George Debono in his Talking Point, Surcharge Cap Promotes Waste (August 16) argued for the removal of the surcharge capping. As one who is involved in both the environmental and business lobby I can see where he is coming from. However, there are some relevant points which need to be made.

Productivity is based on the efficient use of resources and the minimisation of costs, so the point that surcharge capping is encouraging waste goes against the grain of manufacturing firms. Every business will look to its overheads and one must point out that even before the introduction of the surcharge, water and electricity was not looked upon as cheap, especially by those companies which have a high usage. And contrary to Mr Debono's claims, there is absolutely no evidence that consumption of electricity in industry increased since capping was introduced. On the contrary there are a number of cases where industries benefiting from the capping introduced energy saving measures.

In the Federation's position (Talking Point, July 28, In Search Of Power Sources) on the fuel surcharge, we stated that it is very important that the current system of capping of utility charges to large enterprises is maintained. The sudden removal of this system which has cushioned the effects of the meteoric rise in the price of oil may jeopardise the viability of some of these businesses who have created thousands of jobs directly as well as indirectly. Most of the companies benefiting from the capping system, apart from being big employers, also comprise our major exporters, earning much needed foreign currency. It is imperative that we keep these companies on board in this rough patch and ensure that their businesses remain viable and indeed continue to expand and invest. The oil fluctuations may be with us for some time but for how long or how high the prices may go is all conjecture at this point (prices have fallen appreciably at the time of writing) but we need to ensure that these short term fluctuations do not have long term implications for our investors.

However, we need to be intelligent and assist companies in investing in energy efficiency, and the FOI acknowledges that there could be improvements to the capping system, as operated at present, to enhance the optimisation of an energy efficiency culture. To this effect, the FOI recommends that enterprises benefiting from the surcharge capping system should be asked to submit an energy performance plan, which would be spread over a number of years and annually monitored. This would enable a commitment to be made, in cases which are financially feasible, to a reduction in energy use arising from efficiency measures and to an increase in energy generation from sources other than fossil fuels. In this case we would be pushing for a win-win situation whereby companies would be asked to actively reduce their carbon footprint and would gain benefit for doing so through the capping system.

The FOI is of the opinion that there is no one solution to the energy issue, but rather a mix of mitigating measures, including energy efficient practices as well as investment in a renewable energy culture - and as is true in so many cases, often it is better to have many smaller initiatives than large showcase projects which may prove to be white elephants.

The process of reducing the amount of energy that we consume will lead to the reduction of carbon emissions, reduction of the need for additional energy supplies and hence costs. Saving energy can also reduce the amount of renewable energy needed to meet our targets by reducing the overall energy consumption. This is cheaper than investing in a new generation plant and this may lead to an absolute reduction in energy demand in the longer term. Public campaigns should be initiated on the need to conserve energy, efficient lighting, and conversion to solar thermal water heating and effective building design. In the case of the latter, more stringent building regulations are needed. Water harvesting should also be taken seriously as this also impacts on energy consumption.

Investment in a renewable energy culture needs to be made through constant awareness and realistic incentives to promote the use of alternative sources of energy. Investment in renewable energy equipment should not only be seen from the economic viewpoint but also needs to be linked to our environmental responsibility.

It must be emphasised that any measures taken regarding renewables should not be just a case for less expensive energy, but to enable Malta to achieve a much higher level of energy security and potential diversification of energy sources.

Mr Galea is President of the Malta Federation of Industry.