Interest in the decarbonisation of the energy system has grown substantially in many countries over the last few years. Japan issued its national hydrogen strategy in 2017 followed by similar initiatives taken by South Korea, New Zealand, Australia, Norway, Portugal and Germany, among others.
On July 8, 2020, the EU published its own hydrogen strategy, one of the cornerstones for promoting investment in the green economy in the next decade and beyond. The EU hopes that investing in this hydrogen revolution will also help the member states’ economies to grow faster.
The technology behind the use of hydrogen for electrical energy generation is still in its infancy and its costs compared to benefits still need to strike the right balance.
However, there is consensus among most scientists that tackling the global warming crisis, which is mainly caused by the excessive use of carbon fuels, needs a radical change in the way that we generate energy. The use of green hydrogen is today the most promising option for achieving success.
The EU has committed itself to spending nearly €5 billion to support investment in hydrogen to generate energy. However, Malta’s application for financial assistance to build a 159-kilometre long gas pipeline to Sicily, estimated to cost €400 million, was not approved by the EU even though Malta altered its original application to make the pipeline capable of transporting both LNG and hydrogen.
Energy Minister Miriam Dalli was not fazed by this refusal and argued that the government would seek alternative financing arrangements to proceed with the investment in a hydrogen-ready pipeline to Sicily and Italy.
This stand indicates that the government is not prepared to rely solely on investing in the hydrogen revolution being promoted by the EU. It wants to keep depending on LNG use at least in the short term. This preference is understandable because of Electrogas’s outstanding commitments to buy LNG from the Azeri company Socar at a fixed price until 2022.
The EU hydrogen strategy is not as revolutionary as it may seem. Its energy sector integration strategy recognises that the generation of energy through green hydrogen made by renewable electricity, like solar and wind power and hydroelectricity, is the priority as the end game to reduce the use of fossil fuels.
However, it acknowledges that other forms of low-carbon hydrogen made by fossil fuel-generated electricity will play a role in the short and medium-term. The EU strategy also emphasises the need for significant support for research and innovation at an international level, both for technology development and cross-border trading of hydrogen.
While green hydrogen is the best option today for the decarbonisation of the energy system, the risks associated with new technology must never be underestimated. Major challenges remain to translate this revolutionary concept into a commercial reality with proper regulation for the global market for hydrogen trading.
Back in Malta, the government’s management of the energy sector in the last few years has not been transparent. Shadows of corruption still hang over the electricity generation investment and many legitimate questions on how taxpayers’ money was used remain unanswered.
The financing of the pipeline to Sicily is arguably not the most significant challenge facing the country. But the professional and transparent management of such a vast infrastructure project based on relatively new technology will be the acid test of this investment’s sustainability.