EU Energy Efficiency: Overlooked And Undervalued
BMI View: Energy efficiency measures will play a more important role in European energy policy as the continent moves to reduce its reliance on imported hydrocarbons from Russia. Although we believe energy efficiency has thus far been relatively overlooked as a component of European energy policy, and proposed 2030 efficiency targets could be more ambitious, there are indications that the European Commission (EC) is taking efficiency more seriously - galvanised by the crisis in Ukraine.
We emphasise that energy efficiency is an element of Europe's 20'20'20 climate package that warrants closer attention. Although Europe will hit its 2020 emissions and renewable energy consumption targets, efficiency savings will likely only reduce energy demand by 18-19% by 2020 (missing the 20% target). In this context, we believe the EC's decision to launch legal proceedings against member states that have not enforced energy efficiency directives is an acknowledgement of a missed opportunity. The fact that 24 of the 28 EU member states are now subject to legal action shows how little emphasis there has been on efficiency savings.
We believe one outcome of the decision to launch legal action is that EU members may now focus more heavily on 2030 efficiency targets, which were announced at the end of July, and propose reducing energy use in Europe by 30% by 2030 (based on projections made in 2007). While this target is in many regards a compromise between member states, it does send a positive signal to investors in efficiency technology and is a longer-term statement of the EU's intentions.