Energy Efficiency – How Europe Can Achieve Its 2020 Targets

Becoming more energy efficient is perhaps the most straightforward and least expensive way of tackling the energy problem. Recently, the EU has addressed this issue within the framework of the so-called Europe 2020 targets which aim at reducing gross energy consumption by 20 %, producing at least 20 % of all energy from renewable sources and reducing greenhouse gas emissions by 20 % (with respect to 1990 levels). All that is supposed to be attained by 2020 at the latest.

Leaving aside the two latter issues, we will focus in this posting on the question of energy efficiency. Lowering energy consumption by 20% (when compared to projected levels) means in particular that by 2020 Europe will use some 1474 Mtoe (mega-tonnes of oil equivalent) of primary energy.

Fig. 1 shows the development of EU gross inland consumption from 1990 onwards with EU-27 representing the entire union whereas EU-15 refers to the “old” Member States, i.e. excluding those countries which joined the union in 2004 or later.  One striking observation is that during the past two decades consumption figures have always been substantially higher than the 2020 target line. Thus we are facing a real challenge.

Fig.1 EU gross inland consumption of energy. Source: Eurostat.

But looking at absolute consumption levels only does not reveal the whole story since, at the same time, we are also expecting economic growth. And a growing economy means higher energy consumption, at least to some extent. Putting consumption and economic performance together yields another interesting observable, namely the so-called energy intensity which is shown in Fig. 2. This parameter indicates how much energy is needed in order to produce one unit of economic output. Energy intensity is thus measured in kgoe/kEUR (kg of oil equivalent per 1000 EUR). Apparently, this indicator has fallen drastically since 1991.  In 2010 it was at 168 kgoe/kEUR for EU-27.

Fig. 2 EU energy intensity. Source: Eurostat.

One apparent feature of this figure is that the gap in the intensity levels between EU-27 and EU-15 is getting smaller over the years, thus indicating that the countries which joined the EU in 2004 or later are outperforming the older Member States (EU-15) when it comes to becoming more energy efficient. Nevertheless, the energy intensity of the younger EU members is still considerably above average.

Reducing absolute energy consumption means that intensity figures will drop accordingly. But by how much? In order to obtain an answer to this question, we analysed two scenarios, one with a stagnant economy, i.e. no (real) GDP growth up till 2020, and another one with an average GDP increase of 2 % annually.

Taking the zero-increase economy as a reference we find that energy intensity must drop from its 2010 level to some 141 kgoe/kEUR in 2020. This is not too far from the current EU-15 level (151 kgoe/kEUR). However, at EU-27 level this means that the intensity has to go down by some -1.75 % on average per year.

Going over to a more dynamic scenario with an average economic growth rate of 2 % we find the respective energy intensity in 2020 at 115.5 kgoe/kEUR. Obviously, the effort is much stronger in this case, requiring an annual decrease of almost -3.7 %.

To put things into perspective we may mention that the average intensity gain during the period 1991-2010 was 1.94 % per year. Thus, the prospect of performing equally well in a no-growth economy does indeed look quite promising. However, once the economy is supposed to grow even at a moderate pace, our effort may easily double.  In that case, more drastic measures are required in order to attain the ambitious goal.

4 comments on “Energy Efficiency – How Europe Can Achieve Its 2020 Targets

  1. This analysis is great ! specially they EU energy intensity figures and two scenarios . We have lessons to learn from the EU’s proactive efforts to go away from using fossil fuels and swithch to Renewable energy sources , mainly Solar PV and Wind?.

    What the article does not highlight is – how much energy has been saved or used efficiently? – as with every kw or MW saved – you delay building a new coal or nuclear power plant, and most importantly, by simply stalling this process you buy time to make use of the myriad of state of the art and emerging clean energy technologies that come on stream? …..and have reached grid parity.

  2. Indeed, great analysis! Could we not use the fact of problems with the growing economy and trying to get back on track to invest in renewables and saving? Can saving not help to prosper economically? It means: less energy needed, but still able to grow. And if investments are needed or willing to take, it should be sustainable measures. I think we have to understand that still applying non-sustainable measures won’t bring our economy further; this won’t last in the long run.

  3. As for Dutch major industries i know we have had many regulations. It works as follows, in stead of inflexible laws (lawmakers are used to make laws that kill business as making laws is an opposite quality as running a company) major types of industries (e.g. food industry, metal industry, furniture industry etc.) sign a treaty in which they strive to increase efficiency every year with 1-2%. This has been a major success as energy efficiency indeed has improved every year and still does.

    Also on world wide scale major industrial technologies have been improved. Just one problem is that energy efficiency, e.g. GJ/tonne product (e.g. steel/cement/fertilizer) has improved alot But the amounts of these products produced have grown much faster. For metals and cement the use of recyclated material is almost the only way to make another efficiency break through, and since energy is money this is also happening on a global scale. But it will not help to bring down total energy needs just because of the fast growth of global material needs.

    • It is indeed a dilemma that, one the one hand, we become more energy efficient and, on the other, all those savings (or at least a big part of them) is eaten up by production increases. The same is true from population point-of-view. Although energy consumption per capita is going down this effect is largely compensated by a growing population.

      As a matter of fact, the Dutch model represents a very sensible approach without lawmakers interfering too much with business issues. As saving energy also means reducing costs industries will certainly be interested in keeping energy costs at a minimum.

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