It is crucial for companies not to miss the green train
The European Union has said strictly that its direction of development is painted in green. By 2050, Member States of the EU must reach the point, where nature is able to fully absorb the carbon emissions generated by the operations of humans. This will affect each one of us and significantly affect competitiveness of companies by demanding more energy-efficient and greener energy solutions. Therefore, it is very important not to stay catching up to our neighbours.
2050 may sound like a distant future. Majority of Latvian companies plan their activity for significantly shorter periods. However, by postponing climate tasks today, we can lose market positions to the European neighbours tomorrow. Today, Latvia is in one of the last positions in terms investments in research and development overtaking only Romania, Malta and Cyprus. This means that other EU Member States improve their competitiveness in a much faster pace. Very soon, attraction of renewable resources and climate neutral manufacturing will be not only prestigious, but also a matter of competitiveness. This will be determined both by ability to manufacture in more efficient manner consuming less resources and skills in attraction of part of the huge funding to be assigned by Europe for the implementation of its plans.
There is also a number of companies in Latvia, which are aware of the crucial role of circular economy and energy efficiency in national competitiveness calling the state to settle the legal framework within the shortest possible term to enhance sustainable development of economics. However, today, change in overall attitude is also a significant challenge in Latvia – from duty to be more energy efficient to opportunity to reduce expenses by lower energy consumption. Lighting, heating and hot water – all this forms significant part of monthly costs not only for companies, but also for households. According to previous experience, for example, lighting frequently forms up to 50% of the total electricity costs, and investments in energy-efficient lighting solutions pays off in 3–5 years. Therefore, improvement of energy efficiency should not be taken only as inevitable duty.
Thus – the sooner we join the process, the sooner we improve our competitiveness, but, if we opt to sit and wait for the distant future, we can find ourselves catching up.
Primarily, a specific plan at national level is necessary. We may not end up in a situation where Latvian manufacturer pays for electricity the highest price in the Baltic State receiving on average approximately 25% higher electricity bills, while significantly lagging behind our neighbours – Latvia produces half of the amount of renewable energy per each invested million. Latvia must increase share of renewable energy by 10% by 2030, which means that we will have to build powerful wind farms, but it is not a task for a couple of years. Research, designing and harmonisation is required. At the same time, it is already possible to facilitate achievement of our goals by supporting use of solar energy in the form of low power stations, which consumers can use for self-consumption. This would provide instant benefit to change energy balance in favour of green energy and increase in business competitiveness.
There is no doubt that the great homework assigned to us by the European Union will include tasks for everyone – state, manufacturers and every household.
One of the ways already taken by the European Union is making CO2 more expensive. Principle is very simple – the more emissions are generated the higher is the fee to pay. During the last three years, price per CO2 quota has grown five times on average approaching 30 euro mark, and, according to current forecasts, this indicator will reach 50 euro in 2030. Current tax policy also provides for further increase of natural resources tax from 4.50 euro per ton of emissions to 15.00 euro in 2022. Industry, agriculture and transport are among the sectors, which are the major emission sources in Latvia.
What to do, if nothing has been done so far? I my opinion, the first task is energy efficiency audit. This will show where energy is used effectively and where improvements are possible. Afterwards, most efficient solutions to improve situation must be found with the help of specialists. For example, changing lighting solutions to more efficient ones or installing renewable energy sources not only facilitates reduction in CO2 emissions, but also decreases costs, thus giving opportunity to earn money in the long term by producing electricity.
Ability to implement these solutions in efficient manner and use the support available for this purpose will determine our position on the map of Europe way before 2050. In this case, significant role is played also by the state’s ability to absorb the offered funding, which, for example, within the Next Generation EU plan, reaches 750 billion euro, and 37% of this amount is provided just for the green energy investments. Unfortunately, it is already obvious that our neighbours move faster. State guarantees for credits to be used for the installation of renewable energy equipment have been made available to them. As a result, at similar conditions, in Estonia and Lithuania, offer of bank loans and amount of the issued credits, for example, for the installation of solar panels is significantly higher.
Latvia should review its priorities in relation to settlement of energy sector by changing its focus from solving past problems to clear vision of development for the future. At the moment, development of renewable energy is characterised by a very fragmented approach; in separate occasions, there is no future vision at all. This is the factor, which determines that the energy sector of Latvia operates in regulated market conditions, which does not correspond to the actual situation, and continuously and ineffectively consumes resources, while being unable to settle several aspects impeding the market growth. We may not allow the situation where the green train has departed before we have taken our seats in it.
We are about to face a great challenges and great opportunities. It is only up to our wisdom and capacity to act whether we will take these opportunities.