Columnists: Nils Borg, European Council for an Energy Efficient Economy

Published on: 20 Sep 2016

Targets and ambitions: Comparing apples and oranges?

Should we keep pushing EU countries to do more to reach their energy savings targets or shall we celebrate the fact the we are, after all, seeing progress on energy efficiency? The answer requires an understanding the EED’s Article 3 and 7 and the different targets found there.

In April, eceee published an article announcing the publication of the Energy Efficiency Watch survey based on input from 1100 EU experts and policy makers. The consolidated view of the experts was that the progress is too slow, given our ambitions and our targets.  As always, the picture is mixed with some countries doing better than others, but also with some of the “best” countries falling behind in some respects.

That was the view of 1100 experts. Can we trust them to give the real picture? After all, this was not a scientific evaluation based on statistics and vast amounts of data. But experts on the ground provide a refreshing reality check that can provide good contrast to the official national reporting and documentation.

However, the ambitions of the Energy Efficiency Watch project go further than just providing a kind of European “energy efficiency policy barometer”. In May, the project published a suite of reports. The press release headline sums it up quite well: Considerable progress in EE policies but more needed to achieve 2020 target . The EEW’s portfolio of reports contains both individual country reports as well as a consolidated European policy report. These reports are based on National Energy Efficiency Action Plans (NEEAPs) as well as other documentation, roundtables with industry and policy stakeholders, and, importantly, the reality check provided by our vast network of experts from the EEW survey.

Other reports and evaluations of the EU policy progress provide a somewhat different picture: According to those, we are actually meeting our 2020 targets. So are the EEW reports too negative? Should we simply celebrate progress and the fact that our 2020 targets indeed appear to we be working?

First we need to understand that the EU has different targets for energy efficiency aiming at achieving different things. In the Energy Efficiency Directive, these are described in two different articles, Article 3 and Article 7:

Article 3 requires member states to set an indicative national energy efficiency target for 2020 and they shall express the target as an absolute level of primary and final energy consumption. These targets taken together should meet the “headline target” of 20% primary energy savings in the EU as a whole until 2020 (compared to the consumption levels forecast for 2020 by the 2007 official reference scenario). This target and the corresponding national targets under Article 3 reflect energy efficiency progress, but they also include structural changes, changes in economic activity, and so on.

Article 7 , on the other hand, contains a target related to energy saving activities carried out by EU member states. Each member state (MS) is obliged to achieve new savings of 1,5% per annum from 2014 to 2020 through energy efficiency obligations (or alternative measures). MSs must report to the Commission what they plan to do and how well they meet their targets. The reporting regime has rules to prevent, e.g., double counting and claimed “savings” that are just the result of structural changes (which would, however, be reflected in the primary energy target of Article 3). Moreover, the Article 7 savings are cumulative. A country that misses one percent savings in 2014 misses this savings 7 times until 2020 and thus must work much very hard to catch up later.

As for the 2020 headline (article 3) target there have indeed been signs of EU meeting the target: First, Fraunhofer ISI did study the progress from different perspectives: An indicators-based approach showed that we are on track to reach the targets, whereas their bottom-up approach indicated that we may not quite get there. A report from the Commission’s Joint Research Centre (JRC) followed in the early summer, and it seems to support this view: all in all we are doing quite OK on the overall energy efficiency target for 2020. But 20 July, the Commission published its updated 2030 reference scenario , and that scenario suggests that we are not going the meet the targets with current policies.

(Click on image to enlarge)
The July 2016 reference scenario indicates we are not going to meet the headline target, but the most recent Eurostat data indicate we may meet the 2020 headline target.
Figure: Peter Bach, based on Commission’s official reference scenario 20 July 2016.

To complicate things further, all the above assessments are not easy to compare since they use different but partly overlapping sources and methods. For instance, the 20 July reference scenario does not take the last few years’ drop in primary and final energy use into account, which the JRC report does. At the other hand, we should not use JRC’s report that we have met our energy efficiency targets “six years early” ( see Euractiv 31 August ). Much can happen until 2020 and we can’t relax.

This leads us back to the Energy Efficiency Watch reports and what I find more interesting: Article 7 and the energy efficiency programmes and policies contributing to the – different – targets in this article. Here, the discrepancy between what Member States report in their NEEAPs and what experts actually see happening on the ground is larger. This view was in fact supported by a paper by Rosenow et al published at the IEPPEC programme evaluation conference in Amsterdam in June.  The authors write:

Currently only 14% of all energy savings have been rated as fully eligible, fully additional, at low risk of     double counting and at low risk of non-delivery…. our analysis suggests that 86% of these expected savings are at least partially at risk of not being realised.

Let’s draw a few conclusions:

It is excellent that we may be meeting our 2020 primary energy savings targets, which is also, deplorably, due to the economic crisis in many MS since 2008. But we should keep in mind that this is far from enough in the long run. The current 27% target for 2030 is more or less just in line with current trends. It would miss to realise the cost-effective potential for energy efficiency and the many benefits associated with it. We need to set a realistic but more ambitious target, following the European Parliament’s call for a 40% target. And it is Article 7 and the activities covered here that can help deliver more needed savings. It is therefore important that the obligations in article 7 continue after 2020.

Even if some countries are falling behind so far, this is not only because of poor ambition. It is difficult and takes time to get comprehensive programmes in place. As we are learning from experience, we can do better after 2020.

Energy efficiency is a great opportunity and doing more is only good for all of us. To weaken the ambition of EED and Article 7 and to stick to the weak 27 % target for 2030 would be a bad mistake. Energy Efficiency Watch has suggested the way forward in its key policy conclusions : We need to tell the good story of energy efficiency but also allow the Member States the resources they need to make it reality.

The column is based on conversations with Stefan Thomas from Wuppertal Institute and Barbara Schlomann of Fraunhofer ISI with input from eceee President Peter Bach and Wolfgang Eichhammer at Fraunhofer ISI.

The European Commission-supported Energy Efficiency Watch project is led by Eufores. The survey report work was led by project partner OÖ Energiesparverband. Project partners FEDARENE, eceee and Energy Cities contributed with interviews and outreach to networks. Analyses of the NEEAPs and national policies was carried out by partner Wuppertal Institute; partner Ecofys collected views of the energy efficiency business communi

The views expressed in this column are those of the columnist and do not necessarily reflect the views of eceee or any of its members.

Other columns by Nils Borg