Select Committee on European Scrutiny Twelfth Report


COM(01) 226

Draft Directive on the energy performance of buildings.

Legal base:Article 175(1) EC; co-decision; qualified majority voting
Document originated:11 May 2001
Forwarded to the Council: 14 May 2001
Deposited in Parliament: 20 June 2001
Department:Environment, Food and Rural Affairs
Basis of consideration: EM of 17 July 2001, and Minister's letter and SEM of 4 December 2001
Previous Committee Report: None
Discussed in Council: 4 December 2001
Committee's assessment:Politically important
Committee's decision:Not cleared; further information requested


  6.1  In its Green Paper "Towards a European Strategy for Energy Supply", the Commission highlighted the importance of savings in the buildings and transport sectors both in reducing greenhouse gas emissions and addressing the Community's increasing dependence on external sources to meet its energy needs. It has also pointed out that the residential and tertiary[16] sectors are the largest overall users, mainly for heating, lighting, appliances and equipment, and have the potential for large savings. It has therefore brought forward in this document a draft Directive which seeks to improve the energy efficiency of buildings.

The current document

  6.2  In the introduction to its proposal, the Commission points out that total energy consumption in the Community in 1997 was 930 Mtoe,[17] of which 378 Mtoe (40.7%) arose in the residential and tertiary sectors. For households, space heating accounted for 57% of energy use, followed by water heating (25%) and electrical appliances and lighting (11%), whereas for the tertiary sector, the importance of heating was somewhat lower (52%), and that of lighting (14%) somewhat higher. In the latter case, office equipment also accounted for 16%.

  6.3  On certain assumptions about the rate of refitting for existing buildings, the net increase in building stock and the use of best available technologies, the Commission says it has been estimated that an overall savings potential of 83 Mtoe (around 22% of present consumption) could be realised by 2010 from the "building envelope" and installed equipment[18]. It also points out that, if realised, the indicative target set by the Council in a Resolution of 7 December 1998 of improving energy intensity by a further one percentage point a year would result in the building sector in a saving of 55 Mtoe. This would represent a reduction in carbon dioxide emissions equivalent to 20% of the Community's Kyoto commitment, and, according to the Commission, it would realise about two-thirds of the available savings potential of the sector.

  6.4  As regards more specific areas of saving, the Commission says that:

    —  as regards the building envelope, the current average heat loss for new buildings is about half of that for the pre-1945 housing stock, and that important savings could be made by such steps as improving insulation;

    —  although the Community has introduced minimum efficiency requirements for residential hot water boilers, more than 10 million boilers in the Community are more than 20 years old, and, if all these were to be replaced by new boilers, this could lead to a saving of over 10 Mtoe, with additional savings being possible by reducing stand-by losses and by the correct sizing of boilers: however, it also recognises that the benefit of a new boiler is often not sufficient to justify its cost, and it therefore says that an integrated calculation should be made of the costs and risks of retention as compared with replacement;

    —  the other main areas where potential savings arise are lighting and air conditioning: according to the Commission, the former accounts for around 14% of the tertiary sector's energy requirements, and savings of 5 Mtoe could arise from the use of more efficient components and control systems, whilst the latter is a rapidly growing source of consumption in both the residential and tertiary sectors, giving it a substantial cost-saving potential.

  6.5  The Commission also points out the potential for environmentally-friendly energy generation installations, through the use of renewable energy sources, combined heat and power, and heat pumps, and the role of bioclimatic design and construction to take maximum advantage of such factors as wind and solar power and the surrounding terrain, including tree cover.

  6.6  Against this background, the proposal covers four main elements.

— Common methodology for integrated energy performance standards

  6.7  The Commission says that there is a strong tendency towards an integrated approach covering such matters as insulation, heating and cooling installation, energy for ventilation, lighting installations, heat recovery, solar power and other renewable energy sources, which it believes allows energy reduction standards to be met in the most cost-effective way. It notes that such an approach has been introduced in varying degrees by a number of Member States, including the UK, and it suggests that a common approach would be helpful in providing a more level playing field and in facilitating comparisons between buildings throughout the Community for prospective users. It also considers that such a methodology could form the basis for integrated minimum performance standards by Member States, reflecting local circumstances, including climatic differences.

— Energy performance standards for new and existing buildings  

  6.8  The Commission says that new residential buildings and dwellings, as well as new buildings in the tertiary sector, should meet the minimum energy performance standards based on an integrated methodology, and that these standards should also be applied to larger existing buildings — defined as those greater than 1000 square metres — when they undergo larger renovations (whose cost is more than 25% of the existing insured value of the building), and when the additional costs can be recovered within eight years by the accrued energy savings. These performance standards would have to be updated at least every five years to reflect technical progress in the building sector.

— Certification schemes for new and existing buildings and the display of relevant information in public buildings

  6.9  The Commission identifies as a major cause of market imperfection the fact that, since the renter of a building usually pays the energy bill, there is little incentive for the owner to invest in greater efficiency. It suggests that this problem could be addressed by providing to prospective renters clear and reliable information through energy efficiency certificates, renewable every five years, which would influence the rent that could be asked. It also suggests that in public buildings, or certain other buildings frequented by the public, such certificates should be prominently displayed, together with information regarding temperatures and such factors as humidity.

— Inspection and assessment of boilers and heating/cooling installations

  6.10  The Commission says that heating installations are recognised as a key issue affecting energy efficiency, and that boilers with an effective output of more than 10kW up to boilers for blocks of flats and offices should regularly be inspected to improve their operating conditions. It further suggests that, in the case of boilers more than 15 years old, the entire heating installation should be inspected, and advice given to users on alternative solutions to reduce energy consumption. It also considers that similar measures should be taken as regards cooling systems with an effective output of more than 12 kW.

The Government's view

  6.11  In his Explanatory Memorandum of 17 July 2001, the Minister for the Environment at the Department for Environment, Food and Rural Affairs (Mr Michael Meacher) said that the UK supported the proposal, which had "the potential to make a significant impact in reducing greenhouse gas emissions and saving energy through increased energy efficiency", and provided an opportunity to encourage greater co-operation between Member States. However, he said that the proposal was "wide reaching", and that it was therefore not easy to draw out the full policy implications. He also pointed out that, as drafted, some key terms and conditions were unclear, notably the term "public" (which appeared to include usage as well as ownership, and hence could involve the majority of residential, commercial and public buildings in the UK), though he also suggested that the exclusion of industrial buildings on grounds of complexity could represent a missed opportunity to reduce carbon emissions. Another concern was that the proposal included some measures for which there appeared to be no estimates of carbon savings, for example, there being no data to support the direct benefits from, or cost-effectiveness of, the regular inspections proposed for boilers, air-conditioning, and complete heating systems, and no indication of what was meant by "regular".

  6.12  The Minister said that the UK would be seeking clarification on these points, and on the relationship between the proposal and a number of existing measures. In the meantime, it would be carrying out a wide-ranging public consultation, in which it was hoped to identify more clearly the potential financial impact, which would be the subject of a preliminary Regulatory Impact Assessment "shortly after" the Explanatory Memorandum, one of the UK's aims being to ensure that the costs of the measure are proportionate to any carbon savings it would produce.

Minister's letter and Supplementary Explanatory Memorandum of 4 December 2001

  6.13  The Minister wrote to us on 4 December 2001 about the latest position on the proposal, enclosing a Supplementary Explanatory Memorandum and the Regulatory Impact Assessment he had promised in the summer. However, as we did not receive this material until 12 December, we were not able to consider it before the House rose for the Christmas Recess.

  6.14  He said that the proposal had been extensively amended to clarify certain provisions, and that the Belgian Presidency had prepared a compromise document which was to be considered by the Energy Council on 4 December, where he believed it would be in the UK interest to achieve political agreement in order not to lose the amendments already agreed. He therefore intended to authorise the lifting of the UK scrutiny reserve at that meeting if the Government's concerns were met satisfactorily and there was a strong indication of support from other Member States.

  6.15  The main part of the Minister's Supplementary Explanatory Memorandum details the changes made during the course of negotiations to the original Commission proposal. The most important of these would:

    —  ensure that greater account was taken of climatic and local (including indoor) conditions, and that different methodologies could be set at national and local levels;

    —  make it clear that, in setting energy performance requirements, Member States may differentiate between new and existing buildings and different types of buildings: also, the obligation on them to update is now less prescriptive, in that they are simply required to review the position at no more than five yearly intervals, with updating taking place only where necessary;

    —  simplify and make more flexible the requirements for existing buildings, which will not now apply beyond the planned works being carried out;

    —  extend the validity of energy certificates to ten years, remove the obligation on commercial (as opposed to public) buildings to display such a certificate, and, more generally, clarify the definition of public buildings to make clear that these must be occupied by public authorities and by institutions providing public services to a large number of people: it has also been made clear that the sole purpose of the certificates is to provide information;

    —  as regards boilers, enable Member States to determine what constitutes regular inspection, and confine the inspection requirement to boilers fired by liquid or solid fuels, and with a minimum heat output of 20 kW: this higher limit would also apply to the required inspection of boilers more than 15 years old;

    —  restrict the regular inspection of air conditioning systems to non-domestic buildings, with a heat output of more than 15 kW;

    —  amend the proposed implementation date of January 2003, so as to enable the various measures to be phased in on a flexible basis, particularly where there is a shortage of the necessary qualified experts.

  6.16  The Minister adds that the public consultation exercise indicated positive support for the proposal, echoing that of the Government itself. In particular, he says that the Directive would represent a major opportunity for improving energy efficiency in buildings and for increasing carbon savings across the Community, and at the same time give a boost to renewables, low-carbon and no-carbon technologies, such as combined heat and power (CHP), and to energy auditing. He also points out that the revised conditions for improving the energy efficiency of existing buildings are more likely to encourage renovation (and hence sustainability), and that the extension of the life of certificates will reduce the costs to private and social sector landlords. However, he is not convinced of the cost effectiveness of regular inspections of boilers, and says that, should the UK be in a minority of Member States, it would seek to ensure at the very least that this is made voluntary, or to include as alternatives other measures (such as the provision of advice on energy consumption reduction, or of labelling indicating the boiler's energy performance rating).

  6.17  The Minister has also enclosed with his Supplementary Explanatory Memorandum a Regulatory Impact Assessment, but, as this relates to the original Commission proposal, we are not reproducing it here, since a number of aspects would presumably be affected by the changes which seem likely to be made. However, it would appear that many of the provisions in the proposal so far as new buildings are concerned would already be required under existing UK buildings legislation, and that the main effect would therefore arise on existing buildings.


  6.18  Whilst we have noted the information provided by the Minister, we are extremely concerned about the way in which this document has been handled. In particular, we were told last July that the Government had a number of concerns about the proposal, and that it would be submitting "shortly", in the light of the UK's aim to ensure the proposals were proportionate to any carbon savings produced, a Regulatory Impact Assessment. We therefore decided to defer scrutiny until that information was available.

  6.19  Despite numerous reminders, we next heard from the Minister, in a letter dated 4 December 2001 (but received by us on 12 December), that the proposal had been extensively amended, and that he proposed to lift the UK scrutiny reserve at the Energy Council that same day, if the Government's remaining concerns had been met and there was a strong indication that political agreement could be achieved. Moreover, although the Minister had enclosed with his letter the long-awaited Regulatory Impact Assessment, this related to the original Commission proposal, and thus had effectively been overtaken by events. Finally, the Minister also said that he would write to us after the Energy Council to let us know the outcome. So far — some six weeks later — he has yet to do so.

  6.20  Given this patently unsatisfactory situation, we would like the Minister to let us have, in time to consider at our meeting next week, an explanation:

    —  why the Regulatory Impact Assessment he promised to supply shortly after his Explanatory Memorandum of 17 July 2001 took so long to provide, and why we were not kept informed that this would be the case;

    —  why he wrote only on the day of the Council concerned to say that he might be lifting the scrutiny reserve, and why it then took eight days for his letter to reach us;

    —  why he has still to let us know the outcome of the Council;

    —  what the cost implications are of whatever may have been agreed.

  6.21  In the meantime, we are not clearing the proposal.

16  Includes offices, wholesale and retail trade, hotels, restaurants, schools, hospitals, sports halls etc, but excludes industrial buildings. Back

17   Million tonnes oil equivalent. Back

18   Includes heating, air-conditioning and ventilation, but not domestic appliances. Back

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