Pipeline: a sober discussion on our energy future

In a country where issues are so often politicised before they have time to be properly discussed, the appeal made by the Malta Chamber of Commerce this week to “keep in mind the national interest in matters related to energy provision” provided a sobering response to a very specific controversy surrounding the Electrogas contract: in particular, the questions surrounding EU funding for a gas pipeline to Sicily.

In a press conference on Wednesday, Matthew Caruana Galizia, son of slain journalist Daphne Caruana Galizia, insisted that Electrogas – as owners of the Delimara plant – would be the net beneficiaries from an EU-funded pipeline. Along with two MEPs, he argued that EU funds should not be used to fund a company in which magnate Yorgen Fenech, who is charged with his mother’s murder, is also a shareholder.

The same view was soon echoed by the Nationalist Party, which opined that: “The Labour government should not expect the EU to finance a man accused of murdering a journalist who exposed corruption related to this very deal. It is unacceptable for any funds to go towards compensating Electrogas shareholders on a contract that should have been scrapped long ago because it is tainted by corruption and blood.”

These are, of course, powerful arguments which appeal directly to our emotive demands to justice and fair-play. They are also eminently understandable, coming from the family of a murder victim. Not only, but today we know that the murder of Daphne Caruana Galizia is likely connected to the nefarious business interests she was close to reveal: the connection between a secret Dubai company owned by Fenech, and the network of Panama offshore companies opened by people inside the Muscat administration. There is no doubt that Labour’s major electoral pledge in 2013, is connected via a secret plan of enrichment, to the murder of Daphne Caruana Galizia.

But as the Chamber of Commerce rightly pointed out, there are other considerations in this particular equation. Truth be told, this.

Government has already indicated that it will be absorbing any cost-increase itself, to avoid passing on the expense to the consumer. Its ability to do so, however, will surely be impacted by the sudden, unexpected loss of hundreds of millions in EU funding.

On top of that, the original plans for the Malta-Sicily pipeline were limited only to the importation of gas; a strategy which had to be suddenly revised last July, when the European Commission announced – with no warning whatsoever – that it would only provide funding for infrastructure that is also capable of running on hydrogen.

As a result, Malta was initially refused the €200 million it had applied for in EU funding; that decision, however, was later reversed on the basis of new plans for a ‘hydrogen-ready’ pipeline instead, and then only thanks to a derogation obtained during the COVID-19 pandemic.

Effectively, then, the funding for this project could be within reach; but if the above demands are met, and that funding is withheld, it would result in the loss of half the €400 million required for an infrastructural project that is – for better or worse – indispensable to guarantee a reliable provision of energy for the foreseeable future, one beyond the need of Electrogas to run the LNG plant.

As the Chamber put it: “It is therefore imperative that we find ways of addressing concerns related to the existing agreements, independently of proposed projects that could provide us with more options for energy generation in future. For the benefit of our country and the business community, no one should try to jeopardize EU funding for Malta’s energy transition.”

Matters are further complicated by the fact that Electrogas’s current, 10-year agreement for the supply of gas expires in 2027/8: by which time, the gas pipeline would have to be in place, if Malta is to have any form of dependable – and affordable – supply of fuel at all.

This, incidentally, applies also in the case of an future switch-over to hydrogen (although that technology is in its infancy) which would also be impossible, without a pipeline to connect Malta to the European grid.

One must also take into account our European commitments to reduce CO2 emissions by 2050, a transition which, as the Chamber warns, “will require countries to be very careful with managing their energy supply options to minimise the risk of spikes in energy prices.”

In view of this, one can only concur with the Chamber’s assessment that: “Irrespective of the requirements of the existing energy and fuel supply agreements, which should of course be questioned on their own merits, we cannot risk putting in danger the country’s energy supply for the future.”

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