Editorial | An unjust carbon tax and the national interest

The new environmental tax on shipping that came into force on 1 January will lead to higher transport costs for all imports and exports by sea.

The extension of the Emissions Trading Scheme (ETS) to the maritime sector was to be expected as the EU transitions to a green economy.

Reducing carbon emissions that contribute to global warming is key to addressing climate change.

But in achieving this noble aim, the EU must be sensitive to the particularities of certain countries and communities. If going green means added financial pressures on families and small and medium enterprises, the inevitable outcome will be pushback that can have dire political consequences.

The carbon tax is unlikely in the short term to bring about significant change in industry practices but is very likely to create undue inflationary pressures on families and businesses.

This is especially so for an island economy like Malta, which depends on sea transport for its trade.

Writing in Business Today, Joseph Bugeja, the chairperson of ATTO, an association of tractor and trailer operators, argues that transport operators in Malta cannot be put on the same level as those operators who are not burdened with geographic and commercial disadvantages of an island state.

“The impact of this Directive is excessively disproportionate when compared to our European peers,” Bugeja writes.

He says that whilst this tax applies across the EU it mostly impacts countries like Malta which rely solely on maritime connections for their essential imports, exports and economic activity.

Bugeja clearly states that the EU’s one-size-fits-all policy in this case punishes Malta disproportionately.

But he also sounds the warning that this tax could impact the Malta Freeport in Birżebbuġa and Valletta Gateway Terminal in the Grand Harbour. These two ports are pillars of the economy that provide fundamental connections for the transportation of essential goods.

While several ship owners and operators have taken initiatives to operate vessels with more sustainable engines, the transition has not been fast enough. The EU could have created fiscal incentives to encourage more shipping companies to invest in greener technology before wielding the stick. The outcome of the ETS in the short term is unlikely to yield appreciative reductions in carbon emissions but will punish island economies like Malta. This is unjust.

Unfortunately, no exemptions were negotiated for Malta when the EU directive was approved by qualified majority voting.
This leader joins the appeal made by Bugeja for all stakeholders in the sector to put up a united front in addressing the challenges posed by the ETS Directive to ensure an outcome where Malta's unique interests are duly represented.

This also applies to the Maltese political class, since unity is a sine qua non, where the national interest is at stake in international fora. There is, after all, consensus between the government and the Opposition on the deleterious impact of the ETS and this should translate into a united front.

Bugeja says Malta's response to the ETS Directive requires a “strategic, non-politicised approach” that recognises the unique challenges faced by Malta.

This leader supports this position.

Malta should press the European Commission to monitor the impact of the ETS and adjust its course accordingly, especially in those countries and communities that are disadvantaged by geography.