EU - Juncker Pushes for Higher Energy-Efficiency Target

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The incoming president of the European Commission is taking a tougher line than the current president, José Manuel Barroso.

BRUSSELS—The incoming leader of the European Commission has waded into a dispute over one of Europe’s key energy strategies at a time when the bloc is seeking to wean itself off gas and other energy imports from Russia.

Jean-Claude Juncker, who is to assume the presidency in November, has called for an ambitious target to improve energy savings when the proposal is unveiled Wednesday, pitting him against the current commission president, José Manuel Barroso.

Mr. Barroso and some of his senior aides, including his secretary-general, Catherine Day, are calling for an energy-efficiency target of between 27% and 29%, as measured against 1990 levels, out of concern that a higher energy-efficiency target could ruin the chance of securing a deal on a broader climate-change package in October.

But in a speech to the European Parliament last Wednesday, Mr. Juncker said “a binding 30% energy-efficiency target is for me the minimum.”

Mr. Juncker’s comments come as European Union countries and EU officials are locked in last-minute talks to agree on the target ahead of Wednesday. The targets are part of a broader push by the EU to fight climate change and reduce its energy dependency, particularly on Russia. The commission, the EU’s executive arm, has proposed that EU countries cut greenhouse-gas emissions by 40% by 2030, and boost the use of renewable energy by 27%, compared with 1990 levels.

The commission in June unveiled a new energy-security strategy in which it called for greater energy efficiency as part of the bloc’s efforts to wean itself off energy imports. EU countries spend more than €1 billion ($1.35 billion) a day on natural-gas and oil imports, with Russia providing the lion’s share of the bloc’s imported gas.

The latest draft of the commission proposal says it is aiming for a figure of “2X%,” meaning it would likely be in the range of 25% to 29%. An earlier draft had set the figure at 30%.

Under the proposal, any target would be binding on the EU as a whole, not on individual countries, meaning that some could go further than others.

During talks on Friday, the majority of the EU’s commissioners said they supported a target of 30%, said people familiar with the negotiations. Germany is understood to be taking the lead in pressuring both Mr. Barroso and the EU’s energy chief, Günther Oettinger, to go for as much as 35%, these people said.

Berlin views the energy-savings objective as part of a broader response to the Ukraine crisis and to the gas-pricing dispute between Kiev and Moscow. Russia in June suspended gas supplies to Ukraine, the main transit route for Russian gas imports to the EU.

In light of Russia, “some of us think there are a lot of low-hanging fruit we can pluck” in terms of energy efficiency, the EU’s climate commissioner, Connie Hedegaard, said in an interview.

Mr. Barroso and his team are concerned that a higher energy-efficiency target would not only jeopardize a climate-change deal but also provoke strong opposition from some member states, such as Poland.

One major worry is the cost of these energy savings. The most negative of the EU’s various impact assessments shows that the EU would need to spend €47 billion in direct investments a year to meet a 25% target, compared with an investment of €147 billion for 35%.

However, the cost would be dramatically offset by falling costs for energy imports and by job gains, as countries put in place programs to revamp buildings and public infrastructure, say proponents of a higher target.

“The construction of new nuclear-power plants, renewable energies and carbon capture and storage are much more expensive” than energy savings, said Peter Liese, a German lawmaker at the European Parliament.

Ms. Hedegaard pointed out that the countries that are most dependent on Russia for their energy, such as Bulgaria and Slovenia, were the ones where there was the greatest potential as they were the least energy efficient.

“In terms of businesses, public buildings and private homes, there’s no arguing that there’s still a lot that can be done, even in a country like mine, Denmark, where a lot already has been done,” Ms. Hedegaard said.

Although the EU has earmarked funds for energy savings—as much as €30 billion between 2014 and 2030—EU officials said countries would need to put in place incentive plans such as tax breaks to encourage people to renovate their homes.

Once the proposal is announced on Wednesday, it will need to win the support of EU governments and the Parliament, meaning it could still take many months before a final agreement is in place.

SOURCE: Wall Street Journal, July 20th 2014: