What We Think
July 17, 2020
Chart of the Week (28) - Energy
Climate change is potentially the next major global challenge facing humanity when the dust on COVID-19 settles. One of the biggest drivers of climate change giving rise to greenhouse gas emissions is the burning of oil, coal and natural gas in order to produce heat and electricity; responsible for more than 25% of all global emissions.
At the same time, the average cost of electricity has been rising steadily across European member states over the past 10 years, with Denmark having the most expensive electricity in the EU at €29.20 per 100kWh, more than double that of Malta.
European governments are currently debating the stimulation of economic recovery by means of ‘green growth’ policies, which includes investments in renewable energy. Many new renewable energy projects are now cheaper when compared to fossil fuel-based power plants.
Over the period between 2008 and 2018, the percentage of energy production generated by way of renewable sources has increased by 5 percentage points, primarily through wind and solar technologies. Today, EU-27 countries have an average share of energy produced from renewable sources of 18.9%. Malta unfortunately still lags significantly behind and is currently second-to-last when compared to other EU member states with a percentage share of just 8%.
This shift towards renewable energy is key in combating climate change. The UN stated that ‘2019 was the second warmest year on record and the end of the warmest decade (2010-2019) ever recorded’. This is primarily due to the ever-rising carbon dioxide (CO2) levels, along with other greenhouse gases, which rose to new records in 2019.
Malta has surely come a long way on this front, closing down the ailing Marsa power plant and investing in a more efficient energy infrastructure. It is also very encouraging to now see the private sector taking up a more central role in the promotion of green initiatives and projects, embarking primarily on large scale solar farm investments. Against this backdrop, by end of this year, Malta may well reach the EU renewable energy share targets for 2020, set at 10%.
The country will however have to do more to improve its environmental credentials, which will ultimately stand to benefit both the environment and the economy by way of cheaper energy prices and new investment opportunities.