Towards a more rational use of energy in Europe

5 March 2008

EPC Senior Adviser Jørgen Henningsen, a former Director at the European Commission, presented the EPC’s Working Paper on Gain without pain: towards a more rational use of energy.

The report has five key messages, which could be summarised as:

  1. people must have information about how to be energy efficient;
  2. energy must be paid for, so the person who benefits from its use, must be the one who pays;
  3. use standards and incentives to encourage more rational energy use;
  4. third-party financing is needed to encourage people to make energy savings;
  5. the public sector should lead by example in energy saving.

Innovating to save energy would make Europe more competitive, and more energy self-sufficient, said Mr Henningsen. The Commission has calculated that the January 2008 Energy Package could cost €60 billion annually, but he believed that there were many opportunities for action against climate change which could be done at much lower cost.

European Commission working on energy efficiency

Alfonso Gonzalez Finat, Principal Advisor to the Director-General for Transport and Energy (TREN), European Commission, said his institution has presented important proposals over the last two years’ and its Energy Efficiency Action Plan will reinforce existing legislation and pave the way for new initiatives.

The Commission’s target is to cut greenhouse gas emissions by 20% from the 1990 level by making cuts using mechanisms like Emissions Trading Scheme, and increasing the share of renewables in Europe’s energy mix by 20% by 2020.

The Commission’s 2006 Energy Efficiency Action Plan, which is also a core element of the January 2008 Energy Package, has the potential to increase energy efficiency by 27% in manufacturing, 26% in commercial buildings, 25% in households and 30% in transport, through energy-saving products, producing energy more efficiently, using economic incentives and energy pricing, changing behaviour and establishing international partnerships. The general public and policy makers must be mobilised, and the internal energy market transformed.

Mr Finat said the Commission is leading by example, and had asked six EU Member States to run an energy efficiency check on its Berlaymont headquarters, and this should be repeated in all EU institution buildings, said Mr Finat. The Commission’s 2006 Directive on the Promotion of Clean Road Vehiclesalso proposes that all public authorities should buy energy clean vehicles.

Over the next two years, there are plans to extend the Energy Performance of Buildings Directive (EPBD) to cover all existing buildings, and improve both the Eco-Design Directive, which sets minimum energy performances for energy-using products, and Energy Star, the system of energy labelling for domestic and office equipment.

Measures to influence personal behaviour include the EU’s Sustainable Energy Week and the ‘Covenant of Mayors’ to network cities which have agreed to increase their use of renewables.

The Competitiveness and Innovation Programme (CIP) promotes sustainable energy through its SAVE (energy efficiency), ALTENER (renewable energy), and STEER (sustainable transport) programmes. For more than 20 years, the Commission has been involved in energy-efficiency demonstration projects, has carried out large-scale industrial demonstration projects, and promoted energy efficiency in buildings, industry and in transport, said Mr Finat.

Now industry, EU Member States, the European Commission and the international community have to work together to turn these into action.

Industry ‘doing its bit’ to cut emissions

Michelle O’Neill, Director for Government Relations, Europe, Middle East and Africa, Honeywell, explained how the company was improving energy efficiency technologies and energy saving in buildings.

She felt that the European Commission is unfairly criticised for its performance, as it has proposed legislation and action plans, but “the pity is” that Member States do not follow through on these, although she acknowledged that at times legislation can create barriers to innovation. The Commission also has various tools at its disposal to encourage Member States to implement EU Directives, such as initiating infringement procedures, using Structural Funds to develop less polluting technologies, and carrying out impact assessments to evaluate performance.

The Commission’s Strategic Energy Plan “creates a vision” for energy efficient technologies up until 2050, she said, and industry and Member States must carry out joint research and development exercises to innovate in areas where Europe has a particular expertise.

A study commissioned by Honeywell found that of its $36 billion sales, in chemicals, automation and control solutions, transport systems and aerospace in 2007, $15 billion (i.e. nearly 50%) of revenues came from energy efficient technologies.

One of the biggest potential areas for saving energy in the EU is in buildings, which emit between 40% and 42% of the Union’s greenhouse gases. The Commission is therefore is recasting the Energy Performance of Buildings Directiveto make it “more robust”, she said. Again, it is up to the Member States to implement this, said Ms O’Neill, praising the EU’s EPBD Platform, which enables EU and national legislators to discuss implementation problems and to exchange experiences of best practices.

Honeywell is helping public and commercial property owners to save energy through ‘retrofit’ contracts to make buildingsmore energy efficientwithout having to paying for them ‘upfront’. Under this system the money saved in the long term from lower heating and lighting bills covers the costs of carrying them out. She could not “fathom” why more owners did not take this up, she said.

All is not “doom and gloom”, said Ms O’Neill, as using the tools already provided will not only bring gains in saving energy, but could even help to surpass EU energy saving targets.

Sticks not carrots

Sanjeev Kumar, WWF-European Policy Office’s Emissions Trading Scheme (ETS) Coordinator, said the EPC’s Working Paper was good but assumes a ‘business as usual’ model, under-estimated the negative effects of climate change on the EU.Huge swathes of the UK, the Netherlands and Portugal will disappear under water and the disappearance of countries like Bangladesh will result in millions of refugees fleeing to Europe.

Small solutions will not work, and the entire global political system must be reformed, he insisted. Rather than focusing on saving energy, one must focus on cutting emissions. Energy is a system, not a commodity, so one must think in terms of “infrastructural energy systems”, not conventional power plants, moving away from incremental energy efficiency improvements to new production systems and processes.

Timing is running out, with only 12 years left (until 2020) to reduce global emissions, and current forecasts show that the required two degrees Celsius temperature stabilisation will not be achieved. The European Commission has almost left it too late to launch programmes for these targets, but Member States are primarily responsible for reducing the Commission’s original 30% reductions target to 20%.

Corporate responsibility is crucial, said Mr Kumar, and to indicate the Commission’s ineffectiveness in the face of industrial lobbying, he described how the EU cement sector had argued that it could not reduce emissions as it would lose out to international competition, yet its big companies boast of record profits.

Mr Kumar also claimed that companies also bully governments not to enforce legislation that might reduce their profits, so the entire political system colludes with companies while the global climate change situation worsens.

He suggested the following remedies:

  • make carbon prices the same for all players, as using a system of voluntary company commitments does not work;
  • make energy auditing mandatory for all industries, publicise the results and penalise companies for not implementing the most basic measures;
  • ensure that all revenue from auctioning permits in the EU’s ETS is invested in climate protection measures.

“There is no room for carrots anymore, we need sticks, sticks, sticks,” he said.