To date, Europe’s predominant energy efficiency focus has been on the demand side of energy conservation.  However, there is growing recognition that demand-side efforts alone will not be sufficient to meet Europe’s "Energy 2020" policy initiative. Since 30 percent of Europe's primary energy consumption occurs in the energy sector, supply-side efficiency will be the only way to fill this gap. 

In addition to this reasoning, there is an even more compelling scenario: we are just beginning to see the potential for system-wide efficiency gains beyond progress in specific technologies and market segments on the supply and demand sides. The larger energy system is typically divided into individual sub-systems based on end-use sectors or energy carriers. This is necessary at times to address specific problems, but often overlooks the interfaces between the energy systems that could be leveraged to increase efficiency and reduce losses. In a future largely enabled by the system-wide uptake of digital information and smart grid technologies, efficiency gains anywhere in the system trigger efficiency gains everywhere.

Europe’s energy efficiency goal must, therefore, be end-to-end, “system-wide” efficiency; and that self-evidently begins on the supply side with what GE Energy calls “efficient energy”—producing and delivering more energy for final consumption from less primary energy and other natural resources. Building this dynamic energy efficiency future is vital for Europe if we are to avoid constraints on economic growth due to constraints on the availability and consumption of the energy essential to drive that growth.

In this context, our fundamental policy objective must be to ensure a transition to an abundant and on-demand future supply of secure, resource-efficient, environmentally sustainable, low-emission, affordable energy. This goal must not be confused with the stigmatization of energy consumption as undesirable. The goal is not to decouple economic growth from energy consumption, but rather from the unacceptable impacts of the energy consumption necessary for growth. Pursuing system-wide energy efficiency, including the supply side, is vital because it helps reduce both the energy intensity of our economy and the impacts that could otherwise constrain future economic growth. 

Achieving system-wide efficiency requires looking ahead at the optimal market design five to 10 years from now—asking what incentives Europe needs to implement and which enabling factors are needed to drive the investment, technologies, policies and business models capable of delivering the potential identified.