Dalli under pressure as Enemalta lost millions in carbon transaction

Energy Minister Miriam Dalli is facing mounting pressure to explain how Enemalta incurred losses reportedly exceeding €60 million in a carbon trading deal that has collapsed following the failure of a Swiss intermediary.

According to sources familiar with the matter, Enemalta executives informed the minister several weeks ago that the value of a stock of carbon emission certificates purchased under the EU Emissions Trading System (ETS) had been almost entirely written off.

The credits intended to cover roughly two years of the company’s carbon obligations were rendered worthless when the intermediary handling the transaction went bankrupt.

The loss is significant for Enemalta, which, according to its 2022 accounts, spends around €45 million annually on ETS allowances. The company’s already fragile finances are now expected to come under further strain.

Enemalta relies heavily on government subsidies, receiving some €250 million from state coffers in 2022 to offset frozen electricity tariffs.

The development has also unsettled Shanghai Electric Power, Enemalta’s Chinese minority shareholder, which has demanded clarification from Dalli over how the exposure was allowed to occur and who should bear responsibility.

Dalli, typically very active on her social media and public relations efforts, has so far declined to comment publicly on the matter and has reportedly postponed several scheduled press briefings.

Questions sent by The Shift seeking details on the transaction and accountability have gone unanswered.

It remains unclear when the deal was executed and what due diligence was conducted before Enemalta entered into the arrangement with the Swiss counterparty. The transaction was reportedly made before the current board of directors, chaired by Ryan Fava, assumed its mandate.

Under the EU ETS, companies such as Enemalta must surrender carbon allowances corresponding to each tonne of CO₂ they emit. These permits are acquired through international auctions and traded on markets that resemble commodity exchanges.

Some utilities hedge future compliance costs by purchasing certificates in advance – a strategy that can expose them to counterparty risk if intermediaries fail, as has happened in the case of Enemalta.

Enemalta’s carbon exposure has declined in recent years as the company sources electricity from Electrogas, which operates on liquefied natural gas (LNG), a cleaner fuel than oil. However, the utility also relies on a temporary diesel-fired plant operated by Bonnici Brothers for emergency supply, one of the most carbon-intensive fuels available.