Less is more, as EU plans diet for gas and power

Wed Jun 22, 2011 11:30am BST

* EU energy chief wants energy sales cut by 1.5 pct a year

* 3 pct of public buildings to get energy makeover each year

By Pete Harrison

BRUSSELS, June 22 (Reuters) - Most companies strive for growth by increasing their sales, but European gas and electricity companies will be obliged to cut energy sales by 1.5 percent each year under a radical plan by Europe's energy chief.

"The cheapest energy is the one we do not consume," Guenther Oettinger's team said in a statement on Wednesday on plans to revolutionise the way energy is sold in the European Union.

"Energy distributors or retail energy sales companies will be obliged to save every year 1.5 percent of their energy sales, by volume, through the implementation of energy efficiency measures such as improving the efficiency of the heating system, installing double glazed windows or insulating roofs," they added.

Oettinger also called for 3 percent of public and government buildings to be given energy-efficient makeovers each year from 2014.

EU leaders agreed three years ago to try to improve energy efficiency by 20 percent by 2020. That was part of a landmark decision to cut greenhouse gas emissions to 20 percent below 1990 levels by the same date.

The aim was also to keep a lid on an energy import bill that currently amounts to around 270 billion euros ($387 billion) a year for oil and 40 billion euros for gas.

But Oettinger made his move after learning the EU is falling halfway short of that goal, and will only achieve 8.9 percent efficiency gains. [ID:nLDE7181WV]

TURKEYS VOTE FOR CHRISTMAS

While getting energy firms to cut sales has been compared to "getting turkeys to vote for Christmas", the aim has already been achieved via a complex mechanism known as "Energy Saving Obligations" in countries such as Belgium, France and Britain.

Companies are allowed to achieve the savings indirectly by paying for efficiency improvements elsewhere in society, in return for tradable certificates to prove they have met their obligation.

The proposal will need to be approved by the EU's 27 governments and the European Parliament before it becomes law.

If reached, the EU's 20 percent efficiency strategy would reduce consumption by the equivalent of 368 million tonnes of oil in 2020, compared to projected consumption in that year of 1842 million tonnes -- worth a lot of money.

But while most investments in energy efficiency are quickly recouped, Europe's economic crisis has worsened a widespread aversion to upfront spending.

To get round that, the Commission's new strategy will seek to reinvigorate an existing system of Energy Service Companies (ESCOs), which aims to harness the power of the private sector by grouping buildings such as schools and hospitals into sizeable renovation projects.

ESCOs would share the upfront investment in return for a long-term share of the money saved on energy bills.

(Reporting by Pete Harrison, editing by Rex Merrifield)

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