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The 2030 energy efficiency debate: time for the Commission to ‘man up’!

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And so the trio is completed. The European Commission’s opinion on what Europe should be doing with the energy efficiency strand of the 2030 Climate and Energy Package was published last week. They say we are doing just fine with progress to meeting the 20% energy savings 2020 target – missing it by only 1-2%. And they advise a 30% energy savings target in 2030 to fit with a 40% GHG target and a 27% renewable target. “Ambitious but realistic” – great! But is it?

These headline figures mask a complex story of what is actually happening with energy savings. A story that is made difficult in part because of the shifting baselines on which progress is measured and in part because the bundling of data across sectors and countries makes it difficult to see what is really going on. Progress is not uniform. Between 2008-2012 the biggest energy savings have been made by Bulgaria, Denmark, Greece, Hungary and Slovakia. In contrast, progress on energy efficiency declined in Austria, Estonia, Latvia, Lithuania, Luxembourg and Poland during the same period – coincidentally this includes 5 Member States that are heavily reliant on Russia for gas supplies.

The real picture is that actually progress on energy efficiency is patchy.

It is true that a fair chunk of the energy savings delivered in the EU economy to date (around one-third) have been delivered by the fall off in output caused by the economic crisis – not by energy saving policies. In fact, only 12-13% of the energy saved in the EU between 2010-2020 will be linked to real energy efficiency improvements. But digging deeper, we are starting to learn what works and what doesn’t. The EUETS has a minimal effect – regulation and labelling on the other hand have worked very well. In areas where mandatory European-led regulation has been introduced – such as the CO2 in cars regulation that has driven up fuel efficiency; regulations on energy use by new buildings that require housebuilders to fit insulation and superefficient windows; and appliance efficiency standards – there has been a big impact in reducing energy use in Europe. Rising energy prices have driven efficiency gains in industry – but the picture is mixed, with huge opportunities to further reduce energy use in many central and eastern European countries.

So, given that more clearly needs to be done to break down the continued market failures around energy efficiency and given that regulation appears to have been one of the most effective means to doing this, what has the Commission proposed to do? Nothing. They have put the onus on closing the gap to meeting 2020 energy efficiency targets on Member States and will propose no new measures to support the closing of that gap. Given ongoing concerns about the energy security threats facing the EU economy and fears about how Europe remains competitive in an increasingly resource-constrained world, this is a surprise.

Even more of a surprise is that, going forward, the Commission proposes a target for future energy saving that is overwhelming in its underambition. The 30% energy saving target for 2030 will leave around one-third of the possible cost effective energy savings in the EU untapped. There is no new framework setting out how the 2030 target will be met, despite the fact Heads of State in the March European Council meeting requested one. This needs to be revisited under the new Commission.

A new and more interventionist framework is desperately needed for energy efficiency. For years the European Commission has been limited in what it can do to promote energy efficiency in Europe, held back primarily by concerns around subsidiarity and proportionality. This limits how much direction it can give to Member States in areas of energy efficiency policy. But with so many of the successes in efficiency policy coming from European-led regulation, so many clear advantages to collective and ambitious action at European level on efficiency, and so many clear failures by many Member States to deliver energy savings when left to their own devices, the time seems right to open up this discussion. Without the European Commission taking a stronger lead in unlocking this market it is difficult to see how we will ever see the full potential for a truly energy efficient Europe realised.

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