Smoothing the way to energy efficient policies

The need to address climate change has become one of the biggest challenges of our time. In order to slow down global warning, we have to reduce greenhouse gas emissions and move towards a carbon-neutral economy. Energy efficiency will play a central role because two-thirds of emissions come from the production and use of energy. According to the International Energy Agency, the world would have used 12% more energy in 2016 had it not been for efficiency improvements since 2000 — equivalent to adding another EU in the global energy market. But there is much more that needs to be done at all stages of the energy supply chain, at the level of the producer, supplier, researcher, user and household consumer. At the Energy Efficiency Global Forum in Copenhagen, I will highlight how policy can help move things in the right direction and what we are doing in the EU now and in the future.

In the wake of our commitments under the Paris climate agreement, Europe is seeking to show leadership in the clean energy transition. On the international stage, the European Union will continue to be a major driving force for slowing down global warming and improving our carbon footprint. In order to do so we need to set a good example. As policy makers, our role is to set a medium to long-term path and to encourage as many synergies as possible in this transition and smooth out bottlenecks and other impediments to the process. In this sense, taking an EU-wide approach will already provide significant economies of scale and efficiency gains.

In order to set the stable regulatory framework that will facilitate the necessary public and, above all, private investment and thereby enable the EU to fulfil its climate commitments, the European Commission tabled the Clean Energy for All Europeans package in November 2016. Comprising eight different pieces of legislation, this package makes it clear that, alongside the integration of renewable energy sources into the mix, energy efficiency should be one of the major drivers towards a sustainable economy. That is why the Commission is promoting the energy efficiency first principle — the cheapest, cleanest and most secure form of energy is the one we do not use.

Better buildings

In the past ten years, the EU has already established a number of measures in this area, most notably the energy efficiency and the energy performance of buildings directives, as well as important rules on eco-design and energy labelling. These measures have contributed considerably to a reduction in EU energy consumption and helped consumers save energy and money. For example, new buildings now consume half of the energy they did in the 1980s and the benefits from eco-design and energy labelling policies can reach up to €500 of savings per household per year on energy bills.

We need to accelerate efforts, however. As part of the Clean Energy for All Europeans package, therefore, the Commission has launched new and ambitious energy efficiency measures. Building on the 2020 target of 20%, the aim is to set a binding energy efficiency target for 2030, as well as measures to improve the energy performance of products and buildings. We need a target that takes into account the remarkable pace of change in terms of new technologies and reduced costs through economies of scale. Indeed, as the negotiations on the revised EU energy efficiency directive enter the final stage, I believe that this rapid rate of change means that we can now reach the adequate level of ambition. This will bring further savings to consumers and will foster the development of energy efficiency technologies. And energy efficiency is an area where ambition pays off and where the costs are outweighed by the benefits in terms of GDP growth, increased employment, lower health-costs and a healthier environment, reinforced security of supply as well as reduced energy poverty.

I am very pleased that moves to accelerate the rate, quality and effectiveness of building renovation in the coming decades have now been agreed in the revised European performance in buildings directive — the first part of the clean energy package that was agreed by the European Parliament and the Council this month (May 2018). It was important to start with the buildings sector as it is the largest energy consumer in Europe, accounting for 40% of final energy consumption and 36% of greenhouse gas emissions, and even more if we take into account heating and cooling.

About three quarters of our building stock, however, remains energy inefficient and the current level of renovation is low. I am convinced that this revised directive, supported by various financing sources available at EU level, will boost investor certainty and help significantly increase renovation rates. The changes to energy performance rules for buildings will also encourage investors to take advantage of digital technologies, in particular smart metering technologies and smart home appliances. Similarly, new rules for pre-cabling will facilitate progress on charging points for electric vehicles, one of the obvious bottlenecks in the take-up of this technology.

Creating jobs

Energy efficiency is not only one of the most cost effective ways to support the transition to a low-carbon economy, it is also an effective way to create investment, growth and employment opportunities in Europe. This is particularly true in the buildings’ sector. The construction industry already provides 18 million direct jobs in Europe and accounts for 9% of our GDP. Construction activities that include renovation work and energy retrofits add almost twice as much value as the construction of new buildings. It is estimated that up to 700,000 jobs in the construction sector and 270,000 in the engineering sector will be created thanks to the measures put forward in the Clean Energy for All Europeans package. In short, I believe the energy renovation of buildings will not only foster innovation, but also be a real driver for growth and jobs that are local, sustainable and not at risk of relocation.

Beyond the regulatory framework, the role of local actors and in particular of cities will be decisive for the energy transition and the decarbonisation of buildings. Today, the transition to a smart, sustainable and secure energy system is no longer a choice. It is a responsibility towards all citizens. And cities are a motor of innovation and a driver of the EU economy, with three quarters of Europe’s population living in them. But they are also responsible for an equal share of the EU’s energy demand and greenhouse gas emissions. The Commission is therefore supporting cities to become smarter and engage with the use of digital and telecommunication technologies as they have the potential to accelerate the energy transition notably through better use of resources, smarter transport systems and more efficient ways to light and heat buildings.

Looking beyond 2030

The Clean Energy for All Europeans package will provide the stable legal framework to facilitate the necessary investment between now and 2030. This will be good for the environment, good for the economy and good for consumers in terms of quality of life and potentially lower household bills. In its recent blueprint for the EU budget from 2021 to 2027, with an objective of mainstreaming climate-related measures in 25% of future spending, the Commission has further underlined its commitment to the fight against climate change.

But our vision has to look beyond 2030. The European Parliament and EU leaders have mandated the Commission to come forward with a long-term strategy for emissions reduction. We therefore intend to launch a public consultation in the next few weeks about our priorities to 2050. This will include a broad stakeholder conference in Brussels planned for July 10-11, 2018 and events in other parts in Europe. Energy efficiency must be a key point of discussion in these debates.

Dominique Ristori is a speaker at the Global Energy Efficiency Forum taking place in Copenhagen from May 21-22

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