electrogas

Despite the European Union’s agreement to decrease natural gas consumption by 15 per cent, Malta appears to be moving in the opposite direction according to Eurostat, which shows a local increase in consumption approaching 15 per cent.

This would invariably be the result of Malta’s decision to freeze energy prices through subsidies. By dedicating 10 per cent of its expenditure for 2023 to keep energy prices stable, the Government is shielding all households and businesses from shocks in the energy market.

The result is a ceaseless upward trend in natural gas consumption, even when compared to December 2022.

Since the introduction of the energy price freeze, there have been few new incentives for households and businesses to reduce their consumption of energy. Instead the Government released a a set of guidelines on energy consumption habits, and prioritised the adoption of greener energy practices rather than outright reduction.

The Malta Chamber of Commerce had pointed out that the Government’s energy subsidies do not discourage excessive consumption. As part of their proposals for the 2023 Budget, the Malta Chamber had suggested a reduction on VAT for households purchasing energy efficient appliances, and that consumption of energy which surpasses eco-reduction entitlements are not subsidised.

Thus far the Government has not mentioned any intention to remove the price freeze, nor how long it would last for. This led to the International Monetary Fund urging the Government to develop an exit-strategy from the expensive subsidy scheme, as its sustainability is questionable in the long-term.

A house in Manikata via Cami (Facebook)

The reason behind the EU’s intention to reduce consumption of natural gas is to cut the dependence on Russian fossil fuels in light of the invasion of Ukraine.

Unlike the rest of the EU, Malta received an exemption from reducing consumption to natural gas, since it is not connected to the continent’s gas network, and does not receive any gas directly from Russia.

However, Malta could still be receiving energy generated through Russian natural gas from the Malta-Italy interconnector.

malta fuel mix
Malta’s energy mix via Enemalta

Finland, Lithuania and Sweden were the top three countries to have cut their consumption of natural gas, by 57.3 per cent, 47.9 per cent and 40.2 per cent respectively.

Malta and Slovakia were the only countries to register an increase, while Ireland registered the smallest decrease.

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