The views expressed are those of the author and do not necessarily reflect the position of FORESIGHT Climate & Energy
The gains made by efficiency investment outweigh the upfront cost
In 2019, the European Union set its sights on achieving climate neutrality by 2050 through the European Climate Law. This not only enshrined the objective within the EU’s legal framework but also charted a course for an interim target—a reduction of greenhouse gas emissions by no less than 55% by 2030 compared to the 1990 baseline.
The seismic geopolitical events of 2022, marked by Russia’s invasion of Ukraine, have acted as a catalyst for Europe’s energy agenda. More than five hundred days since the beginning of the war, a consensus has emerged: an imperative to accelerate Europe’s transition towards decarbonisation, thereby diminishing Europe’s reliance on fossil fuels.
Within this context, a response to the energy crisis materialised through the REPowerEU package, outlining the strategic goal of liberating the EU from its dependence on Russian fossil fuels well before 2030.
However, the energy dilemma surpasses the contours of geopolitics; it is inextricably linked to the broader global concern of climate change. The robust findings of the Intergovernmental Panel on Climate Change report in April 2022 underscored, once more, the dire consequences of climate change for our planet and civilisation.
Desertification, devastating wildfires, flooding and the erosion of biodiversity, often disproportionately affecting the most vulnerable, are a reality for so many of us as this summer has demonstrated and are chronicled daily.
A RATIONAL STRATEGY
Energy efficiency offers an avenue of immense potential for reducing energy needs and optimising consumption spanning sectors as diverse as buildings, industries, transportation and water management.
By reducing our energy needs and optimising energy consumption we reduce emissions, accelerate the integration of renewables and phase out fossil fuels.
This is a rational strategy prior to embarking on any alternative energy endeavours. By leveraging existent European technologies and solutions, energy efficiency emerges as the linchpin for a comprehensive transformation of the energy system.
FORTIFYING THE FRAMEWORK
To achieve the target of reducing greenhouse gas emissions by 55% before 2030, the European Union unequivocally recognises the centrality of energy efficiency. This is reflected in the ongoing revision of several directives.
At the start of 2023, the revision of the Energy Efficiency Directive (EED) culminated in an agreement following a long legislative process. Nestled within the EED lies a cornerstone provision—the Energy Efficiency First principle (EE1), now firmly enshrined within the EU’s regulatory framework.
This principle stipulates that energy efficiency measures must be integral to all relevant policies, planning endeavours and major investment decisions. The rationale behind this mandate is to avert the creation of an oversized energy infrastructure network, mitigate the risk of stranded assets and reduce emissions while ensuring the affordability of energy for both citizens and businesses.
The application of the EE1 principle should serve as a guiding compass for revising other directives, especially the Energy Performance of Building Directive (EPBD). An ambitious proposal approved by the European Parliament aims to define renovation trajectories and set minimum energy performance standards for the retrofitting of energy-inefficient and uncomfortable homes.
Given that buildings contribute to approximately 40% of Europe’s final energy consumption, we cannot overlook this substantial avenue for savings.
Countless individuals grapple with inadequate temperature regulation in their homes; however, an array of energy efficiency technologies can augment property value and enhance residential comfort.
The Efficiency First principle should further underscore the ongoing revisions of additional directives—such as those pertaining to Urban Wastewater Treatment and Industrial Emissions. Evidence shows the indispensability of a robust energy efficiency policy and regulatory framework to foster long-term investment certainty, galvanise action and propel job creation within energy and resource efficiency.
COST OF INACTION
Despite the political momentum, the financial constraints and the lack of expertise in the journey towards deploying energy efficiency solutions require closer examination.
On the financial front, three elements should be considered: the cost of inaction, energy expenditures and efficiency investments.
The repercussions of inaction in the face of climate change are quantifiable and spiralling. EUROSTAT data underscores an annualised growth of 2% in inaction costs between 2010 and 2020, translating to a staggering €145 billion toll over the past decade.
Escalating energy costs exacerbate the challenge. In 2022, an average Italian household witnessed a 65% escalation in gas expenses and an astounding 108% surge in electricity bills compared to the preceding year.
Moreover, according to a recent report from the International Monetary Fund, the total subsidies for gas, oil and coal in 2022 were in excess of €5 trillion, this is the equivalent of 7% of global GDP and almost double what the world spends on education.
Channelling subsidies into non-structural and transient solutions limits lasting impact. In contrast, investments in efficiency yield long-term savings.
Rather than pointing at the cost of energy efficiency measures, the focus of action should be how to optimise and leverage public resources, innovate financing schemes, engage proactively with private financing entities, and provide regulatory certainty to stimulate private investments.
BRIDGING THE SKILLS GAP
The robust European regulatory framework envisaged for energy efficiency is poised to foster an environment conducive to the proliferation of energy efficiency technologies, solutions and the creation of a multitude of jobs in this sector.
The Employment in Energy Report released by the International Energy Agency in November 2022 projected the creation of 13 million clean energy jobs by 2030. Within this, 16% will be attributed to energy efficiency translating to a staggering 2 million new positions in Europe.
This unique opportunity is supported by a European industrial energy efficiency ecosystem, made of businesses comprising market leaders across sectors and a plethora of small and medium enterprises. The market needs an array of green and digital skills to effectively implement large-scale energy efficiency initiatives to realise a sustainable and equitable transition.
Industry is by no means a passive bystander. It is actively developing a European Pact of Skills for Energy Efficiency, uniting industry players, regional stakeholders, social partners and training providers. This aims to anticipate, monitor and cultivate the requisite skills to foster the energy efficiency ecosystem.
The endeavour comprises two interconnected undertakings: a European energy efficiency skills intelligence initiative and the establishment of the first European Academy of Skills for Energy Efficiency. And as regulatory frameworks gain strength, the impetus to invest in skill development and human resource strategies will amplify.
Europe is back to school and energy efficiency must emerge as the focal point of discourse. A collective commitment is imperative to ensure a sustainable future. •
If you have a thoughtful response to the opinions expressed here or if you have an idea for a thought leadership article regarding an aspect of the global energy transition, please send a short pitch of 200 words outlining your thoughts and credentials to: email@example.com.
Switching all conventional light points to LEDs is one of the easiest, quickest and most cost-effective ways of reducing energy consumption, says Alice Steenland from Signify
The available evidence makes a compelling case for energy efficiency: it is essential to reaching Net Zero, proven technology is widely available, and it can greatly reduce a business’s operating expenditure. However, progress is still quite uneven. It is time for action, says Tarak Mehta from ABB Motion
Europe’s built environment is the single largest consumer of energy. It is also one of the largest emitters of carbon dioxide. But while the building stock’s carbon footprint may be big, it also has a superpower that can be unlocked using energy-efficient renovations, says David Ducarme from Knauf Insulation
Community groups trying to improve the green credentials of Edinburgh’s historic buildings, while battling lethargic public authorities and high upfront costs, are hoping small changes can make a big difference
Taking the old and making it new is a challenge that engineers continue to grapple with, especially when trying to transform what we already have into something more sustainable. Building sustainable infrastructure is one thing, but taking buildings, power grids and transport systems constructed for longevity, and trying to make them sustainable, is entirely different, says Thomas Kiessling from Siemens Smart Infrastructure
Placing decarbonisation of buildings on the international agenda means heat pumps can finally have their moment in the spotlight, says Richard Lowes of the Regulatory Assistance Project (RAP)