Beyond carbon emissions – measuring the impact of energy efficiency

What impact do energy efficiency measures have on the health of Europe’s citizens? What about social welfare and public sector budgets? Do energy efficiency targets impact on industrial competitiveness, GDP and employment levels?

Determining whether energy efficiency policies have a net beneficial or detrimental impact – and to what degree – on these areas is the focus of a new study published today by DG Energy. The study provides policymakers with evidence to confidently design effective energy efficiency policies in the long-term.

Carried out by Cambridge Econometrics, in collaboration with EY and SQ Consult, the report ‘The macro-level and sectoral impacts of energy efficiency policies’ shows that an ambitious European energy efficiency programme could have economic, social and environmental benefits.

The study goes beyond a standard economic modelling approach to consider impacts in six different areas, building on work previously undertaken by the International Energy Agency (IEA).

The six impact areas covered include:

  • Economy and labour market
  • Health
  • The environment
  • Social welfare
  • Public budgets
  • Industrial competitiveness

As far as GDP and employment are concerned energy efficiency targets are shown to have a positive impact:

Summary of GDP and employment impacts, EU28, % from EUCO27 Source: E3ME, Cambridge Econometrics

The potential of energy efficiency measures to generate social, environment and health-related cost savings is also considerable:

  • More than 8 million households could be removed from fuel poverty if ambitious programmes to renovate and improve buildings were implemented and targeted specifically at low-income households;
  • Greenhouse gas emissions are reduced; in all the scenarios the 40% reduction target for 2030 is met and in the more ambitious scenarios it is exceeded by up to 7 percentage points; and
  • Health benefits of up to €77bn pa (with a 40% target) would result largely from reductions in the emissions of particulates.

The Energy Efficiency Directive (2012/27/EU) provides the framework for advances in energy efficiency across Europe which, as this report shows, could result in substantial economic, social and environmental benefits. The challenge for policy makers is to further design specific measures that will realise the full potential of the possible benefits, which may vary between Member States. Most important, however, is to implement policy that ensures that the energy efficiency improvements are actually carried out.

To explore the implications of energy efficiency measures in more details, please see the full report.

 

[1] The range of results affects uncertainty in the degree to which investment in energy efficiency displaces (or ‘crowds out’) other economic activity.

For more information about this study, or to explore how CE might tackle some of the challenges in this policy area, please contact:

Hector Pollitt Director, Head of Modelling hp@camecon.com
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