The ups and downs of EU energy efficiency policy

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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.