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10 things to know on Energy Efficiency Review in 2016

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10 things to know on Energy Efficiency Review in 2016

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The Europe 2020 Strategy involves a number of policies to help Member States towards their 2020 targets. Realising the EU’s long-established intention to ‘turn the European Union into the most energy efficient economy in the world’ will depend on closely monitored policy development.

Since 2010, the Energy Performance of Building Directive (EPBD) and the Energy Efficiency Directive (EED) have been the EU’s primary tools for reducing energy consumption in buildings. Both directives are under revision this year – what does this mean for the building sector?

 

1. Energy efficiency takes centre stage

 

Recent developments are placing greater importance on energy efficiency than ever before.  A report from the Energy Efficiency Financial Institutions Group (EEFIG) identifies energy efficiency as ‘the most cost effective manner to reduce the EU’s reliance, and expenditure, on energy imports,’ and the recent Energy Union strategy identifies energy efficiency as an ‘energy source in its own right.’

The Energy Union supports the transition to a low-carbon, secure and competitive economy through ‘a radical rethink on energy efficiency.’ Energy efficiency and demand side management measures compete on equal terms with new supply capacity. To this end, a review and possible revision of the EPBD and EED are forecasted by the end of 2016.

 

2. The Energy Efficiency Directive

 

The EED’s overarching objective is ‘to ensure the achievement of the Union’s 2020 20% headline target on energy efficiency and to pave the way for further energy efficiency improvements beyond that date.’ Under the Directive, EU countries are required to use energy more efficiently at all stages of the energy chain, from production to final consumption.

These provisions include binding targets for energy companies and national buildings, retrofitting obligations, auditing and monitoring, educational and training support, and financial incentives for SMEs. Before 2020, Member States are required to reach final energy savings of 1.5% per year and at least 3% of government building stock should undergo a retrofit or create alternative savings. The public sector is also obliged to purchase energy efficient buildings, products and services.

By mediating market failures and non-financial barriers, the Directive aims at engendering an energy efficient economy. All EU countries were required to transpose the provisions of the 2012 EED into their national laws by 5 June 2014, but some Member States have not yet achieved this.

 

3.  Building potential

 

Buildings are responsible for 40% of the EU’s energy consumption and 36% of its CO2 emissions. Deep renovation of Europe’s buildings could reduce the sector’s gas imports by 60% by 2030 and 95% by 2050. The sector also holds local employment opportunities that amount to an estimated 1.4 million additional jobs.

Although the EED aims at decreasing energy consumption across the chain, the building sector is an area of particular interest and holds a wealth of possibilities for innovation and carbon savings.

 

4. Where does the European Parliament come in?

 

With a view to furthering the aims of the EED, a draft Implementation Report on the Energy Efficiency Directive was presented to the European Parliament Committee for Industry, Research and Energy (ITRE) by Rapporteur Markus Pieper (European People’s Party, Germany) last February.

The report proposes an assessment of the implementation of the Directive, with a view to possible amendments that might make the Directive more flexible and coherent, improve the related legislation, and encourage a focus on energy efficiency over energy saving.

On 20 April 328 amendments were tabled and discussed at the ITRE Committee, and a proposal to revise the directive is expected in autumn 2016. The Committee discussed the importance of energy efficiency for independence, CO2 reduction, job creation, and mediating energy poverty.

Overall, the April debate focused on deciphering the best path to deliver Europe’s energy efficiency potential.

 

5. The Energy Performance of Buildings Directive

 

The EPBD of 2002 set binding targets for the energy efficiency of public buildings, which were to be transposed into national law and implemented via national regulations at defined dates. In 2010, a recast of the Directive was adopted by the European Parliament and the Council of the European Union. The recast clarifies and extends the 2002 Directive, incorporates more rigorous procedures for issuing energy performance certificates, and requires each government to introduce effective penalties for non-compliance. One of its principal goals is to ensure that the drive towards nearly zero-energy buildings (nZEBs) is integrated into state policies.

 

6. Public evaluation

 

A public evaluation of the EPBD was carried out in 2015. The evaluation concluded that while the Directive presents a good framework for efficient buildings, compliance could be improved.

The purpose of the evaluation was to assess the Directive in view of the experience gained and progress made during its application. The evaluation looks at past and current performance and provides an assessment under five different criteria: Relevance, Effectiveness, Efficiency, EU-added value, and Coherence. It is likely that the Commission will publish its impact assessment based on this evaluation.

The concerns raised by the stakeholders resonate with the debate surrounding key aspects of the EED, and it is expected that the current review of the EED will inform a general review of the EPBD.

 

7. Core debate: Binding Requirements or Market-Driven Solutions?

 

One of the core debates around the review, is whether binding requirements or market-driven solutions are the most effective method for boosting Europe’s energy efficiency.

Some disagreement emerged as to whether the Commission should favour EU-wide targets or national targets, or whether more flexibility would improve uptake. A minority suggested strengthening market-driven solutions, including interactions with the EU Emissions Trading System and cost-driven measures.

Several of the proposed amendments to the Directives involve the inclusion of compulsory targets beyond 2020 in line with additional climate regulations such as the Energy Union and the COP21 Paris Agreement. The mechanisms for implementing a compulsory mandate such as this, however, remain unclear.

 

8. Core debate: Common or Local Efficiency Obligations?

 

Energy Efficiency Obligations (EEOs) contribute significantly to the energy efficiency achievements in Member States. The primary measure of the EED is to set EEOs to reach efficiency targets. The Directive’s three main cross sectoral targets are the 20% EU energy savings target, the indicative national efficiency targets, and the national binding targets for end-use savings.

Much debate has arisen recently about whether an EU standardised methodology is preferable to locally tailored approaches. A one-size-fits-all approach is considered by some to be an unreliable, inflexible tool that limits the potential for growth; while others see it as the best means for achieving accurate and comparable energy savings.

Against this background, a discussion has developed about how best to ensure legislation consistency across the Member States. Should European institutions favour European-wide targets, rather than national mandates? Should specific focus be put on specific social groups and particular buildings, or would stakeholders rather be free to adapt legislation?

 

9. Core debate: Is Energy Efficiency a Resource?

 

Calls to treat energy efficiency as an infrastructure priority have given rise to concern as to whether incentives to use better energy sources could be undermined by national legislation. There is some debate as to whether an energy-efficiency-first principle makes an effective expansion of the share of RES, or takes attention away from the need to develop new energy sources.

 

10. New Horizons 

 

The reviews of the EED and EPBD will be of considerable interest to European partners in the building sector. It will provide long-term perspective on targets, support schemes, mandates and policy support for the coming decade.

Indeed, the expected 3% renovation rate has now fallen to 1%; opening the door to further improvements. Precise definitions of nZEBs with clear intermediary indicative targets for 2030 and 2050 are on the horizon. This would entail additional work on the definition of building stocks, methodology for calculating energy improvements, the best manner to delimit EPCs, etc.

A plenary vote at the European Parliament is scheduled for July 2016. This vote will indicate the preferred measures and systems, and show the major trends in energy efficiency policy at European levels.

The European Commission Direction General for Energy is mandated to release an Impact Assessment on a proposal for a review of the EPBD. This is expected by the end of the year 2016. 

10 things to know on Energy Efficiency Review in 2016