European policy consultants
Rural development and renewable energy

UK may have to adapt to meet Energy Efficiency Directive

EurActiv has seen a letter from three member states to Energy Commissioner Günther Oettinger. The ministers say that if the interpretation which allowed UK to meet the tems of the Directive is allowed to stand, “the level of ambition of the Directive would be substantially reduced and the fulfilment of the EU’s 20% energy efficiency target jeapordised.”

The concern relates to an unpublished EU interpretation note on Article 7 of the directive, which allows countries exemptions so long as they do not lower by more than one-quarter a 1.5% savings target set for energy companies.

This may allow countries with energy efficiency obligations, such as ROCs used in GB, to count energy savings from four years before the directive’s nominal 2014-2020 period towards their attainment. Germany is not eligible for the exemptions set out in the Commission’s note, because it uses other mechanisms.

Such ‘banking and borrowing’ allowed the UK to sign up to the deal by offering it a “massive discount” of up to 60% in its level of annual energy savings, the three ministers say, enabling UK to qualify on the basis of what is in effect a far lower target of around 0.5%. “It would be absurd and unjustified if paragraph 7c were now to be used as an accounting trick to significantly lower the ambition of the Article 7 target for member states”.

According to EurActiv, the issue was raised at the Energy Council on 4 December and again at the European Council working group on energy on 8 December. Germany received broad support for its position from a number of other member states, including the Netherlands, Sweden and Portugal.

However it is understood that France, Denmark, Italy and Poland which have energy-efficiency obligation schemes similar to the UK’s could also benefit from the current exemptions regime.

The legal basis of the text is disputed on a variety of grounds, and the Commission has referred the issue on to its legal service, which is expected to report back in January.

With three countries now signalling that they “cannot accept” the current loopholes, and calling for the Commission to “seriously reconsider and correct” them, UK may be forced to review its policies in order to meet the terms of the Directive.

Friends of the Earth called the current interpretation of the Directive “greenwashing from the so-called greenest government ever.”

EurActiv: www.euractiv.com

The EU adopted Directive 2012/27/EU on energy efficiency on 25th October 2012.

This Directive establishes a common framework of measures for the promotion of energy efficiency within the EU in order to ensure the achievement of the 20 % headline target on energy efficiency for 2020, and to pave the way for further energy efficiency improvements beyond that date.

The Directive lays down rules designed to remove barriers in the energy market and overcome market failures that impede efficiency in the supply and use of energy, and provides for the establishment of indicative national energy efficiency targets for 2020.

It introduces legally binding measures to step up Member States’ efforts to use energy more efficiently at all stages of the energy chain – from the transformation of energy and its distribution to its final consumption. Measures include the legal obligation to establish energy efficiency obligations schemes or policy measures in all Member States. These are intended to drive energy efficiency improvements in households, industries and transport sectors.

Other measures include an exemplary role to be played by the public sector and a right for consumers to know how much energy they consume.

The Directive (legal text): eur-lex.europa.eu

Extract:

1. Each Member State shall set up an energy efficiency obligation scheme ... ensure that energy distributors and/or retail energy sales companies ... operating in each Member State’s territory achieve a cumulative end-use energy savings target by 31 December 2020...

That target shall be at least equivalent to achieving new savings each year from 1 January 2014 to 31 December 2020 of 1.5 % of the annual energy sales ... by volume, averaged over the most recent three-year period prior to 1 January 2013. The sales of energy ... used in transport may be partially or fully excluded from this calculation.
...

7. Within the energy efficiency obligation scheme, Member States may:
(a) include requirements with a social aim in the saving obligations they impose, including by requiring a share of energy efficiency measures to be implemented as a priority in households affected by energy poverty or in social housing;
(b) permit obligated parties to count towards their obligation certified energy savings achieved by energy service providers or other third parties ...
(c) allow obligated parties to count savings obtained in a given year as if they had instead been obtained in any of the four previous or three following years.

When political agreement was reached on the Directive (June 2012), Ed Davey said Edward Davey said:

“I greatly welcome the agreement reached on the Energy Efficiency Directive...

The deal which has now been agreed ... maintains the EU’s position as a global leader in tackling climate change.

It signals a step change in energy efficiency and for the first time sets legally binding energy saving targets, which at a time of economic challenge will help improve the EU’s competitiveness and boost growth.

The UK played a central role in not only brokering a deal but also increasing its ambition. Our experience of our own energy efficiency policies has helped ensure that the Directive promotes practical and cost-effective action that will deliver real savings.

The UK supported the move to ambitious binding energy saving targets throughout the negotiations and played a crucial role in defining this target so that progress can be clearly and effectively demonstrated. We have also worked hard to ensure that the target provides sufficient incentive for longer term measures that will continue to deliver into the future”.

www.decc.gov.uk