Documents considered by the Committee on 13 December 2017 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; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Number

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

Summary and Committee’s conclusions

2.1Reducing 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”.

2.2The 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.

2.3The Minister for Industry and Energy (Richard Harrington) reports that a General Approach was agreed at the June Energy Council and that the UK abstained. While the balance of the compromise reached was acceptable, the UK abstained as the Commission refused to confirm the joint understanding reached with the UK in 2013 on what could be counted towards the UK’s 2020 binding national energy savings target.

2.4The Minister describes the text as a compromise which represented some progress towards ensuring that obligations are consistent with the UK’s domestic objectives under the Climate Change Act, while failing to reflect the agreement reached at the European Council in 2014 that there should be no nationally binding targets post 2020.

2.5The compromise is set out below in greater detail, but key points include:

2.6In a subsequent letter to the House of Lords EU Committee, which reconvened earlier than this Committee following the general election, the Minister explained that the Commission’s refusal to recognise the 2013 joint understanding could mean that the UK would fail to meet its 2020 target. The Minister also noted that the (now published) Clean Growth Strategy15 ought to make a contribution to meeting the 2030 targets.

2.7We note the broad terms of the compromise and the Minister’s explanation for the UK’s position. We have also had sight of the Minister’s letter of 10 August 2017 to the House of Lords EU Committee, which explained that the Commission’s refusal to confirm the joint understanding reached with the UK in 2013 on what could be counted towards the 2020 target means that the UK may miss that target.

2.8It is a matter of concern that the Commission appears to be changing the rules on what can be counted towards the 2020 target at a very late stage in that process. We would welcome an update on progress in persuading the Commission to recognise the earlier understanding and an explanation of the implications of failing to meet the 2020 target.

2.9In the Minister’s letter to the House of Lords EU Committee, he referenced the Clean Growth Strategy as making an important new contribution towards the 2030 efforts. The Strategy does include a range of initiatives on both industrial and domestic energy efficiency. We ask the Minister to confirm whether he considers that the measures set out in the Strategy are sufficient to meet the 2030 targets. How is the Strategy informing the UK’s approach to negotiations of the Directive?

2.10On the UK’s withdrawal from the EU, the Prime Minister proposed in her Florence speech that there should be a post-Brexit implementation period of around two years during which the existing structure of EU rules and regulations would continue to apply. We note that this Directive would need to be transposed 24 months after entry into force. Is the Government negotiating on the basis that the UK may be required to implement the provisions of the Directive during any withdrawal period?

2.11We note that negotiations with the European Parliament were expected to begin in December 2017. We would welcome an update on those negotiations, and responses to the issues that we have raised, well in advance of final agreement. The document remains under scrutiny. We draw this chapter 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

2.12Full detail on the background and content of this proposal and of all of the other elements of the Clean Energy Package were set out in our Report of 25 January 2017.16

2.13As its meeting of 25 April, the predecessor Committee considered a letter from the Government which clarified some of the Government’s concerns about the proposed targets and related measures. In particular, the Government was concerned that the Commission proposal had 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.

2.14The Minister reported that “a significant” number of other Member States shared the UK’s concerns about the provisions relating to targets, although there was some support for a binding 30% target.

2.15At its meeting of 25 April, the previous Committee granted a scrutiny waiver in advance of possible agreement at the June Energy Council.

The Minister’s letter of 14 July 2017

2.16The Minister thanks the predecessor Committee for granting a scrutiny waiver in advance of the June Energy Council. He notes that a General Approach was agreed, and summarises the key elements of the compromise text in the following terms:

2.17The Minister describes the text as a compromise which represented some progress towards ensuring that obligations are consistent with the UK’s domestic objectives under the Climate Change Act, while failing to reflect the agreement reached at the European Council in 2014 that there should be no nationally binding targets post 2020.

2.18While considering the balance of the compromise acceptable, the UK abstained as “the Commission refused to confirm the joint understanding reached with the UK in 2013 on what could be counted towards our 2020 binding national energy savings target.”

2.19In terms of next steps, negotiations with the European Parliament were expected to begin in December 2017. At the time of the Minister’s letter, the EP had not adopted a position but it was expected to call for a higher and binding EU-level target and higher national targets. The UK would expect some Member States to try to use pressure from the EP to raise Council ambition back towards that in the original Commission proposal.

Subsequent ministerial letter to the House of Lords EU Committee

2.20In a subsequent letter to the House of Lords EU Committee, which convened earlier than this Committee following the general election, the Minister clarified a number of the points included in his letter of 14 July.

2.21The Minister confirmed that the text agreed by the Council did not allow Member States to count energy savings derived from EU-level action towards the 2030 target, apart from savings related to the renovation of existing buildings.

2.22On the Commission’s refusal to recognise the 2013 joint understanding on what could be counted towards the 2020 target, the Minister explained that this was relevant because, in updating the Directive, the Commission took the opportunity to update existing provisions in the Directive to clarify what savings Member States could count towards the 2020 target. In doing so, the Commission diverged from what had been the earlier joint understanding that early savings from supplier obligations could count towards the 2020 target. The impact of this was that there was now a risk that the Commission’s latest interpretation of the text would not allow the UK to credit these savings towards its 2020 target. The UK continued to stand by its interpretation of the target in line with the joint understanding and on that basis remained on track to exceed its energy efficiency target under Article 7 of the Energy Efficiency Directive. Progress would be reported to the Commission on that basis.

2.23The Minister recognised that current policies alone would not get the UK to the proposed 2030 target, but argued that the Clean Growth Plan (published since the Minister wrote) should make a further contribution.

Previous Committee Reports

Fortieth Report HC 71–xxxvii (2017–17), chapter 4 (25 April 2017); Twenty-ninth Report HC 71–xxvii (2016–17), chapter 2 (25 January 2017).


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




15 December 2017