Adrian Joyce is the secretary-general of EuroACE, an umbrella organisation representing manufacturers of energy-efficiency-related products and services.
He was speaking to EurActiv's Ana-Maria Tolbaru.
Does the Energy Efficiency Directive bring a big change to the market?
For our market the Energy Efficiency Directive is potentially very important. And it is not in Article 6 [the 1.5% cumulative annual energy savings imposed on energy companies] that it is important, it is in the article on long-term strategies for building renovations - the roadmaps, although this word is not in the directive.
The directive is a huge opportunity for our sector. If these strategies are properly formulated, with a proper time horizon and with proper policies and measures, with milestones along the way, then the certainty we have been calling for our sector will be built into those strategies.
Is there a link between the 1.5% cumulative annual energy savings imposed on power utilities and the long-term strategies for building renovations?
Of course there's a link. But we don't see the long-term refurbishment strategies as reliant on the article for power utilities. We know that those strategies which should have a time horizon of 2050 should lead to an increase in the renovation rate across Europe as a whole, with about 3%, twice the current rate. So, yes, the potential of the directive is a huge to boost the local industries and jobs.
We need to ramp up. We would expect in 2020 to be at a 3% and then maintain it right through 2050. Today you have a renovation rate in Europe at around 1.2% and we don't know how good those renovations are from an efficiency point of view. We would like to see that the 3% is a real rate in 2020 and that it is fitting in with intermediate voluntary targets, for achieving a reduction of energy demand from the available stock. That leads by 2050 to an 80% reduction of today's consumption.
Is the policy now enough to trigger the investment industry needs for energy efficiency improvements?
It depends on the wisdom of member states and how good the strategies are that they put in place. And we have noticed that from the Buildings Under the Microscope study [of the Buildings Performance Institute Europe think tank] in just six member states you have about 75% of all buildings. If those member states get it right, we will already be largely on track to achieve our energy savings targets. Those countries are the UK, France, Germany, Poland, Spain and Italy. If those countries get it right, the spillover on the 21 countries will be significant, it will see the whole continent come forward with the right strategies.
How has energy efficiency in buildings become more popular?
It has got to be a combination of factors. Maybe this includes the willingness of the construction sector to step forward and say, 'We are willing to take this challenge up, we believe we can do it, given the right conditions'. The second is the increased concern about energy security and price and scarcity in the future - and resource efficiency is a very important issue for Europe. There must be a realisation that yes, there has to be a societal shift, so that means engaging building and home owners into something seen as overall progress in the EU.
Another element is that politicians are beginning to see it not as spending, but as an investment, and when you invest in energy efficiency, national budgets get a good payback in a relatively short space of time. But also the other benefits such as those health-related, plus the increased productivity are significant. I am happy to see there is a shift away from talking strictly about the payback and more about a series of benefits, such as greater comfort, greater health, greater productivity, greater general well-being, which results from properly renovated buildings.
Have you seen such a shift to energy efficiency in buildings since you have worked in this field?
I have been working in Brussels on energy efficiency in buildings since 2003, after having already written my dissertation on it. But obviously no, I haven't seen such a shift before - because of the Energy Efficiency Directive, but over this period of time, we have seen steps along the way.
For the building sector, of course, the first big step was the Energy Performance of Buildings Directive in 2002 and when we followed that up with the 20-20-20 targets, that was a big change in mindset at the EU level. The fact that member states committed to these linked 20-20-20 targets was a big shift. But I would say that in the energy efficiency of buildings, we have been disappointed with progress, because it has been known for 10 or more years that this is a very big area for action and only now we are seeing happen. So, yes, you can say it has been a big step in the past nine months, but it has been a hard fought battle for this result.
Would you say this has been the year of energy efficiency in buildings?
Yes, we are about to see the dawn of a new era in energy efficiency in existing buildings and when you add that on top of the requirement for all new buildings to be nearly zero-energy buildings by 2021, we can see that the next decade is going to be a huge transformation.
But it is a transformation that started with a report back in 1997 with a report by DG Enterprise on the competitiveness of the construction sector. This momentum has not come out over night, it has been building up for over 15 years now, despite the fact that it seems to have come back quickly in the past six months. It's like any movie star who breaks onto the scene. Usually you find there have been 15 years, at least, of work behind that. It is the same with the energy efficiency system, we have been working hard to get the successes we have seen this year. But a very important thing we have to ensure: when we talk about 2030 targets, we must also talk about energy efficiency targets for 2030, not only renewables targets. We must seize this momentum, because if we don't, we are going to lose our way.
Are we going to see the market of energy efficiency products and services increase a lot in the near future?
Our companies are already planning how they will move the increased demand that we are asked for. A big investment from our companies is needed upfront and that is why stable policies are important. They are ready to make that commitment, meaning that a number of products for this market will increase steadily to meet the steadily increasing demand, because, of course, the two must be matched.
Do you think EU countries will be inclined to make up for the savings that energy companies are supposed to achieve [1.5%] by renovating buildings instead?
Ireland is looking into how to use energy performance contracting more effectively, and I wouldn't be surprised if France's ambitious scheme will also look into this direction on the article [Article 6] with the energy savings obligation scheme for power utilities.
But I worry that because it is under the energy-efficiency-obligations target, you might get some double-counting between the article on long-term strategies for the renovation of buildings and the opt-out from Article 6, which means the quality of the savings achieved is less optimum, and that energy service companies will only look for only the easy measures and not got for more valuable measures. That means we won't capture the full potential either. So there are risks with the exemption from the power utilities' energy savings obligation scheme.
Also, investments will be made today, which will allay the conscience of the owner, who would think: 'I have done all I can, I don't need to worry for 30 years'. So you get the famous lock-in effect, where small works have been undertaken or single measures have been implemented that don't capture the full potential of the buildings. For our long-term plan, capturing the full potential is essential.
Do you think the EU should have feed-in-tariff schemes for energy efficiency measures, similar to those for renewables in Germany, for example? Would that not be the stimulus Europe needs to boost the energy efficiency market?
How do make an equivalent obligation to the renewables obligation? People say the power utilities' energy savings target is the obligation, but I don't see it functioning in the same way. If you use that philosophy, I don't know if it will it stimulate adequately the energy efficiency market.
What you need to do is you need to look instead at monetising the multiple benefits of energy efficiency and then use it as a positive message, as oppose to what is perceived as a negative imposition on energy suppliers. If you do that, consumers are going to be motivated to take on board energy efficiency measures, because they will see the benefits for themselves, for their families, for society at large. That's a better way of stimulating the energy efficiency market.
Energy companies have to come on board and they have to come and talk to the energy efficiency community meaningfully. Between the three segments, energy supply, energy efficiency and renewables, a new dialogue is needed. That doesn't exist at the present time.
And if it does exist, then it does only at the individual level, not at a higher level. And without this dialogue, Europe will not achieve its 20-20-20 targets, nor will it achieve its longer term targets, because the investments needed in the energy supply field have a 30- to 50-year life cycle. If today you have policies in place that recognise that energy efficiency decisions also have a 30- to 50-year life cycle, energy efficiency will by far be the sector with the highest investments. The pot would be flowing.
Are energy companies in competition with energy services contractors? How will they balance this competition?
An energy supply company understands the market for energy supply. They understand how to transform primary energy into usable energy. They don't necessarily understand how to make energy savings, how to make energy efficiency improvements, particularly in buildings, where coordinated sets of measures are needed, not single measures. Therefore, we are convinced that energy supply companies will be quite ready to subcontract their obligations out to the private sector, because in that subcontracting they would have a more efficient delivery of services.
So, you are right, there is a kind of a new competition coming into market, but I think it is going to be healthy and I think that our companies are going to ultimately benefit from it. In fact, one of the mechanisms in the Energy Efficiency Directive is the option for energy suppliers to, instead of achieving the savings, pay into a national energy efficiency fund.
I think the big questions to be asked are what are the rules governing the expenditure from the fund? - what will be financed form that fund? – downstream. Because it is a real opportunity for proper and responsible expenditure into the few poor.
I think that fund could be also used for those who don't have the means to do the energy efficiency measures themselves, social classes which have a difficulty in raising the initial capital needed. This fund could be used as a social fund to help those persons and make sure their properties are operated earlier in the process. The rules surrounding the spending of that national fund are very important.