UK fails in new bid to water down Energy Efficiency Directive

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EXCLUSIVE / A British attempt to wriggle out of its energy savings obligations under the EU’s flagship Energy Efficiency Directive (EED) has been stymied by a European Commission Legal Services document, which EURACTIV has seen.

Loopholes already included in the directive allowed for a dilution of the headline 1.5% annual energy savings obligation by up to a quarter.

But Britain also wanted to add ‘early actions’ to its savings count, even if these were taken four years before – or three years after – the directive’s nominal 2014-2020 period.

This has now been ruled out of bounds in a Commission interpretation note, dated 15 April. 

It says that while a limited derogation to the directive’s “temporal scope” has been provided for, this is conditioned on its not exceeding "a cap of 25%".

“The closure of this loophole is good news and retains credibility for EU energy savings policy,” said Brook Riley, a spokesman for Friends of the Earth, an environmental group. “But it bodes ill for sustainable energy policy when the self-proclaimed greenest UK government-ever seeks to water down a win-win directive, which aims to reduce fuel bills while cutting fossil fuel imports and carbon emissions.”

While welcoming the new interpretation note, Friends of the Earth pointed out that the directive’s 25% exemption rate lowers the EU’s ambition level by the same amount in reality – to no more than a 1.1% energy savings rate.

The exemptions cover: early (but not late) actions; overlaps with efficiency steps taken under the Emissions Trading System; the counting of savings in the energy transformation sector; and a graduated build-up of the target from 1% in 2014 to 1.5% in 2018. 

If the UK had been allowed to ‘bank and borrow’ efficiency measures beyond this, its required yearly energy savings would have fallen to just 0.75%, according to a Friends of the Earth calculation.

Gentleman’s agreement

In November, Germany, Finland and Austria sent a joint letter to the European Commission protesting what they called an “absurd and unjustified… accounting trick” that had been allowed for the UK to sign up to the Energy Efficiency Directive. That complaint received “broad support” from several other EU states, according to a German diplomat. 

>> Read: Three EU states condemn UK’s energy savings 'accounting trick'

London had argued that it was only fair to count energy use reductions made under its Carbon Emission Reduction Target (CERT) scheme in the 2010-2013 period, as not all EU states had implemented comparable programmes.

But France, Italy and Denmark had done so, and could have activated similar opt-outs.

This in turn would have further defanged the centrepiece of the EU’s wilting attempts to meet an aspirational target of cutting energy use in 2020 by 20% of a projected baseline model drawn up in 2005. 

Sympathy for the British?

Top Commission officials in the EU’s energy directorate are thought to have been sympathetic to the British, and no position was taken on the issue for several weeks. But following an opinion by the EU’s Legal Services, they were left with no choice but to act. 

Whispers in the Brussels wind have it that Philip Lowe, who heads the Commission's energy directorate, "tried to figure out how not to use the legal services’ interpretation,” one EU insider said.

“He did not want to have a fight with them, but now he will very likely have to have a fight with the UK instead, which seems to have come away from the final negotiations with a different interpretation.”

Some energy efficiency experts say that the British position would, counter-intuitively, have encouraged positive long-term trends, such as increased building renovations.

These give cost-effective efficiency returns that can be counted for up to 50 years, so increasing annual energy savings figures. The EED at present only runs until 2020, although a review is planned in 2016. 

Short-term measures

Without an extension of its mandate, fears remain about the potentially minimal steps that EU states will take to meet the directive’s requirements.

“There will very likely be a lot of short-term industrial measures used to fulfil the 1.5% target, as happened in Denmark and other member states in the past,” said Randall Bowie, a veteran efficiency expert responsible for designing past EU energy savings directives. 

“Most of them, unless otherwise required, ended up being done in industry, as it is easier to do quick and peripheral measures there – improving pumps, motors and technical systems, upgrading technical insulation for high temperature processes – you can almost always find a short-term industrial measure that gives a quick payback.”

For now though Brussels will await the response of the UK, which is still a powerful player in the EU, even if its standing has been damaged by Prime Minister David Cameron’s planned referendum on EU membership in 2017.

Environmentalists pointed to the potential for radicalising the Whitehall agenda, with Riley noting that “the UK trumpeted the benefits of energy savings in public but behind the scenes sought to escape any real obligation to reduce energy use.”

“The intention was plainly to cover up the failings of the ‘Green Deal’,” he added. “That will now have to be made much more ambitious if the UK is to meet the full requirements set by the energy efficiency directive”.

Europe aims to reduce its primary energy use by 20% by 2020, a target which is not legally binding. But so far, EU states are only on track for savings of around 9%, according to Commission estimates.

To achieve the EU's stated goal, an Energy Efficiency Directive was proposed by the European Commission in mid-2011 and finally approved after much haggling in June 2012.

Several sectors were covered in the directive, but its cornerstone was an obligation on energy companies to reduce their energy deliveries to customers by 1.5% each year.

  • By end of 2013: Communication on 2030 targets expected.
  • 2014: Energy Efficiency Directive due to come into effect.
  • April 2014: First National Energy Efficiency Action Plans (NEEAPs) to be submitted to the Commission by member states.
  • May 2014: EU member states must prepare schemes for their energy companies to deliver annual energy savings of 1.5%.
  • 30 June 2014: Review of progress towards meeting the 2020 energy efficiency target.
  • 2016: European Commission to review the Energy Efficiency Directive.
  • 2020: Deadline for EU's aspirational target of cutting energy use by 20% of 2005 levels, according to a baseline projection

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