Energy subsidies should be gradually phased out, renewable energy incentives boosted – Chamber CEO

While the government has said that energy subsidies will continue to be maintained both for businesses and families, CEO of the Malta Chamber of Commerce Marthese Portelli has said that the subsidies should be gradually phased out.

The Chamber is advocating for a gradual reduction of subsidies while simultaneously boosting incentives for renewable energy adoption.

Presenting 47 streamlined proposals for the upcoming Budget 2026, The Malta Chamber of Commerce, Enterprise and Industry is pushing government to act now on several sectors, including the phasing out of energy subsidies and going greener to secure Malta’s long-term sustainability and move more towards a well-being economy, in its pre-Budget 2026 document

The Malta Independent spoke to CEO of The Malta Chamber of Commerce Marthese Portelli, who outlined the Chamber’s pre-Budget 2026 proposals in its document, “Time to Action,” ranging from energy transition and infrastructure to transport and tourism. She said that some measures may prove unpopular but are necessary.

Portelli said that the Chamber presented its pre-budget 2026 document to government and Opposition earlier this week, and the reaction to the proposals was overall very positive.

Portelli said that the Chamber does not limit itself to the annual pre-budget exercise.

“We do not wait for the budget season. Apart from submitting our feedback to public consultations, throughout the year we hold several meetings with Government and Opposition representatives, including government entities and authorities, during which we discuss proposals, ideas and issues encountered by businesses. Last year, we held more than 50 meetings to this effect,” she said.

Last year, the Chamber introduced a tracking system to monitor which of its proposals have been taken up and implemented, and to assess whether there is tangible improvement in take-up and implementation from one year to another. “This gives us timely status updates on the adoption and implementation of our proposals. It acts as a metric that helps both us and government to measure and register progress, if any,” Portelli explained.

The Malta Chamber also streamlined its proposals, cutting the number from 200 last year to 47 this year, and aligning them under the pillars of Malta Vision 2050.

“This year’s budget needs to pave the way to kick off implementation of Malta Vision 2050. For this Vision to be implemented in a timely manner, we have to start working on it from today,” Portelli said.

While some of the Chamber’s measures may be viewed as unpopular because they require a culture change and addressing the status quo, Portelli said that their budget proposals are designed for the good of the nation and in favour of a well-being economy.

“The Chamber does not think in silos. Our proposals are designed to address the various challenges that we face as a nation, challenges which impact both businesses and the general public. People and businesses are interconnected, with each relying on the other. The success of one directly influences the success of the other, creating a mutually beneficial relationship,” she said. Portelli said that this is why the Chamber’s documents repeatedly emphasise well-being as a cornerstone of economic and social policy.

“Every proposal that we put forward is implementable, but there needs to be the will and the right structures in place,” she said.

For example, one of the Chamber’s proposals is on how the government can increase efficiency and efficacy within the civil service and the public sector. 

Portelli acknowledged the many valid employees working within the public sector, many of whom have years of experience and expertise within government, but who may not necessarily be currently deployed or assigned to the work they excel at.

Portelli said that the Chamber proposed a comprehensive review of job roles and responsibilities within all government ministries, entities and departments to identify areas of duplication, streamline processes and eliminate unnecessary bureaucratic layers, capture overstaffing and reassign roles and responsibilities to have a leaner public sector which is more responsive.

“We would have discussed these proposals not just internally and within our Council, but we would have also gathered feedback from the business community,” Portelli said.

Energy transition: incentives over subsidies

A central theme of the Chamber’s proposals is on energy transition. Portelli emphasized that Malta must prepare for the eventual phasing out of government’s energy subsidies. She cited the 2024 EU Country Report, which urged Malta to phase out these subsidies gradually. Additionally, she mentioned the Central Bank’s 2025 Discussion Paper, which highlighted the advantages of a well-communicated, gradual suspension of subsidies – according to the Central Bank, this approach would ease the adjustment costs on the real economy while still encouraging private investment in greener and more affordable energy alternatives

“We sat down with our members and explained why it is important to start factoring in the eventual tapering off of energy subsidies in their business plans, annual budgets and infrastructure investment.” Subsidies should be phased out gradually, giving businesses sufficient notice and enough time to adjust. Sudden stops should be avoided. she said.

The Chamber is advocating for a gradual reduction of subsidies while simultaneously boosting incentives for renewable energy adoption.

Portelli said that its proposals include an open rolling call scheme for renewables coupled with  the removal of VAT on photovoltaic panel installation (following models in other EU states),  revisiting tax fringe benefit laws to reflect today’s vehicle cost, particularly green cars.

She said that one of last year’s proposals, which was also proposed in this year’s pre-budget document, was to reimburse VAT when a person wants to replace their appliances for more energy-saving ones.

“In truth, energy prices are subsidised through taxpayers’ money. Therefore, while it may seem that the government is saving you money on your electricity bill, you are still actually paying for it, and ultimately it is being deducted from investment in other areas.” Portelli said.

Furthermore, the Chamber is also proposing the introduction of increased tax credits for businesses investing in renewable energy infrastructure and the purchase or lease of electric vehicles, and supporting manufacturing companies in INDIS estates to cover energy consumption costs through renewable systems.

“Blanket subsidies instigate waste,” Portelli said.

She said that one of the proposals government took on board was to write by how much the energy price was subsidised by the government on one’s electricity bill.

“There, you are already raising an element of consciousness, where the user is made aware of the real cost. It is a small step, but it helps to raise awareness,” Portelli said.

“We must empower businesses to invest and become more sustainable. We need to reward those businesses which, through their actions, are helping us reach renewable energy targets as a country,” Portelli said.

Since government is insisting that it is going to keep energy subsidies, Portelli was asked if the Chamber is worried that a “knee-jerk” reaction would occur, negatively affecting businesses.

“We have voiced our position multiple times. We favour a gradual tapering off. Knee jerk reactions should be avoided at all costs. Ultimately the buck lies with Government. However, we would do well to take heed of the EU Country Report and that of the Central Bank on the subject matter,” she said.

“Additionally, we need to seriously consider the liberalisation of our distribution market, keeping in mind the EU Electricity Market Directive requirements and that the 8-year derogation is bound to expire in 2027 – there is no guarantee that we will be granted further derogations or extensions,” Portelli said.

She said that capital investment and recurrent expenditure need to be looked into as well and recalibrated accordingly both from an ROI perspective and from a national priority perspective,” Portelli said.

Tackling traffic: a mentality shift

Portelli said that to mitigate traffic, the number of cars on the road needs to decrease.

Among the Chamber’s key proposals are an e-mobility wallet, allowing citizens to use government transport subsidies on environmentally sustainable or shared transportation options of their choice, coupled with parking fees in central urban areas with fees paid being transferred back into the e-mobility wallet.

Parking fees are common in many European countries, “however, our proposal aims to incentivize sustainable travel further. When one pays the parking meters fee, this would be reimbursed to the individual in their e-Wallet, so that they can then use it on alternative, sustainable systems,” Portelli said.

The Chamber is also proposing expanded park-and-ride schemes and smart parking systems integrated with GPS, AI-driven monitoring of loading/unloading bays and delivery logistics to ease business operations.

It is also proposing a centralised, AI-based permitting system for works and road closures, integrating and coordinating activities currently overseen by local councils, government entities like Transport Malta, Infrastructure Malta, Water Services and Enemalta, as well as telecoms companies.

Asked about the waste management challenge in the country, she described it as a “plague.”

Portelli said the Chamber is pushing for accountability through new measures such as barcoded waste bags.

“Enforcement would be more straightforward. It would be clear which household the waste bags belong to, making them easily traceable and serving as a deterrent,” she said.

“Who pollutes must be held accountable. Good citizens and businesses who respect sustainable practices should be acknowledged.”

Infrastructure and population pressure

Malta’s growing population and increasing tourism numbers are adding strain to the country’s infrastructure, Portelli said.

“For the past four years or so, we have repeatedly pointed out that our infrastructure is not keep up with the population pressures and respective demand. Energy and water infrastructure, roads – all are under pressure. Some solutions may be unpopular, but if they are fair and ensure a level playing field, people will accept them,” she said.

On tourism, Portelli said that the Chamber continues to push for quality over quantity.

“Quantity puts extra strain on infrastructure. Whether a tourist stays in a five-star or a three-star hotel, they should all be given a quality experience. If you ask me, have we reached the quality levels desired yet? I would say no. We must look not just at the number of tourists but also at their net spend. We should also look at the country’s capital and recurrent expenditure towards the sector,” Portelli said.

Budget expectations

Prime Minister Robert Abela recently promised that the 2026 Budget would be “the best budget ever.” She was asked whether she considered this a populist claim.

“We hear this every year. I would not like to speculate at this point. We need to wait till budget day to see what is going to be proposed,” Portelli said.

“When we hear the term ‘best budget ever,’ we like to think it will address the 12 major challenges we have identified. If those are tackled seriously, then perhaps it can be called the best. But we have yet to see,” Portelli said.