New energy efficiency directive creates growth

The new energy efficiency directive secures a market for energy efficiency solutions in Europe by creating a demand for investments of a total value of 640bn euro in the EU. The investments have a short payback time and high rate of return.

The long awaited EU Directive for Energy Efficiency seems to be finalized in the last weeks of the Danish Presidency of the Council of the EU. Although the initial objectives of the directive should not be fully met, the directive will open a potential for growth in energy efficiency technology development, advice and renovation of about 640bn euro in the EU up to 2020, shows the Danish Energy Association’s assessment.

“The economic crisis is the most urgent problem for the European Union. The best available solution should be given the utmost priority by the European political leaders to boost economic growth. We therefore warmly welcome the new energy efficiency directive. It is a very concrete proposal for creating growth in Europe.” says Ulrich Bang, Director of European Affairs of the Danish Energy Association.

Many diffuse numbers and thoughts on the growth effect have been mentioned in the public debate. The Danish Energy Association has made an assessment of the growth effect based on the final text.
 
“Our analysis shows that about half of the total market for energy efficiency in Europe of 640bn euro is in high-skilled energy efficiency technology development and advice. European companies currently hold a market share of 70 % of this market within Europe. The other half is blue-collar installation and renovation work, for which the market is almost completely covered by European SMEs. Therefore the directive is not just hot air – it will actually boost the European economy”, Ulrich Bang continues.

Investments in energy efficiency deliver a return by reducing energy costs. They should be seen as investments with a positive rate of return and reduces the EU dependency on energy imports outside the EU.

The agreement of the new EU Directive will not take the EU the whole way to reach the 20 % energy efficiency target as was the original target as part of the 20-20-20 framework of Energy and Climate. The directive will deliver about 15% of the 2020 target. However, the Directive contains a binding energy saving commitment of all EU energy companies at 1.5 percent. This target is the back-bone of the directive and will deliver the vast majority of the savings – 70% according to the assessment by the Danish Energy Association. It will most likely force the European Energy sector to be innovative and also focus selling energy efficiency services and not just more energy, as we have seen in e.g. Denmark. Denmark is one of the model countries of the energy efficiency obligation scheme which will now become EU law.

“The directive would have been more ambitious, if the original goal was reached from the Commission proposal. It is, however, a good result for the whole EU. The Energy Efficiency Directive is in my eyes an excellent example of how to pursue an active growth policy for the EU and enhance our competitiveness compared to other regions. The EU legislation can furthermore contribute to make the EU a world leader on the global market for energy efficient equipment and technology by a first mover advantage. We are therefore pleased with the outcome and future growth effects of the EU Directive, says Ulrich Bang on a final note.


THE EU MARKET FOR ENERGY EFFICIENCY FOLLOWING THE ADOPTION OF THE EED

Analysis carried out by the Danish Energy Association