Energy efficiency in Europe has been saved
Energy efficiency in Europe
The levers to deliver the potential
Energy is at the heart of the European economy; the EU consumes 11% of global energy, importing more than 50% at a cost of more than EUR 400 billion per year. Energy efficiency could cut this dependence and this cost, but is not delivering on its promise.
Energy efficiency is a key component of any 21st century energy policy, and is crucial to meet climate change targets, particularly those agreed at the December 2015 COP21 summit in Paris. Currently, however, the EU is unlikely to meet its 2020 target of improving energy efficiency by 20% (primary energy savings are projected to reach only 17.6% by 2020), and needs to be even more ambitious if it is to become a low-carbon economy by 2050. The potential is really significant, but remains to a large extent untapped.
There are many reasons:
- Energy efficiency potential tends to be spread over many small-scale savings; mobilizing them is complex;
- Policymakers are not necessarily picking those indicators and targets which will stimulate use of the most cost-effective measures;
- Users do not have access to the right or enough information thus, they lack the motivation to change their behavior or make the best investments;
- The building sector, which has the largest potential for major gains in energy efficiency, suffers from perverse incentives: landlords have no interest in investing for the sake of tenants, and tenants do not want to invest when they will not get the long-term benefits; and
- The market is failing to send the right price signals, making it hard to raise the capital to invest in energy efficiency, particularly in a difficult economic climate.
This study's aim
This study aims to identify the main levers for public authorities, private companies and households which could help to better unleash the untapped technical and economic potential of energy efficiency in Europe.
The solution will lie in a complex set of many different measures. We have grouped the key findings of this study into six main lines of action that need to be tackled to better unleash the untapped potential behind energy efficiency:
- Define and implement appropriate indicators and targets
- Promote product standards and labels
- Focus on buildings
- Mobilize retail consumers
- Send the right price signals
- Facilitate financing of energy efficiency measures
This study is based on Deloitte’s in-house expertise, bibliographical analyses, and consultation of several key European companies and industry associations.
An Irish perspective
Like our EU counterparts, energy efficiency will be central to the Irish energy transition.
Ireland has national a target of a 20% improvement in energy efficiency by 2020. Significant progress has been made to date - energy efficiency savings equalling to about half of this target have been achieved. 300,000 homes as well as 3,500 businesses and public sector bodies have implemented energy efficiency measures that are saving them an estimated €700 million annually1.
However, accelerated efforts will be required to fully realise our 2020 target and reap the associated economic benefits. Approximately 75,000 homes and businesses will need to be upgraded for improved energy efficiency every year between now and 2020, with this figure being reduced if more extensive retrofits are carried out. Efficiency improvements are also required in vehicle stocks, large industry, public sector and SMEs.
Research commissioned by the SEAI shows that there is potential to deliver benefits, including total savings of 7.6 million tonnes of CO2 and over €2.4 billion annually in reduced energy bills, should the 2020 energy efficiency target be achieved.
The action points suggested in this study, if correctly implemented, could potentially make significant contributions towards Irish and European energy efficiency achieving its full potential.
From a positive perspective, the Irish Government has already committed to the introduction of numerous energy efficiency measures recommended in this study, such as the rollout of new technologies like smart meters and mobile connectivity, which will allow Irish citizens to boost energy efficiency and save money by managing their energy use. In addition to increased engagement with local government on advising consumers on energy efficiency initiatives, the Government has also committed to reducing the barriers to the installation of energy efficiency systems in homes, businesses and public places, by introducing affordable financing options2.
The key is to rapidly move from Government commitment to delivery of the various energy efficiency measures across the residential and commercial sectors.
1 “Ireland’s Energy Targets - Progress, Ambition & Impacts”, SEAI. April 2016
2 “Ireland’s Transition to a Low Carbon Energy Future 2015-2030”, Department of Communications, Energy & Natural Resources. Available here