MAKING MODERN LIVING POSSIBLE

Energy Efficiency 20-20-20. Development opportunities for everyone Julie Kjestrup Head of Public & Industry Affairs Danfoss Heating Solutions

Riga, 1 March 2013

Introducing Danfoss Danfoss is a global leader within

energy-efficient solutions – Well-proven technologies with

enormous energy-saving potential We have built up our

competencies over the past 80 years

– our products and our knowledge are our key strengths

Global competence center for

energy efficiency – rooted in Southern Denmark - 110 sales offices and 79

factories worldwide

Climate and Energy– Danfoss’ World

Refrigeration & Air Conditioning Controls

Power Electronics Heating Solutions

District Energy Sauer-Danfoss Commercial Compressors

Sustainable results

Systematic Social Responsibility Global Compact & Global Reporting

Initiative Responsibility in Supply Chain Ethics policy & Ethics line set-up Anti-discrimination

Environmental Engagement 3×25 objective: 25% less CO2 & 25%

more renewable energy by 2025 Negative list of chemicals

Danfoss Business System World-class value chain with focus on

value creation and customer focus

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Sponsorship of Council Presidency

Resource Scarcity

A Campaign of EuroACE

What Was That Bump?

Financial Crisis

Unemployment

Enter Energy Efficiency Monica Frassoni, former President EU-ASE: ‘If we were in the US, the Energy Efficiency

Directive would be called the jobs and recovery act’

Energy Efficiency & Renewables enable jobs, growth, energy security, climate protection – in short, a sustainable future on all accounts

Europe has agreed on an Energy Efficiency Directive, now Member States need to make the most of it by ensuring ambitious implementation

The Role of Energy Efficiency Energy efficiency can significantly aid in overcoming the crisis Growth/job creation

the ’green economy’ has the potential to create up to 2 million jobs, according to the European Commission

the majority of these are local, and in small and medium

sized enterprises

Economy/growth/public financing many energy efficiency measures have fairly short pay-back

times – and once in place, the savings continue – creating better indoor environments and freeing up money for other causes

Energy/climate

we can continue to lower CO2 emissions whilst improving our energy security: the less energy we use, the less we need to secure

Multiple benefits of energy efficient renovation of buildings: impact on public finances

Energy efficient buildings: why right now?

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Unemployment high and rising, financing costs all time low

Note: Unemployment rate: Unemployed persons as a share of the total active population

Source: AMECO, Eurostat

Substantial evidence that energy efficiency of building is a no-regret option: Costs of investments lower than

value of benefits This is true globally also in the EU

This not a new finding in this study, it is old news.

The real news are: Energy efficiency can also bring

substantial health benefits… …and improve public finances

Now is the time to do it Unemployment is (too) high, so the

capacity is there Borrowing costs for investments at

record low levels

Multiple benefits of energy efficient renovation of buildings: impact on public finances

The multiple benefits of energy renovation in buildings

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The benefits of energy renovation

Energy savings provide Direct and indirect benefits to society at large

Net benefits as value of energy savings exceed investment costs

Reduced air pollution and better indoor climate leads to better health outcomes and higher productivity and welfare

Improve public finances Direct impact of energy savings leads to

loss of tax revenues This is however more than offset by:

Reduced costs of energy in government run and owned buildings

Lower costs of expanding renewable energy which could help fund needed increases in government RD in low carbon technologies

Higher taxes and lower social expenditure from higher activity: a temporary but important additional contribution in coming years

Source: Copenhagen Economics

Multiple benefits of energy efficient renovation of buildings: impact on public finances

Measuring the benefits by 2020

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Quantified benefits to society 2020

Note: These results include the rebound effect, and can therefore not be compared with the sub-results derived in Chapter 1. We have applied a rebound effect of 20 per cent.

The total does not equal the sum of each element due to

rounding. Source: Copenhagen Economics

The study looks at two scenarios for energy savings based on analysis done for EU Commission: Conservative assessment of cost-

effective emissions fully paying for themselves without any co-benefits (“Low EE”)

More optimistic scenario(“high EE”)

Scenario results Low EE:

Net benefits from energy saving around € 50 billion, other benefits adds up to a total plus € 100 billion

High EE Up to € 175 billion.

Multiple benefits of energy efficient renovation of buildings: impact on public finances

Public finance benefits 2020

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Low EE Reduced energy bill in public

buildings, lower public spending on health care expenditure and less need to subsidise renewable energy may in total save nearly € 34 billion

This dwarfs the loss of revenues from lower energy use

So that the total revenue gain is close to € 30 billion

High EE The net effect may reach € 40 billion

Note: These estimated gains to public finances are already included in in Figure 1, and should not be considered additional to these.

The total does not equal the sum of each element due to

rounding. Source: Copenhagen Economics

Multiple benefits of energy efficient renovation of buildings: impact on public finances

Conclusions

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Energy efficient renovation of existing buildings: very attractive economic benefits in their own right

Climate change and energy security The “low hanging fruit” in wide range of studies

Sizeable co-benefits to society improved health and productivity

Now is a perfect time to push for change and realise potential: Low economic activity calls for government action to

spur growth Here is an option that can deliver and also boost

public finances in a time of budget consolidation Identified barriers require structural reform but why

not do it: tenants, landlords, tax payers and consumers will all benefit

Some countries have already started (examples in report), others recommended to follow

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A Campaign of EuroACE

Increased Innovation • EU Industry is World Leader • Opportunity to Remain in the Lead Increased Competitiveness • EU Industry Ahead of the Curve • New Markets will Open in the Future • Boost to International Trade

Energy Performance of Buildings Directive implementation

Renewables Directive

Energy Package 2030

Multi-annual Financing Framework/Structural Funds

Energy Efficiency Directive implementation

You have the keys to unlocking the energy efficiency future

Our: contribution Danfoss has technologies at hand If all radiators would be fitted with thermostats, this

could already save a substantial part of the EU’s proposed energy efficiency gains. In Germany alone, an annual energy saving of 18 billion kWh could be achieved.

517 million tons of CO2 could be saved per year if Europe doubled its use of district heating to 18-20% combined with increased reliance on renewable energy sources.

Heat pumps can help save 50-75% energy per household and uses nature’s free resources to do so – saving money and increasing energy security

Only 8% of the current electricity capacity globally is combined heat and power (CHP). An increase to 14 % would generate energy savings equivalent to one year’s production by all the world’s windmills

A Danish perspective Yes, we can! Energy/climate The world could cut its energy usage and CO2

emissions by 40 per cent, if it had the same energy efficiency as in Denmark (DONG Energy)

Economy/growth Each GDP unit in Denmark now requires

27.8% less energy than in 1990 (Energistatistik 2010)

Energy security In 2010, Denmark was the only EU country

which completely covered its own energy needs (121% in 2010) (Energistatistik 2010)

Questions? More info needed?

Julie Kjestrup Head of Public & Industry Affairs Danfoss Heating Solutions Julie.kjestrup@danfoss.com ++32 475 95 12 75