Businesses need to be told of any change in policy on energy prices ‘at least six months in advance’

Government recently issued a set of guidelines to limit energy consumption, including air conditioner temperature limits and new lighting rules.

The guidelines have been issued in response to the global energy crisis that has seen the international price of energy skyrocket throughout 2022, mainly attributed to Russia’s war against Ukraine.

Across the EU, agreement has been reached to limit energy consumption to shore up supplies and avoid its dependency on Russian gas.

Malta has secured a derogation from the mandatory reduction in gas consumption, however a political decision to freeze electricity prices in 2022 has led the state to cough up over €200 million to cushion the increase in price when purchasing energy from international markets to process and distribute locally.

After the Government’s guidelines for energy use in public buildings came to light, BusinessNow.mt reached out to The Malta Chamber and the SME Chamber to understand whether it is encouraging members to adopt similar practices. Ultimately, lower energy consumption results in lower operating costs, at a time when inflation is being felt across the board.

And, while businesses have yet to face an increase in energy costs, encouraging lower consumption in Malta would limit the amount of Government spending on energy to keep prices stable.

The Malta Chamber

Malta’s largest business interest group recently released its Budget 2023 proposals, in which it acknowledged the severe risk to the Maltese economy posed by energy prices rising globally.

Whilst recognising the importance of Government’s commitment to maintain stable energy prices and shield businesses and consumers alike, a spokesperson commented:

“For business, stability is a crucial factor, yet the cost of this subsidisation has significant implications for the sustainability of public finances.

“Additionally, stable energy prices dilute the added incentive for consumers and businesses to rationalise their energy consumption by adopting more energy efficient practices and investing in renewables.”

The spokesperson continued that it is therefore “imperative” for Government to undertake an ongoing effort to “support more investment in renewables by households and businesses if Malta is to make significant strides towards decarbonisation of energy”.

Furthermore, the spokesperson said that “any deviation from the current policy”, that is of maintaining stable energy prices, “needs to be communicated at least six months in advance to ensure that businesses that typically operate on frame contracts can adjust their prices accordingly where possible.”

The Malta Chamber pointed out that energy is one of the main operating costs for many businesses, and that “we should seek aways how to educate businesses to constantly seek to reduce their operating costs, especially in circumstances of rising costs to survive”.

Going beyond Government guidelines to limit AC temperatures and turn off lights at night, The Malta Chamber believes that significant gains in energy efficiency can be made by adopting robust policies on new buildings and incentivising improvements in the existing building stock, “which is poorly insulated”.

It has made a number of recommendations in its pre-Budget 2023 document, recently presented at the Malta Council of Economic and Social Development (MCESD), on the issues of energy efficiency.

Firstly, it pointed out that at the current levels of energy subsidisation, “it is likely that excessive consumption is also being subsidised. Those units that are over and above the eco-reduction entitlement should not be subsidised,” the Chamber proposed.

It called for incentives for consumers to replace old and energy inefficient appliances through reduced VAT.

The Chamber also called for a long-term energy resilience plan focused on “significantly boosting renewable energy generation”, thereby reducing the current need of energy subsidisation and contributing towards a more diverse energy mix.

It also called for the phasing out of petrol and diesel subsidies as well as a stronger facilitation of investment in commercial electric vehicles.

The SME Chamber

The Malta Chamber of SMEs, which represents small and medium enterprises from all economic sectors, agree with the Government’s guidelines on maximising energy efficiency.

A spokesperson for the business interest group said that indeed, the SME Chamber has “made sure”, through its communication channels with the state, that a number of incentives are in place to help businesses convert to greener buildings.

“We are also aware that the level of interest is quite high, since the schemes give a short to long-term good return on the investment. 

“SMEs are very conscious of their running costs, and it is a top priortiy to address and continue to improve on. Their level of awareness of the importance of this is very high.

“Government’s guidelines are something that has long been achieved in the private sector.

“Following digitalization investments, businesses are eying a number of resource reduction related investments including solar panels, replacing old equipment (especially heating and cooling equipment), going paperless, EVs, and more.”