Securing Energy Efficiency to Secure the Energy Union: How Energy Efficiency meets the EU Climate and Energy Goals

Author: 
Yamina SAHEB
Heinz OSSENBRINK
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In line with the Energy Union strategy, the EU 2030 climate and energy policy framework sees energy saving as Europe’s first fuel in 2030. Making energy efficiency the mechanism for delivering moderation of demand will enable the EU to meet its objectives in terms of security of supply, climate change, jobs, growth and competitiveness.
The decarbonisation of the EU energy system is under way. Energy-related greenhouse gas (GHG) emissions fell by 19% between 1990 and 2013. The power generation and energy-intensive industries covered by the EU Emissions Trading Scheme (ETS) are responsible for 45 % of total EU GHG emissions and for 23 % of the emissions reduction achieved between 2005 and 2013. The end-use sectors, such as buildings and transport, covered by the Effort-Sharing Decision (ESD) contributed 13 % of emissions reduction over the same period.
Emissions reduction in the EU is a result of economic restructuring, the economic crisis and the EU 2020 climate and energy policy package. With the post-2020 climate and policy package, the Energy Union is seeking to develop a more reliable and transparent governance system. Reporting on progress towards climate and energy targets will be streamlined through integrated national energy and climate plans. Indicators will be developed to ensure consistency and better interaction between the various climate and energy policy instruments.
For decarbonisation to be made cost-neutral, a strong signal is required from the 2015 Paris Climate Summit (COP21) – giving a value to the carbon saved by pricing GHG emissions, so that energy saving become the niche fuel for investors. At EU level, a framework for “De-risking Energy Efficiency Investments (DEEI)” is needed to ensure that energy saving compete on equal terms with generation capacity. The framework should include setting-up guarantees for loans related to energy efficiency investments; this would lower capital cost by reducing investors’ perceived risk. Cost/benefit analysis of energy efficiency investments should consider using “Levelised Cost of Conserved Energy (LCCE)”, as a financial metric given that this metric allows for risk and basic rate components to be separated. The aim is to make mitigation of the risk premium related to energy efficiency investments possible via the DEEI framework.

https://e3p.jrc.ec.europa.eu/publications/securing-energy-efficiency-secure-energy-union-how-energy-efficiency-meets-eu-climate
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