Last month, while bailing out Ireland and scrambling to prepare a possible rescue of Portugal, the European Union quietly extended a generous loan to a country with relatively few debt problems: China. A blog about energy and the environment. Go to Blog The €500 million, or $668 million, loan by the European Investment Bank is part of a package of two loans worth €1 billion that is aimed at helping China use more renewable sources and increase energy efficiency. The sum is tiny compared with the €500 billion fund that the Union created in May to save the euro. It is also a fraction of the total lending each year by the European Investment Bank. Even so, the loans are a notable example of how China offers highly attractive investment opportunities in one sector, energy efficiency, which continues to confound policy makers in many parts of the developed world, and in Europe in particular. Earlier this month, José Manuel Barroso, the president of the European Commission, scolded E.U. member states for “not delivering” energy savings. He called on E.U. heads of state and government to take “concrete” measures to tackle the issue when they met Feb. 4 for a summit meeting on innovation and energy. But Mr. Barroso has declined to endorse a motion passed last month by the European Parliament that would make a 20 percent improvement in energy efficiency by 2020 legally binding. Targets for increasing the use of renewable energy and reducing greenhouse gases are already mandatory in European nations. Advocates of energy efficiency say tougher requirements are needed in Europe, where many nations must import energy. They say carefully chosen investments in efficiency ultimately save more than they cost, by cutting energy bills, and usually with little or no new research or technology. Putting efficiency measures into action is another matter. The authorities often recoil at the painstaking and unglamorous work of identifying households and businesses where appliances should be replaced and analyzing buildings that need to be weatherized, instead preferring to subsidize new wind and solar farms, or even new natural gas pipelines, to burnish their low-carbon credentials or to tout their commitments to energy security. A particular problem for Europe is that poorer E.U. member states that rely on coal are balking at the implications of more binding targets on energy savings. They say such targets would burden them unfairly, compared with other members of the bloc. To be sure, promoting energy efficiency is often easier in parts of the developing world like China, where there is a powerful and determined central government and where there are often relatively big gains to be made by investing in improved industrial processes and cleaner power generation. The loans to China will be used for making emissions reductions and improving energy efficiency at companies like Wuhan Iron and Steel and at Haohua, a chemical company. The loans will also be used for wind farms in the provinces of Henan, Hainan and Guangdong, and for solar-powered lighting. Over all, the loans should account for a reduction of six million tons of carbon dioxide. That represents a minuscule percentage of China’s annual emissions of about 6.5 billion tons of carbon dioxide. But the European Investment Bank said the operation ranked among its most efficient loans in terms of emissions reductions and should generate “showcases” for other projects in China, which recently passed the United States as the largest emitter of greenhouse gases. An advantage for E.U. companies should be more tenders for installing energy-efficient equipment, the bank said. Winning those tenders would increase those companies’ market shares and brand awareness in a dynamic and growing market, it said. Another advantage for Europe was that some of the loans were financing the generation of additional carbon credits. Such credits are generally cheaper than those issued by E.U. governments, making it easier for the bloc’s heaviest emitters to meet their targets. “The reduction of greenhouse gases should be considered globally, as greenhouse gases do not stop at the border of China,” said Philippe Maystadt, the president of the European Investment Bank. The “unit cost of reducing a ton of CO2 in Europe can be up to 30 times higher than in China,” said Mr. Maystadt, who added that cutting emissions in China “benefits all.” European lobbyists seeking more measures for energy efficiency said that the bank was right to look to China for promising returns. But they also said the loans highlighted the lack of investment anywhere near a similar scale in Europe. “We simply don’t see the same levels of ambition for energy efficiency in Europe as does China,” said Luigi Meli, the director general of the European Committee of Domestic Equipment Manufacturers, an industry group. Mr. Meli’s group is part of a broader industry forum that includes other associations that encompass major European manufacturers of appliances and of power equipment like Philips and Siemens. Mr. Meli acknowledged that the case for investing in projects that made China more efficient was relatively straightforward, because it still operated plants and factories that consumed vastly more energy than many similar operations in Europe. Even so, Mr. Meli said there still was a great deal more Europe could do to improve its own levels of efficiency and thereby improve its energy security: replacing old appliances, insulating buildings and windows, installing new lighting and using power plants that generated both electricity and heat. In particular, Mr. Meli bemoaned a call by the European Commission to invest €1 trillion in projects to build new grids and pipelines during the next decade while setting aside a relatively meager sum, about €150 million, for energy efficiency. “There is something wrong with that,” said Mr. Meli, who added that Europe would save the same amount of money it would take to build 15 natural gas pipelines by reaching its energy efficiency target of 20 percent.
A version of this article appeared in print on January 17, 2011, in The International Herald Tribune.