07 Dec Interview with Miriam Dalli, Minister for Environment, Energy and Enterprise of Malta
Malta is undergoing a complete economic transformation on the back of the pandemic and a new government party. The Central Bank expects a 5.2% rise in GDP this year, with the country’s employment rates at an all-time high. I’d like to start the interview with an overview of Malta’s greater economy. What are Malta’s current industrial strengths, and why is Malta of great regional significance in the context of the EU?
Miriam Dalli: I think we need to look at those figures in the current context, and in the greater scheme of things, considering that Malta, like all the other countries in the world, has gone through the pandemic. Additionally, being an EU member state, we are directly experiencing the impact of the war on Ukraine. That puts significant pressure when it comes to prices of energy, prices of cereal, prices of the most essential services and the most essential products. As the smallest EU member state, this brings with it certain challenges; as a government we believe that it also brings along opportunities. I will quickly explain why. Challenges, too, because we are not an inland country but an island state at the periphery of the European Union. Therefore, we have to face certain realities that other member states don’t face. For example, we depend a lot on imports. In this regard, logistical expenses in certain cases increased four or five-fold, and that puts a lot of pressure on prices and competitiveness for both domestic and foreign enterprises. On the other hand, we pride ourselves in being accessible and we’re assisting our companies to move forward, not only to absorb the shock that they are currently experiencing but also to remain competitive. I believe our size is an added advantage, in this sense. In fact, investors, including foreign investors, will attest to how easy it to speak with us when concerns arise — this in comparison to other countries where it’s easy to get lost. Less red tape is also something that we will continue working on. If I must speak about our main economic principle, I think it is growth versus austerity. We do not believe in austerity. We believe in helping, supporting, and making sure our families, our companies and our country continues growing. With growth, you can continue supporting the most vulnerable, with growth you can invest in education, with growth you can invest in green public spaces, with growth you can focus on new economic niches, particularly the green economy, the blue economy, while also supporting the industries we have in the country. For several years, for example, the manufacturing sector was side-lined. There wasn’t a vision that it was a sector that could help the economy grow. This government believes differently. We believe that if we have companies here, we can support further. If a company chooses Malta as its base country, we want them to see it as a country they can continue expanding and growing in. This helps our economy thrive; it makes our country attractive. We are helping and supporting manufacturing companies that are growing here while also attracting new companies. We are working on attracting new international companies and at the same time helping companies established here, be it local or international companies. We have companies like De La Rue that are involved in currency printing. They are expanding here further, and they want to invest in the sustainable and digital area because that is what we are primarily interested in. We are interested in those companies that support sustainable and digital investments. For example, this year I was pleased to see the launch of a number of investments related to biopharma, in the pharma sector, and MRO in the aviation sector. To mention a few: the SRT Hangar was a massive investment for Malta. Likewise, there was the investment by Ryanair in Malta. We continue to work on strengthening the medical cannabis sector. In the meantime, we’re investing a lot in start-ups because we believe that we have an economic niche which can help us pave the way for the future, particularly when it comes to AI, Med-Tech, Fintech. Indeed, we are seeing a growing interest in terms of digitization of financial services in addition to digitization of software production, AI, gaming, etc.
Europe has been hit hard as it pulls out of the pandemic with the conflict in Ukraine, which has quickly disassembled necessary value chains – particularly in energy. What kind of challenges have these recent crises had on Malta, and what kind of opportunities are now available for the country as the region re-writes its economic and trade framework?
Miriam Dalli: What is happening in the Energy sector obviously hits us hard like any other EU country but I think our approach was a bit different all along. Other countries chose to pass the price hike onto the consumers. We chose a different path. Malta is a highly electrified country: families depend on electricity for their heat, as compared to other countries that depend on gas for their electricity. Our industries depend on lot on electricity. Our water production depends a lot on electricity because of a lack of resources. Obviously, we have invested primarily in desalinization production and we’re looking at electrifying even further. Our aim is to have as much as possible battery electric vehicles on our road or at least zero emission vehicles, but the predominant technology at this point is battery electric and that depends on electrification. We are investing in shore-to-ship technology so that when ships come into our ports, they can switch off their engines which pollutes primarily when it comes to sulphur. They can switch on to electricity from the port and that means even more electrification. To give you a quick idea of how our electricity mixes, we have 70% of our electricity which relies on LNG plants, 20% which is from the Interconnector which is linked to mainland Europe, and we have over 10% from renewables. When we look at this electricity mix, it is obvious to me that we need to invest further to increase that percentage of renewables. While the current situation is a challenge, we have decided not to transfer that expense onto consumers considering also that we saw that people have been struggling with the Covid pandemic and most of our enterprises are small to medium enterprises, as we mentioned earlier due to the lack of space. We believe this is the opportunity to ramp up that 10% of renewables. We want to involve the private sector in this and one of the key sectors that we are looking at where we can also attract foreign direct investment or local investors is in renewable projects. When we speak about renewables given our size, we can’t go for massive investments in renewables if they are on shore, on land, because land availability is what it is. But we have the potential of the sea surrounding us. Now the bathymetry around Malta is a bit challenging because we have deep seas surrounding us but we’re seeing developments when it comes to offshore renewable technology which is floating wind and solar energy. It is the same idea as a solar or wind farm but instead of on land, it is offshore. We believe this is an innovative sector for us. The Ministry of Finance issued a pre-market consultation to understand what interest exists out there and we will be kicking off the process to start issuing an expression of interest and request for proposals to get these projects materialized with the involvement of the private sector. I don’t believe the government should do this alone. We want the private sector to be involved with our support. Until a few years or even months ago, people said offshore floating energy is too expensive, it is not financially feasible, it does not make any economic sense, but with the gas prices we are seeing at this point in time, it does make sense. Mind you, it is still expensive technology compared to the technology onshore, but we believe there is a case there. From what we have seen so far, the private sector is also interested in investing in that direction. That would be a new economic niche for us as a country. We want to invest in the green and the blue economy. Green economy was mentioned in the budget speech recently and there was a whole chapter on the green economy and that’s how much we believe it is a turning point for our country. That brings me to where there are challenges. We try and see the opportunities in those challenges to see where we can tap into those opportunities.
Malta has joined the EU in cutting down on carbon emissions, with an ambitious national reduction goal of 40% by 2030 compared to levels in 1990. You’ve worked a lot in pushing for climate change policy at both the national and EU levels, such as your recent involvement in the Fit for 55 initiative. Can you give us an overview of Malta’s current roadmap towards cutting down carbon emissions and creating more circular economies, and what more needs to be done in terms of policy to push the national green agenda forward?
Miriam Dalli: Our aim and target is to have a decarbonized economy by 2050. To have a decarbonized economy by 2050, we need to have targets in place. I always think of the final target and try to act in reverse, otherwise you will never reach that target. I mentioned the work that we are doing when we it comes to renewable energy and electrification to reduce emissions from transport, also we are really working hard on the waste management area. I believe that this country for far too long has left waste management on the back burner, and you can’t postpone these things forever, so one of the biggest priorities for me is waste management. We’re also working on a waste to energy plant that will help us not only manage waste but also it will be another source of energy production. The priorities that we will be working on in the coming months will be that we are ambitious when it comes to waste separation. We want to reverse the percentages of waste that end up in our landfill as compared to waste that is being recycled and there is a lot of work that needs to be done there as well. All of these things in my point of view can create jobs, help us move forward when it comes to green economy, and reach the targets that we have set in place.
You’ve also spoken a lot about what new technologies can do to help with climate change and create a more sustainable future. What key technologies is the government of Malta currently leveraging to change the dynamic of its energy and greater industry, and what kind of opportunities are available for Maltese and foreign entrepreneurs in this area?
Miriam Dalli: We try and assist as much as possible both local and foreign investors when it comes to investment in areas of renewables, energy efficiency for example, water savings, waste management, etc. Malta Enterprise, which is our entity that works with foreign investors can explain the incentives that we have and how we guide investors because one of our biggest concerns would be a foreign investor coming from outside the European Union, and how they would navigate in the new sector. That is precisely what we try to provide at Malta Enterprises- the hand holding. If you are a foreign investor, maybe it is your first time moving outside of your country, looking at the EU as a potential market, obviously you need hand holding to understand how the market works. We want to make it easy for investors who are moving in the direction of the green economy to invest with sustainability and environmental friendliness as goals. We are also working on an ESG platform, and it is beyond any regulation from the European Union. We have launched that platform which initially was open to our companies listed on the Stock Exchange. They are reporting on a voluntary basis what they are achieving when it comes to criteria for the environment and social governance. There was a very interesting update because 85% of the companies listed on the Stock Exchange are putting out their data. Now we are opening the platform for other companies who want to join in. I think that creates a lot of awareness amongst our companies. How they can be not only environmentally conscious but also more conscious when it comes to the social aspect. For example, we have seen that companies on their board have more equal representation between men and women have been registering more profits. Companies that have invested in waste management have managed to decrease their waste by 85%. It shows that if you invest in in the environment, the social, and the governance, you might see a slightly higher capital expenditure, but in the long term, it pays you more.
You stepped up as Minister for Environment Energy and Enterprise in November 2020 during a tumultuous time for the country. Before that you’ve spent most of your career pushing for sustainable causes, including working with the European Green Deal and the EU’s regulatory stance on reducing transport emissions. You’re quite an inspiration! As Minister for Environment, Energy and Enterprise, what are you current top three priorities, and what kind of potential does Malta have?
Miriam Dalli: When I came back from the European Parliament, and it hadn’t been a planned decision, I believed there were areas that we could really push toward change. Primarily, I want to see a higher share of renewables and the country moving towards cleaner energy. That has been my aim from Day 1 and I believe now there is a lot of potential when it comes to off shore renewable initiatives and projects, as I mentioned. Secondly, I would like us to establish a structured blue economy. I believe that we have a lot of potential when it comes to the blue economy, maybe so far it has been a bit disjointed because we have seen a lot of work going on when it comes to the maritime sector vis à vis shipping, tourism and coastal tourism, fisheries but I believe that we can have more of a structured approach when it comes to the blue economy, train our people when it comes to the blue economy, and make sure that we attract those kind of initiatives and projects that can help us move forward when it comes to the blue economy. Thirdly, this is something I really want to manage to achieve: a greener Malta, by having greener spaces in the urban areas, and making sure that we protect our rural areas, have more green spaces there because interestingly enough in the latest by EY, because they had a conference recently, one of the things foreign investors were interested in having was these green spaces on our island. With our island being very small and highly dense, I think it is something that we really need, and we must achieve.
Final message for the readers of Japan Times.
Miriam Dalli: The message that I would like to convey is that even though we are small and investors coming from bigger countries might overlook Malta due to our small size, the fact that we are small makes us much more agile, more innovative, and willing to try new technologies where foreign investors might look for a country as their pilot project before they scale up in other countries. Malta is the ideal place for that.