The Malta Business Bureau (MBB) has called for caution regarding the European Commission’s proposal to set an unprecedented 90% binding target on greenhouse gas (GHG) emissions reduction by 2040, compared to 1990 levels.

For businesses, particularly those in energy-intensive sectors, the proposed target presents both opportunities and challenges. While it creates potential for innovation in greener products and efficient resource use, it will also demand substantial costs and investments to achieve the required emissions reductions.

Maltese businesses are especially hit hard by stringent environmental legislation, due to our geographic situation, dependence on air and sea transport, and high trade costs.

Head of Projects & Sustainability Gabriel Cassar commented, “Through simplification initiatives over the past few months, the European Commission has acknowledged that it acted too hastily in proposing several pieces of new environmental legislation during the last term. While we value the EU’s climate objectives, they were not accompanied by sufficient support mechanisms, such as attractive financing and appropriate transition periods, which would ensure competitiveness and growth. We are now facing a situation where EU legislation is being amended and revised, in some cases even prior to being implemented.”

“A 90% GHG reduction by 2040 will undoubtedly require further major changes at both member state and company levels. The MBB calls on the Commission and EU legislators to learn from recent experience and adapt future policy proposals accordingly,” he added.

The 2040 proposal includes flexibility mechanisms to help member states reach the target, including the use of Carbon Capture and Storage (CCS) and international carbon credits.

EU climate targets lay the groundwork for its long-term climate policy framework. The current binding target aims for a 55% reduction in GHG emissions by 2030. This was accompanied by a wave of new EU environmental legislation impacting all sectors, most notably transport, energy production, and manufacturing.

According to Commission assessments, the EU is currently on track to achieve a 54% reduction in GHG emissions by 2030; just one percentage point short of the target. This progress reflects the strong commitment of all stakeholders and businesses to reduce their environmental impact and contribute positively to the green transition. Nonetheless, the cost to the competitiveness of European businesses and island-based operators should be properly acknowledged.

The MBB will continue to assess the implications of this ambitious trajectory and remains committed to be vocal at EU level while supporting Maltese businesses throughout the green transition. Strong dialogue between businesses and policymakers will be crucial to ensure a fair and gradual shift to a low-carbon economy to absorb additional costs in a proportional way.

The proposal will now move forward to the Council of the EU and the European Parliament for evaluation and adoption.