There will be no quick fix to Europe’s costly dependence on gas imports. But leaders do have the power to put in place lasting renovation solutions to cut consumer bills and deliver our climate commitments, writes Brook Riley.
Brook Riley is the head of EU affairs at Rockwool Group, a Danish multinational manufacturer of mineral wool products used in building insulation.
The perverse law of gas prices seems to be that what comes down must go up. In 2019-2020, gas prices fell in 21 out of the 24 EU member states which report on price trends.
Now they are at record highs across Europe, to the point that the UK energy minister felt obliged to deny there could be energy rationing and a return to the three-day working week. She might as well have told people not to think of elephants.
Meanwhile, gas prices are being discussed by EU energy ministers today and made it onto the agenda of last week’s European Council. But in the scramble for solutions, there is too much focus on supply, combined with worrying signs that climate commitments are expendable.
Three weeks away from the climate talks in Glasgow, high gas prices are prompting a switch to oil in the UK, and rising coal use in Germany. The lesson from the 2014 gas crisis and all the energy crises before that is apparently being forgotten: the cheapest, cleanest and safest energy is the stuff we don’t use.
New analysis from Cambridge Econometrics, a go-to consultancy for the European Commission, comes as a timely reminder.
They estimate that if the EU meets its goal of renovating 35 million buildings over the course of this decade, gas imports could fall by about 4.5 billion cubic meters of gas per year – the equivalent of 25 of the world’s largest LNG carriers. Households could save over €400 on their heating bills.
You could carve the message in stone: energy efficient homes protect people from high energy costs.
But that is not to say it will be easy. Research by Buildings Performance Institute Europe, a think-tank, shows that today’s spike in energy prices was years in the making, fuelled by insufficient investments in energy efficiency and renewables. It will not be weeks in the fixing.
Meanwhile, more than 96 million people in the EU are estimated to be at risk of poverty and social exclusion, and this damning figure does not take into account the full effects of COVID.
The dilemma is that even as financial compensation for high gas prices seems necessary this winter, longer-term compensation will have the effect of subsidising fossil fuel use and driving people deeper into energy precarity.
This is why Europe’s leaders have to double down on building renovation. And if there is much to do, there is also a lot to build on. Ask anyone who is planning to renovate their home and they will speak of their struggle to find qualified workers.
But France, for example, insists that households hire officially certified installers if they wish to get subsidies for insulation, and this has encouraged manufacturers to expand their own efforts to train installers.
There is also the catch-22 challenge that regions and cities are short of funding and staff for bigger renovation programmes, but lack the capacity to apply for extra resources. Here too there are solutions: the EU provides one-off grants for cities to hire people to put together applications.
Poland, meanwhile, rewards local government officials if they sign up people for renovation programmes. And Italy operates the hugely attractive ‘superbonus’ scheme, which offers 110% tax credits in return for sizeable improvements in building efficiency.
None of these measures are particularly headline-grabbing, yet their practical appeal to self-interest can be game-changing if they are scaled-up and replicated. To that end, EU leaders could do worse than ponder the old adage that amateurs study tactics, and professional logistics.
There will be no quick fix to Europe’s costly dependence on gas imports. But leaders do have the power to put in place lasting renovation solutions to cut consumer bills and deliver our climate commitments.