The PKF conference will be opened by Minister Miriam Dalli, followed by presentations made by notable local and foreign speakers.

This conference will be held at the Hilton Malta on 12 April 2023 between 9am and 2pm followed by a networking lunch and drinks. This is a revolutionary theme which if taken at the flood will lead to fortune.

There is no lack of awareness that something big must be done to fight climate change. Considering our highly mobilized community, the advent of a booming tourism industry and our 100% dependency on fossil fuels, it is time that the stakeholders in Malta wake up and seriously start investing in renewable sources with the eventual generation of Green Hydrogen.  In ambitious visions of a green hydrogen-fuelled future, the liquified fuel powers everything from cars to both Electrogas and BWSC electricity plants. In this vision, the sheer scale and variety of demand mean that the supply question solves itself: investors will be happy to finance schemes to generate green hydrogen, because they are confident there will always be buyers.

For now, Malta has been a laggard as regards renewable energy reaching a mere 10% mainly on home use of PV panels. No serious investment on wind turbines was planned except for a controversial construction of wind farm in Montenegro by Enemalta and its Chinese shareholder. The next leap forward was the issue of a PMC last October which invited consultations with interested parties to set up an ambitious Green hydrogen facility located offshore within Malta's Economic Exclusive Zone.  

Imagine, if within the next decade Malta can be generating over 2GW in green electricity in an offshore location with the possibility of exporting surplus to requirement green hydrogen via a gas pipe to Italy. When the renewable energy revolution started a few decades ago, financing was hard to come by, yet was really only one question investors had to ask.  Would the electricity produced by solar panels and wind turbines be cheap enough to compete with coal or gas?  The answer is yes.

Now, that we are seeing the end of the pandemic tunnel, economies are facing new obstacles to growth as the Russian war has distorted commerce in Europe and racked up consumer prices. However, apart from the atrocities of war, this resulted in huge uncertainty of supply chains caused since the start of the Russian invasion of Kyiv. 

Other emergencies affected the energy sector to replace Russian gas once the taps were turned off by Putin. In past months, one is noticing a global drive to fight climate change amid new incentives to activate de-carbonisation policies. Major oil producers have been wary of the turbulence in the markets and prudently did not seek new upstream projects resulting in a spill over effect on the production of natural gas, which is often a by-product of drilling for crude. One reads about frantic attempts to build new terminals in Europe to liquefy natural gas from sources alternative to Russia.

The Russian war on Ukraine and the curtailment by Putin of natural gas from Siberian sources has exacerbated the need to secure alternative green energy. Demand for electricity was clear, and the problem of getting it to market has long been solved by national grids and gas pipe lines. With green hydrogen the picture is very different. First there is the complexity of production, which requires a local source of both water and renewable energy to generate Green hydrogen via electrolysis.

Then comes the question of getting the product to where it needs to be consumed. There is limited existing hydrogen pipeline infrastructure. Shipping would involve building one plant to liquefy the gas first, and a second to convert back to gas before consumption at the destination. Alternatives of using ammonia or other fuel carriers for shipping have become viable but are still facing challenges to produce on a massive scale.

Certainly, State financing is not unlimited, so it is essential that green hydrogen supply projects are funded privately. This will not only increase demand for green hydrogen and encourage economies of scale, but also demonstrate to other private investors that the industry is viable.

That is also a reason why oil and gas companies such as Shell and BP, are actively developing electrolyser projects. They have the ability to fund projects from equity, even if the economics are uncertain, or the project risk is high, rather than relying on bank lending. Visions of a hydrogen-powered future also assume a global trade underpinned by a spot market for the fuel at a commodity exchange, and derivatives allowing for risk management. There is nothing to stop the creation of an active financial market in green hydrogen, as market participants seek to manage risk, and financial market participants see profitability in providing a service.  In the EU there are seven European countries (France, Finland, Portugal, Spain, Germany, Netherlands and Norway) that have published their national hydrogen strategies.

At the moment Malta mentions hydrogen in Malta's 2030 National Energy and Climate Plan that was adopted in December 2019.  Regarding the efforts of Minister Miriam Dalli on proposed gas pipeline with Italy it shows tenacity and vision.  Malta is surrounded by water so production of hydrogen would be logical step.  Hydrogen has about 2.5 times the energy density of methane, which would mean if one pound of hydrogen would be burnt, 2.5 time more of energy would be generated then from burning same amount of natural gas. This would mean bigger energetic stability for Malta since it would be less depended on LNG.

An ideal option is to use renewable energy to produce green hydrogen by attracting foreign investors to set up sophisticated infrastructure to use renewable energy  to split water into hydrogen and oxygen. It also does not stop governments from funding new uses of green hydrogen, such as hydrogen-powered bus and an underground mass transit network.

International banks will also be relatively comfortable lending to supply projects where demand at a fixed price is guaranteed by a state-backed entity. Join us at the conference and share your thoughts on this unique solution towards climate change.

 

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George M. Mangion is a senior partner at PKFMalta