Balancing the Energy Economy 1: efficiency is now top energy target for new Commission

Energy saving has the biggest role to play in making Europe more competitive, according to Tudor Constantinescu, Principal Adviser to the European Commission’s Director General for Energy, Dominique Ristori.

Cutting energy use not only curbs imports, but also cuts carbon emissions, Constantinescu  said, speaking at ‘Balancing the Energy Economy’ on Tuesday (20 January), a conference organised by Science|Business in Brussels. “It’s top of the Commission’s priorities in energy, followed by renewables,” said Constantinescu.

Bendt Bendtsen, a Danish centre-right member of the European Parliament (MEP) and fellow panellist agreed. “It’s the cheapest way to cut carbon emissions,” Bendtsen said.

There is also a strong business case for energy efficiency measures, including insulating buildings and homes, improvements in vehicle fuel consumption and investments in energy-efficient products, said Jeppe Kofod, another Danish MEP, who sits in the parliament’s centre-left bloc. “You have a full return on investment in a few years,” he said.

While popular amongst construction and insulation firms, energy-producing companies see energy efficiency as a drag on their profit margins, or in some cases survival.

Similarly, energy-intensive industries such as steel and chemicals view energy-efficiency as a time-wasting distraction, Constaninescu acknowledged. “When we speak about energy efficiency, producers don’t like it. Their business is to sell [goods], not to save energy,” he said.

But as Stephan Reimelt, President and CEO of GE Europe, noted, “A one per cent saving in energy [use in] production translates to €15 billion in fuel cost savings in Europe.” 

Late last year, EU member states agreed on an optional target for energy efficiency for 2030 of 27 per cent, although it could be raised to 30 per cent by a review in 2020. This is seen as a modest ambition and less than hoped for from many quarters.

Energy Union’s difficult journey

Many agree that constructing a common internal energy market would unite Europe’s inefficient patchwork of competing national energy grids and help prices converge. But when it comes to Energy Union, the name given to the EU’s long-running policy goal, headaches abound.

One particular frustration is the extent to which the cost of renewables differs across Europe, as illustrated by Marie Donnelly, the European Commission’s Director for Renewables in DG Energy. “In Ireland, it’s at least twice the cost of Denmark to pursue wind energy,” she said. This divergence is down to supply-chain bottlenecks. “Denmark has 68 per cent interconnections with its neighbours. Ireland has three per cent,” Donnelly said.

Cross-border power flows are clearly a problem. One of the EU’s most glaring inefficiencies, said Kofod, is that it cannot harness cheap surplus electricity, particularly from renewables, and export it.   

Kofod cited the example of selling electricity produced by Danish windfarms to Germany, but the same power flow problems exist between Spain, Italy, Scandinavia, the Balkans and other parts of the continent.

The EU energy strategy includes developing interconnections and modernising infrastructure, noted Emmanuelle Maincent, Head of Economic Analysis of Energy in the European Commission’s DG Economic and Financial Affairs (ECFIN).

But any cash the Commission can muster will be a tiny percentage of the investment needed to build this infrastructure. The Commission expects private investment to step in, although with total investment down 15 per cent on pre-recession figures, the situation is not encouraging, added Maincent. However, she is confident the new €315 billion EU investment package, set up by EU President Jean-Claude Juncker, will seed the ground.

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