The concept of environmental capacity seems intuitively attractive for implementing sustainability in small island states, and this paper examines its usefulness in the island state of Malta. The concept suggests that there may be limits or thresholds to the total amount of development that an area can contain without losing its critical environmental features or capital. The research uncovers serious tensions in the theory and practice of environmental capacity assessment, surrounding the determination of critical environmental capital, and the reconciliation of scale, expertise and environmental justice. It concludes that for the concept and its associated planning tool to have transformative potential in Malta, it will need to throw off reformist versions that are technocratic, expert based and dominated by metaphors of instrumentality, and that the political context in which it is implemented will need to support open, informed debate and a genuine search for alternative models of environmental governance.