How Energy Efficiency Can Break Europe’s Gas Addiction – The European Sting – Critical News & Insights on European Politics, Economy, Foreign Affairs, Business & Technology
This article is brought to you through The European Sting’s collaboration with the World Economic Forum.
Author: Philippe Delorme, Executive Vice-President and General Manager, European Operations, Schneider Electric
- The new REPowerEU plan tries to reconcile the need to reduce dependence on Russian gas with European climate objectives.
- Yet more can be done to maximize energy efficiency in buildings and industry.
- Digitization, electrification, decentralization and better building from scratch must be priorities.
In early April, a landmark UN report warned that if we are to avoid an environmental catastrophe, it is a matter of acting “now or never”.
Even under favorable economic conditions, scientists struggle to persuade policy makers to act on climate change. But conditions are now far from positive. Soaring inflation, tangled supply chains and energy price shocks have heightened the political temptation to delay climate action. And all of these factors have been aggravated by the situation in Ukraine.
This temptation is particularly felt in the European Union: Russian imports represent nearly 25% of the EU’s energy needs. It is therefore not surprising that, as the EU strives to reduce its dependence on Russian gas, several Member States have begun to rely more on energy sources such as coal to compensate for the shortages result.
In the short term, such measures may perhaps be tolerated as a form of crisis management. But they go completely against the net zero ambitions of the European Green Deal.
REPowerEU: a framework for climate progress
In an effort to reconcile this tension, the European Commission published its REPowerEU plan in May: a series of policies designed to end the bloc’s dependence on Russian fossil fuels, while accelerating the green transition. It is about diversifying gas supplies, increasing the use of renewable energies and saving more energy.
From a clean energy perspective, there’s a lot to like about REPowerEU. The priority given to policies such as the EU’s solar energy strategy is particularly encouraging.
But when it comes to saving energy, more can be done to inspire consumers to embrace digital technologies that maximize energy efficiency, minimize waste and ensure we get the most out of what we do. produce.
So what might such a political approach look like?
To help regulators understand what additional concrete steps they can take to strengthen the REPowerEU proposals, we have published a set of 10 recommendations, centered around four key themes:
1. Digitization as a way to increase energy efficiency: the best watt is the negawatt
In terms of energy saving, the fastest gains can be achieved by increasing the use of digital energy efficiency tools, both in buildings (with monitoring and control technologies) and in industry ( with energy management systems).
According to the European Commission, gas imports can be reduced by 2.6% for each additional 1% of energy savings. Therefore, we estimate that by adopting technologies to maximize consumption efficiency, buildings and industry can save approximately 46 and 17 billion cubic meters (bcm) of gas imports annually respectively. In 2021, EU natural gas consumption amounted to 412 billion m3, of which 155 billion m3 came from Russia. This means that buildings can only save the equivalent of 29.7% of annual imports from Russia.
To encourage more widespread adoption of these tools, we recommend that EU regulators build into the REPowerEU plan a combination of new legal mandates – including reforming the Energy Performance in Buildings Directive (EPBD) – and incentives additional costs, such as the introduction of tax breaks on smart meters.
2. Electrification: less carbon emissions and more energy efficiency
The electrification of heating in buildings and industry (today still heavily dependent on the combustion of gas or oil) will be just as crucial.
Electricity is a cleaner form of energy than burning oil or gas and, with heat pumps and other technologies already available, research indicates that the EU can increase electricity consumption for heating process by about 7% to 90% in the case of buildings, and by 30% to 78% in the case of industry.
In addition, electric devices are much more efficient than gasoline-powered ones: the performance of an electric motor is 3 times more efficient than that of a gasoline engine. And, of course, electrification also means reducing air pollution from burning fossil fuels.
Again, EU policymakers can do more to encourage consumers and other end users to electrify heating. This can be achieved, for example, by reducing the costs associated with installing a smart heat pump.
Almost a quarter of Europe’s current energy needs are met by Russian sources Image: Eurostat
3. Decentralization: flexibility, resilience and renewable energies
We also recommend that EU regulators take proactive steps to decentralize our energy system. This can be done by encouraging the adoption of new technologies related to rooftop solar panels, demand-side flexibility, micro-grids and smart electric vehicle (EV) charging.
Although the REPowerEU plan makes positive proposals on these issues, we believe that they should be a much higher priority at European and national level. Again, a mix of new regulatory obligations, tax incentives, and planning exemptions can drive demand-side adoption of these technologies.
4. Build from the start: optimize energy use
Finally, instead of retrofitting to compensate for past inefficiencies, we need to build better from the ground up, leveraging digital tools to guide the design of new buildings for maximum energy efficiency.
Our research indicates that by adopting the right efficiency tools from the outset, the EU can, by 2030, increase energy savings by 20-30% in new commercial buildings and 50% in new residential buildings. An ambitious overhaul of the EPBD will be fundamental in this process.
REPowerEU and energy efficiency: time to act
The situation in Ukraine and the energy supply shocks show how important it is to accelerate the EU’s transition to a safer and cleaner energy future.
It can be done. Recall how Japan quickly achieved large-scale structural transformation. In the decade following the Fukushima nuclear disaster, the country has reduced the share of electricity generated by nuclear power from a third in 2011 to less than 4% today. Saving energy, improving efficiency and increasing the use of renewable energy have proven to be crucial to making this transition a success.
What is the World Economic Forum doing about the clean energy transition?
The clean energy shift is key to tackling climate change, but over the past five years the energy transition has stalled.
Energy consumption and production contribute two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago. Additionally, improvements in the energy intensity of the global economy (the amount of energy used per unit of economic activity) are slowing. In 2018, energy intensity improved by 1.2%, the slowest rate since 2010.
Effective policies, private sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing the energy transition is the lack of preparedness of the world’s largest emitters, including the United States, China, India and Russia. The 10 countries with the highest score in terms of preparedness account for only 2.6% of annual global emissions.
To future-proof the global energy system, the Forum’s Shaping the Future of Energy and Materials platform works on initiatives such as systemic efficiency, innovation and clean energy and the Global Battery Alliance to encourage and enable innovative energy investments, technologies and solutions.
Additionally, the Mission Possible Platform (MPP) works to bring together public and private partners to drive industry transition to put the heavy industry and mobility sectors on a path to net zero emissions. . MPP is an initiative created by the World Economic Forum and the Commission for Energy Transitions.
Is your organization interested in working with the World Economic Forum? Learn more here.
Europe now has the opportunity to boost its own energy transition, while improving its long-term competitiveness and creating a greener and more sustainable future for its citizens.
We can’t wait any longer. The clock is turning.
• Read Schneider Electric’s white paper in response to REPowerEU here.