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Network News • 19-06-2022

Malta – a trajectory for lower emissions

Author: George Mangion - Senior partner at PKF Malta
Published on The Malta Independent: 19th June 2022

Malta's efforts towards climate change mitigation and adaptation are enacted in the Climate Action Act, established in 2015 and further strengthened through the ratification of the Paris Agreement, whereby we reaffirmed our commitment to address climate issues to its fullest potential and contribute towards achieving the EU's collective target of 40% reduction of emissions by 2030 compared to 1990 levels.

Our commitment towards reduction of CO2 emissions is regulated under the Paris Agreement (2015), where governments gave their commitment to limit the cumulative rise in global average temperature to +1.5°C compared to pre-industrial levels. All these directives have pushed Malta to place an increasing amount of resources to investigate the challenges implied in pursuing this goal.

Government considers the Gas Pipeline project with Italy as an important element to secure its energy supply and tap future opportunities such as the supply of biogas blended with natural gas and possibly also hydrogen via the future use of offshore artificial islands in the new Economic Exclusive Zone where the advantage of Hurd's Bank is located in comparatively shallow waters.

Government closed the inefficient Marsa Power Station; completed and placed in operation the 200MW interconnector with the European grid and has commissioned a new 205MW gas-fired, high efficiency combined cycle gas turbine power plant as well as an LNG facility for the provision of natural gas in the short-term with a view to replace this option by a permanent multi-purpose gas pipeline with Sicily.

Thus, over the past years, Malta has transformed its energy mix used for electricity generation from one based on heavy fuel oil and gas oil to a more sustainable energy mix based on natural gas, electricity imports and renewables.

Notwithstanding this, one is conscious that the use of LNG as a fossil fuel should ideally lead to its entire conversion to hydrogen if and when such zero emission fuel is made available, possibly via the proposed Italy pipeline. It goes without saying that the island faces an increase in electricity demand, now that the pandemic is easing. Over the past decade, due to increasing population and corresponding demand in the housing market, all these have intensified pressure on land and scarce natural potable water resources.

Steep population and GDP growth in recent years have indeed made it difficult to restrain an increase in energy consumption. From 2010 to 2018, the average annual growth rate of Malta's population has amounted to 1.8%, which represents the second largest annual increase in the EU after Luxembourg.

In view of the high population density of the islands and the limited land availability, and to a certain extent the local climatic conditions (such as limited rainfall and hotter summers), the potential for further reduction of CO2 emissions through carbon sequestration in vegetation is envisaged to be minimal. One observes that the woodland areas of the Maltese Islands total about 200 hectares. Sites for ground-mounted PV systems, predominantly designated for installations above 1 MW, are relatively limited.

The total area of the Maltese Islands (316km2), coupled with a population density of over 1,500 persons per km2 largely restricts the availability of green field sites and therefore government's policy on solar farms is designed to take full advantage of brownfield sites such as car parks, disused quarries and landfills. However, the relatively high land costs for such sites, driven by increasing land scarcity, together with significant grid connection costs is impacting the financial viability of solar farms. Obviously, once solar farms are limited and expensive one would consider another option for offshore sites.

All sites experience moderate to low wind speeds, with only the site at Sikka L-Bajda marginally exceeding 7m/s (7.16m/s at 80m) 26. Wind speeds at the other sites vary between 6.41 and 6.66m/s (at 90m) and the corresponding projected capacity factor varied between 22% and 25%. These figures show that even the most promising site would still heavily underperform when compared to similar farms located in more favourable areas such as the North Sea where wind speeds are appreciably higher.

This has significant implications on the level of attractiveness of such sites to potential investors. Wind speeds of less than 8m/s are typical of the Central Mediterranean, denoting that wind farms installed in the area would have a relatively low capacity factor, negatively impacting their financial viability.

So how does Malta intend to address climate change? We are committed to contribute towards the European Union's collective target of 40% reduction of its emissions by 2030 compared to 1990 levels. This is an enigma since one needs to respect Malta's limited mitigation potential, arising from our service-based economy, specifically in the transport and agricultural sectors as well as the legacy effect in solid waste disposal.

Naturally all these factors have resultant high mitigation costs coupled with significant socio-economic considerations. Since the easing of health measures to combat the Covid pandemic are now on the wane, one expects a steady growth in tourist arrivals for 2022/3. Combine this with a thriving economy, showing increases in GDP over 2021 of about 6%; all this drives up emissions. Which brings us to the point where we need to contribute towards emission reduction to fight climate change - we are already experiencing higher temperatures in summer and the occasional storm in winter. As stated earlier, linked to the unbridled wave of new builds, the construction industry is running on steroids.

Consider the increase in influx of third country nationals to stem the severe scarcity in manpower, the corresponding growing demand in the housing market and the revival of expected explosion in tourist arrivals, all these factors made it difficult to restrain an increase in energy consumption. All this brings forward the stark realisation that our policy of increasing renewable energy sources is problematic. One cannot but sympathise with readers reminding us that Malta has no indigenous energy sources that would provide a secure energy supply and is therefore dependent on imported fuels and electricity over the interconnector to meet its energy demand.

Over the past decade, regrettably government ceased to promote petroleum exploration opportunities. In the area of renewable energy, Malta will continue its efforts to increase its renewable energy share, a task which is progressively becoming ever more daunting given the growth in final energy consumption. One hopes that the proposed EEZ project to focus on attracting foreign capital to invest in substantial floating PV offshore stations, coupled with wind farms, will produce sufficient power to run a hydrogen generation plant, which gas can then be a suitable alternative to the current use of LNG. 

Author: George Mangion - Senior Partner PKF Malta
Published on The Malta Independent: 19th June 2022
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