"Let the market choose the most effective measures"

28-06-2013

Column by Gertjan Lankhorst, CEO GasTerra

The prestigious British weekly magazine The Economist recently devoted an article to electric cars. It wasn’t a positive report. Based on experiences in California, which put huge efforts into promoting electric transport a few years ago, the magazine concluded that the statutory regulations and millions in subsidies that were supposed to make electric cars formidable opponents to petrol cars had not had the desired effect. I could relate to the report’s lament. "Subsidies (for the manufacturers of electric cars and batteries) make little sense. If governments want to cut emissions it would be better, say, to pay people to insulate their homes." And: "the wise thing for politicians would be to set overall emissions targets, and leave the risk to businesspeople. Wherever this has been tried, in Europe, America, Japan and, more recently China, carmakers have grumbled: but they have responded – most notably by squeezing more efficiency out of the century-old internal-combustion engine." According to the Economist. We’ve mentioned the word: efficiency. In the short-term and medium-term, saving energy by handling it more efficiently is better than any other measures aiming to solve energy and climate issues. The cleanest energy is the energy that we don’t use. I can’t think of anything more sustainable than that.

Energy saving: there's so much to gain here

In the light of this, it is astonishing that relatively so little effort is made towards encouraging energy-saving practices. We have so much to gain here. On Energiepodium, Hans Altevogt from Greenpeace puts his finger on it: "Every year in the Netherlands we are still throwing away, unused, the equivalent of as much as 15 billion m3 of natural gas in the form of residual heat. A third of our national gas consumption. It has been shown that only 20-30 percent of the energy-input in fossil-fuel-based power stations is being usefully applied by consumers. The remainder is released from the production chain as heat into the air or water and wasted by end-users." We can also add the transport chain on to this, another reason why decentralised energy production is so attractive.

However, Mr Altevogt’s recommendation in association with this – artificial creation of an energy shortage – would not be mine. Energy shortages push up costs, and are therefore completely unattractive in economic terms and ultimately have the worst effect on the weakest. There are smarter ways of tackling the problem of energy waste. You can do that by creating a different type of shortage: CO2 shortage. The much-discussed European emissions trading system ETS – providing it is effectively remodelled – may be a useful method for doing this, but more measures are necessary. For example, what about extending the ETS to sectors that it does not yet cover (end-users), as advocated in the study that CE Delft recently carried out into energy-saving options. The advantage of this approach is that market players are forced to choose the most effective measures. How they do that is their business. By purchasing renewable energy, promoting energy efficiency, or obtaining green certificates, the choice is entirely up to them. As already mentioned, energy efficiency delivers the best solution and is, therefore, the best guarantee for business continuity. As the car manufacturers also finally realised after their initial resistance.