Share this on social media
Columnists: Fiona Hall, Senior Adviser
Published on: 26 Jun 2018
Energy Efficiency Directive – a good deal or not?
On Tuesday 19th June at 8.30pm the lead negotiators from the European Parliament, Commission and Council reached a deal on the Energy Efficiency Directive (EED). The key points: a headline EU energy saving target for 2030 of 32.5% (compared to 2007 projections), a revision of that headline target in 2023 in light of the Paris Agreement, and real final energy savings under Article 7 of 0.8% a year.
Some voices have expressed disappointment at this outcome. It looks a long way from the binding 40% savings target demanded by MEPs at the committee stage in the Parliament. And how could MEPs have agreed to such a lowering of the Article 7 annual savings rate, which is currently fixed at 1.5% a year?
First, let’s clear up the confusion about the Article 7 annual savings rate. The text of the 2012 Energy Efficiency Directive indeed has an annual rate, in principle, of 1.5% a year. But this requirement is so hedged about with exemptions and flexibilities that, in practice, Member States need only deliver annual savings of around half of that – and, sadly, it is this 0.75% figure that civil servants in the national capitals have been routinely assuming. A breakthrough moment was reached in the negotiations when MEPs and the Bulgarian Presidency (negotiating for the Member States) agreed to work on finding a compromise on the in-practice, de-facto annual savings rate instead of the number on paper. The figure of 0.8% per annum that was finally agreed is an improvement on the de-facto 0.75% rate to 2020 and the Commission’s de-facto 2016 draft proposal – and nearly double the de-facto rate proposed by the Member States last June. Agreeing a real annual saving rate of 0.8% to 2030 was a victory for both ambition and honesty.
But what about the overall target? Critics point out the many studies indicating that the cost-effective potential for energy savings to 2030 is 40%. Unfortunately, the level of savings backed by Member States has consistently dragged a very long way behind that. At the EU summit in October 2014, under pressure from the UK, the energy efficiency target for 2030 was pegged down to 27%, “having in mind an EU level of 30%”. The Commission duly came forward with a proposal for a binding 30% target in November 2016. The European Parliament backed a 40% binding target at the committee stage, but mindful of the need to reach a political agreement with the other institutions, came down to a 35% binding target in the plenary vote. In the negotiations which followed, most Member States found it easier to move above 30% than to accept a mandatory target.
So is a 32.5% non-binding target for 2030 a big disappointment? No – because, crucially, it is a accompanied by a requirement for the Commission to revise the target level by 2023, in light of the Paris Agreement. The European Union will need to reduce its greenhouse gas (GHG) emissions by at the very least 55% by 2030, in order to deliver on its Paris commitments, and energy efficiency is routinely shown to be the most cost-effective way to do this. Up is therefore the only direction for the EU energy efficiency target to go.
Will the 2030 energy efficiency target be less enforceable because it isn’t binding? The Commission believes not, pointing out that the 20% 2020 efficiency target is also non-binding, and that this has not prevented the Commission from coming forward with additional proposals (notably, the 2012 EED) when it was clear that efforts were not on track. Under the Governance Regulation, however, energy efficiency was at grave risk of becoming less important in national energy and climate plans because, in the absence of a binding EU target, there was no automatic need for checkpoints on progress or rules for additional measures, unlike for renewables.
Enter the shining knight of energy efficiency – MEP Claude Turmes, who had engineered the successful outcome of the 2012 EED. At 4.30 am on Wednesday 20th June – eight hours through the night after the EED deal – Claude, now the rapporteur leading the Parliament on the Governance Regulation, clinched a deal. It was agreed that under the Governance Regulation there will be reference points in 2022, 2025 and 2027 when progress towards the 2030 energy efficiency target will be assessed. If necessary, the Commission will then propose additional EU-wide energy efficiency measures to ‘fill the gap’. Moreover, the principle of “Efficiency First” is enshrined in the Governance Regulation: in their national plans, governments will have to show how they prioritise efficiency in infrastructure investments.
What next? There is still work to do to finalise the Energy Efficiency Directive. First, there is a legal and technical process to ensure that the detail of the text on Article 7 delivers the agreed 0.8% real savings. Then the deal must be approved by committee and plenary in the Parliament, and by the Member States in the Council. It is likely to be 2019 before the EED text is published in the Official Journal. Member States will then have 18 months to transpose the directive into their national legislation – and this time, they will have to find the real annual final energy savings that the EU directive lays down.
