Universities, the energy crisis and the cost-cutting trap

All over Europe, universities are facing multi-fold increases in their energy bills. This calls for action from both public authorities and higher education institutions alike, in both the short and medium term.

Universities are big consumers of energy. Their real estate tends to be large, diverse and fragmented. High energy consumption is inherent to their operations, whether for training in certain academic fields, for research activities or for maintaining such facilities as laboratories and data centres.

The development of digital infrastructure also contributes to this trend, especially with increased hybrid and online academic provision. Price hikes are now heavily weighing on university budgets, with extremely worrying projections. For example, the national association of French universities estimated additional costs of €100 million (US$105 million) for the sector in 2022, a figure which may be much higher in 2023.

In some countries, inflation and soaring energy bills compound structural underfunding of the sector. After two difficult years of the COVID-19 pandemic, this leaves universities with little room to manoeuvre and absorb another major shock. That leaves many pondering, or already implementing, measures such as lowering heating in buildings and reducing opening hours, to longer campus closures in winter and even a return to fully online tuition.

Latvian universities have chosen to intensify the study process and accommodate as many lectures, labs and research activities as possible within the period, taking into consideration students’ preference for face-to-face teaching. Other examples show how dramatic the situation could soon become.

Slovakia’s largest university recently communicated that, in the absence of state guidance regarding energy price caps, it may not be able to turn on the lights in 2023 as it had not received any bids from energy suppliers.

Relief schemes

In the short run, public authorities must acknowledge the unprecedented financial hardship that universities face and support them to maintain the quality of research and teaching. This means additional public funding through temporary relief schemes, such as those announced in France or in several German states.

However, additional funds may only partially cover rising costs, as university representatives in Austria pointed out in October following a government announcement of an extra €500 million for the next two years.

Strong, predictable and sustainable financial support from public authorities is paramount to protect university communities, and above all students, whose academic paths were already disrupted by the pandemic.

Drastic measures such as full or partial campus closures would affect students’ learning experience, social integration and well-being. The European Students’ Union recently launched the campaign “Education is freezing” to raise awareness of student poverty exacerbated by the current inflation and energy crisis. Such decisions also hit internationally mobile students who already face soaring study and living costs and have few safety nets to fall back on while abroad.

Impact on international students

The energy crisis makes student mobility significantly less affordable in Europe, thus putting current inclusion efforts at risk. In addition, related cost-cutting measures could lower the quality of study experience for both domestic and international students, through more limited access to vital study spaces such as libraries or research laboratories.

This makes study in Europe less attractive for international students, therefore undermining European universities’ competitiveness for global talent, a key ambition outlined in the European Strategy for Universities.

To mitigate such risks, the German Academic Exchange Service (DAAD) has advocated the importance of classroom teaching for international students during the current winter semester and has welcomed German higher education institutions being granted protected customer status in the event of gas shortages.

University funding increasingly comes from competitive, project-based schemes. There, coverage of extra costs is fundamental, but may come at the expense of cutting funds for new projects (for example, the recent case of the Austrian Science Fund).

Furthermore, as national funders across Europe need to revise both funding priorities and grant sizes to remain competitive internationally and to secure the quality of teaching and research, differentiated responses to the energy crisis could create further disparities in the European Education Area and the European Research Area in the longer term.

To address students’ financial concerns in 2023, an approximate 12% increase in mobility grant rates under Erasmus+ is planned for next year. However, institutional lump sums remain at the same level – so further efforts are needed to support different types of transnational collaboration.

The enhanced use of lump sums in the next Horizon Europe work programme could also lead to increasing cost pressures on beneficiaries.

The crisis also reveals shortcomings in regulatory frameworks, which often limit universities’ capacity to tackle structural issues, for example, related to managing real estate (in many countries, universities do not have full ownership or control over their facilities) or engaging in joint procurement and shared services. Such restrictions hamper long-term planning and more agile management strategies.

A test of resilience

Universities that are well advanced in the so-called twin transitions, having formulated and started to implement greening and digitalisation strategies, are better placed to address this new challenge. However, they also know that neither transformation process offers short-term cost-saving solutions. Rather, they are medium- to long-term investments, and are therefore all the more difficult to roll out when funds are running low.

The energy crisis is putting universities’ resilience to the test for the second time within three years. Universities are key actors in understanding the causes of such crises and finding solutions through research, innovation and teaching, so it is crucial to continue supporting them in this endeavour.

This means both enabling the transition to more sustainable energy consumption over the long term as well as direct financial support to preserve a qualitative student experience in the short term.

Enora Bennetot Pruvot is deputy director for governance, funding and public policy development at the European University Association and Veronika Kupriyanova is senior policy coordinator at the Academic Cooperation Association.