Investing in Tomorrow: Malta's Leading Examples of Sustainable Finance

In the last decade, Malta has seen various projects in sustainability investments, that have attracted both local and international funding. This article, which is part of a FinanceMalta series of articles on sustainable finance, highlights several case studies that illustrate how various sectors in Malta have been nudged through the right channeling of savings into sustainable finance.

Transforming the Energy Sector

One of the most profound changes in Malta's sustainability journey has been in the energy sector. The shift away from pollution-intense heavy fuel oil towards cleaner alternatives has been driven by strategic investments. The introduction of liquefied natural gas (LNG) has played a pivotal role, marked by the construction of an LNG terminal and gas-fired power plants. Additionally, the establishment of an HVAC interconnector to Sicily (and a second one on the way) has enhanced Malta's energy security and efficiency.

In parallel, significant funds have been allocated towards renewable energy initiatives, leveraging Malta's abundant sunshine. The launch of Malta’s Solar Farm Policy has facilitated government aid for large-scale photovoltaic (PV) installations, resulting in numerous solar farms across the island. This initiative complements the renewable energy grants available for households, which have empowered homeowners to install PV systems and battery storage units. The feed-in tariff scheme has further incentivized these investments. According to the National Statistics Office, over 33,800 PV panels were recorded in Malta and Gozo by the end of 2023. Collectively, these efforts have led to a remarkable reduction in energy-related greenhouse gas emissions by almost 60% in recent years.

Financing Energy Efficiency

Another effective strategy for enhancing sustainability in Malta has been the financing of energy-efficient technologies, mostly related to buildings and industrial processes. Government has provided cash grants to both enterprises and private individuals seeking to invest in energy efficiency projects. Businesses have benefited from financial assistance for various initiatives, while individuals have received part-financing for purchasing heat pump water heaters, installing roof insulation, and double-glazed window panels.

EU funds have also been directed towards larger-scale national projects, such as the mass retrofitting of street lighting with higher efficiency bulbs. These funding initiatives have significantly improved Malta’s energy efficiency, particularly in the residential sector. The technical energy efficiency index has shown a steady improvement, with an efficiency gain of approximately 12.5% between 2010 and 2022, as reported by the EU’s Odyssee MURE database.

Promoting Low-Emission Vehicles

The promotion of low-emission vehicles has been another key area of sustainable investment in Malta. Government has introduced generous grants for the purchase of zero or low-emission private vehicles, making it one of the most attractive schemes in the EU. Maltese drivers could benefit from an €11,000 grant when purchasing a new electric or plug-in hybrid vehicle, with an additional €1,000 available for scrapping an old fossil-fuel vehicle. Although grants for hybrid vehicles were discontinued in 2022, electric car purchases can still benefit from an €8,000 grant as of 2025. In addition, financial instruments were put in place by commercial banks, aided through EU/ national loan guarantees, to sustain this transition through low-interest rate, low collateral loans. Public transport has also seen a set of electric bus vehicles being rolled out within the route network.

The impact of these incentives is evident in the substantial increase in registered hybrid and electric vehicles. By the end of 2024, electric and plug-in hybrid vehicles accounted for 4.0% of the national stock, totaling 17,759 vehicles. Notably, the number of electric vehicle registrations surged by 13.5% within a single quarter, underscoring the effectiveness of sustainable financing in promoting cleaner transportation options.

Innovations in Water Management

Malta's water management system has also seen significant improvements through sustainable investments. In 2023, the Water Services Corporation launched Malta’s first green bond to fund projects such as the new reverse osmosis plant in Hondoq. This initiative aims to enhance the efficiency of the WSC network and reduce non-revenue water.

Furthermore, the “Iftaħ u Ixrob” campaign has encouraged locals to shift from plastic-bottled water to tap water, promoting sustainability by reducing single-use plastic consumption. This initiative is supported by subsidies for household taste improvement technologies, including activated carbon filters and reverse osmosis systems.

Broader Sustainable Financing Initiatives

Beyond the aforementioned categories, Malta has witnessed numerous other successful sustainable financing initiatives. Tens of millions have been invested in building the infrastructure for the shore-to-ship electrical connection in the Grand Harbour, significantly reducing pollutants in the air and water. Additionally, substantial investments have been made in waste separation, collection, and sorting, alongside schemes aimed at greening and enhancing open spaces within communities. These examples reflect the diverse and impactful nature of sustainable financing in Malta.

Conclusion

The case studies of successful sustainable investments in Malta demonstrate a commitment to fostering a greener future. Through strategic investments in energy, transportation, and water management, Malta has made significant progress in reducing its carbon footprint. As these initiatives continue to evolve, they serve as a model for other sectors looking to embrace sustainable practices and investments. The journey towards sustainability is ongoing, and Malta's achievements highlight the potential for positive change through collaboration and financial innovation.

Chris Meilak and Dr Jeanelle Arpa are members of EY Malta’s sustainability team, who support FinanceMalta’s initiatives on sustainable finance.