Explanatory Memorandum to COM(2011)370 - Energy efficiency - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2011)370 - Energy efficiency. |
|---|---|
| source | COM(2011)370  |
| date | 22-06-2011 |
The EU has set itself the objective of achieving 20 % primary energy savings in 2020 and has made this objective one of the five headline targets of the Europe 2020 Strategy for smart, sustainable and inclusive growth.
The Commission’s latest estimations, which take into account the national energy efficiency targets for 2020 that Member States have set in the context of the Europe 2020 strategy, suggest that the EU will achieve only half of the 20 % target in 2020. The European Council and the European Parliament have urged the Commission to adopt a new ambitious strategy on energy efficiency for determined action to tap the considerable potential.
To give fresh momentum to energy efficiency, on 8 March 2011 the Commission put forward a new Energy Efficiency Plan (EEP) setting out measures to achieve further savings in energy supply and use.
This legislative proposal transforms certain aspects of the EEP into binding measures. The main purpose of the proposal is to make a significant contribution to meeting the EU’s 2020 energy efficiency target. For it to be successful, the proposal must be promptly adopted and implemented in the Member States.
The proposal also looks beyond the 20 % target and seeks to set a common framework to promote energy efficiency in the Union beyond 2020. The proposal is a strategic priority in the Commission Work Programme for 2011.
Against a backdrop of rising EU imports of energy at rising prices, access to energy resources will in the medium term play a more important role with the potential to risk seriously compromising EU economic growth. This explains why energy efficiency is one of the main aspects of the Europe 2020 flagship initiative for a resource-efficient Europe. Energy efficiency is the most cost-effective and fastest way to increase security of supply, and is an effective way to reduce the greenhouse gases emissions responsible for climate change. As outlined in the Commission Communication ‘A Roadmap for moving to a competitive low carbon economy in 2050’[7], energy efficiency can help the EU achieve and even outperform its greenhouse gas emission reduction target.
Making the EU economy more energy efficient will also have positive impacts in terms of economic growth and job creation. Energy savings free up financial resources that can be reinvested elsewhere in the economy and can help alleviate public budgets that are under strain. For individuals, energy efficiency means paying less on their energy bills. Energy poverty can be tackled strategically by taking energy efficiency improvement measures. Finally, producing more with less energy should improve EU industries’ competitiveness and give them the lead in the global markets for energy efficiency technologies. Energy efficiency and savings benefit the EU economy as a whole, the public sector, business and private individuals. For these reasons, the European Energy Strategy 2020 identified energy efficiency as one of the key priorities of EU energy policy for the following years.
The scope of two Directives: the Cogeneration Directive (2004/8/EC, CHP Directive) and the Energy Services Directive (2006/32/EC, ESD)[8] overlap with this Proposal. Both have failed to fully tap the energy saving potential. Therefore, it is proposed that these two Directives are repealed when the new Directive enters into force, except for Articles 4 to and Annexes I, III and IV to the ESD. These provisions concern the achievement by 2017 of an indicative energy saving target of 9% of the final energy consumption of each Member State in the 5 years before the implementation of the ESD. This target – albeit different in scope and level of ambition - contributes to the realisation of the EU's 20% energy efficiency target by 2020, and should therefore remain applicable until 2017.
Other provisions overlapping with the provisions of the new Directive are Article 9 and of Directive 2010/30/EU on energy labelling[9], which will be repealed when the new Directive enters into force.
This proposal is anchored in the Europe 2020 Strategy for smart, sustainable and inclusive growth i, as the EU’s 20 % energy efficiency target is part of one of the five headline targets under this Strategy. It is one of the proposals planned for 2011 to deliver on one of the seven key initiatives of the Strategy, the Europe 2020 flagship initiative for a resource-efficient Europe. It is consistent and complementary with EU climate policy.
The decreased energy consumption aimed at by this proposal should also help Member States to reach their targets on the share of energy from renewable sources set by Directive 2009/28/EC on the promotion of the use of energy from renewable sources[11].
2. Consultation of interested parties and impact assessment 2.1. Consultation, data collection and use of expertise
The proposal was developed on the basis of a broad range of contributions from Member States and interested parties provided on various occasions, including a general online public consultation[12]. Another broad consultation exercise was launched in January 2011 by the working groups of the Bucharest forum on sustainable energy (which include Member State representatives and stakeholders)[13]. A comprehensive analysis of the impact of the options proposed was carried out using the results of three models and numerous studies. The analysis studied the economic, social and environmental impact of the options, taking into account the subsidiarity and proportionality principles.
The impact assessment (IA) explores a number of options broken down into three levels:
- First-level policy options analyse ways to improve the current policy framework. This analysis focuses primarily on issues of whether the current approach of the ESD to target setting should be extended until 2020, whether national energy savings targets should be added to achieve the EU 20 % target and if so, whether they should be binding or merely indicative.
The analysis concludes that the ESD targets should be maintained for end-use sectors until their deadline in 2016, but to reach the 20 % energy efficiency target they need to be complemented with more ambitious energy savings targets under the Europe 2020 process. It indicates that such targets do not need to be binding at present and that binding measures can achieve the same or better results. These binding measures, together with the current policy framework, should be sufficient to reach the EU’s 20 % target in 2020. However, progress needs to be followed and appropriate corrective action taken early enough to ensure the 20 % target is reached in 2020 if progress is, after all, inadequate.
- Second-level policy options explore different measures to tackle the remaining economic potential on the demand and supply side.
The IA looks at energy savings obligation schemes as a possible option for yielding energy savings in end-use sectors. It concludes that energy saving obligations have the scope to achieve significant savings but the existing provisions in the ESD (where such obligations are only one of the options provided to Member States to ensure that energy utilities achieve savings in end-use sectors) should be reinforced. The questions then raised are the level of energy savings required from energy utilities and whether the design of such obligation schemes should be completely left to the Member States or whether there should be some harmonisation of key design features. The IA suggests introducing national energy efficiency obligation schemes in all Member States with the aim of yielding an annual final energy reduction of 1.5 %. While certain key features need to be harmonised at EU level (targeted sectors, level of ambition and counting methods), Member States should have the possibility to adjust the schemes to their national circumstances or retain their current schemes, to a large degree. The option of introducing a European system of tradable white certificates was also considered, but rejected for the same reasons as the option to completely harmonise all design features of the scheme.
Another set of policy options examine measures involving the public sector. The analysis concludes that two measures could be beneficial. Firstly, 3 % of buildings owned by public bodies should be renovated annually to cost-optimal levels, a doubling of the current renovation rate. Secondly, public bodies should be required to purchase high energy performance products and buildings based on the available energy labels and certificates.
Other options with a considerable positive impact compared to their costs are those that aim to promote the energy services market, provide improved and more frequent information to households and companies on their actual energy consumption through billing and smart meters, and mandatory energy audits for large companies. The IA shows that all these measures are valuable in reducing the information gap that is one of the barriers to efficiency and could yield major energy savings. Other options to promote energy efficiency via voluntary measures are assessed as insufficient to tap all the available potential for savings.
The IA also analyses which measures could help tap energy efficiency potential in energy transformation and distribution. It rejects the options involving a continuation of the provisions of the current CHP Directive, as they do not promote energy efficiency across the energy supply sector, but only in relation to cogeneration and without ensuring an actual deployment of CHP (Member States are only required to gather information and report to the Commission). The analysis suggests that establishing minimum performance requirements for energy generation (including on mandatory CHP and district heating/cooling requirements for new electricity generation installations and mandatory connection and priority access of high-efficiency cogeneration to the electricity grid) would significantly improve energy efficiency in generation. Establishing energy efficiency obligations for energy regulatory authorities would also be valuable in improving efficiency in energy transmission and distribution.
The IA examines options for national reporting and monitoring of implementation. To limit the administrative burden whilst ensuring proper monitoring of progress, it suggests a light form of annual reporting based on a selection of energy efficiency and savings indicators, which could be fed into the annual National Reform Programmes. This would be supplemented by more detailed information on energy efficiency measures and programmes that would only be required from Member States every three years.
- Third-level policy options assess the legal form of the selected first- and second-level measures. It concludes that, in order to reach the level of ambition of the EU 20 % energy efficiency target, EU policies need to reap the energy saving potential in every sector, including in those sectors excluded from the scope of the ESD. This is why it is proposed to adopt a new legislative proposal that covers the scope of the two Directives and extends it to all sectors with energy saving potential. Merging the two Directives into a single legislative text was considered to be the best option to streamline the existing legal framework and provide better coherence.
The analysis was not as conclusive regarding the legal form. However, as the specific provisions of the legislative proposal have been fleshed out, it has become clear that, given the content and the need to adopt further implementing measures at national level, a Directive is the most appropriate legal form.
The modelling exercise to evaluate the overall impact of the selected policy options shows that for the EU27, the net effect of the proposed measures reaches the 20 % primary energy saving objective. The IA also shows that the additional cost of achieving the overall 20 % target through the set of selected measures is modest compared to the benefits. The overall economic, social and environmental impacts of these measures will make a strong positive contribution to EU policies and underpin the Europe 2020 Strategy.
Energy efficiency is one of the main vehicles to achieve the objectives of the 2050 Low Carbon Economy Roadmap. The price of ETS allowances is an important incentive to reduce greenhouse gas emissions. While the modelling exercises carried out in preparation of this proposal showed that its measures will certainly deliver additional greenhouse gas emissions reductions, they were not conclusive regarding possible impacts on the price of ETS allowances. In the implementation of the 20% energy efficiency target, the Commission will have to monitor the impact of new measures on Directive 2003/87/EC establishing the EU's emissions trading directive (ETS) in order to maintain the incentives in the emissions trading system rewarding low carbon investments and preparing the ETS sectors for the innovations needed in the future. In this respect, appropriate measures need to be considered, including recalibrating the emissions trading system by setting aside a corresponding number of allowances from the part to be auctioned during the period 2013 to 2020, should a corresponding political decision be taken.
The proposed Directive establishes a common framework for promoting energy efficiency in the Union to ensure the target of 20 % primary energy savings by 2020 is met and to pave the way for further energy efficiency afterwards. It lays down rules designed to remove barriers and overcome some of the market failures that impede efficiency in the supply and use of energy.
For end-use sectors, the proposed Directive focuses on measures that lay down requirements on the public sector, both as regards renovating the buildings it owns and applying high energy efficiency standards to the purchase of buildings, products and services. The proposal requires Member States to establish national energy efficiency obligation schemes. It requires regular mandatory energy audits for large companies and lays down a series of requirements on energy companies regarding metering and billing.
For the energy supply sector, the proposal requires Member States to adopt national heating and cooling plans to develop the potential for high-efficiency generation and efficient district heating and cooling, and to ensure that spatial planning regulations are in line with these plans. Member States must adopt authorisation criteria that ensure that installations are located in sites close to heat demand points and that all new electricity generation installations and existing installations that are substantially refurbished are equipped with high-efficiency CHP units. Member States should however be able to lay down conditions for exemption from this obligation where certain conditions are met. The proposal also requires Member States to establish an inventory of energy efficiency data for installations undertaking the combustion of fuels or the refining of mineral oil and gas and sets requirements on priority/guaranteed access to the grid, priority dispatch of electricity from high-efficiency cogeneration and the connection of new industrial plants producing waste heat to district or cooling networks.
Other measures proposed include efficiency requirements for national energy regulatory authorities, information and awareness-raising actions, requirements concerning the availability of certification schemes, action to promote the development of energy services, and an obligation for Member States to remove obstacles to energy efficiency, notably the split of incentives between the owner and tenant of a building or among building owners.
Finally, the proposal provides for the establishment of national energy efficiency targets for 2020 and requires the Commission to assess in 2014 whether the Union can achieve its target of 20 % primary energy savings by 2020. The Commission is required to submit its assessment to the European Parliament and the Council, followed, if appropriate, by a legislative proposal laying down mandatory national targets.
The proposal is based on Article 194 of the Treaty on the Functioning of the European Union. According to Article 194, ‘in the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States, to (…) c) promote energy efficiency and energy saving and the development of new and renewable forms of energy’. The aim of this proposal is precisely to establish a common framework to promote energy efficiency in the Union.
The subsidiarity principle applies to this proposal insofar as energy policy does not fall under the exclusive competence of the Union.
The EU has set itself the target of achieving 20 % primary energy savings in 2020 and has made it one of the five headline targets of the Europe 2020 Strategy. The current energy efficiency framework, in particular the ESD and CHP Directives, have not managed to tap existing energy saving potential. Measures currently adopted at Member States level are also insufficient to overcome the remaining market and regulatory barriers.
The energy challenges addressed by this proposal (security of energy supply, sustainability and climate change, as well as EU competitiveness) are concerns shared by the EU as a whole. A collective response at EU level is necessary to ensure action is coordinated and the shared objectives are achieved more effectively.
The measures proposed by the new Directive will contribute to ensuring that all Member States make an appropriate contribution to the efforts needed to achieve the 20 % target and a level playing field for all market actors, notably by setting minimum energy performance requirements (for instance on access to public markets, energy audit obligations on companies, energy saving obligations on energy utilities and access to the grid for cogeneration producers). The proposal gives investors certainty as regards the achievement of the EU target and support for energy efficiency improvement measures such as high-efficiency cogeneration and district heating and cooling.
The proposal does not go beyond what is necessary to achieve the energy efficiency target. It sets strict energy efficiency requirements in a number of areas, but Member States keep a high degree of discretion to favour energy efficiency improvement measures in the way that suits their national circumstances best.
The instrument chosen is a Directive to be transposed into national law by the Member States. A Directive defines the final result to be achieved and the general requirements, while leaving sufficient flexibility to Member States to adapt implementation to their national specificities. In this particular case, a Directive is sufficient to achieve the objectives of the proposal. The level of constraint is thus proportionate to the objective.
Contents
- Budgetary implication
- 1.2. General context
- 1.3. Existing provisions
- 1.4. Consistency with other EU policies and objectives
- 2. Consultation of interested parties and impact assessment 2.1. Consultation, data collection and use of expertise
- 2.2. Impact assessment
- 3. Legal elements of the proposal 3.1. Summary of proposed action
- 3.2. Legal basis
- 3.3. Subsidiarity principle
- 3.4. Proportionality principle and choice of legal instrument
- 5.2. Repeal of existing legislation
- 5.3. Review/revision/sunset clause
- 5.4. Recasting
- 5.5. Correlation table
- 5.6. European Economic Area (EEA)
As specified in the financial statement accompanying this Directive, the Directive will be implemented using the existing budget and will not have an impact on the multi-annual financial framework.
5. Additional information 5.1. Simplification of the ‘acquis’
The proposal contributes to the simplification of the ‘acquis’, although it is not included in the list of measures of the simplification work plan. As a result of adopting this proposal, the ESD and CHP Directives will be replaced by a single Directive, giving a more integrated approach to energy efficiency and savings. Some administrative simplification should also result from the need to transpose only one Directive instead of two.
Reporting obligations are currently laid down in both Directives. They will replaced with a single set of annual reports (in-depth every three years), building on the reporting process under the Europe 2020 strategy.
Furthermore, this proposal simplifies the energy saving measurement requirements contained in the existing ESD. In this sense, it should help achieve a significant reduction in the administrative burden currently faced by Member States.
Adoption of the proposal will lead to the repeal of existing legislation. This concerns Article 9 and of Directive 2010/30/EU; Directive 2004/8/EC and Directive 2006/32/EC. Article 4 to and Annexes I, III and IV of Directive 2006/32/EC will only be repealed with effect from 1 January 2017.
The proposal includes several review clauses.
The proposal does not involve recasting.
Member States are required to communicate to the Commission the text of national provisions transposing the Directive, and a correlation table between those provisions and the Directive.
The Proposal concerns an EEA matter and should therefore be applicable to it.