European Commissioner for Climate Action
It's time to call the "energy-plumber"!
Active House Symposium
Brussels, 14 April 2011
Ladies and Gentlemen,
Thank you for giving me the opportunity to speak at this symposium. The EU can set a framework with its policies, it sets targets, defines standards, gives incentives… But in the end it is up to the industry and other stakeholders to actually deliver the solutions. And the construction sector is a sector that will be key for implementing our climate policies in the next decades.
Where are we heading? 2050 targets
By the middle of this century the EU has to cut its greenhouse gas emissions by 80%-95%. That is the goal that the heads of state and governments of the 27 member states have agreed to. It is the EU's fair share – as a region of developed countries – in meeting the global goal of halving emissions by 2050, as the scientist tell us will be necessary. The Roadmap says at least 80% of the reductions will have to be done her in Europe.
Recent developments in the world demonstrate that climate action is needed more than ever. Since the beginning of this year, we have seen extreme flooding in Australia and the worst drought in 60 years in northern China and India. As a consequence of that, but also as a consequence of other extreme weather disasters last year like for instance the forest fires in Russia, food prices are soaring all over the world.
Some experts suggest that rising food prices have contributed to the uprising in the Middle East, from which we have not seen the end yet. This unrest has again pushed up oil and gas prices. The oil price is at the highest level since before the economic crisis.
I am not saying that all these developments are necessarily linked to climate change. But they are similar to the kind of events, which according to scientists, we will get more of in the future. Climate change makes these tendencies even worse.
All these developments make a compelling case for making the transition to another economic model – a low-carbon economy, which is more energy-efficient and climate friendly. In the 2050 Roadmap for moving towards a competitive low-carbon economy, which was published just a month ago, the Commission sets out its vision on how we could achieve that goal of virtually cutting all emissions in the EU. For the first time, it indicates the range of efforts needed, not only for the industry or power sector, but also for other sectors.
Need for more energy-efficient, low-carbon buildings
For achieving that ambitious goal, we will unavoidably have to improve the performances of buildings. Buildings account for nearly 40% of the EU's energy consumption and greenhouse gas emissions. And emissions from households are still increasing, as we are using more and more energy. However, by the middle of this century, emissions from buildings can be cut by 90% below 1990 levels, according to the analysis in the Roadmap.
This can be done at a relatively short-term, if you compare to the efforts needed in industry, transport or agriculture, for instance. The clue is improving energy efficiency. By insulating walls and roofs of our buildings. By using energy-efficient windows. By installing efficient boilers – for which, by the way, new European eco-design standards and eco-labels will be adopted shortly. Or by replacing fossil fuels with renewable energy sources, such as solar panels or biomass or energy captured by heat pumps so that companies and households can generate their own renewable energy.
Many European countries are stimulating this, for instance by means of tax rebates, investment subsidies or feed-in-tariffs or smart meters that literally turn back as you produce and feed in renewable energy to the net. For instance, feed-in-tariffs had a strong positive impacts in Germany on the development of the market. According to a study by PEW institute a record number of households installed solar panels in 2010, especially in Germany, France and Italy. 10% of German electricity is produced from renewable energy sources; and as much as 70% of this was supported with feed-in-tariffs. And in the country where I come from, Denmark, saw the biggest increase: 27% of Denmark's electricity came from renewables in 2009.
There are obviously costs related to these feed-in-tariffs, but they serve a purpose. As all countries face budget constraints or technology costs come down, feed-in-tariffs are now being lowered in several places. But it is clear that stimulating measures will remain an important incentive for households and companies to turn to renewable energy sources for some time to come.
2020 targets – achieving energy efficiency target is crucial
In difficult economic times, it is important keep the long-term goals in sight. By the end of this decade, countries have committed themselves to raising the share of renewables in the EU's energy mix to 20%. That is one of the three targets of the 2020 climate and energy package.
The second target is reducing GHG emissions by 20% below 1990 levels. By 2009, emissions were down by 16%. So if we continue implementing all policies, we are on track towards achieving that goal. For the third goal of the 2020 package, however, we are NOT on track – and that is energy efficiency. According to the last estimates from February this year, we are even at risk of only making it half of the way.
It is crucial that we deliver on energy efficiency if we want to meet our emission reduction targets by 2020. If we do as agreed and improve energy efficiency by 20% by 2020, we could cut 740 million tonnes of emissions every year. This could – if combined with adjustments to the EU Emissions Trading Scheme - lead us to a 25% emissions cut by the end of this decade and would put us on a cost-efficient course for reaching our 2050 target of cutting emissions by 80%.
But it is not only about climate: there are also compelling economic reasons for doing so. If we implement all foreseen energy efficiency measures within the next decade, every household in Europe could save up to € 1,000 every year.
On longer term, energy savings could compensate - at least partially and more likely even entirely - for the additional investment expenditure needed for making the transition to a low-carbon economy. According to our Roadmap analysis, we would need to invest an additional 270 billion euro every year. But we also could save between € 175 and 320 billion every year on average fuel costs.
2011 Energy efficiency plan
As late as 4 February this year the 27 heads of states and governments re-confirmed their commitment for meeting the 20% energy efficiency target by 2020 at the February European Council. Now it is crucial that we implement the measures and use the tools that are included in the new Energy Efficiency plan which was presented together with the Low-Carbon Roadmap. The plan contains for instance a target for improving the energy-efficiency of public buildings: the Commission will present a legal proposal to ensure that every year 3% of the public buildings stock is retrofitted – which is double as much as now, so it is definitely an ambitious target.
The budgets of cities and municipalities cannot pay for the refurbishment of all these public and private buildings. Innovative public-private financing mechanisms like ESCO's can bring the solution. In Berlin, for instance, 1300 public buildings were renovated by Energy Service Companies. Energy companies paid for energy-efficiency improvements in these buildings and recovered costs through the obtained energy savings..
So we must better target the EU budget and make energy efficiency one of its priorities. In that way, European money can serve as seed money for attracting private activities.
The Energy efficiency plan also looks at households. That is a large untapped energy saving potential. If all households would cut energy consumption by a third, the EU's total energy consumption would fall by more than 10%. This would bring us halfway towards our European energy efficiency target. It is harder to impose targets for private buildings from the EU level, but in the plan the Commission invited Member States to set such targets and take action to meet them, and I encourage you all to join this call on your respective governments to do so.
Moreover, by raising the amount of buildings that are renovated, we create new jobs in the construction sector, in industries that are producing energy efficient building materials and appliances, and the renewable energy sector. According to the Roadmap analysis, we could create up to 1.5 million new NET jobs in all those sectors by the end of this decade. And these jobs in retrofitting business, cannot easily be outsourced.
Role of public authorities and construction sector
The energy-efficient building techniques exist –as participants of this Active House symposium you are well aware of this. I don't need to convince you either about the advantages of active houses or passive houses or zero carbon houses – whatever you want to call them, there are 17 different terms for low-energy buildings in the EU. The problem is that the renovation rate of buildings is too low, as is the uptake of the most efficient appliances.
Therefore, financial incentives by the EU and by national governments are important to enhance renovation and to leverage private investments. In Lithuania, for instance, the European Investment Bank made a loan to home owners' associations from 58 social housing buildings to retrofit their old apartment blocks. In France, new buildings that are respecting the strictest environmental criteria can be exempted of property tax for 15 to 30 years. And in Germany the Kreditanstalt für Wiederaufbau is providing interest-free loans for renovations in buildings aiming at improving energy-efficiency.
We must also do better in removing legal obstacles, for instance on the division of costs between owners and tenants, which is a problem in many member states..
The EU and national governments should also set standards to make the market rolling. We have, as you know, a European directive on the energy performance of buildings, with requirements for new buildings to be near zero energy buildings within the next decade. But also in other areas standards are necessary – this week the Commission adopted a Communication on Smart Grids which highlights the need to rapidly agree on European standards allowing to seize the potential that such technologies represent. Think where music was in 1980 and where we've come – from gramophone records and magnetic tapes to MP3, YouTube download on smart phones etc: imagine now the same technology development happening to energy supply and management in our homes. Just as the internet needed its protocols to develop, so of course smart grids need standards.
The EU has also introduced eco-design efficiency standards and energy labels for fridges, washing machines and all kinds of household appliances. Here, we should also explore the possibility of requiring not just efficiency but also a minimum of built-in "intelligence" – as part of the smart grid approach.
Apart from that, more products will follow, also building components, e.g. windows. Today more than 40% of windows in the EU are still single-glazing, and another 40% are early uncoated double-glazing. By introducing eco-design labels for windows, we could ensure that consumers are better aware of the energy performance and chose for windows that insulate better. Similar issues will be addressed in the communication on sustainable competitiveness of the construction sector, which will be presented at the end of this year by the Commission.
By setting the right framework and harmonising standards, the EU must provide the sector with predictability and a level playing field – which are two basic conditions for attracting private investments. But the construction sector and industries that are producing building components should also raise ambitions. As a minister in Denmark I experienced that all too often, when the EU is preparing for new standards, industries defend status quo, vested interests or go for the lowest common denominator.
Finally, all of us must work on making communication on energy more relevant to citizens, and making it easier to act. Too many citizens still aren't really aware how much can be saved – or find it too complicated or expensive to act.
Ladies and gentlemen,
If you have a water leak in your house, you will set everything else aside until you've managed to stop the leak or made a plumber come urgently and fix it – within the hour.
When it comes to energy, it is time to start thinking more like that: Europe's buildings are leaking – big time. Money, energy and emissions are literally flowing out of the windows and cracks as we speak It is time to fix it – it's time to call the "energy-plumber"! That is why I hope that the Active House standards – "buildings that give more than they take", will become the European norm in the future.
Thank you for your attention.