The Malta Independent 18 June 2024, Tuesday
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Towards carbon neutrality

Sunday, 21 November 2021, 08:00 Last update: about 4 years ago

Gabriel Cassar, MBB senior executive – Sustainability

Climate change adaptation and mitigation are becoming even more urgent with every passing year. Aside from weather events, which will become more common, climate change has a clear socio-economic impact. This is of particular concern to countries like Malta, which not only suffers from insularity, being a small island state, but also has to contend with the difficulties of operating from the European periphery.

Given our geography, Malta has limited natural resources at its disposal. It is heavily reliant on the importation of essential products from abroad, such as food and other basic goods. Supply disruptions abroad have an impact on prices and availability locally, as could already be felt during the worst of the Covid-19 pandemic.


Climate change will not only have a negative effect on imports, but also on economic activity. The Tourism sector is a key component of Malta's economy, contributing to almost 30% of GDP accounting for spillover effects. Our tourism product is naturally dependent on favourable weather conditions. This is further compounded by the fact that the only means of transport to Malta are by sea or air. It is clear to understand how severe or unpredictable weather can negatively impact Maltese prosperity.

The danger is real and the international community has set the common target of limiting global warming to 1.5C, which was reconfirmed in COP26 and looks to avoid the worst effects of climate change. This target needs to be achieved through a drastic reduction in the amount of greenhouse gases we produce. Europe is a leader on this front, committing itself to become a carbon-neutral continent by 2050. This will be achieved by employing greener energy sources, increasing energy efficiency and actively removing carbon from the atmosphere.

The EU has taken a step towards this vision by first adopting the EU Green Deal in 2019, which is a comprehensive strategy to achieve carbon neutrality, and then publishing the Fit For 55 package this year. The latter is the first set of legislative proposals which outlines the road to carbon neutrality in policy terms. The issues range from increasing energy efficiency, to generating more renewable energy and reducing emissions in the transport sector.

Maltese businesses embrace this greener future to safeguard Malta's long-term prosperity. The dual goal of increasing energy efficiency and sourcing greener energy production, coupled with measures to remove carbon from the atmosphere take Europe on the right path to combat climate change. Nonetheless, policy measures should always be designed keeping in mind the economic context they are operating in.

Businesses are just starting to recover from the worst economic downturn since the 2008 financial crisis. It is critical that new or revised policy measures do not hamper business competitiveness or introduce disproportionate financial costs that will invariably be felt by companies and consequently impact consumers at large.

One critical example is the proposed measure to phase out tax exemptions on airline and maritime fuel, in view of transitioning towards more sustainable fuel sources by 2033. The first issue is that supply of these sustainable fuels is still low, with ambition outpacing technical progress. This is further compounded by sustainable fuels being much more expensive. Such measures will lead to significant increases in transport costs, resulting in inflationary pressures on the prices of goods. Increasing costs to operate routes may also negatively affect Malta's airline connectivity to mainland Europe and beyond, which is a major threat to our tourism product. These real concerns must be considered by government and the EU policy-makers and properly accounted for, perhaps through financial support.

Despite these clear challenges, climate ambition presents important opportunities. The first is to supply innovative technologies to industry and transport sectors. These sectors account for over half of annual energy consumption in Malta, showing significant potential gains in terms of energy efficiency. Secondly, through better working conditions for many that will undoubtedly transition to more digital and green jobs.

Malta also needs to be more ambitious on renewable energies. Our geography naturally limits potential in this area, but R&D efforts for innovative applications should continue to be explored to move beyond minimum targets. This will also help ensure the security of energy supply and decouple prices from international disruption in the supply of oil and gas.

Of course, this shift towards newer technology will come at a cost, which is often substantial. Government and financial institutions should continue working towards offering financing instruments that meet business needs in terms of scope and design. It is encouraging to see local banks already offering "green loans". Nonetheless, the financing gap is still being felt by businesses - ambitious targets need ambitious financing.

These issues and how Malta can play its part towards carbon neutrality will be discussed during a webinar organised by the Malta Business Bureau and the European Commission Representation in Malta in collaboration with The Malta Independent and the Enterprise Europe Network. The event, entitled, Towards Carbon Neutrality, will be moderated by journalist Rachel Attard and will focus on the role of energy and transport, as well as Malta's readiness in meeting the EU climate objectives.

For more information and registration visit 
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