With the war in Ukraine fueling the energy crisis and the fears about adequate gas supplies for the winter, it is high time for Europe to reflect on some poorly made energy decisions of the past decade.
It was only in 2014, when the Russian invasion in Crimea raised concerns about the security of supply in Europe and the reliability of Russia as a trading partner. All the signs showed that stronger climate action was needed, with emphasis on energy efficiency. A leaked European Commission impact assessment report (produced as part of the Energy Efficiency Directive review), showed that higher energy efficiency policies would lower energy imports significantly, while creating more jobs. This was also the outcome of independent analyses, such as the technical report from DLR – the German Institute of Technical Thermodynamics – commissioned by Greenpeace, that estimated reductions of energy imports up to 45% until 2030 from stronger renewable energy and energy efficiency policies.
Still, European leaders at the time clearly failed to rise to the occasion. Instead of speeding up the transition away from all fossil fuels the opposite happened: since 2014 the EU actually slowly, but steadily, increased fossil gas consumption.
As a result of these blindsighted policies, the European economies, their citizens and businesses, are now suffering greatly from high energy prices and an increased reliance on foreign climate damaging energy sources. Perhaps nowhere is this more evident than in the case of Greece, a country that had suffered a severe and painful economic recession the past decade and had just managed to return to growth.
The disastrous results of choosing fossil gas instead of energy efficiency in Greece
Despite the economic crisis that crippled its GDP and its national budget, Greece still recklessly spent more than 9 billion euros in direct and indirect subsidies to support the expansion of fossil gas between 2011-2022, according to a Greenpeace Greece analysis.
According to the same analysis, if these 9 billion euros had been used instead to fund energy upgrades of buildings (insulation, window frames, heat-pumps and ventilation), then more than 750.000 households – almost a fifth of all households in Greece – could have had their homes retrofitted by now and thus being effectively protected from the current energy crisis. Unfortunately, Greeks still live in largely uninsulated houses, burning oil or gas for heating and the government is now forced to burn (pun intended) billions towards heating and electricity allowances.
As this wasn’t bad enough, the Greek government plans to additionally spend another €1.5 billion until 2030 towards new fossil gas infrastructure for heating homes.
This is just one example of how energy efficiency in the EU is often neglected in favor of questionable investments in energy supply. Aware of this situation, the European Commission has put forward legislation that tries to tackle the problem. This is the Energy Efficiency First Principle (EE1) – a lesser known act – that was formally defined in the Regulation on Governance of the Energy Union and Climate Action (2018) and explicitly made a priority under the recent recast of the Energy Efficiency Directive (2021).
Energy Efficiency First Principle in a nutshell
In simple words, the EE1 principle says that a government first ought to thoroughly check whether an investment in supply infrastructure, such as new gas pipelines, is really needed or it can be avoided because another investment in energy efficiency has similar, or better, value for the energy system, the economy, the environment and the society. In this case, any public support for energy supply infrastructure is not justified.
According to the Commission’s own words, the principle “should ensure that:
- only the energy really needed is produced
- investments in stranded assets are avoided
- demand for energy is reduced and managed in a cost-effective way”
Proving that energy efficiency matters in Greece, and elsewhere
With the EE1 principle in mind Greenpeace Greece decided to test the government’s decision to spend 1.5 billion euros in new fossil gas infrastructure until 2030. Greenpeace Greece asked the Institute of European Energy & Climate Policy (IEECP) to make a cost-benefit economic analysis of this decision and compare it with other hypothetical investments in energy efficiency of buildings. Exactly as the EE1 said all governments ought to do.
IEECP’s methodology considered factors such as reduction of pollution, protection from rising energy prices, and higher property values from energy upgrades. It then tested the economic impact of the 1.5 billion euros gas investment, as well as that of 5 hypothetical scenarios of energy efficiency investments worth 1.5 billion euros each. These efficiency scenarios were:
- Using €1.5 billion to insulate buildings
- Using €1.5 billion to install heat pumps
- Using €1.5 billion to install photovoltaic systems at buildings
- Using €1.5 billion to upgrade buildings to nearly-Zero Energy Buildings (nZEB)
- Using €1.5 billion to upgrade buildings to Zero Energy Buildings (ZEB).
As shown from the graph below, the economic impact (expressed in the ‘net present value’ of the investments) is much higher in all the energy efficiency scenarios than the fossil gas scenario. In fact, the fossil gas scenario was the only one that actually had a negative economic impact.
Simply put, spending €1.5 billion in energy efficiency investments can yield back to the economy (households, businesses, industry etc.) as much as €800 millions. While spending €1.5 billion in new gas infrastructure will further damage the economy by an additional €1 billion.
It’s a no-brainer really: more gas means more energy imports, higher energy prices and more climate damaging emissions while more efficient homes means higher income for households, higher property value, less energy poverty and more jobs created inside the economy. The study (in Greek with an English abstract) can be found here.
Time to quit gas and move ahead
Greece has a chance to correct this mistake. In 2023 all EU member-states will have to present their updated National Energy & Climate Plans for 2030 which ought to be adjusted to the new political, economic and technological developments. Greece, as any other government, should quit new fossil gas projects, speed up the process of phasing out fossil fuels and invest in energy efficiency and clean energy.
The signs of our times are hard to neglect, demanding even stronger political action. All governments ought to know better than to waste even a single euro down the fossil gas drain hole.
Takis Grigoriou
Climate & Energy Policy Advisor for Greenpeace Greece