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Network News • 08-12-2022

Inflation, abortion and a clean energy vision

Author: George Mangion - Senior Partner PKF Malta
Published on Business Today: 8th December 2022

In his opening address at the annual conference, George Vella, FinanceMalta’s chairman said: “The significance of gathering was that stakeholders in our industry are all under one roof to look at what we have learnt from the recent past, but also chart the future strategy in an ever-changing world”.

The launch of the Malta Financial Services Advisory Council (MFSAC) strategy for our industry is a positive step forward, which will put Malta back on the map.  This is a welcome vision for the general economy which has suffered a huge deficit to withstand the pressures of a two-year pandemic.  Certainly, we look forward to a gradual awakening notwithstanding the heavy yoke of higher inflation and weaker EU markets suffering from the aftermaths of a Russian invasion of Ukraine.

The prime minister has been rallying his co-ministers to be proactive and exploit overseas niches that have been the aspiring theme of the FinanceMalta conference.  His passion has been reflected in a vision that the extended political mandate will offer a better quality of life, better opportunities for everyone and a “more beautiful Malta”.  

Out of the blue, the prime minister is adamant to amend the laws concerning health care of pregnant females. Observers lament that there was no reference in the manifesto to pass such amendments that may give rise to an abortion law. The legal amendment as proposed by the government would allow a pregnancy to be terminated if the mother’s life is at risk or her health is in grave danger. There have been strong protests by persons who feel that this amendment is a bygone excuse to usher in a full-blown abortion law.  As can be expected the Nationalist Party declared its opposition to the amendment.  More will be happening as these amendments may be tweaked and discussed in parliament before start of the Christmas holidays.

Labour winning manifesto included interesting targets such as laying a second underwater electricity inter connector with Sicily, erecting 200 new substations to stabilize the flow of electricity distribution, an Ecohive incinerator to convert waste into energy, new incentives for domestic grey water reuse systems and most ambitious - the drive to engage the private sector to develop offshore renewable energy projects – both floating wind and solar. When mentioning renewable energy, a corollary topic follows, that is setting a national strategy unit on hydrogen use.

Perhaps, this calls on the Miriam Dalli as energy minister to muster the drawback of the pandemic and start in earnest to join forces with the private sector to invest in renewable energy generating green hydrogen - thus fighting climate change and creating an export product.  It goes without saying, that surely, we must take more initiatives to address climate change.

Scientists warn us that unrestrained, this leads to rises in sea levels.  As a result of not controlling the rise in temperature by 2050, discussions by heads of nations in Egypt in COP 27, all talk of warmer temperatures.  This global warming would result in a heightened exposure to disease, putting additional strains on health services.  One can blame this due to high emissions of greenhouse gases results through human processes such as burning of fossil fuels.

Locally, there exists an undeniable fact pointing to the increase in carbon dioxide concentrations and other greenhouse gases, such as methane and nitrous oxide caused by daily activities - mainly due to the explosion in car ownership, more travel by sea and air, not to forget emissions from heavy industry.  Perhaps, we can emulate Italy, which has taken the bull by the horns and commissioned Renexia (an energy firm) to install a vast floating wind farm off the island of Sicily.  Locally, one hears little, or no mention made about the pressing need to convert Electrogas - a single generating plant, run on fossil fuel.

The EU is encouraging countries to run on green hydrogen.  One hopes that the energy minister will focus on the potential of exploiting our recent declared Economic Exclusivity Zone to use it to harvest energy on floating sea PV panels and/or wind turbines.  This task comes as no minnow since it is a long-term project which, if properly structured, can have many beneficial economic and environmental rewards.

Many commentators on the European scene have waxed lyrical about a plan to produce green hydrogen using electrolysis powered on clean energy produced on offshore platforms.

In our case, such platforms can be floated in Hurds’ bank - currently being used free of charge by various foreign fuel tankers as an oil bunkering facility.

On a separate note, one may ask how can we finance such an ambitious project? Can a partial solution be expanding the remit of the Development Bank which was funded to support economic expansion following the dearth of FDI during the two years of pandemic.

Many in the past discounted the importance of attracting new energy projects blaming the relative lack of research and development hosted locally.  This is now solved as the budget plans a triple increase in R&D to reach 2% of GDP (this may equate to over €320 million).  Unfortunately, due to a 5.7% annual deficit, the 2023 budget went the other way and trimmed over one million euro in funding to the University.

It is not all doom and gloom, as we praise the efforts of the government to recognise the importance of getting MCAST and University to work closely with industry. MCAST has reached a high standard in teaching technical subjects and proudly reported a regular increase of graduates awarded diplomas and degrees.  It has revived apprenticeship schemes in various technical areas and is also making steady progress in vocational courses as a catch-all for early school leavers.

We need to strike while the iron is hot, and the EU is making billions of euros available to countries which dare exploit the renewable energy sector and export green fuels. In conclusion, the 15th edition of the FinanceMalta annual conference augurs that the stakeholders succeed to provide cutting-edge services and products - having access to an innovative philosophy leading to proficiency to expand clean energy and reduce our carbon footprint.

Author: George Mangion - Senior Partner PKF Malta
Published on Business Today: 8th December 2022
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