Hedegaard said the EU should use its financial resources to reduce greenhouse gas emissions and raise energy efficiency standards, which she sees as key priorities.
She was speaking yesterday (12 April) to representatives of regional governments from across Europe, who attended a 'European Regions Energy Day' event in Brussels.
The climate commissioner said the EU budget must be used in a more targeted way, and structural and cohesion funds should finance energy efficiency measures, such as retrofitting buildings.
"So far it has been the experience that this is one of the areas where we are actually not using all the possibilities that we have in the budget," she said, noting that the next Multi-annual Financial Framework (MFF) should give bigger priority to energy efficiency.
Hedegaard's remarks were made in the context of the build-up to political discussions over the priorities of the European Union's budget in the years after 2013.
The European Commission is due to presents its first proposals for the next so-called 'Multi-annual Financial Framework' (MFF) before the end of June.
Greater efficiency, cutting emissions, leveraging invetments
According to Hedegaard, energy efficiency is the main area in which the EU is failing to live up the commitments it has already made in the framework of the 'climate and energy package' that was adopted in 2009.
"We are on track to meet the emissions target and the renewables target, but not our energy efficiency target," warned the commissioner.
She said that if the EU could improve its performance with regard to using less energy by reducing waste and using more efficient technologies, greenhouse gas emissions could also be further reduced, thereby helping to limit the impacts of climate change.
Hedegaard referred to the Commission's roadmap for moving towards a low-carbon economy by 2050, which was published last month.
"One of the very clear messages in the 2050 roadmap is we need to focus much more on energy efficiency: on retrofitting buildings, restoring pipelines, and being much more energy efficient all over the place," said the commissioner.
The Commission estimates that across the EU as a whole, some €270 billion of investment will be needed each year to support the transition to low-carbon solutions in all areas of activity including buildings, transport and agriculture.
"Yes, it's a lot of money," admitted Hedegaard, "but in the same period, each year we would save between €175 billion and €320 billion in less expenses for imported fossil fuels. So we have very much to see this as an investment in a cleaner future".
Other benefits of moving to less-polluting technologies would be cleaner air, better health and more employment. The Commission estimates that there could be a net gain of between 1 and 2 million jobs across the whole of the EU.
Retrofitting buildings and create jobs
Improving insulation standards for new buildings, while also retrofitting old buildings so they use much less energy – both are vital to meeting Europe's climate and energy goals, according to Hedegaard.
The latest European Energy Efficiency Plan, which was published by the Commission last month, includes the proposal for a target to retrofit at least 3% of all public buildings each year, in all of the member states.
Hedegaard points out that retrofitting buildings creates jobs in the construction sector, which in some countries has been very badly hit by the crisis. Moreover, these new jobs must be based in Europe and cannot be outsourced.
However, Hedegaard warns that such initiatives cannot rely only on public money, and therefore it is necessary to find ways of encouraging private companies and banks to invest in the renovation and retrofitting of buildings.
Hedegaard believes that the EU should develop financing instruments that are designed to leverage private capital and encourage investments in activities that contribute to energy efficiency, drawing on examples of good practice in the member states.
"I think that's one of the best ways we could actually use the EU budget," she insisted.
The commissioner cited the case of Berlin, where some 1,300 public buildings have been renovated by energy service companies. These companies finance the initial investments, and then the costs are recovered through lower energy bills.
Regions must have climate strategies
Hedegaard admitted that while the overall vision could be agreed at EU level, progress could only be achieved through the actions taken by local, regional and national governments, as they are the ones responsible for the management of public buildings, investments in public transport and infrastructure, and the preservation of rural areas.
"To exploit synergies and provide coherent network for action in these fields, regions, like member states, should have regional climate strategies," said the Dane.
The commissioner pointed to several examples of existing initiatives, such as carbon-proofing and climate-screening of infrastructure projects; public transport projects that reduce pollution and create jobs; and investments in renewable energy.
"Regions can promote structural change, but they often lack knowledge and capacity and this is reflected in the lower use of EU regional funding for climate-related projects than for other projects," she said.
Hedegaard underlined the role played by networks in helping to share and spread good practices among regional and local public authorities, mentioning the 'Covenant of Mayors' that has been signed by more than 2,400 municipalities across Europe, as well as the R20 initiative supported by the Assembly of European Regions (AER).