Deals on Energy Efficiency Directive and Governance of the Energy Union Regulation fail to untap European Energy Efficiency cost-effective potential

20 June 2018, Brussels. Last night negotiators from the Bulgarian Presidency of the Council of the EU and the European Parliament reached a deal on the Energy Efficiency Directive (EED) and on the Governance of the Energy Union Regulation (Governance).

The regulatory framework set by the EED for post 2020 foresees a non-binding energy efficiency target of 32.5% for 2030, an upward review clause of the target in 2023 and a mandatory sub-target of 0.8% of annual sales to final consumers. The text agreed is an improvement of the proposal of the European Commission and goes well beyond the Council positions.  

“The EED deal falls short of potential. During the last months the role of progressive forces of the business community and civil society was paramount to outline the benefits of higher and binding targets to unlock the full economic, social and environmental potential of energy efficiency. We helped to go beyond some of the hesitations and doubts that still exists on energy efficiency however much more needs to be done. The EED lacks the strong political signal required by the business community to invest in the energy efficiency projects needed to decarbonize our economy” said Monica Frassoni, President of the European Alliance to Save Energy.

“Unfortunately, the deal reached on the Governance of the Energy Union Regulation” continued Monica Frassoni “reflects the lack of ambition in the EED”.

“A cost-effective 40% energy efficiency target would have been more adequate to align with the European commitments to the Paris Agreement. Energy efficiency is a key driver of the Europe energy transition. Europe and Member States will have to step up their efforts in the implementation phase and acknowledge the central role of energy efficiency if they have to transform Europe’s energy system and realize the emission reductions necessary to fulfill the Paris Agreement objective” concluded Harry Verhaar, Chairman of the European Alliance to Save Energy and Head of Global Public & Government Affairs at Signify.

Contacts and Media Enquiries

Luigi Petito (+32 2 588 5671 / info@euase.eu) / Laura J. Bolé (+32 492 08 69 54 / lauraj.bole@euase.eu)

Op-ed: Energy Efficiency – let’s do it!

David Berman, Head of Public Affairs at Veolia

David Berman is the Head of Group Public Affairs at Veolia.

French-German lawyer by training, he has been following the development of European environmental and energy regulatory frameworks for the last 10 years.

The need for putting our efforts into increased energy efficiency is more urgent than ever: the European Union is struggling to reach its own climate and energy objectives; it has to adjust its short term and long-term policy to be compatible with the Paris agreement; it aims at strengthening its energy security.

At the eve of the final negotiations on the ‘Clean Energy package for all’, Member States have the responsibility to make sure the EU gets on a path towards decarbonisation.

This opportunity should not be missed. We see have a unique take on the importance of energy efficiency not only for our activities[1] but for its wider societal, economic and environmental benefits. Energy efficiency is a resource to be harvested across the entire energy chain from generation through transmission and distribution to consumption.

For these reasons, together with a group of 75 leading businesses and associations, Veolia has recently signed a call for a cost-effective energy efficiency target of 40% by 2030 with an extension of 1.5% cumulative annual energy savings obligations beyond 2020 (with a 2050 perspective) to be inscribed in the final text of the Energy Efficiency Directive. Member States have in their best interest to accept the Parliament’s option of a 34% and ideally binding energy efficiency target for 2030. These objectives would radically strengthen investor confidence and channel private investments towards large-scale renovation and conservation projects. They would also provide a guarantee to EU citizens that right policies will be eventually put in place to help EU dwindle down its CO2 emissions.

Targets are quintessential, but in case of energy efficiency they are optimal only if expressed both in primary and final energy. So far, any sort of public debate on energy efficiency has systematically been focused on savings made by the end-users, whether in buildings or in consumer products like TV sets. While it is essential to reduce final energy consumption, in order to achieve the actual energy efficiency, we should imperatively be looking at ways to limit losses that occur before energy (heat and/electricity) is delivered to customers. This is about optimizing the way we generate, extract, convert, distribute and transmit energy, in order to reduce to maximum energy losses. To give an example, the amount of energy lost in the production and distribution of electricity reaches an average of 60%. The EU project Heat Roadmap Europe estimates that there is more heat wasted during electricity generation than is required to heat all buildings on our continent. In order to help improve energy efficiency across the entire energy chain, we support the European Parliament to express the EU energy efficiency targets in both primary and final energy (leaving the Member States the choice between those two options would not allow for proper benchmark and results analysis).

Last but not least, we need to make everyone aware of the dangers that the ‘energy efficiency first’ principle remains just a slogan. Energy efficiency first is actually a simple rule that when consistently applied, will ensure that all investing and planning decisions are based on cost-benefit analysis, that all options available are carefully weighed, and that those solutions that will avoid stranded assets and excess of energy capacities will be privileged. It is nothing more than common sense and application of a basic economic matrix and should not be considered a constraint to Member States’ future choices. Not only we need the ‘Energy Efficiency first’ principle to structure the Energy Efficiency Directive up to 2030, but we also have to have it applied across the entire Clean Energy Package. Enshrining this principle in both the Energy Union Governance Regulation and the Renewables Directive will enable countries to maximise their energy gains while fostering a growing integration of renewable energy sources such as wind, solar and hydro, reaping all the benefits of an integrated approach to energy planning and an effective sector coupling.

Before the final discussions on the EU Clean Energy Package are over, we have a once-in-a-decade window of opportunity to make Energy Efficiency a centrepiece of a successful transition towards decarbonized future in Europe. Let’s do it!

[1] For years now, Veolia has been providing resource (water, materials and energy) optimization solutions for municipalities and industries across Europe. The group carries energy efficiency at the heart of its activities, as a part of its circular economy paradigm. Through energy performance contracts, we commit to optimize our clients’ production efficiency, energy consumption, and energy mix, deriving part of the agreed remuneration on results-based standards. We work both on the energy supply side of buildings, with our boiler and cogeneration installations, and on the demand side, through tailor-made solutions enhancing the way buildings operate. Committed to its core missions, we stand ready to help industries, cities and people achieve an optimized decarbonisation of the European economy through increased energy savings.

EU-ASE joins European businesses, local authorities and NGOs urging EU leaders to step up climate action

Today, 12 June, a unique gathering of businesses, investor groups, local and regional authorities, and civil society groups, standing together as the Coalition for Higher Ambition, are calling upon EU leaders to accelerate the transition to a zero-carbon Europe and thus limit climate impacts and allow for improvements to public health, greater competitiveness for businesses, and an increase in good quality jobs.

EU-ASE believes that the current EU climate commitments need to be raised in order to keep the Paris Agreement goals within reach. The stakeholders urge EU leaders to:

  • Ensure the finalisation of the EU’s energy legislation for 2030 in line with the ambition levels adopted by the European Parliament.
  • Ensure that the new EU long-term climate strategy sets Europe on a pathway that delivers on the 1.5°C objective of the Paris Agreement, which must include a net-zero emissions target by 2050 at the latest.
  • Ensure a timely revision of the 2030 greenhouse gas emissions reduction target so as to allow the EU to resubmit its Paris pledge to the UN by 2020, as agreed in Paris.

The statement comes prior to the High-Level EU Talanoa Dialogue where key decision makers and stakeholders will be discussing ways to step up climate action; and the final round of negotiations on the EU’s energy legislation for 2030, both taking place on 13 June.

Successful EUSEW event shows the benefits and opportunities offered by Energy performance contracting for the Public Sector

On Thursday 7 June, eu.esco, EFIEES, EU‐ASE, Factor 4 and EVO organised, in the framework of the EU Sustainable Energy Week 2018, a seminar on “Energy Performance Contracts to foster Energy Efficiency in the public sector – how to turn difficulties into success?”.

The successful event took place in a packed “Lord Jenkins Room” at Charlemagne building in Brussels and was attended by participants representing European institutions, relevant sector associations, consultancies and academics.

Ms. Monica Frassoni, President of EU‐ASE, opened the event introducing the broad realm of possibilities they offer in the field of energy efficiency, contrary to the opinion they usually arise. “EPCs are a fantastic tool to address one of the main barriers to implement energy efficiency projects, which is the financial barrier and the idea that energy efficiency is costly”, Ms. Frassoni reminded the attendees, “and one of the most important objectives of this event is to find out how we can actually take away the existing barriers so these instruments can be more effective”, she added.

The first panel, moderated by Ms. Frassoni, was kicked‐off by Mr. Oliver Rapf, Executive Director of BPIE, on “The public building stock: what is the current status and what the main barriers to energy efficiency improvements?”. Mr. Rapf reminded the exemplary role that government’s buildings have to play regarding buildings’ energy renovation according to EED Art. 5 and proved the impressive untapped potential for energy savings by showing the distribution of the EU building stock’s consumption according to the EPC rating in 15 countries, with the major part of the building stock only labelled D or worst. Concluding his intervention, Mr. Rapf underlined that stronger actions are needed in the coming years concerning the renovation of public buildings, with a major role that must be played by long‐term renovation strategies that will prove successful if designed to provide appropriate signals to the market.

Immediately afterwards, Ms. Theresa Griffin, S&D MEP member of the ITRE committee and EU Energy Week Ambassador, highlighted the importance of energy efficiency, keeping in mind that the best energy source is the energy that is never used in the first place. She also stressed the importance of fighting against energy poverty and reducing pollution, without giving up on growth: on the contrary, energy efficiency creates jobs and growth, while at the same time reducing pollution and preserving health.

The second panel, led by moderator Mr. Volker Dragon, Chair of eu.esco, was opened by a presentation of Mr. Joan Vidal, European Energy Solution Development Leader at Honeywell Building Solution, illustrating the basic concepts of the EPC model and showing some impressive numbers on the potential of EPCs in the EU Public Sector: carbon footprint reduction up to 14M tCO2/y, energy cost savings up to 4,600 M€/y and an impact on jobs and economic growth up to 5,500 M€/y.

After Mr. Vidal, it was the turn of Ms. Kamila Waciega, Director for Energy in the Public Affairs Department of VEOLIA. Ms. Waciega centred her presentation on an EPC project that was carried out in the Fragonard High School in the Paris’ region, under a new contract type called “global contract” that covers design, implementation, operation and maintenance. The benefits achieved by this projectshowed how EPC can be hugely beneficial for deep renovation projects: 45% reduction of gas consumption, 30%     reduction of electricity consumption and reduction of primary energy consumption from 190 to 60 kWhep*/m2/year.

Mr. Javier Siguenza, Secretary General of AMI, started his presentation welcoming the new Eurostat Accounting Rules and Practicioners’ Guide, but also voicing some reservations on some elements, such as the fact that operational payments in the EPC would have to be less than the energy savings, such a rule – he claimed – would make the renovation of buildings almost impossible. Also, other elements of concerns would be the lack of payments before the end of construction – with a consequent long period without cashflows – and the fact that the maintenance saving would not be considered in the calculation of Energy Services.

Mr. Robert Pernetta, Financial Instrument Advisor at the European Investment Bank, revealed the new Eurostat Guidance Note, that, together with the new Practitioners’ Guide, is opening the way for “off‐ balance sheet” EPC. Mr. Pernetta explained the scope of the guide (minimum contract length 8 years, Energy Performance Contracting financed by private EPC provider, Energy efficiency related assets, including renewable energy) and the most important principles of the new payment mechanism: principle of proportionality (% payment relates to % savings achieved), no cap on EPC provider’s liability for savings shortfalls and the fact that the authority cannot take more than 1/3 share of the savings excesses.

Concluding the second panel, Mr. Geert Goorden, Project Manager at Factor 4 and Mr. Pierre Langlois, Chair of the Board of EVO, co‐presented the “QualitEE” project, with particular focus on Measurement and Verification (M&V). QualitEE aims at driving investment in Energy Efficiency Services by providing Quality Assurance.  Within the QualitEE‐project, Technical as well as Financial Quality Criteria are being developed in order to standardize the assessment of energy efficiency services, which is expected to bring trust in the energy efficiency arena. With respect to M&V a new initiative was announced: EVO’s new Certified Energy Savings Verifier (CESV) training and certification program.

After an interesting and fruitful Q&A session, mostly concentrated on the new Eurostat Guidance Note, the event was wrapped up with the final remarks by Mr. Bernard Thomas, President of EFIEES. He    stressed the role of Energy Efficiency Services in general and of EPCs in particular towards the achievement of our energy efficiency and decarbonization goals, calling, for instance, for their full inclusion in the Long‐Term Renovation Strategies that MS will have to design according to the new EPBD. He reminded that the right combination of measures is key to deliver the necessary energy efficiency improvements and that there is no one‐size fits all solution. A case‐by‐case approach is therefore needed and energy efficiency services are the best answer to situations and needsthat can vary considerably from time to time.

For more info:

 

Photos of the event available here.

Op-ed: European businesses ready to invest in energy efficiency

Monica Frassoni, President of the European Alliance to Save Energy

Monica Frassoni is an Italian politician and former MEP (1999-2009). During that time she was co-chair of the European Greens–European Free Alliance group in the European Parliament. Currently, she is co-President of the European Green Party.

Previously, she served for 10 years as an officer of the Greens group in the European Parliament and was Secretary General of the Young European Federalists. In late 2010, Monica took up the role of President of the European Alliance to Save Energy, which promotes energy efficiency across Europe.

In recent years, the European Union has led by example in terms of its commitments made to meet the targets of the Paris climate agreement. Europe’s energy system is now entering a decade of deepened efficiency, decarbonisation, digitisation and decentralisation, which will completely transform the way energy is generated, distributed and consumed. In this landscape, energy efficiency is the key enabler for a decarbonised Europe and is beneficial both to businesses and consumers.

The ongoing negotiations in the EU on the energy efficiency directive and the governance of the energy union regulation represent a unique opportunity to strengthen Europe’s role as a world leader in climate action. They can provide the policy framework to drive Europe’s energy transition, embodying the principle of energy efficiency first as a chief and indispensable step to decarbonise our economies. In the EU, 76% of the emission reductions needed to meet the Paris agreement should be reached through energy efficiency measures. In other words, without bold energy efficiency policies, it will be impossible to achieve our climate commitments.

From an investor and business perspective, these two pieces of legislation, if correctly designed, have the potential to provide a clear and positive signal to investors, banks and companies, and to increase the competitiveness of European industry, generate economic growth and create millions of jobs across the continent. Unfortunately, though, the negative stance on energy efficiency taken by many EU member states during the negotiations of this legislation, such as a call for no legally binding targets for efficiency and no recognition of the efficiency first principle, could severely hamper the capacity of the EU to deliver.

Clear signals

The private sector needs a clear political sign to invest in clean energy. Investments in energy efficiency typically create value by delivering multiple benefits, such as improved energy security, public health and air quality, and by supporting innovation and competitiveness. As the lion’s share of the required investment will have to come from the private sector, the EU should strengthen the regulatory framework for energy efficiency to stimulate private investment in climate-related projects on a large scale, as referred to in the Paris agreement.

Along the same lines, on May 2, 2018 the European Commission released the long-term budget proposals for the EU for after 2020. The Commission is proposing a total budget corresponding to 1.114% of European gross national income (GNI), the equivalent of €1.279 trillion for 2021 to 2027. This would be an increase from the 1.03% of GNI for the current budget and more or less cover the €13 billion annual gap that will be created when the UK leaves the EU under Brexit. The Commission’s proposal also suggests that all programmes funded by the EU take into account climate change, with a target of 25% of EU expenditure contributing directly to the region’s climate objectives.

These proposals go in the right direction, but the actual amounts that countries will be forced to spend on energy efficiency and other measures to tackle climate change are far too low to have the impact needed to meet Europe’s climate and energy objectives. The European Parliament has therefore proposed increasing the EU budget from 1.03% to 1.3% of GNI and increasing spending on climate action to 30%. We support this proposal and would also like to see criteria to exclude all investments in energy supply infrastructure that fail to pass the energy efficiency first principle.

EU member states, which will ultimately sign off on the budget, should not hesitate to accept these more ambitious proposals. Businesses are poised to invest in energy efficiency, but they will only throw themselves and their money whole-heartedly into the sector if political leaders set a fully enabling environment. Having the courage and the conviction to do this will ultimately benefit the economy, the environment and society at large.

Source: Foresight

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