At the conference organized by the Federation of Employers and Industrialists on the challenges that businesses will face as a result of the legislative framework Fit for 55, participated today the Minister of Transport, Communications and Works Mr.
As the Minister said, "the biggest challenge we will all face, at least for the next 25 years, is Fit for 55. Essentially, this generation will 'pay' so that the next generation will be better off and better off."
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 costs that the above Regulations will have on the country's economy, developing a tool which has been shared with the other countries. According to the calculations, the cost to Cyprus for the three aforementioned proposals is estimated at $18 billion 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 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 impact, if the necessary amendments to the legislative package are not made, 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, the additional cost per flight in 2030 would amount to around $9,000. Based on studies in academic journals, for every 1% increase in ticket costs, demand decreases by 3%. In 2025, if nothing changes, the cost to airlines will be 200 million euros per 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 per year. 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, today an airline is travelling from Germany to Cyprus or Crete. In 2035 if the airline decides 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.
Specifically, 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 proposal of Cyprus, for the 10 years of the extension, the average will be calculated and it will not be compulsory at each airport to refuel the plane with this percentage which will help competition.
In addition, the change in the definition of Sustainable Aviation Fuel was adopted, in which some materials were included, so that this biofuel can be produced with another raw material, which is considered sustainable and clean, other than food.
In addition, 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 they will be able to redeem them in the ETS to reduce their costs there. "We proposed a tool and we succeeded in getting it included in the preamble of ReFuel EU Aviation in 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 proposal by Cyprus and Malta that, for competition purposes, for 1.200 km radius, an airline, if it considers that it is affected by competition, would have the right to apply to the state and would be exempted to be able to refuel at whatever airport it prefers and 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 to date has 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 upgraded in the transport sector," Karousos said.
Finally, the Minister of Transport, Communications and Works referred to the legislation concerning the creation of alternative fuel infrastructure and recharging stations, for which "photographic" exemptions were achieved for Cyprus. According to the decision, Cyprus is exempted from the creation of recharging stations ("resting" stations) and may create recharging stations every 100 km instead of every 60 km.
(MKY)
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