CAN THE ENERGY UNION BECOME A GROWTH ENGINE FOR EUROPE?
The Energy Union is an unparalleled opportunity for the EU to boost energy its efficiency, cut imports and create money for consumers. To achieve this, we must unlock the potential of smart systems and embrace digitalisation, writes Anton Koller.
Anton Koller is the president of district energy at Danfoss.
Not long ago a discussion around climate, energy and the economy would quickly have ended up in a straight choice between one and the other. Who would have argued that you could fight climate change, get cheaper and cleaner energy, and have economic growth all at the same time?
Today we know that we don’t have to choose. Decarbonising our energy doesn’t mean giving up growth. Sustainable and smart cities and buildings of the future will emerge from a holistic approach to energy and the climate. And so will green growth. This is what the Energy Union is about.
Where are we on this path? The State of the Energy Union shows a mixed picture. We have made progress on the way to reaching our 2020 energy and climate targets, but a lot still needs to be done, especially in order to make our buildings more energy efficient and to decarbonise our heating supply. If we want to succeed, we need to address these challenges now.
We have almost reached our target to improve energy efficiency by 20% by 2020. And we have succeeded in decoupling energy from growth. While our energy intensity has decreased, our economy has grown. Energy efficiency has also helped 22 member states to reduce their dependency on energy imports, and thus to increase their energy security. The European Commission showed in its 2016 impact assessment that for every percentage point gained in energy efficiency, gas imports fall by 4%.
All this shows that energy efficiency is a reality. It shows that energy efficiency is a key element of the energy transition. And I think it also shows that there is potential to
set even more ambitious targets for 2030.
However, to reach these targets, we need to scale up investments in energy efficiency and renewables. This is only possible if we manage to unlock private investment. The opportunity is there: interest rates have never been lower, the cost of capital has never been lower, returns on investments are increasingly understood. We have a historic chance to drive investment in Europe. Let’s seize it.
Digitalisation will be the backbone for unlocking growth
Digitalisation is a powerful growth engine and will help us use our energy more efficiently. We need to increase our efforts to reduce the final energy demand of our building stock and accelerate the deployment of smart buildings. With close to half of our energy demand coming from buildings, this could be a real game changer.
Yet, the State of the Energy Union shows that at the current renovation rate of 1% per year, renovating the European building stock would take 100 years. The question here is this: does the Clean Energy Package released by the Commission last November put us on the right track?
The proposal for a revision of the Energy Performance of Buildings Directive goes in the right direction. It pushes digital connected solutions that monitor and adjust energy use in real time. Buildings of the future will consume less energy, with better comfort. And they will be capable of providing demand-response and feeding excess heat into district heating networks.
But the package doesn’t go far enough. The proposals need to help the many millions of EU citizens who live in homes lacking basic heating control features, wasting energy and money. The final package must not forget about them.
A smart and connected energy system that integrates energy efficiency and renewables
Another challenge is to decarbonise our heating and cooling supply – representing 50% of the EU’s energy consumption. Energy efficient district heating and cooling can play a central role here. District energy networks can facilitate the use of local and renewable energy sources (e.g. from solar thermal) and they can be used to store renewable electricity.
District heating can also use waste heat that would otherwise be lost, for example from industrial processes, supermarkets, data centres. The state of the energy union shows that the amount of heat we waste every day is as high as the entire heating demand of the EU building stock. That is a resource that we should better use.
The State of the Energy Union is a useful democratic marker to look at the achievements made and the way forward. It enables us to take a holistic view of the Energy Union. I strongly believe that this holistic view, crossing the silos, is the only way we can succeed in finding the cheapest and most efficient solutions. We must be smart in connecting demand with supply. Making intelligent links between energy in buildings, industry and transport. Connecting the electricity and district heating and cooling grids. Enhancing synergies between energy efficiency, renewable energy and energy recovery.
The fundamental economic lesson is that investing in a green future really pays off.