Capping energy subsidies for the wealthy is no simple feat and could even have a negative impact on lower income earners, according to Prime Minister Robert Abela.
“To reduce waste is desirable, but it doesn’t work in such an easy way as saying you want to only help the lowest tranche of society – those that have the least," he said.
“The reality is that if you are going to raise [the price of energy] for higher categories of earners, the burden will be felt even by lower earners."
Abela was asked whether his administration would consider setting a limit on the amount of energy a household can consume at subsidised rates in a bid to cut down on waste.
As global energy prices skyrocket, households in Malta have enjoyed energy bills that have remained at pre-pandemic levels.
That is because the government is currently subsidising utility bills, effectively absorbing the increase in price.
Malta is buying electricity from the European grid for more than five times the price it used to in 2019.
The government subsidies for this year are expected to cost the taxpayer €250 million.
This policy is for a blanket subsidy, meaning that all energy consumption is being partially paid through taxpayer funds.
To reduce waste is desirable, but it doesn’t work in such an easy way as saying you want to only help the lowest tranche of society – those that have the least- Robert Abela
This means that even the wealthiest in society have their energy bills covered and that taxpayer funds are being used to partially subsidise wasteful behaviour.
Last month, the country’s main business lobby called for limits to be set on energy subsidies.
Electricity units that are over and above the government’s eco-reduction entitlement should not be subsidised, the Malta Chamber of Commerce, Enterprise and Industry said.
The eco-reduction quota system calls for people to use roughly 2,000 units of electricity a year.
The lobby also said consumers should be incentivised to replace appliances with energy-efficient alternatives through VAT cuts.
Asked to weigh in on this, Abela said that his administration had recently released guidelines for energy reduction in the public sector.
The guidelines set limits on temperatures to be set on air-conditioning units, and call for decorative facade lighting on public buildings and monuments to be dimmed late at night.
Abela did not say whether any such guidelines would be issued for the public, saying only that it was always “desirable” to reduce consumption.
Times of Malta reported that the government is expected to put a freeze on capital projects which were entirely paid from its coffers, in an attempt to subsidise the cost of energy to the consumer.
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