What limits the Member States and other actors to fully tap into their potential?

By Thomas Comtet

Introduction:

For decades, the IPCC has stressed in its reports the need to drastically reduce greenhouse gas emissions, in particular by reaching zero net C02 emissions by 2050, in order to limit global warming below 1.5°C or 2°C (IPCC, 2018, 2022). In the European Union (EU), nearly 80% of the greenhouse gas emissions are due to energy production and consumption (EEA, 2008). It is therefore impossible to consider mitigating climate change without achieving an energy transition that will involve a significant reduction in energy consumption. In a sustainable development context, however, a fair energy transition that does not compromise the global and local energy supply and the vital needs of the population is required (Bertoldi & Mosconi, 2020). Found in academic literature since the 1970s, the concept of energy efficiency (EE) has become, in response to the 1973 oil crisis, a key issue for the governments of developed, major energy consumers, countries. In physical terms, the energy efficiency of a system is defined by the ratio between the level of useful energy it delivers and the level of energy it requires to operate (Patterson, 1996). The European Environment Agency (EEA) defines EE in a broader way: “energy efficiency means using less energy for the same output or producing more with the same energy input and minimizing energy waste”. For many years, EE has been recognized by the academic community and policy makers as an attractive multiple-benefit solution, as it not only contributes to the reduction of greenhouse gas emissions but also helps to guaranty energy security, improves global business competitiveness or contributes to the reduction of energy costs for households (Geller et al., 2006 ; Mallaburn & Eyre, 2014, Fawcett & Killip, 2019). Energy efficiency is one of the pillars of the EU’s energy and climate policies. However, many barriers limit the level of energy efficiency achieved in the main energy consuming sectors and hinder the potential of the different actors of energy efficiency: individuals, companies, public institutions and services. The aim of this paper taking the form of a literature review is to provide a quick overview of the limits that prevent these actors and therefore the EU from reaching its full EE potential.

Energy efficiency in the EU:

The history of the EU is inextricably linked to energy issues, as evidenced by the creation of the European Coal and Steel Community (ECSC) in 1952. Today, energy management is one of the competences of the EU, although the Member States retain their sovereignty. The Treaty on the Functioning of the European Union (TFEU) lists the EU’s competences and commitments in the field of energy, including guaranteeing the proper functioning of the energy market, ensuring the energy supply of the EU member states, promoting renewable energies and promoting energy efficiency. These objectives have been reflected in EU policies for decades. In 2007, the 2020 package was presented which set three targets: 20% cut in greenhouse gas emissions (from 1990 levels), 20% of EU energy from renewables and 20% improvement in energy efficiency. The Energy Efficiency Directive (EED, 2012/27/EU) adopted in 2012 set out a number of measures to improve energy efficiency in accordance with the 2020 package. Since then, and even as doubts have arisen about the EU’s ability to meet the targets formulated without more binding measures and greater commitment from Member States, there have been ongoing negotiations in the European Commission and ongoing discussions in civil society (Trotta, 2019) which resulted in several increases in the EE targets. In 2018, through the Clean Energy for all Europeans package, the EU adopted the revised Energy Efficiency Directive (EED, 2018/2002), which set the EE target at 32.5% (i.e. a final energy consumption of 956 Mtoe and/or primary energy consumption of 1,273 Mtoe in the EU by 2030). Currently, in the context of the European Green Deal and the REPowerEU plan, the Commission proposed a new increase in the EE target and the negotiations are currently ongoing.

However, the progress made in recent years is not sufficient and the policies implemented often fail to reach their full energy savings potential (Rosenow et al., 2016). The energy efficiency gap, as identified and studied by the academic community (Jaffe & Stavins, 1994; Gerarden, Newell & Stavins, 2017; Bagaini et al., 2020), describes this difference between the potential of EE policies and their actual results. This gap is due to a number of limits that policy makers need to understand, anticipate and tackle in order to reach the increasingly high EE targets they fix.  

Economic, institutional and behavioral barriers to energy efficiency:

Many studies have aimed to better understand the limits of energy efficiency policies that contribute to the energy efficiency gap. Some of these limitations are related to the very structure of the policies, such as the rebound effect, for example, which has been extensively studied and is now generally anticipated by policy makers when implementing an energy policy (Brännlund, 2007 ; Baležentis et al., 2021). Other limits and barriers have a detrimental impact on the policy’s results because they prevent the different stakeholders (governments and political institutions, companies, households and individuals…) from grasping and using the policies to their full potential. Many authors have sought to identify and classify these barriers (Weber, 1997 ; Langlois-Bertrand et al., 2015; Sorell et al., 2016) and Bagaini et al. (2020) propose, for example, a classification into three broad categories: economic barriers, behavioral barriers and institutional barriers.

Economic barriers:

Economic barriers are certainly the most intuitive and have an extremely high influence on the effectiveness of a policy. Several studies show that measures that are financially costly and coercive are likely to be strongly rejected by individuals (Ebrahimigharehbaghi et al., 2019; Bagaini et al., 2020; Faure et al., 2022), who generally prefer policies that are voluntary and offer an attractive financial incentive for implementation (Rhodes et al., 2017; Kitt et al., 2021). Firms also need to perceive a substantial economic interest (via subsidies or a real gain in competitiveness) in order to contribute to the success of a policy in which they are stakeholders (Bertoldi & Mosconi, 2020).

Behavioral barriers:

When implementing a policy that affects people’s daily lives, behavioral barriers can undermine its potential impact. Drews and van der Bergh (2015) identified factors that positively influence public support for climate policies. Many of these factors are also relevant for EE policies. These factors can be related to the political orientation of individuals, their level of trust in scientists, their perception and knowledge of climate and energy issues (Bagaini et al, 2020) or their emotions towards climate change. Measures that make people feel that they are conceding some of their freedom (Kitt et al, 2021) or that they are suffering from an injustice compared to another part of the population are likely to receive opposition. Other contextual factors such as the media consulted for information or the location of individuals and thus their exposure to climate change impacts or natural disasters may influence whether they support the policies in question (Drews & van der Bergh, 2015).

Institutional barriers:

Finally, political and institutional barriers can have a strong impact on the EE gap. Langlois-Bertrand et al. consider that political institutional barriers “originate from, are controlled by, or are caused by factors directly related to political institutions” (2015, p.32). They may, for example, stem from a lack of transposition of EU directives into Member State legislation or a lack of institutions or human resources in charge of enforcement (Garrone et al., 2017; Pereira & da Silva, 2017). Issues of governance can also have a negative impact: at what scale (national, regional, local…) is the implementation and management of the policy done and who is in charge of it, between the different agencies, departments, ministries? Are there redundancies between policies implemented at different scales and are the delays for implementation longer than expected at the time of the impact assessment (Bagaini et al, 2020)? Do these different stakeholders have divergent policy interests? Is there high exposure to external pressures or potential corruption (Langlois-Bertrand et al 2015). Other limitations relate to the methods for calculating and evaluating policies. Also, some barriers are both behavioral and institutional: citizens who have a very low level of trust in the political institutions, for example, may oppose policies without even evaluating their potential benefits (Drews & van der Bergh, 2015 ; Faure et al, 2022).

Conclusion:

Improving energy efficiency has been identified for years by the academic community and policy makers as a priority issue for mitigating climate change. Energy efficiency is at the heart of the EU’s energy and climate commitments but many barriers still limit the impact of policies implemented by the EU and within Member States. Of different natures and impacting different stakeholders crucial to the successful implementation of policies, more and more studies are identifying these barriers with the objective of helping policy makers to improve the measures already in place and to design policies with the highest possible impact potential in order to close the energy efficiency gap as soon as possible. Another challenge that goes beyond the scope of this paper will consist in refining, objectifying and systematizing as much as possible the calculation methods and indicators for evaluating and monitoring policies.

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