Make or break for EU Industry

Make or break for EU Industry

The Energy Efficiency Financial Institutions Group (EEFIG) established by the European Commission and the United Nations Environment Programme Finance Initiative (UNEP FI) has just published its final report from its working group on industry . It is a wake-up call that action needs to be taken urgently.

Europe’s industry is being called upon to play a key role meeting our long-term climate and energy objectives and more investment in energy efficiency improvements is key. Yes, industry must decarbonise to unprecedented levels at a slow pace. But decarbonisation will remain at a slow rate unless addressing energy demand, through improved energy efficiency, is confronted. This necessitates decarbonisation to unprecedented levels at a very fast pace.

Europe’s industry is complex with globally recognised energy-intensive industries and about 25 million small and medium-sized enterprises. Given the complexity of the sector, there are no simple solutions that fit all. Furthermore, the policy context keeps changing, not only because of the war in Ukraine and the ensuing energy crisis, but also because the EU is taking leadership in the efforts to meet its Paris climate obligations through the European Green Deal and the recently published ‘Fit for 55’ package.

Achieving energy efficiency improvements, reducing GHG emissions and decarbonising industry becomes a higher priority. Importantly, the New EU Industrial Strategy (March 2020 and updated in May 2021) seeks to balance the objectives of a globally competitive and world-leading industry and an industry that paves the way to climate-neutrality by a number of initiatives supporting industry on their path towards climate neutrality.

The EEFIG Industry Working Group was set up to analyse the challenges inherent to obtaining long-term financing for energy efficiency. It’s objective was to

• assess the complex array of industrial practices dealing with energy efficiency,
• identify and assess the main obstacles and drivers for improving energy efficiency in industry (energy-intensive, non-energy intensive and SMEs),
• develop a portfolio of best practices examples on driving investments and overcoming obstacles, and
• provide recommendations on what tools and policy instruments are likely to be most effective for increasing the energy efficiency investments in industry.

The Working Group included a wide range of experts from the financial community, industry representatives, technology and service suppliers, academics and policy analysts. There were six lively meetings for the group to look at the sector from every perspective. As team lead, representing EEIP, it was an invigorating and motivating experience because everyone knew more had to be done if Europe was to meet – or surpass – its Paris climate commitments.

When you read the report, you will see that the Group provides valuable conclusions and recommendations for member states, EU institutions, industry and financial institutions.

One point comes out quite strong: give priority to energy efficiency investments - in industry as well as buildings - in support of the strategy for sustainable finance and the Energy Efficiency First principle.

What is obvious is the need for regular dialogue amongst the full range of stakeholders related to the industrial sector. The working group played an important role but its mandate is over. The challenges are not.