Maltese business needs to go energy-efficient for manifold reasons. There is clear and ample scope for business across all manufacturing sectors, service providers and the hospitality industry to undertake a strong push to implement a feasible yet comprehensive package of energy efficiency initiatives at firm level.
The need for energy efficiency in business is simply self-evident without the need of elaborate explanations. Energy is expensive and in some sensitive sectors the energy utilities bill is even costlier than the average, consequently impinging negatively on the operating and profit margins of enterprise.
Moreover, energy generated from fossil fuels is also beginning to be scarce. According to scientific expertise, known oil reserves should only suffice to cover today's energy needs for about 40 years.
That is why this topic is very high on the European business agenda, particularly the security and reliability of energy supplies and what type of energy mix should be adopted in the medium to long term.
With depleting conventional energy resources and high international oil prices, there is an overriding need to pursue energy efficiency initiatives and other energy saving practices in business. The high, volatile international oil prices have a direct impact on economic growth in the EU-25/EU-27 over a medium to long-term basis.
EU action: Green Paper on Energy Efficiency
In this regard, the EU has taken the initiative to spur effective action to curb energy consumption across both the industrial market and the domestic household end-users in the member states. Energy consumption cannot be restrained substantially unless the factors contributing to energy waste are first identified and properly tackled from a demand-side perspective.
Demand management policies are at the core of the European Commission Green Paper on Energy Efficiency entitled 'Energy Efficiency - Doing Less with More', published in June 2005.
From a Maltese business perspective, the Green Paper is of interest to the local business community insofar that it seeks to identify the bottlenecks currently preventing the greater market deployment of energy efficiency applications in enterprise.
In brief, the Green Paper puts forward a number of practical initiatives that are already being pursued at both Community and member state level:
• establish energy efficiency action plans at national level, including a subsequent benchmarking exercise permitting the exchange of best practices among the member states;
• provide citizens better information through, for example, better targeted publicity campaigns and improved product labelling;
• streamlining taxation on the polluter pays principle without, however, increasing the overall tax burden;
• better targeting state aid where public finance support is justified, proportionate and necessary to provide incentives for business uptake of energy efficiency initiatives;
• using 'green' public procurement mechanisms to kickstart new energy efficient technologies, such as more energy-efficient IT equipment at the office, consequently encouraging the niche market growth of eco-industries and eco-innovation in general; and
• doing more on energy-efficiency of buildings to which a Community Directive already applies.
The formulation of annual energy efficiency action plans at national level is one of the core initiatives endorsed in the Green Paper with the aim of improving citizens' awareness on energy savings through information campaigns and product labelling for both household goods and industrial products.
The promotion of eco-innovative products is also meant to stimulate the growth of niche eco-innovative industries with latent potential just requiring that extra fiscal or supply-side incentives to take off across the internal market.
Better targeting of state aid for eco-innovative industries is among the ideas being mooted in the Commission's Energy Efficiency Action Plan, which was adopted on October 19.
Through the various initiatives listed in the Commission's Energy Efficiency Action Plan, the EU energy policymakers are now attempting to create a catalyst leading to renewed interest in energy-efficiency initiatives across the EU-25 member states.
Unsurprisingly, there is specific emphasis on the application of small-scale energy efficiency practices within the widest possible cross-segment of EU-based industry.
This rationale was originally underpinned by the Energy Efficiency Green Paper's efforts at highlighting how energy efficiency has a direct bearing on the international competitive standing of European business in terms of budgetary savings as well as new opportunities for niche market growth in eco-innovative industries.
Clearly, with an increasing market demand for energy efficient technologies, these can in turn create new and multi-faceted business opportunities for research and development endeavours related to industrial energy saving practices.
Energy efficiency as a Lisbon driver
The Green Paper places energy saving at the forefront of the policy measures required to attain the revamped Lisbon Strategy, which seeks to inject new dynamism in the European economy to compete at the global level.
There is an intimate link between energy efficiency and the Lisbon Strategy for Growth and Employment. The revised Lisbon Guidelines adopted by the Commission in April 2005 for the period 2005-08 point out that recent and forecast trends for oil prices make action for energy efficiency a priority.
Malta is also committed through the submission of its own Lisbon Action Plan, better known as the National Reform Programme in promoting energy efficiency through the launch of Green Public Procurement (GPP) and the formulation of an Environmental Technologies Action Plan (ETAP).
Energy efficiency can be a key competitiveness driver for industry and business if energy saving practices are properly deployed at firm level. The contribution that energy efficiency can make to bolster the competitive edge of local business is difficult to gauge.
However, according to numerous studies, the EU could save at least 20 per cent of its present energy consumption in a cost-effective manner, equivalent to €60 billion per year. To drive the message home that indeed energy efficiency pays and it pays well, the Green Paper cites how this estimated 20 per cent potential savings in energy consumption constitutes the present combined energy consumption of Germany and Finland.
The energy efficiency business sector is a relatively new market for both industry and household consumers. Inevitably, the use and further uptake of energy efficient practices within business depends to a significant extent on the availability of cost-effective and user-friendly technologies.
Improving energy efficiency in business, therefore, means using the best technologies to consume less, whether at the final consumption or energy-production stage.
The effective uptake of energy efficient practices in business could, consequently, make a major contribution to EU business competitiveness in terms of savings, which can then be channelled to other operational budget streams within the company and also in terms of new employment generation, especially in the R&D sector.
Although considerable capital investment is required to deploy energy efficient technologies, it is clear that cost-effective energy-efficiency measures - ones that result in net savings even once the necessary investment is taken into account - can directly contribute to the creation of many new high-quality jobs.
Unleashing R&D potential
The EU is an already established worldwide leader in energy-efficient equipment and energy services, and consequently the potential for job creation in energy efficiency research, production, installation and maintenance businesses in the ambit of the wider and rapidly developing eco-innovation sector is tangible.
The deployment of energy efficiency initiatives in local business is a veritable asset not only for cost reduction but also to unleash new research and technological development improving the production processes at the shop floor in the manufacturing industry.
Several promising end-use technologies still require extensive R&D support. In this regard, the seventh Framework Programme for Research and Development (FP7) will carry a specific priority action on Energy dealing in particular with renewables for power generation and fuel production, smart energy networks and energy efficiency within the main 'co-operation programme'.
Another funding instrument for Maltese business for the promotion of technological best practices in 'intelligent' energy use is the Intelligent Energy Europe Programme (IEE), which will further continue for the period 2007-13 within another framework programme known as the Competitiveness and Innovation Programme.
The CIP has just obtained Council approval at the last Transport, Telecommunications and Energy Council meeting on October 12.
To be concluded
Mr Cutajar is an executive and Mr De Martino is a trainee at the Malta Business Bureau.