20 % missing: A case for Hercule Poirot?

Something strange has happened with the recently announced EU Climate and Energy package. On Monday January 21, when it was previewed in a presentation by none other than the President Barroso of the European Commission, he said that the goal was “20-20-20 by 2020”: a reduction in GHG emissions of 20 %, with the share of renewable fuels in energy mix being 20 % and energy efficiency should be improved by 20 %.

Two days later on January 23rd the EU Commissioner for Energy signed a memo where the target is reiterated, but the text relating to energy efficiency part disappeared (!) – the text became a long advocacy for renewable fuels. Good, but is it good enough?

Then at last the package was publicly presented by President Barroso on the same Wednesday and look what has happened? The energy efficiency part had been dropped entirely! Now the goal has been shifted to “20-20 by 2020”.

The most valuable part of the package, which can be estimated to roughly 200 billion Euro Europe-wide savings yearly, was dropped. The part that saves you and me money was dropped in favour of parts that cost us money. Though commendable, renewable fuel costs money where energy efficiency saves.

My graph below illustrates how the renewable commitment for each country shrinks in practice if we achieve the 20 % efficiency improvements. As you can see, Sweden and Latvia could just lean back and do nothing (not that they should!) and for the others the share shrinks as well.

Blue is old EU15 and Red is new EU+12.
Source: Hans Nilsson, FourFact AB.

The mystery is what could reasonably have happened in this short period between Monday and Wednesday? Is it, as some say, that energy efficiency always loses out to energy supply because politicians like machines with moving parts and detest the dull, invisible energy efficiency? Does energy efficiency dissolve into thin air in the presence of renewable fuels? It should not, since the two are genuine complements and not rivals.

Is it as some political analysts say that energy efficiency was only an indicative target and therefore should be dropped since the two others are committing? Or is it as some mathematically oriented analysts say that with aggressive energy efficiency improvements it will be easier to fulfil the renewable quotas and therefore energy efficiency is either implicit or redundant?

Or could it be that Mr. Barroso was robbed on his way from London to Brussels? If so it could be a case for a Belgian detective and we would suggest Hercule Poirot to be put on the case.

Whichever the explanation is, this is sloppy handling from the Commission, not the least since several member states are crying to high heaven for being maltreated by GHG emission-quotas and renewable energy targets. It would have been so much easier for all to be able to point at a simple solution: improved energy efficiency. Now, that part is out of focus.

The following graph combines the aspects of how much each member state will have to add of renewable fuels (vertical axis) and how much that has to be added compared to the already existing domestic use (horizontal axis): in the latter case after deducting the 20 % energy efficiency improvements. This gives some idea on where the market forces may play out, where the money is and where is the competence.

So where is Hercule Poirot when we need him?

Source: Hans Nilsson, FourFact AB.