The European Commission has projected that, overall, member states were not expected to economically return to normality before 2023.
Yet, Malta is projected to see recovery in 2021 and 2022, having some of the best projections by being double the overall EU’s projected recovery growth.
As a recovery plan, the EU has been dolling out a €750 million proposal to help speed up the recovery of the worst affected economies in Europe due to the pandemic – in which a total of 19 of the 27 member states are considered most in need of this stimulus package.
The need for a stimulus package has continued to show more and more prevalence as the weeks continue to go by and cases rise across the Europe. According to the European Commission, the overall Eurozone economy is projected to regress by 7.8% (an improvement to original projections of 8.7% at the start of the pandemic).
In Malta, unemployment has risen from 3.6% in 2019 to 5.1% in 2020 – yet this is thought to fall to around 4.1% by 2022.
Despite Malta having recorded one of the highest real GDP growth rates in the EU, after the pandemic paralysed Malta’s ability to rely on critical sectors such as tourism and immigration for growth (which Malta’s economic models are built around), much of that has been gravely impacted.
Yet, much of Malta’s projected recovery meanwhile is estimated to come from a driven domestic demand that has been expanded and accelerated throughout the pandemic.
In this regard, Malta is expected to accelerate GDP growth from 3% in 2021 to 6.25% in 2022.
All of these factors come at the precipice of the EU Budget period of 2021-2027, in which funding for the next financial period of the EU must be decided. Originally, much of this was being aimed towards funding a Green Deal for the EU – a flagship initiative of EU Commission President Ursula von der Leyen.
The EU’s Green Deal is intended to lay out a framework for legislation in order for the EU to be able to keep its international climate commitments – including reaching the goals that member nations have promised to reach under the Paris Climate Agreement.
This deal would touch upon every aspect of public policy and promote climate friendly, sustainable legislation – such as sustainable farming, efficient buildings, and green fiscal measures.
It also would include trade agreements – such as the new green trade deal announced between the EU and New Zealand.
Whilst private and public investment in each member state is expected to exist, it is estimated that a total of €3 trillion is needed to be raised for the investment plan linked to the Green Deal with all of this funding relying on the EU budget for the programming period 2021-2027.
Yet, with the timing of the pandemic and the effect that it has had upon EU countries, the Green Deal looked to become a victim potentially to COVID-19.
However, the Next Generation EU – an instrument designed to boost recovery – offers the opportunity for the EU to accelerate efforts towards a Green Deal transition alongside reaching carbon neutrality throughout this six-year period.
The money proposed by the Next Generation EU (€750 Billion) will go in addition with the EU Budget in order to reinforce specific, climate-friendly programmes within the budget by a total of €15 Billion.
This includes 30% of the expenditure which will go towards fighting climate change by only funding legislations that comply with climate commitments.
In terms of Malta, it can allow for the country to accelerate the commitments it has made under the EU and the Paris Climate Agreement.
According to a report released by the EU Commission to 2019, Malta has committed to reducing greenhouse gas (GHG) emissions by 19% by 2030.
The report notes that Malta – due to our service-based economy, specifically with the transport and agricultural sectors and legacy of waste disposal – Malta’s potential of reducing the scale of GHG’s is limited and with high mitigation costs, thus requiring more flexible solutions.
When it comes to a Green Recovery, this could lead to funding towards ensuring that Malta is able to further expand its solar energy sector (which the EU’s report notes is Malta’s most viable renewable energy source).
This puts forth a scenario in which the government is able to be further encouraged to ensure that PV Solar Panel Farms are developed further – which thus far are negatively impacted due to high land and grid connection costs.
It may also be utilised to further push Malta towards sustainable development and perhaps offer a more concrete drive towards the conservation of what natural resources the island still maintains both on land and at sea.
Another opportunity for a Green Recovery in Malta would be to encourage the development of Floating Offshore Wind farms. When initially studied by the EU Commission, this endeavour was seen as very costly – and thus estimates of its effects were minimal.
However, as reported in another Lovin Malta article, Malta has “one of the largest territorial waters in the region.” Through a European Green Deal initiative, this may become a more viable solution for renewable energy as well.
The report does note that Malta is fortunate that “climate and energy policy features prominently in the political agenda as reflected through the recent major infrastructural investments in the energy sector” whilst also remaining committed towards climate finance internationally.
As Malta approaches 10,000 COVID-19 cases, and as the EU Budget recently became approved, the chance for a recovery – both for COVID-19 and the economy – will undoubtedly begin to take further precedence in the coming weeks.
Yet, the chance for a Green Recovery for both Malta and the EU as a whole does offer an interesting opportunity looking at the future past the pandemic. Whilst COVID-19’s days seem to be numbered, a concrete solution towards fighting Climate Change does not seem as visible yet.
What do you think about a Green COVID-19 Recovery?