Issue link: https://maltatoday.uberflip.com/i/1497622
8 OPINION 20.4.2023 PKF - a successful renewables and ESG conference George Mangion George Mangion is a senior partner at PKF, an audit and consultancy firm, and has over 25 years' experience in accounting, taxation, financial and consultancy services. His efforts have made PKF instrumental in establishing many companies in Malta and established PKF as a leading professional financial service provider on the Island T his week a renewable energy and ESG conference was hosted by PKF in collaboration with Times of Malta at the Hilton. is event was well attended and managed to pack var- ious technical presentations from 16 lo- cal and foreign experts explaining how we can start a path towards green energy and how Malta can gear up to follow the new directive on ESG. e audience were treated to two videos broadcast from ex- perts at PKF offices in New York on ESG. It was a pleasure to note that the event was opened by Miriam Dalli, minister for energy and sustainable development and enterprise. She de- livered a keynote speech on this ex- citing and innovative subject. Oppo- sition spokesperson Mark Anthony Sammut also addressed the audience and stressed the need to take a serious regulatory approach (as was the case in 1994 when MFSA started regulat- ing the financial services industry). He advised that Malta could become a Centre for research on this subject. One of the foreign experts Dr Srdjan Sokolovic covered the technical path of how Malta can make use of its Ex- clusive Economic Zone to start pro- ducing green hydrogen. He explained, that if Malta decides to exploit its waters in EEZ, it can by means of ex- tensive electrolysis generate green hydrogen for use both in running an electricity power plant and eventually for use by inland mobility. At present, the cost of hydrogen pro- duction on a commercial scale may be higher than equivalent fuels such as LNG, however, he predicts that by 2030 the price will go down to around $3 per kilogram. Used as fuel for cars, hydrogen is more powerful. He stated that one kilogram of hydrogen could propel a car for 95km whereas the same amount of gas could provide en- ergy for only 15 km. If government crosses this revolu- tionary path, then in five to ten years Malta could start its own production of green hydrogen, or it could export it using pressured containers on ships, or via a future pipeline between Malta and Sicily. He explained, how hydro- gen could be used in the production of electricity, in the beginning with a mixture of gas, maybe 5%, or it could go in the future even up to 100%. A consultant at Clarkson Renewa- bles said that Malta's future capacity may reach 25 Gigawatt from floating offshore wind farms. At present, Mal- ta uses only 11% of total energy local- ly generated from renewables (mainly P.V's - no windmills except for a for- eign investment by Enemalta in Mon- tenegro) while Europe strives to in- crease it's average rate of renewables to reach 37%. A lot has been written how the island started late to convert to renewables while we consumed the best part of a decade to test, build and run a fos- sil fuel plant supplied by LNG from a floating service vessel. Time is ripe for a more radical focus to switch to cleaner fuels. For visionaries, the sub- ject can be part of a long-term project to be self sufficient in producing hy- drogen and methane/ammonia gases - part of which can constitute future economic pillar. Perhaps, this is the right time for pol- icymakers to stop playing with renew- ables as a national sport -churning it like a spinning top. Really and truly, we woke up late to the technology as offshore wind capacity is forecast to more than triple by 2026. By then, offshore wind additions are expected to account for one-fifth of the global wind market, a major milestone. The question is asked - will renew- ables lower our cost of energy? This was the crucial battle cry in 2013 by the Joseph Muscat movement - he promised to cut tariffs and attract pri- vate investment to build an electrici- ty plant burning LNG. The electoral promise was kept and the Labour Par- ty crushed in to power with a bigger majority in the 2022 elections. Now the chicks came home to roost as burning fossil fuels to generate elec- tricity needs to be gradually phased out. It is interesting to note how in order to keep electoral promises of 2013, Castille is spending more than €400m annually in subsidies to cushion the high cost of energy. That subsidy and other inflationary pressures are push- ing the national deficit beyond the EU-set limit, which could trigger an excessive deficit procedure. Experts at the PKF event said that raising elec- tricity production from renewable sources would be a key part in avoid- ing a spike in prices thus making the country less dependent on vagaries of LNG price. This does not mean Malta must have offshore wind farms up and running by next year but it follows that the government must persuade the Eu- ropean Commission that it will have new sources of green energy in place over the following years. It goes with- out saying that any arduous journey starts by taking the first definitive steps. Meanwhile, Malta is bound by international treaties to become car- bon neutral by 2050. So, the obvious question to ask is, where will Castille secure the millions needed to exploit our lofty targets. The solution was announced by min- ister Miriam Dalli when she called for increased private investment in re- newable energy sources. She came up with the idea to tap idle capital at local banks. These institutions report bal- ance sheets that are chronically over liquid and are sitting on €24 billion in deposits paying comparatively low in- terest rates. Putting our money where our mouth is should be sound advice for depositors and banks. The coun- try needs more commitment from lo- cal banks towards the implementation of public and private ESG objectives. HSBC in Germany is partner to one of the most successful private-public programmes to accelerate the devel- opment of clean technologies with the investment of USD100m in 2022. Barclays is targeting to facilitate $1 trillion of sustainable and transition financing by 2030 and is investing substantially in climate-tech start-ups supporting new green technologies and infrastructure projects. While Dalli's efforts to renew sub- sidies on electric cars are commend- able, her government did little in practice to set up a national renewa- bles council. Thousands of fuel-guz- zling vehicles, many of them old and second-hand, are still being import- ed monthly – further increasing the country's already high transport-re- lated pollution levels. Words speak louder than acts. Flash back to 2013/4, when top government ministers paid various business meet- ings in Azerbaijan to secure private investment towards financing the Electrogas plant, so history seems to be rewritten noting how Dalli pleads with local banks and the financial in- dustry to play a pivotal role in partic- ipating in a historical move to a green economy. We wish her all our support and humbly pass our contacts for her min- istry to succeed in this Herculean ven- ture.