EU ETS creating ‘serious competition distortions’, Malta Maritime Forum says

The Malta Maritime Forum (MMF) has warned that the EU’s Emissions Trading System (EU ETS) for maritime transport is creating competition distortions that could threaten Malta’s connectivity and have wider repercussions for the economy.

The forum presented its concerns and recommendations on the maritime EU ETS to Parliament’s Standing Committee on Foreign and European Affairs, following an invitation from the committee.

MMF Chairman Godwin Xerri and Vice Chairman Alex Montebello led the presentation, during which the Forum reiterated its support for decarbonisation and the objectives of the EU ETS.

However, the forum argued that the way the system is being applied is resulting in “serious competition distortions and leakages”, creating disproportionate risks for Malta and other EU member states.

According to the MMF, the maritime EU ETS is also failing to achieve its intended climate objectives, as ships continue to travel through the same waters while increasingly shifting transhipment operations away from EU ports.

The forum said this was contributing to both carbon and business leakage, while also encouraging investment in new transhipment ports outside the European Union.

For Malta, which depends heavily on global maritime connectivity, the MMF warned that the loss of mainline shipping services could have consequences extending well beyond the maritime sector.

A reduction in connectivity could affect feeder services, towage, pilotage, port services, terminal operations, stevedoring, mooring and ship agency services, as well as legal services and bunkering.

The forum also highlighted potential knock-on effects for the importation of raw materials and supplies and for Malta’s manufacturing industry.

It warned that reduced maritime connectivity could ultimately encourage some industries to relocate away from Malta due to considerations linked to market proximity and limitations on export channels.

This, it said, could result in job losses, reduced investment and an imbalance in the country’s balance of payments.

The MMF maintained that the risks posed by the current application of the maritime EU ETS need to be considered in the context of fair competition and solidarity among EU member states.

Earlier this year, even ATTO raised concerns about the EU ETS as it can affect Malta disproportionately.