What Is Energy Efficiency?

The question ‘what is energy efficiency?’ is currently on the lips of many policymakers, business executives and citizens, as cutting greenhouse gas emissions and making savings on energy bills have shot to the top of the international agenda. The concept itself, however, is wieldy and how to measure energy efficiency is a matter of some debate.



The International Energy Agency ( IEA ) defines something more energy efficient “if it delivers more services for the same energy input, or the same services for less energy input”.

Improving the energy efficiency of homes, vehicles and businesses is increasingly seen as a way to fight global warming, reduce pollution, combat fossil fuel depletion and boost energy security. Improving energy efficiency significantly reduces the expenditure of companies and individual households, as heating and transport costs consume a growing share of revenues.

There are opportunities to make energy efficiency gains throughout the economy, such as improving the efficiency of electrical appliances, reducing heat loss from buildings, developing electric vehicles and incentivising companies to reduce their energy consumption through regulation.

The European Union pledged in 2006 to cut its annual consumption of primary energy by 20% by 2020 via energy efficiency improvements. The European Commission estimated that average energy saving benefits per year can easily amount to over €1000 per household.

But unlike the 2020 targets to cut greenhouse gas emissions and increase the share of renewable energy, the efficiency target is not legally binding. The burden was therefore not shared between member states as in the other cases. The lack of binding commitments means that the EU is currently (late 2010) far from reaching the target, as the Commission estimates that it is heading towards 11% energy savings at best.

The old debate about making the target binding is picking up again as the Commission prepares a revision of the 2006 Energy Efficiency Action Plan , but opponents point to difficulties in measuring progress towards the target.

Progress has, however, been made on the regulatory front since 2006. For instance, the EU has set energy efficiency standards on energy-using products such televisions, refrigerators and lighting, limited CO2 emissions from cars, and introduced fuel efficiency labels for tyres.

Perhaps most importantly, it agreed a recast of the Energy Performance of Buildings Directive in 2009, requiring member states to introduce minimum efficiency requirements and requiring the inclusion of an energy performance certificate in documents regarding the sale, renting or advertising of a property. Buildings account for about 40% of Europe’s energy use, which makes them the most important source of untapped energy efficiency gains.

In the UK, the new coalition government’s manifesto includes a green deal to encourage household energy efficiency improvements paid for by savings from energy bills. The government also vowed to introduce measures to improve the energy efficiency of businesses and public sector buildings and pledged to reduce central government carbon emissions by 10% within 12 months.

Meanwhile, the Scottish government is currently developing an Energy Efficiency Action Plan for Scotland.

In Wales, the Welsh Assembly Government funds the Home Energy Efficiency Scheme , which offers homeowners a grant of up to £3,600 to make heating and insulation improvements.

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