EU countries strike deal on energy efficiency law
Negotiators from the European Parliament, Commission and Council reached a deal on the Energy Efficiency Directive last night (13 June). But it fails to achieve its initial purpose of reaching 20% energy savings by 2020, the Parliament's chief negotiator has warned.
Claude Turmes, the Green MEP from Luxembourg who was leading the negotiation on behalf of the European Parliament, appeared moderately satisfied after the agreement was struck.
“This deal will give a boost to Europe's economy and help achieve our energy security and climate goals," he said.
"The new energy efficiency legislation sets out binding measures, which will go a significant way towards bridging the current gap the EU is facing with regards to meeting its pledge to reduce energy consumption 20% by 2020,” he explained.
However, just last week, Turmes had calculated that the current compromise would result in only 14.5% total energy savings by 2020, well short of the 20% goal that member states had previously agreed on in principle at an EU summit in 2007.
Before entering the negotiation with member states and Commission yesterday, the outspoken Green MEP told EurActiv that the Parliament would settle for a 15% energy savings goal as an "absolute minimum”.
In fact, he might have obtained more.
British liberal-democrat MEP Fiona Hall said today (14 June) that "the directive will now achieve 17% of the 20% energy efficiency savings needed by 2020 - compared to less than 15% before last night".
“Unfortunately, EU governments were not willing to agree to more ambitious measures, which would have fully delivered the 20% target,” Turmes said after the so-called trialogue talks with the Commission, Parliament and Council.
In order to close as much of the gap as possible, Turmes has asked the Commission to propose additional measures for transport, which are now part of the deal, Turmes said. These could result in new standards for car fuel efficiency, he explained.
“The Commission has to come up with a credible enough proposal,” Turmes said before entering the meeting yesterday.
Squeezed from all sides
Brook Riley of Friends of the Earth Europe, an environmental group, said the 20% target will not be reached because the most ambitious measures in the directive “have been squeezed from all sides”.
Under the Commission's initial proposal, energy companies were requested to reduce their energy sales to industrial and household clients by at least 1.5% each year.
But member states have obtained that a quarter of the 1.5% annual obligation can be achieved through a series of different measures. This will be broken down in the following way:
- ETS: 40% of the efforts that industries already make under the EU Emissions Trading System for carbon dioxide (EU-ETS) will now be accounted for in the yearly obligation.
- Early action: Member states will be able to include “early action" in their energy savings goals, allowing them to credit savings measures launched before the EU law comes into force.
- Future action: Countries will be able to count not only current, "real" savings, but also “future actions” in their national energy savings schemes.
- Savings at source: Countries will also be able to count energy savings made at the source, in the energy transformation sector, before it is distributed to clients. This will account towards a further quarter of the 1.5% obligation.
“All these measures can replace a quarter of the 1.5% energy savings obligation. That means that the level of the target has been reduced to 1.1%,” Riley said.
Moreover, it was agreed that all the different measures in the directive will be gradually phased in, allowing more time for EU member states and industries to prepare.
UK threatened to blow up the deal
Despite those concessions, the Danish EU presidency, which shepherded the negotiations, can probably be satisfied that the deal was passed as the talks appeared close to collapsing.
At the last minute, the UK asked for additional exemptions for countries that have already adopted savings schemes for energy retail companies. This applies only to the UK, Denmark, France and Italy.
“The UK made this exemption loophole a condition to accept the deal," Riley said, adding: "They threatened that otherwise they would block the deal" at a meeting of EU ambassadors Coreper) taking place on Thursday evening (14 June).
According to Riley, “the UK has clearly been one of the worst” in the negotiation. “It is a paradox, because on the one hand the UK is saying that it is committed to green policies, but on the other hand here they are opposing energy savings legislation which would deliver their commitment."
Riley estimates that the agreement on the energy efficiency directive represents “only a small progress” compared to existing legislation and regrets that it has become “much weaker than it was six months ago."
"Governments have scored an own goal against their own commitments to cut emissions, save money and create jobs,” he said.
Last-minute additions: buildings renovation and smart meters
Still, during the last leg of the negotiations, the Parliament did manage to introduce some additional measures designed to guarantee further energy savings in the future.
The key measure there is an obligation on each EU member state to draw up a roadmap to make the entire buildings sector more energy efficienty by 2050 (commercial, public and private households included).
"It contributes to the framework and it is a long term outlook but it is not strong enough for 2020 – member states agreed to have them because they don't have to implement these roadmaps too soon," Erica Hope, of Climate Action Network said.
EurActiv understands this measure has been agreed in exchange for watering down a proposed 3% renovation rate for public buildings, which will now only address “central government-owned and occupied buildings”. In a country like Germany, where most public buildings belong to the regions, this reduces the scope to only around 37 buildings.
Other "detailed measures" that were added at the last minute include "binding financial instruments" for energy efficiency and "better consumer information," such as through the use of smart meters, Turmes said in a statement.
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.
“The Council substantially watered down text from the Commission and especially the Parliament. This deal reflects neither the ambition nor the urgency needed to put the EU on the right path towards 2020” said Arianna Vitali, Policy Officer for Energy Conservation at WWF European Policy Office.
Agathe Ernoult, from the European Environmental Bureau (EEB), a green NGO, expressed disappointment at the deal: “The Energy Efficiency Directive was a golden opportunity to help lift Europe out of the crisis by creating jobs, cutting harmful emissions and increasing energy security. However, European leaders have spectacularly failed to seize this opportunity," she said.
"Countries have committed to deliver energy savings by putting an obligation on energy utilities to make energy savings but gaping loopholes remain and lack of ambition stand in the way of an effective directive. Worse, there is no guarantee that their commitment will be invested in the most important sector: building renovation," Ernoult added.
British MEP Fiona Hall, who took part in the negotiations with EU member states on behalf of the Liberals and Democrats group (ALDE), has welcomed the deal brokered last night. "Although the text in Article 6 on the energy efficiency obligation schemes is not as strong as the Parliament wanted, it is an important achievement that for the first time ever Member States will have to have a long term strategy with policy and measures in place for dealing with the energy efficiency of their buildings," she said.
"Thanks to the changes insisted upon by the Parliament, the directive will now achieve 17% of the 20% energy efficiency savings needed by 2020 – as compared to less than 15% before last night," Hall said.
"In addition, the Parliament secured an early review of the deal in 2016 including of the exemptions that currently weaken Article 6," she added.
Erica Hope, of green group Climate Action Network Europe said the 2016 review is part of the compromise package.The timing is strategic and has pleased activists, because the commission would have to review it at the same time when it would have to conclude whether measures taken have put the EU on track to meet the 20% energy savings targets.
But the 3% energy savings that member states have given up show that they have not realised the benefits energy efficiency brings, Hope added. "Every percentage point missed the change to achieve more GHG reductions, have less energy imports from abroad and save tens of millions of euros every year."
Each idea of the initial energy efficiency proposal left the final round of negotiations only as a small fraction of what they were meant to be, according to Hope.
The energy savings obligation scheme imposed on energy retailers “is not a strong enough push towards that as it should have been”. And by choosing not to renovate all public buildings, member states are not setting the example they wanted to set at all. “Only people happening to go by the central government buildings every day will see this change,” Hope added.
Danish MEP Britta Thomsen, the chief negotiator on the directive for the Socialists & Democrats (S&D) group in the European Parliament, said: "We wanted to go much further, but over the last weeks of negotiation the Council was stepping back instead of moving forward, and we accept this compromise as the only real scenario to improve energy efficiency in the near future. Regrettably, some key demands are now voluntary instead of mandatory. It will depend on member states' will. The 3% annual renovation target is limited to central government buildings (estimated to be 10% of all public buildings), instead of all public buildings."
"The Commission must guarantee that the 20% target is reached by 2020. If the Commission assessment of national strategies due in 2014 shows that the EU as a whole is not on target to reach the 20% objective, then it should propose binding targets," S&D Vice President Marita Ulvskog said.
“It is regrettable that the financial crisis weakened the political will for a strong Directive - when in fact investments in energy efficiency could give a major boost to European economies” said Stefan Scheuer, Secretary General of the Coalition for Energy Savings.
“The restriction of public building renovation and procurement obligations to central government reduces them to mere symbolism," said Jan te Bos, Director General of Eurima, the European Mineral Wool Manufacturers Association. “This is why the inclusion of national building renovation strategies is important to start a serious process and engage all policy-levels in the long-term and deep renovation of all buildings. Again this week the International Labour Organisation (ILO) reconfirmed the enormous economic and social benefits of building refurbishment programmes.”
Riccardo Viaggi, secretary general of the European Builders Confederation said that “this job creation potential can only be a reality if clear partnerships are encouraged and implemented between energy distributors and energy services providers, as we demand since the beginning.”
"The requirement for Member states to set up national roadmaps by 2014 for the deep renovation of the existing building stock, both public and private, is at least a starting point," Martin Engelmann, Advocacy Director at PlasticsEurope said. He calls on member states to develop now stepwise plans with clear intermediate targets and on the Commission to monitor them closely.
John Harris, vice president of energy management solutions company Landis+Gyr expressed his disappointment with the smart metering and consumer information provisions in the Directive. “You have to give credit to the Commission and Parliament’s negotiators; they came away with a better Directive than the Council was willing to offer just last week. But will it ensure that the smart metering systems installed in the future contribute to energy efficiency?"
Speaking on behalf of the European Alliance to Save Energy (EU-ASE), a grouping of business leaders, politicians and campaigners, President, Monica Frassoni said: “The Danish Presidency and the European Parliament have worked hard to reach a compromise with the Council over the last weeks as some EU Member States made several last minute attempts to water-down or block the Directive’s flagship measures whilst some others played a more positive role."
She added: "This isn't a time to rest on our laurels; the European Commission and EU Member States have a very important task ahead not only to ensure that this important law is enforced properly."
British Conservative MEP Vicky Ford, in charge of negotiating the directive on behalf of the European Conservatives and Reformists group said that the deal represents a fair compromise.
"Soaring energy bills are a huge problem for many households. Insulation and other energy saving measures can be a great help. However, it is important that each country can come up with their own tailored schemes to help households and businesses."
"This is a big step ahead: for the very first time we have legally binding energy efficiency measures," Energy Commissioner Günther Oettinger said. "Europe is now much better placed to achieve its 20% energy efficiency target for 2020".
"The measures will reduce our energy bill while generating further growth and jobs. They stimulate investments and make our energy using products more efficient," he added.
Monique Goyens, Director General of The European Consumer Organisation said:
“European leaders missed a unique opportunity to help consumers contribute to reduce our energy consumption. If we want people to save energy, they need to have up-to-date and accurate information about how much energy they use. Unless this is guaranteed, reducing energy becomes a fulltime job.”
Secretary general of EuroAce, Adrian Joyce said the move should enable member states to seize the huge potential of savings offered by their existing building stock. "If member states get this right, they have the opportunity to cut the energy demand of the EU existing building stock by 80% by 2050, freeing up large amounts of energy and, in turn, money."
“A broader and more technology-neutral approach would have made it easier for Member States to reach more ambitious targets in a way that is appropriate to their particular national and geographical circumstances”, says Thomas Nowak, Secretary General of EHPA (European Heat Pump Association).
On the energy efficiency obligation schemes, the European energy association Eurelectric said "the greater flexibility of the final text enables member states to better adapt obligation schemes to national circumstances while giving equal footing to alternative or complementary instruments that stimulate demand for energy savings".
"The European electricity sector is ready to step up and play its role in optimising energy use. But while some improvements have been made, the continued use of an old conversion factor means that the proposed directive still favours direct-use of fossil fuels instead of clean electric technologies that increase the share of renewables and reduce import dependency and carbon emissions,' said Eurelectric Secretary General Hans ten Berge.
“As regards building renovation, the Energy Efficiency Directive is another example of an EU directive which provides a praiseworthy long-term objective but which lacks EU-wide stringent measures that would provide certainty and confidence for industrial actors to mobilize resources” Bertrand Cazes, Secretary General of Glass for Europe said.
Cazes said the EU has made "small progress" on building renovation, but added: "The requirement for Member States to establish long-term strategies to improve the energy performance of the building stock through the deep renovation of commercial and residential buildings is welcomed. Similarly, the willingness shown by the co-legislators to set-up financial facilities to achieve the objective of the directive are also seen positively by the flat glass industry."
- 14 June 2012: EU ambassadors' group (Coreper) votes on the energy efficiency deal.
- 1 July 2012: Cyprus takes over the EU presidency from Denmark.
- July 2012: European Parliament's Industry, Research and Energy Committee (ITRE) scheduled to vote on the directive.
- Sept. 2012: Vote in Parliament plenary.
- 1 Jan. 2013: Ireland takes over the EU presidency from Cyprus.
- 2016: European Commission reviews the Energy Efficiency Directive.