The benefits of energy savings: many still have their heads in the sand

Ever driven a €500 000 car? We have: a hybrid hydrogen / electric test car from Daimler Chrysler. And as we whizzed happily around Brussels, we thought about how the car symbolised the end of Europe’s reliance on fossil fuels.

Europe built itself with fossil fuels - coal, mostly, and oil. That’s what powered the industrial revolutions and made the EU what it is today: the world’s biggest economy.

But we now import 80% of our oil and 60% of our gas. Coal imports have doubled since 1990. The International Energy Agency puts the EU’s oil and gas import bill at a whopping €420 billion per year. Most goes to Russia.

Benefits of energy savings

It’s clear that it’s time to adapt to changing circumstances. Europe could continue to scramble for fossil fuels on the international markets and prolong its financial haemorrhage. But this would be burying its head in sand. Or it can save energy and meet its lower demand with locally produced power.

This requires legislation. An electric car uses roughly 5 times less energy than a conventional petrol or diesel model. It’s an obvious energy savings solution (especially in conjunction with high efficiency renewable power generation). But consumer demand isn’t high enough to take the electric car market beyond its current niche for the wealthy environmentally aware.

Make it obligatory to save energy, however, and electric cars will get a much-needed shot in the arm. So will other energy savings solutions such as more efficient power generation or better insulated buildings.

Translated into policy terms, this means the EU must get serious about its 20% by 2020 energy savings target and the draft Energy Efficiency Directive which is supposed to deliver it.

Instead of the current voluntary 20% target - which has proved hopelessly ineffective - the EU must set binding legislation. This will reassure investors. Member States must also stop lobbying for a weak Directive which would allow them to double-count savings or to credit savings before they have actually been made. Such accounting tricks are the energy policy equivalent of an own-goal.

Consider the figures: according to the Commission, making the Directive strong enough to meet the 20% target would cut energy costs by over €200 billion per year. This would help fix national budget deficits. Businesses would become more competitive by producing more efficient goods with less energy. There would be up to 2 million new jobs by 2020. Carbon emissions would fall, reducing the costs of dealing with climate change.

This Wednesday’s EU summit on growth and jobs is the chance to take a fresh look at the opportunities of the Energy Efficiency Directive dossier. The French and Greek elections have shown there is appetite for structural reform without (too much) austerity, and it’s easy to see that saving energy is a solution that adds up. Come to think of it, is there a better one?