CERA: Europe’s Energy-Reduction Goals May Decrease Gas Demand 16% by 2020

April 2009 Vol. 236 No. 4

Utility companies across the EU registered all-time peak electric and gas usage during the winter of 2008/2009. But a forthcoming Cambridge Energy Research Associates (CERA) study, Strategies for a Leaner Europe: Meeting the Energy Efficiency Challenge, concludes that action on the EU goal of reducing energy usage 20% by 2020 through energy efficiency could result in significant energy use reduction by 2020, and could fundamentally reshape Europe’s energy landscape by 2030.

Reduced energy consumption at the level desired by the European Commission (EC) by 2020 would cost at least 250 billion euros, according to the study. The reductions would also require major new policy initiatives, making the implications a critical issue for government and industry at a time of great uncertainty. “The depth of the recession and the resulting freeze-up of investment combined with lead times will mean hard choices ahead for the EU in pursuit of these goals,” said Strategies for a Leaner Europe Project Director Doug Howe.

“Our analysis shows that if the EU member states pursue both the renewable energy target and the energy efficiency target in a mandatory fashion, and if energy prices begin to rebound in 2010 and later as we think is quite possible, then total natural gas consumption across the EU could drop 16% by 2020 and 35% by 2030 over 2008 levels,” said Howe. “Electricity consumption would likely remain flat. That means overall energy – electricity plus gas – would sustainably decline in this scenario. This would be unprecedented in the history of Europe.”

“Eye-opening as these results are, even these would not meet the 2020 goal on energy efficiency set out by the Commission, but fall short by nearly half,” added Howe.

Strategies for a Leaner Europe concludes, however, that the marketplace alone will not deliver these kinds of savings, pointing out that the price of energy is too low in most countries of the EU, and the priority of energy efficiency purchases is relatively low in most households. Most of the projected energy savings would come from homes, apartment buildings and small commercial enterprises, but the technologies that are the most energy-intensive, such as home heating boilers, water heaters and refrigeration, have very long lifetimes and are replaced in the housing stock only over decades.

The savings envisioned by the EC would require mandated increases in efficiency standards approaching best available technology levels on a wide variety of appliances very quickly and, potentially, the implementation of accelerated replacement programs at the residential and small commercial enterprise levels through subsidies. These programs are the source of CERA’s estimate of a 250 billion-euro price tag.

The most important energy-efficiency decision policymakers will face is whether or not the 2020 goals will be binding on member states, which currently are indicative only. In the absence of mandatory goals, CERA would expect energy efficiency to occur unevenly across the EU, and at a much slower pace.
For more information about Strategies for a Leaner Europe: Meeting the Energy Efficiency Challenge, see http://www.cera.com/aspx/cda/client/knowledgeArea/serviceDescription.aspx?KID=223

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