Energy efficiency boosts Finland’s competitiveness

Tomi Mäkipelto
Thanks to improvements in energy efficiency, Sweden, for instance, has managed to reduce properties’ energy bills considerably, while Finland has not yet achieved such success. In Sweden, investments in energy-efficient heating systems in particular took off when heating oil started to be taxed at the same level as diesel oil.

It is possible to save national economies billions of euros on their energy bills by exploiting the wide-ranging potential for enhancing energy efficiency.

The recent Warsaw climate summit ended in disappointment, like so many earlier meetings. It is very hard for countries to agree on emission reductions, even though there is more consensus today than ever before on the urgency of this issue.

Robust efforts to curb emissions are nevertheless continuing around the world – motivated primarily by the consequent financial benefits. Using energy efficiently reduces the expenses of property owners and improves the viability of industrial processes and entire companies. Enhancing energy efficiency is the cheapest way to cut emissions – it works like a virtual fuel, which should be utilised in preference to other energy sources.

The International Energy Agency (IEA) recently put energy efficiency firmly in the spotlight. The agency’s executive director Maria van der Hoeven emphasised that energy efficiency should be treated as a “primary” energy source, because it serves to protect countries against risks such as changing fuel prices, pressure to invest in energy infrastructure, and potential disruptions in the availability of energy.

Van der Hoeven also pointed out that using energy more prudently will accelerate economic growth rather than slowing it down. Energy efficiency will enable consumers and businesses to redirect some of their spending to other economic sectors. The productivity of energy, in the meantime, will rise.

 

In 2012, Finland, for example, consumed some 380 terawatt-hours of primary energy. The related imports cost the national economy a total of 13.4 billion euros.

Imports of oil, coal and gas are some of the greatest factors behind Finland’s balance of payments deficit. By improving energy efficiency, Finland can reduce this deficit, cut the national economy’s energy bill, and become more self-sufficient.

Levels of energy efficiency in major industrial processes are already typically high. But a lot can still be achieved in terms of saving energy in other processes and in properties.

Thanks to improvements in energy efficiency, Sweden, for instance, has managed to reduce properties’ energy bills considerably, while Finland has not yet achieved such success. In Sweden, investments in energy-efficient heating systems in particular took off when heating oil started to be taxed at the same level as diesel oil.

Shifting away from oil-fired heating is just one possible measure. Properties’ energy bills can typically be cut by 20% with the help of energy needs analyses and the installation of automation, heat pumps and LED lighting. It would also be economically feasible to enhance the energy efficiency of many industrial processes by about 10%.

Considering the total amount of energy used in industrial processes and properties around Finland, and the potential for savings indicated by energy audits, it can be estimated that the potential for savings in primary energy use nationwide could amount to more than 40 terawatt-hours a year.

This amount of energy costs some 4–5 billion euros. This is how much we could save every year by applying existing technologies that can already be viably utilized.

 

Energy efficiency already features prominently in the energy policies of major countries including the US, China, the UK and Germany. In Germany, interest in energy efficiency has increased due to a focus on the social costs of the country’s ongoing energy transition, reflected in the higher energy bills facing households and small businesses.

In other countries, including Finland, the potential for improvements in energy efficiency has not yet been fully recognised, since decision-makers have tended to focus mainly on energy production rather than ways to save energy. Energy efficiency suffers by not having a lobbying association of its own.

Another factor is the pricing of electricity and heating. In Finland, energy has often been considerably cheaper than in competing countries.

Tougher international competition and declining competitiveness have changed the situation, however. Efficient energy use is now also climbing up the agenda for policy-makers in Finland.

It is important to highlight such issues publicly so that people will realise the potential that exists for improvements in hundreds of thousands of different locations and properties. For individual processes and buildings, the opportunities for enhancing energy efficiency can particularly be revealed by assessing the expected return on the related capital investments.

In Finland and many other countries, investing in energy efficiency can bring much higher rates of return than alternative investments – and with lower risks. The viability of such investments has increased considerably in recent years due to higher energy prices and rapid technological developments. Reducing emissions is today more profitable than ever.

Tomi Mäkipelto, M. Sc. (Tech), D.Sc. (Econ.), is CEO of the LeaseGreen Group, which provides a wide range of energy saving services for clients in the private and public sectors.

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