In 2019, Malta’s share of renewable energy in relation to gross final energy consumption amounted to only 8.49%, whilst in 2018 and 2017, this amounted to 8% and 7.3% respectively. Although these figures present a steady year-on-year increase, when comparing such figures to other European countries, it is evident that a lot of work still needs to be done in terms of the deployment of renewable energy in Malta.
There are many benefits of using renewable energy sources, but what exactly is renewable energy?
Renewable energy is considered as a ‘clean’ source of energy which doesn’t emit any greenhouse gases such as carbon dioxide, which contribute to global warming and climate change. A characteristic of renewable energy is that such energy comes from natural sources or processes that are capable of being replenished. Renewable energy sources include hydropower, wind, solar, biomass and geothermal power among other sources. Renewable energy contributes to making electric grids more resilient, lowering energy bills, as well as creating more jobs in this fast-growing sector.
In the past, there has been a lot of reliance on coal, oil, and other fossil fuels in order to generate energy and as a result of this, fossil fuels have become embedded in almost everything we do. Renewables on the other hand, constitute the fastest-growing source of energy in the world, which can be used to combat climate change and global warming.
The Status Quo
Malta’s current renewable energy situation
Malta has no domestic resource of fossil fuels, no gas distribution network, and relies overwhelmingly on imports of fossil fuels and electricity to cover its energy needs. Since 2015, the Malta–Sicily interconnector allows Malta to be connected to the European power grid and import a significant share of its electricity. The Maltese energy sector is predominantly in the hands of the public sector, with little involvement of the private sector or third parties. In fact, one of the only ways in which renewable energy is generated by third parties, is through the national promotion of solar water heating systems and aerothermal heat pumps for domestic use through a government subsidy scheme.
Tendering schemes are currently limited to photovoltaic (‘PV’) installations supported through a feed-in tariff, whereby installations with a minimum capacity of 1,000 kWp are funded. Essentially, a feed-in tariff pays you for surplus energy you produce at home via technology such as solar panels or wind turbines and send on to the National Grid. Designed to encourage investment in renewable energy, feed-in tariff rates vary, but they can definitely help to significantly reduce your energy bills. However, these incentives, while great, have shown to be simply not enough.
The definition of ‘renewable energy’ under Maltese law
Under Maltese law, ‘energy’ is defined as “electrical energy, fuels, heat when transmitted as a commercial activity, and energy derived from renewable sources”. The definition of renewable energy is “energy from renewable non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases”.
While this definition of renewable energy has been drafted in a non-exhaustive manner with only ‘examples’ of what could qualify as a renewable energy source, in practice there is much debate as to what kinds of technologies can qualify as renewable sources of energy, with much focus being given to the indefinite and renewable nature of sources. If this definition were interpreted to require only indefinite sources of energy which do not need replenishing, it would automatically exclude sources such as those being seen from alternative new technologies which operate by benefitting from energy waves (made available through the Sun’s Ultraviolet Light, X-Rays, Beta, and Gamma waves, which are not currently captured by conventional photovoltaic systems) through radioisotopes. This would in turn mean that such new innovative technologies will not qualify for the feed-in tariff which is so crucial to encourage investment in these new technologies in the first place.
Legislation must be clear, and if we are going to adopt an interpretation of the definition which excludes innovative green technologies, such as those using radioisotopes, which nonetheless generate zero carbon energy and generate no waste, no company would be interested in investing in innovation.
These kinds of legislative obstacles will exclude innovative green technologies and stifle innovation.
The Green Transition
2020 will surely be remembered for the launch of the European Green Deal and the proposal by the European Commission (‘EC’) for the adoption of a ‘European Climate Law’. Both these initiatives reaffirm Europe’s ambition in relation to climate change and renewable energy targets.
The European Green Deal is a set of policy initiatives by the EC with the overarching aim of making Europe climate neutral by 2050. It is a response to the challenges imposed by the pollution of our environment. It is a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient, and competitive economy where there are no net emissions of greenhouse gases in 2050, and where economic growth is decoupled from resource use. Some of these policies include reducing greenhouse gas emissions from transport, for example through carbon dioxide (‘CO2’) emission standards for vehicles, boosting energy efficiency, renewable energy and governance of EU countries’ energy and climate policies, and the funding of climate action.
The European Climate Law will transform political promises into a binding legal obligation. It will write Europe’s climate neutrality target for 2050 into law and propose the path to get there. It will give European citizens and businesses the predictability, transparency, and accountability which they need for this collective transformation. The legislative proposal was submitted to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions for further consideration under the ordinary legislative procedure. It appears that negotiations will be complete by April 2021, ahead of the “Fit for 55” package of energy and climate laws that the EC will table in June. By June 2021, the EC will also review and, where necessary, propose to revise all relevant policy instruments to deliver additional greenhouse gas emissions reductions.
In Malta, the Prime Minister, Dr. Robert Abela, recently reaffirmed that the country must reach its 2050 carbon neutrality objective, whilst also acknowledging the challenges faced by the country due to its geographical and territorial limitations. When examining Malta’s progress in terms of the deployment of renewable energy, it is evident that there has been a steady incline in renewable power generation in terms of Malta’s energy demand. Malta remains ambitious in this regard, as is reflected in the National Renewable Energy Action Plan and the National Energy and Climate Plan. However, this ambition needs to be translated into action, and a workable framework.
Amendments to our laws
It is imperative that Malta implements the EU’s climate neutrality 2050 target into Maltese law in a binding way so that the country can remain committed to tangibly reaching these targets. With this target embedded in law, Malta will be obliged to ensure that before 2050, all electricity generated or consumed in Malta is generated in a greenhouse gas-neutral manner.
In drafting this into law, the legislator might also want to consider other amendments to our renewable energy legislation that are required. In particular, we must ensure that we do not impede innovation through our legislation.
One amendment which should be tackled with urgency is the definition of renewable energy under our law. We believe that the current drafting of this definition – as interpreted by the majority of academics and regulators – is not able to keep up with technological advancements. We are witnessing a proliferation of innovative green technologies appearing on the market; technologies which are capable of generating zero-carbon energy with zero-waste, but which, arguably do not fall within a restrictive interpretation of the definition in our law. In other words, it is possible that new green technologies which generate completely green energy and produce no waste do not fall within the ‘bioenergy, geothermal, hydropower, ocean, solar or wind’ bracket. This is quite a conundrum for Malta because in principle, anyone who invests in these promising technologies would not qualify for the feed-in tariff unless they are considered as renewable energy sources as per the definition in our law, a definition which was conceived for traditional technologies such as solar energy.
If we do not remove this ambiguity in the interpretation of the law, we will stifle innovation and hinder the emergence of a market of alternative green technologies in Malta. The reason for this is that the current definition of renewable energy under Maltese law is simply not technology-neutral or is interpreted in a traditionalist or conservative manner. This would be even more lamentable because without these innovative technologies, Malta will not be able to meet the 2050 targets as enshrined in the European Green Deal as we simply do not have enough wind, sun, or land to generate these amounts of clean energy by 2050. Malta needs to foster the growth of alternative green technologies that are best suited to meet Malta’s constraints and particularities as a small island, cut off from the rest of Europe. We cannot afford to exclude these technologies which are instrumental in the effective implementation of the European Green Deal in Malta. We cannot delay making the required legislative amendments.
In addition to broadening the scope of the legal definition of renewable energy sources, the second step for Malta to be able to meet its 2050 climate targets, is involving the private sector and the innovation it brings. Leading Member States of carbon-neutral energy generation in Europe, such as Germany, which is one of the global leaders in the renewable energy field, resort to tendering procedures to incentivise and attract operators of renewable or carbon-neutral energy facilities for both utility-scale and distribution scale and help shoulder a sizeable share of the costs and progresses towards a carbon-neutral society, while also welcoming competition and cost efficiency. This is in line with the EC’s Energy and Environment State Aid Guidelines which require that support for renewable energy projects of a large scale must be awarded in a competitive bidding process. Exceptions to this rule are allowed only for small-scale projects, if too few bidders would be eligible, if support levels would increase, or if project realisation rates would decrease. The renewable energy sources with the largest potential capacity addition – for Malta being offshore wind energy, large photovoltaic systems, and possibly biomass – could be incentivised through competitive calls for tenders.
Germany, for example, is aiming to have 65% of its electricity consumption covered by renewable energy sources by 2030 and in order to make this a reality, they have taken a number of steps.
Firstly, electricity from renewable sources is mainly supported through a market premium scheme, or more commonly referred to as a ‘premium tariff’. In Germany, the plant operator sells its electricity directly, i.e. to a third party, either by a supply agreement or at the stock market price, and then claims the market premium from the grid operator. For most installations, the award and the level of the market premium is determined through a tendering scheme.
In January 2021, the German Renewable Energy Act (the ‘EEG’) was amended to provide for inter alia the increase in tender volumes for wind energy, and primarily for solar power. To put things into perspective, while the EEG 2017 (which is the law prior to being updated in 2021) provided for a tender volume of 2,650 MW for onshore wind energy, in 2021, this figure will now be 4,500 MW under the EEG 2021, that is, almost double. The tender volume for solar energy will be increased even further.
Another significant development is the privileged treatment of green hydrogen producers when procuring electricity.
Despite all the positive aspects of the EEG, it was nonetheless criticised for lacking in providing for the expansion of technologies enabling negative emissions. Since greenhouse gases cannot be completely avoided, the remaining emissions must be compensated for by removing CO2 from the atmosphere, which is where negative emission technologies come into motion.
And as the saying goes – ‘don’t change a winning horse’. Our vision for Malta, with all the geographical and territorial limitations that come along with being the most densely populated country in Europe and with being isolated from mainland Europe, sees the targets for energy production from existing schemes, such as PVs, increasing.
The Maltese government should consider introducing a tender volume scheme, with incentives which are more attractive than the ones which exist. We should incentivise the research and development of alternative green technologies such as those using radioisotopes and prioritise the uptake of hydrogen for the public transport system and extend it to the shipping sector. We could also go a step further than the rest and consider introducing a compensation scheme for negative emission technologies. The simplest way is the way that has been proven fool proof for millions of years – planting more trees. There are of course, other new and innovative ways of doing this, such as land management to increase carbon in soils, carbon capture and storage, and enhanced weathering. All these routes should be assessed and, where feasible, implemented.
If Malta is to meet its 2050 carbon neutrality targets, then our legislators and government need to implement concrete regulatory, legislative and policy steps which will prove most effective and least burdensome. We need to begin by expanding the scope of the legal definition of renewable energy and increasing capacity volumes, starting with the photovoltaic system as once this is done, the involvement of the private sector will automatically follow. By adopting an ambitious forward-looking stance, we will enable the private sector to bring to the market those new alternative green technologies which complement and work so well with solar energy technologies.
Moreover, global innovators in the renewable energy field are now viewing Malta’s size, demographics, and capacity as a very attractive testing base for small-scale pilot projects which can be demonstrated here and then scaled out to the rest of Europe. This should be addressed and incentivised as it will undoubtedly benefit our economy by creating niche sectors of expertise and making Malta the leading green tech hub in Europe.