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Energy: avoiding a race to the bottom

Irrespective of whether we are dealing with cheaper than diesel HFO or coal-flavoured bio-paste, we risk a race to the bottom if our sole aim is that of keeping tariffs down.

James Debono
9 December 2011, 12:00am
Some of the questions raised by the HFO saga apply to the latest proposal by Sargas, which was prematurely endorsed by Labour Opposition leader Joseph Muscat in his budget speech.
Some of the questions raised by the HFO saga apply to the latest proposal by Sargas, which was prematurely endorsed by Labour Opposition leader Joseph Muscat in his budget speech.
Last Monday's public hearing raised an important question; is MEPA's role that of protecting the environment and health of that of alleviating costs for Enemalta? 

The MEPA press release on the issue of an Integrated Pollution Control states:

"A representative of EPD informed the Board that while diesel gives better environmental results overall, with the abatement equipment at the new extension, the forecasted emission limit values using heavy fuel oil will remain in line with EU legislation".

So rather than seeking the most environmentally friendly measure MEPA has settled for an alternative whose efficacy depends on a desulphurisation plant which produces 28 daily tonnes of hazardous waste which will be exported abroad.

KPMG consultants representing Enemalta warned that if the extension were operated on diesel for this period, tariffs would need to be increased by 10%.

This raises the question; what is the function of MEPA, that of advocating the most environmentally friendly process or that of advocating the technological fixes which turns out to be the least expensive one for Enemalta?

One may argue that MEPA's yardstick are EU emission levels and if these can be reached by HFO without incurring any extra expense, so be it. 

But what about the "precautionary approach" invoked by the same MEPA to justify a nine-month trial period for HFO?

It is a fact that HFO costs more than diesel and there is a reason for this; HFO is a residual fuel oil.

But it is also a fact confirmed by Enemalta that that the cost of producing one unit of energy with diesel at the new extension will still be cheaper than producing one unit of energy with HFO in Marsa.

Still even this is a bit beside the point.  For MEPA's brief is to ensure that the most environmentally friendly technology is used.  If its not we should call a spade a spade, put an end to the farce and let government take the decisions.

The best "precautionary approach" would have been to use diesel and thus eliminate the need for messy solutions.

The only consolation we get is that the performance of the plant will be reviewed by no later than September 2012. The Board will then decide whether heavy fuel oil can continue to be used or not.  Another complication in a complicated process.

So this raises the prospect of a u-turn conveniently close to the next general election.  But that would have mean that the money invested in abatement measures to desulpherise HFO would have gone down the drain.

The whole episode also raises three important questions;

1)   How autonomous MEPA really is when faced by fait accompli decisions already taken by government?

2)   How much sense did it make to expect MEPA to decide on HFO before the government approved Malta's energy policy which is still a draft one?

3)   How technically prepared are our environmental guardians in assessing the claims made by consultants paid by Enemalta or private companies in the energy field?

4)   Should we base our decisions on the impact on tariffs or on the impact on health, climate change and the local environment?

In fact the argument that the use of gas oil could raise tariffs could create a dangerous precedent in what might well turn out to be a race to the bottom.

Some of the questions raised by the HFO saga apply to the latest proposal by Sargas, which was prematurely endorsed by Labour Opposition leader Joseph Muscat in his budget speech.

In both cases cost cutting and lower bills were invoked to justify the two technological fixes. 

But should these be our criteria in assessing the impact of technology? 

In both cases we are dealing with highly complicated technical processes, which ultimately depend on the export of residues to other countries. 

In the case of HFO we have to export 28 tonnes of hazardous waste on a daily basis.  This was one of the main arguments of the opposition against the new plant. Local councils in the area have also objected to the transport of this material.

We are told that this is an established and safe procedure and that we are already exporting similar ash from Marsa, albeit at lower quantities.

In the case of Sargas we will be experimenting with a technology, which still requires the export of hazardous ash, which we are told, will be exported to concrete plants in Europe. 

Added to this is that the process depends on the export and storage of carbon in other countries. Denmark was mentioned as a possible destination of Maltese carbon. But Denmark's newly elected centre left government has already decided to halt carbon storage in its territory.

One may well say; who cares about the impact of carbon storage in other countries as long as we get cheaper bills?   But that approach could be very short sighted, as global realities tend to catch up on us at some time.

Depositing carbon in exhausted oil wells with the aim of draining the last drops of oil, transporting carbon over a large distance between Malta and Denmark and finding a new market for coal hardly qualify as green technologies. 

Instead Carbon Capture and Storage (CCS) appears to be an attempt to give a new lease of life to the coal and the petroleum industries, which like big tobacco industry tend to be very inventive to postpone their inevitable decline.

As an article on the Economist warned: "Carbon Capture and Storage (CCS) is not just a potential waste of money. It might also create a false sense of security about climate change, while depriving potentially cheaper methods of cutting emissions of cash and attention-all for the sake of placating the coal lobby".

Carbon capture technology does have potential in alleviating the harm done by already existing coal power stations in Europe but similar initiatives have so far depended on government subsidies.

Just a month ago the UK government scrapped the UK's first carbon capture project at the Longannet power station in Fife due to technical and financial problems.

But while capturing carbon from existing could be understood what sense to build a new floating power station using a bio paste which includes coal?

It is true that the present cost of renewables like wind and solar which are the cleanest and most sustainable, is still on the high side compared to fossil fuels and that presently we still need provision by fossil fuels.

Of these we know that the cleanest and least messy is gas and the second best option is gas oil.  So why not opt for the least messy and complicated processes while seeking to reach the 10% renewable energy target which we cannot avoid?

But there is also a less populist but more long term alternative to encourage people to save money on energy; energy conservation-a science which is resulting in near zero or zero energy buildings using both renewables as well as modern design.

In fact the higher price of conventional energy sources should act as an incentive for energy conservation.  On the other hand the temptation to rely on apparently cheap technologies could derail us from the long-term goal of reducing consumption. 

Why should people invest in solar heaters if they are promised energy at half its present price?  What if ten years down the line we discover that we have taken a wrong path and that we have to return back to what is already tried and tested?

The polluter pays argument with regards to energy bills makes sense but only if the government actively subsidises energy and water conservation and does away with planning polices which effectively block access to solar energy for thousands of homes. 

It would be a big pity if we go quirky at the very moment when real green technologies are becoming mainstream.

In the past the opposition rightly criticised the government's energy policy (or lack of it) as being project driven. I agree completely, but what's good for the goose is also good for the gander.

James Debono is MaltaToday's chief reporter on environment, planning and land use issues, ...
josephine borg
@Antoine Vella ===== Tenders are issued by Purchasers. It implies that there are at least two potential bidders. In this case, it would imply that Malta's government is very much interested in acquiring Sargas' technology. ==== Sargas is not offering to sell its technology; its offer is to sell the fruits of that technology: ample power, which is relatively clean, and at roughly 50% of the current price of a KW-hr of electrical energy. It is a simple, straighforward offer. ====== Now, assuming that it were the case where Malta does not want to just buy the power, but would rather own the plant which can supply the equivalent of Sargas' product, how many potential bidders are there to fulfill the terms as specified by, what else, the contract? The answer is, none! Sargas' technology is proprietary and under a patent application which, no doubt, will be issued by Malta under the PCT ("Patent Cooperation Treaty" in which Malta is a contracting state). ======= The media are only reporting what is being said/discussed by both sides. The misinformation seems to come from people, such as your good self, who have little or no understanding of what is involved, but nonetheless, have no hesitation in turning this technology into a political issue.
Samuel Falzon
It seems that some PN apologist have now become visibly obsessed with their government's likely possibility of loosing it's reign of power and paranoid with all that is not compatible with their masters' brief.
Karl Cremona
C.John Zammit, I'm afraid you've been fooled, like many others (and not by chance - Labour mediam including MaltaToday, are engaged in a misinformation campaign). Sargas want an assurance that Malta will buy their electricity. They won't be forking out one billion euros on the off-chance that they'll be able to somehow sell their product. What they want is a CONTRACT worth billions of euros. And you think there is no need for a tender? Incrtedible.
josephine borg
@james debono ========== There is no need for tenders to be issued. Sargas is not offering to sell to the Government a power plant. They are offering to sell electrical energy at €0.075 per Kilowatt-Hour. Needless to say, it is MEPA's responsibility to oversee the plant's emission levels. And Enemalta to accept (or reject) the quoted price. One needs to ask if engineers would risk their reputation by building a plant which does not meet their claims ... and if savvy investors, who back the engineers, would risk their monies, to the tune of almost a €1-Billion, if there were any reason to doubt the enginners' professional skills. ======== (Please get your webmaster to fix this system. Don't you find it annoying to not be able to include paragraphs?)
Sylvana Farrugia
My opinions are based on scientific opinions and the views mainstream and independent NGOs. I would add the following link: Carbon, capture and storage - a new solution or another problem? — Friends of the Earth International and I M Schreck raises a valid procedural point. I find it very odd that government is forced in to a discussion with any particular company. In fact this is how things would have worked in a normal country: If any government thinks there is any validity in CCS technology, it should first initiate a public consultation on changes to the draft energy policy which makes no mention of CCS. Any such drastic revision of the plan would than be submitted to a strategic environmental impact assessment which assesses the environmental impact of such a plan. If this shows there is potential in CCS, than the government would proceed with an international call for expression of interest. Only at this stage should government deal with any particular company. Following this an international call for tenders would be required. After plans for the development are submitted an EIA has to be submitted. After that an Integrated Polllution Control Permit will be required...My whole point is that projects by private sector should fit in our energy policy rather than other way round and we should avoid shaping our energy policy around particular projects like Sargas.
Emmanuel Scerri
The 'Sargas fiasco' is still very much in Gonzi's thoughts and unless a clear statement is issued by the PM that he has completely rubbished this proposition, we have every reason to believe that Sargas could be very viable and a satisfactory alternative to other propositions.
Karl Cremona
The Sargas fiasco has done irreparable harm to PL's credibility.
chris oliva
Inkredibbli l-istupidita ta' certu nies: il-hmieg u l-irmied tal-BWSC hazin imma l-hmieg u l-irmied tas-SARGAS le l-aqwa li jpecilqu bhan-naghag ta' Bendu... pajjiz tac-cwiec
chris oliva
GonziPN gave us heavy fuel oil and defends BWSC, Muscat rushes to support coal qisu salesman tas-Sargas... kemm ahna sbieh min jaf jarana... u l-plebej jibilghu kollox...
Robert Aquilina
This is a very technical subject and should be left for the professionals to tackle. What I find intriguing is the political aspect of it all. Why did the PM completely ignore (at least that's the impression which we have been given) this offer for a good number of months, only to start contemplating it now that it has been mentioned by the opposition? Hearing Tonio Fenech on Bondi + last night, he gave the impression that the government did not completely scrap the Sargas idea, but could put it up for considerations any time if pushed to do so. That is what makes politics intriguing and the citizens uncomfortable. Why not being open and honest with the electorate all the time?
M Pisani
James - you are becoming too pro-Nationalist. Been noticing your articles and opinions. One way traffic like your dear friend Mr. Briguglio. What a pity! I expected much better from you.
Karen Cefai
james hemm xxi chance turi fejn semma is sargas waqt il budget speech jekk joghbok?? Replying to the Budget speech in parliament, Joseph Muscat said a Labour government would run the Delimara power station gas and not by heavy fuel oil, benefiting from the cheaper gas prices. Additionally, a further €12 million will be saved by reassessing the return on capital employed factored in the utility rates and reduce the mark-up on the rates. A third measure will be the introduction of a night tariff to stabilise demand, which Muscat said would help families save money on energy consumption. "The inefficiency of the smart metres project has prevented families from benefiting from this proposal," Muscat said. "Our plan is based on common sense. We're confident that new technologies and better leadership will lead to lower utility rates... Our vision is that we no longer depend on oil and move towards cleaner technology." The Labour leader said his government would seek the best utility rates in Europe through the Malta-Sicily interconnector project, as part of a coherent energy strategy under one ministry.
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