MAINSTREAMING EE AS AN INDUSTRY...Part 2 - FUNDING

iv) EE Fund and Financial Support Mechanism 

EE is not on top of the periority in most organizations unless they are EE players in the industry itself such as ESCO, EE product suppliers and practitioners. We can save energy and from my own observation, we know how to do it exactly. 

EE initiatives that will lead to energy cost savings can be classified as no and low cost measures, medium cost measures and finally high cost measures.In term of amount of savings, high cost measures normally will be translated into more significant savings.This applies to all types of EE applications in all sectors including energy using equipment and appliances.

EE need sufficent fund and this fund also must from as sustainable sources and managed with certain accountability to ensure the policiy targets to be achieved.We have spend millions over the years for EE related efforts we can hardly measure the actual performance achieved from those efforts.When that happen, it would tougher to get more funds now due to inability for us to showcase our true success stories in term how much economic and social benefits achieved from our previous EE efforts.

EE fund could come from few sources with different types of mechanism and it can be described briefly as follows: 

i)Direct allocation for government annual budget

This is  very much unlikely at the moment due to priorities for more strategic areas. EE is a very long long way to go to become a strategic area for most key policy makers and that will make funding for EE almost not in anyone's radar at all. I tried to work out some other options to the government and all that have been submitted in the form write- up in the document that being drafted.Hope they will consider that.

ii) Levy on energy tariff

One option is to impose a levy on top of the existing tariff of electricity and fuels such as gas, petrol and diesel but this may not be politically popular and definitely majority Malaysians will against it. Why?Simply because they have to pay more.When we think about it again, Malaysians also do not feel guilty when they waste more on energy and on other matters as well.

iii) Energy Subsidies reallocation

 Reallocation of some a amount from fuel subsidies to EE fund Another option is to reallocate the amount of subsidies for each type of fuel and channel it into the EE fund.For example, if the total subsidy for petrol per litre is about 80 cents per litre, we just need to reallocate 1/2 cent per litre.Based the data that I can recall, the total petrol and diesel sold in 2009 is about 23 billions litres and just imagine how much fund we can have and the consumers will have to pay extra 1/2 cent only or RM0.005/litre.My argument is, if we compare the levy imposed for RE fund for FiT will only benefits FiAHs but for EE, the iniatives to be implemented in the 10- year plan will benefits all energy using sectors namely industrial, buildings and domestic.This EE fund will also to be managed under the legal requirements as prescribed under the new EE Law later...yet and still this may not be something politicians like to do...still people has to pay more

iv) EE Revolving fund

It can be in the form of loans with specific criteria of evaluation for EE projects. Among ways to do it is from the set up of special fund by the government for certain sources and  operate it as a revolving fund. Loans to be given for EE initiatives that met the specified requirements with very minimal administrative charges/low interest. This was tried under the fund named EE Loan Fund Scheme during the implementation when the Malaysian Industrial EE Improvement Project(2000-2005) but I am not sure about the take-up of that.But the fund size was not that big if I am not mistaken. 

This repayments from the qualified borrowers will be used to give loans to others but the real challenges to assess the  viability of each projects to ensure minimal failure from borrowers to repay the approved loans because it will affect deeply on the total available fund to be disbursed.

The fund for the revolving fund could also allocated by participated banks and reasonably low interest rates too.

The figure below is the summary successful stories of EE revolving fund introduced in Thailand which already a proven scenario which led the government to secure bigger fund size in the way forward.

v)EE Fund  from the financial institutions

Another way is to get a group of banks to participate to provide the fund with government guarantee certain % of the loan which almost  similar to the current Green Technology Fund Scheme that was introduced for green projects in 2009.

The possible target groups would private companies to implement EE projects at for new and existing building or facilities and these  companies must registered with the competent/authorized body for EE  to ensure they already met  qualification requirement.

In the same time the government through the competent/authorized body for EE  will  provide  the supporting measures to banks in evaluating EE projects. The procedure will be developed where they will perform the technical evaluation for the technical viability of EE projects to be considered for the scheme and the next step is for banks to assess the financial viability & risks of the projects based on agreed criteria and conditions.

The fund for this fund could also comes from foreign banks or international funding agencies  or under government to government cooperation where some funds can be allocated  for EE too.

Below are the summary of the possible sources and mechanism for EE funding.

No		Option#1 (Recommended)	Option#2	Option#3
1	Source	Combination of : 1.      budget from  federal government and 2.      others (banks, international organizations, foreign governments): ·      Government created revolving fund ·      EE loans	Total budget from federal government	Federal  Government: Total annual sales  of diesel and petrol
2	Mechanism	Combination of : 1.    Annual allocation to the centralized agency by the federal government. 2.    Approved amount by the funding party to the competent/authorized body for EE	Annual allocation to the centralized agency by the federal government.	A portion  from every subsidy removal per liter (RM/liter)
3	Distribution & administration of fund	Through provisions  in the act  and its subsidiary legislations  by  the competent/authorized body for EE

In short, the must be some kind of  funding the government to indicate its commitment on " lead by example" concept which have been implemented in many countries. This will pave the way for other players in the financial sector to slowly have more believe to invest their fund in EE projects.