Local industry welcomes EU Clean Industrial Deal but wants more islands focus

A new EU plan to accelerate the decarbonisation of European industry has been welcomed by local stakeholders, though they say they fear the ambitious plan fails to take the isolation of island states like Malta into account.

The Malta Business Bureau said that the European Commission’s Clean Industrial Deal (CID) could prove to be a good balance between greening the economy without damaging competitiveness.

However, it said the plan “falls short in recognising the specific challenges faced by islands and other territories, such as higher transportation costs that impact competitiveness.”

The CID is part of Commission President Ursula von der Leyen’s plan to leverage climate change to drive growth of European industries, and comes amidst growing concerns that Europe is rapidly losing out to the US and Asia when it comes to competitiveness and innovation.

The CID proposes to strengthen financing mechanisms for industries to switch to clean forms of energy and decarbonise their processes, speed up the roll-out of clean forms of energy and cut European dependence on fossil fuels. It also proposes ways of increasing demand for EU-made products.

This will be achieved through actions such as reforming the EU’s electricity market, simplifying state aid, ensuring the circularity of raw materials, public procurement reform, and further leveraging public and private financing.

Malta Business Bureau CEO Mario Xuereb said the Commission was acknowledging a persistent funding gap in driving research and innovation in clean technology. He described new funding mechanisms and a set of simplified state aid rules for decarbonization projects as “welcome steps”.

The CID’s success “now hinges on spurring investment and innovation and enabling businesses of all sizes to participate in the green transition,” he said.

However, he said the Commission would need to do more to ensure that future EU environmental legislation did not disproportionately burden peripheral regions – an issue that has been raised by Maltese industrial sectors several times in the past few years.

EU pushes to revise maritime and aviation emissions rules and efforts to reform the Energy Tax Directive have drawn similar criticism in the recent past.

The Malta Business Bureau – a lobby group that represents the Malta Chamber and Malta Hotel and Restaurant Association at EU level – noted that Malta may struggle to fully benefit from some of the CID’s energy proposals due to its small consumer market and the presence of a single energy distributor.

Businesses stood to benefit if adequate EU and government incentives were allocated to encourage the large-scale adoption of green practices, the bureau said.

One of the EU's largest business lobbies, BusinessEurope, said the CID was a step in the right direction but that the EU needed to move faster if it is to avoid falling further behind.

"It is unlikely that the measures proposed today will be enough to lower energy costs in the short-term," BusinessEurope director general Markus Beyrer said. 

"We cannot wait until the end of the year for critical actions like those expected to be included in the Industrial Decarbonisation Accelerator Act," he said, adding that he hoped the Commission's pledge for "technological neutrality" would be consistently applied across all CID initiatives.