Investing in Negawatts, the World's 'First Fuel'

By Kathleen Van Brempt, MEP and S&Ds vice-president responsible for sustainability
Spring 2015

The European Energy Union has been on the political agenda since 2010, but only recently a first ambitious framework for such a Union was presented by the Commissions Vice-President Maros Sefcovic. Just as the early sprouts of the European Union, notably the European Coal and Steel Community, emerged from industry and energy questions, the new European Solar and Wind Community will have to solve the energy problems we are facing now and will face in the future.

In 1951, European leaders acknowledged that coöperation would boost the European economy. Integrating the patchwork of 28 national energy grids, which symbolize an energy policy of the past, would create a similar boost to the European economy. With a growing share of renewables in our energy mix, we will need to transport energy over vast distances in Europe, from our off shore windfarms in the North Sea, the hydroelectric plants in Scandinavia, solar farms in the south of Europe and the thousands of decentralized micro-power plants in other parts of the Union. In times of distress member states will have to rely on each other, using each others reserves or sur plus capacities.

Much can be said about the Energy Union framework presented in February, but I will focus only on the emerging Negawatt - not Megawatt - industry: energy efficiency (EE).

During the last years political leaders have paid massive lip service to energy efficiency, but forgot to put their investment money where their mouth is. Energy efficiency has long been treated as the Cinderella of investments, even though EE investments offer immens benefits which go far beyond energy savings. They can be an important contributor to economic growth and social development. Energy efficiency investments can create short term benefits, helping the economy grow in times of recession by promoting employment. Renewable energy projects are creating ten times more jobs than similar-sized fossil fuel projects. Energy efficiency projects also create 3 to 5 times more jobs than fossil investments. The macroeconomic outcomes from EE could be huge.

An Energy Union consistent with the EU's strategic objectives, such as tackling climate change or job creation, should therefore prioritise energy efficiency measures. The S&D group in the European parliament pushed energy efficiency towards the top of the Energy Union agenda. The first drafts of the framework performed poorly on energy efficiency, but the final text stated: 'Energy efficiency first'. The Commissions Vice-president Maros Sefcovic acknowledges that energy efficiency is "an energy source in its own right", which will make it possible to compete on equal terms with generation capacity. The International Energy Agency (IEA) called energy efficiency 'an invisible powerhouse' worth at least 276 billon euros per year and growing. This confirms EE's position as the world's 'first fuel'.

The EU's devastating austerity policy prevented us from taking the necessary actions to reach our most important objectives. For the first time in years the Juncker Investment plan EFSI changes Europe's small minded stance on the economic crisis by better balancing budget control with investments. Finally, underfunded European priorities like energy efficiency could be back on the agenda. But are they? Looking at the member states projects for the EFSI, only 5% of them include energy efficiency measures, smart technology or demand side measures although, according to the IEA, 40% of emission reductions can come from energy efficiency. When taking decisions on where to invest, we will have to prioritise EE's share in the investment portfolio. In doing that, Europe can take a big leap forwards and reclaim it's world leadership in sustainable development.