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The small and medium-sized enterprise (SME) sector in Bosnia and Herzegovina (BiH) is the backbone of the economy and by far the largest employer, and now it is also becoming a driving force for decarbonization. While the first two achievements are something that is not a surprise, the third came somewhat unexpectedly. These companies, especially export-oriented ones, have been under pressure in recent years to apply ESG standards and report on the carbon footprint of their products. On top of that, electricity has risen by about 70 percent in recent years. Decarbonization has thus become a condition for survival, so they have turned to solutions in the projects of improving energy efficiency, increasing the use of renewable energy, and applying energy management and monitoring systems. Somehow, it is not surprising that decision-makers in BiH, through strategic documents and institutions, planned almost no assistance for the decarbonization of SMEs.
The success of small and medium-sized enterprises (SMEs) is perfectly illustrated by the project “Energy Transition Network in Industry in Bosnia and Herzegovina – METI Project”, which has shown that their decarbonization is possible and that it brings them various benefits.
The success is also evidenced by the fact that SMEs are the economic actors that have achieved the best results in decarbonization, by, among other things, installing about 150 MW of solar power plants, which is more than all public power companies in BiH combined.
The METI project, which was implemented in the past three years by the Centre for Sustainable Energy Transition – RESET, from Sarajevo in cooperation with the Enterprise Development Agency Eda from Banja Luka, and financed by Sweden, was dedicated to manufacturing SMEs with 50-250 workers. SMEs are the backbone of BiH’s economy: about 98 percent of private companies in BiH are small and medium-sized enterprises, which generate 70 percent of jobs and create 63 percent of the added value.
More than 30 companies participated in the METI project, most of which are export-oriented, and energy audits were carried out in all of them
More than 30 companies participated in the METI project, most of which are export-oriented, and in all of them energy audits were performed. The METI network, which operated for one year, involved nine SMEs that showed interest in starting the decarbonization process. The network is designed as a specific model to support the decarbonization of SMEs.
Members of the METI network are: five companies from Gracanica – Plastoflex, Variplast, Poly, BEMA BA and Berry Superfos Balkan, two from Prnjavor – Pekara Cvijeta and MI Trivas, Menprom from Tuzla and Rapic from Gradiška.
“Unfortunately, currently the authorities in BiH do not pay enough attention to the decarbonization of SMEs. In energy development strategies and plans, for example in the National Energy and Climate Plan (NECP), the decarbonization of industry is mainly based on measures applied in energy intensive industries (cement industry and coke production, iron and steel plants, forges and chemical industry)”, says Professor Mirza Kušljugic, energy expert and one of the founders of the RESET Centre.
SMEs face requirements to comply with ESG principles and carbon footprint reporting when participating in the production chain for export to the EU
That is why the decarbonization of manufacturing SMEs, which are considered non-energy intensive companies, is mostly approached on a voluntary basis. However, due to their importance for the economy, Kušljugic warns, their decarbonization represents an important component of the energy transition of industry and energy sector in BiH.
Despite the government’s negligence, SMEs have achieved impressive results in decarbonization over the past three years. Of course, under the pressure of increasing electricity prices, which have risen by more than 70 percent in BiH, and due to the requirement to respect ESG principles, for example, from banks, and reporting on the carbon dioxide (CO2) content in their products (i.e. carbon accounting reports when participating in the production chain for export to the EU). These requirements are also linked to the implementation of the Carbon Border Adjustment Mechanism (CBAM).
The SME sector is forced to change, and the best way, as Kušljugic says, to convince business owners of the effectiveness of a new concept or solution is to show it already implemented in their environment.
The METI network of nine companies is just that, and a particularly good example is the company Plastoflex from Gracanica, which has finalised a series of decarbonization measures by installing a digital energy monitoring system.
When asked what was the motive for participating in the project, Suad Helic, CEO and owner of Plastoflex company, says that the main motive was to increase energy efficiency, networking, exchange of experiences with companies that are similar to them, and the fact that the project leadership is taken over by experienced consultants.
“The project has achieved the expected results, energy is used in a more efficient way, energy audits have been conducted and a system of monitoring electricity consumption has been introduced,” said Helic.
Four practices have achieved the best results in the companies of the METI Network
The practices with the best results in the companies that participated in the activities of the METI network, as well as the practices that mostly contribute to decarbonization, can be grouped into four areas: improving energy efficiency, increasing the use of renewable energy sources, implementing energy management practices and energy monitoring systems.
It has been noted that all companies have started decarbonization process with the implementation of energy efficiency measures, and some have completed it with requirements for the introduction of energy management standards, energy monitoring systems and calculation of the CO2 footprint.
As part of the METI project, 30 energy audits were carried out and the preparation of ten specific projects was supported, many of which were implemented.
In general, SMEs have mainly implemented projects to improve energy efficiency in core technological processes, by purchasing more energy-efficient machines, and this is still a trend because modern, more energy-efficient machines have higher productivity and better automation systems.
Thus, within the METI network, the companies Plastoflex and BEMA BA have purchased modern machines with a servo drive for plastic injection moulding, where the costs for electricity and heat for cooling moulds is reduced by up to 70 percent.
Helic: The expected return on investment in the machine is 5 years
Suad Helic, CEO and owner of Plastoflex, says that about 400,000 Euros have been invested in the purchase of new machines, and the savings on electricity alone are 50 percent, and if we take into account that they are within the warranty period and that it is easier to maintain them, then the savings are about 70 percents compared to the existing hydraulic machines. The expected return on investment is five years.
In addition to the core processes, it is possible to apply energy efficiency measures in supporting processes, such as lighting, heating, air conditioning and cooling systems, preparation and distribution of compressed air, pumping and transport.
Plastoflex has invested 4,602 EUR in the replacement of classic lighting with LED lighting. The replacement was done in 2019 and the investment paid off in a year and a half. The savings amount to 60 percent compared to old lighting. A solution was also found for the warehouse, where LED lighting with motion sensors was installed, which cost 906 EUR, so now the lighting works only five percent during one eight-hour shift. |
