ECEEE says EU should focus on reducing costs of energy efficiency

11th June, 2013

A discussion paper on competitiveness and energy efficiency published by eceee today argues that the EU debate wrongly focuses on high energy prices rather than looking at strategies for getting the costs down. The paper explores how energy efficiency is the most powerful and quickest way to cut the energy costs of European businesses, and thereby boosting their competitiveness.

The discussion paper published by eceee, the European Council for an Energy Efficient Economy, is entitled “European competitiveness and energy efficiency: Focusing on the real issue”.

The eceee paper points out the simple fact that energy prices are not necessarily the cause of high costs. Application of energy efficiency reduces the volume of energy used and since costs are the product of price and volume, energy efficiency mitigates accordingly the disadvantage that higher prices may have.

“It is well documented both in European studies and in those of the International Energy Agency that there is a huge potential for cost-efficient reduction of energy use even in the short term and even with existing technologies”, says Nils Borg, Executive Director of eceee. So, the first response to high costs (in particular when they are induced by high prices) should be vigorous application of energy efficiency.
It should be remembered that when industries in different parts of the world compete, energy price is only one component and production factor. Still, looking only at the energy supply companies in various parts of the world, they also have to face generation and distribution problems with e.g. black-outs and risks for disturbances from external factors, in addition to increasing environmental constraints. A higher price for the input of energy can and almost invariably will be offset by higher security of supply and less exposure to risks the paper argues.

“Competitiveness is to a considerable degree an issue of quality rather than of price for the products”, says Hans Nilsson, Swedish energy efficiency expert and an eceee board member. “European industry should not primarily compete with low-priced products. Focusing on price competition rather than innovation and high quality when Europe tries to get out of a long and deep financial crisis might be the worst thing that our governments could do to their industry.”

Energy efficiency will work in a number of important ways to boost the competitiveness of Europe. It will (A) in the short term, help solve the cost problems; and (B) in the longer term, it will lay the foundation for innovation and establishment of a new and invigorated industry for both sustainable energy services and for high quality products for rapidly changing domestic and global markets, the paper argues.

In addition to and as a consequence of these investments in energy efficiency, (C) the improved labour productivity, increased competitiveness and larger market shares will lead to higher economic growth, lower public sector payments for unemployment benefits, and higher net VAT and income tax receipts.

The paper lays out a strategic framework for increasing the competitiveness of Europe:

  • Map out and harvest the existing cost-effective potential for energy efficiency, based on life-cycle costing analysis. This will reduce the bills and costs for energy for enterprises as well as individual consumers, and take the pressure off the problem of import dependency and uncertainty about future price increases;

  • Develop the methodology for implementation of energy efficiency in programmes that encourage new business models, smarter systems and a more holistic approach in dealing with the market and the customers. Behavioural economics is a key element;

  • In this process to ensure that technologies and applications for appliances, equipment design engineering, and systems development are put in place and made fit for penetrating global markets while meeting domestic market needs. European industry strengthens its role as leaders, both regarding innovation, and understanding the needs of the users of the services provided by energy and energy-related products;

  • Fine-tune these activities for a roll out of distributed generation with renewables in smart grids, as well as full regard to passive technologies;

  • Position Europe as a market leader in sustainable energy and resource efficiency for the long haul.

Download the paper (pdf)

For further information.
Nils Borg, eceee Executive Director: +46 70 585 31 74
nils@eceee.org

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