Documents considered by the Committee on 25 April 2017 Contents

4Energy Efficiency Directive

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; scrutiny waiver granted; 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

4.1Reducing energy consumption is an important element of the EU’s long-term climate and energy policy. As part of its “Clean Energy for All Europeans” proposals in November 2016, the Commission proposed a binding EU-level energy efficiency target of 30%. This contrasted with the European Council’s agreement in 2014 to an indicative EU-level target of 27%, 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”.

4.2The Commission also proposed to extend the national energy saving targets until 2030 and to make amendments to the provisions on metering and billing. Further details on the proposals were set out in our Report of 25 January.

4.3When we first considered the proposal, at our meeting of 25 January, we noted that the Government had a range of concerns relating to the proposal, notably as regards the proposed approach to targets. We asked for clarification of the Government’s position.

4.4Full details of the response from the Minister for Industry and Energy (Jesse Norman) are set out below. The Minister also attaches a copy of the Government’s “Checklist for analysis on EU proposals”. In summary, the Government is concerned that the Commission proposal has the potential to constrain Member States’ flexibility to determine the most cost-effective pathway to meeting greenhouse gas emissions targets. Furthermore, the proposal excludes energy savings derived from EU-level action (such as product standards) and from measures already taken (such as insulation) which, once installed, will continue to generate energy savings throughout their lifetime.

4.5The Minister reports that “a significant” number of other Member States share the UK’s concerns about the provisions relating to targets, although there was some support for a binding 30% target.

4.6The Minister has helpfully clarified the Government’s approach to targets as proposed by the Commission. We note that negotiations are ongoing and we understand that the Maltese Presidency still aspires to reach agreement to a General Approach by the end of June. It is very unlikely that we will have an opportunity to consider a further update before any such agreement. In that light, we are content to grant a scrutiny waiver on the basis both that the Government negotiates along the lines already set out and that the Minister updates the Committee on any agreement. We also expect to receive information on the progress of discussions in the European Parliament.

4.7The proposal remains under scrutiny. We draw the Minister’s response 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

4.8Full detail on the background and content of this proposal and of all the other elements of the Clean Energy Package were set out in our Report of 25 January.8 In that Report, we requested further detail from the Government on the following points:

4.9Noting that the Maltese Presidency intended to prioritise negotiations on this proposal, we looked forward to the requested information as soon as possible. Finally, we observed that the possible swift adoption meant that implementation might be required before the UK has left the European Union.

Minister’s letter of 27 March 2017

4.10On the terms of the October 2014 European Council conclusions, the Minister says that it was clearly understood at the time that the review of the energy efficiency target should be restricted to its level rather than its nature. He adds that the Commission, in proposing a binding target, has recognised that it has diverged from the Council position agreed in 2014 but has highlighted the need also to reflect the European Parliament’s resolution calling for a binding target of 40% for 2030.

4.11In response to the Committee’s query about how the EU-level target, national indicative contributions and binding national energy-saving targets relate to each other, the Minister says:

“In accordance with the proposed Regulation on the Governance of the Energy Union Member States will be required to submit an indicative national contribution towards the binding EU level energy efficiency target, together with linear trajectories at the national level setting out how the MS foresees its energy savings increasing over time to achieve that contribution. In determining that contribution, the Member States have to take into account the EU-level binding target but can also consider other factors such as remaining cost-effective energy-saving potential, GDP forecasts, and early action.

“Under the proposed Regulation on the Governance of the Energy Union the Commission has the ability to make recommendations to Member States in the light of their proposed national contributions and progress against the suggested trajectories. If monitoring of progress suggests a shortfall against the EU-level target it will look to bring forward additional EU-level measures to plug the gap, focussing on products, transport and buildings.

“Energy savings generated to meet the binding national targets under Article 7 will contribute towards the indicative national contributions, and by extension to achievement of the binding EU-level target. However, achievement of the Article 7 target across all Member States in itself will not be sufficient to deliver the EU-level binding target. The Commission estimates that the Article 7 target will deliver savings equivalent to approximately 50% of the total savings needed to meet the proposed EU-level 2030 target.”

4.12The Minister explains the Government’s concerns about national targets in the following terms:

“The Government is concerned by the extension of binding national targets beyond 2020 because we believe that such targets have the potential to constrain Member States’ flexibility to determine the most cost-effective pathway to meeting their greenhouse gas emissions targets. This is the approach that we have taken nationally under the Climate Change Act framework and our legally-binding system of Carbon Budgets. We do not want to see that flexibility constrained, which is not to say that energy efficiency improvements will not continue to play an important role in decarbonisation.

“In addition, in order to count towards the binding target under Article 7, energy savings must meet a range of criteria. These criteria can constrain Member States’ choice of policy options if they wish savings to count towards the target. The inability to count any energy savings that derive from EU-level action (for example product or vehicle standards) towards the national target also offers a perverse incentive for Member States to limit ambition at the EU-level in order to preserve their ability to take action at the national level so that savings can count towards the target.

“Another key issue is the way in which the proposal seeks (or rather fails) to reflect the impact of early action and installation of long term measures. Measures such as insulation, once installed, will continue to generate energy savings every year throughout their lifetime. As currently drafted the proposal implies that long-term savings from actions taking place before 2021 cannot be counted towards the 2030 target, so, for example, annual savings from installation of insulation in 2019 would only count towards the 2020 target and the ongoing annual savings that it will continue to deliver would not be eligible towards the 2030 target. We consider that these provisions discriminate against both long-standing policies and important measures with long lifetimes that deliver annual savings over the long term.”

4.13The Minister reports that “a significant number” of Member States have expressed a preference for standing by the European Council conclusions of 2014 and an indicative EU-level target of 27% though there is also some support for a binding 30% target. At the Energy Council on 27 February, says the Minister, Member States also expressed a series of doubts about extending national binding targets to 2030, both in terms of the principle but also in terms of the underpinning methodology, particularly the lack of credit for early action and potential administrative burdens associated with monitoring and verification.

4.14The European Parliament is expected, says the Minister, to continue to argue for a binding EU level target of 40% and extending national binding targets out to 2030. A number of Member States have also raised concerns over the lack of clarity about EU funding programmes post 2020 given their importance in supporting investment in measures that would contribute savings toward the target.

4.15On the analysis of the impact of the proposal on the UK, the Minister attaches the Checklist for analysis on EU proposals. This largely summarises the costs and benefits for the EU as a whole and assures the quality of the Commission’s Impact Assessment. Analysis of the potential impacts on the UK has begun. It is not expected that the amendments relating to metering and billing would be costly to enforce for the UK.

Previous Committee Reports

Twenty-ninth Report HC 71-xxvii (2016–17), chapter 2 (25 January 2017).


8 Twenty-ninth Report HC 71-xxvii (2016–17), chapter 2 (25 January 2017).




27 April 2017