Explanatory Memorandum to COM(2016)761 - Amendment of Directive 2012/27/EU on energy efficiency - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2016)761 - Amendment of Directive 2012/27/EU on energy efficiency. |
|---|---|
| source | COM(2016)761  |
| date | 30-11-2016 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
"Energy efficiency first" is a key element of the Energy Union – this proposal puts it into practice. The cheapest energy, the cleanest energy, the most secure energy is the energy that is not used at all. Energy efficiency needs to be considered as a source of energy in it own right. It is one of the most cost effective ways to support the transition to a low carbon economy and to create growth, employment and investment opportunities.
The European Union legal framework was constructed around an energy efficiency target of 20% for 2020 – this now needs to be reset with a 2030 perspective, following the European Council's agreement in 2014 on a target of at least 27% for 2030 to be reviewed by 2020 having in mind a 30% target, and the Parliament's resolution calling for a 40% binding target.
This proposal sets a 30% binding energy efficiency target for 2030 at EU level. This will give Member States and investors a long term perspective to plan their policies and investments and to adapt their strategies towards energy afficiency. Underpinned by dedicated policies at the EU, national and regional level, this target will bring substantial multiple benefits for Europe. Such a target represents a drop in final energy consumption of 17% compared to 2005. It will increase economic growth, leading to an increase in GDP of around 0.4% (€70 billion). Greater energy efficiency will help European companies improve their competitiveness by keeping their costs down, with electricity prices for household and industry expected to be reduced on average from 161 to 157 €/MWh. It will create local business opportunities and jobs, with an estimated 400,000 additional jobs in all sectors by 2030, especially in the construction sector, including by increasing the demand for skilled manual labour. Buildings are the largest single energy consumer in Europe, consuming 40% of final energy, so a 30% efficiency target has great potential in the sector. Finally, pollution control costs & health damage costs should be reduced by €4.5 – 8.3 billion and energy security will be greatly improved, reducing gas imports by 12% in 2030.
Under the Energy Efficiency Directive Member States must ensure that energy suppliers and distributors increase their energy savings by 1.5% per year. Implemented via dedicated obligation schemes and alternative measures, this is a key element of the EU energy efficiency framework. It has proved to have a strong 'pulling' effect to trigger end-use energy savings, attract private investment in energy efficiency and support the emergence of new market actors. It creates a political drive for energy efficiency while increasing the building renovation rate and the uptake of energy efficient appliances and techniques. It is a key policy to unlock, after 2020 and beyond, the needed private investments and business opportunities for EU companies, especially for small and medium sized enterprises.
The proposal therefore extends beyond 2020 the energy saving obligation while retaining the rate of 1.5% and the possibility to use both energy efficiency obligation schemes and alternative measures. This keeps fully the existing flexibility for Member States in how they implement the savings obligation, in accordance with their policy environment and market conditions. This provision is central for achieving the Union's energy and climate objectives, as around half of the additional savings that are needed to achieve a 30% energy efficiency target in 2030 are expected to come from its extension beyond 2020.
To further empower consumers as key players in the energy market, the Commission proposes to improve the provision of information on their heating and cooling consumption and strengthen their rights in metering and billing of thermal energy, in particular for people living in multi-apartment buildings. In order to improve frequency of information, an obligation for heat meters to be remotely readable is introduced.
The proposal strengthens the social aspects of energy efficiency by requiring that energy poverty must be taken into account in designing energy efficiency obligation schemes and alternative measures. The decrease in energy bills will also be of particular benefit to the most vulnerable consumers.
Only those articles of the Directive which need to be updated for the 2030 timeframe, and the metering and billing provisions, are included in this proposal. Apart from technical amendments to the default coefficient in Annex IV and to the delegation in Article 22, the other articles of the Directive are untouched.
• Consistency with existing policy provisions
Energy efficiency and the energy efficiency first principle are at the heart of the Energy Union strategy. The proposal streamlines and simplifies the existing provisions and increases coherence with other elements of the Clean Energy for All Europeans package, namely the new Governance regulation, the new electricity market design and the update of legislation on renewable energy.
It will also enable the Energy Performance of Buildings Directive to reach its full potential by increasing energy efficiency building renovation. Energy suppliers and distributors often achieve their 1.5% savings obligation by implementing energy efficiency measures in the homes of their individual customers.The linked staff working document gives examples of good practice in energy efficiency from across the Union 1 .
Energy efficiency targets are linked to climate targets and in particular the Effort Sharing Decision (ESD) 2 that sets greenhouse gas (GHG) emission reduction targets for Member States. Energy efficiency policies significantly increase the take-up of energy saving technologies in buildings, industry and transport. Energy efficiency measures are a cost-effective way of helping Member States achieve the Emissions Trading System (ETS) 3 and ESD targets, as Article 7 of the Directive requires Member States to achieve actual energy savings and therefore encourages energy efficiency measures in practice.
The proposed amendments to the provisions on metering and billing will increase coherence with the internal energy market legislation on electricity and contribute to other Energy Union initiatives: the Heating and Cooling Strategy 4 and the New Deal for Energy Consumers.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union, which is the legal basis for measures on energy. This is also the legal basis for Directive 2012/27/EU on energy efficiency, which this proposal amends. As the Treaty contains a specific energy legal basis, it is appropriate to use it.
• Subsidiarity
The instruments on energy efficiency adopted at EU level reflect the growing importance of energy as a political and economic challenge and its close interrelation with the policy areas of security of energy supply, climate change, sustainability, internal market, and economic development. Because of market and regulatory failures, large amounts of cost-effective investments in energy efficiency will not take place, which will lead to a level of energy consumption in 2030 which is not in line with the agreement of the European Council of October 2014. To date, energy efficiency objectives could not be sufficiently achieved by Member States alone, and action at Union level is therefore needed to facilitate and support the uptake of activities at national level. The principle of subsidiarity is respected as Member States will retain the same flexibility as today in terms of selecting their policy mix and their approach to achieving the required savings by 2030, including how the savings are phased.
• Proportionality
In accordance with the principle of proportionality, the proposed amendments do not go beyond what is necessary to achieve the objectives set. The proposed amendments to the current legislative framework will adapt it to a 2030 time frame and improve its clarity and workability. The preferred option assessed for Article 7 would not go beyond what is necessary to achieve the objectives (savings requirement by 2030). The impact assessment sets out why it is appropriate for the same rate of 1.5 % per year to be also retained for the new period (2021-2030).
The scope of the elements proposed in the options is limited to those aspects that require action by the Union (setting the savings requirement and putting in place the framework to ensure that these savings are achieved in a credible way).
The simplification and clarification amendments will make it easier for the Member States to implement the provisions and to satisfy the energy savings requirements.
The amendments to Articles 9-11 are unlikely to have any major effect on how Member States already deal with obligations relating to metering and billing for energy consumers and appropriate deadlines have been set for obligations relating to remotely readable devices.
• Choice of the instrument
As this proposal amends an existing Directive, an amending Directive is the appropriate instrument.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Stakeholder consultations
A public consultation was launched on 4 November 2015 to receive feedback and input from stakeholders. In line with good practice, the survey accepted responses for more than 12 weeks.
The online survey received 332 responses, and the functional email address received an additional 69 documents, either complementary to or in lieu of survey-based responses. Most contributions were submitted by industry associations (140), private companies (47) and NGOs (33). A total of 19 central public authorities submitted contributions, including 18 from within the EU and Norway. Of the 18 central public authorities from within the EU, 3 asked to remain anonymous. The remaining 15 were from Austria, Belgium, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Hungary, Latvia, Lithuania, the Netherlands, Slovakia, Sweden and the UK.
A more targeted consultation with Member States took place through the Energy Efficiency Directive Committee meeting of 2 February 2016 and the Concerted Action meeting of 17-18 March 2016.
Further stakeholder inputs were collected through thematic workshops, notably on monitoring and verification (3 February 2016) and on trading of energy savings under Article 7 (29 February 2016).
A dedicated stakeholder event focussing on the policy options took place on 14 March 2016 and the discussion fed into the impact assessment process (see conclusions below).This stakeholder event, with 282 participants from European industry, civil society organisations and Member States, was also held to discuss the 2030 target. The majority of stakeholders who expressed a view, supported a target of up to 40 % in 2030, but did not come to a definitive view on whether the target should be binding.
• Collection and use of expertise
Contents
– Final Report evaluating the implementation of Article 7 of the EED, Ricardo-AEA/ CE Delft.
– Draft final Report on assessing costs and benefits of the EEOSs, RAP.
– Analysis provided to the impact assessment of Article 7, EED, Ricardo AEA/CE Delft (in the framework of the 3rd follow-up study on Article 7).
– 'Analysis of good practices and development of guidelines for accurate and fair allocation of costs for individual consumption of heating, cooling and domestic hot water in multi-apartment and multi-purpose buildings to support the implementation of relevant provisions of the Articles 9-11 of the Directive 2012/27/EU on energy efficiency' by Empirica.
For the amendments to Articles 1 and 3, the energy system model, PRIMES of the National Technical University of Athens (NTUA) was used. In addition, for the macro-economic modelling and analysis, expertise from NTUA, Cambridge Econometrics and Ernst and Young was used.
• Impact assessment
For the level of the target, a reduction of primary energy compared to a 2007 baseline of 27, 30, 33, 35 and 40 % was assessed. For the formulation of the target, a primary and/or a final energy consumption, a saving or an energy intensity target were analysed. Regarding the nature of the target, the following options were assessed:
– Option 1: indicative EU and national targets;
– Option 2: binding EU target;
– Option 3: binding Member State targets.
– Option 1: no action at EU level – continue with guidance on the regulatory framework and enforcement until 2020;
– Option 2: extend Article 7 to 2030;
– Option 3: extend Article 7 to 2030, simplify and update;
– Option 4: extend Article 7 to 2030, increase the rate of savings.
– Option 1: enhanced implementation and further guidance (non-legislative option);
– Option 2: clarification and updating, including consolidation of certain provisions to increase coherence with the Internal energy market legislation.
All options are assessed in the Impact Assessment and compared against the baseline scenario and to each other. The assessment showed that a level higher than 27 % energy efficiency in 2030 would bring higher benefits with regard to jobs and economic growth, security of supply, greenhouse gas emission reductions, health and environment. Based on this multi-dimensional analysis a political decision of a binding 30 % energy efficiency target was taken. As a result of the analysis, option 3 for Article 7 and option 2 for Articles 9-11 are the preferred options as these are the most effective and efficient in achieving the desired objectives and are consistent with other EU energy policy areas.
Extending Article 7 to 2030 under the preferred option will help reduce energy consumption and CO2 emissions and will also lead to improvements in air quality.
In terms of social impacts, the preferred option would have a positive effect on employment: a review of more than 20 studies concluded that for every 1.2 million euro spent on energy efficiency approximately 23 jobs are directly supported in the energy efficiency industry. Applying this ratio to the total expenditure by energy companies in for example Austria, Denmark France, Italy, and the UK, and assuming a leverage factor of 2, this suggests that up to 100 000 jobs are supported by energy efficiency obligation schemes in those countries. A positive impact for the energy poor is also expected: a 2013 study for the European Investment Bank found that reducing fuel bills through energy efficiency measures could mitigate energy poverty and help address issues associated with inequality and social exclusion.
• Regulatory fitness and simplification
The proposal does not exempt micro-enterprises but the Directive contains specific provisions for small and medium-sized enterprises (SMEs), which are not subject to the obligation to have an energy audit every four years. Member States are required to develop programmes to encourage SMEs to undergo energy audits, and they may set up support schemes to cover the costs of such energy audits.
The energy savings obligation in Article 7 of the Directive often translates in practice into many small scale energy saving measures, in particular related to the renovation of buildings. SMEs, for example small construction firms, benefit from these business opportunities, and extending Article 7 beyond its present 2020 limit to 2030 will allow that positive effect to continue. The expansion of energy performance contracting has led to energy suppliers using energy services companies (ESCOs), which are often SMEs.
In 2016 the Commission carried out a fitness check on the construction industry in the policy areas of internal market and energy efficiency which found that, overall, EU energy efficiency legislation has had a positive effect on the construction sector, leading to increased business opportunities linked to energy efficient renovation of buildings.
The proposed amendments on metering and billing for energy consumers will clarify and update the current provisions to take account of the development and benefits of devices to remotely measure thermal consumption and increase information on own energy use as well as its frequency.
The proposed amendments to the Directive will simplify and clarify implementation for the Member States, and will minimise, as far as possible, overlaps with other energy legislation and policies.
4. BUDGETARY IMPLICATIONS
This proposal amends an existing Directive on energy efficiency, and although the requirements are extended in time, this is not expected to lead to much additional budgetary or administrative cost consequences for public authorities in the Member States as they already have measures and structures in place. In most cases, the costs associated with measures under the energy efficiency obligation schemes are passed on to final customers, but they benefit from reduced energy bills due to reduced energy consumption.
The proposal does not have any implication for the EU budget.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
This proposal makes no change to the Member States' current reporting obligations. The legislative proposal on Energy Union Governance will ensure that a transparent and reliable planning, reporting and monitoring system will be put in place, based on integrated national energy and climate plans and progress reports by Member States. regularly assessing the implementation of national plans. This will ease the administrative burden on Member States, but will still allow the Commission to monitor Member States' progress towards their energy efficiency targets and the overall EU target. Indicators of success in line with the preferred option once the proposal is adopted will be:
– correct transposition and implementation of the changes to the Directive;
– increased progress towards the national and EU energy efficiency targets;
– more information available to consumers about their thermal energy consumption;
– reduced administrative burden on Member States and better reporting on the measures and savings by the Member States.
One of the proposed amendments to the Directive adds a requirement for the Commission to undertake a general review of the Directive by 28 February 2024. The existing Guidance Notes on Article 7 5 and Articles 9-11 6 will be updated to reflect the changes made by this proposal.
• Detailed explanation of the specific provisions of the proposal
Article 1 and Article 3 of the Directive are amended to add the Union's 2030 binding 30 % energy efficiency target.
There are no national binding targets for the Member States, but their indicative national energy efficiency contributions for 2030 will be notified in Member States' Integrated National Energy and Climate Plans. The Commission will assess indicative national energy efficiency contributions for 2030 and lay down the process on how to ensure that the contributions add up to the Union's 2030 energy efficiency target in the legislative proposal on Energy Union Governance. The Commission also evaluates the energy efficiency progress towards the 2030 target and propose additional measures if the Union is not on track to reach the 2030 target. In this context, the Commission's assessment of collective progress made in implementing Integrated National Energy and Climate Plans will be of key importance. The provision for the regular evaluations by the Commission of progress by Member States and by the Union as a whole towards the 2030 targets are also specified in the legislative proposal on Energy Union Governance.
Article 4, which requires Member States to establish long-term strategies for mobilising investment in the renovation of their national building stock, will be removed from this Directive and added to the Directive on the energy performance of buildings where it fits better due to the smart financing for buildings initiative, long term plans for nearly zero energy buildings and the goal of decarbonisation of buildings.
Article 7 is amended to extend the obligation period beyond 2020 to 2030 and to make it clear that Member States can achieve the required energy savings through an energy efficiency obligation scheme, alternative measures, or a combination of both approaches. Member States will be able to take into account to some extent the installation of new renewable energy technologies on or in buildings. Annex V is also amended to simplify how energy savings must be calculated and to clarify which savings are eligible for the purposes of Article 7. This is in particular relevant as regards energy savings stemming from measures targeting the renovation of buildings which can now be claimed in full.
The calculation of the amount of savings required for the 2021 to 2030 period will continue to be based on annual energy sales to final customers averaged over the three years preceding the start of that obligation period. Member States may already include social requirements targeting households affected by energy poverty in their energy efficiency obligation schemes. The amended Article 7 strengthens this provision and requires Member States to take energy poverty into account when designing alternative measures. The Commission will continue to support the accessibility of energy efficiency measures for energy poor consumers through the exchange of best practice.
Article 9 on metering and Article 10 on billing are amended to make them applicable only to gas while complementing them with new, similar and clear provisions applicable only to heating, cooling and domestic hot water supplied from central sources.
A distinction between final customers and final consumers is introduced to clarify the applicability of the rules in sub-metered multi-apartment and purpose buildings. Timely and clear feedback to consumers about their actual energy consumption can help reduce energy bills but feedback works best when it is delivered frequently; devices to measure thermal energy should therefore over time be remotely readable to ensure that consumers can be provided, in a cost-effective way, with consumption information on a frequent basis, ultimately monthly. As an additional benefit, remote reading eliminates the need for consumers to be home and give meter readers access to their dwellings. Annex VII is also amended to ensure coherence with Articles 9 to 11.
The provisions of Article 15(5) and 15(8) of the Directive on energy transformation, transmission and distribution are repealed so that new equivalent provisions can be included in the legislative proposals made under the Market Design Initiative. In the case of Article 15(8), this will be done in such a way as to ensure that the duties laid on Member States by these requirements are fully maintained.
Article 23 on delegated powers is amended to delete the current time limit on the delegation, replacing it with the standard five year period set out in the common understanding of the European Parliament and the Council on delegated acts.
Article 24 will be amended by the legislative proposal on Energy Union Governance.
A general review clause is added to the Directive, under which the Commission must evaluate the Directive and submit a report to the European Parliament and Council by 28 February 2024, and then every five years.
The default primary energy factor (PEF) in Annex IV is amended to take into account technological advances. This could be amended through a delegated act, but it is considered to be more appropriate to use this legal proposal to achieve the same end.