Brian Muscat, MBB Director & Chair of The Malta Chamber’s Manufacturing Group
This Opinion Piece featured on The Sunday Times of Malta, on 26th September 2021
Ambitious targets will require equally ambitious financing to be reached
Energy efficiency as standard practice for businesses has been gaining increased momentum for a decade now. Today it is reflected in legal obligations arising through the EU Energy Efficiency Directive’s increasingly ambitious targets, and its need has been highlighted by the UN’s IPCC report on climate change. That report stresses the importance of limiting CO2 and other greenhouse-gas emissions if we are to avoid disastrous climate change – something critically important to us all.
As the chair of the Malta Chamber of Commerce, Enterprise and Industry’s Manufacturing Group and the CEO of a manufacturing company, I believe there is still a lot of potential for increasing business’ energy efficiency. To give some examples:
(1) 80 per cent of electrical energy consumption in industry is used to operate motors; high-performance motors can improve operational efficiency by up to 10 per cent
(2) Lighting can account for around 35 per cent of energy use in a building and lighting control is an area where it is the easiest way to make substantial energy savings.
(3) Power factor correction results in less current being drawn, and therefore less electricity cost, less heat and greater longevity of the electrical system; it also reduces the maximum demand tariff and thereby reduces your power costs.
(3) Introducing smart panels – which are distribution switchboards that include key functions – provide energy-saving benefits through real-time monitoring and control.
There is no contesting that energy and water efficiency improvements are technically feasible. Additionally, a decade of awareness-raising has worked – businesses understand the need and opportunities for energy and water efficiency. Going forward, I believe the key impediment to increased ambition at this point in time is the lack of suitable financing.
We are living in a world of expenses; industry cannot fork out money due to pressures being incurred to run a company efficiently: people are leaving to find a better wage, therefore industry needs to increase its wages; material costs are increasing day by day; freight and transport costs are impeding us from competing with other industries.
Malta being a small state compared with other huge countries brings its own challenges: large, medium and small companies in Malta do not employ the same number of people as, for example, in Germany, and our businesses incur freight and transport costs for import and export which are often disproportionate to those faced by mainland businesses. The financial pressure for Maltese businesses is large, and they have to make difficult decisions on how best to budget.
To become more competitive, industry does not need handouts, but it does need national support. If targets are ambitious, then financing must also be ambitious. Importantly, there is no need to reinvent the wheel. I believe if we simply take proven mechanisms and apply them to this sector, this will bring about considerable improvement.
Examples include direct monetary support to immediately implement projects and go for the change needed. This monetary support need not be a non-refundable grant; companies could repay the financial support provided through the savings achieved with this investment over a period of time – such as thematic and favourable state-backed loans. This would provide businesses with the investment capital needed to implement projects, all of which would be repaid as projects succeed.
Unless this issue is addressed and direct financing is made available, I don’t think industry can match ambitious targets. Through the ‘We Make’ project, the Malta Business Bureau, the Malta Chamber and Malta’s Energy and Water Agency will organise a set of financial workshops over the next two years. The aim is to link financing entities, be they public or private sector, with industrial operators to allow for an exchange of information on financing needs and project opportunities. We strongly encourage industry and financing entities to participate.
The Water and Energy Management and Knowledge Transfer in Manufacturing Enterprises (We Make) project, is a collaboration between the Energy and Water Agency (EWA), Malta Business Bureau and the Malta Chamber of Commerce, Enterprise and Industry, sponsored by the EWA, to give manufacturing industry businesses guidance on how to consume energy and water efficiently.