The European Union has entered a decisive stage in its climate agenda as the European Commission launches an in‑depth review of the EU Emissions Trading System (ETS), a process that will shape the Union’s carbon‑pricing framework beyond 2030. Among the key issues under examination are sectoral expansion, possible changes to address carbon leakage, the market stability reserve, the use of ETS revenues and potential linkages with other carbon markets.
Reforms introduced back in 2022 brought shipping into the ETS for the first time, requiring operators of vessels above 5,000 gross tonnes to surrender allowances for 100 per cent of emissions on intra‑EU voyages and 50 per cent of emissions on voyages between EU and non‑EU ports. The European Parliament had also insisted that further extension of coverage would depend on developments at the International Maritime Organization (IMO).
Under the Directive, if by 2028 the IMO fails to adopt a global market‑based measure aligned with the Paris Agreement’s goals and at least as ambitious as the EU’s ETS, the Commission must submit a report accompanied by a legislative proposal to amend the Directive. In practical terms, this means Brussels will assess the IMO’s progress and decide whether to maintain the current partial coverage or extend ETS obligations to all international voyages touching EU ports.
Last Autumn, the IMO had deferred its vote on a draft global carbon-pricing framework, after more than 50 member states raised concerns over the scheme’s design, pace and potential economic impact on developing and emerging maritime nations.
The Malta Maritime Forum (MMF), which has long warned that the ETS could erode the competitiveness of peripheral ports, has urged caution. MMF Chairman Godwin Xerri said the Commission’s intention to amend the ETS “remains vague and premature,” insisting that “Europe should not move ahead with changes until there is one single global market measure that can be enforced equally all over the world.”
He added that the ETS “was designed for continental economies, not islands whose connectivity, and ultimately their economic survival, depend entirely on maritime transport.”
“Rising compliance costs”, he warned, “could threaten essential shipping routes and Malta’s wider economic resilience.”
Xerri welcomed the Parliament’s earlier safeguards for island and outermost regions, particularly Amendment 244, which obliges the Commission to evaluate the specific needs of island territories, but said such provisions now need “concrete operational interpretation before new obligations are imposed.”
Meanwhile, Maltese MEPs Peter Agius (EPP) and Thomas Bajada (S&D) have joined colleagues from Italy and Cyprus in calling for an “Island Clause” within the ETS to recognise the distinct economic pressures on island states.
Dr Agius said that while the European Union’s commitment to climate neutrality was “a noble and necessary objective,” the ETS extension to maritime had placed a disproportionate burden on island economies. Because maritime routes are longer and alternatives limited, island states end up paying significantly more for emissions generated by essential transport links.
“The further you are from the centre, the higher your cost under the ETS,” he said, noting that countries such as Malta, Cyprus and the Greek islands were bearing the brunt of a policy that does not reflect their structural dependency on sea transport.
“We want a systemic and general safeguard on the needs of islands for them not be placed under disproportionate pressure,” Agius added.
He added that the MEPs would also be pressing for a Mobility Package tailored to island connectivity and expected the Commission to present a dedicated strategy for island communities, to identify how islands are protected.
