MEPs across political spectrum call for ‘island clause’ to ease ETS burden on island economies

Maltese MEPs Peter Agius (EPP) and Thomas Bajada (S&D), together with colleagues from Italy and Cyprus, are backing a cross-party push for an ‘island clause’ in the EU Emissions Trading System (ETS) to reduce the disproportionate economic impact on island communities.

A group of Members of the European Parliament (MEPs) from across the political spectrum has urged the European Commission to introduce an “island clause” in the EU Emissions Trading System (ETS), citing the disproportionate economic impact of current ETS provisions on island regions and Island Member States.

In a joint letter addressed to the President of the European Commission, Maltese MEPs Peter Agius and Thomas Bajada, Italian MEPs Marco Falcone (EPP) and Giuseppe Lupo (S&D), and Cypriot MEPs Michalis Hadjipantela (EPP) and Mavrides Costas (S&D) pointed to mounting evidence of the strain that ETS regulations are placing on maritime and aviation connectivity for islands. The letter was sent in the context of ongoing work on an EU Strategy for Islands and Coastal Communities as well as European Industrial, Maritime, and Ports Strategies.

The ETS is the EU’s cornerstone climate policy, designed to reduce greenhouse gas emissions by setting a price on carbon. By requiring companies to buy allowances for their CO₂ emissions, the system provides strong incentives for industries, transport operators, and energy producers to lower their carbon footprint, playing a crucial role in achieving the EU’s climate targets.

The MEPs cited data showing the sharp costs already being felt. According to the Maltese Association of Tractor and Trailer Operators, the ETS and fuel surcharge for a single round-trip trailer on the Genoa–Malta–Genoa route now totals €734.40. Meanwhile, the Central Bank of Malta has estimated that ETS aviation fees alone caused an €88 million setback to the Maltese economy in 2024, even before the scheduled removal of free airline allowances in 2026.

Similar concerns are noted in island regions such as Sicily and Sardinia, where freight operators warn that full implementation of ETS-related surcharges could substantially raise the cost of journeys along key “motorways of the sea.” The MEPs stress that such increases would not only affect hauliers and shipowners but would also be passed along the supply chain, raising input costs, reducing export competitiveness, and exacerbating the structural challenges traditionally associated with insularity.

Aviation-dependent islands,  face additional pressures. Rising compliance costs and the gradual removal of free allowances could drive up ticket prices, reduce affordability, and negatively affect connectivity, potentially harming economic competitiveness.

The MEPs insisted that, under Article 174 of the Treaty, the European Commission is obliged to address the economic, social, and territorial disadvantages faced by islands. They argue that the upcoming ETS review, expected in the third quarter of this year, presents an opportunity to introduce proportionality through a broadly applicable “Island Clause,” balancing climate ambition with economic and social realities.