Fit for 55 is the biggest challenge we will all face, at least for the next 25 years, said Minister of Transport, Communications and Works Yannis Karousos.
He was speaking at a conference organised by the Federation of Employers and Industrialists (OEB) on the challenges that businesses will face as a result of the Fit for 55 legislative framework. Karousos said, "essentially, this generation will 'pay' so that the next generation will be better off and in better conditions."
With regard to the transport sector, Mr. Karousos explained that there are three legislative proposals/regulations that affect it. Specifically, these are the ReFuelEU Regulation, the ETS Regulation and taxation.
The Transport Minister pointed out that Cyprus has carried out an analysis of the cost that the above Regulations will have on the country's economy, developing a tool which was shared with the other countries.
According to the calculations, the cost for Cyprus for the three aforementioned proposals is estimated at 18 billion dollars for the period 2025-2050. For the EU as a whole the cost is estimated at $1.4 trillion, while for Greece it is around $87 billion, the Netherlands $104 billion, Poland $53 billion, etc.
For Cyprus, $9 billion is for fuel costs, $5 billion is for the ETS and the rest is for taxation. "Because of the island nature, we have eight times the impact of the rest of the EU. We have informed the European Parliament and officials of the European Commission and the other member states about the disproportionate impact that Cyprus will have," the minister noted.
As he explained, the impact, if the necessary amendments are not made to the legislative package, will significantly affect the tourism sector, where it is estimated that there will be a 15-20% reduction, 10,000 jobs will be lost and GDP will be negatively affected by 1.75% per year. For example, he said, the extra cost per flight in 2030 would amount to about $9,000.
He explained that based on studies in academic journals, for every 1% increase in ticket costs, demand is reduced by 3%. In 2025, if nothing changes, the cost to airlines will be 200 million euros a year, in 2030 it will be more than 500 million euros, in 2035, 800 million euros and we are talking about 50-60,000 flights a year.
At the same time, Karousos stressed that the issue of competition with third countries also arises. One of the issues, he said, is that these measures only concern EU member states. For non-EU flights, it only includes alternative fuel at the EU airport (carbon leakage).
For example, he said, today an airline travels from Germany to Cyprus or Crete. In 2035, if the airline decided to travel to Egypt instead of Cyprus, it would save about $13,000 per flight. Therefore, on the one hand, there is a competition issue and on the other hand, connectivity and tourism are affected, the Transport Minister said.
According to Mr. Karousos, Cyprus, supporting the successful implementation of the objectives included in Fit for 55, developed an initiative and through a series of contacts, achieved the inclusion of specific proposals that will reduce costs for our country.
In particular, he continued, an extension for 10 years for the implementation of the regulation on mandatory refuelling at every airport was achieved. "The regulation said we start with 2% in 2025. Taking into account the Cyprus proposal, for the 10 years of the extension, the average will be calculated and it will not be mandatory at each airport to refuel the plane with this percentage which will help competition," he added.
In addition, he said, a change was adopted in the definition of Sustainable Aviation Fuel, in which some materials were included, so that this biofuel can be produced with other feedstock, which is considered sustainable and clean, besides food.
In addition, he continued. Karousos, another important issue was Cyprus' proposal for a mechanism called the SAF Allowance Mechanism, whereby free allowances will be granted to those who perform best in the sector and can redeem them in the ETS to reduce their costs there.
"We proposed a tool and succeeded in the preamble of ReFuel EU Aviation to include a paragraph saying that mechanisms should be found to bridge the cost of alternative fuel with regular fuel. Now the aim is to have it approved at the Environment Council on 28 June, which the Minister of Agriculture and I will attend, because we consider it very important," the Minister said.
Also, he noted, the proposal of Cyprus and Malta was taken into account that, for competition purposes, for 1.200 km radius, an airline, if it considers that it is affected by competition, will have the right to apply to the state and will be exempted to be able to refuel at any airport it prefers and it is in its economic interest.
Continuing, Mr. Karousos pointed out that the alliance created under the Cyprus initiative for the Declaration on Air Connectivity, which has so far been co-signed by 12 EU Member States, has also been used. "When organisations such as IATA, Airlines for Europe, Airports Council International, come to us and consult us, it becomes clear how much our country has been upgraded in the transport sector," Karousos said.
Finally, the Minister referred to the legislation concerning the creation of alternative fuel infrastructure and recharging stations, for which "photographic" exemptions for Cyprus have been achieved. According to the decision, Cyprus is exempted from the creation of recharging stations (rest stations), while it can create recharging stations every 100 km instead of every 60 km.
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