EU Energy Policy Contents

2Energy Efficiency Directive

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Proposal for a Directive amending Directive 2012/27/EU on energy efficiency.

Legal base

Article 194(2) TFEU

Department

Business, Energy and Industrial Strategy

Document Number

(38340), 15091/16 + ADDs 1–13, COM(16) 761

Summary and Committee’s conclusions

2.1Explaining its proposals on energy efficiency, the Commission says:

“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 its 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”.

2.2In 2014 the European Council agreed—as part of the “2030 framework”—to adopt an indicative EU-level target to reduce primary energy consumption by 27% by 2030 against a business-as-usual projection, a target that was to be reviewed by 2020 “having in mind” a target of 30%. The Council was clear that targets “will not be translated into nationally binding targets”.

2.3The Commission proposes accordingly to update the existing Energy Efficiency Directive by:

2.4The Minister of State, Baroness Neville-Rolfe, indicates that the Government is still developing its negotiating position. Based on an initial assessment, the Government is concerned about the proposed targets. The Government believes that the Commission’s proposal goes beyond the agreement reached at the October 2014 European Council.

2.5The Government highlights a range of concerns relating to the proposal, notably as regards the proposed approach to targets. On the EU-wide target, we note that the October 2014 European Council agreed to a 27% indicative target by 2030, but subject to a review before 2020, having in mind a target of 30%. The European Council was, however, silent as to whether a 30% target would be binding or indicative. Whether that was deliberate or not is unclear. Nevertheless, we urge the Government to recognise that lack of clarity in its advocacy of an indicative approach.

2.6On the nature of any national targets, which the European Council stated should not be binding, the proposed amendments to Articles 1 and 3 are clear that national energy efficiency targets—expressed in terms of energy consumption, energy savings or energy intensity—should be indicative. The Government takes the view that the amendments to Article 7 make national energy saving targets binding. While we concur that this appears to be the intention of Article 7, we note that the current Directive includes similar provisions. We ask the Government to explain further its concerns and we also ask that the Government supply analysis of how the Article 7 energy savings targets relate to the provisions on EU-wide and national energy efficiency targets.

2.7The nature of the targets will have a substantive impact on the Government’s assessment of the impact of the proposal on the UK. We ask that the Government supply further details of its analysis once progress has been made. We would also welcome any early indication as to whether the Government’s concerns might be shared by others.

2.8We note that the Maltese Presidency intends to prioritise this proposal. We therefore look forward to the requested information as soon as possible.

2.9There is a 12 month deadline for implementation by Member States following adoption of the legislation. We observe that the possible swift adoption means that implementation may be required before the UK has left the European Union.

2.10We retain the document under scrutiny and draw it to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Proposal for a Directive amending Directive 2012/27/EU on energy efficiency: (38340), 15091/16 + ADDs 1–13, COM(16) 761.

Background

2.11The Commission has estimated that the current national and EU energy efficiency frameworks will lead to a reduction of approximately 23.9% in primary energy consumption by 2030. To redress this projected shortfall against the target of 27% agreed by the European Council, the Commission is proposing a number of amendments to the Energy Efficiency Directive to ensure that the objectives of the 2030 framework are met. The bulk of the existing Directive has not been reviewed, and will not be amended, as the Commission consider that, with transposition only completed in 2014, it is too early to judge the effectiveness of many of its requirements.

European Commission proposal

2.12The key elements of the proposal are as follows:

2.13In its explanation of the proposal’s compliance with the principle of subsidiarity, the Commission says:

“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.”

Minister’s Explanatory Memorandum of 20 December 2016

2.14The Minister reports that the Government is currently considering the detail of the proposal to determine its negotiating position. As set out below, she is able to share some initial views.

2.15The Government agrees with the Commission that further action to deliver improvements in energy efficiency will have an important role to play in reducing greenhouse gas emissions, improving energy security, helping consumers manage energy bills and boosting competiveness. In the UK, she says, such improvements in energy efficiency have a fundamental role in delivering the carbon savings required under the UK’s Carbon Budgets up to and including the recently agreed Fifth Carbon Budget (2028–2032) that will correspond with the period covered by this Directive.

2.16The Government welcomes the Commission’s decision to restrict the scope of the re-draft of the Directive and agrees that it is too early to judge the effectiveness of the bulk of the provisions in the Directive given that transposition of the Directive only concluded in 2014.

2.17The Minister expresses concern, however, that the proposed changes do not align with the approach agreed in 2014:

“[The Government notes that the proposed changes] are intended, inter alia, to adapt the Directive to implement the EU’s 2030 climate and energy framework. It is therefore of concern to the Government that the proposal has seemingly ignored the agreement reached at the European Council in 2014 on the nature of the EU’s 2030 target for energy efficiency. Leaders agreed that the EU-level target would be an indicative one and that there would no binding national targets—the proposal as presented both puts the EU-level target on a binding footing and contains proposals for binding national energy-saving targets (Article 7).

“The Government considers that the imposition of these binding targets has the potential to divert Member States from the most cost-effective pathway to meeting their challenging greenhouse gas targets, raising costs for both consumers and businesses.

“The Government recognises that provisions in the existing Directive setting out the criteria which energy saving policies and measures must meet in order to count towards national energy saving targets were poorly drafted. However, the Government is concerned that in seeking to add clarity, the proposal may unduly constrain the measures that Member States may count towards both the existing 2020 target and proposed 2030 target.”

2.18The Government agrees that there are important benefits in ensuring that consumers of heating and cooling have access to accurate, timely and useful metering and billing information to enable them to effectively manage their energy consumption and bills. However, says the Minister, “it will be important to ensure that the proposed requirements are technically feasible, capable of being delivered cost-effectively for suppliers, property owners or consumers, and are practically deliverable in the timescales envisaged in the Directive”.

2.19On the timing of negotiations, the Minister reports the Maltese Presidency’s intention to prioritise negotiation of the proposal from January 2017 “with the aim of agreeing a general approach in June to pave the way for discussions with the European Parliament under the Estonian Presidency in the latter half of 2017”.

2.20Finally, the Government will complete and submit to the Committees its own assessment of the impact of the proposal on the UK.

Previous Committee Reports

None.





27 January 2017