Energy efficiency market will invigorate the EU economy, boost growth prospects and benefit European citizens
The cheapest energy is the is the one we don’t use.
By now everybody knows and agrees on that. What is less consensual is that to reduce our use of energy we have to invest money in new technologies, renewable sources and in renovating buildings.
That’s why we talk of having more ambitious targets in energy efficiency and it is not always easy to convince stakeholders.
And yet the investments in energy efficiency are a big opportunities for our economies.
According to the European Commission by encouraging cross-border cooperation and mobilising public and private investment in the clean energy sector (it is estimated that EUR 379 billion will be required each year from 2021 onwards) the proposals of the Clean Energy for All Europeans package have the potential to be good for economy, generating an estimated 900 000 jobs and an increase of up to 1% in GDP over the next decade.
The European Energy Efficiency Industries estimate confirms that the market for low-carbon products and services is growing globally and within the EU represents revenues of over €150 billion each year.
The EU has flourishing skills and industries in this sector but these industries need a strong home market in which to continue to develop, compete and grow.
Producers and service providers are also active on the global market, contributing to Europe’s export revenues.
According to the International Energy Agency (IEA), if EU countries were to fully exploit the potential of energy efficiency, overall GDP would grow by up to 1.1% per year.
The European Commission estimated additional GDP growth of up to 4.45% by 2030 if 40% energy savings could be achieved.
Construction, for example, is a strong engine of the European economy. Investment in the energy efficiency of buildings robustly supports this sector which contributes nearly 10% to EU GDP and accounts for 18 million jobs.
That’s why in April we approved the Energy Performance of Buildings Directive (EPBD), which is the first of 8 legislative proposals part of the Clean Energy for All Europeans package brought forward by the European Commission on 30 November 2016.
The new legislation requires member states to develop national long-term strategies to support cost-saving renovation of public and private buildings, with a view to reducing emissions in the EU by 80-85% compared to 1990 levels.
Copenhagen Economics estimates that by harvesting the investment opportunities provided by energy efficiency renovations in the existing building stock, EU Member States can stimulate economic activity which can bring net benefits to GDP of up to €291 billion.
This corresponds to between 1.2% and 2.3% of EU GDP. Furthermore increased energy efficiency investment in the buildings sector would bring a high density of new local stable jobs where they are most needed.
On average, an investment of €1m in the buildings sector creates 19 new jobs.
Investing in energy efficiency means to boost industrial competitiveness. High dependency on international energy markets exposes companies to price shocks which reduce the predictability of returns on investment.
Sudden price increases cannot always be passed on to the market and undermine companies’ profitability. Due to increases in worldwide demand and the introduction of energy taxes, energy prices are expected to rise over the next decade.
Energy efficiency measures can decouple energy prices from energy costs for companies. Furthermore, the European Commission’s scenario modelling also sees a direct link between energy consumption in Europe and international energy prices.
If energy efficiency gains of 40% were achieved by 2030, gas prices could be 8% lower and oil prices 3% lower than in business-as-usual scenarios.
The energy efficient operation of industrial plants in the EU makes them more competitive thanks to already existing solutions.
Energy Efficiency Services Companies (ESCOs) deliver overall management of energy demand to energy end-users, providing operational, design maintenance and management of equipment services and leading to optimisation of energy consumption.
Energy efficiency is a driving factor for innovation in the manufacturing and services sectors.
The development of the ESCO market is particularly important for optimising and modernising the EU’s infrastructure.
The global market value of ESCOs is estimated at €12bn in 2010. Our industries create centres of innovation led by major European companies and foster knowledge economy working with academia, supporting research and developing new areas of economic activity.
However, innovation centres will only stay in the EU if the legislator is able to provide an ambitious long-term framework demonstrating the political will to realise energy saving potentials.
The creation of local skilled jobs is an absolute imperative for the EU.
It is widely recognised that ambitious energy efficiency measures lead to significant net job creation.
The European Commission states that the number of jobs could be increased by up to 3% by 2030 if a 40% energy savings target were implemented.
In other words more ambitious targets on energy efficiency will boost our economy and the competitiveness of our industries, but will also have direct beneficial consequences for European citizens.
About 10% of them are considered fuel poor. Many governments spend more money on fuel subsidies than on reducing energy bills sustainably through energy efficiency measures.
At the end of the day energy efficiency is one of the smartest investment we can make and a win win move for industries and citizens.
All we need is a daring and forward looking approach.