SOLAR TODAY - July/August 2011

investing | green stocks report
eu Pushes for more energy efficiency
The 2020 initiative may require regulation upgrades.
by RONA FRIED, PH.D.

rona Fried, Ph.D., is president of sustainable business.com, the online community for green business: daily green business and investor news, green jobs and green investing newsletter, The Green Investor. contact Fried at rona@ sustainablebusiness.com.

Consult your financial advisor before making any investment.

In 2008, the European Union (EU) launched an ambi- tious 20-20-20 plan for 2020, which would increase renewable energy to 20 percent of the mix, reduce greenhouse gas emissions 20 percent below 1990 levels and increase energy-efficiency 20 percent compared to business-as-usual projections.

The EU is on track to achieve the first two goals, but although energy-efficiency is usually touted as the least-expensive, most easily-achieved of the three goals, so far it’s turning out to be the laggard.

One reason is that the first two targets are legally binding, but the energy-efficiency goal is not.

EU member countries are on track to increase energy-efficiency only 10 percent by 2020, which prompted the Commission to intervene with a plan to raise it another 10 percent. They noted that legally binding measures may be necessary, but they are not starting with that.

The new energy-efficiency plan focuses on the three main sources of energy consumption:

1. Buildings — create incentives to trigger the renovation process in public and private buildings, while improving the energy performance of components and appliances used in them.

2. Transportation — a forthcoming “White Paper on Transport” will cover advanced traffic-manage-ment systems, infrastructure investment, smart pricing and vehicle-efficiency standards.

3. Industry — offer incentives for increasing energy management (such as tax rebates, energy-efficiency financing and funding for energy audits) for small and medium-sized businesses; institute mandatory regular energy audits for large corporations; and establish energy-efficiency requirements for industrial equipment and HVAC.

Public authorities will be required to renovate at least 3 percent (by floor area) of their buildings each year, double the current rate. The Commission’s new Energy Efficiency Plan states that retrofits must “bring the building up to the level of the best 10 percent of the national building stock.” And, “when public bodies rent or buy existing buildings, these should always be in the best available energy performance class.” ( tinyurl.com/EUnewplan.)

While these are aggressive recommendations, public buildings represent only 12 percent of the EU’s building stock. They have yet to address the rest of the market.

efficiency services provider, which generated 38 percent of its sales ($13 billion) in fiscal year 2010.

Ameresco Inc. (AMRC) only has a nascent presence in Europe, and this would provide a significant opportunity for expansion. The company is the leading provider of energy-efficiency and renewable energy services in the United States.

EnerNOC Inc. (ENOC), known for its demand-response and energy management solutions, has entered the U.K. as a first step toward EU-wide expansion. Other smart-grid leaders would also benefit, such as Itron Inc. (ITRI), Echelon Corp. (ELON) and Telvent GIT, S.A. (TLVT).

Long-time sustainability pioneer Interface Inc. (IFSIA), which makes broadloom carpet, already generates 28 percent of its sales in Europe. As more buildings are renovated, there will be increased demand for green products such as carpets.

ICF International Inc. (ICFI) is at the forefront of issues like energy-efficiency and climate change consulting in the United States. This would provide a significant growth opportunity, as it currently gets less than 10 percent of its revenue from Europe.