One of the priorities of the European Commission appointed at the end of 2014 is the formation of a single energy market. It is indeed unfortunate that the minute one uses the term ‘single market’ within an EU framework, one gets sceptics who believe that this is yet another attempt by the Commission to interfere in matters which should remain the competency of national governments. But the economic and social impact of an appropriate power supply is such that it makes the formation of a single energy market a necessity.
We may take energy supply for granted until it is cut off. The fact that we take it for granted means that energy is an intrinsic part of our personal lives as well as the operation of any business entity. A cynical question that one could ask is how much of what we do and produce is totally dependent on the availability of energy at reasonable prices.
Over the years, the debate in Malta about energy supply has been characterised by severe underinvestment in the 1970s and the first half of the 1980s, the siting of a new power plant in the late 1980s, the resource to use to power the plant, the price to be paid by consumers and the cases of corruption in front of the law courts.
Until some form of crisis hits, we rarely stop to think that energy powers our economy
Until some form of crisis hits, we rarely stop to think that energy powers our economy, that infrastructure needs to be modernised, that prices need to be kept at the lowest levels possible, that there should be increased choice for users (that is, removing monopolistic practices as much as possible), and that disruption in supply should be minimised if not eliminated.
What will the single energy market imply in practical terms? It would reduce dependence on the production of energy within the boundaries of our country. We already have the interconnector between Malta and Sicily which is making it possible for us from a technical perspective to obtain supply of energy from the European continent. The single energy market will make this even more possible from a commercial perspective. An interconnected Europe will make energy more efficient to produce and to distribute, resulting in savings for users and improved support for the business sector.
We have never been subjected to a disruption in the energy supply for any length of time. But we could learn from the Cyprus (an island like us) example, whose power station exploded some years ago. It was during summer and therefore at a time when there was peak tourism activity. It did bring the economy to a standstill. Some Cypriots claim that the economic woes of the country started at that time, and that the overspending by its government and the Greek crisis only exacerbated the situation.
Some issues need to be kept in mind. The European Union imports just over 50 per cent of its energy requirements, while Malta imports just under 100 per cent of its own. Developments in technology have made it possible to produce renewable energy more efficiently.
Because of its small size, Malta does not enjoy economies of scale in the production of energy.
All this leads to higher costs and therefore a loss in competitiveness for businesses operating here.
I have made no mention of the impact of a single energy market on the environment, given that the thrust of my contribution is economic. Yet it is an aspect that cannot be ignored, especially since a greener economy is likely to have a positive impact on the quality of our life, thereby indirectly making a positive contribution to the economy.
This leads me to conclude that the formation of a single energy market in the EU is likely to be of benefit to our economy, as it will give us the possibility to diversify the sources of our energy requirements at a lower price and with less uncertainty.
It will make our economy less vulnerable, which must always be seen as a positive effect.