The article Failure To Reach Energy Targets Could Cost €400 Million (July 1) referred to the report prepared by the National Audit Office on Malta's renewable energy contingent liability - potential costs relating to the non-attainment of the EU's mandatory 2020 targets.

The National Audit Office is to be commended for the serious approach which was adopted in preparing this report, which is well researched.

It is therefore regrettable that in its front-page article, The Times appears to have misinterpreted the report and has come up with a sensationalist title that is both incorrect and misleading.

The article states that "According to the report by the Auditor General, in a worst-case scenario where Malta only manages to generate one per cent of renewable energy, it would face penalties of up to €26.1 million." The article then continues that Malta "might also have to fork out money to rectify the situation with interim measures (buying green credits from countries with excess renewable energy) and longer-term measures through new cooperation agreements with other states.

These could cost €58.5 million and €324.9 million respectively, according to the report, which, put together with the penalties, put the damage at more than €400 million".

In this regard, it is mystifying how The Times decided to lump the penalties, the interim measures and the longer-term measures all in one basket, thus concluding that the cost would be more than €400 million.

It is pertinent to note that the three "options" on the table, that is, financial penalties, statistical transfers and/or cooperation agreements in new renewable energy projects, are mutually exclusive and, while it is possible to have a mix of the second and third, it is never possible to have a situation where there are statistical transfers and/or cooperation agreements in new renewable energy projects and at the same time financial penalties are also being applied.

Indeed, the rationale of investing in statistical transfers and/or cooperation agreements in new renewable energy projects is precisely to act as a mechanism for member states to reach their respective targets in view of possible difficulties in ensuring sufficient domestic production of renewable energy and, thus, avoid the financial penalties that would be imposed if the set targets are not reached by 2020.

Therefore, according to the National Audit Office, in the worst-case scenario, the financial penalties could potentially amount to €26.2 million.

However, these penalties will be avoided if Malta invests in acquiring statistical transfers, which could cost from a minimum of €10.2 million if acquired from Sweden to a maximum of €58.4 million if acquired from Italy; and/or alternatively Malta makes use of measures of cooperation which, as a minimum, would cost €27.9 million up to a maximum of €324.5 million.

It is worth noting that the "maximum" figures in the report are worked out on the premise that the domestic production of renewable energy is limited to one per cent of Malta's overall energy needs. Malta is already approaching double that figure.

Furthermore, non-compliance does not lead to an automatic imposition of penalties by the European Court of Justice. As explained in the National Audit Office report, there are a number of assessments that have to be made by the Commission before it decides on whether or not to refer a matter to the Court. The Times is therefore misleading when it assumes that a decision to refer the matter to the Court has already been taken by the Commission.

It is also important to note that the government, following an extensive evaluation of current available measures, is positive that the renewable energy target will be achieved and possibly exceeded by 2020 solely through domestic measures.

The measures that are being foreseen include substantial investment in wind energy, solar energy, biomass and also measures related to renewable energy utilised in transport.

The author is Minister of Resources and Rural Affairs.