Break Russia's Gas Stranglehold with Energy Efficiency

April 24, 2014 | 00:00

Break Russia’s Gas Stranglehold with Energy Efficiency

The Ukraine crisis has underscored again just how dependent much of EU Europe is on Russian gas imports – and how helpless it would be should worse ever come to worse. This is why Germany’s Chancellor Merkel recently proclaimed: “There’s going to be a review of all of our energy policies.” Yet the reinvigorated discussion on energy security is overlooking the simplest and quickest way to break free of Russia’s grip: pragmatic energy efficiency measures.

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It’s not pie-in-the-sky visions of shale gas imports from the U.S. or expensive new pipelines stretching across continents that could best help wean Europe’s economic powerhouse Germany off Russian gas starting now -- but rather unspectacular, down-to-earth steps to conserve energy. If implemented in Germany’s industry, businesses, and households, these savings could account for half of German imports of Russian natural gas. All of gas-dependent Europe, including Ukraine, could benefit immensely from the same strategy.

Germany currently imports 37 percent of its gas from Russia. This is much higher than the EU Europe average of 25 percent, limiting Germany’s geostrategic clout in dealing with Vladimir Putin.

In Germany, three-quarters of gas supply goes to heating German homes and businesses, and running its factories. In terms of energy security, this is Germany’s, and much of Europe’s, Achilles heel as there seems to be no obvious means to replace this supply. But it is also an opportunity.

Research shows that particularly in the industry and building stock sectors there is enormous potential for energy savings. This is the low-hanging fruit that can be plucked almost at once.

A new study conducted by the consulting firm ECOFYS for the Berlin-based advocacy group German Industry Initiative for Energy Efficiency (DENEFF), shows that if efficiency measures for buildings and industrial processes were doubled over the course of the next decade, Germany could slash its gas consumption, and thus reduce its imports from Russia by half.

The insulation of buildings according to standards slightly higher than those currently set by German building codes would contribute the lion’s share of this savings. State-of-the-art refurbishment would dramatically diminish buildings’ heating and hot water bills – even by as much as 80 percent. Currently, Germany is retrofitting about 1 percent of its buildings a year. But this is only half of what Germany has pledged to do. This pace has to be doubled for Germany to meet its own target and greatly augment its energy security.

The optimization of industrial processes – like heat recycling, smart plant management, and other measures -- would make up the rest of the savings. For example, the insulation of piping, machinery, and other hardware, could cut total gas consumption significantly. If such industrial insulation measures were implemented across the EU, these branches would reduce their total fuel consumption by 4 percent.

With heat recovery devices – technology that captures waste heat from the production process – Germany’s industry could shave another 2 to 3 percent off its gas usage. German breweries, like the Bergquell Brauerei Löbau in Saxony, have been using such equipment since 2010 to impressive effect.

The bulk of these measures require neither advanced nor costly technology, and can be implemented rather easily. It takes about two months for a small construction firm to retrofit a one family home with roof, wall, and floor insulation, draught-proof windows and doors, and improved heating, plumbing, electrical and ventilation systems.

The efficiency measures for industry pay off very quickly, in most cases in just two to four years. Old buildings are the most expensive – and important – to renovate; the investment is recovered over 20 to 25 years. According to previous studies, the same measures employed across EU Europe would, on average, result in even greater savings. Of course, if energy prices and CO2 prices rise, as is expected, the investment would be paid back even more quickly.

Indeed, much of the necessary legislation mandating these energy savings goals is already on the books in Germany – it’s just not enforced. Neither Germany nor the rest of EU Europe is on schedule to meet its 2020 targets –namely a 20 percent savings in the heating sector (since 2008). Yet the EU’s stated goal is to have one-hundred-percent ”climate neutral“ building stock by 2050.

None of the other proposed strategies or technologies under discussion, including renewable energies, offer the realistic promise of replacing Russian gas so fast. Unlike unconventional gas or futuristic power-to-gas technology, high-quality insulation and heat recycling devices are already available and at reasonable cost. They’re not rocket science.

Moreover, energy efficient societies will help Europeans meet their climate goals by reducing C02 emissions. The most recent report from the United Nations' Intergovernmental Panel on Climate Change (IPCC), for example, underscores the impact of investing in energy-efficiency technologies, particularly in housing stock. It cites “strong evidence that very low-energy construction and retrofits” can be economically attractive. New know-how, better design, and behavioural changes could achieve a two to four fold reduction of energy consumption in existing buildings at low or even negative costs, it claims.

The push toward energy efficient societies also has other benefits. Germany and EU Europe hold nearly 40 percent of the patents in the energy efficiency sector. In Germany alone, the energy efficiency sector boasted a turnover of 146 billion euro in 2012. A number domestic industries stand to gain from a renewed commitment to energy savings.

There is overwhelming evidence that Germany and the EU can bolster their energy security with the help of binding energy-savings measures. Industry and building stock is only the beginning – the lowest hanging fruit. Energy savings measures applied to fossil-fuel power plants, the transportation and service sectors, and commerce can increase savings further, and facilitate the drive for energy independence, as will greater renewable-energy production.

Energy efficiency isn’t the flashiest of the low-carbon technologies – but it’s the quickest, easiest, and arguably the cheapest. A rigorous energy efficiency program for Germany would cost roughly €5 billion a year – a lot of money, but just a fifth of what renewable energy subsidies are expected to cost in 2014. EU Europe can take advantage of efficiency, too, by writing binding targets – like an energy-efficiency improvement of 40 percent, as the European Parliament has demanded – into its 2030 policy framework for climate and energy.

As it has done with renewables energies, Germany can be the trailblazer and the first to loosen the shackles of gas-import dependency. Others will follow.


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