Energy efficiency deal blocked by ‘vested interests’

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The draft energy efficiency directive, initially billed as the most important energy savings law to date, is being held back by the "vested interests" of large energy companies with very close ties to member states, EU sources have said.

The Energy Efficiency Directive was tabled in 2011 as the EU's main instrument to reaching the bloc's goal of reducing energy consumption by 20% by 2020.

Despite numerous public statements supporting the objective, EU member states did not want it included in the draft energy efficiency directive. They are now arguing that “there are also other sectors which could deliver” such as the transport sector, which is currently not covered by the draft directive.

“It's true that the member states have been more eager to water down the rates than to support it. That’s the paradox we’re facing – that all member states would like to achieve the same level of ambition,” Martin Lidegaard, Denmark's climate and energy minister, recently told EURACTIV.

Belgium, Denmark, Ireland, Poland, Italy, Luxembourg and Slovenia are among the 'friends' of the energy efficiency bill, but “older EU member states” are blocking an ambitious text, EURACTIV was told.

Others such as the United Kingdom, Germany, France, the Netherlands and Spain are holding back for different reasons – some because they already have energy efficiency schemes in place, and others because they are being constrained by severe cuts in public budgets.

Efficiency, not energy savings

The main pillar of the Energy Efficiency Directive is a proposed 1.5% savings obligation that member states would have to impose on national energy retailers every year, calculated from the energy use of the previous year.

This requirement, enshrined in the directive's Article 6, is supported by the European Parliament and the Danish EU presidency and would result in a net annual decrease in energy sales by big utilities such as Germany's RWE or France's EDF.

But the EU Council of Ministers, which represents the EU's 27 member states, rejected Article 6 in its current form and replaced it with an “energy efficiency obligation scheme”. 

The Council's version is only slightly different but significant enough to trigger a heated debate between EU negotiators. It requires energy companies to ensure they make energy efficiency improvements accounting for a total volume of energy equal to 1.5% savings from the previous years' energy use. At the end of the day, this means energy retailers would no longer need to cut down their annual sales.

“I think that some of the articles in the directive – for example, especially Article 6 – have been too watered down and if we should have a chance to reach agreement with the Parliament, we have to increase the ambition level of that article again,” Lidegaard said.

Industry resistance

The energy efficiency bill seems to have hit a wall with the obligation imposed on energy retailers.

Different companies have had varied reactions but the main argument has been that countries already have national schemes in place, industry and government officials say.

Also, there was resistance to the implied increase in energy costs, especially from the side of the energy-intensive industry, such as chemical manufacturers.

Large power utilities complain that they are already suffocating under environmental legislation and say more EU laws would put their business under pressure, an EU source told EURACTIV.

In addition, energy companies have largely rejected having to comply with an EU law requiring them to change their business model by turning greater profits from energy efficiency services and selling less energy.

One of the arguments that industry organisations use is that energy sales are directly linked to economic growth. BusinessEurope, the EU's employers' organisation, claims that the EU's efficiency directive is an “energy cutting directive” and thus a “growth-cutting” law.

In reply, the Danish presidency, supported by a large number of MEPs and the European Commission, have been focusing their arguments on the economic benefits the directive could bring.

In its original version, the directive was supposed to trigger an increase in the EU's gross domestic product of €34 billion in 2020, create almost half a million "green" jobs and reduce fuel expenditure by €38 billion annually.

The Danish presidency has four rounds of “trialogues” – negotiation meetings between the Parliament, the Council and the Commission – left until it hands over the EU presidency to Cyprus on 1 July.

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.

The 20% target will not be reached, unless the EU more than doubles its energy savings efforts.

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.

  • 8 May 2012, 29 May 2012, 5 June 2012 and 13 June 2012: Trialogue meetings (excluding the regular non-political, technical meetings) between the Council, Commission and Parliament.
  • 1 July 2012: Danish presidency ends.

 

 

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