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A BUSINESS PLEA FOR A STRONG 2030 ENERGY AND CLIMATE DEAL

CEO of the ROCKWOOL Group, Eelco van Heel posted a comment on the business web site BusinessGreen.com 21 October 2014 where he calls for the European Council to show leadership and approve on an ambitious energy savings target this week.


As a leading global insulation company based in Denmark, making most of our income by providing solutions to save energy, we are saddened to realise that most of our growth opportunities are now placed outside the EU. Despite the huge untapped energy savings potential in the EU, our latest investments in new insulation factories or acquisitions of insulation activities have taken place in China, India, Russia, and the US.

On October 23-24, European Heads of State or Government will take a landmark decision on Europe's energy future when they vote, amongst other things, on the ambition level for energy efficiency improvements for the coming decade. This decision will not only shape the future prosperity of European citizens and the growth potential of businesses like ours in Europe, but it will also determine Europe's ability to deal with future geo-political energy shocks.

There is broad acknowledgement that energy efficiency is one of the most important tools we have to tackle climate change. Energy efficiency is also known to be a highly effective way to stimulate economic growth and create new jobs. However, it seems there is a lack of real understanding and commitment to move from empty words on the subject to real action.

Last month, the International Energy Agency concluded that "the uptake of economically viable energy efficiency investments has the potential to boost cumulative economic output through 2035 by $18tr" – a sum larger than the current size of the economies of the US, Canada, and Mexico combined.

The up-front costs of improving energy efficiency are repeatedly claimed to be too high. But the often unmeasured co-benefits from energy efficiency for society in the form of reduced emissions, improved health and productivity, and reduced fuel poverty are huge, far outweighing the costs.

Up-front costs also pale in comparison with the investments needed to build the new energy supply infrastructure Europe would need if rapidly growing energy demand is not tamed by significant energy efficiency improvements, and as existing infrastructure expires.
Over 80 per cent of the global energy savings potential in buildings will remain untapped unless the world's policy-makers step up efforts to exploit it – which means taking proper account of the multitude of co-benefits from energy efficiency. Not capitalising on this 80 per cent would mean wasting not only the world's limited resources, but also mismanaging our public money.

This July, the European Commission proposed a new energy savings target of a meagre 30 per cent by 2030 compared to projections for future energy use. This was despite its own impact assessment showing that 40 per cent savings are feasible and will deliver many more benefits in terms of greenhouse gas emissions reduction, jobs, energy security and improved competitiveness than a 30 per cent savings target would. While a 40 per cent energy savings target could deliver 4.5 per cent annual growth in GDP by 2030, the analysis shows that a 30 per cent target would only deliver one per cent GDP growth.

On energy security, a recent European Commission analysis shows that for every one per cent increase in energy savings above 25 per cent, EU gas imports would be reduced by 2.6 per cent. This calculation further underlines the significant energy security benefits a 40 per cent energy savings target can deliver.

We know that ambition makes a difference. In the EU, the 2020 target for energy savings has helped create a market for more efficient buildings that has put the EU at the forefront of green building technology, and enabled businesses to viably invest in green technology. It has allowed many European businesses to become sector leaders. However, other countries are catching up fast. India and China, for example, are now world leaders in efficient cement production, and Japan and South Korea have implemented the most comprehensive energy efficiency programs for industry to date.

Today, Europe is still a leader on energy efficiency in buildings. But if the EU leaders in their final vote on October 23-24 fail to raise the bar and set out a clear and ambitious energy savings target for 2030, it will be a huge missed opportunity to create new business for organisations like ours. It will leave unrealised many investments that would increase economic growth, provide new jobs, improve our competitiveness, reduce import dependency and fight climate change.

To us, a binding target of 40 per cent energy savings by 2030 makes business sense. And it is a prerequisite for Europe to have a chance of retaining its leadership position in energy efficiency in the global marketplace.

Read the comment on the BusinessGreen website (subscription needed)

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