Tag: eu law

 

Gianni Lo Schiavo

LL.M., College of Europe


PhD Candidate, the Dickson Poon School of Law, King’s College London

 

1. Introduction

Energy efficiency constitutes the third pillar of the “20+20+20” initiative of 2009 aimed at reforming climate change and energy policy by 2020 in the European Union (EU)[1]. The adoption of the Commission’s proposal on a directive for energy efficiency by the Council in October 2012[2] and its publication on 14 November 2012[3] are the ultimate achievements of the EU in the field of energy efficiency.

The Directive repeals two directives on energy efficiency[4] and is intended to attain the target of “20% primary energy savings in 2020”.[5]

This article aims at analysing the most important developments contained in the Directive, taking into account their impact in light of the 2020 target.

 

2. Energy efficiency and EU law

Energy efficiency is not defined in the European Treaties. The only reference to it is contained under the new Article 194 TFEU included by the Lisbon Treaty.[6] This provision, establishes that, among other objectives, the EU promotes energy efficiency. This is not a new objective of EU policies.[7] However it is only with the new “20+20+20” initiative that energy efficiency has acquired a primary role in EU policy-making.

 

2.1 The “20+20+20” initiative and energy efficiency

EU law has already pioneered energy efficiency in the 90s.[8] More recently, energy efficiency has acquired more importance. Already in a 2006 Communication, the Commission foresaw a number of measures to achieve the 20% increase in energy efficiency.[9] However, it was only with the “20+20+20” initiative that energy efficiency has assumed a central role. Following the 2007 Spring European Council conclusions,[10] the European Commission adopted the seminal EU Climate and Energy Package in 2009.[11] It establishes a number of proposals which aim to achieve three objectives by 2020: the reduction of greenhouse gases emissions by 20%, the increase in the use of renewable energies by 20% and the improvement in energy efficiency by 20%. The reference year to achieve these objectives has been set in 2020.

Hence, energy efficiency constitutes one of the three pillars of the initiative and aims at saving “the EU some € 100 billion and cut emissions by almost 800 million tonnes a year”. [12] As part of this pillar, the Commission published a Communication[13] in 2008 named “Energy Efficiency: Delivering the 20% Target” which contained specific measures to be addressed to achieve the target.[14] A strong emphasis in the document was put on the obstacles to energy efficiency improvements consisting in “the poor implementation of existing legislation, the lack of consumer awareness and the absence of adequate structures to trigger essential investments in and market uptake of energy efficient buildings, products and services” and the ways to overcome them in the near future.

Notwithstanding the ambitious programme put forward by the Commission, current achievements have not been as effective as hoped. As shown by the European Council Conclusions of 4 February 2011,[15] the 20% energy efficiency target is currently not on track and further measures are needed in order to achieve the energy efficiency goal.

 

2.2 The Directive on energy efficiency

The Commission made a legislative proposal on a Directive on energy efficiency on 22 June 2011 on the basis of Art.194(2) TFEU. As stated in the Impact Assessment, the policy choices followed by the Commission were three: set indicative targets to be achieved by the Member States, evaluate the nature and impact of individual policy measures, and extend the scope of the two former instruments to be merged into one directive. Overall, according to the Commission, these policy objectives were favoured with a view to achieve strong energy savings and reinforce action for energy services.

After first reading amendments, the European Parliament and the Council approved the proposal in October 2012. The directive has been published on 14 November 2012. According to Art.28, Member States shall transpose the Directive eighteen months after its entry into force. So the delay of transposition is set by the end of the first half of 2014.

The directive is divided into four main chapters: the first on subject matter, scope, definitions and energy efficiency targets; the second on efficiency in energy use; the third on efficiency in energy supply; the fourth on horizontal provision; and the fifth on final provisions. In the preamble, the Directive states a number of targets which the directive aims at achieving.

Through referring both to the European Council Conclusions of 4 February 2011[16] and to the 2011 Energy Efficiency Plan,[17] the Directive recalls that Member States are not yet on target to achieve the 2020 energy efficiency goals. On the contrary, these goals require that Member States set strict indicative national energy efficiency targets, schemes and programmes.

The Directive defines energy efficiency in “terms of the ratio of output of performance, services, goods or energy, to input of energy”.[18] Energy efficiency targets are related to primary energy consumption as “gross inland consumption, excluding non-energy uses”, and final energy consumption as “all energy supplied to industry, households, services and agriculture”. To that extent, Member States shall notify their targets to the Commission taking into account the “absolute level of primary energy consumption and final energy consumption in 2020”.[19]

The Directive puts great emphasis on the public sector to achieve targets of energy efficiency. In particular, it provides that 3% of public bodies’ buildings shall be renovated to respect minimum energy performance requirements. Similarly, public bodies are required to purchase products, services and buildings with high energy-efficiency performance. Further, the Directive states that Member States shall set up energy efficiency obligation schemes with a view to achieve the energy efficiency goals.

The consumers are entitled to receive intelligent metering system indicating competitive prices, reflecting accurately the consumer’s actual energy consumption and providing information on actual time of use.[20] Similarly, billing information shall be accurate and based on actual consumption. This system of billing information shall be free of charge and be easy to access.[21]

Finally, the chapter on energy efficiency in supply contains provisions on energy auditing, energy transformation, transmission and distribution, energy services and incentives to reduce energy consumption.[22] The primary objective of these provisions is to allow a smart use of energy and to promote energy efficiency in the Member States.

 

3. A commentary to the Directive: critical remarks

The Directive stands out as the most important piece efficiency of legislation in European energy law. Its content, admittedly much more detailed as compared with the Commission’s initial proposal, has been fairly modified. On the whole, as shown also by a Commission Non-paper,[23] the amendments to the Directive have not been beneficial to reach the energy efficiency target.

First, contrary to the initial attempts of the Commission, the Directive follows the policy objective of reaching indicative national targets on Member States rather than the binding targets. This policy choice reflects the need not to impose an excessive burden on Member States and is motivated by the difficulties of accepting “binding terms” in the Council. Admittedly, indicative targets do not share the same guarantees as the binding ones and they appear problematic from the point of view of compliance.

Second, the setting up of an energy efficient obligation scheme where Member States need to indicate at least 1.5% annual energy savings is a positive development because it will induce Member States to save energy. Nonetheless, a number of provisions limit the general scope of the obligation scheme and provide for some alternatives to energy saving calculations that do not contribute to energy efficiency on the whole.[24]

Further, important innovations refer to obligations on the part of the public sector. For instance, public bodies should play an exemplary role in energy savings. Accordingly, the directive contains two provisions on the public sector.[25] First, a percentage of 3% in annual renovation for public bodies’ buildings respectful of energy efficient performance is a positive requirement to assure that energy is not wasted by public bodies. As affirmed in the preamble,[26] both the fact that a considerable share of buildings in the Member States is public and that public buildings have high visibility in public life suggest that effective energy saving can be achieved in future. Second, the provision requiring public bodies of the central government to purchase services and buildings with high energy-efficiency performance stands out as a sound condition to assure energy savings. However, at a more careful reading, one aspect strongly limits the scope of this provision: the obligation to purchase does not apply to local authorities as long as the purchase does not have a value equal or greater than the threshold established in Art.7 of directive 2004/18/EC.[27] Admittedly, this limitation on scope contained in the Directive does not contribute to far-reaching energy savings.

Conversely, from the point of view of the consumer, the directive appears a significant improvement in transparency and access to information. In fact, consumers will be informed on energy consumption through intelligent metering systems and sound billings. Nonetheless, the insertion of conditionalities to metering and billing obligations strongly reduces the potential benefit for energy efficiency.

As for undertakings, the directive establishes, on the one side, incentives for Small and Medium Enterprises (“SMEs”) to promote energy audits and, on the other side, obligations for large companies to carry out energy audits. These could prove to be effective measures to assure that the private sector respects appropriate standards of energy consumption. However, given the voluntary nature of audit for SMEs, it appears less probable that SMEs will make use of audits if the Member States do not provide for substantial incentives to the benefit of the undertaking itself. Conversely, the audit obligation on the part of non-SMEs will take place only from 5 December 2015. Hence, one may question whether these provisions are actually effective in contributing to reach the 2020 targets of energy efficiency.

Finally, the Directive contains a provision on efficiency in heating and cooling that should promote cogeneration. Once again, this provision refers to an obligation to carry out a cost-benefit analysis rather than an obligation of cogeneration as envisaged in the proposal. Hence, even if the proposal attempted at assuring that cogeneration took place in the EU, the final Directive is less stringent in achieving cogeneration as a way to reduce energy consumption.

 

4. Conclusion

The Directive contains important improvements to raise energy efficiency in Europe but, unfortunately, its content is not as stringent as expected to reach the 20% target by 2020. Even if Member States duly implement the provisions of the Directive, which is still difficult to preconize, the EU does not have realistic chances to attain the planned 20% increase in energy efficiency by 2020 with the new Directive. Hence, it is still open to debate whether the EU should refocus energy efficiency on less ambitious goals or promote stricter policy solutions to reach the 2020 target.