Enemalta confirms large loss linked to carbon trade

Malta’s state-owned energy utility, Enemalta, has officially confirmed losses of approximately €60 million related to a failed carbon trading transaction. The development has sparked questions about ministerial oversight, corporate governance, and the adequacy of internal controls at the company.

The loss involves carbon allowances traded under the European Union Emissions Trading System (EU ETS) through a Swiss intermediary. These allowances are crucial for offsetting carbon emissions from power plants and ensuring compliance with EU environmental regulations. The revelation has prompted concern both domestically and among international stakeholders, particularly Shanghai Electric Power, the Chinese minority shareholder in Enemalta.

Details of the transaction and losses

The problem came to light in August 2025, when Enemalta discovered that around €60 million worth of carbon certificates could not be accounted for. At a press conference convened shortly after the discovery, Chairman Ryan Fava explained the situation and the steps being taken to address it.

“Enemalta is working with Maltese, British, and Swiss legal advisers to recover the missing allowances,” Fava said. He also emphasized that while the company is exploring all legal avenues, there is no assurance that the funds or allowances can be recovered.

Stefan Calamatta, Enemalta’s executive director responsible for trading, was also present at the briefing. However, Fava did not provide details regarding potential responsibility for the mishap, nor did he indicate whether criminal or civil fraud investigations were underway.

The Swiss intermediary involved in the trade has not gone bankrupt and continues operations, according to Fava. He declined to comment on whether fraud or mismanagement is suspected, leaving the nature of the loss ambiguous.

Ministerial oversight and absence of Energy Minister

Energy Minister Miriam Dalli, who oversees Enemalta, was notably absent from the press briefing and has not publicly responded to inquiries regarding the incident. Her absence has fueled questions about the level of governmental oversight and accountability within Malta’s energy sector.

The problematic transaction was linked to a 2021 board decision taken before Fava assumed the chairmanship of Enemalta. While Fava acknowledged the board’s role in the original decision, he did not clarify the extent of ministerial knowledge or involvement prior to the discovery of the missing funds.

Journalists attending the press conference reported that the event was tightly controlled. They were barred from taking photographs or recordings, and only a limited number of questions were permitted. This restricted access has raised further concerns about transparency and public accountability, particularly given that Minister Dalli was reportedly aware of the missing €60 million as early as August.

Impact on Enemalta and international stakeholders

Enemalta is already under financial pressure due to high energy costs and infrastructure demands. The confirmed loss exacerbates concerns about the company’s financial resilience and its ability to manage risks associated with complex trading operations.

Shanghai Electric Power, the Chinese minority shareholder in Enemalta, has reportedly sought clarification from Minister Dalli regarding how the exposure occurred and who would bear the financial responsibility. The lack of publicly available answers has created uncertainty among international investors and partners, highlighting the broader reputational risks for Malta’s energy sector.

The news follows investigative reporting by The Shift, which revealed that two years’ worth of carbon certificates were missing due to dealings with the Swiss intermediary. Questions remain about the level of due diligence conducted before the trading arrangements were approved and the internal checks that should have prevented such losses.

Corporate governance concerns

The Enemalta case underscores longstanding questions about corporate governance and oversight in Malta’s state-owned utilities. Experts point out that carbon trading is a complex area requiring stringent risk management and robust internal controls. Failures in this domain can have financial, reputational, and legal consequences for both the company and its government stakeholders.

“Effective governance is critical for state-owned utilities, especially when dealing with international trading and regulatory compliance,” said an energy sector analyst who requested anonymity. “The Enemalta case suggests a breakdown in oversight mechanisms, either at the board level, executive management level, or both.”

Critics argue that the absence of the Energy Minister from public briefings, combined with the controlled press conference, reflects a broader issue of accountability and transparency. Stakeholders, including international partners and domestic taxpayers, are left without clear information on the measures being implemented to prevent similar incidents in the future.

Legal implications and recovery efforts

Enemalta has engaged legal advisers in Malta, the United Kingdom, and Switzerland to pursue recovery of the missing allowances. These efforts could involve civil claims, arbitration, or other forms of legal action, though no formal proceedings have been announced to date.

The Swiss intermediary remains operational, which raises questions about the potential for asset recovery. Legal experts note that cross-border transactions can complicate recovery efforts, particularly when dealing with financial instruments such as carbon allowances.

“Recovering assets in international trading cases is often a lengthy and complex process,” said a corporate lawyer familiar with energy market regulations. “Even when wrongdoing is suspected, the chances of full recovery can be limited by jurisdictional and procedural challenges.”

Broader context: carbon trading risks

Carbon trading, under schemes like the EU ETS, is intended to provide economic incentives for reducing greenhouse gas emissions. Companies buy and sell allowances representing a limited quantity of carbon emissions. The system is designed to cap total emissions while offering flexibility for market participants.

However, the Enemalta incident illustrates the risks associated with these markets. Missing or mismanaged carbon certificates can result in substantial financial losses, regulatory non-compliance, and reputational damage. Ensuring proper due diligence, transparency, and internal control mechanisms is essential to mitigate such risks.

Financial analysts have noted that while carbon trading can be profitable, it requires sophisticated understanding of market dynamics, regulatory requirements, and counterparty risk management. In Enemalta’s case, the failure appears linked to gaps in these areas.

Potential reforms and next steps

The incident may trigger discussions within the Maltese government regarding stricter oversight of state-owned utilities, particularly in complex trading operations. Potential reforms could include enhanced board-level scrutiny, stronger internal audit functions, and more rigorous reporting requirements to parliament and the public.

Enemalta has stated that it is reviewing its internal controls and compliance procedures to prevent similar occurrences in the future. However, until the missing allowances are recovered or responsibility is clarified, the company faces both financial and reputational challenges.

The Energy Ministry has yet to issue a public statement detailing steps to mitigate risk and ensure accountability, leaving observers and stakeholders in Malta and abroad awaiting further clarity.

Financial and political implications

The €60 million loss is significant for Malta, given the relatively small scale of the national economy and the strategic importance of Enemalta. Beyond the immediate financial impact, the incident could affect investor confidence and complicate ongoing partnerships with international energy firms.

Politically, the lack of transparency surrounding the incident may become a contentious issue. Opposition parties and civil society groups may demand a more comprehensive investigation, including the role of ministers, executives, and board members in authorizing the trading arrangements.

For Shanghai Electric Power, the loss raises questions about the risk exposure of minority investors in state-owned enterprises and may influence their future involvement in Malta’s energy sector.

Conclusion

The Enemalta carbon trading loss highlights the complexity and risks of managing state-owned energy utilities in a global financial and regulatory environment. While efforts are underway to recover the missing allowances, the incident underscores the need for robust governance, transparency, and ministerial oversight.

As Malta continues to rely on Enemalta for energy provision and compliance with EU environmental standards, ensuring accountability and preventing similar losses will be critical for financial stability, investor confidence, and public trust.

FAQs

What caused Enemalta’s €60 million loss?
Enemalta lost €60 million due to a failed carbon trading transaction with a Swiss intermediary under the EU ETS.

When did Enemalta discover the loss?
The company discovered the missing carbon certificates in August 2025.

Who is responsible for the transaction?
The transaction originated from a 2021 board decision. Responsibility has not been publicly assigned.

Has the Energy Minister commented on the loss?
No, Minister Miriam Dalli has not provided public comments regarding the incident.

Is the Swiss intermediary bankrupt?
No, the intermediary is still operating.

Can the €60 million be recovered?
Recovery is uncertain. Enemalta is working with legal advisers in Malta, the UK, and Switzerland.

What impact does this loss have on Enemalta?
The loss exacerbates financial strain, affects investor confidence, and highlights governance gaps.

Will there be legal action?
No formal legal proceedings have been initiated yet.

How does this affect Shanghai Electric Power?
The Chinese minority shareholder is seeking clarification on financial exposure and accountability.

What lessons does this incident provide?
It underscores the importance of robust oversight, due diligence, and internal controls in carbon trading.