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

Op-ed: Renovation breakthrough for public buildings

Katarzyna Wardal, Chair of the European Alliance to Save Energy Advocacy Working Group

Katarzyna Wardal is an EU Public Affairs Manager for Knauf Insulation and Knauf Group. Since January 2018, Katarzyna is chairing the Advocacy Working Group of the European Alliance to Save Energy (EU-ASE).

In her previous roles, Katarzyna worked for 5 years as a Policy Officer in the European Federation of Intelligent Energy Efficiency Services (EFIEES). Katarzyna has also worked for the European Commission’s Directorate-General for Energy.

When it comes to accounting for the finance of public buildings, the devil is always in the detail. It’s understandable. After all, these buildings are funded by public money — our money — so we expect highly rigorous standards.

Last week saw the publication of a document that upholds those standards and clarifies them — The Guide to the Statistical Treatment of Energy Performance Contracts by Eurostat, the Statistical Office of the European Commission and the European Investment Bank. It is a lengthy title that, in short, helps everyone easily navigate complicated accounting rules that govern private investments in energy efficiency measures in the public sector.

The Guide follows the Eurostat Guidance note on the revised treatment of Energy Performance Contracts in government accounts, issued in September 2017. And it is hugely important, because before the guidance note, that devilish detail stood in the way of energy efficient renovation and prevented the saving of billions of euros in energy bills in public buildings (as well as blocking major reductions in their carbon footprint).

This was why. Energy Performance Contracts or EPCs as they are known, should be a win-win. Private companies finance, carry out, and guarantee energy efficient renovation and the work is paid for by the savings generated by reduced energy bills. In return, the local authority gets a comfortable, energy efficient, more environmentally-friendly building.

However, even though private companies were picking up the bill, when authorities recorded the investment it had to be counted towards debt on their balance sheets. And no authority likes to increase public debt — particularly if they are being watched closely by budget-conscious politicians in a time of austerity.

The publication of the new guide is a major breakthrough because it clarifies exactly how EPCs should be accounted for to the benefit of everyone involved.

According to the Commission, the guidance note “significantly increases the possibilities for public bodies to use EPC contracts, by including and clarifying the circumstances in which these contacts can be recorded off government balance sheets”.

In practical terms, the guidance note clarifies accounting procedures for EPCs — which can come in a wide variety of forms – and also unlocks money for energy efficient renovation from financial institutions including from the European Investment Bank (EIB) and facilitates getting technical and advisory support from the European Investment Advisory Hub.

The guidance note is a massive step forward, but there is now a lot of work to be done to realise its enormous potential for more energy efficient public buildings. The members of the European Alliance to Save Energy look forward to working with the EIB and local authorities to ensure that contracts are structured to ensure the maximum possible reach of energy efficient renovation across Europe.

EU-ASE reaction to EU long-term budget 2021-2027 proposal

3 May 2018, Brussels. The European Commission presentation of the Communication “A Modern Budget for a Union that Protects, Empowers and Defends. The Multiannual Financial Framework for 2021-2027” is an important first step to define the financial means to address major EU societal, economic and environmental challenges. For the European Alliance to Save Energy, the Multiannual Financial Framework for 2021-2027 (MFF) is a unique opportunity for the EU to demonstrate coherence with its long-term energy and climate policy objectives and delivering tangible benefits for European citizens.

The Commission proposed a Multiannual Financial Framework of EUR 1,279 billion in commitments over the period 2021-2027, equivalent to 1.114% of the EU-27 gross national income. For climate action – which is one of the 10 policy asks of the European Alliance to Save Energy for a climate-proof MFF post 2020 – the Commission proposed to include a more ambitious goal for climate mainstreaming across all EU programmes, with a target of 25% of EU expenditure contributing to climate objectives. “A 25% target of EU expenditure contributing to climate objectives is a good political signal for investors – said Monica Frassoni, President of the European Alliance to Save Energy – however, the scale and the importance of the Paris Agreement objectives and the UN Sustainable Developments Goals would have deserved a more central role in the EU long-term budget because the decarbonisation of our economy delivers European added value and impacts on growth and jobs across the continent. On the overall size of the budget proposed – continued Ms Frassoni – we believe that the European Parliament proposal to increase the EU budget to 1.3 % of EU gross national income is more adequate to address Europe future challenges. We hope that the figures proposed by the Commission will be revised and increased in the months to come.”

The 10 policy asks of the European Alliance to Save Energy for a climate-proof MFF post 2020 include also references to better funds allocation and climate action tracking. “We welcome the Commission proposal to strengthen the focus on performance to make it easier to monitor and measure results and consequently improve the quality of the expenditure – said Monica Frassoni – and we hope that the monitoring of the impact of the resources invested in energy and climate projects will take into due consideration the full and optimal implementation of key energy legislation such as the Energy Efficiency Directive (EED), the Energy Performance of Building Directive (EPBD) and the Governance of the Energy Union Regulation.”

The Commission’s proposal refers to strategic energy infrastructures but fails to foresee exclusion criteria to fossil fuel projects and it fails to mention the Energy Efficiency First Principle which – according to Ms Frassoni – “should guide all investment decisions in the field of climate and energy infrastructures to avoid investments in stranded assets. Energy efficiency is a strategic driver of Europe economic and political agenda. The energy efficient renovation of EU residential buildings, for example, would make the EU building stock (which makes up to 40% of Europe total energy consumption) a strategic energy infrastructure and should be prioritized. We believe – concluded Frassoni – that the MFF post 2020 should kick-start a Europe-wide programme to improve Europe buildings’ energy performance, supporting EU economic growth, job creation and better living conditions for citizens.”

Good day today for energy efficiency

11 October 2017, Brussels: Today an important vote took place in the Industry, Transport and Research (ITRE) Committee of the European Parliament. Members of the European Parliament (MEPs) were called to vote on the Energy Performance of Building Directive (EPBD) and the final report adopted significantly improves the Commission’s proposal and counterbalances the weak General Approach of the Energy Council.

Commenting on the vote, Monica Frassoni, President of the European Alliance to Save Energy (EU-ASE), said “We are pleased with the vote today. MEPs have raised the level of ambition of this important Directive. We welcome their support to the definition of national long-term renovation strategies and the promotion of Smart Buildings. The EPBD voted today set a reliable and coherent framework to attract investments in the building sector”.

The positive vote of today is encouraging because it shows endorsement of energy efficiency policies and indicates that policy makers are in the process of fully understand the incredibly important role in the EU’s transition to a cleaner, healthier, more affordable energy system.

There is more to do” said Monica Frassoni “the legislative process that concerns the energy efficiency directives (i.e. EPBD and Energy Efficiency Directive) under revision is still long. In the coming months we must keep high the level of ambition and during the forthcoming trialogue we must strengthen the key provisions of such directives to scale up investments to unprecedented level”.

And today, in its effort to engage with policy makers, business and energy efficiency stakeholders, EU-ASE released its new website. “Indeed it was a good day today for energy efficiency” concluded Monica Frassoni, “our new website is online and it will help to further promote energy efficiency as the smart, cost-effective and sustainable solution for European job growth and economic success.

Top executives highlight to the Spanish Government the opportunity to bolster energy efficiency investments with new Accounting Rules

 22 September 2017, Madrid: Yesterday a delegation of top executives representing some of the largest European companies operating in the energy efficiency sector met Daniel Navia Simón, the Spanish Secretary of State for Energy, to discuss the position of Spain on the current review of major EU energy efficiency directives.

The meeting coincides with the publication on 19 September of an updated guidance note on Accounting Rules of Energy Performance Contracts (EPCs) for public authorities. As requested also by the Spanish Ministry of Energy, the note makes it easier to classify off balance sheet the investment using the operating lease or the buy and leaseback models. Eurostat is here with answering the call by stakeholders and Member States for facilitated investment in efficiency projects that deliver multiple benefits.

In May 2017, when the Energy Council was still shaping its position on the revisions of the Energy Efficiency Directive (EED) and Energy Performance of Buildings Directive (EPBD), the Energy Ministers from Spain, France, Italy and Portugal sent a joint letter to the European Commission to request more flexibility to facilitate investment in energy efficiency.

Ahead of the meeting, Monica Frassoni, EU-ASE President, said: “ With the revision of Accounting Rules the Commission sent a strong signal to the business and investor community. It proved that is serious about lifting structural barriers to energy efficiency investments. We believe this positive outcome will have an impact on the Energy Council and will help to improve its position during trilogue negotiations on energy efficiency files. Energy efficiency is a job and sustainable growth opportunity, notably for Spain and other Mediterranean countries. We are convinced that with this recent positive news Spain will now have a real interest in supporting an ambitious EU legislation on energy efficiency”.

While meeting EU-ASE representatives, Daniel Navia Simón, the Spanish Secretary of State for Energy, said: “ Energy efficiency is a key drive of the Spanish Government energy policy due to its benefits from the energy and economic point of view. The update of the Accounting Rules is a recognition of the commitment of Spain in this regard and will make it possible to speed up public investment in energy efficiency even further, to create new jobs and to promote R&D”.

On behalf of EU-ASE delegation in Madrid, Patrick J. Gaonach, Zone President Iberia, Schneider Electric, affirmed: “ The existing Spanish building stock has an untapped energy efficiency potential of + 80%, that can easily be reached thanks to existing cost-effective digital technologies, while creating jobs in a sector that has greatly suffered from the crisis. Spanish engineers, EPCs, Installers, Integrators are among the most qualified in the world and can lead the decarbonization of Spain and export their knowledge. The revision of the EPBD directive and the new accounting rules are now giving Spain a golden opportunity that should not be missed”.

After the General Approach reached by the Maltese EU Presidency on EU energy efficiency directives under revision, the file will be back on the table of the Energy Council during trilogue negotiations with the Commission and European Parliament later this year.

A final agreement is expected by early 2018.