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The role of energy cost in firms’ investment decisions differs considerably across EU members and sectors. In 2019, the share of firms that reported energy cost as a major obstacle to investment ranged from 6% in Denmark to 56% in Latvia. Geographically, this share is higher in southern countries (Italy, Greece, Spain, Portugal, Cyprus) compared to Scandinavian countries (Denmark, Finland, Sweden) and is positively correlated with the presence of higher electricity prices (Figure 4). Firms located in the south of Europe have experienced higher energy costs, despite the falling oil prices, due to higher taxes and levies aimed at supporting the deployment of renewables. Differences are also present across sectors, with firms in energy-intensive sectors, such as manufacturing, being more concerned about energy costs compared to less energy-intensive ones, such as services (Figure 3).
At the same time, higher energy cost concerns act as an economic incentive for investments into energy efficiency. Regardless of firm size and sector, investments in energy-saving technologies are higher where energy is considered an important cost factor (Figure 5). These firms tend to be more aware of the potential cost savings from investments in energy efficiency and are more inclined to invest in cost-saving technologies. On the contrary, there seems to be no significant difference between investment decisions in energy efficiency and other investment areas of other long term barriers, such as access to finance, availability of skilled staff, business regulation and uncertainty about the future.
The untapped potential of energy savings is high, as EU firms consider their building stock of relatively low quality
In 2019, EU firms reported a third of their commercial building stock to be of high or highest energy efficiency standards, higher than in the United States (Figure 6). Still, since 2016, the firms’ perceptions of the quality of their building stock has deteriorated. This seems to suggest that most of Europe’s existing building stock may not yet meet recently-adopted energy performance requirements in the Energy Performance Directive and the Energy Efficiency Directive and that we are still to witness the improvement of the stock as it is brought up to the new standards.
The opinion of firms on the quality of their building stock varies considerably across countries and regions. Firms located in the south of Europe – notably in Greece, Cyprus and Spain – believe that more than 50% of their building stock satisfies high or highest energy efficiency standards, almost four times more than firms in Lithuania, which say that only 16% of their building stock is energy-efficient. Firms in the Baltics have the most pessimistic views about the quality of their building stock than any other EU region. Part of the cross-country differences could be explained by differences in culture, expectations, technical information and environmental objectives. These factors affect firms’ beliefs on building stock performance when assessing various aspects, such as thermal comfort, air quality, activity noise, light quality and environmental control.