Issue link: https://maltatoday.uberflip.com/i/1392848
I n 2015, the EU ratified the Paris Agreement, the first universal agree- ment to combat climate change. Its goal is to mitigate climate change by maintaining the increase in global tem- perature at 1.5°C compared to pre-in- dustrialised times. Now, the EU is urging cutting greenhouse gas emissions in the EU by at least 55% below 1990 levels by 2030. In addition, the EU has pledged to reach net-zero emissions by 2050 under the European Green Deal. How can this lofty target be reached - the answer is that the EU has put in action several measures how to reach it. Definately, post Covid, de-carboniza- tion is not a walk in the park. Close to home, climate change is manifesting it- self in higher summer temperatures and repeated lower rainy seasons these past years. Ideally, business will also benefit from de-carbonization as new opportu- nities are created in areas where Europe aims to set global standards. "Green deal" is also expected to gen- erate jobs, for example in renewable en- ergy, energy efficient buildings and pro- cesses. Realistically, we must be ready for surgery bearing in mind how during the coronavirus pandemic economic activity particularly in hospitality, avi- ation and associated industries tanked. e silver lining was a reduction in carbon emissions but the pandemic caused the EU to face recession, so the welcoming of a new package announced this week, called 'Fit for 55', can be dam- ascene. is may help guide us how to slash gas emissions, which will likely re- shape how people commute, how land is managed and how new homes are built. Both the "Green Deal" and "Fit for 55" slogans are eye-catching pledg- es, such as the expected decision to ban the sales of new petrol-driven cars from 2035. Perhaps even more importantly, the Commission will seek to reform the EU Emissions Trading System (ETS), a carbon market in which industry trade their pollution quotas. According to the European Commission, the building sector must reduce emissions by 60% to meet the 55% emissions-reduction goal by 2030. is could be a watershed mo- ment for our Planning Authority which needs to pull its socks up and clean its stables - stoically run by mostly politi- cally appointed board members. e housing and building sector in Malta must decarbonise rapidly, par- ticularly heating and cooling which is still largely based on fossil fuels (LNG). On a Pan-European scale, the 2030 Climate Target Plan indicates that the share of coal, oil and fossil gas in resi- dential buildings final energy consump- tion will need to be reduced by 55% by 2030, projected to be achieved through energy savings, electricity use and am- bient energy using heat pumps. Can Malta follow suit? e construc- tion and its cousin the real estate sec- tor are both teflon coated in Malta. e paradox is they rallied during 16 months of the pandemic while One TV, continues to remind us how demand for new builds is rising. e decarbon- ization of the building sector therefore depends on an effective combination of policy enabling both reduction in energy demand through higher energy efficiency and mandating a fuel switch from fossil-based heat supply to clean, renewable sources. Building codes for both new buildings and renovation must result in an in- creasing share of buildings fitted with renewable heating and cooling systems. e detractors of the "Green deal" pay lip service to the necessary reforms needed saying these cost millions. EU member states are at loggerheads over how to share the cost of the measures, and industrial lobbyists will fight some of them as the final drafting process continues. For instance airlines complain, that a measure to tax aviation fuel for in- tra-European flights would distort the market with the rest of the world. Equally belligerent is Poland which re- lies heavily on coal, and will resist tight- er emission reduction targets. Again, it is an enigma how environmentalists are unconvinced by plans to promote natu- ral carbon sinks like forests (we started a race to the bottom to fell trees to wid- en roads). Despite widespread support for achieving net-zero emissions by 2050, the opposition to short-term regulatory ambition on climate is often accompa- nied by claims that immediate action threatens the competitiveness of Euro- pean business. So the darlings of "Fit for 55" are renewable energy such as solar and wind. ese don't emit carbon di- oxide and other greenhouse gases that contribute to global warming. Back to Malta's energy policy - this on paper focuses on maximizing Malta's effective renewable energy potential. We all remember electoral promises from the Joseph Muscat government saying it increased efforts to support the deployment of renewable energy (R.E) especially photovoltaics, solar wa- ter heaters and heat pump water heat- ers (which are particularly well suited to Malta's geographic location). e administration also persuaded the party faithful about the technical, geo- graphical and spatial barriers limiting renewable energy potential. Yet our rat- ing in using R.E is a mere 8% compared to 34% - the EU average. Facts show how Malta does not have a natural gas network (LNG is delivered by an FSU to Electrogas - the power plant), although uses of natural gas in niche applications may start to develop if the Malta-Italy gas pipeline is pursued. For posterity, one recalls how Joseph Muscat's feted "L-Aqwa Zmien" policy had no time to waste on oil and gas exploration as an alternative extractive industry. e pro- verbial rabbit in his magic hat was a pri- vate deal signed with Socar consortium (owned 33% by the state of Azerbaijan) and equal shares with the Tumas/Gasan groups and Siemens. e much-hyped strategy was for the private sector to build an exclusive elec- tricity facility run on imported LNG (costing circa euro450 million). is turned out to be a controversial deal which bound Enemalta for 18 years to buy electricity units at a fixed rate ex- clusively from Electrogas. When during installation, its shareholders were cash stuck with banks, many quizzed why the State issued a bank's guarantee for euro 350 million to bail Electrogas. No other private sector was given similar financial privileges. In the spirit of the "Fit for 55", one hopes that the sanctioning of Electrogas as a fossil-fuel based energy generator is not a fig leaf to assuage our critics that we are laggards in de-carbonization. De-carbonisation: is this a fig leaf? George Mangion George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island 8 OPINION 15.7.2021