The EU fit for 55 package and Malta’s maritime industry

Abstract

Climate mitigation has never been more important. What’s driving this laudable effort to mitigate the consequences of climate change is a series of occurrences and phenomena which are becoming a recurrence affecting societies, contributing to ‘human emergencies’ (WHO, 2023) and posing a global challenge. Climate scientists studied global warming, gathered evidence and indicated an alarming rise in global temperatures which might lead to a climate apocalypse. Scientists remain steadfast on highlighting the irreversible damage from climate change which is mainly caused by human activity – anthropogenic emissions. It begs the question of what befitting policies ought to be implemented to address the adverse effects of climate change before it is too late to stop climate change, and the climate point of no return is reached. We can say with some confidence that the EU as a global leader, pushed forward green diplomacy and embarked on a green revolution, to fight climate change and pioneered in developing an ambitious environmental policy. In 2021, the European Commission launched the ambitious European Green Deal – a long-term strategy which sets the net zero target by 2050 which is at the heart of the EGD. The Directives and Regulations, under the Fit for 55 Package aim at implementing such set goals, in primis, to push forward an economy with net-zero greenhouse gas emissions and in secondis, to reach carbon neutrality. This is in line with the ParisAgreement capping to limit the temperature increase to 1.5°C above pre-industrial levels. The EGD lays the groundwork for the implementation of climate-neutral policies, by using zero-emission technology which provides clean energy such as the shore-to-ship power supply. The transportation sector is one of the most contributors to pollution and the reform of the EU ETS Directive and its expansion to the maritime sector matters from a climate change perspective. This Directive binds ships to surrender EUAs (Emission Unit Allowances). The Emission Trading Scheme is a pivotal instrument for abating greenhouse gases emissions and is redefining industry standards. This environmental tax on shipping activities is compensation for emissions from ships entering European ports. Climate change mitigation comes at a price. Mediterranean maritime clusters are concerned, and Malta is no exception. The Malta Maritime Forum is envisaging that price hikes will affect the transport of shipping containers between Malta and four Italian ports. The implementation mechanism of the EU ETS is being seen as a hanging sword of Damocles. The likely scenario is that big shipping lines move to non-EU ports to unload their cargo in other Mediterranean ports. Malta risks losing its role as an international shipping hub. Ships will sail to ports of call outside the EU to evade this tax. The Malta Maritime Forum insists that the implementation of the EU ETS is suspended due to ‘serious risks of business and carbon leakage’. A techno-economic analysis (TEA) needs to assess the impacts of the FF55 vis-à-vis shipping activities and the maritime industry.