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EU climate policies make Cyprus flights, shipping more costly

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Nicosia argues that greener EU transport policies will disproportionately impact Cyprus holiday flights and shipping costs.

Minister for Transport Yiannis Karousos and Deputy Minister for Shipping Vassilis Demetriades were in Brussels this week to discuss the implications of EU proposals to reduce pollution from the transport sector.

In a statement made during their visit, the two ministers explained that if the proposals are implemented, they are expected to bring additional costs to airlines which will be borne by consumers while also increasing the cost of maritime transport and, therefore, the cost of imports.

Karousos and Demetriades also noted that Cyprus has analysed the implications of these measures for all EU member states and have specific proposals to mitigate this impact.

They will continue the discussion with fellow EU ministers as work continues on the legislative package proposed by the Commission and amended by the parliament and the Council.

Karousos said they put forward concerns and initiatives such as creating a “self-allowance mechanism” that would give airlines incentives “to use more biofuel in a shorter time frame and at a lower cost.”

He said that Cyprus has carried out an analysis of how the legislative package will affect aviation, the country’s economy, and the economy of other EU states.

“This study is now being used as a reference point.

“Cyprus may face a competitive disadvantage as the cost of a flight to Cyprus by 2035 will be much higher compared to third countries such as Egypt and Turkey.”

The measures that will come into force in 2025 are estimated to cost about $220 mln per year to airlines, while in 2030, the cost will rise to $520 mln.

Estimates suggest the total cost will reach $821 mln in 2035, Karousos argued.

In the case of Cyprus, Karousos pointed out that airlines operating flights to the country will have to face additional costs of up to around €800 mln after 2035.

“These costs will be passed on to passengers, negatively impacting tourism and the economy.

“Given this data and if our concerns are not taken into account, it is estimated that Cyprus will lose about 15 to 20% of its tourism with a reduction of 1.7% in the country’s GDP per year.”

Karousos said by the time the climate neutrality target is reached in 2050; airlines will bear costs of up to $18 bln.

Shipping costs

Shipping is the second most important sector for the Cypriot economy after tourism.

Demetriades agreed that shipping must contribute to reducing emissions, but the Brussels proposals would have disproportionate costs for Cyprus.

“As you know, all trade inputs to Cyprus – all goods – are transported by sea, and it is estimated that the cost of maritime transport will increase by around 25% by 2032.”

Demetriades said that during contacts with MEPs, rapporteurs and representatives of the European Commission, the two ministers highlighted “the particularities of Cyprus as an island state and made suggestions for their improvement, especially regarding the issue; of pollutant trading allocation.”

“We ask that the mechanism for collecting allowances should change its philosophy and be based on the ship’s flag when it comes to ships with EU member state flags, and not on the state of the port of call.”

He said that Cyprus favours a “separate fund for shipping so that revenues generated by maritime transport can be used to finance research projects aimed at finding and making available alternative fuels of non-fossil origin to the shipping industry, which will lead to the decarbonisation of the sector”.