Corporation pegs CO2 cost at €11m-€12m per year from 2013

The commissioning of the new diesel engine plant at the Delimara power extension will lead to an annual reduction in CO2 emissions of 25 per cent, or approximately 475,000 metric tonnes per year due to the increased efficiency of this plant and the consequent reduction in fuel consumption, according to the Enemalta Corporation.

The corporation was replying to an article published in The Malta Independent on Sunday of 1 April entitled “Additional €30-€45m cost for Enemalta with Delimara heavy fuel ‘solution’”. In its reply, Enemalta explains that when taking into account the full production of electricity in Malta, it is expected that the cost of emissions, based on current prices, will be in the range between €11million and €12million.

The current futures market cost of one allowance to cover the emission of one tonne of CO2 when new rules on such emissions kick in next year, varies from €7.4 to €8.6, representing an annual cost of between €3.7million to €4.3million for the CO2 produced by the new plant.

Taking into account the full production of electricity in Malta, it is expected that the cost of emissions, based on current prices, will be in the range of between €11million and €12million annually.

The Corporation also clarified that is was incorrect to imply that the use of fuel oil by the new plant at Delimara would be responsible for the emissions of CO2 that will have to be paid for under the emissions trading scheme.

CO2 emissions are produced whenever a hydrocarbon fuel is burnt, be it fuel oil, gasoil or natural gas, the Corporation said. In fact, the Intergovernmental Panel on Climate Change (IPCC), a UN body, published the following CO2 emission factors for commonly available fuels and it can be seen that use of gasoil would only result in a four per cent reduction in CO2 emissions the use of natural gas would still produce 73 per cent of the CO2 produced using fuel oil, and the 27 per cent reduction in CO2 emissions registered when Enemalta stopped using coal in 1994 is comparable to the reduction expected from any future use of natural gas for the extension.

The new Emissions

Trading Scheme

In line with its objectives to reduce CO2 emissions and hence minimise global warming, the European Commission established, back in 2003, a scheme for greenhouse gas emission allowance trading within the European Union in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.

As such, Enemalta says it would be wrong to classify this scheme as a fine. The objective of these Directives is to support the UN Climate Change programme and to stabilise greenhouse gas concentrations in the atmosphere.

As a result, all consumers of electricity have to pay for every ton of CO2 emitted as a consequence of the production of the electricity consumed, it adds.

As from next year, each EU member state, including Malta, will be given allowances in proportion to their electricity production and emissions reduction targets, which they will sell to the power sector through a system of auctioning. These allowances were previously passed on to the power sector free of charge, but taking into account the polluters pay principle, they will be sold to the electricity generators who are expected to pass on the increased cost of CO2 to the consumers of electricity, this being the best way to incentivise the conservation and efficient use of energy.

CO2 is emitted whenever a hydrocarbon fuel is burnt, in other words CO2 is emitted irrespective of what kind of fuel is burnt (this being fuel oil, gasoil or natural gas). The Emissions Trading Scheme also provides the main long-term incentive for new renewable energy technologies and the capture and storage of CO2.

At present, for every kWh consumed in Malta, 0.89 kilos of CO2 are emitted. When the extension is brought into service, this will reduce to about 0.67kg per kWh of electricity when the new plant is fully in service, Enemalta explains. In fact, Enemalta says that the new plant itself will only emit 0.58kg of CO2 for every kWh generated, and it is worth noting that other emissions will also be reduced with the commissioning of the Delimara extension. SO2 will be reduced by 38 per cent, and NOX by 48 per cent of current levels.

Enemalta’s debt to be offset by interconnector rates, increased efficiency

In reply to questions raised over the servicing of the debt incurred by Enemalta, the Corporation says such loans were taken mainly to finance the construction of the new generating plant and more recently the interconnector, and the increased operating costs resulting from compliance with EU Environmental Directives.

“It is expected that the savings gained through the increased efficiency of the new plant and the fact that electricity may be sourced from the European electricity markets at a lower cost to that generated locally, since the large European generators benefit from significant economies of scale, both in the generating plant and in the procurement of fuel, will compensate for this,” it explains.

“Furthermore the cost of electricity in Italy and most of the other member states is liberalised and historical data on the electricity prices on the markets is available on the Internet. The type of market manipulation which is alluded to in the article would be very unlikely, not to mention illegal.”

Over and above that, Enemalta cites the fact that the cost of continued operation of the Marsa plant will reduce substantially when the new generating plant comes into operation and that will end with the commissioning of the interconnector when the Marsa plant will cease operations.

“There is no intention of keeping the Marsa Power Station operational after the interconnector is in operation. In the unlikely event of damage to the cable, Enemalta has 487MW of generating capacity, enough to supply the summer’s peak of 404MW.”

Interconnector ‘safe’

Enemalta also put to rest concerns raised over the safety of the interconnector cable. The cable is a very heavy, weighing about 100 tons per kilometre, large, with a 300mm diameter, and the copper cable is armoured in lead sheathing – far sturdier than the 30mm or smaller diameter of fibre-optic submarine telecommunications cables that have been damaged in the past.

Enemalta clarifies that the interconnector will also be protected across its entire length by being either trenched or covered with specially sourced smooth rocks piled 1.5 metres high over the cable where necessary.

“While damage can never be excluded, every effort has been made through the planning of the best route and mechanical protection is to be provided to minimise the risk of external damage. This is in contrast with the prevalent practice with telecommunication cables, which are small, relatively light and just laid on the sea bed.”