Malta’s energy renaissance

Energy is the foundation stone of the ‘European Project’. This may come across as a bold statement but what we know today as the EU was originally set in motion by putting the two main ingredients of war (coal and steel) under supranational control through the 1957 Coal and Steel Treaty.

That same year, energy was the catalyst for another step in European integration, through the Euroatom Treaty which governs the movement of nuclear materials across Europe. While keeping a low profile, its value has recently been brought to the surface by the Brexit debate and the UK’s position in favour of remaining part of Euratom while still leaving the Union.

Henry Kissinger is infamously reported to have asked, “Who do I call if I want to speak to Europe?” The implication of a disjointed Union – as highlighted in Juncker’s State of the Union speech – remains valid. Nonetheless, EU energy policy has remained an agent towards greater European integration, which has evolved and recently gathered pace towards greater supranationality.

The EU bloc is in many ways comparable to Malta’s insularity in terms of energy security of supply: it is largely dependent on foreign suppliers and has only few energy interconnections with third countries. This makes the bloc susceptible to supply disruptions with severe socio-economic effects. In this regard the EU’s energy policy has evolved into a legal framework which focuses on three priorities: security of supply, sustainability and affordability of energy for all. Malta’s energy policy, following its recent overhaul, has evolved in the same direction.

The common denominator to turn the above vision into reality is ‘interconnectivity’.

The next key factor is sustainable energy to flow through the network when and where required – affordably. In this regard, while renewable energy and energy efficiency are the way forward to a decarbonised economy, the European Commission regards natural gas as critical for the transformation of the energy system to help reduce emissions.

Its 2050 Energy Roadmap foresees natural gas will remain in high demand in various sectors, such as power, until 2050. With the EU’s push away from oil and towards LNG for transport, in particular maritime, the benefits of LNG are gradually being taken up by the market in this sector.

The above patterns may sound familiar to many locally. Like all other EU Member States, Malta is required to decarbonise its economy in a cost-effective manner. Last January, Malta joined the EU norm by introducing natural gas to its energy mix. The quickest way to do so was through an LNG facility whose design, dubbed by Brussels as a ‘Blueprint for Europe’, is tailored for Malta’s specificities.

Energy islands must become a thing of the past

LNG, a household name for the rest of Europe but a newbie for Malta, is deemed by Brussels as an important fuel with potential. With an expected 50 per cent expansion in global supply over the next few years, the Commission’s recently published LNG strategy identifies the product as a major opportunity for the EU and its members in terms of resilient security of supply, sustainability and affordability of both LNG power and its transportation. The Government of Malta is on the same page and considers natural gas as key in Malta’s energy transition. In this regard, the next step is piped natural gas.

If we’re after a well-connected pan-European network, energy islands must become a thing of the past. Europe learnt the hard way that diversification of sources, routes and suppliers of gas is required to avoid gas disruptions due to geopolitical tensions. In 2013, the EU adopted Regulation 347/2013 to provide a legal framework for the selection of projects of common European interest designed to fill urgent gaps in the network. This meant that such projects would be a priority for the Member State as much as they are for the Union to function effectively. The Malta-Italy gas pipeline ticked all the right boxes and has since been given the prestigious PCI status.

PCIs receive VIP treatment from Brussels. They get a fast-tracked permitting process and are eligible for EU funding, among other perks. However, their exclusivity demands that such projects are re-evaluated every two years to ensure they still fit into the Union’s strategy – a key criterion being the progress registered by the project. Malta’s gas pipeline project has passed this test twice so far and shall soon be required to overcome the third hurdle.

The Malta-Italy gas pipeline project is a ground-breaking feat which brings together engineering, economics and diplomacy. While pipeline technology is nowadays considered run of the mill, it is uncharted territory for Malta. The Energy and Water Agency, within the Ministry for Energy and Water Management, has spent four years conducting technical studies costing €1 million. It has also held bilateral meetings in Rome, Palermo and Brussels and prepared all the groundwork to submit a full development application on both sides of the border, i.e. the Planning Authority in Malta and the Ministero dello Sviluppo Economico in Italy.

The initiation of permit-granting procedures means shifting into top gear in terms of project implementation and puts Malta a step closer to joining the European Gas Network. It will also see the setting up of Malta’s Gas Transmission System Operator and the setting in motion of environmental and marine studies followed by the publication of tenders for works in 2020/21.

Beyond the obvious benefits of the pipeline – security of supply, clean and cheaper fuel and doing away with the temporary FSU (LNG storage) berthed in Marsaxlokk – the gas pipeline is another milestone towards a ‘Neo-Malta’, a Malta changing from a ‘small and isolated’ mentality into a country undergoing an energy renaissance that fits into the contemporary European project.

A Malta whose gas bridge to Gela will yet again contribute to unifying the Mediterranean, to integrating the EU, and ultimately provide cheaper, cleaner and a constant source of energy to families and businesses.

Daniel Azzopardi is CEO of the Energy and Water Agency.

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