Last Updated on Thursday, 26 January, 2023 at 11:30 am by Andre Camilleri
Last Sunday, I had the opportunity to attend an event organised by the Labour Party in the charming city of Żejtun, also known as Città Beland. A speech was delivered by the Prime Minister on the eve of the visit of the European Commissioner for Cohesion and Reforms, Elisa Ferreira.
Indeed, the Commissioner was present in Malta as part of her tour to announce the approval of the operational programmes under the current Multiannual Financial Framework, covering the years 2021-2027. During the Maltese Presidency of the Council of the EU, in my former role of president of the EU Budget, we managed to negotiate the revision of the Financial Regulation of the EU, which encompassed another fourteen pieces of legislations. Part of this revision extended to the simplification of complex rules under the Common Provisions Regulation in relation to the European Regional Development Fund, the European Social Fund, and the Cohesion Fund.The latter relates to the rules that would need to be opened and simplified once again to cater for the current Multiannual Financial Framework, and to also reflect the Covid-19 and the current geopolitical realities.
My understanding is that as part of these operational programmes, Malta planned infrastructure projects for the greening of the highly urbanised areas of the Maltese islands, as well as massive investments in research and development, sustainable tourism especially in Gozo, and digitalisation. Surely, in a global context where the problem is not the economic demand but the restrictions of raw materials emanating from the war in Ukraine, investing in supply-side policies is crucial to create a better long-term plan for Malta’s agile economy. Clearly, we must expediate the implementation of investments in renewable energy, other sources of energy and digitalisation. The former is crucial for the transition to cleaner energy due to its embedded regulatory transition risks, while the latter can aid in shifting the steady state of our economy by also investing in people’s skills to primarily enhance our competitiveness.
Unquestionably, we need the European Commission’s swift proactiveness for the simplification of public procurement rules, which at times, proves a little cumbersome, and even contributes to unnecessary delays in delivering massive infrastructure projects on time. Frankly, I know about this process as it was my role to engage with the European Court of Auditors. Undoubtedly, if public procurement rules are not simplified, the European Court of Auditors will obviously stick to the current criteria when assessing transactions to prepare for the Statement of Assurance, or as generally known by its French acronym DAS, Déclaration d’Assurance. For the benefit of my readers, the European Court of Auditors is one of the seven EU institutions. The Maltese representative in the EU Court of Auditors is our former Commissioner for standards in public life, Dr. George Hyzler, who was nominated by the Maltese government and recently approved by Council and the European Parliament for a term of six years.
Plainly, the government’s strategy is to embark on major infrastructure green projects including the excavation of tunnels to create overground gardens and open public spaces. It is worth noting that public authorities are able and have the power to choose environmentally friendly goods and services to promote sustainable consumption. Obviously, this can fall under the realm of Green Public Procurement. Notwithstanding that Green Public Procurement is still a voluntary instrument in the EU, it can only be effective by following an established set of criteria, including the requirement of clear, and verifiable environmental standards for the purchase of products along the procurement process.
Likewise, we must prepare for the transition of our main energy source that operates with LNG, which like nuclear energy is currently in transition under specific conditions for activities that contribute to climate mitigation in the European Commission’s Taxonomy Delegated Act. Correspondingly, from what I have recently followed in the local media, given our limited territory, the Maltese government is planning to extend the generation of renewable energy by using floating solar panels around Malta’s Exclusive Economic Zone (EEZ). Needless to say, all energy companies in Europe, are required to prepare strict transition plans beyond solar panels and limited renewable energy sources.
Clearly, Malta must carry on investing, and shall not stop achieving higher economic growth rates, as otherwise it would prove difficult to sustain free childcare, pensions, healthcare, education, and now the additional greening of our concrete spaces. Nevertheless, advancement in technology and digitalisation can aid in achieving better economic results. Considering the population growth, and the restricted territory, the progress in technology and digitalisation are key to create a bit of breathing space for our citizens. Likewise, we must use technology to the benefit of our citizens and to optimise working hours. As much as I would love to see the greening of Malta’s most urbanised zones, equally we must not forget that the planting of additional trees, especially in large open spaces, require additional supply of water if we are to create proper open spaces for the Maltese public.
Therefore, the holistic plan for the greening of Malta, must cater for additional water catchment reservoirs, if we are planning to excavate underpasses, including a self-sustained energy system for its surroundings. Else, we must produce more water from our desalination plants, and consume additional electricity from our grid. It is important to recall that the ECB and other reputable international companies, including rating agencies, are reporting that the Southern Mediterranean region, will suffer from heat stress and water stress due to climate change events. This means that Malta might require additional investments in water generation to firstly cater for its permanent population, the seasonal population, as well as those economic sectors that are directly affected, such as warehousing, and hotel accommodation.
For instance, if a country is highly dependent on construction, its physical risks emanating from climate change might affect the economy’s performance due to physical risk shocks, especially if there are no plans to reduce such dependency. Similarly, the sectors that are highly affected by transition risks stemming from regulatory changes, might also affect our economy in the medium to longer term. Hence, the next level is to shy away from just breaking and excavating and the idea of green projects must embed sustainable practices along the entire process, ideally from procurement stage to the project’s sign off.
Unless we complement such massive infrastructure green projects with a change in behaviour and culture, including the adjustments of hybrid working hours, as well as tax incentives for retail establishments to open in different hours, it will prove difficult to transit to a contemporary sustainable economy. Otherwise, our chronic traffic problems will persist during rush hours, and so will our frustrations.
Unquestionably, we must simultaneously focus on our own national ESG rating. My understanding is that rating agencies are attaching great importance to ESG ranking when assessing the credit rating of a country. The methodologies, from one rating agency to another, differ. Plainly, the E is quite important under ESG. However, the other subsets, S for the social and G for the governance play a key role in determining the ranking score of an ESG rating. Therefore, it is time to do the necessary quantum leap and change the way we behave if we are to transit to a more sustainable economy, way beyond the planting of trees and the installation of solar panels.
Certainly, the next step is the comprehensive democratisation of Europe’s financial system!
