Malta secures key wins in revised EU ETS proposal, Government says

The Maltese Government said it is satisfied that the European Commission’s revised Emissions Trading System (ETS) proposal incorporates a number of key Maltese priorities, including stronger protection for the Malta Freeport, continued safeguards for the country’s air connectivity and the retention of dedicated support for island Member States.

“The proposal for the revision reflects several recommendations consistently advanced by the Government throughout the past years following the entry into force of the current system, which recognise the unique realities faced by island states whose economies depend heavily on maritime and air transport.”

The ETS is the European Union’s carbon pricing mechanism, which places a cost on emissions from shipping, aviation and other sectors.

While the system is designed to drive down carbon emissions across Europe, its implementation must also ensure that island Member States are not placed at a structural disadvantage simply because of their geography, the Government said, highlighting an issue that has been brought up in Malta.

“These results are the outcome of sustained engagement by Government at European level, backed by continuous consultation with Malta’s private sector. Government worked closely with businesses, industry representatives and operators to understand the practical realities they face and ensure Malta’s position was firmly grounded in evidence, practical experience and economic realities.” 

Under the proposed revision, transhipment operations involving cargo arriving from non-EU ports and not destined for the European Union will no longer be subject to ETS charges. This is a significant achievement for Malta Freeport, safeguarding its competitiveness against rival transhipment hubs outside the European Union, the Government said. 

The Neighbouring Port clause has also been extended to cover all competing North African ports. “This closes a loophole that previously incentivised shipping operators to make an intermediate stop outside the European Union purely to reduce their ETS costs before entering EU ports.” 

Government also welcomes the proposed retention of a dedicated allocation of ETS revenues for Malta, Cyprus and Greece until 2038.

In aviation, the temporary suspension of full ETS charges on departing flights has been maintained until 2032, helping safeguard Malta’s connectivity while limiting additional costs for airlines, businesses and passengers, it added.

Minister for Energy, the Environment and the Regeneration of the Grand Harbour Miriam Dalli welcomed the revised proposal, describing it as proof that Malta can achieve meaningful results when it combines ambitious climate objectives with a strong defence of the national interest.

“Climate action must be fair. Island states cannot be expected to carry disproportionate costs simply because of their geography. Throughout its active engagement with the European Commission ahead of this proposal, Malta consistently made the case that Europe’s climate ambitions must go hand in hand with competitiveness, connectivity and fairness. I am pleased that Malta’s realities are reflected in this revision, delivering tangible improvements that safeguard the competitiveness of our strategic maritime and aviation sectors,” Minister Dalli said. 

“We look forward to the negotiations in the Council where Government will continue working constructively to deliver further targeted support to our businesses and citizens. Our commitment to climate action is unwavering, but the transition must also be practical, equitable and leave no island state behind," Minister Dalli added.

Government maintains that mechanisms which pass ETS-related costs directly onto businesses and consumers must continue to take account of the specific circumstances of island Member States.

The Malta Business Bureau, which is the EU business advisory organisation of The Malta Chamber and the Malta Hotels and Restaurants Association, recently weighed in on the EU Commission’s revisions, insisting for better safeguards for island states.