DONG says EU energy savings law can boost revenue

BRUSSELS Wed Jun 13, 2012 12:17pm BST

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BRUSSELS (Reuters) - An EU energy savings law, hanging in the balance as states haggle over terms, can create a new source of business revenue for utilities or other energy companies, as Danish state-owned DONG said its experience has proved.

Denmark has taken the lead in the politics and practice of energy efficiency, while companies including utilities in other countries have opposed the EU measures on the grounds they would hobble growth and that there is no cash for upfront spending.

"When I joined this company, I was very sceptical. I worked at Shell for 20 years. I was very sceptical about whether we were able to achieve this," Lars Clausen, an executive vice president at DONG, said with reference to energy efficiency.

"This does not cost money. In our experience, it delivers jobs. We don't do anything that does not make business sense," he said in a telephone interview.

DONG, primarily an oil and gas producer, bought gas retailer Shell Gas Direct from oil major Royal Dutch Shell earlier this year to take its business strategy into Britain.

Denmark, which holds the rotating EU presidency until the end of June, has made a deal on an Energy Efficiency Directive a priority, with backing from the Commission. The aim is to improve the bloc's record on energy savings by enforcing measures such as building renovation and insulation.

The Danes will steer a final round of talks to try to thrash out a text late on Wednesday.

Denmark and the Commission have argued that its many potential benefits include job creation.

The many opponents have included Britain, Spain and Portugal, as well as Germany, home to giant utilities, EU sources said.

NOT ROCKET SCIENCE

For Clausen, building a business based on energy efficiency is "not rocket science". He said DONG had about 140 client partnerships, primarily large industrial consumers, with whom it discusses how to reduce their energy use.

"We sell them a guarantee that we will improve their bottom line," Clausen said.

He gave as an example Danish healthcare company Novo Nordisk, which will save more than 50 million crowns ($8.4 million), he said, because DONG had managed to cut its energy use by 30 percent over a five-year period.

The contribution of energy efficiency services to DONG's financial results have increased by 400 percent since 2006, and the aim by 2015 is to double that, he said, but did not provide cash figures.

While Denmark is ahead of EU peers in terms of efficiency, Clausen says it still has major room for progress. Buildings, responsible for an estimated 40 percent of EU energy use, offer huge potential for change, he said.

Denmark has set a target, which means DONG must help consumers cut energy use by 2 percent annually from 2015, compared with 1 percent now. The country also aims for 100 percent renewable energy in 2050.

Clausen said DONG, meanwhile, was happy to supply oil and gas to the parts of the world expected to be "80 percent dependent on fossil fuels for the next 30 years".

(Editing by Jane Baird)