Malta’s Budget for 2021 − Focusing on a carbon neutral economy?

A budget underpins and enables the implementation of policy, highlighting the state of a country’s finances and its intentions.

Without a budget, there is no policy. The 2021 Malta Budget shows coherence in planning for the required climate mitigation and adaptation, however, leaves considerable room for improvement.

As announced in the Budget speech, €2.5bn in European funds were received in 2020 for COVID recovery; going forward, €220m have been assigned to both digitalisation, and environment and climate change. It will be interesting to see how much will be spent on each. There are many ways in which AI can assist climate mitigation and adaptation.

Green bonds are being made available only for renewable energy investments. Here is a missed opportunity as the market would be much larger and more attractive if these included energy efficiency services and regenerative farming which aims at national self-sufficiency.

The policy on Combatting Climate Change has not yet been published. I hope it will cover actions to limit the emissions of greenhouse gases (GHGs) and actions which capture and store GHGs naturally. Carbon is an essential building block of life whether plant or animal. Western industrialisation and the way of life have simply displaced too much carbon as CO2 into the atmosphere. To address this and prevent our planet heating by 4 degrees Celsius by 2050, we need to stop adding to the legacy load of CO2 and simultaneously pull as much as possible out of the air and fix it permanently in soil and in growing plants. If we simply reduce CO2 and other GHG emissions, the legacy load will still warm the planet above 4 degrees by 2050, making investment in agriculture, reforestation, reversing desertification, regeneration of the coastlines and seas vital. These are not only economic risks to every industry that depends on them; they are areas of economic growth if appropriately supported.

The 2021 budget plans €450m and €11m investment in new construction of offices and sports facilities, respectively. Any new building in the EU must be nearly zero carbon by 31 December in accordance with the Energy Performance of Buildings Directive (2010/31/EU) and the Energy Efficiency Directive (2012/27/EU). The EU Green Deal calls for their revision, most likely extending them to existing building stock as part of the EU’s GHG reduction goal of 55% by 2030. I hope that the new Building and Construction Authority will include experts on these EU laws as well as on combatting the Urban Heat Island Effect. The Authority will need to work towards increasing resource efficiency and natural carbon capture and storage within cities, including using green roofs and vertical gardens, renewable energy sources and flood abatement.

A new waste management policy is under consultation though the Budget does not seem to include this. At least €50m should be directed to the construction of an anaerobic digestion plant to treat all food waste generated on the islands. The investment would need to include land area and equipment to cocompost the liquid digestate from the anaerobic digestion with shredded green waste to form compost.

Unemployment is at its highest in four years and projected to remain so for 2021; many of those employed are earning below a living wage. A circular, carbon neutral business model creates sustainable and socially just employment. New jobs can come from a Repair and Reuse Network, which will decrease waste management costs and make A++ appliances more affordable. Regenerative farming can sustain jobs: one ton of compost applied to land and not tilled sequesters 30kg of carbon. Every ton of carbon saved is a carbon credit saved. With carbon pricing under discussion in the EU and increasing pressure towards climate neutrality, this is a crucial consideration.

The €400 subsidy for purchasing electric cars is an insufficient incentive. The Budget should focus on the scrappage of vehicles that emit black smoke whenever the accelerator is engaged. Subsidies should include a long guarantee period for the battery – 25 years in other EU countries – and zero VAT and road tax until all mobility is zero emission.

Ultimately, we need to be moving towards an economy which leaves the balance of earth systems intact, so the ban on single-use plastics is a huge positive step. The lack of a better mass transit plan is regrettable as is the lack of integration of climate change aspects in subsidies for the purchase and restoration of property.

An incentive programme for all companies on the islands to be future proofed by undergoing an environmental and climate impact assessment, followed by implementation of the recommendations, should be within the budget for at least the next five years.

The fact that the Swiss re-insurers studied global biodiversity loss, Malta being in the top 5, demonstrates the pivotal importance of all climate change indicators in finance today. If Malta is to improve its attraction of Foreign Direct Investment, this is the first element to improve on.

Vanya Veras is a Maltabased environmental economist and expert in environmental affairs, waste management and green infrastructure

“A circular, carbon neutral business model creates sustainable and socially just employment.”