By now, everyone knows that the world is facing an energy crisis. But many prefer to adopt a let’s wait-and-see attitude on how best to deal with it.
EU governments have been urging their citizens to prepare for a long-term struggle with high energy inflation. The good old days of relatively low oil and gas prices are almost certainly behind us.
Malta also needs to act urgently to manage this challenging socio-economic reality. The country must adopt an effective energy-saving campaign to ensure that present and future taxpayers’ money is used judiciously.
The government has done well to issue guidelines for the public sector to adopt energy-saving measures in public buildings. An educational campaign encouraging Maltese households and businesses to take up more sustainable energy practices will also be launched.
More drastically, we report today that planned infrastructure projects financed entirely by national funds will be frozen to cushion spiralling energy costs. This measure will also help to keep public expenditure under control.
These are all good moves. They now need to be followed up with more intense, determined action.
Unfortunately, the government has been very reluctant to reveal the exact costs of generating electricity and water, and the cost of keeping fuel prices at the pumps at pre-crisis levels. It is estimated that this year alone, energy subsidies will amount to about €250 million. If people are not conscious of what it is costing the government to keep fuel, gas, electricity and water prices at pre-crisis levels, they may never feel the need to economise.
The word ‘austerity’ has understandably never been used by this administration as a tool to manage the current energy crisis. No doubt, the Labour administration understands the toxic political consequences of hiking electricity rates. In 1997, the Alfred Sant administration gave a new meaning to the word ‘ħofra’ – a fiscal sinkhole that was swallowing debt-ridden Enemalta and the Maltese economy into a quagmire.
The word ‘austerity’ has understandably never been used by this administration as a tool to manage the current energy crisis
It is fallacious to now tiptoe about the consequences of the country’s energy costs. The prime minister will undoubtedly argue that the second quarter economic results show that the country can afford to continue pumping taxpayers’ money into subsidy schemes. However, Abela would do well to listen to what energy experts are advising EU governments.
Energy giant Shell chief executive Ben van Beurden has warned that Europe may need to ration access to energy for several years as the crisis confronting the region is likely to last more than one winter. He commented: “It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives. That this is going to be somehow easy, or over, I think is a fantasy that we should put aside.”
So far, the subsidies given to absorb the energy price shocks have been socially regressive – those who consume most have benefited most. This needs to change. Excessive use of cheap energy must be discouraged or even penalised.
The government’s energy-saving campaign needs to move from symbolic tactics to clinically focused measures to ensure that only those households and businesses that need the most support get it.
The sight of subsidised fuel-guzzling pleasure craft cruising the waters is just one example of why many feel frustrated at how the government seems to want to underestimate the country’s harsh realities.
Malta will only be postponing the inevitable correction needed in years to come if we keep pretending that, for us, the energy crisis will only be a minor irritation.