SustainaWeekly - High energy bills should spur efficiency investments
In this week's SustainaWeekly, we look at the incentive effects of higher energy bills. We also look at gas consumption in the industrial sector and increased energy efficiency. It is the last SustainaWeekly of this year, so happy holidays and a happy new year in advance!
In this week’s SustainaWeekly, we start by looking at the incentive effects of higher energy bills. For instance, the payback period for investments to improve the energy-efficiency of residential buildings has halved since the start of the energy crisis. This is true even if this investment is financed at a higher interest rate. We go on to look at the outlook for IG EUR ESG bond issuance for next year, which is set to be record breaking. We expect total issuance of EUR 340bn in 2023 following 249bn in 2022 and 279bn in 2021. Finally, we take a look at energy consumption trends in the Dutch industrial sector. Total gas consumption in industry has decreased by 28% so far in 2022, while gas consumption looks to have declined year-on-year in 2022 across all industry subsectors. The recent fall in gas prices means that the pace of decline was already easing towards the end of the year.
Economist:
Higher energy bills have significantly reduced payback time for investments in improving the energy performance of (residential buildings) even accounting for higher interest rates. Meanwhile, there the price gap between homes with high and low energy labels has started to become larger as well. This provides opportunities for households to fuel the energy transition
Strategist:
Following a slow 2022, we expect total IG EUR ESG bond issuance to jump to a new record in 2023. This will be led by public sector and utility use-of-proceeds bonds, but also issuance of SLB’s by corporates broadly. We expect total issuance of EUR 340bn in 2023 following 249bn in 2022 and 279bn in 2021.
Sectors:
In the Netherlands' total energy consumption, industry has a large share at 36%, with oil and natural gas consumed particularly heavily. Total gas consumption in industry has decreased by 28% so far in 2022. The share of renewable electricity in the total is about 35% on average; by 2030, this share should be 70%.
This marks the last edition of this publication for 2022. Thank you for reading and we wish you a happy festive season and a great end to the year!