Small island economies (SIEs) such as Malta are at the forefront of the global climate crisis. Rising sea levels, increasingly frequent and more powerful storms, reduced access to potable water and damage to ecosystems are a few of the risks that a rapidly changing climate exerts on islands’ economies and livelihoods. As a means of safeguarding against the ongoing climate crisis, efforts by many SIEs have focused on shifting to renewable energy and electric transportation and setting dates for net-zero targets.

In this context, KPMG has launched its ‘Net zero readiness spotlight: Islands’. This spotlight edition of the KPMG ‘Net zero readiness’ series, co-created with CREATE-Research, highlights SIEs and how they can attract private capital in their journeys towards net zero.

It assesses 36 countries and territories across the globe, including Malta, on their relative preparedness and ambition to achieve net zero, and their ability to attract private capital to fund the transition to a sustainable economy, while highlighting examples of practices that are already being deployed.

This report is comprised of two research areas. The first is a country profile analysis across 19 different indicators to evaluate preparedness based on four pillars: 1) their contribution to decarbonisation; 2) their drivers of emissions; 3) policies and enabling environment; and 4) energy supply and use. The country profiles are shown in Figure 1. 

The second part of the report focuses on the investor perspective and the steps SIEs need to take to attract private capital. Decision-makers at 24 large institutional investors and pension plans, together managing $28.7 trillion in assets, have provided insight into the reasons global investment portfolios are underweight in SIEs and the actions SIEs may take to create change.

 

A spotlight on Malta: How is the country performing on net zero readiness?

The report indicates that Malta is one of the more prepared and ambitious countries in respect of its net zero emissions, compared to the other SIEs surveyed in this study.

Malta’s carbon-neutral target for 2050 is supported by several initiatives, including the operation of a gas-fired power station, plans for a gas pipeline to Sicily, free buses and electric vehicle subsidies.

The country’s aim to become carbon neutral by 2050, with sights on its sister island Gozo to become carbon neutral earlier, places it among 10 SIEs in this publication that have either a net zero target embedded within law, a declaration pledge or policy.

In 2021, the Maltese government published a low-carbon development strategy based on scientific and economic analysis, which includes a plan to decarbonise across all local sectors.

In a KPMG interview on this topic with the Minister for Environment, Energy & Enterprise Miriam Dalli viewed this strategy as “one which will guide Malta in this transition in various areas identified as key contributors, in particular renewables, energy efficiency in buildings, transport and waste management”.  

Malta’s economy is service based, with no large-scale industries to decarbonise and emissions per person are already low. This context should allow the country to focus on priority areas, including renewables and transport, which will yield benefits beyond net zero – including on air emissions and public health.

Minister Dalli also indicated that “the Maltese government will be setting up a low carbon development strategy monitoring board that will oversee and create synergies among ministries for the delivery of its planned actions and measures”.

Such an enabling policy environment, supported by awareness raising and education at all levels, will support Malta in taking the necessary steps towards a more sustainable future.

David Pace is partner, Head of Advisory, and Rachel Decelis is senior manager, ESG, KPMG in Malta. For more information, e-mail racheldecelis@kpmg.com.mt or davidpace@kpmg.com.mt.