Europe is on the brink of missing a huge opportunity to put its industry and economy back on their feet by not fully considering energy efficiency investments, argues Hans Korteweg.
Europe has invested many efforts in developing and deploying clean energy over the past two decades.
Wind farms have popped up in every country, solar panels are decorating roofs and electric vehicles have become a regular feature on European roads.
These efforts need to be seriously stepped up over the next three decades to reach a net-zero emissions energy system by 2050 as stipulated in the Paris Agreement. Therefore, the European Union is coming up with the Green Deal, a large package to speed up the decarbonisation of Europe.
This Green Deal and the accompanying COVID-19 recovery plan require the right focus and sufficient implementation means if they intend to be game-changers towards a more sustainable energy system.
First and foremost, enhancing efficiency across the entire energy system is key. This means coupling decreasing energy consumption to more efficient generation and transport of heat and electricity.
It is not sufficient to put more renewable fuels in the energy system. It is as important to use them in the most efficient and cost-effective way. One answer is to prioritise the use of renewable fuels in a combined heat and power mode.
A combined heat and power unit can reach efficiencies of more than 90%, meaning that more than 90% of the fuel is transformed into useful energy. The production of heat and power in a separate power plant and boiler is 15-40% less efficient.
By prioritising the use of renewable fuels in combined heat and power mode, we maximise their potential and speed up the switch from fossil to renewable.
The Energy Efficiency First principle has been an important guiding line in shaping European energy legislation over the last decade. However, this principle has been inconsistently applied in different legislative pieces and poorly implemented by European countries.
Energy efficiency warning
As a result, Europe is about to miss its target of improving energy efficiency by 20% by 2020 completely. Latest data indicates that the primary energy consumption was 5.8% above the 2020 targets in 2018, whereas the final energy consumption was 3.5% above those targets.
The European Commission has repeatedly warned that energy efficiency efforts must be intensified to achieve the EU targets and Europe’s commitments under the Paris Agreement. This has been echoed by the International Energy Agency, which stresses in its World Energy Outlook 2019 Report that energy efficiency progress has slowed down.
A good example is the untapped potential for energy efficiency improvements in small and medium enterprises. The EU Strategy on Heating and Cooling, published in 2016, states that SMEs have a considerable energy demand.
Yet energy efficiency measures are not on their radar, often due to a lack of resources and access to financing. The provisions of the European Energy Efficiency Directive offer a tool for European members states to determine the best ways to decarbonise heating and cooling in the domestic, commercial and industrial sectors.
Nevertheless, countries seem not to make full use of this tool as they often lack astable environment for investments in energy-efficient solutions.
Similarly, combined heat and power is being treated inconsistently. Despite being supported by EU legislation and the European Investment Bank, its potential is omitted in other important European initiatives.
In the Sustainable Finance Initiative, Regional Development and Cohesion Funds and the recently-established Just Transition Fund, there is no support for combined heat and power, or CHP faces different requirements than in other legislative pieces.
This prevents enterprises and public buildings from investing in modernising their energy installations and improving their energy efficiency.
In light of the COVID-19 crisis, Europe is on the brink of missing a huge opportunity to put its industry and economy back on their feet by not fully considering energy efficiency investments.
Another essential condition to make the Green Deal work is to step away from a pure electrification perspective. Electrifying parts of the energy system and decarbonising electricity supply will bring us far on the net-zero pathway.
However, several energy segments, such as high-temperature heat, cannot be electrified cost-effectively. Furthermore, storing large amounts of electricity over a period of several months is an incredibly technical challenge and economically not viable.
We need a broader focus on decarbonisation, a focus that encompasses both electrification and more renewable fuels. Therefore, accelerating the uptake of renewable fuels such as hydrogen and biofuels should be a key priority. An ambitious EU Hydrogen Strategy should be on equal footing with electrification.
Electrification and the development of renewable fuels are not a zero-sum game. They are reinforcing each other. As wind and solar power are intermittent, they require a green and reliable back-up when there is insufficient wind and sun. More wind and sun means a greater need for renewable fuels to guarantee a constant supply of energy. That back-up should be provided by the most efficient and cost-effective solutions. Electrification, renewables and energy efficiency are a winning combination for the energy transition. Each pillar deserves the appropriate attention in designing and implementing the Green Deal.
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These three pillars come together as well in the intended renovation wave for Europe. Europe’s building stock currently represents more than 30% of emissions and energy consumption in Europe. More than 75% of buildings are inefficient due to a leaky building envelope, the use of old and inefficient heating systems or both.
In addition, it is predicted that 90% of the existing building stock will still be standing by 2050. The renovation rate in Europe is dramatically lagging behind Europe’sclimate ambitions. The COVID-19 recovery plan should be tailored towards giving a boost to building renovation.
It will be of paramount importance to combine improved insulation with more efficient heating and cooling systems running on renewables. Furthermore, buildings and districts are ideal places to integrate different decarbonisation solutions.
District heating, solar panels, heat pumps, electric vehicle charging points, combined heat and power systems all come together at household and community level. They will enable each other, providing a secure, green and affordable energy system at local level. It will empower citizens and strengthen their energy independence.
The European Green Deal has the potential to put Europe on a decarbonisation fast track spurred by accompanying funds from the COVID-19 recovery package. The Green Deal package and its files have to ensure that a broad approach is taken to maximise its impact and fulfil Europe’scommitments under the Paris Agreement.
Improving efficiency in all segments of the energy system will play a crucial role. Moreover, there should be a level playing field between different decarbonisation solutions. Citizens, communities and businesses should have the opportunity to pick the solution(s) which fit their needs.
Only when all pieces can be put together will Europe be able to complete the decarbonisation puzzle by 2050 for a net zero emissions economy and society.