Recent media reports claim that Malta's strong growth has rendered its economy more greenhouse‑gas emissions‑intensive. These conclusions are largely based on statistical releases by Eurostat.

These show Malta as the only EU country to have experienced an increase in emissions intensity since 2013 and ranking among the highest emitters per capita. Up to the mid‑2020s, Malta's emissions intensity declined significantly, particularly following major energy‑sector reforms. As a result, emissions from the energy sector fell sharply while economic activity accelerated, leading to a rapid reduction in emissions intensity that outpaced the EU average. After 2018, Eurostat data show a sharp increase in Malta's total GHG emissions and emissions intensity, a trend that appears counterintuitive given Malta's continued shift towards high value‑added, low‑emission service sectors.

This outcome reflects the application of the "residence principle," under which emissions are attributed to Malta if they are generated by entities registered on the islands, regardless of where the emissions physically occur. By contrast, emissions calculated under the United Nations Framework Convention on Climate Change, which adopts a territorial approach, show only modest growth in emissions alongside substantial economic expansion, implying continued improvements in emissions intensity. The divergence is driven mainly by international aviation.

Malta has developed a large international aircraft registry, with hundreds of aircraft registered under the Maltese flag but operating predominantly outside Maltese airspace. Under Eurostat's residence‑based accounting, emissions from all flights operated by these aircraft are attributed to Malta, causing transport‑sector emissions to dominate national totals.

Up to 2017, Eurostat data indicated relatively stable GHG emissions from the air transport sector, dropping slightly from 230 thousand tonnes in 2008 to 225 thousand tonnes a decade later. During this period Malta's aircraft register had grown steadily but was still relatively small. In the subsequent seven years, the number of registered aircraft more than tripled. The sector's emissions increased by more than twenty times, reflecting the fact that most of the newly registered aircraft were relatively large and formed part of airlines with quite intensive use, notably low-cost airlines.

Looking at 2024, it transpires that only 4.38% of the total number of flights performed by Maltese-flagged aircraft were in Malta's airspace, and under certain assumptions one can estimate that only 4.07% of total GHG emissions reported for the air transport sector were related to flights connected to Malta. This implies that instead of 4,730 thousand tonnes, GHG emissions for air transport services in Malta should be 194 thousand tonnes, thus continuing the trend decline observed in this sector.

When emissions are adjusted to reflect only aviation activity linked to Maltese airspace, the resulting emissions totals closely align with those reported under the UN methodology. On this basis, Malta's emissions intensity continued to decline after 2018 and, by 2024, stood at roughly a quarter of its 2005 level, representing a historic low.

In recent years, the Maltese economy and the population on the islands have grown very strongly. These factors by themselves could have led to considerable increases in GHG emissions, resulting in a substantial deterioration in Malta's air quality. Yet substantial investments in the energy sector together with other reforms, such as incentives for the public to invest more in solar panels and to purchase non-fossil fuel operated vehicles, have helped to address this. The adoption of energy-saving technologies and green investment by many private operators has also contributed. However, a key driver of lower emissions intensity was the shift of the Maltese economy towards high valued services, especially digital sectors such as gaming and computer programming. This has meant that the emissions generated by additional economic activity in Malta has effectively shrunk to a quarter of what is had been two decades earlier.

This improvement does not mean Malta faces no climate‑policy challenges. In particular, Malta still has projected gaps in meeting EU effort‑sharing targets for sectors such as domestic transport, agriculture, waste, and buildings. However, public debate has often conflated different indicators and misinterpreted projections, leading to exaggerated or incorrect claims about Malta's overall emissions trajectory.

Malta's economy is not becoming more emissions‑intensive in territorial terms. Instead, statistical definitions-especially those related to international aviation-have created confusion and fuelled misleading narratives. Understanding progress is crucial if stakeholders are to make the necessary changes to economic behaviour needed for the country to satisfy all its international commitments. Policymakers should explain more the indicators and targets applied in this area, as sensationalism could hurt Malta's business environment, in turn making the achievement of climate neutrality even more of a challenge. In a world where ESG concerns are becoming ever more considered by investors, public communications about Malta's progress warrant responsibility and need to be more evidence-based.

Clearer communication is essential to ensure informed policymaking, maintain investor confidence, and support Malta's transition towards climate neutrality. 

Dr Aaron G. Grech is Chief Officer in the  Economics Division at the Central Bank of Malta.