Brussels slaps opt-outs on efficiency plan

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EU member states have been granted an opt-out from efficiency plans that would force energy companies to make savings among final customers of 1.5% a year.

"Our proposal aims at making the way we use energy in our daily life more efficient," EU Energy Commissioner Günther Oettinger said in a statement.

It would also "lead to a reduced energy bill," he said.

Climate Commissioner Connie Hedegaard went further, hailing an "important day for European climate policy" after years of failure to meet EU efficiency targets.

"If member states follow the Commission's proposal, that will now change," she added.

A wave of criticism

But environmentalists were dismayed at proposals allowing EU states to "opt to take other measures to achieve energy savings among final customers" than compelling efficiency savings.

"There will be no changes to company business models now," the World Wildlife Fund's Arianna Vitali told EURACTIV, "and no clear way of proving that actions taken by member states are additional to what they would have done anyway".

"It is a big disappointment," she continued.

The opt-out is believed to have been agreed under pressure from Germany and Sweden.

According to figures compiled by Friends of the Earth, even a fully implemented 1.5% energy savings obligation would only recoup energy worth at most 12 Million tonnes of oil equivalent (Mtoe) in its first year.

The EU is committed to reaching annual savings of 368 Mtoe by 2020.

In 2009, EU member states committed to meet three targets for 2020: a 20% cut in emissions reductions, a 20% rise in the share of renewables in the energy mix, and a 20% cut in energy consumption, all on 1990 levels.

But the efficiency pledge was voluntary, and it is the only one that Europe is on track to miss.

"I don't think it is a coincidence that we are on track when it comes to the binding [2020] renewables target but not on the non-binding energy efficiency target," Commissioner Hedegaard told a UN conference last week.

Energy savings are profitable in the long term but also require capital outlays that can put firms at a short-term competitive disadvantage. As a result, enterprises and environmentalists have both looked to Brussels to level the playing field. 

However, Randall Bowie, an energy consultant for Rockwool who has designed past EU efficiency directives, said that this one had "missed an opportunity" by trying to cover all objections anticipated at the Council of Ministers.

"When you start from a weak level, you risk going to a weaker level in the Council discussions," he told EURACTIV. "Normally you start from a strong and ambitious proposal and argue to keep it. You don't give in before the discussions even start."

Public procurement opt-outs

He complained that the EU had also rowed back on proposals to force member states to refurbish 3% of all public buildings – 12% of Europe's building stock – for heat loss.

Opt-outs from the proposal will be 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 previously mooted.

"They left out the quality of the measures needed," Bowie said, "and there is a real risk that member states may meet their obligations with short-term cherry-picking measures, instead of longer-term deep renovations, where the real savings potential lies."

Vitali agreed that this was the directive's "black spot".

Cost effectiveness and economic criteria were also added to the public procurement provisions. 

But the European Commission's energy and climate departments (DGs) buried the hatchet in a long-running dispute over which should implement energy efficiency measures against big industry.

In a compromise deal, industrial installations already covered by the Emissions Trading Scheme (ETS) will now also be covered by the new directive.

The European Commission will monitor the situation to ensure that carbon prices do not collapse as a result.

If necessary, Brussels would consider "recalibrating the ETS by setting aside a corresponding number of allowances from the part to be auctioned during the period 2013-2020, should a corresponding political decision be taken". 

EURACTIV understands that such a move could come in the form of a regulation or co-decision.

One official at DG Climate hailed the deal as a success. "Europe is moving forward on carbon emissions," he told EURACTIV. "We've found a good compromise and matters have been solved."

But Brook Riley of Friends of the Earth only welcomed the news as the death of a red herring. "There never was any threat to CO2 prices from this energy efficiency directive," he told EURACTIV.

"It was always far too weak to be a threat to the ETS, unfortunately."

Arthur Neslen

John Harris, vice-president of Landis+Gyr, a leading smart metering company, welcomed what he saw as a "stronger drive" from the Commission to achieve Europe's energy efficiency targets. "It's clear that changes will not happen of their own accord," he said. "Today's targets are simple but ambitious - and unless we act now, the EU will only achieve half of its targeted 20% improvement in energy efficiency."

Smart metering was essential in this process, in his opinion. "Real-time access to consumption data is crucial to empower consumers to manage their energy better," he explained. "Without information on how much energy we use and how much it costs, it won't be possible to curb the energy we consume. Asking people to do so under the current circumstances is like asking drivers to stick to a speed limit without a speedometer in the car. Member states must start implementing measures now while there is still time to make a difference, otherwise we will miss the targets."

Monique Goyens, director-general of the European Consumers' Organisation (BEUC), said that a study of the price tag was needed to judge efficiency measures. "Much focus has been placed on 'smart meters'," she said. "They undeniably can bring benefits for consumers, but it's also clear that not all households will benefit equally from the device's energy saving potential, if at all. Some households are too small to make energy savings and vulnerable consumers like the elderly or those of low income often cannot shift their energy consumption to cheaper off-peak periods." 

"So, the roll-out of smart meters shouldn't be mandatory and the costs for installing them fairly shared between consumers and industry. Ultimately, smart meters will only achieve their energy saving potential when they are really consumer-friendly, for instance through an in-house display or when the consumption rate is shown in monetary terms," Goyens said.

Erica Hope of Climate Action Network echoed the Climate Commissioner's recent cadence at the IPCC conference to give a different message. "It's no coincidence that Europe is failing so dismally to tap the enormous potential that energy efficiency offers for the environment, the economy and society," she said.

"Concerted government action is needed to modify the pricing structures, business models, cultural mindsets and lack of awareness which currently stand in the way of widespread uptake of energy saving practices and technologies. Unfortunately, with no binding target and only a flimsy set of sectoral requirements, the Commission's proposals as they stand do not inspire this."

At Friends of the Earth, Brook Riley, the group's climate justice and energy campaigner, had strong words. "Frankly, the European Commission is fooling itself if it believes the energy efficiency directive will deliver the 20% savings target," he said. "Its own internal analyses show that only a binding target will suffice. Instead of showing leadership, the European Commission is giving in to industry scaremongering and pandering to the lack of understanding among national governments. This directive is set up to fail."

"Tough action to meet the EU's 20% energy savings target could mean a total phase-out of nuclear energy and a 50% reduction in our use of coal. The safest, cleanest energy is that which a country doesn't need to use. Done correctly, efficiency is the key to a sustainable energy system."

One influential industry body, EURELECTRIC, said that it "firmly supports a market-based approach to energy efficiency" and would be judging the energy efficiency directive accordingly. They welcomed the compromise deal on the ETS. But the group also identified three areas of "concern and ambiguity" in a press statement. These were:

"Administrative burden: The proposal adds further uncertainties in permitting and authorisation procedures, potentially deterring investments and resulting in additional costs to meet the EU's energy-climate targets. One example is the ambition to pre-define a technology mix for electricity generation."

"Inconsistency with the third liberalisation package: Many provisions (e.g. on smart metering/billing or on energy storage) contradict the EU legislation currently under implementation, creating further uncertainties for the sector."

"Subsidiarity in delivering energy savings: Market mechanisms can create financial incentives for energy savings and can thus play an important role in meeting national energy efficiency targets. But the conditions required to deliver energy savings vary between and even within member states. We therefore welcome the proposal's flexible approach allowing member states to develop alternatives to the suggested obligation scheme (Article 6 (1) and (9))."

The European Aluminium Association (EAA) welcomes the new directive as it recognises "the critical importance of financial support in accelerating the refurbishment and construction of energy efficient buildings," said Patrick de Schrynmakers, its secretary-general. "There are potentially massive energy savings to be gained from buildings, and as a key building technology, aluminium can more than play its part."

"Energy-efficient building products and materials are usually more expensive in the short term, and therefore we need adequate incentives to ensure their market uptake," he continued. "In this respect the proposal recognises the critical role of the member states in making such support available and acknowledges that short term costs lead ultimately to long-term gains."

A contrasting view was displayed by Glass for Europe. "Without stronger efforts to foster the deep renovation of buildings, Europe will only continue wasting precious energy," a statement issued by the group said. "Glass for Europe deplores the lack of ambition emanating from the Commission proposal for an Energy Efficiency Directive."

"Although the political objective of increasing Europe's rational use of energy by way of reducing energy demand in key sectors such as buildings is very much welcome, the measures laid down in the proposal are clearly insufficient for the EU to achieve its current target of saving 20% of energy consumption by 2020."

"We were shocked by the lack of ambition in the Commission's proposal," Rick Wilberforce, president of EuroACE, which represents companies working on energy efficiency in the buildings sector, agreed. "Europe is already walking on thin, melting ice, yet the European Commission proposes a Directive that experts already consider as a failure. Even the 3% binding renovation target for public buildings was watered-down. The Commission only opting to renovate buildings to minimum standards instead of deep renovation will lead to a significant untapped savings potential whilst at the same time lead to higher costs for public authorities in the future," he added.

For the Greens, Luxembourg MEP Claude Turmes made a similar observation: "The proposed directive contains too many loopholes to ensure the EU can meet its 20% energy savings target," he said. "Clearly, the absence of binding national targets, which have been postponed to 2014, is the biggest deficiency but there are other crucial gaps in the proposals."

"The proposed 'energy saving obligation' on energy suppliers has also been watered-down, following intense industry lobbying. The final proposals on the 1.5% energy saving obligation are a fudge, which will allow energy suppliers to opt out of the obligation and pass the costs for energy savings to taxpayers. This loophole, in what is a key area of the directive, will prevent the shift away from the current outdated business model of selling energy by unit to a new model based on 'energy efficiency services'." 

DigitalEurope Director-General Bridget Cosgrave was more upbeat. "The member states will play an important role as they will be required to develop national energy saving targets, which will be essential to meeting our 2020 goals," she suggested.

"The ICT industry can play a crucial role in assessing, monitoring and delivering energy saving potentials through for instance the deployment of smart grids. Smart grids use ICT to better manage production, supply, distribution, retail and consumption of electricity, thereby reducing greenhouse gas emissions, and improving energy saving and network security," she said.

In a simillar vein, Arnaldo Abruzzini, secretary-general of EUROCHAMBRES, which represents chambers of commerce, called for more incentives and targeted information rather than obligations. "As it has been rightly decided not to propose binding energy-efficiency targets for the time being, proposing mandatory measures would be inconsistent with this approach and would create unnecessary administrative burdens," he explained.

"To overcome the existing obstacles to increased energy efficiency, the focus should rather be on flexible incentives, targeted information, further education of energy consumers and sharing of best practices among member states."

The European Environmental Bureau (EEB) welcomed the Commission's steps, as far as they went. "There is huge potential right under our noses to save massive amounts of energy," said EEB's Catherine Pearce, "and we are pleased the Commission is finally beginning to see the benefits that savings bring to our society and economy. However, this directive still lacks decisive, immediate action with binding targets and the scope and ambition necessary to start achieving our energy savings goals".

Monica Frassoni, president of the European Alliance to Save Energy (EU-ASE), expressed disappointment by labelling the proposal "half-hearted". "The European Commission did not fulfill its commitment to replace binding targets with binding measures and has missed out a huge opportunity to save significant amounts of energy and money – at a time when we need both the most," she said. 

"In the [coming] months, we will support the European Parliament and the most progressive members of the European Council in their effort to strengthen its provisions in terms of targets and concrete measures," she added.

COGEN Europe, the Confederation of European Paper Industries (CEPI), Cerame-Unie and the Confederation of Food and Drinks Industries (CFDI) praised the directive in a joint press release for signalling "a clear intention  by the Commission to remove barriers and create a supportive environment for existing and new cogeneration operators, underpinning their investment certainty and the economic justification on the investment".

The Confederation of European Waste-to-Energy Plants (CEWEP) praised the directive for "fully tak[ing] into account heat and local aspects in order to increase energy efficiency". Managing Director Ella Stengler added: "We hope that during the upcoming legislative process the spirit of the directive will be maintained, providing us with a clear, long-term legislative basis that is needed for future investments."

Energy efficiency is one of the EU's three 20-20-20 targets for the decade, along with increasing the use of renewable energies to 20% of its overall energy mix and reducing greenhouse gas emissions by 20%. 

Unlike the other two goals, though, energy efficiency targets are not legally binding and in January, European Commission President José Manuel Barroso blamed this for the fact that it was the only goal not being met.

Commission documents forecast average energy savings of only around 10% by 2020, with the UK on track for 9% and even Germany only likely to hit 14%.

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