Written by 7:10 am EU Investment

Accelerating investment in energy efficiency – Alison Mizzi

The policy drive towards greater climate ambition has intensified substantially over the past decade. As part of its climate-change mitigation strategy, the European Union is calling on EU member states to adopt more ambitious emission-reduction targets to be able to meet the legally binding commitment of becoming climate-neutral by 2050. A key component of this vision is to significantly increase energy efficiency.

The private sector holds significant potential to increase energy-efficiency levels and invest in greener energy sources. As the EU Advisory organisation of the Malta Chamber of Commerce and the Malta Hotels and Restaurants Association, the Malta Business Bureau (MBB) acknowledges this importance and has been involved in several EU and national projects focusing on business needs, and which aim to raise awareness on critical issues such as energy efficiency.

This provided the MBB first-hand experience on the desire of Maltese businesses to invest, improve their operations and contribute towards climate action. Crucially, many lessons were learned on what stumbling blocks are in their way to achieve these objectives.

Clearly, there is still a basic need to create awareness among certain businesses of the benefits that energy-efficiency measures can bring to their companies. Others require some handholding on what to look for and where to start. This confirms a clear need for national authorities to provide capacity- building especially among smaller businesses.

Through collaborations with the Energy and Water Agency, the MBB organised several best- practice workshops where businesses share their experiences and innovative solutions to common challenges. These types of actions go a long way to supporting businesses with limited capacity or experience in adopting energy-efficiency measures. That said, the key hurdle to increased ambition by businesses is undoubtedly the lack of suitable funding opportunities to support private investment.

The green transition requires an unprecedented level of investment across virtually all sectors, with the cost to businesses anticipated to be significant. While Maltese businesses embrace the green ambition to safeguard Malta’s economic future, public policies should be drafted by carefully considering the context in which businesses are operating in.

This is especially true in the current economic circumstances. Businesses are exceptionally contending with rising input prices, supply-side issues, logistical hurdles, staff shortages, and long-term energy uncertainties. All these contribute towards ever-mounting expenses.

Ambitious climate targets must be met with ambitious public financing– Alison Mizzi

Energy efficiency may therefore not top the priority list in which businesses opt to allocate their limited capital. Given the urgency to see investments in energy efficiency, appropriate financial support from government and the EU is indispensable.

Positively, several local and EU- funding opportunities exist which Maltese businesses can already apply for to support their investments. These range from local schemes, including Malta Enterprise and the Energy and Water Agency national support measures, to schemes stemming from European funds such as the Recovery and Resilience Facility, and other structural funds.

While these are certainly steps in the right direction, their execution can be improved to pose a more attractive incentive for businesses to take up these opportunities and invest. This is because so far, due to state aid rules for instance, financial support has only been limited to the incremental difference in the price between efficient and non-efficient solutions.

This has created an insufficient incentive for businesses to give up older practices and invest in newer ones. With the revision of the EU’s General Block Exemption Regulation (GBER) governing the state aid framework, we remain hopeful that necessary changes will be made in this regard to properly incentivise the uptake of energy-efficient solutions by businesses.

As for the local disbursement of EU funds, particularly from the Recovery and Resilience Facility, the bulk of the support is being diverted towards public buildings and infrastructure. The public sector leading by example is a core tenet of the EU Green Deal. But considering that every euro of investment by the private sector yields a higher multiplier effect in the economy, the government should consider increasing the share of available funding support for the private sector.

Aside from funding, there are other considerations such as effective implementation. For instance, businesses would benefit from more timely schemes that are demand-driven, flexible, and with minimal bureaucracy as possible.

Ambitious climate targets must be met with ambitious public financing.  Measures to date, while welcome, are nowhere close to the level of energy-efficiency investment that needs to be mobilised to achieve requirements under the Energy Efficiency Directive.

It is therefore imperative that the drive to incentivise energy-efficiency investments is significantly accelerated sooner rather than later, if we are to contribute our share to the EU climate objectives in a significant way.

Alison Mizzi is president of the Malta Business Bureau. The MBB is the EU advocacy organisation for the Malta Chamber and the Malta Hotels and Restaurants Association, and a partner of the Enterprise Europe Network.

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