Energy efficiency to drive European growth

energy efficiency, european union, growth, energy transitionThe European Council met on 23 and 24 October to lay down the priorities of the 2030 Climate and Energy Package. Member States struck a compromise by committing to increasing energy efficiency by at least 27%, which should boost investment in this sector. According to a study from the International Energy Agency, the energy efficiency market is worth between 310 and 360 billion euros.

EU raises energy efficiency targets

The directive adopted on 4 December 2012 set an indicative target of 20% more energy efficiency by 2020. In order to monitor progress, Member States had to submit their respective energy efficiency action plans to the European Commission. Last April, the Coalition for energy savings stressed the limits of current measures. In order to increase the energy performance of European economies, the Climate and Energy Package adopted on 23 and 24 October 2014 raised its energy savings target to 27%.

As Vice President of Fieec[1] Luc Remont put it, “there is no energy transition without energy efficiency. Mature technology and solutions are available and ready for use: now the time is ripe to put them at the core of our policies.” Within the new climate and energy policy framework adopted in Brussels, “the European Council therefore invites the Commission to further examine instruments and measures for a comprehensive and technology neutral approach for the promotion of emissions reduction and energy efficiency”.

Energy efficiency serves both environmental and economic ends

On the environmental front, European institutions welcomed the positive results of these negotiations, which bode well for the upcoming conference of the parties to the United Nations Framework Convention on Climate Change, which will take place in Paris in December 2015. Besides, on the economic front, a new Europe-wide mechanism known as NER 400 was created, i.e. a fund managed by Member States in co-operation with the European Investment Bank.

Shortly thereafter, Terra Nova, a French progressive think tank, insisted that “as of today, energy efficiency represents the largest pool of profitable and beneficial investments.” According to Terra Nova, energy efficiency can both create new jobs and help reduce public spending. Not only will these new activities generate additional tax revenue, but the government also expects direct savings to be achieved on public service such as public lighting.

Support from International Energy Agency

Besides, a number of economic indicators suggest that this strategy is adequate. According to Eurostat, 53.4% of gross domestic energy consumption in the EU was covered by imports. Furthermore, the EU’s Joint Research Centre found that “a third of total energy consumption is wasted for want of efficiency”. For all these reasons, the International Energy Agency (IEA) support s initiatives towards more energy efficiency.

In its 2014 Energy Efficiency Market Report, the IEA argues that energy efficiency is no longer a niche market. The German investment bank indeed spent 16 billion euros on energy efficiency technologies, while the French Caisse des Dépôts spent 453 million euros. As IEA Executive Director Maria van der Hoeven puts it, “energy efficiency is the “hidden” fuel that will improve our energy security, cut our bills and help us meet our climate goals”.

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[1] French Federation of Electrical, Electronic and Communication Industries

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