Energy efficiency talks focus on finance, deal uncertain

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Financing aspects are dominating ongoing talks on the energy efficiency directive, but member states are keeping their hands firmly on their wallets, EURACTIV has learned.

As negotiations over the energy efficiency directive reopen under the Danish EU presidency, discussions are  focusing heavily on financing aspects.

However, several options floated by the European Parliament to break the deadlock already look like non-starters, EURACTIV was told.

And opposition by some EU states is making a binding 20% energy efficiency target impossible, Martin Lidegaard, Danish minister for climate, energy and building, told journalists in Copenhagen.

Bendt Bendtsen, a Danish member of the European Parliament who is following the dossier for the European People's Party (EPP), told EURACTIV that funding mechanisms currently contemplated by Parliament will be blocked by the EU Council of Ministers, which represents the EU's 27 member states.

“The provision on ear-marking of financing, such as national energy efficiency funds will not be part of the final piece of legislation,” Bendtsen said.

“It is generally quite difficult to convince member states to earmark funds," said  Bendtsen, adding that "this has even been the case before the crisis emerged”.

“I feel that the Council has a hard job ahead, the ball is really on their table,” he said.

Danes revive talks

Both the European Commission and Parliament were forced to change their position on the proposed energy efficiency directive in order to accommodate the Council's views. Member sates first refused to sign up to binding targets on energy savings, which prompted the Commission to propose binding "measures" instead.

Now, the Council does not want binding measures either, Bendtsen said, “unless the targets are measured differently or there are opt-outs or something else”.

The Danish presidency was expected to meet the Council’s energy working group yesterday (10 January) for the first time since it took over the EU's rotating presidency on 1 January. The Danes are hoping to piggy-back on discussions over the EU's energy roadmap to 2050 in order to re-launch the stalled talks on the directive.

Funding to be discussed

But financing issues are more likely to be addressed in wider talks over the EU budget for 2014-2020, the Multi-Annual Financial Framework (MFF), which covers areas such as research and regional funding.

The funding aspect of the directive “has to be seen in the full picture of the European Regional Development Fund and 'Horizon 2020' [research agenda], but should not necessarily be a part of the directive,” an EU official told EURACTIV.

Member states are avoiding signing up to a specific wording on financing issues in the text of the directive, as they do not want to prejudge the ongoing negotiations over the EU’s budget for the 2014-2020 period, EURACTIV understands.

The upcoming months will see “tough talks” on the proposed directive, with “a large majority of the European Parliament” wanting binding financial facilities in place to fund the energy efficiency measures and member states being reluctant to allocating further money.

The talks are "like a poker game" where governments keep their cards close to their chests, said Claude Turmes, a Green MEP from Luxembourg who is spearheading talks for the European Parliament.

Claire Roumet of CECODHAS, a federation promoting social housing in Europe, said financing issues were crucial as renovation work in homes help bring energy bills down for the poorest. The efficiency directive “is looking at more than just EU finance. Tapping money for energy efficiency is not touched fully by the MFF, because it does not take into consideration all alternative types of funding,” Roumet told EURACTIV.

Roumet was also adamant that binding measures were necessary:? “If there is an obligation without specific measures, it will never be complied with."

March vote in Parliament

Meanwhile, the European Parliament's committee on industry, research and energy (ITRE), which has the lead on the dossier, has pushed back its vote on the draft text from 24 January to 28 February. A full parliamentary vote is expected to take place late March.

The delay can be explained by the huge number of amendments, with more than 1,800 changes proposed to the draft energy efficiency bill.

“The number of amendments shows just how important this directive is,” said Claude Turmes, a Green MEP from Luxembourg. The industry committee aims to integrate all those into 60-70 compromise amendments for the final vote of the Parliament.

“We are entering the eye of the storm, we are trying to build alliances with friendly governments,” Turmes said.

On financing aspects, he said he was optimistic: “We are very much still in the negotiations, it is still very probable that we will have a text on this issue of financing in the directive".

The Green MEP said that the Parliament's insistence on having financial facilities included in the text of the directive gives the Assembly “visibility” and allows it “to have a tough discussion on financing” with member states.

Targets to stimulate investment

And as financing aspects remain the most difficult part of the negotiation, some are trying to revive an old idea – making the EU's 20% energy efficiency target legally-binding.

Proponents say a binding target would make it harder for countries to argue against energy efficiency funds, because they would be compelled to allocate some money from the EU budget to meet that objective.

"A way of seeing it is the spine is the target and the flesh is the European budget to add meat to the bone," said Sanjeev Kumar of environmental group E3G.

And even if the EU allocates some specific funds for energy efficiency, without targets investments might remain scarce, efficiency advocates argue.

The European Commission’s last report on the 2007-2013 budget says that "certain energy and environmental investments are not progressing  as expected" and this must be redressed by the member states and regions.

"The direction for 10-20 years is vital so that you can cast these investments over a longer time," Kumar said. "It gives people certainty that their efforts will not be reversed."

Roumet and Turmes agree that binding targets create an incentive for investment in energy efficiency.

The  Danish presidency, described as “ambitious, but realistic” its aim to finalise talks between the European Commission, Council and Parliament on the energy efficiency directive during the first six months of 2012.

Europe aims to reduce its primary energy use by 20% in 2020 “simply by applying cost-effective energy savings measures”.

The proposed Energy Efficiency Directive was unveiled by the Commission in summer 2011 to update the previous Energy Efficiency Action Plan, which had not been designed to create full energy savings. The 20% will not be reached, unless the EU doubles its energy savings efforts from the current projection of 9%.

The European Commission proposes individual measures for each of the sectors that could play a role in reducing energy consumption. However, talks on the directive are expected to be "very tough".

  • Jan.-Feb. 2012: First discussions on the directive between member states.
  • 7 Feb. 2012: Stakeholder conference on the 2050 Energy Roadmap.
  • 28 Feb. 2012: Parliament committee on Industry, Reserach and Energy (ITRE) votes on the Energy Efficiency Directive.
  • 28 Mar. 2012: Expected parliament plenary vote on the energy efficiency directive.

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