The Second Report on the State of the Energy Union shows that the modernisation of the European Union economy and the transition to a low-carbon era are happening.
How is Europe performing in energy efficiency?
The Commission is optimistic that Europe is on track to reach its 2020 targets.
Europe has committed itself to increasing its energy efficiency by 20% by 2020. Reaching this target will require effort from all Member States. The EU has already significantly lowered its energy consumption, and has reduced its final energy consumption below the 2020 target:
- As regards final energy consumption (the use of energy by end users such as residential consumers, industry, services sector), Europe has already reached its 2020 target. In 2014 the EU consumed 1062 Mtoe, which is already 2.2% below the 2020 indicative energy consumption target of 1086 Mtoe. Final energy consumption dropped by 11% between 2005 and 2014.
- As regards primary energy consumption (including final energy consumption, the generation sectors as well as distribution losses), Europe has not yet reached its 2020 target (it used 1507 Mtoe in 2014: this is 1.6% above the target of 1483 Mtoe for 2020). Nonetheless, the EU is on the right path: primary energy consumption dropped by 12% between 2005 and 2014, even if primary energy consumption slightly increased from 2014 to 2015.
Why is energy efficiency a key component of the Energy Union strategy?
Energy efficiency is a key element of the clean energy transition, a top priority of the Juncker Commission. It unlocks the energy savings that boost growth in the EU’s economy, investments and job creation. It brings cost savings for consumers, in addition to benefits in the form of the reduction of greenhouse gas emissions, improved air quality and increased security of supply, competitiveness, sustainability of the European economy and job creation.
As a pillar of the Energy Union Framework Strategy, energy efficiency plays a key role in the recently published ‘Clean Energy for All Europeans’ package, in which the European Commission proposed to raise the ambition level: a binding EU level target of 30% by 2030. Such a target would bring more benefits by 2030 compared to a 27% energy efficiency target:
- create about 400,000 new jobs;
- reduce gas imports by 12%;
- save 70bn in fossil fuel import bills (cumulatively for 2021-30);
- reduce health damage costs by up to 8.3bn per year.
Is it true that Europe is putting energy efficiency first?
Energy Efficiency First is a principle that today permeates all aspects of the EU’s energy policy. As highlighted in the Communication on ‘Clean Energy for All Europeans’, energy efficiency should be seen as an energy source in its own right, as it will play a key role in speeding up the clean energy transition and boosting growth and job creation, and contributes to the EU’s security of supply.
Energy efficiency saves money and has become a sustainable business model. Most Member States have recognised the multiple benefits of energy efficiency and have not only committed themselves to reaching ambitious energy efficiency targets for 2020, but have also put in place many energy efficiency programmes and measures.
What is the role of energy efficiency in reaching the Paris climate goals?
The EU, which played a decisive role in the adoption of the Paris Agreement in 2015, is a global leader on climate action. The European Union has committed itself to reducing emissions in the European Union by at least 40% by 2030. Energy efficiency contributes very significantly to the reduction of greenhouse gases, and goes hand in hand with renewable energies to enable the energy transition.
The Commission considers that the EU energy efficiency policy and regulatory framework have been the key driver for energy efficiency improvements. Primary energy consumption would have been much higher today otherwise. The reduction of energy consumption in the period 2005 to 2014 helped reducing greenhouse gas emissions by around 800 million tonnes of CO2 in 2014 which is almost equal to Germany’s CO2 emissions in 2014.
What is happening in the Member States?
The 2016 Energy Efficiency Report, which keeps track of Member States’ progress in energy efficiency, highlights that the majority of EU countries improved their final energy intensity in the period 2005-2014 in industry and the services sectors.
In the buildings sector, which accounts for 40% of Europe’s energy consumption, most Member States reduced their energy consumption per square metre (on average, in 2005-2014). However, in order to reach the EU’s climate goals, Member States should continue to focus on renovating existing buildings. This helps households to achieve the same or better levels of comfort for less money.
In the transport sector, where oil supplies about 94% of all energy to power cars, trucks, ships and planes, most Member States need to make further improvements in energy efficiency. In fact, transport was the only sector to experience an overall increase in final energy consumption in 2014 compared with 2013.
What role does innovation play for energy efficiency?
The recently adopted ‘Strategy on accelerating clean energy innovation’, together with the ‘Accelerating clean energy in buildings’ initiative, lays out a comprehensive plan for the main policy levers the EU can deploy to boost clean energy innovation, and focuses its Horizon 2020 funding on decarbonising the EU building stock as one of its priorities.
The Commission is committed to put all initiatives in place immediately. The direct impact of these initiatives will help to close the gap towards the energy efficiency targets in the short term.
Why are heating and cooling to play a key role?
Heating and cooling represents about half of the EU’s energy consumption. However, renewables represent only 18% of supply, and the sector is largely reliant on fossil fuels, which in turn translates into a high import dependency. Moreover, much of the energy used to heat and cool is wasted.
Buildings (and people living in them) are the first consumers of heating and cooling. Space heating accounts for more than 80% of heating and cooling consumption in colder climates. In warmer climates, space cooling is the most important – and is growing. Two thirds of the EU’s buildings were built when energy efficiency requirements were limited or non-existent.
In industry it is possible to reduce energy costs by 4-10% with investment in existing technologies that pay for themselves in less than 5 years. Some industries generate heat as a by-product. Much more of this could be reused within plants or sold to heat buildings nearby. The same applies to waste heat from power stations, the service sector, and infrastructure such as metros. Therefore, the trends and potential of this sector need to be assessed better in the future.
Therefore, the heating and cooling sector plays a crucial role in decreasing primary energy consumption and decarbonising the energy sector.
European buildings are old. Is the renovation rate catching up?
On average the EU renovation rate is around 1% per year. This means that renovating the entire EU building stock would take roughly 100 years. In Germany and France, the renovation rates are higher than the average, around 1.75% and 1.5% respectively. So, in some Member States building energy renovations are beginning to accelerate.
The review of the Energy Performance of Buildings Directive which is part of the ‘Clean Energy for all Europeans’ package, includes supporting measures that address the need to speed up the renovation of the existing building stock by, for example, reinforcing the link between energy performance certification and financial support. Creating a vision and an action plan for the decarbonisation of existing buildings by 2050 will also play a fundamental role.
In order to sustain this renovation acceleration, a new ‘Smart Finance for Smart Buildings’ initiative was also presented to promote investments, growth and jobs for energy efficiency and renewable energies in buildings. The Smart Finance for Smart Buildings initiative, in close cooperation with the European Investment Bank (EIB) and the Member States, will be able to unlock an additional 10bn of public and private funds between now and 2020.
The construction industry generates about 9% of the European GDP in and accounts for 18 million direct jobs, whereas engineering sector employs 11 million people. Considering the renovation and construction needs, the contribution of these sectors is expected to increase. Construction activities that include renovation work and energy retrofits add almost twice as much value as the construction of new buildings, and SMEs contribute more than 70% of the value added in the EU building sector
Have social imbalances been addressed by energy efficiency?
Addressing social imbalances in energy access is a top priority for the Juncker Commission. On average, 8.6% of the expenditure of low-income European households is used for energy-related purposes. This proportion has increased for most Member States since 2005. In addition, a growing share of these households (23% in 2015) do not have sufficient financial means to heat their homes to an adequately warm level.
The Commission proposed a range of specific measures in its recent ‘Clean Energy for All Europeans’ package to reverse this trend and ensure vulnerable and energy-poor consumers are not left behind. From 2021 onwards, Member States will have to take into account energy poverty when designing their energy efficiency obligation schemes or alternative measures. The Energy Performance of Buildings Directive will also ensure that Member States’ long-term building renovation strategies contribute to the alleviation of energy poverty.
What is the link between the Energy Union Strategy and the recently adopted ‘Clean Energy for All Europeans’ package?
The Energy Union Strategy highlighted the ‘Energy Efficiency First’ principle and defined energy efficiency as one of the Energy Union’s main dimensions.
The ‘Clean Energy for All Europeans’ package contains concrete legislative proposals on energy efficiency, namely the reviews of the Energy Efficiency Directive, the Energy Performance of Buildings Directive, the Ecodesign working plan and the ‘Smart Finance for Smart Buildings’ initiative. These proposals directly contribute to achieving the objectives of the Energy Union.
What’s coming next?
In line with Joint Declaration setting out the EU’s objectives and priorities for the legislative process in 2017, the Energy Union-related legislative proposals presented by the Commission such as those included in the Clean Energy for All Europeans package should be addressed as a priority by the European Parliament and Council.
