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running costs for energy. In the UK, in 2013, over half (56%) of the organisations in commercial property rented their spaces to conduct business.214 This value has increase from 50% in 2003, and is anticipated to further increase.215 Considering that the value of UK commercial real estate stock in 2013 was over 20% of total European commercial real estate,216,217 then it can be assumed that the impact of this barrier is significant, especially it similar rental to owned trends exist in other Member States. This issue can be seen in the accommodation sector, where hotels owned and managed have undertaken energy efficiency activities compared to hotels in franchised chains. Furthermore, contractual relationships between multi-tenant providers and their customers result in the data centre owner paying the power bill, the tenants buying power blocks, and their IT purchasers separately specify equipment.
Therefore fragmentation results in little motivation to invest in efficiency in data centres.
Low awareness: The majority of the hotels in Europe are family centred enterprises that have limited/no awareness on energy issues. Furthermore, even within large organisations, budgets (profit and loss) and operations are localized to specific retail units, restaurants, warehouses, etc. Consequently, awareness is impacted by limited human and capital resources required to investigate and implement energy efficiency opportunities.
To illustrate this issue, Figure 5.1 and Figure 5.2 present the spread in 2011-12 energy intensity (kWh/m2) for a subset of EU-based hotels and restaurants belonging to the same organisations, respectively. These organisations have established energy efficiency programmes; consequently, one might expect a similar range in energy performance.
However, the performance spreads illustrate a wide variation in how sites are operated and maintained, which is a reflection in the lack of standardisation of practices (e.g., building management systems, operator training).
Figure 5.1 Energy performance spread of EU-based hotels belonging to the same organisation (source: ICF)
214 Property Industry Alliance (2015), ‘Property Data Report 2014’
215 Reducing energy demand in the commercial sector, Westminster Sustainable Business Forum and Carbon Connect, 2013.
216 Property Industry Alliance (2015), ‘Property Data Report 2014’
217 http://www.costar.co.uk/en/assets/news/2015/June/DTZ-European-CRE-stock-hits-34trn/
- 100 200 300 400 500 600 700 800 900 1,000
- 10,000 20,000 30,000 40,000 50,000 60,000 70,000 Energy Intensity (kWh / m2)
Site Floor Area (m2) Accomodation: Energy Intensity (kWh / m2)
Budget hotel Economy hotel Mid-scale hotel Upscale hotel
184 Figure 5.2 Energy performance spread of EU-based restaurants belonging to the same
organisation (source: ICF)
Unwillingness to install energy efficiency measures that go beyond the minimum standards set in building codes, although the efficiency standards in building codes rarely represent the optimum for efficiency, and because builders and designers rarely find an incentive to exceed these efficiency standards which might increase initial costs.
Replacement cycles: Large, expensive equipment (e.g., food service, data centres) is typically installed when existing equipment fails or maintenance costs become prohibitive.
Standard procurement practices usually entail obtaining bids and then selecting the one with lowest purchase price. In the case of energy-using equipment this usually means not only low first-costs but also lower efficiency, making the equipment more expensive to own and operate over the life of the product.
Financial disincentives: Although there are substantial savings over the long run, decisions are typically dictated by up-front capital costs since expenditure on measures within a shorter financial horizon might not be justifiable compared to company turnover or available funds.
Server utilisation remains low: underutilisation is a significant contributor to energy consumption and also constrains data centre capacity. Several factors contribute towards low server utilisation, these include: over-provisioning of IT resources; unused servers that use electricity while delivering no information services; and under-deployment of server power- management solutions.
0 200 400 600 800 1,000 1,200 1,400 1,600
0 100 200 300 400 500
kWh/m2
Surface area (m2)
Food services: Energy Intensity (kWh/m2)
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6 Proposed Policy Measures
6.1 EU policy context
6.1.1 Regulatory background
Energy efficiency is a key priority for Europe. Europe’s 2020 strategy218 for smart sustainable and inclusive growth set a target to increase its energy efficiency by 20% in 2020. The focus on energy efficiency has been attributed to the EU’s aim to improve economic competitiveness and sustainability, lower emissions and reduce energy dependency while also raising levels of employment and social cohesion. The recent 2030 Climate and Energy Policy Framework and the Council's Conclusion of October 2014 builds on the 2020 goals by identifying an indicative EE target of 27% for 2030, which would be reviewed by the Commission having a 30% target in mind. Furthermore, the Commission aims to identify priority sectors and ways in which EE gains can be addressed.219
The Energy Efficiency Directive (EED) which entered into force in 2012 establishes a common framework of measures for the promotion of energy efficiency within the Union, to ensure the achievement of the Union’s 20% target on energy efficiency which means that EU energy consumption in 2020 should be no more than 1483 Mtoe of primary energy or no more than 1078 Mtoe of final energy.
Since industry is one of the largest consumers of energy in the EU, energy efficiency is viewed as important for helping the Commission to achieve its energy efficiency target. Industrial efficiency was one of the seven flagship initiatives under the 2020 strategy. Here, the Commission established its commitment to support “the transition of manufacturing sectors to greater energy and resource efficiency”.220 Energy efficiency policy for industry has thus aimed at reducing the amount of energy required, for the same product or process.
A key regulation for energy intensive industries has been the Industrial Emissions Directive (IED)221, which introduces emission limit values for combustion plants with a total rated thermal input which is equal to or greater than 50MW. Operators of specified industrial installations operating activities covered by Annex I of the IED222 are required to obtain an integrated permit from authorities for their activities. Additionally, there have been proposals for limiting emissions from medium combustion plants (MCP) which will apply minimum emission limit values all combustion plants with a rated thermal input (RTI) of between 1 and 50 MW223. Similarly, the EU Emissions Trading Scheme224 sets limits on the total amount of certain greenhouse gases that can be emitted by the factories, power plants and other installations.
The scheme covers more than 11,000 heavy energy-using installations in power generation
218 COM(2010) 2020 Final EUROPE 2020 A strategy for smart, sustainable and inclusive growth
219 EUCO 169/14 2030 Climate and Energy Policy Framework; 24 October 2014
220 COM(2010) 2020 Final EUROPE 2020 A strategy for smart, sustainable and inclusive growth
221 Directive 2010/75/EU
222 Industries covered under the IED Directive are defined in Annex I to the Directive (e.g. energy industries, production and processing of metals, mineral industry, chemical industry, waste management, rearing of animals, etc.)
223 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the limitation of emissions of certain pollutants into the air from medium combustion plants http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2013:0919:FIN:EN:PDF
224 Directive 2003/87/EC, OJ L 275, 25.10.2003 (consolidated version 25.06.2009) and its implementing legislation
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and manufacturing industry. Regulatory frameworks such as these support the drive towards energy efficiency in industry and provide regulatory predictability.225
Industrial energy efficiency has also been promoted by other legislative instruments and policy initiatives. The Energy Performance of Buildings Directive, Energy Labelling Directive, Ecodesign Directive, Renewable Energy Directive, and proposed revision of the Energy Taxation Directive, are all directed to help the Member States (MSs) achieve their energy reduction objectives. This is complemented by policy initiatives, such as Resource Efficient Europe (COM/2011/21), Industrial Policy for the Globalisation Era (COM/2012/582), the Innovation Union (COM/2010/546) and the Agenda for new skills and jobs (COM/010/682), which leads to a complex matrix of multiple, potentially non-cohesive policies.
6.1.2 Recent EC communication on Industrial Energy Efficiency
The need for improving energy efficiency to improve competitiveness for EU industry and reduce costs was further emphasized under a recent communication on the ‘European Industrial Renaissance’226. The communication outlined that EU retail electricity prices for industry grew on average by 3.5% a year and gas prices 1% between 2008 and 2012.
Consequently, it is estimated that EU industrial electricity prices are twice that of the USA and Russia and 20% higher than in China. The price gap for gas is more significant, with gas being four times more expensive for EU industry compared with the USA, Russian and Indian competitors; and 12% more expensive than in China (but cheaper than in Japan). However, prices paid by industrial users vary by Member State. The communication also highlights that energy cost disparities represent the largest concern for the competitiveness of energy intensive industries in Europe (e.g. those involved in the production of paper and printing products, chemical goods, glass and ceramics, iron and steel and non-ferrous metals), although there are variations across plants, technologies and countries.
Under this backdrop of higher energy prices, EU industry improved its energy intensity by almost 19% between 2001 and 2011, compared with 9% in the US.227
The EU has developed industrial leadership initiatives that help to promote the uptake of breakthrough technologies that promote energy efficiency in industry. Two recent initiatives include the SPIRE and SILC II initiatives (Box 6.1)
Box 6.1 Outline of two key Industrial leadership initiatives in the EU
■ Sustainable Process Industry through Resource and Energy Efficiency (SPIRE) SPIRE is a contractual Public-Private Partnership (PPP) dedicated to innovation in resource and energy efficiency and enabled by the process industries. SPIRE brings together eight industry sectors operating in Europe who have a high dependence on resources in their production process; thus, they all have interest in improved efficiency and competitiveness. Its objective is to develop the enabling technologies and solutions along the value chain, required to reach long term sustainability for Europe in terms of global competitiveness, ecology and employment.
■ Sustainable Industry Low Carbon II (SILC II)
The SILC II initiative (2014-2020) was launched under the Horizon 2020 programme with a budget of €20m. The initiative will fund projects which develop low carbon technology solutions, with a special focus on energy intensive industries, in order to achieve significant greenhouse gas (GHG) emission reductions in EU industry. In practice, the initiative will support the development of new technologies, and their implementation in
225 COM(2014) 520 final Energy Efficiency and its contribution to energy security and the 2030 Framework for climate energy policy
226 COM(2014) 14 final For a European Industrial Renaissance
227 Energy efficiency trends in the EU, Odyssee-Mure, 2013
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some “pilot” industrial plants under real working conditions, that will allow goods to be produced with much lower GHG emissions. Targeted industries include inter alia iron and steel, non-ferrous metals such as aluminium and copper, cement, glass, pulp and paper, chemicals and ceramics.