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Energy Efficiency as the Largest Economic Potential

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Author:
Goran Jankes
Professor at the Faculty of Mechanical Engineering - University of Belgrade, retired, Thermal Engineer, the Founder and the Director of the Serbian Industrial Energy Efficiency Network (SIEEN)

Goran Jankes

 

Energy efficiency and reducing CO2 emissions, play a very important role when discussing sustainable development. The National Sustainable Development Strategy of the Republic of Serbia for the period 2008-2017 also includes energy efficiency in its five priorities and sets out that sustainable development should provide for a safe energy supply with increased energy efficiency of actors in the energy sector and improved energy efficiency of the economy; reduce the high energy intensity of the economy and provide for a more efficient use of fossil fuels, as well as promote the use of renewable energy sources. The new Energy Development Strategy of the Republic of Serbia until 2025 also includes energy efficiency as one of its top priorities.

 

Nevertheless, there has been no visible progress in the implementation of strategic priorities for quite some time. On the contrary, considering that improving energy efficiency is a long-term activity that requires creating certain preconditions (such as suitable legal framework, securing the sources of funding, the required level of education and awareness of the main actors and the public), that cannot be met at a fast pace, the question remains as to what extent would we succeed in reducing the existing discrepancies with the developed countries, or at least preventing them from growing further.

 

Energy efficiency is our largest energy resource, one that we should set in action, and the one that we have not even begun to use effectively.

 

According to the energy balance for Serbia, about 27% of final energy consumption is in industry, about 47% in other sectors of consumption (households, commercial and public services and agriculture), and the remaining percentage is in transport. Households play a dominant role in other sectors of consumption, in other words, the energy used for heating buildings.

 

 

Energy Efficiency in Large Cities

 

Interesting figures related to sustainable development were outlined in the study initiated by Siemens for several European cities (Munich, London, Stockholm, Belgrade), which pertain to challenges of urban development in these metropolis. The study concludes that climate protection must start from large cities given that more than 50% of the global population lives in them today; because they are simultaneously the largest energy consumers and possess the greatest potential to combat climate change (The Study on Munich). In line with the aforementioned study and obligations for reducing CO2 emissions, major cities in the European Union countries have developed strategies to reduce CO2 emissions, that in many cases set stricter strategic objectives than those outlined in their national strategies (London: reduce CO2 emissions by 60% by 2025, Munich: reduce the energy required for heating by at least 80%).

 

25-30% of Serbia’s population lives in Belgrade, and according to its strategy, the city has the ambition to follow the lines of development established by major European cities. Nonetheless, suitable strategic documents for reducing CO2 emissions and reducing energy consumption have not yet been drafted. The valid Energy Development Strategy of the City of Belgrade was created in 2008 and envisages an increase in energy consumption for heating by some 12% in 2030 compared to 2006. The previously mentioned study on Belgrade sets out that the energy consumption for heating in 2030 should be some 50% lower than in 2006; that is if the city adheres to the Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010, and “Regulation on conditions, the content and method of issuing certificates of building energy performance” of the Republic of Serbia, along with other development assumptions such as in the City’s Energy Development Strategy.

 

 

Efficient Use of Energy in Serbia – Legal Regulations

 

Even the new Energy Development Strategy of the Republic of Serbia lacks an ample vision on this matter. It foresees that the total energy consumption in households should be about 1.2% higher in 2030 than in 2010. As we know, the largest share in household energy consumption is heating; therefore the planned reduction in energy consumption for heating is not in accordance with the envisaged EU strategies.

 

In terms of industrial energy efficiency, Serbia falls considerably behind in this area, even in relation to the application of other European standards. After the first Energy Development Strategy was accepted, Implementation Programs for Serbian Energy Sector Development Strategy were made in 2006 for every field of ​​energy use. At that time, it was expected for the law on energy efficiency to be adopted by 2007. In 2009 we practically copied the 2006 Implementation Programs for the Strategy, given that there was no follow up during the previous three years. The Law on Efficient Use of Energy was passed only last year and, in order for it to be implemented in practice, another series of belated by-laws needed to be adopted.

 

 

An Example of Good Practice – The Netherlands

 

It is essential that the state rounds off this area of ​​law, because the improvement of energy efficiency is achieved as a consequence of state coercion and incentives, as well as economic interests of companies due to the reduction of energy costs and increase in profits. A typical example of government coercion is the case of the Netherlands where the so-called voluntary agreements were introduced after the oil crisis in the 1970s, which obliged companies to work on improving their energy efficiency. The sole element of voluntariness lied only in the fact that there was a choice to either sign the obligation to make concrete investments in energy efficient measures each year, or to pay a high tariff on energy use. The combination of this with other control measures, alongside rigorous implementation of prescribed means resulted in a very slight increase in energy consumption compared to the considerable increase in the national income.

 

 

The Role of the State

 

According to the data from the Serbian Industrial Energy Efficiency Network, the calculated energy consumption per unit of product for most industrial sectors during the 2000s (as well as according to the analysis that we have done for the purpose of developing the Action Plan for the Strategy) was 30%, or in some cases up to 200% larger in our companies than that of the similar ones in the West. Another indicator is energy intensity, or its consumption per unit of domestic product, which is approximately two times greater than that of the EU countries.

 

The European Union has defined a 20-20-20 policy for 2020, as well as a series of concrete measures for its implementation. It is safe to say that Serbia has made progress. However, it pertains mostly to approximately 100 projects financed mainly by EBRD and KfW funds. The motive for the implementation of the projects initiated by industrial companies (in addition to reducing energy costs) was the existence of financially attractive funding sources. This is one of the major prerequisites for improving industrial energy efficiency, along with the existence of balanced coercion, incentives, and rigorous enforcement measures in energy policy. The lagging behind of our industrial energy efficiency, in an era of growing energy prices, affects the competitiveness of our companies very adversely, and consequently impedes the role of Serbia in the international market.

 

Whilst criticism is not the primary intention of this article, it should serve as a warning that more decisive action is needed in order to avoid country’s further falling behind in terms of energy efficiency. In addition to the dominant role played by markets, the influence of the state through legal regulations and various financial instruments remains crucial even in the most developed countries of the EU.

 

Goran Jankes, Professor at the Faculty of Mechanical Engineering - University of Belgrade, retired, Thermal Engineer, the Founder and the Director of the Serbian Industrial Energy Efficiency Network (SIEEN)

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