Godwin Xerri
It is both heartening and strategically important to see a unified position emerging between Government and Opposition, Members of the European Parliament from both sides, and a wide range of entities and associations in their criticism of the EU’s Emissions Trading System (ETS) as currently applied to Shipping.
This rare and necessary consensus reinforces the Malta Maritime Forum’s resolve to continue its forthright and evidence-based criticism of the ETS, which, while well-intentioned in principle, is fundamentally flawed in its application and places a disproportionate and unjustifiable burden on island economies such as Malta.
Recent interventions by the Honourable Dr E. Zammit Lewis and MEPs Peter Agius and Thomas Bajada have rightly drawn attention to the uncertainty and scale of the economic damage already inflicted on Malta by ETS.
ETS remains an unacceptable burden for Malta who, despite intense and sustained competition from neighbouring countries, successfully developed and maintained a leading transhipment Mediterranean hub. This success is now at serious risk by EU policy choices that fail to recognise the structural realities of island states.
Within months of its introduction, container carriers added surcharges averaging €500 per 20-foot container. When ETS was extended to short-sea shipping, trailers moving to Malta saw additional charges of around €700 each. These impacts are now being borne directly by businesses and consumers.
This is a fundamental flaw. Although ETS is presented as a “polluter pays” mechanism, the cost is not absorbed by polluters but is passed through the supply chain. For Malta, which depends entirely on maritime transport, this means a disproportionate burden.
“If those routes shift elsewhere, Malta does not simply lose business but also access”
Competing transport modes, particularly road haulage across Europe remains outside the ETS framework. This is not environmental balance, but competitive distortion. The consequence strikes at the core of Malta’s economic model.
Malta’s success as a transhipment hub, centred on the Freeport, is not accidental. It is the product of long-term investment, operational efficiency, and competitive positioning. Handling around three million TEUs annually, Malta has established itself as a leading hub in the central Mediterranean, connecting over 130 ports worldwide.
This connectivity is not a luxury but a necessity and ETS is putting this entire ecosystem at risk. Significant added costs to vessels calling at EU ports is already incentivising shipping lines to reroute to non-EU hubs. Ports in neighbouring countries, particularly in North Africa, are expanding aggressively and positioning themselves as alternatives to avoid EU ports reduces costs.
For Malta, the implications are severe. The loss of transhipment activity not only means reduced revenue and fewer jobs but an erosion of maritime connectivity. Before the Freeport, Malta relied on limited and fragmented shipping services. Transhipment changed that, integrating Malta into global trade routes and ensuring regular, direct connections to major markets.
If those routes shift elsewhere, Malta does not simply lose business but also access.
With over 30% of imports originating from the Far East, any weakening of these connections will have direct consequences for supply chains, pricing, and economic resilience.
Despite repeated engagement, the response from EU institutions has been limited to monitoring the situation. That is not sufficient. The effects are already visible, and the market is already adapting. Malta’s circumstances as an island economy are not comparable to mainland member states and policy that ignores this reality risks undermining the very cohesion it is meant to support.
Reducing emissions is a clear and urgent priority but measures must be effective, proportionate, and globally aligned. Applying ETS to EU ports, while non-EU competitors operate under different conditions cannot be considered a success.
The upcoming ETS review in July presents a unique opportunity to correct course. Solutions exist that can balance environmental objectives with economic realities, without penalising island economies or distorting competition.
Malta cannot allow policy to place us at a structural disadvantage. The country needs decisive adjustment because the stakes for Malta’s connectivity, competitiveness, and economic stability are too high.
Godwin Xerri is chairman of the Malta Maritime Forum
