In this policy paper, ZOE Institute highlights the potential of demand-side policies to ensure energy security in the European transport and housing sectors. Our policy design framework set out in the paper provides guidance on how these policies should be designed to be effective and socially balanced. In addition, we propose a multi-level governance approach to coordinate EU and Member State actions taken to reduce energy demand. In doing so, public policy can cushion oil and gas price increases and mitigate social impacts in light of a looming energy shortage in Europe.
The European Commission’s recently announced REPowerEU plan responds to surging energy prices. However, this plan misses the opportunity to utilise the potential of demand-side measures to effectively achieve energy savings. The paper recommends widening the REPowerEU policy mix to include demand-side measures in order to reduce final energy consumption in the EU.
Our analysis shows that the demand-side measures not only contribute to meeting the energy supply deficit, but also entail the following co-benefits for Member States:
- Increasing the EU’s strategic independence, thereby strengthening the EU’s geopolitical leverage
- Reduction in energy prices due to the reduced demand for energy services
- Decreasing the long-term economic cost of the energy transition by one-third
- Beneficial effects on health and wellbeing through active mobility and improved energy efficiency of buildings.
- Protection of EU industry as demand-side measures are applied precisely where overconsumption prevails.
The policy paper sets out recommendations for national as well EU level measures to increase energy saving. Demand-side measures can immediately reduce energy consumption while simultaneously supporting the EU’s long-term Green Deal climate objectives.