Author: Dr Lina Klesper - Legal Assistant at PKF Malta 
Published on Business Now on 10th February 2022

In June 2021 Malta started the process to declare an Exclusive Economic Zone (EEZ) with the potential of extending its responsibilities by as much as 71,446 sq. km beyond territorial waters.

With Malta´s size of just 316 sq. km, the zone could potentially be 226 times the size of the tiny Mediterranean island. Finance Minister Clyde Caruana stressed the huge economic potential such a declaration would give to the Maltese Islands. In the coming years, Malta´s EEZ could be used for fisheries, artificial islands, wind farms, solar farms, wave-generated electricity, and revenue from shipping movements.

Just recently, the Government showed commitment to proceed with the EEZ plans by identifying two areas for offshore economic activities. Area 1 of Malta´s EEZ, a 900 sq. km zone of shallow waters around Hurd´s Bank, has the greatest potential due to its shallow offshore characteristics. Concessions are planned to be awarded to private companies in a tendering procedure with planning and environmental permits, which will be fast-tracked and issued within only three months. These concessions are foremost aimed at projects for the production of renewable energy, the production and storage of hydrogen, fish farms, and the establishment of artificial islands.

The observation has to be made, that oil exploration and seabed mining are not included among the objectives as past administrations have always considered such objectives of crucial strategic importance to the economy of the Maltese islands. The current plan seems to have a rather green undertone aiming at attracting the attention of investors who wish to use the area for developing projects both in renewable and more exciting in hydrogen production.

With the production of hydrogen on its list, Malta is paving the way for its own production of green hydrogen, which uses renewable energy sources instead of fossil fuels for energy, to not be reliant exclusively on the Sicilian hydrogen ready pipeline in the future. Even though the technology used for the production of green hydrogen still needs to be fully developed and tested, it is a long-term project with the potential of making Malta fit and competitive for the future.

But with power over the two designated areas for economic activities outside the country´s territorial waters comes great responsibility.

On the one hand, Malta has the responsibility to choose and examine the projects carefully so that they are following ecological and environmental standards. Especially in the area of Hurt´s bank the underwater devastation through bunkering already must be alarming with a high vessel density and missing control. Not to speak of the impact of the already existing fish farms. It, therefore, seems to be important to be extra precautions with issuing fast-tracked permits from the Planning Authority and the Environment and Resources Authority in Malta.

On the other hand, the main problem can be seen in the exercise of the jurisdiction over the newly claimed territory together with its rights and duties. Malta needs to establish control and enforcement procedures in its economic zone to prevent unsafe practices and environmental pollution and illegal activities, which might include illegal fishing, smuggling, and the trafficking of drugs among others. In practice, this would also mean that the not always legal oil and gas activities conducted around Hurd´s Bank would now fall into the direct jurisdiction of Malta.

In a nutshell, with more territory comes more responsibility and the question of whether Malta has the capacity and economic power to make use of its rights, fulfil its duties and keep up with its obligations. Time will tell if these waves of change will wash prosperity or hardship to Malta´s shores.

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Author: Dr Lina Klesper - Legal Assistant at PKF Malta 
Published on Business Now on 10th February 2022
Get in touch: info@pkfmalta.com