Enhancing competitiveness through energy efficiency

In recent years in Malta there has been a marked increase in the policy focus on competitiveness. In the immediate post-EU accession period Malta joined the other member states in embarking on its own national initiative to discern its economic priorities to implement the Lisbon Agenda objectives locally.

The Maltese government correctly identified the environment as one of the most important sectors for taking action to bolster Malta's economic competitiveness. Energy efficiency is an inextricable intertwined policy priority within this environmental pillar of Malta's National Reform Programme.

The EU Action Plan for Energy Efficiency, published on October 19 by the European Commission, carries ten practical priority actions that are meant to guide both European industry and the domestic household consumers towards achieving greater energy efficiency.

The European economy is highly dependent on foreign energy supplies and this dependence is even more accentuated in Malta's case. The direct cost of the EU member states' inability to use energy efficiently will amount to more than €100 billion annually by 2020.

There is the potential of energy saving of over 20 per cent within the EU member states by 2020. Making the best of the economic potential of energy savings within business is of the utmost importance to help the European economy maintain and improve its competitiveness.

The European Commission will seek to update labelling and minimum energy performance standards for energy using equipment with special emphasis on standby loss reduction.

Energy efficiency in the construction industry

The EU Action Plan on energy efficiency also points out something very important for Maltese business - that there is significant energy savings potential in the commercial buildings sector.

By the end of 2008 the European Commission will also develop a strategy for very low energy or passive houses.

Low energy houses are commonly defined as houses without traditional heating systems and without active cooling, very good insulation levels and a mechanical ventilation system with highly efficient heat recovery. The cooling aspect is particularly relevant for Malta's situation, given our long, hot summers.

The European Commission will be entering into a close dialogue with the member states and key stakeholders towards more widespread deployment of these houses by 2015.

The potential savings to the business sector are estimated to be some 30 per cent of energy use and 25 per cent energy saving for the manufacturing industry.

The European Commission will propose expanding the scope of the Energy Performance of Buildings Directive in 2009. It will also propose minimum performance requirements for new and renovated buildings.

The Maltese government has taken a step in the right direction by providing a reasonable level of reimbursement for white goods that are energy efficient certified. These incentives, unveiled in Budget 2007, should result in greater energy savings in future years.

The Directive on the Energy Performance of Buildings is of direct relevance to the local business community as it can be conducive to the reduction of energy consumption.

From 2009 onwards the European Commission is also to propose EU minimum performance requirements for new and renovated buildings. It will collaborate with the construction industry to develop a deployment strategy for very low energy or passive houses.

The EU also has several proposals that it aims to launch in 2009 on the Buildings Directive, such as an expanded role for the public sector to demonstrate and showcase the effectiveness of new technologies and methods of implementation as well as lowering performance requirements as regards kilowatts per m2 for new and renovated buildings.

Besides taking stock of the entry into force of the buildings directive in January 2006, the Maltese construction industry also needs to keep in mind that there are further legislative amendments in the pipeline over the incoming two years.

Making power generation and distribution more efficient is also extremely important as the Commission by 2008 will develop minimum binding requirements for new electricity, heating and cooling equipment with a capacity lower than 20 MW and possibly even for larger units.

Good operating practices for existing capacity to raise average generation efficiency for all plants will also contribute towards more energy efficiency. The Commission will also be promoting tighter standards with regard to CO2 emissions from cars in 2007 to ensure that the 120g CO2/km target is achieved by 2012.

What Maltese SMEs stand to gain

The cost aspect will be addressed in the coming two years as the Commission will call on the banking sector to offer packages specifically aimed at small and medium enterprises to adopt energy efficiency savings plans identified thanks to energy audits to be carried out at firm-level.

Access to Community financing, such as Green Investment Funds, co-financed by the Competitiveness and Innovation Framework Programme (2007-2013), will be made available for promoting eco-innovations.

The EU action plan also seeks to facilitate public-private partnerships with the commercial banking sector, the European Bank for Reconstruction and Development and in partnership with other international financial institutions, to cover debt financing and make available at competitive pricing guarantee funds for private enterprise.

From a Maltese business perspective it is interesting to note that the Commission will prepare a Green Paper on indirect taxation in 2007 and will review the Energy Tax Directive in 2008. This review is designed to facilitate a more targeted and coherent use of energy taxation.

The Action Plan on Energy Efficiency also gives priority to increased education and training programmes for energy managers in private industry and the public utilities sector.

In an attempt to trigger a domino effect a 'Covenant of Mayors' will be created by the Commission in 2007 bringing together within a permanent network the mayors of 20-30 of Europe's largest and most pioneering cities in terms of energy management and energy efficiency policies. This will help in the exchange and application of best practices.

The Commission is committed to adopt a work plan in 2007 to realise an internal market for additional energy-using products by 2010. This proposal is intended to ensure that energy-intensive products will be covered by EU-wide minimum standards and performance rating/labelling.

The need for more energy-efficient business applications has never been more urgent, particularly in Malta's case given our almost 100 per cent dependence on fossil fuel imports for our energy supply.

Of particular relevance to Malta's scenario is the emphasis the European Commission will be giving to the banking sector in the next two years so that specific finance packages for SMEs will be developed to facilitate their adoption of energy saving strategies.

Malta will also be able to tap EU funds, known as Green Investment Funds, under the incoming 2007-2013 financial instruments. The EU is seeking to encourage the development of public-private partnerships with the commercial banking sector.

The exchange and promotion of best practices is an important development to help disseminate better use of energy resources. The policy priorities outlined in the EU Action Plan on Energy Efficiency will lead to a healthier and better environment without jeopardising economic competitiveness.