Unleash the Energy Efficiency Potential of Buildings

DELOITTE Energy Efficiency in Europe Report

In December 2015, the COP21 meeting and the Paris Agreement stressed more than ever how crucial it is for the future of mankind to hold the increase in the global average temperature to well below 2°C above pre-industrial levels (and even to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels). According to the International Energy Agency (IEA), energy efficiency is central to any two-degree energy scenario. The IEA considers that, by 2035, investments in energy efficiency need to represent nearly half of all the global energy investments required to stay under the two degree limit1. Accordingly, energy efficiency is one of the key elements of the EU’s energy policy. This is reflected in existing legislation and in targets to be reached by 2020 and 2030.

While there is a broad consensus at the international level that there is considerable untapped economic and technical energy efficiency potential, the measures implemented with a view to an improvement in energy efficiency have not made it possible so far to stay on track to reach the targets set by the European Union. This is due in particular to various existing barriers.

Unleash the Energy Efficiency Potential of Buildings

Buildings account for 39% of the EU’s total final energy consumption (2014), two thirds of which is in the residential sector. This is where the greatest potential for energy savings lies: 75% of the EU’s building stock is still energy inefficient and the rate of building renovation remains very low at around 0.4% to 1.2% per year13, while a rate of around 3% per year would be needed. European legislation on building sector energy efficiency is embedded in different Directives, mainly in the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive (EED). According to a recent study, 48% of the energy savings targeted under the EED’s energy obligation schemes (Article 7) are likely to be achieved in the building sector.

At project level, a better anticipation of benefits resulting from energy efficiency measures is necessary to justify their implementation on solid grounds: ex ante assessment of energy savings should be based on real ex post evaluations of similar projects and be tailored to each specific measure. The analysis should also take into account potential co-benefits (impact on individual comfort, on the market value of buildings, etc.). These can be more significant than pure energy savings in certain cases. France’s pilot energy renovation passport is one example of such specific analysis. This passport is an in-depth energy audit of a dwelling, with at least three detailed scenarios for the renovation work. It includes a detailed analysis, a cost estimation, and an assessment of expected savings and potential subsidies

Source: DELOITTE Energy Efficiency in Europe Report