EU energy efficiency directive (EED) – evaluation and review, public consultation

News | 2021-02-09

The EU is heading towards climate neutrality by 2050. Finland is setting more ambitious targets
and is aiming at climate neutrality by 2035. Within the context of Finland’s target, the chemical
industry in Finland announced its ambition towards climate neutrality already in early 2019, before the government set its targets. In June 2020 the chemical industry published a study that
sets the pathway to large greenhouse gas reductions and climate neutrality.

In the chemical industry carbon neutrality roadmap, greenhouse gas emission reductions are
taken into consideration from three different angles, reduction from processes (scope 1), energy
use (scope 2) and raw materials (scope 3). When looking at the solutions towards climate neutrality, a large toolbox of different technologies has been identified. Energy efficiency is a central
tool in the box.

Originally the Energy Efficiency Directive was set up by the EU to reach a more energy efficient
economy, to create innovative and technological solutions and thus improve the competitiveness
of the industry, boost economic growth, create jobs and reduce the dependency on energy imports. Now the emphasis on climate change has, additionally, become one of the main drivers of
the directive, and thus requirements for achieving climate neutrality need to be taken into consideration.

The chemical industry in Finland uses over 27 terawatt hours of energy, 20 terawatt hours being
heat and 7 terawatt hours being electricity. This energy mix will transform completely in the upcoming decades, reducing the need for heating with combustion and increasing the need for
clean, securely available and globally price competitive electricity. The electricity need in the upcoming decades will be at least 5-10 times higher than that of today. This is mainly due to the
massive deployment of power-to-x solutions and electrification of industry processes, but also
because of accelerating the circular economy. There is no climate friendly future industry without
a substantial increase in primary energy, and especially emission free electricity.

Energy efficiency in the Finnish chemical industry is already an established way of thinking and
doing business. The "Energy Efficiency First" principle is largely applied throughout the industry
sector. Since 1995 until 2019 the chemical industry has reduced its energy use per ton of
product with 24 percent. Since energy efficiency thinking has been largely deployed for decades,
many plants are already close to their thermo-dynamical limits of current processes. It becomes
tougher to find economically viable energy efficiency projects. Increasing the Energy Efficiency
Directive's current ambitions further, would require capital intensive investments into renewing
current facilities and building new ones. This could result in investment being done rather with
energy efficiency than climate action in mind.

The measurement of energy efficiency in the EU today is performed in absolute terms rather
than related to performance. A viable part of any industrial climate neutrality target is electrification, and this requires increasing the absolute use of electricity. The focus of the Energy Efficiency Directive should not be on measuring absolute use of energy, rather focus on
what kind of energy is used (the emissions coefficient), how much energy is used
performance wise, eg. per ton of product, and how cost-efficient the energy use is. If
the measurement for energy efficiency will be an absolute cap with a linear reduction, it will
sooner or later become counterproductive for industrial climate ambitions. New capital investment in technologies advancing the use of green hydrogen, of electrifying industrial processes,
capturing carbon dioxide and utilizing it and accelerating circular economy, will be harder to motivate if the focus is more towards minimizing absolute use of energy rather than minimizing the
absolute impact on climate.

For the industry to advance with its climate ambition, the Energy Efficiency Directive needs to be
updated to the 21st century. The directive should be guiding industry actions towards:
• Performance-based energy efficiency
• Growing utilization of low-emission or emission free energy sources
• Decreased dependence on energy imports
• Acceleration of innovative technological solutions
• Investments in new climate friendly technology
• More integrated sector coupling, advancing the energy efficiency in a broader scope and
between sectors
• Improved competitiveness of the EU industry

To conclude, the Chemical Industry Federation of Finland (CIFF) emphasizes that measuring absolute energy use is a defective way of measuring energy efficiency in the industry, especially
with climate ambitions in mind. However, there are many chemical industry customer sectors
with a high potential for reducing the absolute use of energy and thus create energy efficiency
gains. E.g. accelerating the renovation of old buildings to higher energy efficiency standards
would be a major contribution to both efficient energy use and climate action.

Respectfully,
The Chemical Industry Federation of Finland (CIFF)

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