Climate change poses a significant challenge to our planet, our personal lives and our businesses.
Right now, there’s probably at least one area of your business facing transformative change driven by technology or digital risk.
The vast majority of businesses operate in and benefit from the urban environment.
The war in Ukraine and the energy crunch are precipitating policy responses across the continent
The European Union and its member countries, as well as addressing questions of supply and subsidising the cost of energy, have taken steps to reduce demand. Some countries have gone as far as setting out legally enforceable obligations on the energy use by people and businesses.
By contrast, the UK government has so far shied away from addressing energy demand as part of the current energy crisis though on 6 October 2022, National Grid ESO, the electricity system operator for Great Britain, published its scenario planning for the winter which includes some demand side measures.
What are the energy demand policy responses so far from the UK and across the EU?
National Grid ESO has announced (6 October 2022) that it will be launching a voluntary scheme on 1 November 2022 offering financial incentives to domestic customers with smart meters and businesses to reduce power usage during peak hours. The electricity system operator for Great Britain projects that this tool, known as the Demand Flexibility Service, could reduce demand by up to 2 gigawatts (enough to supply about 600,000 homes and flats).
The GB operator is encouraging suppliers and aggregators to work with their customers to ensure the highest levels of engagement and participation. As part of the same announcement, National Grid acknowledged that it may have to impose rolling power cuts in the unlikely scenario that the UK could not secure sufficient gas and electricity imports during the winter.
In August 2022, the EU passed a regulation under which member states agreed to reduce their gas demand by 15% compared to their average consumption in the past five years, between 1 August 2022 and 31 March 2023, with measures of their own choice.
Although voluntary at the time of adoption, the regulations foresee the possibility for the European Council to trigger a "Union alert" on security of supply, in which case the gas demand reduction would become mandatory – though there are some exemptions from the mandatory requirements for member states which have limited interconnections with other European states.
The regulations require member states to update their national plans with the demand reduction measures they are planning and regularly report those plans to the Commission. The regulation will be in place for one year and will be reviewed in advance of the sunset clause by May 2023.
There are currently no mandatory measures to cut energy consumption in Belgium. Belgian governments at the federal, regional and community levels are, however, looking at how they can save energy themselves; for example, by turning off street lights earlier and by turning off the lights of monuments and government buildings between 7 pm and 6 am. In public buildings, the heating will go no hotter than 19 degrees and the air conditioning will go down to a maximum of 27 degrees. The same will be asked of businesses, but not imposed.
Germany has passed an Energy Saving Ordinance which initially applies for six months from 1 September 2022 to the end of February 2022. The measures include the following:
A second set of rules coming into force in October 2022 set out longer-term energy-saving measures such as requiring all owners of buildings with a gas heating system to have a heating efficiency checkup. These rules will be in place for two years.
The Spanish Parliament in its extraordinary session of 25 August 2022, approved a law which included measures to promote energy saving and efficiency. In particular, with respect to buildings and premises used for administrative, commercial, cultural, entertainment, restaurant and transport:
These provisions will be in force until 1 November 2023.
The crisis has put the reduction of energy consumption at the heart of the government's concerns. The objective is to reduce energy consumption by 10% by 2024, the prime minister, Elisabeth Borne, has announced.
To achieve this, an "enterprise and work organisation" energy sobriety plan and a guide to good practice for businesses are being drawn up. At the same time, the prime minister called on all companies to draw up their own energy efficiency plan in September 2022.
Common measures to reduce the energy consumption of companies are:
Some companies have already implemented measures on their own initiative to reduce their energy consumption, for example, French luxury goods group LVMH has announced its own energy reduction plan which includes turning down the thermostat and turning off the lights earlier at night in its shops and supermarkets, such as E.Leclerc, Carrefour and Casino have lowered the electricity used by their signs.
In Poland, most of the solutions for responding to the energy crisis are still in the pipeline. According to the government's announcement, the planned regulations are intended to encourage consumer to save energy rather than to introduce a statutory obligation or any kind of restriction (excluding public administration). The government's actions related to saving energy include the following:
Italy has established measures to save more than 5.3 billion cubic meters of gas. The measures to curb domestic gas consumption (which exempt hospitals) include:
These energy saving measures will be of interest to all businesses operating within Europe. It remains to be seen whether the UK government will replicate the interventions we have seen in the EU, though the National Grid ESO's comments on 6 October 2022 show that the UK is likely to need some sort of demand side response.
* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.