How energy efficiency can be the game changer to kick Europe’s gas addiction

Energy transition

As the final trilogue discussions approach on the Energy Efficiency Directive (EED), it is important to understand how this legislation can be the missing piece when it comes to Europe weaning off fossil gas.

As we approach the end of winter filled with energy uncertainty, policy makers and governments have already turned their attention to the next. Europe’s success in filling its gas storage reserves and the relatively mild winter weather have helped soften the blow of skyrocketing energy prices. Yet, most of these reserves were filled by Russian gas and with less of this gas flowing through Europe’s pipelines,the winter of 2023 will bring a new set of challenges. While renewable energy has a major role to play in tackling these challenges, an often overlooked solution is Energy Efficiency. 

The Energy Efficiency Directive (EED) is part of the European Green Deal and covers a range of topics including overall EU targets for energy efficiency across member states, as well as the usually overlooked provisions which will decide the fate of combined heat and power plants and their ability to burn fossil fuels. The EED recast proposal incentivises a switch from coal to gas fired cogeneration, putting a heavier burden on already limited gas supplies. Yet, the European Council and Parliament have not put this into question.

The heating and cooling provisions within the EED is a central component that can resolve this issue. By tackling the phase out of fossil fuels in the EU’s heating mix, the impact of limited gas supplies on homes will be minimal as energy prices become less volatile. There are already some promising provisions that are agreed upon within the EED trilogues that can help with this. Local heat plans that prioritise the use of energy efficiency and set a trajectory towards climate neutrality are a great foundation to build from. Locals working on these plans can adopt a holistic approach where the integration of renewables, the local building stock and the decision-making structure can lead to more efficient heating and distribution systems. 

Moreover, in the upcoming trilogue discussions, decision makers will need to decide how long heat produced from cogeneration, including gas, can be included to get the label efficient district heating and cooling. Recent discussions between the EU Council and Parliament are concerning. The Council is pressing to continue allowing fossil fuel based cogeneration. The Parliament needs to push back stronger on a decision that excludes cogeneration running on fossil fuels after 2035 as a minimum. The continued use of fossil fuels to produce both heat and power will seriously undermine the EU reducing its dependence on fossil fuels and hamper efforts to ensure a safer, secure energy supply. 

As part of the current discussions, there are also considerations for an alternative approach for efficient district heating and cooling based on greenhouse gas emissions. Again, this is not a formidable solution as it fails to address the fossil fuel dilemma as it does not incentivise renewable heating solutions. Instead, it potentially prolongs the use of coal with costly and unproven carbon capture and storage and therefore, should be strongly rejected by co-legislators. 

The inclusion of the use of waste heat will also be up for debate in the dialogues. At present, unused waste heat from other processes such as heavy industry or data centers are an often underutilized heat source that could potentially prevent the combustion of additional fuels for heat, if this waste heat gets to be fully renewables based. However, there needs to be a clearer timeline of when these waste heat sources would be decarbonized themselves. Otherwise, we run the risk of creating another heat system that relies on fossil fuels, something Europeans and our climate cannot afford. 

This winter has proven how fragile our existing heating system is. Meaningful progress on legislation such as the EED is needed to protect us from the coming winters. Fossil fuels have no further place in a future proof energy system and any further delay on replacing them with renewable energy will prove costly. Over the next one and a half months, as the trilogue discussions on the EED draw to a close, policy makers have the opportunity to guarantee a safer, energy secure future for Europeans through supporting ambitious provisions that can accelerate the energy transition.

By Morgan Henley of CEE Bankwatch & Verena Bax of CAN Europe

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