The European Union is set to be the first advanced econ-omic grouping to achieve a sustained reduction in its demand for energy, as policies to curb gas and electricity consumption take effect, according to an analysis published today.

The EU's energy efficiency strategy, even if only partially successful, will cut countries' dependence on imports of Russian gas and ease the need for new energy infrastructure such as power stations and gas pipelines. It will also create a challenge for European energy companies, which will face shrinking domestic markets.

Cambridge Energy Re-search Associates, a consultancy, says it is unlikely the EU will meet its target of improving energy efficiency by 20 per cent by 2020. But Doug Howe of CERA says: "Even though we think they can only get halfway, what they can do is astounding, and unprecedented."

He believes the EU will be able to cut its gas consumption, and stop electricity consumption growing, using only technology in use today. By 2030, EU gas consumption could be cut back to the levels of the early 1990s. That would represent a cut of 125bn cubic metres a year - equivalent to the combined consumption of Germany, France and Spain.

Most of the potential for savings is in Europe's homes rather than industry, which has already improved its energy efficiency greatly. The biggest single contribution would come from greater use of more efficient condensing boilers, which are in use in 50 per cent of homes in the Netherlands but are much less common in other EU countries.

Cutting electricity demand is more difficult because of the spread of gadgets such as MP3 players and personal computers, but there are still large gains possible from using energy-saving lightbulbs and less wasteful standby modes on electronic products.

EU countries will need to legislate to make these changes happen, as they have done with lightbulbs, because the more efficient products often cost more to buy. But the 2020 target creates pressure for that legislation to be passed. Success in moving towards that target will cut the EU's dependence on Russian gas, which would otherwise rise as the bloc's own production declines.

It also weakens the commercial case for new gas import pipelines, such as the Russian-backed Nord Stream and South Stream routes and the proposed Nabucco pipeline to bring gas from the Caspian region to the EU via Turkey.

The disruption to supplies caused by the confrontation between Russia and Ukraine in January reignited concerns in the EU about securing gas imports.

Mr Howe says: "When the Ukraine-Russia crisis hit, everyone was saying: 'We need to get those pipelines built.' But energy efficiency, if the EU manages to deliver it, could be the single biggest contribution possible for energy security in Europe."
By Ed Crooks in London

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