EU energy demand dips as renewables and energy efficiency flourish

Reading time: 4 minutes
19 February 2015

LONDON: Energy demand in the EU went down to 53% in 2013, a level only reached before in the early 1990s. And with so many companies now working to go 100% renewable as shown by The Climate Group and CDP's RE100 campaign, the business sector is taking an increasingly important role in supporting decarbonization of the power sector.

A report published by Eurostat, the statistical office of the European Union, shows the continent's energy demand has decreased by 9.1% since its peak in 2006, a year when the whole continent consumed almost 2 million tons of oil equivalent, or Mtoe.

Aside from the economic recession, the dip in figures is largely caused by new policies driving energy efficiency in buildings, vehicles and electrical products – as well as businesses improving energy efficiency and investing in their own renewable power.

Eurostat details the sources countries used to produce energy in the continent in 2013, and although a third of Europe’s power is provided by nuclear energy at 29% of domestic production, renewables is close behind at 24%.

Clean energy investment actually rose for the first time in three years last year, increasing 16% to $310 billion, according to Bloomberg New Energy Finance.

Corporate demand for renewables is a major part of the fast-growing low carbon economy and is the focus of the RE100 campaign, an initiative led by The Climate Group in partnership with CDP, which promotes companies that commit to becoming 100% renewable.

Emily Farnworth, Campaign Director of RE100, commented on the Eurostat study: “These trends show that we are already on the right track, as a transition to a low carbon global economy is no longer a mere option. It is the future. We are glad to see that there is a rising awareness on the need to understand more about energy demand.

“Many companies have already started to reconsider their actual energy needs, while working to go 100% renewable. Our aim of the RE100 campaign is to demonstrate that the pathway to 100% renewable is not only achievable, but preferable - particular when aligned with improved energy efficiency.”

BUSINESS ENERGY DEMAND

During the World Future Energy Summit in Abu Dhabi where we launched a RE100 briefing paper, discussions about reduced corporate energy demand and its impact on the utility sector highlighted an interesting dynamic.

Industry experts pointed out that less demand means reduced revenues for power companies, who then struggle to make the major long-term investments in renewables needed to deliver more stable future energy prices.

And because businesses increasingly want the stable electricity costs that renewables offer, alongside the desire to source low carbon power, it makes good economic sense for the private sector to team up with utilities to help fund major renewable projects.

This way, companies reap the rewards of long term, competitively-costed renewable power and the power companies have a cost effective source of capital needed for large scale renewable investment.

Emily Farnworth added: "Investment through power purchase agreements is already happening, with many of the companies that are part of the RE100 choosing to take this route to meet their 100% commitments. And as better understanding about how these kinds of investments provide win-win benefits for the demand and supply side of power generation, it is likely this trend will continue."

RENEWABLES TREND

The growth of renewables in profitable businesses echoes the pattern seen in the wider economy. By developing renewable technologies and energy efficiency policies that will slow or even halt the pace of their energy needs, it is possible for both developed and emerging economies to decouple economic growth and energy demands.

As European Energy Union Commissioner Miguel Arias Cañete stated in a speech this week at the Lisbon Council: “A decoupling of economic growth and energy consumption is reflected in the improvements that can be observed at the level of different end-uses: new dwellings built today consume on average 40% less than dwellings built 20 years ago, while cars consume on average two litres less than 20 years ago. This is to a large extent the result of concrete policies like the introduction of energy efficiency requirements into building codes and the setting of fuel-efficiency standards for passenger cars – to name but a few.”

The significance of this trend in the long term is also stressed in the new Energy Outlook 2035, which was released this week by BP. The report is updated every year to give a projection of what the global energy trends will be until 2035, focusing specifically on what sources of energy will become dominant and their impact on carbon emissions.

Global energy consumption is projected to grow at a slower rate than the 2000-2013 trend (2.4% per year), especially in non-OECD Asia, where the growth rate will decrease from 7% to 2.5% per year.

During the presentation of Energy Outlook 2035, BP's group chief economist, Spencer Dale, stressed there will be no predominant source of energy in the next decades, as countries will keep reducing dependence on coal and diversifying their purchases. But among non-fossil fuels, it is inevitable that renewables will continue to grow the most.

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By Denise Puca

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