implications for both the maritime sector and the national economy were outlined. The social partners considered various challenges that might arise if cargo diverts to African ports. The meeting also highlighted that the Maltese Freeport currently handles approximately 3 million containers annually and maintains connections to 160 international ports on a weekly basis.

It was pointed out that, under the ETS Scheme, services from major producers in the Far East, such as Hong Kong, Singapore, and China, currently choose Malta Freeport as their first EU port of entry due to its proximity and efficient transit times, which may have an impact on this preference because operators might divert their routes to North African ports.

The social partners expressed their concern on this matter and support for the discussions between the government, Malta Freeport, and MMF with the EU regarding the challenges and impacts on the country. One of the key concerns raised was the assurance of a secure future for the workers employed at the Freeport and the important connectivity hub that Malta provided.

The social partners also highlighted the pressing issues surrounding aviation fuel and the importance of nurturing the newly established national air company. They acknowledged that the new airline could potentially alleviate some of the challenges faced by businesses in the service sector in terms of logistics.

The MCESD views this meeting as important for the future of Malta, as it anticipates having implications not only for workers and businesses but also for society as a whole. This is particularly crucial when considering that our country relies on other countries’ imports of products and raw materials. The MCESD will continue to monitor the situation and collaborate with the government and relevant authorities to minimise economic and social impacts while addressing climate change challenges.