Green bonds are designed to raise funds for projects with environmental benefits, including renewable energy developments (wind, solar, hydroelectric power), pollution prevention, sustainable water management and biodiversity conservation. Issuers of Green bonds may include the Malta Development Bank and NSDF. So far, Malta's economy is heavily reliant on revenue from mass tourism and gaming, so it may find it challenging to allocate new resources for such a significant shift without external investment such as Green bonds.
What needs to be done is to faithfully follow the government policy on its Green Deal. Yet, one must be aware of greenwashing tactics. These obscure the truth, making it difficult for citizens to make informed choices. It's important for islanders to critically assess claims by Castille of sustainability and look for certifications or third-party verifications to avoid being misled by greenwashing tactics. Politicians have a knack of using vague terminology such as "eco-friendly" or sustainable development without providing evidence or certification to support these claims. In the renewables consultation document, issued last year, there was ebullient endearing remarks about a Green Deal. One would expect the drafting of an ambitious target to produce hydrogen by electrolysis.
Castille has recently smelt the coffee. It wants to start speeding up the development of renewables in the Exclusive Economic Zone (EEZ). It is good to know that last year PKF hosted conferences (jointly with Times of Malta) at the Hilton on the theme of green hydrogen. Now it plans to introduce its business partners to bid for renewables and hydrogen generation, when the call for tenders is announced. By contrast, in the US, funding for low carbon industries is backed by solid legislation. President Joe Biden has proposed and supported various fiscal incentives and policies aimed at promoting clean energy, addressing climate change and encouraging green investments. Some of the key initiatives and proposals include tax credits. Malta's position can be labelled as a laggard concerning its drive to launch Green Loans. Ideally, these can spearhead a drive for sustainable offshore renewables future. Malta is one of the smallest and most densely populated countries in the Mediterranean. Its limited availability of land makes it very challenging to establish large-scale renewable energy projects, such as extensive solar farms or wind turbines, which require significant space.
Yet, it is undeniable that Malta has a good potential for solar energy due to its Mediterranean climate, its opportunities for other types of renewable energy, such as anchoring large offshore wind farms in its vast EEZ. Transitioning to renewable energy requires substantial upfront investments in infrastructure, technology and imported skills. Malta's economy is presently totally reliant on volatile sectors such as mass (low-cost airlines driven) tourism, construction, manufacturing and gaming. Moving forward, one must be careful not to over-estimate the intermittent nature of renewable energy sources, like solar and wind. It worked in larger countries but for us, it necessitates advanced energy storage solutions and expert grid integration technologies to ensure a constant power supply. Developing such infrastructure can be costly and technically complex, particularly for a small island nation with a fragile grid system.
The energy minister must be mindful to set certain safeguards. The blueprint requires not only smart investment but also a cultural and modal shift towards sustainability. It is good to note that the European Union's green targets and support for renewable energy, as well as advancements in technology, could help Malta overcome some of these barriers and increase its success rate. Currently for the past decade, the island has been weaned on burning fossil fuel at Delimara and Electrogas power stations. The gas is supplied exclusively by Socar, a company owned by Azerbaijan private investors. Malta has a good potential for increasing solar panels in homes and factories which so far reaches a mere 13%. Yet opportunities for large scale floating wind farms exist. Once, in full function mode, they can supply considerable power to generate and export hydrogen to Italy in a future gas pipe line. The island lacks large rivers or high-altitude areas for hydroelectric projects, and its relatively small land area limits the potential for onshore wind energy developments.
It is true that transitioning to renewable energy requires substantial upfront investments in grid infrastructure, higher technology and higher manpower skills at Enemalta. The intermittent nature of renewable energy sources, like solar and wind, necessitates advanced energy storage solutions and grid integration technologies to ensure a constant and reliable power supply. It goes without saying that Castille needs effective policies and astute regulatory frameworks to encourage the modal shift from LNG to hydrogen/ammonia gases. Malta may face challenges in creating and implementing policies that sufficiently incentivise international investors to place their bets on energy projects, particularly in a way that balances economic growth with environmental and ecological sustainability. The roadmap requires not only high Capex but also a cultural and economic shift towards a Green mentality. Malta improved its offers of financial assistance in many schemes to reduce domestic levels of carbon footprint.
Regrettably, there will be no renewable projects on Hurd's Bank, which is a shallow area in international waters off the Marsascala coastline currently used for ship bunkering. This location, which due to its shallow water, is ideal for anchoring renewables but is strongly resisted by the maritime lobby. Readers ask why is use of shallow waters around Hurd's Bank so important. The simple answer is that for many years, such location (approximately 700 sq. kilometres) served as a convenient bunkering spot for shipowners known as ship-to-ship transfer operations. Such activities involve the transfer of a vessel's cargo, be it petroleum, chemical and gaseous cargoes, to another vessel moored alongside it. One needs to evaluate the ideal alternative use of this location and possibly afford another bunkering spot elsewhere. Attracting overseas capital for large-scale renewable energy projects, involving extensive wind farms or floating solar panels, looks like a pipe dream. This dream is aimed to reach its apex by 2035. Consultants think that barring any unforeseen obstacles, the area shall generate a significant amount of electricity (for example 3.5 gigawatts) for the exclusive purpose of electrolyzing seawater into hydrogen gas, (for export). It is doable. While the ambition to produce energy for green hydrogen production is laudable, achieving this goal would require overcoming substantial technological, financial and regulatory challenges. Only the brave venture forth.
gmm@pkfmalta.com
George M. Mangion is a senior partner at PKF Malta