Friday 17. September 2021
#176 - November 2014


Energy efficiency in the EU: moving in the right direction


Energy efficiency is one of the pillars of the climate change policy. The last European Council has proposed a very ambitious 27% increase in efficiency beyond previous expectations.

At the end of July the European Commission issued a Communication on “Energy Efficiency and its contribution to energy security and the 2030 Framework for climate and energy policy”. With this document the Commission wants to assess the track to reach the 2020 target on energy efficiency, which was defined as an increase of 20%, and it also proposes a new target of 30% by 2030.


Energy efficiency is an important topic because it is one of the three major components of climate change policies, together with the shift to renewable sources and the restriction of CO2 gas emissions. In the previous European strategy for preventing climate change there was established the famous 20-20-20 rule, that is: renewable energies would become 20% of the total mix of European energy consumption, CO2 gas emissions would be reduced by 20%; and the efficiency of our energy system would be increased by 27%, as the recent European Council that took place on 23rd October agreed.


Energy efficiency is not a unique concept, it is an attempt to achieve a balance between production and energy consumption. Up to 2006 the GDP and energy consumption moved –growing- in parallel but since then energy consumption started declining, in a decoupling process; intensified since 2008 because of the crisis. Behind this reduction in the consumption of energy there is certainly a reduction in general economic activity but also a better energy performance of buildings, more efficient equipment and a detailed system of labelling that allows consumers to choose those electric and electronic devices which are more energy efficient.


EU households spend on average 6.4% of their disposable income on home-related energy use, about two thirds for heating and one-third for other purposes. In 2012 almost 11% of the population of the EU was unable to keep its homes adequately warm. In this sense energy efficiency is very much linked with energy poverty. Those with more difficulties in coping with the electricity bill at the end of the month usually live in the houses with the worst insulation conditions. Less resources and worst housing correlate perfectly. Any policy that would improve building insulation will benefit the population with lower income, as the money spent on energy will be better used.


The expectations as to meeting the 2020 target, 27%, are very high. Unfortunately a third of the success is due to the economic crisis, but in any case, the trend towards a more efficient energy system is clearly outlined and that allows us to be also optimistic that the new target for 2030 will be accomplished, and that hopefully, in a recovering economic situation. In this sense the objective of a 30% improvement in efficiency, although ambitious it doesn´t sound impossible. On the contrary energy efficiency is very much linked to cost reduction for industries, in the medium term, although it can imply necessary investments at the first stages. And it can boost activity in construction so as to improve building energy efficiency


The bottle neck of this process is the finance. The Commission assesses that at least €38 billion/year will be necessary to achieve the 2030 framework. Most of this money should come from private funding, as almost 90% of the EU building floorspace is privately owned. State funds will also be necessary to support this shift. The contribution of the European Structural Funds in the period 2014-2020 in promoting low carbon economy investments reaches €38 billion but it will be necessary that the states allocate significant amounts for the Cohesion Policy funding.  The negotiation now open is about the funding after 2020 because if these measures are to have a real impact the level of investment has to be in accordance with the challenge, and extended over the long term.


The whole efficiency programme of the European Commission has some weakness. For example, although the Commission establishes binding targets for the Union itself it is not the case for each Member State as they operate on voluntary targets. The expectation is that the aggregate result will be positive for the Union, but the speed can be very different state by state. In fact the Union is counting on the more efficient countries keeping to their path in such an intense way that they could compensate for the limitations of the others.


Jose Ignacio Garcia


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