Lobbyists brace for new battle over EU energy efficiency
The lobbying battle on the Energy Efficiency Directive between member states, power utilities, consumers and green groups will intensify in the coming months, as countries will try to fashion ways of transposing new rules into their national legislation.
The European Parliament's energy committee endorsed on 12 July the deal struck by member states on the EU's Energy Efficiency Directive, leaving just two more steps for the bill to go through - an energy Council and a plenary parliament vote in the autumn - before it becomes law.
The proposed directive has been seen as a game-changer mainly because it imposes an annual 1.5% energy-savings obligation on energy utilities – considerably more than the existing legislation – and it is expected to trigger a major energy-efficient revamp of the EU's existing building stock.
The European Commission will meet member states' representatives in autumn. The meetings will be structured as special 'working groups' meant to help each country with the implementation of the energy efficiency measures into their national framework. But utilities would also like to be at the table when they discuss these 'technicalities'.
“It will certainly be on our agenda," said Nicola Rega of Eurelectric, the association of the electricity industry in Europe. “In September we will engage in the dialogue with member states into how to implement this directive.”
“I suspect the lobbying will continue,” said Giles Dickson of Alstom, the global energy and transport company. “There is still quite a lot at stake.”
Member states have systematically watered down the directive in its negotiation process and have included several opt-outs, as well as “where possible”, “where feasible” and “may” phrases.
“There will be a lot of struggle on what energy savings options they can go for,” said Brook Riley, who has followed the legislation for Friends of the Earth Europe. “It's going to be a real lobby battle.”
The cost hot-potato
Energy companies worry they alone will bear the national annual obligation to save 1.5% energy from their previous year's final consumption.
“This is the area with most detail in the bill,” said Riley, referring to the utilities obligation scheme. Despite this provision having its opt-outs, Riley thinks it will be one of the most used energy-saving measures in member states.
However, energy utilities fear they will not be able to pass the costs on to consumers.
“There is a fear among several energy companies to be squeezed between governments requiring them, on the one hand, to deliver energy savings and, on the other hand, not to be able to pass through the costs of such obligations,” Rega said. “In both cases, the energy companies would be an easy target to blame in the eyes of public opinion.”
As utilities will have to achieve additional savings every year, they will start implementing energy efficiency measures for their customers – measures which will see electricity prices go down in the long-run, but which require initial upfront costs.
Bogdan Atanasiu, of the Buildings Performance Institute Europe, said there are two ways governments can do this. “You either take money from the public budget – to which not every citizen really contributes – or you raise the energy bills, ensuring everyone will pay.” For the latter, a fair solution would be to help those who cannot afford the revamp, Atanasiu said.
But it is not clear who will finance this 'fair' solution and the most probable scenario will see a so-called socialisation of the cost needed to achieve energy savings and offer efficiency solutions to customers. This means that customers would ultimately pay.
This ambiguity was strengthened by member states, which deleted a provision in the final text of the directive which said that costs would be passed onto the end-consumers. This way, when electricity prices go up, they can place the blame on energy companies.
“With the financial crisis, the way costs are distributed has become quite a sensitive issue for many governments,” Rega said.
“They don't want to be seen as accountable for the cost of the system. It is more convenient to hide the cost,” Rega added. “The cost would have to be recovered anyway, otherwise the system will collapse, but at least they don't say it.”
Europe aims to reduce its primary energy use by 20% by 2020, a target which is not legally binding.
The Energy Efficiency Directive was proposed by the European Commission in mid-2011 as part of its effort to reach this objective.
To achieve this, the EU needs to more than doubles its energy savings efforts, according to the Commission's estimates.
In its draft directive, the Commission proposed individual measures for each of the sectors that could play a role in reducing energy consumption, including a controversial obligation on energy companies to reduce their deliveries to customers by 1.5% each year.
- Sept. 2012: Vote in Parliament plenary.
- 1 Jan. 2013: Ireland takes over the EU presidency from Cyprus.
- 2014, 2016: European Commission reviews the Energy Efficiency Directive.