Connie Hedegaard at Batibouw: "What can we do to meet the 2020 targets?"
Introduction – The need for progressive European agenda
As we meet here today the European Heads of State are gathering for the European Summit. And it just might be the first summit in a long time where the agenda is not totally dominated by economic governance and crisis.
Let me be clear, it has been out of sheer necessity that we have spent so much time over the last two years on controlling public debt, reinforcing our currency and tightening the economic governance in Europe.
That said, however, we have to realize that austerity alone is not going to get us back on a prosperous track. And I must say that I fully share the opinion that President Barroso has expressed in his letter to 12 European Heads of State ahead of the summit: We need to do more to create the conditions for our longer term prosperity.
Europe is still teetering on the brink of recession. Youth unemployment is soaring. And so is the oil price.
Here are two figures that really make you wonder: In 2011, the TOTAL trade deficit of Europe was around 150 bn EUR.
Do you know how much we paid for our oil imports the same year? … 315 bn EUR!
In other words, our oil imports are eating up a hard-earned trade surplus from other sectors.
Although we have other really pressing issues here and now, we have to look beyond the immediate crisis and start discussing: How do we ensure Europe's long-term competitiveness?
How do we reduce our fossil energy bill? How can we create new jobs? And what should be our future sources of growth?
That is a discussion that goes way beyond that of controlling public spending. And that is why the question you have asked me to address today – what can we do to meet the 2020 targets – is indeed very relevant.
Because while we are on track to meet targets for emissions and renewables in the 2020 strategy, we will not meet our energy efficiency target unless further efforts are made. As things stand today, with current measures, only half of the 20% energy efficiency target will be met by 2020. But we can make up the lost ground – not least through the building sector.
Building sector is a key to reducing energy consumption and emissions
Buildings account for nearly 40% of the EU's energy consumption and greenhouse gas pollution. And emissions from households are still increasing, as we are using more and more energy.
The built environment provides cheap and quick opportunities to reduce emissions, first and foremost through improvement of the energy performance of buildings.
But it is also crucial in order to deliver on our long-term goal. The low-carbon roadmap we presented last year shows that emissions in this area could be reduced by around 90% by 2050. In other words, this sector is absolutely crucial for emission reductions.
I don’t need to lecture you on energy saving measures and technologies – many of you represent the businesses that make a living of producing pumps, thermostats, energy efficient windows and the like.
The point I would like to make here is that energy efficiency is a win-win for energy security, for the climate and for the economy.
Just one example: The implementation of the EU directive on the Energy Performance of Buildings alone is expected to yield significant benefits: It could save us almost the total energy consumption of Belgium and the Netherlands together and save 4-5 percent of EU total CO2 emissions in 2020.
But this is not only about energy savings and emission reductions – it is also about the economy. Improvement in the energy efficiency of public sector buildings and appliances reduces public expenditure – and thus benefits the economy.
Improvement of energy efficiency in residential buildings, helps reduce energy poverty and public expenditure for energy subsidies. And thus benefits the economy.
Increased demand for energy efficient products increases revenues in sectors where Europe has a strong competitive advantage. And thus benefits the economy.
And it creates jobs in the building sector – up to two million jobs by 2020, jobs that can not easily be sent abroad. This, of course, also benefits the economy.
Finally, by saving energy we will need less energy infrastructure expansion – and thereby save money to the benefit of the economy.
So if the benefits are so self-evident, why are things not moving faster?
A number of barriers hold back large scale improvement of energy efficiency – many of which are well-known.
But whether it is about the size of up-front investments, the landlord/tenant-split or long pay-back times, the bottom-line is the same from a political point of view:
In this area the market does not deliver progress at the necessary speed and scale. Therefore, robust policies are needed at EU, national and local levels.
At the EU level we already have numerous policies and actions in place. Energy performance requirements, certificates for buildings, energy labels, eco-design regulations, help to overcome information barriers – I will spare you the full readout.
The real question is: what more can we do? I think the private and the public sector both hold an important part of the answer here.
Let me start by focussing on the public sector. I think there are (at least) two areas of EU policy that can really help us deliver on the 2020 targets.
The 2011 Energy efficiency plan and Energy Efficiency Directive
The first area is the energy efficiency initiatives that we have proposed primarily with the Energy Efficiency Directive.
This proposal suggests a broad range of measures to step up Member States efforts to use energy more wisely at all stages of the energy chain.
The measures are simple but ambitious: major savings for consumers, a legal obligation to establish energy saving schemes in all Member States and the public sector to lead by example, among other things by renovating 3% of public buildings each year.
I am really pleased that the Danish Presidency has made progress on this directive a clear priority. And from the most recent reports it seems that the European Parliament has been able to boil down 800 amendment proposals to less than 20!
However, I also hear from the Council that some big Member States have difficulties making up their mind. So I think it is still really important that industries who realize the potential of this proposal speak up and push for ambition as well as a swift adoption.
Using the EU budget deliver on Europe 2020
The second area I would like to mention is the next EU budget. One of the key principles guiding the work with the budget proposal we put forward in June last year, was that the spending under the next financial framework should be closer aligned with the political priorities.
This is why we proposed to increase the climate-related share significantly to at least 20% of the whole EU budget. With a total of roughly €1,000bn, this would mean around €200bn for climate-related expenditures purposes.
These funds will not be parked in a separate corner of the budget – in stead climate will be mainstreamed into the big spending areas. For example, our proposal on regional policy offers strong support for energy efficiency.
The shift towards a low-carbon economy is one of three main objectives of the future regional policy. Concretely, the Commission proposed that the richer regions should spend at least at least 20 percent of all regional funds on low-carbon initiatives. In less developed regions it should be at least 6 percent.
This represents a total investment from the EU budget of at least €17bn – as the very minimum in the Commission proposal. And since we replaced ceilings for low-carbon investments with floors, the amount could increase.
Moreover, the idea is that these funds should be given as 'seed money' so that they are used to leverage additional resources at national and regional levels.
Hopefully the negotiations on the budget can be finalised before the end of this year. Needless to say it is going to be an extremely complicated exercise. And nobody should expect to get everything they might wish for.
My plea to industry in this connection is support for the principle that funds should follow the political priorities we have defined for Europe. Of course it is tempting for Member States to opt for flexibility and autonomy when spending, for example, regional funds.
But the risk of reverting to the "Christmas tree" model of spending is clear. And that would happen at the expense of overall direction and European value added. After all you could ask: Why should we transfer and administer funds at European level, if they don't serve a clear European purpose?
The role of the private sector
Before concluding let me mention two things that the private sector can do: One is about innovative financing. We urgently need to overcome the barrier of up-front investments. And the solutions are already out there. For instance, I believe that Energy Service Companies hold a huge potential that yet needs to be harvested and brought to scale.
The second thing the private sector could do is help spreading the word. We have so many good solutions, so many convincing business cases and technologies. I really believe that a lot can be achieved by communicating the existing solutions.
From the Commission we will launch a communication campaign later this year with that explicit purpose. But our marketing budgets are quite modest – to say the least – compared to those of the private sector. Also, with their products, many private companies have a much more direct communication interface with consumers. So, here is another area where you could really make a difference.
So, to sum up on what we can do to meet 2020 targets: The short answer is that we CAN do a whole lot. We KNOW what to do. In fact, the Commission has already PROPOSED what to do.
We also know that doing it would be good for employment and competitiveness, good for our energy bills and good for the climate.
And we know that doing it is not rocket science. The question that remains is whether Member States and the European Parliament are ready to take the necessary steps.