To the kind attention of the Members of the REGI Committee

Brussels, 14 March 2019

Dear Members of the REGI Committee,

I am writing to you on behalf of the European Alliance to Save Energy (EU-ASE). EU-ASE is a multi-sectorial business organisation whose members operate across the 28 Member States of the European Union, with an aggregated annual turnover of €115 bn, directly employing 340.000 people in Europe.

The post 2020 Multi Annual Financial Framework (MFF) is a unique opportunity for the EU to demonstrate coherence with its long-term energy and climate objectives and show commitment to deliver tangible benefits to European citizens. In the framework of the MFF post-2020, the ERDF and CF Regulation is a necessary trigger for outlining the much-needed long-term political direction and mobilizing private investments towards a decarbonized European economy.

The ERDF and CF Regulation must give the right political signal to stimulate investments in clean technologies, and in particular in cost-efficient energy efficiency projects, which will only get unlocked if the EU provides clear direction and long term certainty to the private sector.

The impact that ERDF and CF can have in terms of employment creation, mainly youth employment is also significant. In order to implement a sustainable energy transition, there will be a large additional demand for workers with different types and levels of qualifications, ranging from lower skilled workforce to highly skilled professionals. This is an opportunity that should not be missed, especially for regions that are suffering from high rates of unemployment, and those that will have to go through a challenging transition pathway.

According to the European Commission reflection paper on the 2030 vision^[1], in Europe there are currently nearly 1.5 million jobs in renewables and energy efficiency. Industries operating in the area of building refurbishment represent more than 3.4 million jobs and the Commission impact assessment for the Clean Energy Package stated that there is a potential to create an additional 900.000 jobs by 2030, provided that public and private investments are sufficiently mobilised. Of these, up to 400.000 additional local jobs could come from the energy efficiency sector.

In view of the ERDF and CF Regulation’s deadline for amendments (March 20) and following plenary vote (March 27), we urge you to:

• Increase to 40% the overall target of ERDF/CF expenditure supporting climate objectives

Such increase is necessary taking into account the magnitude of the climate change challenge and the level of support required to achieve climate neutrality by 2050.

• Prioritize investments in energy efficiency (both on the energy demand and supply sides) in all sectors

To prioritize energy efficiency investments, ERDF and CF Regulation should fully apply the Energy Efficiency First principle and therefore embed the principle to first assess the economic opportunity to reduce energy consumption through cost effective energy efficiency solutions before investing in new sustainable supply capacities. In our view, all investment decisions in the field of energy and climate change must be guided by long term decarbonisation objectives. Faced with the challenge of scarcity, public resources should be spent in the most intelligent, efficient and effective way, paying due attention to aspects such as just transition, and prioritizing areas with the highest economic, societal and environmental value.

• Exclude investments in new fossil fuels infrastructures

It does not make economic and environmental sense to invest in new fossil fuels infrastructures like allowed by the exceptions foreseen by Art.6 as proposed by the rapporteur. We should not misuse public resources. Investing in new fossil fuels-based facilities would lock-in investments in technologies of the past for decades and lead to the creation of stranded assets. Instead, we need to invest in the future efficient energy system which will bring multiple economic, environmental and social benefits.

Dear Members, ahead of the vote in Plenary, we urge you to support an ERDF and CF Regulation which envisages a smarter, climate neutral, energy and resource efficient society for the common good of European citizens and businesses.

We remain at your disposal for further discussion on this strategic topic.

Yours sincerely,

Harry Verhaar

Chairman of the Board of Director of the European Alliance to Save Energy (EU-ASE)

Head of Global Public and Government Affairs, Philips/Signify

For more information, our position papers “A climate-proof  budget to drive the EU clean energy transition to a low carbon economy” (released in March 2018) and a “A climate-proof budget to leverage the necessary investments to deliver the Paris Agreement” (released in November 2018) outline in greater detail our views and calls for a full application of the Energy Efficiency First principle, increased climate mainstreaming and improved climate proofing in the MFF post-2020

[1] Reflection Paper on a Sustainable Europe by 2030. European Commission, 2019.

To the kind attention of Ms Grațiela-Leocadia Gavrilescu

Vice Prime Minister, Minister of the Environment of the Government of Romania

Cc ENVI Council Members of the 28 Member States of the European Union

Dear Vice Prime Minister Gavrilescu,

I am writing to you on behalf of the European Alliance to Save Energy (EU-ASE). We are a multi-sectoral business organisation whose members operate across the 28 Member States of the European Union, with an aggregated annual turnover of €115 bn, directly employing 340.000 people in Europe.

The Alliance creates an outreach platform for our companies (Danfoss, Knauf Insulation, Schneider Electric, Saint-Gobain, Siemens, Signify, and Veolia) towards politicians and thought leaders to ensure the voice of energy efficiency is heard from across the business and political community.

Below we summarized our reactions to and recommendations on the European Commission’s communication A Clean Planet For All. More information on our views concerning the EU long term energy and climate strategy are available in the position paper “Energy Efficiency accelerating the shift to a decarbonised Europe”.

• We welcome the European Commission’s vision and we share the sense of urgency to tackle climate change it vehiculates.
• We support the objective of net–zero emissions by 2050 in order to limit the temperature rise to 1.5 °C and align the Paris Agreement objectives.

According to the latest science as spelled out in the IPCC special report,  global emissions must fall to net-zero as early as possible if we are to prevent economic, environmental and human losses that would stem from the temperature increase above 1.5 °C.[1]

• We call upon European leaders to agree on net-zero emissions by 2050 without further delays.

The European Commission communication clearly demonstrated the transition to net-zero emissions is an economic opportunity that Europe should not miss. An EU-wide strategy for climate neutrality can unleash innovation and investment streams in the short and medium term while safeguarding the future of the planet. We need to act fast. As the Commission has acknowledged the current 2030 targets are not sufficient to be in line with the Paris Agreement objectives.  Therefore, in a 2030 perspective, we need to step up those targets to boost our efforts in terms of policies and investments. This way the EU will continue to prove its global leadership in curbing emissions and reinforcing the business, social and environmental case for climate-change mitigation.

• We strongly endorse the call of the European Commission for energy efficiency to play a central role in reaching net-zero emissions by 2050

Integrating the Energy Efficiency First principle in the long-term EU energy and climate strategy becomes even more urgent if we consider that 76% of EU GHG emissions cuts needed to achieve the Paris Agreement objectives can come from energy efficiency improvements, in particular in sectors with high potential.[2]

Energy efficiency is by far the most cost-effective way to reduce emissions . Yet, when presenting the cost of energy efficiency in the policy scenarios, the European Commission used in its modelling exercise a high 10% discount rate that made the investments look less attractive, while the discount rates applied by Member States across the EU usually range between of 4 to 5.7%.  Lowering the discount rate used for modeling purpose would  help to promote investments necessary to halve the energy consumption needs by 2050 (as compared to 2005) as announced by the Commission in the LTS.

• We believe that Energy Efficiency First should be considered as a basis of the European long term strategy and the main driver of the transformation towards a fossil–free energy system.

According to the EU’s Governance of the Energy Union Regulation, “Energy Efficiency First” means assessing the potential of energy efficiency in all decision related to energy use. In practice this is about systematically comparing the added value of energy efficiency measures and carbon-neutral energy supply solutions, taking account of benefits such as job creation, economic growth, energy security, improved air quality, and climate mitigation. The Energy Efficiency First principle boils down to making informed choices to invest taxpayers’ money in cost-effective measures. We need to avoid investments in infrastructures that are incompatible with the net-zero ambition and could thus lead to the creation of stranded assets.

• We welcome the call for higher buildings’ renovation rates and the recognition of the role that digitalisation and near zero-emissions buildings will play in the transition.

While it is well established that buildings sector  (both the residential and service sectors) will play a crucial role in the reduction of the final energy consumption, the modelled renovation rates in the LTS are not capturing its full potential. The Communication assumes a timid 1.8% yearly renovation rate, which will not be sufficient to achieve the needed transformation of the building stock – 97% of which is still remaining energy inefficient.

We, therefore, urge European leaders to back deep staged renovation of the European building stock and aim to increase the retrofit rate to at least 3% per year. Highly efficient and resilient buildings will also help accelerate the integration of renewables into a flexible and consumer centered energy system.

• We are convinced that the transition is feasible because:

1. Reliable and tested technologies exist and are ready to be deployed at scale and across sectors;
2. The legislative framework is in place and must be implemented in an ambitious and forward-looking manner;
3. Innovative financing mechanisms are available and together with public resources can help mobilize private investments in areas with high mitigation potential.

• We are eager to work together with citizens and decision-makers to support a just transition

A just transition, as spelled out during the COP24, will foster sustainable growth through innovation, knowledge transfer and development of new skills, each of these contributing to the prosperity, health and well-being of Europe’s citizens.

The process to achieve a climate neutral Europe is an opportunity to design an energy transition path that will benefit citizens, businesses and the environment. The European Alliance to Save Energy wants to be part of that process and accompany stakeholders in the definition of the most adequate and enabling policy framework there is.

We encourage you and your colleagues, as a political leaders to endorse the Commission’s strategic vision and notably its ambition of EU climate neutrality by 2050 at the latest.

We wish you a fruitful meeting and remain at your disposition for further discussion on this strategic topic.

We remain at your disposal for further discussion on this important topic.

Yours sincerely,

Monica Frassoni

[1] Keeping global warming to a 1.5°C rather than a 2°C rise will save an estimated €17 trillion in world GDP, according to research by Stanford University.

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