MMF CEO warns ‘design flaws’ in execution of EU ETS Directive will pose ‘serious risks’ to businesses

Malta Maritime Forum (MMF) CEO Kevin J. Borg has stressed that design flaws in the implementation of the recently-introduced EU Emissions Trading Scheme (ETS) Directive on shipping will result in major challenges to local businesses.

The ETS is a key part of the EU’s strategy to address issues related to climate change, and has been described as a vital tool in reducing greenhouse gas emissions. The directive obliges ships to surrender their EU allowances (EUAs) to compensate for the emissions they generate, thus leading to higher costs. For vessels with a tonnage exceeding 5,000 gross tonnage (GT) that have visited EU ports, annual emissions quotas will apply, with a pricing system set at €93 per EUA for every ton of CO2 emitted. This directive is being phased in this month (January).

The MMF, the local entity representing Malta’s maritime industry, has repeatedly voiced its disapproval at the way the directive was being introduced, joining various other Mediterranean countries in calls for a postponement in its implementation.

For MaltaCEOs.mt’s end-of-year series, Mr Borg, who has also been very vocal about the issue over the past few months, emphasised the significance of the challenges that this directive will bring to businesses, together with the work that the MMF has done in order to encourage the EU to not proceed with the initiative.

When asked how he would best sum up the past year, Mr Borg said that everything revolved around the ETS, as it has occupied the best part of the MMF’s year. Over the course of 2023, it had various intense representations both at local and European level to ensure the “least damage possible” from the various “design flaws in the implementation of this directive” to Malta’s maritime industry and economic interests at large.

“ETS is a commendable initiative but the design flaws inherent in its implementation will result in serious risks of business and carbon leakage which run counter to its very own principles and objects, and thus must be addressed,” he explained.

The directive’s introduction will have a significant impact on the countries’ attractiveness in terms of shipping. This is especially the case for Malta, given that it has become known as a transhipment hub over the years.

Mr Borg remarked that he is proud that the MMF is taking the lead on the ETS matter, to the extent that it was invited to the Malta Council for Economic and Social Development (MCESD) and EU institutions in Brussels to present its views. In addition to this, the MMF has also worked on various policy and communication-related achievements.

“These achievements are in line with a vision and a three-year business plan I put forth to the MMF Board in 2021, which is successfully materialising to the benefit of the local maritime community. Suffice to mention that the momentum gained so far has permitted the generation of a certain level of content to justify the publication of the forum’s first ever Annual Report since inception in 2015,” he added.

Looking ahead, he said that ETS will continue to be the biggest challenge for the MMF in 2024, as it poses “serious business risks” to the forum’s members and the wider economic sectors which depend on “efficient sea and transhipment links to procure imports and raw materials and export their products.”

“I also see opportunities for Maltese companies which proactively adopt an environmental, social and governance (ESG) approach to their business. This is another area in which the MMF has actively and concretely supported its members,” Mr Borg said.

In this respect, he also expressed gratitude to present MMF Chairman Godwin Xerri and former Chairman Joseph Zammit McKeon for their support during 2023. He remarked that Judge Emeritus Zammit McKeon led the forum with his “unique wisdom, dynamism, and integrity,” while Mr Xerri has seamlessly taken over the reins with an “energy and determination to carry on the good work of his predecessors.”

Shifting to a more personal topic, Mr Borg was asked whether there is a skill he would like to develop in 2024.

“Not a particular skill in general, but I am relatively a newcomer to the maritime industry which I am most intrigued by. I am constantly eager to absorb knowledge from the wealth of expertise residing amongst the active MMF members who are the champions of the maritime industry and whom I have the privilege to work alongside,” he explained. He noted that some of these members are not just seasoned professionals, but “highly regarded authorities” in their fields of expertise, both in Malta and abroad.

Additionally, he also expressed his willingness to find some more time to disconnect from his work during his daily routine to find more time to exercise and spend time with his family, especially when it comes to supporting his two teenage sons. He started working on this resolution during the New Year celebrations, choosing to switch off and spend the week between Christmas and New Year with his family.

Social image: Malta Freeport Terminals / LinkedIn