‘Golden era’ lying ahead for EU’s energy efficiency industries, IEA says

European companies are among world leaders in energy saving solutions and are ideally positioned to reap the benefits of climate action, but they feel ignored by Brussels, which left aside the EU’s multi-billion energy efficiency sector in its recent Net-Zero Industry Act.

Energy efficiency – doing more with less – is widely considered as a core tenet of climate action. The International Energy Agency (IEA) estimates that the sector will provide 40% of the necessary greenhouse gas cuts expected worldwide by 2040.

Yet, the European companies producing the many technologies that help improve energy efficiency feel left out by policymakers in Brussels.

“We sometimes have the impression that more could have been done to recognise the full role of the energy efficient industrial ecosystem and its potential to decarbonise Europe,” said Arianna Vitali Roscini, secretary-general of the coalition for energy savings, an association bringing together businesses, local authorities and civil society groups.

Among the European champions is Danish multinational Danfoss, which is best known for manufacturing the valves controlling the heat output of radiators. The company employs more than 40,000 people and had a turnover of more than €10 billion in 2021.

Others include Irish building material producer Kingspan, which employs 22,000 people with a turnover of €8.3 billion, and Signify – formerly Philips Lighting and located in the Netherlands – which boasts 34,000 employees and €7.5 billion in revenue.

“Energy efficiency is a massive [business] opportunity for Europe,” said Brian Motherway, who heads the IEA’s energy efficiency division.

“It’s got the kind of industry and strengths and competitiveness advantage around technology, around innovation, around advanced business models, around leadership globally that are really called for now,” he said at at a recent event in Brussels organised by the coalition where Euractiv was media partner.

At least 3 million jobs, possibly reaching up to 7 million, could be created around the world “depending on how fast we go on progress,” Motherway said. Especially when it comes to “digital smart technology, Europe has a real competitive edge,” he pointed out.

“We’re moving into a golden era for energy efficiency and therefore a golden business opportunity for energy efficiency” companies, the IEA official said, expressing his hope that “we can capture some of that for Europe”.

Little attention in Brussels

In Brussels though, policymakers have not shown the same enthusiasm.

To its dismay, the energy efficiency sector was left out of the European Commission’s propoosal for a Net-Zero Industry ACT (NZIA), tabled in March this year.

The law, which is currently being examined by legislators in the European Parliament and the Council of the EU, highlights specific sectors that deserve special government attention in order to keep manufacturing activity within the EU’s borders.

“There were 14 ecosystems that were highlighted, and energy efficiency was not one of those,” Roscini said, deploring the sector’s lack of visibility in comparison with other clean energy industries like wind power, solar photovoltaics or electrolysers.

“Of course, we are very happy that renewables had an ecosystem of their own,” she added, underscoring the strong complementarity between energy efficiency technologies and renewables.

In the European Commission, officials recognise the importance of the sector to reach the EU’s decarbonisation objectives. However, they also point out to the wide diversity of businesses represented in the sector, which makes it more difficult to identify.

The selection of industries featured in the NZIA was the outcome of “long, very political discussions and choices had to be made,” said Giulia Del Brenna, head of unit at the European Commission’s directorate for internal market and industry.

And because energy efficiency products are so diverse and often nearly invisible, like Danfoss’ radiator valves, it was difficult to pin them down and offer them a top spot in the NZIA, she explained.

“You are everywhere, so it is a bit more difficult to single out,” Brenna said.

[Edited by Frédéric Simon and Nathalie Weatherald]

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