7 Energy Efficiency Plan 2011
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7363/11
+ ADDs 1-6
COM(11) 109
| Commission Communication: Energy Efficiency Plan 2011
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| Legal base | —
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| Document originated | 8 March 2011
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| Deposited in Parliament | 14 March 2011
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| Department | Energy & Climate Change
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| Basis of consideration | EM of 28 March 2011
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| Previous Committee Report | None, but see footnotes
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| To be discussed in Council | June 2011
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
7.1 As we have noted in various Reports from time to time,
energy efficiency is at the heart of the EU's 2020 growth strategy,
in that it is seen as one of the most cost-effective ways of enhancing
security of energy supply and of reducing emissions of greenhouse
gases and other pollutants. In particular, the Communication "Energy
2020" which the Commission put forward in November 2010[18]
placed heavy emphasis on the EU's aim of increasing energy efficiency
in 2020 by 20%, and on the need for further action in a number
of areas if that aim is to be achieved.
7.2 With this in mind, the Commission said that
it would present an Energy Efficiency Plan in early 2011, and
it has now sought to do so in the current document (which it says
should be pursued consistently with other policy actions under
the Europe 2020 Strategy's Flagship Initiative for a Resource
Efficient Europe).[19]
There is also a read-across between the document and the Communication[20]
setting out a roadmap for moving to a competitive low carbon economy
in 2020, on which we are reporting separately.
The current document
7.3 In putting forward this Communication, the
Commission notes that the greatest potential for energy saving
lies in buildings, followed by transport, and that targets for
energy efficiency are an effective way to trigger action. In the
latter case, it proposes a two step approach, with the targets
currently set by Member States being evaluated to assess the likelihood
of the overall EU target being met, following which the Commission
will propose legally binding national targets for 2020 if an assessment
in 2013 shows that the present approach will not deliver the required
savings. The Communication then looks in turn at the contribution
which the public sector can make, at the steps needed to reduce
the energy consumption of buildings; at those needed to reduce
consumption by European industry; at the available national and
European financial support; and at the implications for consumers.
THE ROLE OF THE PUBLIC SECTOR
7.4 The Commission notes that publicly owned
or occupied buildings represent about 12% by area of the EU building
stock, and that a stronger emphasis on energy efficiency in the
public sector is crucial, covering purchasing, the refurbishment
of buildings, and the encouragement of high performance in cities
and communities. In particular, it looks at:
- Energy efficiency in public
spending
The Commission suggests that steering public spending
towards energy efficient products, transport methods, buildings,
works and services helps to reduce expenditure by public authorities
on energy bills and offers improved value for money. It says that
it has developed procurement criteria which take energy efficiency
into account, with those public bodies which are subject to the
EU public procurement Directives being required already to take
into account energy efficiency criteria in their purchases of
vehicles or office equipment. It adds that this will also be the
case from 2019 onwards for new buildings, which will have to reach
a "nearly zero-energy" performance level, and that high
standards of energy efficiency should systematically be applied
when public authorities purchase goods, services and works.
- Renovation of public buildings
The Commission believes that public bodies should
take the lead in bringing their buildings up to high energy performance
levels, and that it would be appropriate for them to at least
double their current renovation rate. It therefore intends to
present a legal instrument requiring public authorities to refurbish
at least 3% of their buildings (by floor area) each year, with
each refurbishment bringing the building concerned up to the level
of the best 10% of the national stock.
- Energy performance contracting
The Commission says that this is an important tool
in the refurbishment of buildings, with monetary savings from
lower utility bills and maintenance costs being used to cover
part or all of investment costs. It adds that this approach has
proved cost-effective in a number of Member States, but that it
is in many cases hampered by legal ambiguities and a lack of reliable
energy consumption data: it therefore intends to bring forward
legislative proposals in 2011 to overcome these problems.
- Implementing energy efficiency
The Commission observes that more than 2,000 cities
have volunteered to implement sustainable energy measures through
the EU-supported Covenant of Mayors,[21]
and that this is given concrete effect through Sustainable Energy
Action Plans. It says that the benefits go beyond energy saving,
in that the measures adopted are employment-intensive and involve
the creation of skilled jobs, and that it will continue to support
the local approach in this way, and to encourage partnerships
with like-minded cities, including those outside the EU. In addition,
it will launch a Smart Cities and Smart Communities initiative
to develop innovative low-carbon and efficient energy solutions
at the municipal level, involving the translation of research
results into practical innovations and supporting large scale
demonstration projects.
ACHIEVING LOW ENERGY CONSUMING BUILDINGS
7.5 The Commission points out that nearly 40%
of final energy consumption is in houses, public and private offices,
shops and other buildings, and that two-thirds of consumption
in residential homes is for space heating. It also says that a
large energy saving potential remains untapped, with the both
the renovation rate of buildings and the uptake of the most efficient
appliances being too low: and it invites Member States to establish
promotion systems for private sector building to overcome barriers
to energy efficiency.
7.6 The Commission then addresses a number of
specific issues:
- Tackling heat use in buildings
The Commission says that this is of prime importance,
and that it will further explore the range of available solutions,
including the promotion of district heating.
The Commission believes that one important barrier
is "split incentives" for upgrading energy performance,
with owners and tenants each reluctant to improve the energy performance
of a rented building because the benefits are shared between them.
It notes that several Member States have developed legal provisions
defining the amount which can be recovered by investors from tenants,
and suggests that Energy Service Companies (ESCOs) can help to
overcome the problem in public and commercial buildings. It says
that it will bring forward legislative proposals to require Member
States to introduce measures, in line with national property law,
to address this issue.
The Commission points out that energy efficient building
solutions are often technically demanding, with a lack of appropriate
training for craftsmen involved with refurbishment, and a shortfall
in the availability of qualified workers. It says that it is therefore
launching an initiative to support Member States in assessing
training needs for the construction sector, developing strategies
to meet them, and fostering effective training schemes, which
may lead to recommendations for certification, qualification or
training of craftsmen. It will also work with Member States to
adapt their training curricula, and notes that its Flagship Initiative
"An Agenda for New Skills and Jobs"[22]
calls for skills supply to be matched with labour market needs.
- Role of ESCOs as catalysts for renovation
The Commission points out that ESCOs deliver energy
efficiency improvements, accepting financial risk by covering
upfront investment costs and refinancing this through the savings
achieved, and that they help public authorities upgrade buildings
by grouping them into scalable projects. However, it suggests
that the European market for energy services is not developing
to its full potential, with clients often lacking information
on available services, and it says that it will propose that Member
States provide market overviews, lists of accredited energy service
providers, and model contracts., with emphasis also being placed
on comprehensive renovations in order to avoid repeated disruption
of buildings. At the same time, it notes that ESCOs need access
to finance, for example through the provision of liquidity and
guarantees, credit lines and revolving funds.
ENERGY EFFICIENCY AND INDUSTRY
Efficient generation of heat and electricity
7.7 The Commission points out that about 30%
of the EU's primary energy is consumed by the energy sector in
transforming energy into electricity and heat and distributing
it, making it important that, when ageing equipment is replaced,
new capacity reflects the best available technology (BAT). It
believes that the Emissions Trading Scheme and the Industrial
Emissions Directive (2010/75/EU) will encourage this, and it says
that it will monitor the extent to which these lead to an improvement
in the efficiency of new generation. It will then consider introducing
a legal provision requiring Member States to make BAT levels mandatory
for new installations, and to ensure that existing installations
are similarly upgraded as part of their permit update. It says
that another important task will be to secure effective recovery
of heat loss from electricity and industrial production processes,
which requires an integrated, cross-cutting approach, adding that
greater use of co-generation (including that from municipal waste
treatment plants) and district heating can make an important contribution.
It will therefore propose that, where there is a sufficient potential
demand, authorisation for new thermal power generation should
be conditional on its being combined with systems allowing heat
to be used (combined heat and power), and that district heating
systems are combined with electricity generation wherever possible.
In addition, it will propose that electricity distribution operators
should provide priority access for electricity from combined heat
and power.
Energy efficiency in electricity and gas networks
7.8 The Commission says that it will strengthen
the basis for national grid regulators to take energy efficiency
into account in monitoring the management and operation of gas
and electricity grids and markets, including network regulations
and tariffs.
Energy efficiency as a business sector
7.9 The Commission believes that creating value
for energy savings through market mechanisms is a prerequisite
for an energy efficient Europe, and that instruments are needed
to put a financial value on energy savings and link the profits
of utilities to energy efficiency rather than the volume delivered.
It notes that some Member States have already delivered successfully
a system of national energy saving obligations for the energy
industry, under which utilities are required to deliver a fixed
amount of savings, and it says that it will propose that all Member
States should establish an appropriate national energy saving
obligation scheme.
Increasing competitiveness of manufacturing industry
7.10 The Commission notes that industry accounts
for about 20% of the EU's primary energy consumption, and is the
sector where progress has been greatest. At the same time, it
believes that worthwhile saving opportunities remain by addressing
such areas as lack of information, lack of access to capital and
short term business pressures. It suggests that the obstacles
are most acute for small and medium sized enterprises (SMEs),
and it says it will encourage Member States to provide them with
information and develop appropriate incentives. It will also support
the exchange of best practices and the development of tools enabling
SMEs to benchmark their energy use against comparable companies.
In the case of larger companies, the Commission says that it will
propose making regular energy audits mandatory, and recommend
Member States to develop incentives for companies to introduce
an energy management system, whilst also encouraging voluntary
agreements.
Role of research and innovation
7.11 The Commission says that it will continue
to foster the development, testing and deployment of new energy-efficient
technologies in order to reduce costs and improve performance,
generate new solutions, and facilitate widespread market take-up.
NATIONAL AND EUROPEAN FINANCIAL SUPPORT
7.12 The Commission observes that many energy
efficiency investments pay for themselves quickly, but are not
realised due to market and regulatory barriers, and that market
incentives and price signals therefore need to be intensified
through energy and carbon taxes and national energy saving obligations
for utilities. It also says that the availability of funding plays
an important role in accelerating investment, and notes that the
EU is currently able to support energy efficiency through the
Cohesion Fund (involving support of about €4.4 billion for
the period 2007-13); the Intelligent Energy Europe Programme (with
€730 million available to overcome market failures); intermediated
finance from international financial institutions provided through
local banks; €1 billion from the European Economic Recovery
Programme; and a €1 billion contribution from the 2007-13
Framework Programme for Research towards more than 200 projects.
It says that, in preparing the next multi-annual financial framework,
it is examining the results achieved, and will analyse the scope
for improving existing EU financial mechanisms as well as further
options to trigger investments on the scale necessary to achieve
the EU's 2020 energy and climate objectives.
SAVINGS FOR CONSUMERS
7.13 The Commission says that improvements to
the energy performance of devices used by consumers should play
a greater role in achieving possible cost savings, and that it
will ensure that consumer interests are properly taken into account
in work on labelling, energy saving information, metering and
use of ICT, and identify those policy solutions likely to bring
about desired changes in behaviour, including clear and precise
information on their energy consumption. It goes on to point out
that improving the performance of buildings and the products used
to heal, cool, ventilate and light them, is one of the more tangible
ways in which energy efficiency can benefit household budgets,
and that eco-design standards and energy labels have already delivered
substantial energy savings for consumers (and business opportunities
for manufacturers). It says that it will continue this approach
by setting stricter consumption service for various household
appliances, by launching a consumer survey of consumer understanding
of energy labels, and by promoting the uptake of more efficient
building components, such as double glazing.
7.14 The Commission also looks at the impact
of new technology for consumers, noting that, whilst they should
under current EU legislation already be informed about their consumption
at the time of use, and provided through their bills with information
about prices and energy costs, in practice these rights need to
be properly implemented. It says that it will work with Member
States to address this issue, and it also draws attention to the
role in future years of a European "smart grid" in bringing
about a step change in communicating information about energy
supply and consumption. It adds that it will propose measures
to ensure that technological innovation, including the roll-out
of smart grids and meters fulfils this function.
TRANSPORT
7.15 The Commission points out that transport
accounts for 32% of final energy consumption, is the sector with
the fastest growing use (and strongest reliance on fossil fuel),
and is thus a key area for savings. It notes that it will shortly
be producing a White Paper, which will define a strategy for improving
the sector's efficiency, including advanced traffic management
systems, infrastructure investment, and the creation of a Single
European Transport Area.
ROLE OF MEMBER STATES
7.16 The Commission comments that Member States
have the key role in introducing the energy efficiency policies
needed to achieve the 20% savings target, and that National Energy
Efficiency Action Plans have so far provided the framework for
policy development. It says that the additional measures set out
in the current document will require an expansion of the scope
of these Plans, and that it will also consider how best to monitor
subsequent progress towards achieving the EU 20% target.
The Government's view
7.17 In his Explanatory Memorandum of 28 March
2011, the Minister of State at the Department of Energy &
Climate Change (Gregory Barker) says that the Government shares
the Commission's view that further action to improve energy efficiency
within the EU is needed if the target of reducing primary energy
consumption of the EU by 20% by 2020 is to be met, and it therefore
welcomes the Energy Efficiency Plan, which it says contains a
timely and ambitious set of proposals. He adds that the Government
particularly welcomes the focus on those areas where either action
can only be taken at the EU level, such as to expand and strengthen
the standards and labels regime for energy using products, or
where collaboration and co-operation can add value, recognising
that it is at the national level where policy can most effectively
be delivered. It also welcomes action to promote combined heat
and power, and the strong focus on facilitating action at the
local level and providing support for SMEs.
7.18 The Minister adds that there is also an
important role for the EU in improving consumer information and
promoting innovation to support jobs and growth by fostering the
development, testing and deployment of new energy efficient technologies.
Similarly, it is vital that EU programmes and financial mechanisms
(such as the regional development funds) actively support efforts
to improve efficiency, and he welcomes the Commission's proposals
in these areas, with particular reference to encouraging higher
uptake of energy efficiency measures by SMEs. The Government also
welcomes that fact that the Plan draws on successful policies
deployed in the Member States, but points out that, in encouraging,
facilitating or requiring action at the national level, there
is a need to be careful about over-prescription and any tendency
to adopt a one-size-fits-all approach, adding that the Commission
should always be aware of the over-arching need to take national
circumstances into account in order to avoid compromising the
very national schemes and programmes which it is seeking to replicate.
7.19 The Government also agrees with the Commission
that there is an important role for the public sector in demonstrating
leadership, and therefore welcomes the focus on public procurement.
However, it believes that, although detail is currently lacking,
the proposed renovation target for public sector buildings could
be costly, overly bureaucratic to administer, and conflict with
the ability of local communities to determine their own priorities.
It also believes that it will be important to avoid placing unnecessary
additional regulatory burdens on business, and that, whilst it
is entirely right to promote the benefits of energy audits, there
is no justification for making them compulsory, as proposed.
Conclusion
7.20 As we noted in our Report of 15 December
2010,[23] the
Commission Communication "Energy 2020" placed
heavy emphasis on the EU's aim of increasing energy efficiency
in 2020 by 20%, and on the need for further action in a number
of areas if that aim is to be achieved. To the extent that the
current Communication seeks to identify that further action, it
is clearly an important document which it is right to draw to
the attention of the House. Having said that, it is — like
many recent comparable Commission Communications — couched
in relatively broad terms, and, insofar as any of the actions
recommended it require further consideration, we think it would
be more sensible for this to take place as and when specific proposals
are put forward. In view of this, and the general welcome which
the Government has given to the Communication, we are content
to clear it.
18 (32170) 16096/10: see HC 428-xi (2010-11) chapter
2 (15 December 2010). Back
19
(32473) 5869/11: see HC 428-xviii (2010-11), chapter 8 (2 March
2011) Back
20
(32592) 7505/11: see chapter 8 of this Report. Back
21
This is a formal commitment to reduce carbon dioxide emissions
by more than 20% by 2020 through sustainable energy measures. Back
22
(32293) 17066/10: see HC 428-xii (2010-11), chapter 7 (12 January
2011). Back
23
(32170) 16096/10 + ADD 1: see HC 428-xi (2010-11), chapter 2,
(15 December 2011). Back
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