Policy Briefing. Energy efficiency improvements and related energy security and climate benefits: the case of Finland

Energy efficiency is widely considered a cost-effective strategy for reducing energy demand, energy-related carbon dioxide emissions and dependence on foreign energy sources. However, measuring the contribution of energy efficiency in reducing energy consumption and triggering economy-wide benefits is very complex, especially in large-scale process. In Finland, as well as other EU Member States, improvements in energy efficiency are measured against model-based scenarios and ex ante engineering estimates, which might provide an inaccurate indication of the actual energy savings delivered by energy efficiency. By employing decomposition analysis, this study isolates and quantifies the energy savings driven by energy efficiency improvements from the factors influencing the variation of final energy consumption in Finland over the 2005-2015 period. In addition, simple formulae are used to estimate the energy security and climate benefits associated with energy efficiency improvements. Overall, the results indicate modest energy savings as well as energy security and climate benefits due to energy efficiency improvements. Without energy efficiency improvements occurred between 2005 and 2015, the final energy consumption, the energy dependence and CO2 emissions in Finland would have hypothetically been 2.4%, 5%, and 3.5% higher, respectively, in 2015. If the energy and climate targets outlined in the Finland’s Integrated National Energy and Climate plan are to be met, a stronger political commitment to energy efficiency is needed. Future energy efficiency policies should be targeted at residential space heating demand, chemical, mining, food, and construction industries, and heavy-duty vehicles as energy efficiency was not effective in reducing energy consumption.