Op-ed: Decarbonizing the European economy – Let’s start off on the right foot with Energy Efficiency First

Monica Frassoni, President of the European Alliance to Save Energy

Monica Frassoni is an Italian politician and former MEP (1999-2009). During that time, she was co-chair of the European Greens–European Free Alliance group in the European Parliament. Currently, she is co-President of the European Green Party.

Previously, she served for 10 years as an officer of the Greens group in the European Parliament and was Secretary General of the Young European Federalists. In late 2010, Monica took up the role of President of the European Alliance to Save Energy, which promotes energy efficiency across Europe.

The beginning of the work of the European Commission on a long-term strategy to reduce greenhouse gas emissions is good and timely.

First, Europe needs to step up its efforts to implement the Paris Agreement, where the EU and Member States committed to achieve ambitious emission reductions objectives.

Second, there is acknowledgment that transforming the energy system is necessary to combat climate change. The switching pace should be faster to be more adequate to address the its unprecedented challenges, but things are coming together and some indicators, as the introduction of the Energy Efficiency First principle in the Regulation of the Governance of the Energy Union, are very encouraging.

Third, the EU project is in an extremely difficult moment and its future is at risk. The falling appetite for European legislation must be clearly resisted and defeated over the next months and years.  Areas such as climate change represent a unique opportunity to develop policies and regulation of common interest and deliver tangible results to European citizens. Indeed, a recent EU-wide survey shows that 92% of EU citizens see climate change as a serious problem and support action across the EU to tackle it[1].

On the 2050 energy and climate strategy the European Commission must dare to be bold and send the right political messages to citizens, businesses and the international community.

The long-term emissions reduction strategy can only be developed correctly if it is based on the latest available science. From our understanding, the IPCC Special Report Global Warming of 1.5°C due to be published next October will conclude that the upper temperature goal of the Paris Agreement of 2°C does not represent a climate safe zone. As such, the EU long term energy and climate strategy must clearly lay out pathways for how the bloc will contribute to limiting global temperature rise to 1.5°C, including a net-zero emissions target by 2050 at the latest. This transformation of European economy must be achieved over time but also on time.  Hence, the EU, needs to urgently and substantially increase its action well beyond the current 2030 targets.

In this scenario, Energy Efficiency plays a fundamental role. The EU must take into account that global energy demand rose in 2017 by 2.1%, out of which 70% came from fossil fuels. The EU strategy must therefore pursue a review of energy and climate targets with the long-term goal to further reduce energy consumption and phase out fossil fuels.

Energy Efficiency must be firmly placed at the centre of the EU long-term strategy by:

  1. Applying Energy Efficiency first principle when planning and designing the transition

Energy efficiency measures must be put on an equal footing with other supply side investment options. Efficiency First principle boils down to making informed choice to invest taxpayers’ money in cost-effective energy measures.

According to the IEA, energy efficiency makes the largest contribution to the global emissions reduction in the EU, able to deliver 76% of those needed to achieve Paris Agreement objectives[2]. Enshrining the Efficiency First principle in long-term strategy will enable countries to maximize their energy gains while fostering a growing integration of renewables and making more affordable the electrification of key sectors like transport and heating & cooling.

  1. Revising EU’s current inadequate 2030 target

According to the European Commission, the new EU targets for energy efficiency (32.5%) and renewables (32%) translate into 46% GHG cuts. To achieve net 0 by 2050 at the latest, the Commission should propose a scenario of 55-60% GHG emission reduction by 2030.

  1. Fixing current energy system modelling to value Energy Efficiency for its actual and broad contribution

The consultations held by DG ENER on energy system modelling have shown that PRIMES model is inadequate to address energy efficiency. It is crucial to work on the PRIMES model’s weaknesses integrating the wider spectrum of energy and non-energy benefits of energy efficiency, such as energy security, public health, improved air quality and support of innovation and competitiveness.

  1. Fairly presenting costs and benefits

In previous EU Impact assessments[3], the investment costs and financial savings of energy efficiency were unfairly presented. In particular, a discount rate of 10% was applied to value energy efficiency investments, which made them look more expensive. The Commission should instead consider a lower societal discount rate – which is more aligned with those applied by Member States (between 4.0-5.7%)[4] – and the costs of delayed actions and of non-action.

The EU long-term emissions reduction strategy is a unique window of opportunity for the EU to attract investments in cost competitive technologies that will drive emissions reductions. A forward-looking strategy will make Europe progress as a strong competitive and innovative energy efficiency market from where European companies can spearhead the energy transition and commercialize their technologies and know-how globally.

 

[1] EU Survey, 2017:  https://ec.europa.eux/clima/citizens/support_en

[2] IEA, 2015, (figure 3.4), p.76.: https://www.iea.org/publications/freepublications/publication/WEO2015SpecialReportonEnergyandClimateChange.pdf

[3] EC IA : https://ec.europa.eu/energy/sites/ener/files/documents/1_en_impact_assessment_part1_v4_0.pdf

[4] 4% discount rate recommended by better regulation guidelines and 5.7% is average used by member states for energy efficiency in buildings;

 

Op-ed: How concerted action on building renovation and electrification of transport can help keeping global warming within the ‘Paris boundaries’

Harry Verhaar, Head of Public and Government Affairs at Signify and Chair of the EU-ASE Board

Harry Verhaar has over 20 years of experience in the lighting industry, and is Head of Global Public & Government Affairs for Signify. He is responsible for the strategy, outreach and stakeholder management on energy & climate change, resource efficiency and sustainable development, with a key focus on the role of the LED lighting revolution. He has since the end of 2003 been the architect of the lighting strategy on energy and climate change, which has resulted in a global momentum on phasing out of old lighting technologies.

Harry is a recipient of the 2011 UN Leader of Change Award, and has received the Carbon War Room’s Gigaton award on behalf of Philips at COP17 in Durban. In May 2015 he received the Energy Efficiency Visionary Award from the Alliance to Save Energy in Washington DC. He holds a MSc in Solid State Luminescence from the University of Utrecht, The Netherlands.

Just last week we had an exciting launch of a thought leadership report we developed with the Rocky Mountain Institute. The “Energy Efficiency and Electric Vehicles” report covers scenarios and recommendations on how accelerated renovation of buildings can pave the way for the electric vehicles revolution, while keeping the world below 2 degrees Celsius of global warming.

The report was launched at the UN Earth Innovation Summit on September 5 in Tallinn, Estonia. Estonia currently chairs the UN Environmental Assembly, who will be meeting for UNEA-4 in Nairobi in March. The recommendations from this report will be one of the subjects on the table.

You may wonder why a report on buildings and transport as these seem two different unrelated subjects. How are these related in energy and climate scenarios, and what can one recommend that links these areas together?

First, we see that although the climate rhetoric may differ at federal level in various countries on this planet, the situation is that almost everywhere the projected CO2 emissions reductions from commitments and initiatives is only roughly half of what is needed to keep global warming below 2C. From IPCC and IEA analyses we know that energy efficiency has to do between half and two thirds of the job of keeping us below that level. Here the two big areas that require more ambition and action are buildings and transport. And the elegant relationship between the two is that by increasing building renovation rates we can ‘free up’ the energy that is needed to accelerate the electrification of transport!

The EV-revolution offers tremendous climate benefits (as well as more comfortable driving) though demands that policy makers manage the resulting increase in electricity demand. The accelerated deployment of energy efficient technologies in buildings (where most of our electricity is consumed) is by far the most cost-effective way to accomplish this. The ambitious deployment of Electric Vehicles (EVs) with 90% of car sales being electric by 2040 requires an additional 3000 TWh of electricity, which is more than the whole of Europe consumes per year today. Increasing building renovation rates from the current 1% to between 3 and 5% per year (with the 5% rate estimated at current practice of 30% efficiency improvement, and the 3% renovation rate requiring larger improvements) will prevent the need to build and invest in new power generation. Furthermore, another important practical relationship between buildings and EVs is that the EV charging points can be included in the building (residential, commercial or public sector building) as part of the renovation. After all we will charge our cars while we are at work or at home. A third linkage between buildings and EVs is that most if not all new efficient technologies – like LED lighting – are digital, and thus our buildings can become smart buildings connected to the Internet of Things following these renovations. This will enable smart charging and load management that can further reduce power demand on the grid! All in all renovation makes our buildings fit for the 21st century as was also highlighted in a recent study by the Corporate Leadership Group.

So, what should be done to make this happen? The report has several recommendations of which the most important is that policy makers should develop integrated policy frameworks, particularly on buildings and transport, while combining these with renewable energy policies making the energy we consume clean and sustainable. An important enabler for the increase in building renovation is that when the moment of building ownership or tenancy change would be used for deep building renovation – either for our homes, commercial or public buildings – this would do the job. And come to think of it, the additional budget required can easily be included in the mortgage or in the real estate portfolio, as these buildings will be cheaper to use and are safer investments for individuals and investors. Recent insights even show that an energy efficient building does not even require higher investments. It is critical that we get the charging infrastructure right, so that charging can be done where we live or work, and that demand response management balances the load on the electricity grid.

So, we see through these scenarios and recommendations that the task at hand is pretty big. Yet, I believe that when we embrace these goals and work together to accomplish what is needed, we can get this done. It is not the first time to see massive change in a short period. The transition to LED lighting is possibly the fastest of the past decades. Only a little over 10 years ago two thirds of our sales volume were incandescent light bulbs, while today 70% of our sales is LED, and by 2020 every LED we put on the market will be a connected or connectable LED, thus fully converting to an IoT portfolio.

For the planet our long-term goal should be to move to a net zero carbon world by 2050. This is why as Signify we announced that we joined the WorldGBC’s Net Zero Carbon Buildings (NZCB) by 2030 commitment as well as the EV100 program of The Climate Group. As a company our buildings will become net zero carbon and our company fleet 100% electric by 2030. My thinking is that if we can do this in this timeframe, we should be able to jointly do this across all sectors and geographies by 2050!

Deals on Energy Efficiency Directive and Governance of the Energy Union Regulation fail to untap European Energy Efficiency cost-effective potential

20 June 2018, Brussels. Last night negotiators from the Bulgarian Presidency of the Council of the EU and the European Parliament reached a deal on the Energy Efficiency Directive (EED) and on the Governance of the Energy Union Regulation (Governance).

The regulatory framework set by the EED for post 2020 foresees a non-binding energy efficiency target of 32.5% for 2030, an upward review clause of the target in 2023 and a mandatory sub-target of 0.8% of annual sales to final consumers. The text agreed is an improvement of the proposal of the European Commission and goes well beyond the Council positions.  

“The EED deal falls short of potential. During the last months the role of progressive forces of the business community and civil society was paramount to outline the benefits of higher and binding targets to unlock the full economic, social and environmental potential of energy efficiency. We helped to go beyond some of the hesitations and doubts that still exists on energy efficiency however much more needs to be done. The EED lacks the strong political signal required by the business community to invest in the energy efficiency projects needed to decarbonize our economy” said Monica Frassoni, President of the European Alliance to Save Energy.

“Unfortunately, the deal reached on the Governance of the Energy Union Regulation” continued Monica Frassoni “reflects the lack of ambition in the EED”.

“A cost-effective 40% energy efficiency target would have been more adequate to align with the European commitments to the Paris Agreement. Energy efficiency is a key driver of the Europe energy transition. Europe and Member States will have to step up their efforts in the implementation phase and acknowledge the central role of energy efficiency if they have to transform Europe’s energy system and realize the emission reductions necessary to fulfill the Paris Agreement objective” concluded Harry Verhaar, Chairman of the European Alliance to Save Energy and Head of Global Public & Government Affairs at Signify.

Contacts and Media Enquiries

Luigi Petito (+32 2 588 5671 / info@euase.eu) / Laura J. Bolé (+32 492 08 69 54 / lauraj.bole@euase.eu)

Op-ed: Energy Efficiency – let’s do it!

David Berman, Head of Public Affairs at Veolia

David Berman is the Head of Group Public Affairs at Veolia.

French-German lawyer by training, he has been following the development of European environmental and energy regulatory frameworks for the last 10 years.

The need for putting our efforts into increased energy efficiency is more urgent than ever: the European Union is struggling to reach its own climate and energy objectives; it has to adjust its short term and long-term policy to be compatible with the Paris agreement; it aims at strengthening its energy security.

At the eve of the final negotiations on the ‘Clean Energy package for all’, Member States have the responsibility to make sure the EU gets on a path towards decarbonisation.

This opportunity should not be missed. We see have a unique take on the importance of energy efficiency not only for our activities[1] but for its wider societal, economic and environmental benefits. Energy efficiency is a resource to be harvested across the entire energy chain from generation through transmission and distribution to consumption.

For these reasons, together with a group of 75 leading businesses and associations, Veolia has recently signed a call for a cost-effective energy efficiency target of 40% by 2030 with an extension of 1.5% cumulative annual energy savings obligations beyond 2020 (with a 2050 perspective) to be inscribed in the final text of the Energy Efficiency Directive. Member States have in their best interest to accept the Parliament’s option of a 34% and ideally binding energy efficiency target for 2030. These objectives would radically strengthen investor confidence and channel private investments towards large-scale renovation and conservation projects. They would also provide a guarantee to EU citizens that right policies will be eventually put in place to help EU dwindle down its CO2 emissions.

Targets are quintessential, but in case of energy efficiency they are optimal only if expressed both in primary and final energy. So far, any sort of public debate on energy efficiency has systematically been focused on savings made by the end-users, whether in buildings or in consumer products like TV sets. While it is essential to reduce final energy consumption, in order to achieve the actual energy efficiency, we should imperatively be looking at ways to limit losses that occur before energy (heat and/electricity) is delivered to customers. This is about optimizing the way we generate, extract, convert, distribute and transmit energy, in order to reduce to maximum energy losses. To give an example, the amount of energy lost in the production and distribution of electricity reaches an average of 60%. The EU project Heat Roadmap Europe estimates that there is more heat wasted during electricity generation than is required to heat all buildings on our continent. In order to help improve energy efficiency across the entire energy chain, we support the European Parliament to express the EU energy efficiency targets in both primary and final energy (leaving the Member States the choice between those two options would not allow for proper benchmark and results analysis).

Last but not least, we need to make everyone aware of the dangers that the ‘energy efficiency first’ principle remains just a slogan. Energy efficiency first is actually a simple rule that when consistently applied, will ensure that all investing and planning decisions are based on cost-benefit analysis, that all options available are carefully weighed, and that those solutions that will avoid stranded assets and excess of energy capacities will be privileged. It is nothing more than common sense and application of a basic economic matrix and should not be considered a constraint to Member States’ future choices. Not only we need the ‘Energy Efficiency first’ principle to structure the Energy Efficiency Directive up to 2030, but we also have to have it applied across the entire Clean Energy Package. Enshrining this principle in both the Energy Union Governance Regulation and the Renewables Directive will enable countries to maximise their energy gains while fostering a growing integration of renewable energy sources such as wind, solar and hydro, reaping all the benefits of an integrated approach to energy planning and an effective sector coupling.

Before the final discussions on the EU Clean Energy Package are over, we have a once-in-a-decade window of opportunity to make Energy Efficiency a centrepiece of a successful transition towards decarbonized future in Europe. Let’s do it!

[1] For years now, Veolia has been providing resource (water, materials and energy) optimization solutions for municipalities and industries across Europe. The group carries energy efficiency at the heart of its activities, as a part of its circular economy paradigm. Through energy performance contracts, we commit to optimize our clients’ production efficiency, energy consumption, and energy mix, deriving part of the agreed remuneration on results-based standards. We work both on the energy supply side of buildings, with our boiler and cogeneration installations, and on the demand side, through tailor-made solutions enhancing the way buildings operate. Committed to its core missions, we stand ready to help industries, cities and people achieve an optimized decarbonisation of the European economy through increased energy savings.

EU-ASE joins European businesses, local authorities and NGOs urging EU leaders to step up climate action

Today, 12 June, a unique gathering of businesses, investor groups, local and regional authorities, and civil society groups, standing together as the Coalition for Higher Ambition, are calling upon EU leaders to accelerate the transition to a zero-carbon Europe and thus limit climate impacts and allow for improvements to public health, greater competitiveness for businesses, and an increase in good quality jobs.

EU-ASE believes that the current EU climate commitments need to be raised in order to keep the Paris Agreement goals within reach. The stakeholders urge EU leaders to:

  • Ensure the finalisation of the EU’s energy legislation for 2030 in line with the ambition levels adopted by the European Parliament.
  • Ensure that the new EU long-term climate strategy sets Europe on a pathway that delivers on the 1.5°C objective of the Paris Agreement, which must include a net-zero emissions target by 2050 at the latest.
  • Ensure a timely revision of the 2030 greenhouse gas emissions reduction target so as to allow the EU to resubmit its Paris pledge to the UN by 2020, as agreed in Paris.

The statement comes prior to the High-Level EU Talanoa Dialogue where key decision makers and stakeholders will be discussing ways to step up climate action; and the final round of negotiations on the EU’s energy legislation for 2030, both taking place on 13 June.