There has been a lot of comments about the effect of climate change following Minister Miriam Dalli's visit to Baku last week where she attended the COP 29. Can we honour our pledge to cut down on carbon emissions?
Brussels is busily encouraging member states to meet targets - and to reach net-zero carbon emissions by 2050. Remember, how president elect Donald Trump had ridiculed "climate change" and walked out of the Paris agreement signed in 2015. How is Malta faring in this quest?
During the past decades, our energy policy focused on generating electricity by first burning coal, then cheap quality oil, later changing to fossil fuels. All supplemented in the mix by importing power over a subsea inter-connector from Italy.
To date, we do not have a subsea connection to a green energy network with mainland Europe. Although we applied for EU funds, our initial application, which was for an LNG-only pipeline, was rejected (later amended to include hydrogen ready connection). Consequently, LNG is supplied to the Electrogas power plant via an FSU.
When, and if, Electrogas and BWSC are converted to run on hydrogen this may be facilitated once the Malta-Italy gas/hydrogen pipeline comes on stream. At COP 29 all members vowed to collectively cap warming at "well below" two degrees Celsius - and 1.5 degrees if possible. How can we define the deleterious effect of climate change? Simply put, this measure will fundamentally reshape life on Earth in the coming decades, once humans can collectively tame planet-warming greenhouse gas emissions, according to a landmark signed report from the UN's climate science advisors.
Let us now change the subject and discuss what are our energy plans in the aftermath of a budget 2025.
Party apologists and One station remind us how the economy is doing well, with low unemployment and an inflation rate lower than others. Basically, they all attribute the cornucopia of well-being linked to improvements reported by the NSO and Central Bank of a galloping GDP. Recently, during the budget speech, renewables were not given top relevance. However, Minister Caruana believes that more foreign workers are needed, based on a simulation model that predicts the population will reach 800,000 by 2040. What has not been valued or discussed is the resulting degradation of ecology and air quality if the population continues to grow at such an exponential rate. Good news comes on a bumper tourist year with revenue expected to reach €3.1bn according to the prime minister during his presentation at the National Property conference.
The gaming sector's contribution to the economy grew to more than €1.3bn last year while the number of new gaming licenses halved, according to an annual report from the industry watchdog. The IMF said in its annual country report that the economy is projected to grow by 5% in 2024 and 4% in 2025, largely in line with projections.
That growth will be among the highest in the EU. The fly in the ointment is the energy subsidies which last year accounted for a fifth of the financial deficit. Again, the IMF says fixed energy price policies should be phased out and the funds allocated for investment (including green) and productivity-enhancing policies.
This rebuke from IMF was to start shifting to more targeted subsidies and strengthening market pricing mechanisms. This will reduce fiscal risks associated with energy price shocks, enhance incentives for energy conservation and help accelerate the green transition. But it is not all doom and gloom as both tourism and gaming recovered from Covid days.
The Gross Value Added of the latter sector grew by €55m, a rise of 4%, yet the number of terminated licenses almost doubled. Party apologists laud this rise in GDP as the primary gauge of a society's success, ignoring that it fails to measure ills ranging from environmental degradation, congested roads, to mental health and a stark reminder of more people at risk of poverty.
If only policymakers at Castille tone down its propaganda over affluence such as ownership of luxury yachts (notice over-crowded marinas), the import of expensive EV cars, use of private jets and marketing of Dubai-style holidays. Stop and envisage a grandiose future; the resplendent Villa Rosa seafront complex by Anton Camilleri (tal-Franciz).
Not far away, another three tower cluster by DB and its Hard Rock complex. These architectural gems are cousins to Mercury Towers, now approaching its final opening. Yes, we are all trying to grow the pie and gorge at the cream cakes and savoury Japanese steaks, all the while, we are advised against gluttony and gout.
The cantankerous clique never stops to amass millions. Copying Dubai, we import an increasing cohort of low-skilled and low-paid TCNs. Let us now discuss the crusade of low-value tourists. In an interview, O'Leary celebrates Ryanair's significant presence in Malta, highlighting a 24% growth in passenger traffic over the past year. He pontificates how Ryanair has been beneficial to Malta's tourism sector, planning in future to increase to eight million visitors - not only during the summer but better still during the shoulder periods. The question arises, can tiny Malta survive an unstoppable invasion of low-paying tourists.
In summary, back to COP 29, Minister Dalli acknowledged that the green sector creates jobs, strengthens electric grids, reduces power cuts, and eliminates the need for noisy diesel generators. It helps lower energy bills. But many ask where can we access the capex? As revealed by Steve Ellul (ex BOV analyst and now CEO of Infrastructure Malta), our banks are sitting on a €25bn cache of idle funds. So, the money pot is full. In unison, we are earnestly waiting for Castille to fire the starting gun to issue licenses for Renewables (wind farms and solar).
Eventually we can dream to export hydrogen gas by electrolysis mechanism set in shallow waters at the much coveted Hurd's bank.
Hope springs eternal that Hon Dalli lures foreign capital in Baku (as was the case of Electrogas) to invest in such renewables.
George M. Mangion is a senior partner at PKF Malta
gmm@pkfmalta.com