Investments in energy efficiency improvements are vital to ensure Europe’s future as a sustainable, yet prosperous economy. The benefits are enormous: these investments contribute to abating greenhouse gas emissions, improving the competitiveness of European businesses, and enhancing Europe’s energy security. This is why European leaders are placing energy efficiency at the heart of their strategy to make Europe the first climate-neutral continent by 2050.
Yet, amid the COVID-19 crisis, there is a great risk of losing sight of the benefits of energy efficiency investments by European firms, just at a time when we really must accelerate our efforts. Because of the crisis, businesses and policy-makers are prioritising short-term measures to ensure that firms survive, rather than investing for the long-term. At the same time, the collapse of global energy prices has weakened incentives for green energy investments of all kinds, including energy efficiency.
We must not lose sight of the long-term investment needs of European firms. The EIB Investment Survey (EIBIS) provides a unique source of data that highlights how more investment in energy efficiency is needed. An annual survey of some 12 000 firms from all EU countries, it provides information on investment conditions, activities and financing needs, with micro-data allowing for in-depth analysis. In this report we examine the quality of firms’ building stock, their spending on energy efficiency measures and the factors that influence their decisions regarding that investment.
In 2019, more than a third of EU firms took measures to improve energy efficiency, a slight improvement over 2018. While this is encouraging, energy efficiency is still a low priority, especially considering the potential gains for firms. On average, EU firms believe that only a third of their building stock meets high energy efficiency standards.
This is so despite the relatively high cost of energy in Europe and the fact that energy cost concerns are becoming an important determinant of firms’ investment decisions. EIBIS data reveal that both high-quality information and advanced management practices make a crucial difference in the likelihood of investment in energy efficiency. Energy audits notably play an important role in supporting energy efficiency investment decisions.
The response of the European countries and institutions to the deep recession caused by the COVID-19 pandemic has so far focused on mitigating the hopefully short-run threat to firms and jobs. Attention is turning, however, to the question of how Europe can rebuild. At a time when firms across the European economy are looking to the public sector for support, there is an excellent opportunity to combine immediate relief with action that helps ensure a competitive, prosperous and sustainable future.
If we are to achieve a carbon-neutral economy, in a timespan that will help avert catastrophic changes to the global climate, then there can be no room for complacency. Delay will only result in higher costs, more stranded assets and a more painful energy transition in the end. Unavoidably, European firms must play their part. To do this, they need clear energy policy signals, clear information and clear incentives. They need a regulatory framework that is supportive, yet also pushes for higher energy building performance standards. Lastly, it is essential to ensure that financing conditions also facilitate timely investment by firms to realise the enormous gains that can be achieved through energy efficiency improvements.
Foreword by Debora Revoltella
Director, Economics Department - European Investment Bank