Plans to build the gas pipeline, estimated to cost around €400 million, began in earnest in 2017, when the government set up InterConnect Malta to oversee the project. Following a positive assessment by the Commission pursuant to Article 24(1) and (2) of the TEN-E Regulation (EU) 2022/869, the project has retained its PCI status in the 2023 list. However, all attempts to tap into European Union funding for the project were unsuccessful, with Brussels growing less keen on financing infrastructure projects for fossil fuels such as LNG. Naturally, both the Enemalta and Electrogas plants run exclusively on LNG, hence the government's inclination not to exclude it.

Good news came this year. The green light has been given by the EU for a 159-kilometre pipeline to transport natural gas and, eventually, hydrogen between Malta and Gela, in Sicily. It has also been approved by the Planning Authority. The government has thus secured European Council backing to extend a derogation that keeps its hopes alive of securing EU funding for an LNG pipeline that could also carry hydrogen from the European mainland. EU Energy ministers agreed last week to back derogation extensions for Malta and Cyprus, two island states that are physically isolated from the trans-European gas network. The extended derogation will allow Malta's plans to continue to be recognised as a Project of Common Interest (PCI) and therefore remain potentially eligible for EU funding.

With hindsight, Malta's pipeline dream has remained stalled for over a decade, with the European Commission saying the country's bid for EU funding to finance the project is unjustified. The country had initially sought EU financing to develop an LNG gas pipeline linking Malta to Sicily but adjusted that plan in 2020 to present it as a "hydrogen-ready" one. The project is currently being redesigned to allow for the transportation of blends of hydrogen, biomethane and natural gas, and up to 100% hydrogen. Its intention is to use the pipeline to transport natural gas in the immediate term, while also ensuring it can transport hydrogen from Italy without incurring any major additional expenses or damage to the system. Hydrogen technology is still in its infancy, but many policymakers expect the substance to play an increasing role in energy generation in the coming decades.

Sicily's first green hydrogen project has now received approval, reinforcing its role as a key entry and transit point. Subsequently, the Malta project has been reconfirmed in the second, third, fourth and fifth PCI lists.

What does it mean to be recognised as a PCI?

This means the project may benefit from accelerated planning and permit granting, a single national authority for obtaining permits, improved regulatory conditions, lower administrative costs due to streamlined environmental assessment processes, increased public participation through consultations, and increased visibility to investors. They are also eligible for EU co-financing under the Connecting Europe Facility (CEF). In fact, the project has already benefited from such grants, and more than €4.5 million has already been co-financed for all the preparatory studies.

One hopes that the PCI will end Malta's physical isolation from the European gas network and allow access to renewable gases from Italy. The project is an essential part of the future hydrogen cross-border network, giving Malta access to import and export pure hydrogen through the future EU hydrogen grid while potentially linking North African hydrogen supplies to Europe.

Is there a lot of preparation from our side to accommodate this project? The answer is land reclamation with the construction of a terminal station at the Delimara power station, a micro-tunnel route through the Delimara peninsula, and the laying of an offshore pipeline up to the median line between Delimara and Gela, Sicily. The environmental regulator had said it favoured the project, provided that the safeguarding conditions outlined in the report and eventually imposed through the conditions of the development permit are met.

The European Commission has recognised the project's strategic importance at the EU level by including it as a Project of Common Interest (PCI 5.19) since the first PCI list in 2013 (under the TEN-E Regulation). It has been reconfirmed in subsequent lists, including the 2023 list (with a derogation for Malta and Cyprus under the updated TEN-E rules). The revised TEN-E generally excludes new natural gas infrastructure from PCI status. However, Article 24 provides a limited, time-bound derogation for Malta and Cyprus (peripheral island states) that are not yet directly connected to the trans-European gas network. This allows gas interconnection projects, such as Malta's Melita TransGas Pipeline (MTGP) to Sicily, to retain or obtain PCI status if they are designed as hydrogen-ready.

For hydrogen-ready or transitional gas projects like the MTGP under the Article 24 derogation, eligibility windows are time-limited but still open for well-prepared proposals. The project will provide a more reliable, secure and energy-efficient means of transporting gas and hydrogen than the current LNG maritime supply and will allow Malta to tap into the emerging European hydrogen backbone, thereby contributing to the decarbonisation of the power generation sector. It will also diversify the island's energy supplies and routes. The pipeline is designed for bidirectional flow and hence has the potential to send gas to Italy and the EU in the event of a gas shortage. The PCI status supports studies and works (construction and implementation) for mature, strategically important cross-border projects that deliver clear European added value.

The PCI's hydrogen-ready design shall enhance the deployment of renewable gases and allow for the decarbonisation of local power generation, which is necessary to ensure the security of electricity supply to the island and support the intermittency and growth of renewable energy sources (RES). The pipeline's capacity shall allow the use of renewable gases not solely for energy generation purposes but also for other potential inland uses, including hard-to-abate sectors.

The Gas Project will diversify import sources and routes, increasing competitiveness. It shall accelerate the repurposing of the Italian gas network to transmit hydrogen and incentivise neighbouring states, including North African countries, to invest in low-cost green hydrogen production.