Energy efficiency: The EU's new action plan
The European Union has proposed new energy efficiency measures to make good on its pledge to combat climate change and reduce its dependency on imported oil and gas.
In October 2006, the European Commission presented an Action Plan for Energy Efficiency, with the aim of consuming 20% less energy by 2020. It estimated that making such energy savings would allow Europe to reduce its CO2 emissions by 780 million tonnes and save €100 billion in fuel costs, dwarfing the cost of the necessary investment in energy-efficiency technologies.
To achieve the objective, the strategy identified specific actions in ten priority areas to be implemented between 2007 and the end of 2012. Actions taken since then include:
- Efficiency standards for product groups such as televisions, refrigerators and lighting.
- Recast of the Energy Performance of Buildings Directive.
- Legislation to limit the CO2 emissions of cars.
- Creation of the Covenant of Mayors.
Member states also committed to submitting national energy efficiency action plans to the EU executive under the Energy End-Use Efficiency and Energy Services Directive by June 2007. The plans were to outline how each country meant to reach an indicative energy saving target of 16% by 2016.
Nevertheless, rather than putting Europe on track to 20% energy savings, the Commission has conceded that the block is at best heading towards 11% savings.
The revised Energy Efficiency Plan launched in 2011 lost its 'Action' adjective, but was still intended to reinforce the EU's efforts to reach a goal of reducing energy consumption by 20% by 2020. In June 2011 it was translated into a directive.
A study by Ecofys and Fraunhofer ISI, published in September 2010, showed that EU policy measures would have to triple to achieve this energy savings target. But meeting the objective would reduce energy bills annually by €78 billion, create one million jobs and save 560Mt of CO2, the study said.
Buildings in focus
The EU's plans focus on the building, utility and transport sectors.
With buildings, the directive proposed an annual binding refurbishing target of 3% of all public buildings – such as schools and libraries – for heat loss. The building sector as a whole accounts for 40% of Europe's energy consumption and public buildings make up 12% of the continent's building stock. However, opt-outs from the proposal have been given to social housing, and buildings under 250 square metres, such as post offices.
Renovations will also only be carried out to 'minimum energy performance requirements' rather than the 'best practice' standards that had previously been mooted. Some energy efficiency experts complain that this could encourage member states to meet their obligations with "short-term cherry-picking measures," instead of longer-term deep renovations, where greater savings potential lies. Cost effectiveness and economic criteria were also added to the public procurement provisions.
The original blueprint had targeted the buildings sector with a European Buildings Initiative to stimulate the renovation of 15 million buildings by 2020. It suggested obliging all member states to set up a National Energy Efficiency Fund to support preferential loans or risk-sharing facilities, for instance.
Other initiatives in the draft plan included creating a network of smart cities to pioneer new technologies in a bid to cut emissions by more than 20% by 2020. However, this proposal did not make it into the final directive.
Energy company savings schemes
The Energy Efficiency Directive proposes making a 1.5% energy saving mandatory on all energy companies operating in Europe. But here too, an opt-out has been given, which allows member states to "opt to take other measures to achieve energy savings among final customers" than compelling efficiency savings. Consequently, environmentalists fear that there will be little incentive for companies to change wasteful business models, or make the short term investments necessary for longer term cost benefits.
Energy Commissioner Günther Oettinger said in a statement that the required savings could come from measures such as improving heating systems, installing double-glazed windows or insulating roofs, or other energy savings mechanisms proposed by member states. Regular energy audits and requirements for more use of smart meters and billing would be mandated.
The directive also requires member states to establish energy efficiency inventories providing data for installations involved in fuel combustion or mineral oil and gas refining, and setting requirements on priority/guaranteed access to the grid, priority dispatch of electricity from high-efficiency cogeneration and the connection of new industrial plants producing waste heat to district or cooling networks.
According to the commissioner's statement, incentives will be provided for SMEs to undergo energy audits and disseminate best practices. Large companies will have to make an audit of their energy consumption to help them identify the potential for reduced energy consumption.
Efficiency levels in new energy generation capacities will also be monitored. National heat and cooling plans will be established to help plan infrastructure efficiency improvements, including the recovery of waste heat. National energy regulators would also be obliged to take energy efficiency criteria into account in their decisions, particularly when approving network tariffs.
Member states should also draw up national plans to develop high-efficiency cogeneration (CHP) and district heating and cooling plans, the directive says. But cost effectiveness and economic criteria were also added to the public procurement provisions.
Other sectors: Transport and cities
A smart cities initiative to bring together initiatives in several sectors has already been included in the EU's strategy for funding the Strategic Energy Technology (SET) Plan, published in October 2009 (EurActiv 07/10/09). The idea is that the EU would select 25 to 30 European cities to champion energy efficiency and renewable energy, as well as pioneer smart networks, a new generation of buildings and alternative means of transport.
Transport is another sector where efficiency improvements will be crucial, as the sector's emissions continue to rise. Some options include stricter vehicle efficiency standards, speed management, promoting a shift to less energy-intensive forms of transport and public transport, and the promotion of renewable and alternative fuels.
In March 2011, the EU's transport roadmap proposed strict targets for halving urban usage of oil-fuelled cars by 2030 and phasing them out by 2050, but these will not be made binding. The Commission's transport department wanted an overall 60% reduction in carbon emissions by 2050. This included a 1% efficiency gain every year which would help the aviation industry's efforts to reduce its emissions by 34% between 2005 and 2050.
But questions remain as to how the €1.8 trillion, which the Commission says is needed for infrastructure investments in the next 20 years, will be raised. And again, the targets remain voluntary.
Ties that bind?
Unlike the EU's 2020 targets on greenhouse gas emissions and renewable energy, which are mandatory, energy efficiency remains an aspirational goal. The previous Commission's leaked draft action plan said the EU executive would introduce a directive imposing mandatory energy-saving obligations on member states in line with the previously agreed voluntary target to use 20% less energy by 2020. The paper suggested that the targets could be either sector-specific, potentially limited to buildings or cover all aspects of the economy.
Senior Commission figures such as President José Manuel Barroso and Climate Commissioner Connie Hedegaard have blamed the EU's lagging progress towards meeting efficiency targets on the non-binding nature of the commitment.
But proposals to make the efficiency targets binding if insufficient progress has been made in December 2013, which were initially flagged in the Energy Efficiency Plan in March 2011, have now been pushed back to June 2014, by which time the current executive led by Barroso will have left office.
More profoundly, some environmental NGOs question whether the Commission will even be able to evaluate progress towards the 2020 goals when EU member states lack any common methodology in their National Reform Programmes, which are the EU executive's measuring stick.
Some member states, such as the UK, say that they refused to sign up to a binding efficiency reduction target because of the 'Primes Model' which Brussels was using to calculate what these should be. Some countries are using this as their template regardless, while others, such as Finland, are aiming at more esoteric measurements, such as a 10% cut in the national baseline measured against projected Terrawatt hours consumption in 2020.
Underpinning such manoeuvring is a fear among member states of being put at a short-term competitive disadvantage by implementing efficiency measures which are only likely to bring savings in the long term.
Danish centre-right MEP Bendt Bendtsen (European People's Party; EPP), who is drafting the European Parliament's report on the revised action plan, argued that more implementation will be key in unlocking energy savings. He also stressed the importance of more innovation in the transport sector.
"Our real problem is a lack of financing, so we have to look at structural funds and we also have to find ways of accessing private capital," Bendtsen said.
UK Liberal Democrat MEP Fiona Hall (Alliance of Liberals and Democrats for Europe; ALDE), the shadow rapporteur on the revision of the action plan, stressed the importance of keeping an open mind on all possibilities, as the need for energy-efficiency improvements stretches across various sectors.
"We need to look at the possibility of EU-wide targets which would capture energy efficiency on the supply side as well as looking at the demand side of energy efficiency," she said.
Hall added that the EU should look at the possibility of introducing targets for member states to renovate a certain percentage of buildings each year, on which there are currently no obligations.
EuroACE, the European Alliance of Companies for Energy Efficiency in Buildings, argued that a revision of the Energy End-Use Efficiency and Energy Services Directive (ESD) should introduce binding national targets for energy savings in buildings as well as a mandatory target to increase the renovation rate.
"The mandatory approach has clearly been more effective for meeting the carbon reduction and renewable energy targets and, without a clear and measurable target for reducing the demand for energy use in buildings, Europe risks falling far short of its efficiency goal," the association said.
EuroACE pointed out that a binding target for energy savings in buildings is easier to calculate and administer than an overall primary energy savings target. It added that the rate of renovation will have to increase by a factor of two or three from the current rate of 1.2% to 1.4% by 2020 for Europe to meet its goals.
The Energy Efficiency Industrial Forum (EEIF), which includes organisations like the European Copper Institute, the European Lamp Companies Federation and the European Federation of Intelligent Energy Efficiency Services, called for an ambitious building strategy concentrating on the refurbishment of existing buildings, coupled with a financing strategy for very low-energy buildings.
"Policymakers need, as a priority, to direct a higher proportion of EU funds directly to energy efficiency, for example via the EU recovery plan, ETS revenue spend, structural funds and other routes," the companies said. They urged the Commission to identify new proposals to "bridge the gap between large grants as provided via the structural funds and EIB [European Investment Bank] loans and the small investments typically required in many energy efficiency projects".
A coalition of energy efficiency industries and NGOs, including EuroACE, Cogen Europe, the European Environmental Bureau (EEB) and others, regretted in a letter to EU leaders the lack of commitment to energy efficiency in the 'Europe 2020' strategy for growth.
"Even taking into account the economic recession and policies adopted since the 2006 Energy Efficiency Action Plan (EEAP), a three-fold increase in policy impact will be needed to achieve the 20% target," they wrote. The coming months will present "a narrow window of opportunity," they argued.
"The forthcoming Energy Action Plan and review of the 2006 EEAP must set out the framework and new legislation to ensure that the savings gap is closed," the coalition stressed. It called for targeted efficiency policies and binding targets.
The Energy Efficiency Action Plan Taskforce of the European Construction Sector, which includes business associations like the European Construction Industry Federation (FIEC) and the Royal Institution of Chartered Surveyors (RICS), NGOs like the European Climate Foundation, and the European Investment Bank (EIB), argues that binding renovation targets are needed to encourage the roll-out of large scale, systematic and quality-controlled renovation programmes.
"Such targets need to be well formulated, related to a common understanding of the level of improved performance needed, connected to financing and incentive systems and be fully co-ordinated. They also need to be supported by effective energy performance certificate schemes that allow investors and fiscal authorities to make a fair appraisal of the energy performance and savings potential of a building," the experts said.
They estimated that the 2020 target should be set at 50 million buildings to undergo major energy renovation, which should be defined so that it can be tied to the Energy Performance of Buildings Directive.
Veolia Environnement argued that the revision of the action plan is an opportunity to identify and overcome barriers to efficient implementation of measures in priority areas such as co-generation, district heating and buildings.
Efficiency in the non-emissions trading sectors "will only be pursued if it is economical," the company said. "The energy efficiency framework needs to be transparent over time with clear objectives and targets, economically attractive and visible," it added, pointing out that it would have to be adapted to the high number of small projects that characterise the building sector.
Veolia therefore called on the EU to promote the use of products adapted to financing small projects while also encouraging the financing of "highly visible demonstration projects," particularly in public transport and thermal energy.
European environmental NGOs urged the European Commission to set a binding energy-efficiency target with an absolute cap on the energy consumption of each member state by 2020. In a letter to Commission President José Manuel Barroso, CAN-Europe, the EEB, Greenpeace, Friends of the Earth Europe and WWF wrote that the binding target should be accompanied by harmonised provisions on measuring, reporting and complying with it.
They stressed the importance of including in the action plan measures on the coherent use of taxation to discourage the use of energy wasteful products. This should be complemented by reduced VAT for energy saving goods and services, they added. "A clear proposal from the Commission on this topic is instrumental in driving the debate at European level and should not be disregarded," the NGOs said.
COGEN Europe in its position paper on energy efficiency says the "cogeneration measures in the new text signal a clear intention by the Commission to create a supportive environment for existing and new cogeneration operators, underpinning their investment certainty and the economic justification on the investment."
At the same time, it makes a number of requests for the combined heat and power sector, including maintaining continuity of the legal framework, requiring "measurable progress" for CHP and keeping primary energy as the measure for energy savings.
- Oct. 2006: Commission presents Action Plan for Energy Efficiency.
- 10 Jan. 2007: Commission's 'energy and climate change package' identifies energy efficiency as a priority (EurActiv 11/01/07).
- 30 June 2007: EU member states begin to submit national energy efficiency action plans to Commission.
- Oct. 2009: EU agrees on tyre efficiency labelling (EurActiv 02/10/09).
- 17 Nov. 2009: EU reaches compromise on Energy Performance of Buildings Directive (EurActiv 18/11/09) and Energy Label (EurActiv 19/11/09).
- 6-7 Sept. 2010: Informal meeting of EU energy ministers to debate energy efficiency.
- March 2011: The Commission proposes a new Energy Efficiency Plan.
- June 2011: An EU Energy Efficiency Directive is finally launched.
- June 2014: Brussels will weigh whether member states have made sufficient progress towards the 20% target for 2020, and will consider making the target binding if the answer is no.
- 2020: Deadline for the non-binding goal of increasing Europe's energy efficiency by 20%.