Governments fall into own trap with EU Energy Efficiency Directive

Perhaps some of you remember the embarrassing (for some) story about how the EU’s 20% renewable energy target came into being? After the renewables directive was agreed, governments belatedly realised they had signed up to meeting a 20% share of energy rather than a 20% share of electricity… It was a much more ambitious target, but it was too late to back out.

Now it turns out that something similar has happened with the EU energy efficiency directive.

Two key agreements – both on the binding 1.5% annual savings target – made the deal on the energy efficiency directive possible in June.

The first allowed member states to use four exemptions (read ‘loopholes’), providing these do not lower the 1.5% target by more than 25%. One of these loopholes is to credit savings made before the directive is implemented in 2014. This is a legal accounting trick known as ‘early action’.

The second agreement was that member states could credit additional early actions on top of the 25% exemption bundle. It was a sort of loophole in a loophole. Without this compromise there would not have been a deal on the directive.

But the condition was that only those member states which already have ‘energy efficiency obligation schemes’ (i.e. savings targets for energy companies) in place, could credit this additional early action. They were France, Denmark, Italy, Poland and especially the UK – the lead advocate of the loophole.

Now Germany, Austria, Finland, the Netherlands and a few other member states have just woken up to the fact that, as they don’t have energy efficiency obligation schemes, they don’t qualify for the extra exemption. They are privately furious, but the deal is already made.

It gets even better. We now know that the right to use additional early action on top of the 25% limit was nothing more than a gentleman’s agreement made to secure the deal. It has no legal basis in the directive and should be rejected. If it is, the UK, France, Italy, Denmark and Poland will also have to make significantly (about a third) more savings than they envisaged.

But will anyone force them to comply? It seems the EU Commission will respect the gentleman’s agreement unless there is an outcry against it. This is beginning to happen. ClientEarth, a non-profit environmental law organisation, has notified the Commission that the additional early action is legally unjustified. Governments are essentially seeking to cheat on their savings targets. They mustn’t get away with it.

EU Energy Efficiency Directive: the fight continues behind closed doors

This week the EU Parliament will vote on the Energy Efficiency Directive, with the Council due to follow in October. Both votes are expected to be a formality – no-one wants another row over the text.

But before savings from the Directive can actually begin in 2014, the Commission and member states must work out the exact requirements it sets. Make no mistake: this process may be just as tough as the political negotiations on the text of the Directive.

Because of the extensive horse-trading to reach a deal back in June, the text is messy and often unclear. This leaves room for different interpretations, with different levels of ambition. The Directive should lead to 15% savings in 2020 (which, remember, is still only three quarters of the EU’s stated 20% target), but it could end up delivering significantly less. These are very high stakes: a ‘low’ interpretation means less emissions cuts, less cost savings and less jobs created.

All this finessing is taking place out of the spotlight. There is no oversight from the most ambitious player in the negotiations – the Parliament – nor indeed any official channel to find out what is going on. In fact, working out exactly who is responsible for interpreting the Directive is like being dropped, clueless, into the middle of a detective novel.

This is what we have found out so far: the Commission (DG Energy) has set up a special six-person team within its energy efficiency unit. These officials are in the process of preparing ‘interpretative notes’ (or guidance documents) on key articles in the Directive.

The member states, meanwhile, are organised in at least two working groups in Brussels. The first and most formal is the Energy Demand Management Committee (EDMC). This is a secretive set-up, with no publicly available information except a few meeting agendas buried deep in the Commission’s committee register. We are told that the EDMC handles policy, and that its members are mostly drawn from national energy ministries. It was apparently consulted at critical points during the negotiations on the Directive.

The second group goes by the name of the ‘Concerted Action Energy Services Directive’. It is mostly made up of representatives from national energy agencies, and is responsible for technical questions.

We also know that on September 26 the Commission will be meeting these two groups (as well as a third, the ‘Combined Heat and Power’ committee). The Commission will talk them through the Directive, and there will be a discussion on the interpretation process. But what will actually be said there? It’s likely we will never know.

This is worrying, of course. It’s no secret that certain member states bullied the Commission into watering down the Directive before and during the negotiations. In all likelihood they will try to use vague wording in the text (which they were largely responsible for creating) to weaken the Directive even more.

So far there is very little anyone can do to counter that. To say that the process lacks transparency is an understatement. Isn’t it time – as has been done with other directives – to open up the interpretation process to public scrutiny?

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

What gut feelings did to the EU Energy Efficiency Directive

Two days before negotiations on the Energy Efficiency Directive were concluded in the night of 13/14 June, Martin Lidegaard, the Danish Climate and Energy minister, told us how baffled he was by the Council position. Why did Member States support the benefits of meeting the EU’s 20% by 2020 energy savings target, but insist on a Directive which will only deliver 15%?

We think an answer might lie in work compiled by Dan Gardner – an award winning Canadian journalist and author – on conflicting systems of thought. He puts it down to a conflict between ‘head’ versus ‘gut’ (or reason versus instinct). The first is ‘calculating, slow and rational’. The second ‘intuitive, quick and emotional’. Gardner’s work does much to explain the muddled thinking on the Directive.

Let’s start with the ‘head’ arguments. Reducing energy demand is the obvious solution to the EU’s growing dependence on oil, gas and coal imports. At the same time, because CO2 emitting fossil fuels dominate the EU’s energy mix, saving energy is crucial if we are to address global warming.

Then there’s money: the net benefits of meeting the EU’s 20% by 2020 energy savings target are likely to exceed €200 billion per year, according to work from Ecofys, a research group. This is a huge number: equivalent to over a third of the total budget deficit of the 27 Member States in 2011.

But many policymakers in the Member States instinctively took a very different view of the Energy Efficiency Directive. They had three main gut feelings.

The first – reinforced by the short-termism arising from the Eurozone crisis – was that GDP growth is dependent on increasing energy consumption. Saving energy, in other words, was seen as rationing, and entailing recession.

The second gut feeling was that it costs money to save money. Governments might ultimately benefit, but only with sufficient upfront investment which they felt obliged but unable to provide.

The third was that markets alone would suffice. If energy savings make such good financial sense, surely businesses would be on the case, whether or not there was a Directive?

Frustratingly, information and studies which showed the reality was more complex fell on deaf ears. Commission research showing that meeting the 20% target would accelerate GDP growth gained little attention. Nor did warnings from private investors that they would finance energy savings – but only with tougher EU legislation to provide investment security (i.e. the binding targets model used for the EU’s climate and renewable energy targets).

The fact that businesses gain a competitive edge by using less energy to produce more efficient goods also went unheeded. And as for the markets, it was their failure to act that, more than anything, made the Directive necessary.

It’s fear, of course: fear of change. Instinctively, most policymakers stuck to what they knew (no restrictions on energy usage). And those Member States who preferred a watered-down Directive – which is to say almost all – felt reassured by lobbying from influential heavy industry and energy companies with a vested interest in keeping energy consumption high. Counter arguments were ignored. Even though good economic and environmental sense supported the case for making the Directive as strong as possible, for the Council, at least, ‘gut’ beat ‘head’.

Gardner calls this confirmation bias. ‘Once a belief is in place’, he writes, ‘we screen what we see and hear in a biased way that ensures our ‘beliefs’ are proven correct’. In all likelihood, key decision makers in the Member States genuinely failed to realise that energy savings are a solution to many of their financial and environmental difficulties. They were simply not tuned in to the benefits.

There is no easy solution. In the end, it’s all down to critical mass and confidence that saving energy is a plan that adds up.

Consider the 2009 Renewable Energy Directive: by any measure, a more ambitious piece of legislation. There are many explanations for this, but undoubtedly in renewables’ favour when the law was being negotiated was the close understanding and working relationship between a critical majority of governments, businesses, investors, and civil society organisations. Differences were technical (which type of renewable energy?) rather than conceptual (why renewables?). Everyone understood the benefits.

This is the approach needed to strengthen EU legislation on energy savings: coalition work, smart communications, and a very clear awareness of what consumers and businesses stand to gain. If we can get it right, ‘head’ and ‘gut’ should be more in tune for the implementation of the Efficiency Directive in 2013 (Member States can exceed the EU requirements, if they so choose). And because we all tend to believe what we see, the fact that there will be additional savings compared to existing legislation should pave the way for an ambitious review of the Directive in 2014. Sound reasonable?

Posted by Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

Energy Savings Man returns, but we need real heroes

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Posted by Friends of the Earth Europe and Climate Action Network Europe.

Underhand negotiating tactics employed by the Council of Ministers

An edited version of this post was first published in European Voice

Many are suggesting that it is for the EU Parliament to make concessions on the Energy Efficiency Directive dossier. This downplays the EU Council’s underhand negotiating tactics, especially on the centrepiece 1.5% annual savings target.

Over the past months Member States have been aggressively lobbying for a range of exemptions to the 1.5% target.  Some, for example, wish to credit savings made before the implementation of the directive (‘early actions’). Others want to count savings before they have actually been delivered (‘future actions’). Others wish to be able to include savings made by switching from coal or nuclear to wind or solar (which they will do anyway to meet the 20% renewable energy target).

The Danish Presidency has sought to address these loopholes – which risk making the 1.5% target completely meaningless – by proposing to cap exemptions at 25% (i.e. effectively lowering the ambition of the 1.5% target by a quarter). This is being billed as a decisive move towards the Parliament’s position for which much is expected in return.

But the Danes’ proposal is weak and only covers two exemptions satisfactorily.  Other major loopholes are not covered by the 25% cap. And besides, the Council – led by the UK – has sneakily inserted exactly the same exemptions elsewhere into the draft Directive. So even if the Parliament fixes the 25% cap, Member States will still be able to meet their targets by crediting bogus savings.

The Council is trying to appear reasonable. It is piling pressure on MEPs to agree to its 25% cap ‘compromise’. In reality this is a decoy. The Parliament is being made to look terribly inflexible for not making concessions, but MEPs must remain firm and negotiate a Directive which delivers real energy savings and all the benefits that come with them.

Posted by Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe).

EU could make net savings of over €200 billion per year with energy savings

Click here to read the full report by ECOFYS

Report commissioned by Climate Action Network Europe and Friends of the Earth Europe

More about the study:

Standard studies on the financial benefits of energy savings simply look at the money that businesses and consumers no longer need to spend on energy.

According to ECOFYS, if the EU meets its 20% by 2020 savings target, these ‘direct’ net savings would add up to €107bn per year.

But there is more to it than that. ECOFYS’s research shows that for every euro saved by using less energy, businesses and consumers would save another euro. Why? Because energy savings push down energy prices. So the energy that is used would cost less.

This means over €200bn net savings per year across the EU. Just to be clear: that’s money saved after investment costs have been covered

But only if the draft Energy Efficiency Directive is made strong enough to deliver the 20% savings target.

It is time for the EU Council to support a deal that adds up.

Posted by Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

EU Council’s Energy Efficiency Directive Drink – Keep Diluting for Desired Effect

Posted by efficiency1st on 29/05/12

If you’re reading this then you’ve got your bottle and scanned the code. Congratulations!

But you’ve got to admit it’s not yet time to pop the cork and have a celebratory drink of Normandy cider.

The Council has rejected a binding overall 20% target (which Commission analysis shows would have been the best option). It has watered down all the main measures in the Energy Efficiency Directive (read more). This guarantees the EU’s 20% by 2020 energy savings target will not be met.

Why so much reluctance to sign up to an ambitious deal?

According to the Commission, making the Directive strong enough to meet the 20% target could cut energy costs by over €200 billion per year. This would help fix national budget deficits and put the EU on the path to economic recovery. Businesses would become more competitive by producing more efficient goods with less energy. There would be up to 2 million new jobs by 2020. Carbon emissions would fall, reducing the costs of dealing with climate change.

It’s easy to see saving energy is a solution that adds up. But it’s just as clear that the Council’s position on the Energy Efficiency Directive is nothing to celebrate…

Friends of the Europe Europe

Climate Action Network Europe

European Environmental Bureau

Greenpeace EU unit

WWF European Policy Office




Denmark must get tough on Energy Efficiency Directive

No country could be more fitting to negotiate a deal on the draft Energy Efficiency Directive than current EU President Denmark. The country is the inspiration behind the directive – the proof that economic growth can go hand-in-hand with reductions in energy use.

But the Danes seem to have caught ‘Presidency Syndrome’: the desire to make a deal at all costs, to look good politically, even if this means getting an unacceptably weak directive.

Denmark started out talking tough, arguing – as the European Parliament is rightly doing now – that the directive should set binding energy savings targets for each Member State. But the Danes seem to have given up this fight.

True, they don’t have an easy task. Many governments are strangely reluctant to agree to a directive which – if it is made strong enough – could cut energy bills by over EUR200 billion per year, reduce energy imports and play a vital role in carbon emission reductions.

As the Presidency holder, however, Denmark is ideally placed to steer the negotiating process on the directive. In February, the European Parliament adopted a series of ambitious amendments to the original Commission proposal. Denmark’s task now is to work out a deal with the Parliament and the Commission (in the so-called ‘trialogue’ negotiations). This is certainly not the time, therefore, for Denmark to continue to meekly accept the most damaging national amendments. Rather, it is the moment to seek middle ground with the many constructive ideas put forward by the Parliament.

Denmark should also be highlighting the costs of not saving energy. It should be setting up working coalitions with other governments and putting pressure on the most critical Member States.

But instead of moving the Council towards the Parliament, Denmark is going the other way. Danish diplomats are trying to convince the Parliament’s lead negotiator, MEP Claude Turmes, to be less ambitious. All this is aimed at wrapping up talks before the end of June – when Denmark will hand over the Presidency to Cyprus.

This is dangerously short-sighted. Better no deal under the Danish Presidency than a gutted directive.

It is not too late yet for the Danes to broker a strong agreement. Six months ago the Commission was also being bullied into supporting a weak deal. Now it is talking up the importance of tough energy savings legislation for economic recovery. There is still time for the Danes to flex their muscles.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

Council must rethink its position on the Energy Efficiency Directive

Throw a frog into boiling water, the story goes, and it will jump out. But if it is placed in cold water that is slowly heated it will not perceive the danger and will be boiled to death.

This is just what is happening to the draft Energy Efficiency Directive. Each successive amendment from the European Council weakens the text a little more. Now the Council’s version – a compilation of the most unambitious points from each member state – has almost reached junk status.

Already last year – before the directive’s release in June 2011 – the Council had pressured the Commission into proposing a number of loosely-linked binding measures instead of a binding overall 20% target (which Commission analysis shows would have been the best option).

Since then the Council has been steadily watering down all the main measures in the directive – especially the 3% renovation rate for public buildings and the measure with the highest savings potential: the 1.5% annual savings target.

Council amendments started by specifying that the 3% renovation rate for public buildings should initially only apply to surface areas over 500m2. This excludes, for example, most social housing in the UK. So those most in need of better insulated and cheaper-to-run homes would be left out.

Some weeks later the Council proposed that only ‘Central Government Authorities’ should be covered by the 3% target. In Germany this narrows the scope of the target to around 30 buildings.

Meanwhile, the Council is squeezing the 1.5% annual savings target from all sides. First, by reducing its scope: the 1.5% target covers final energy – the energy used by businesses and consumers after it has been transformed into electricity, or refined into petrol or diesel. The Commission had already excluded the transport sector (the European Parliament, rightly, wants it back in). But now the Council wants to exempt 40% of the industries covered by the EU Emissions Trading System. If allowed, this means only half of the EU’s final energy use would be covered by the 1.5% target.

Second, the Council wishes to revise the 1.5% target downwards. Its latest amendments call for a gradual phase in of “1.0% in 2014 and 2015, 1.25% in 2016 and 2017 and 1.5% in 2018, 2019 and 2020”. This would reduce projected savings over the 2014-2020 period by about 14-15%.

Then there is the quality of the savings. The Council – led by Austria – is pushing for ‘early actions’ to allow member states to credit savings made before the introduction of the directive. Picture the reactions if a government sought to correct a budget deficit by statistically transferring the effects of previous economic measures. Yet this is standard Council practice for energy savings. Based on past experience with the 2006 Energy Services Directive this could slash the 1.5% target to around 1%.

Some member states also wish to credit ‘future actions’. This would allow savings to be credited before they have actually been delivered – meaning that each year’s 1.5% target would actually be delivered over a 5-25 year timeframe. Real annual savings would be just a fraction of the claimed savings.

Finally, there is the strong Council pressure to allow member states to “fulfil up to 20% of the [1.5% target] through energy savings achieved in the energy transformation sector” (i.e. power plants). This is bad for two reasons. The first is that the 1.5% target is intended to reduce energy consumption by businesses and consumers, not to make energy production more efficient. That was the task of other measures in the directive (which have also been watered down).

The second reason is more serious. If this amendment goes through, member states could meet the 20% contribution simply by fulfilling their 2020 renewable energy target obligations. Producing electricity from wind and solar energy is far more efficient than fossil fuel and nuclear generation (there are no thermal conversion losses from wind and solar). But the benefits of switching to renewables are already factored into estimates of the EU’s likely energy savings by 2020. These estimates – which the Council agrees with – show existing legislation is not enough to meet the EU’s 20% by 2020 energy savings target. There is a gap, which the Energy Efficiency Directive must close. It will not do so by counting savings that will happen anyway.

So the frog is slowly being boiled. But the good news is that the boiling frog anecdote is not actually true – frogs will jump out of the water, even when gradually heated. Will EU policymakers be similarly wise?

Alarm bells are starting to be heard. A recent paper from the Commission estimates that “the impact of the Council version would represent 38% of the expected impact of the Commission’s proposal”. And of course the Commission’s own proposal is not tough enough to close the savings gap and meet the 2020 savings target (only the European Parliament’s version would do so).

It is not too late to stop and think. Official negotiations with the European Parliament and Commission on the final text of the directive are still in their early stages. Governments repeatedly insist on the need to cut carbon emissions, save money, create jobs and reduce energy imports. A strong Energy Efficiency Directive is their best chance to do so.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

UK calls for 30% emissions target – but opposes the policies to get there

On 8 April climate change minister Greg Barker told the Financial Times “We are working patiently and quietly behind the scenes with EU partners to convince them of the strong economic as well as environmental reasons why we should go for 30 per cent [greenhouse gas emission cuts] rather than 20 per cent”.

Barker hopes to win his case in a meeting of EU environment ministers this Thursday (19 April) in Denmark. Good for him. But there is a catch. Barker’s Department of Energy and Climate Change is just as patiently and quietly working to weaken a proposal for tougher EU energy savings legislation. This proposal – the draft Energy Efficiency Directive – will also be debated in Denmark.

Leaked copies of official comments are clear proof of the UK’s opposition. It is rejecting proposals to make the EU’s 20% by 2020 energy savings target legally binding – despite experience with greenhouse gas and renewable targets showing such targets to be the most effective solution. It is blocking mandatory audits and follow-up energy efficiency improvements for businesses. And in a farcical spy games twist, the UK is also opposing widespread renovations for public buildings on the grounds of public security (see the full story from Reuters).

Analysis from the European Commission – which UK climate officials say they agree with – shows the EU needs to meet its 20% by 2020 energy savings target to achieve higher greenhouse gas cuts. The reason? Fossil fuels still account for 80% of the EU’s energy use. So using less energy is the most effective way to cut emissions.  At present rates, however, only 10% savings are expected; the draft Energy Efficiency Directive is supposed to close the gap.

So the UK is going to Denmark to lobby for a 30% greenhouse gas target while opposing the policy which can do most to cut emissions. Hardly a victory for joined-up thinking.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)


The ups and downs of EU energy efficiency policy rss

We’re not sure what words first spring to mind when you hear “energy efficiency”, but we bet “exciting” isn’t one of them. Yet that’s exactly what it is – or rather what the benefits of meeting Europe’s 2020 energy efficiency target would be. According to the EU Commission (not much given to producing exciting numbers) we could all be saving 1000 € per household every year if Europe’s energy use was brought down by 20%. Not bad… We’d also be cutting back energy imports – a smart move given the EU’s burgeoning dependence – and giving CO2 emissions a real hit. All experts agree this is possible. The question is: why isn’t more being done? And what needs to be done? Follow our blog for some of the answers. more.