EU 2030 energy efficiency target shows 'lacklustre ambition'
EU must provide 'certainty and direction' in energy efficiency proposal to ensure Europe can overcome 'critical challenges', Stefan Scheuer.
Last week, the European commission presented its long-awaited 2020 energy efficiency review and proposals for the energy efficiency framework until 2030.
The Ukrainian crisis has highlighted the vulnerability faced by the EU due to its overreliance on energy imports. The EU imports 60 per cent of its gas and 80 per cent of the oil it consumes. EU energy policy is in the spotlight and the commission is under pressure from member states to make sure energy supplies are stable and secure.
"The Ukrainian crisis has highlighted the vulnerability faced by the EU due to its overreliance on energy imports"
Energy efficiency could play a huge role in ensuring this. Saving 40 per cent of the EU’s final energy by 2030 for example, is equivalent to the EU’s total current gas imports from Russia.
Numerous stakeholders, including the European parliament and an increasing number of member states, spoke out about this and the need for an ambitious and binding energy savings target. As 23 July approached, the commission’s announcement on the 2030 energy efficiency target was eagerly anticipated.
What happened was a complete disappointment. Energy commissioner Günter Oettinger proposed an energy savings goal of just 30 per cent for the 2030 climate and energy framework.
In its communication, the commission gives 28 per cent as the cost-effective level of energy savings, where total costs meet savings. It further states that every additional percentage of energy saved would represent a net cost increase for the EU, making 30 per cent look like a very expensive effort. However, the methodology behind this number is misleading.
A major problem is that in the underlying models, the costs on the energy system were artificially inflated by using high discount rates. This makes energy efficiency look much more expensive than any business in this sector would estimate. DG energy provided an alternative scenario using lower and more realistic discount rates, which was made available in previous draft versions of the impact assessment, but this disappeared from the final text.
The commission has also ignored the cost-effective energy savings potential as calculated by the Fraunhofer Institute, who has assessed the potential in each sector - such as buildings, industry, and transport - to establish the overall EU potential. Using this approach they found that Europe could reduce its energy consumption by more than 40 per cent by making investments that would deliver net financial benefits over their full lifetime.
It’s not only that the costs were made to look high but there was also a complete failure to account for the macro and micro-economic 'co-benefits' of energy savings. These include air quality, health, employment, fuel poverty and GDP benefits, fiscal and budgetary improvements, positive balance of trade impacts, as well as security of supply and climate change mitigation benefits.
This cannot be called scientific and evidence-based policy making. My view is that this modelling battle hides a political battle, which is far from over. In the end, it all comes down to one question: can market-based instruments like the emissions trading scheme solve all energy and climate problems alone?
"The outgoing commission failed to produce a vision for a 2030 energy-efficient Europe, despite the mandate provided by the European council and the parliament, and the support shown by the commission’s incoming president Jean-Claude Juncker for a binding target of at least 30 per cent"
Market, but also non-market barriers prevent energy savings from happening. The EU needs an overall target to overcome these barriers and provide certainty and direction without which much-needed private sector investments will not be made.
The outgoing commission failed to produce a vision for a 2030 energy-efficient Europe, despite the mandate provided by the European council and the parliament, and the support shown by the commission’s incoming president Jean-Claude Juncker for a binding target of at least 30 per cent.
With the events in Russia and Ukraine, and the critical challenges the EU faces on growth, global competitiveness and securing an ambitious agreement on climate change, energy efficiency has never been as important as it is now. Member states and the parliament should take a closer look at the commission’s proposal: they might be alarmed at its lacklustre ambition.
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