Energy savings and the market economy

By Paloma López Bermejo, MEP (pictured)
Winter 2016

There is little doubt that one of the major obstacles in creating a sovereign, sustainable and democratic energy system for Europe lies in the colossal import dependency of the continent, which consumes as much as twice the energy it produces. While the EU has engaged in aggressive trade and neighbourhood policies to guarantee its future imports, thus perpetuating geopolitical tensions and economic dependency for the coming decades, energy savings (along with the development of renewables and traditional resources such as European coal) seem an alternative and ultimately more promising avenue to adjust the energy needs of the European economy to its production capacity and climate commitments.

There is, however, legitimate concern on the ability of the EU to deliver on its promises. The 20% target for primary energy savings for 2020 is unlikely to be met, and whatever progress has been made seems more a result of prolonged of economic stagnation and de-industrialization than of meaningful public action.

The relevant directives (the Energy Efficiency Directive and the Buildings Directive) are still far from fully implemented by the Member States and legal loopholes and overall uncertainty over the post-2020 framework have further inhibited investment. These delays are not without consequences for employment: conservative estimates put at at least 2.4 million the number of jobs that could have been created in building renovation alone if the 20% target was achieved. But they also create a growing gap between the energy and climate policy of the EU and its ability to create a credible roadmap for energy savings -which, as the European Parliament has repeatedly emphasized, should be not lower than 40% in the 2030 horizon.

While we insist on the necessity of binding action in this sense, it is not only goals -but instruments, that we must focus on. Up to now, the EU has concentrated in creating "markets" for energy efficiency, hoping that prices will lead the way towards meaningful reduction in energy consumption. In doing so, it has once more led neoliberal theory trumps reality -for indeed, many households are constrained in their ability to change individual consumption, while industry often finds it more convenient to relocate production than to reduce its environmental impact when energy prices rise. It is by now widely accepted that markets create (and reward) inequality: it is no different for environmental market solutions, which, as implemented, have been doing more to generate energy poverty and erode our industrial base than to prepare a meaningful energy transition.

On the one hand, it is clear that a reduction in energy consumption at household level requires public investment and subsidies to lead the way. With an emphasis on energy-poor consumers, public administrations have to intervene to design better urban infraestructure and renew current buildings, planifying for a significant reduction in energy demand. Better isolation, improved heating and cooling systems and a shift away from private transport to better integrated production and residential urban systems require a fundamental shift in the market-led developments that have so far dictated developments in this area -and not unsurprisingly, led to the boom-and-bust cycles in real estate and infrastructure development that we are still suffering from.

Equally, it is clear that we must adjust our trade systems to reward energy efficient production and short value chains. Currently, environmental dumping threatens European plants in sectors, such as steel or ceramics, where the EU is the most efficient amongst global producers. This situation is unlikely to be solved through free ETS permits, since these only shift the burden of adjusment from some industrial sectors to others. Border-adjustment mechanisms, rewarding energy-efficient production, should be part of any meaningful reform of anti-dumping measures: we certainly hope that the EU considers these before opening up any further to trade overseas.

Ultimately, however, achieving durable energy savings will also require a cultural change, from the individual to society as a whole. We must not forget that consumerism is, after all, the material culture of neoliberalism - both creating the needs that alienate workers and enforce distinction in an increasingly unequal economic system.

So, while the enjoyment of particular goods can always be made more efficient, the societal drive towards higher consumption levels jeopardizes any particular achievement. A global paradox emerges: while production improves, waste becomes ever-more prevalent.

Understanding this later, civilizational obstacle places market environmentalists in a difficult position. It is hard to imagine a world that rewards frugality without being austeritarian - unless, of course, one that does not threat consumption as a competitive reward, but as a socially-defined good. Environmental challenges represent, in this way, a powerful justification for a radically different life: one, ultimately, that is only possible with a fundamental re-shifting of social relations.

There is, by now, a fundamental consensus that improving energy efficiency can be a boon for quality jobs when those are dear and a potential niche for European production at a time of ever-increasing global competition. Only vested interests and an increasingly irrational fear of public intervention hold back Member States towards more decisive action: we will continue our fight to ensure such obstacles are removed.

But we are not blind to the contradictions that a market response to environmental problems is creating - a contradiction unlikely to be overcome within the current economic system.