Volatile energy markets hinder competitiveness, says efficiency forum

This article is part of our special report Closing the gap, how to advance energy efficiency for EU competitiveness and climate goals.

At a macro level, the EU's industrial competitiveness depends on breaking free from volatile energy markets and supply dependencies, Energy Efficiency Movement (EEM) executive director Mike Umiker told Euractiv.

EEM released a report in May explaining how to overcome internal barriers to industrial energy efficiency. They found that companies often struggle with volatile energy prices amid an uncertain macroeconomic environment.

Companies can use energy efficiency as a competitive advantage, and many are aligning their energy strategies with broader economic trends. However, political shifts create inconsistent energy policies where climate measures are often reversed by subsequent governments.

“Energy efficiency is Europe's homegrown resource; it reduces import dependencies while strengthening industrial resilience,” said Umiker, who leads the global energy efficiency forum EEM.

According to Umiker, energy efficiency is not only essential to reach net zero, but it also constitutes a highway to competitiveness for businesses. He said the industry doesn't need to be convinced of the benefits of energy efficiency. Leaders simply need a data-driven, pragmatic pathway to implementation.

Misconceptions remain

For many, the benefits may be clear, but misconceptions surrounding the EU’s Energy Efficiency First principle remain. Dr Tim Mandel, a research associate at the Energy Systems department at Fraunhofer ISI, told Euractiv there are three main misconceptions he observes when talking to consultants, ministries, and regulators.

The first is the claim that the principle is ‘just a political slogan’.

Mandel explained that since the recast Energy Efficiency Directive, member states must show that efficiency options have been “systematically considered” and report on the methodology in their National Energy and Climate Plans (NECPs).

“So at least in theory, Brussels can now reject investment plans that skip the test,” Mandel said.

Another misconception is the belief that the principle means that energy efficiency should always be prioritised over renewables or grids. Mandel said the principle is given priority when it brings more societal value.

“If a cost-benefit analysis that monetises climate, health and security co-benefits still shows a new power grid beats extra efficiency, the power grid proceeds,” Mandel said. “So, in other words, [the Energy Efficiency First principle] is a screening hierarchy, not an anti-renewables veto,” Mandel said.

Mandel also finds that some people still believe implementing the principle will lead to higher costs. However, he points out that various studies show the opposite, with energy efficiency solutions typically downsizing infrastructure and avoiding fuel imports, thereby cutting total system expenditure.

In Umiker’s view, it’s primarily a lack of courage that is preventing companies from going all in on energy efficiency.

Funding is available. Technology is ready. Knowledge to gather data and implement energy efficiency strategies is available. What's missing is the ability to make certain decisions and take certain risks to prioritise energy efficiency - even when payback times are often under 5 years,” Umiker said.

With the EU still falling short of its 2030 efficiency targets by the equivalent of Belgium’s annual energy use, more remains to be done in the eyes of the European Climate Neutrality Observatory (ECNO). Starting with the implementation of existing laws.

“The European Commission should support and hold member states accountable in implementing national energy efficiency measures, including renovation plans. Supporting the adoption of the Energy Taxation Directive is also crucial to remove benefits for fossil fuels,” ECNO expert Eike Velten told Euractiv.

Velten said the Commission should ensure EU funding goes toward clean and efficient systems instead of promoting new fossil-based investments.

“The European Commission is exploring options like an EU-wide white certificate scheme to help streamline and boost investment in efficiency. However, there’s also a risk of misdirected investment,” Velten said.

Velten argued that investing in fossil-based systems to make them slightly more efficient is not a long-term, sustainable path, and could divert resources away from clean, long-term solutions like electrification and renewables. She said, “Strong implementation, smart incentives, and consistent policy direction are essential to closing the efficiency gap.”

Public procurement as a strategic lever

Umiker acknowledges that while the bulk of funding for investments in energy efficiency will come from the private sector, the public sector plays a crucial enabling role.

“Strategic public-private partnerships can mobilise significant capital by aligning goals, sharing risks, and combining public incentives with private investment,” Umiker said. He described public procurement as a powerful tool since governments can use their purchasing power to set new energy efficiency standards and steer the market.

Umiker said in this way, public procurement becomes a strategic lever, not only for energy efficiency, but also for broader goals like industrial competitiveness and energy security.

Reducing our energy consumption is central to getting rid of Russian gas. As stated in the EU’s REPowerEU plan, energy savings are the quickest and cheapest way to reduce our dependence on Russian gas,” MEP Niels Fuglsang (S&D) told Euractiv. “Therefore, to me, it’s also a mystery that energy efficiency solutions often seem to be overlooked.”

[ Edited by Brian Maguire | Euractiv's Advocacy Lab ]