Documents considered by the Committee on 5 September 2018 Contents

22EU Clean Energy legislation

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

(a) Proposal for a Directive amending Directive 2012/27/EU; (b) Proposal for a Directive on the promotion of the use of energy from renewable sources (recast); (c) Proposal for a Regulation on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013

Legal base

(a) Article 194(2) TFEU, ordinary legislative procedure, QMV; (b) Article 194(2) TFEU, ordinary legislative procedure, QMV; (c) Articles 192(1) and 194(2) TFEU, ordinary legislative procedure, QMV

Department

Business, Energy and Industrial Strategy

Document Numbers

(a) (38340), 15091/16 + ADDs 1–13, COM(16) 761; (b) (38345), 15120/16 + ADDs 1–9, COM(16) 767; (c) (38352), 15090/16 + ADDs 1–5, COM(16) 759

Summary and Committee’s conclusions

22.1The Commission proposed its “Clean Energy for all Europeans” package162 of legislation at the end of November 2016, aiming to “keep the European Union competitive as the clean energy transition is changing the global energy markets”. We have considered the constituent elements of the package on several occasions and we now report the outcome of negotiations on the proposals relating to energy efficiency, renewable energy and governance.

22.2When we last considered these proposals—at our meeting of 6 June—we requested an update on the progress of negotiations. The Minister for Energy and Clean Growth (Claire Perry) wrote163 to us on 12 June setting out the trajectory of discussions and then again164 on 12 July explaining the outcome of negotiations, as described below. The compromise texts are expected to be put to Council for final adoption as early as September.

22.3On document (a)—the revised Energy Efficiency Directive (EED)—an EU-level target to reduce energy consumption by 2030 by an ‘indicative’ 32.5% was agreed. While the UK attempted to limit the level of the EU target as far as possible, the UK applied flexibility here, given that there are no binding consequences on the UK. Under the final text, Member States are required to set an indicative national target which contributes to the overall target, but there is no mechanism to ensure that national targets add up to the required EU level. On the further national energy savings targets, the final deal was for a binding requirement for Member States to achieve annual end-use energy savings of at least 0.8% of final consumption (including transport) over the period to 2030.

22.4In the final stages of the negotiation over the EED, the Minister reports that the UK was able to resolve its concerns relating to the calculation of existing 2020 targets. The previous (more favourable) methodology is now set out within the new legislative text.

22.5On the Renewable Energy Directive (RED) and Governance Regulation, the UK’s strategy was to prioritise limiting the overall costs to the UK, including ensuring that any targets were not nationally binding, and minimising the cost of specific requirements on heating and cooling and on transport. The institutions agreed a headline EU renewables target for 2030 of 32% with a review in the mid-2020s. The Minister views this as an acceptable compromise, given that the UK secured language in the Governance Regulation allowing Member States to set their own contributions to this target. This means that there will be no legal mechanism to oblige the UK to make any specific contribution, giving the UK the flexibility to meet its climate targets in the most cost-effective way.

22.6Regarding heating and cooling under the RED, the provisional agreement sets a defined level of endeavour of a 1.1 percentage point per annum increase in renewable heat’s share of total heat but allows Member States to aim for a lower endeavour on grounds of cost-effectiveness. On transport, an overall renewable energy target of 14% in 2030 was agreed with a review clause in 2023, alongside a range of further detailed provisions.

22.7The Minister makes no reference to the UK’s withdrawal from the EU, but this is an area that we have explored in our earlier scrutiny of these proposals. The EED must be transposed within 18 months of entry into force (22 months for some of the provisions), and so the UK will be obliged to transpose it into UK law before the end of the post-Brexit implementation period (31 December 2020). The Governance Regulation will apply to the UK upon its entry into force, although some provisions need only be applied from 1 January 2021. The RED must be transposed by 30 June 2021.

22.8The degree to which the UK will apply EU energy legislation, or align with it, after the implementation period, is yet to be resolved. In the White Paper on the future relationship between the UK and the EU, the Government noted that it would explore with the EU the options for the future energy relationship. This would include the options of leaving, or remaining in, the internal energy market. The Government acknowledged that remaining in the internal energy market would “need a common rulebook with the EU on the technical rules for electricity trading” as well as a consistent approach to carbon pricing, which could include remaining in the EU’s Emission Trading System. The Government was unequivocal, however, that participation in the internal energy market should not require a common rulebook on wider environmental and climate change rules.

22.9It is also noteworthy that the White Paper indicated that the proposed common rulebook on manufactured goods would include rules which set environmental requirements for products, such as their energy consumption.

22.10We note the ambitious but flexible outcome of these negotiations. As we understand the timetables, the UK will be obliged to transpose the Energy Efficiency Directive into UK law before the end of the post-Brexit implementation period on 31 December 2020. Elements of the Governance Regulation would also apply before that date. It would be helpful to have the Minister’s confirmation that our understanding is correct.

22.11The arrangements that will apply after the implementation period remain subject to substantial uncertainty following the recent White Paper, which set out the rather obvious position that the UK could either remain in the internal energy market or leave it. A development in that Paper was a recognition that a condition of remaining in the internal energy market would likely require some sort of common rulebook, although this would not extend to “wider environmental and climate change rules”. We consider that the delineation between these policies is rarely as neat as suggested, and this is encapsulated by the name of this package of legislation—”clean energy”. In the light of the material in the White Paper, the Minister’s comment on this issue would be helpful.

22.12We note with interest that, regardless of the arrangements for any alignment of energy policy, the proposed common rulebook on manufactured goods would extend to energy consumption requirements for products.

22.13There is one point of detail on which we would welcome further information, particularly as the UK will likely be obliged to implement the Energy Efficiency Directive. The Minister is content with the proposed indicative target as it is not binding on the UK. There is nevertheless a binding requirement for Member States to achieve annual end-use energy savings of at least 0.8% of final consumption. It would be helpful if the Minister could explain:

22.14We release these documents from scrutiny ahead of formal agreement in Council and look forward to a response to the above queries by 3 October. We draw this chapter to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

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

(b) Proposal for a Directive on the promotion of the use of energy from renewable sources (recast): (38345), 15120/16 + ADDs 1–9, COM(16) 767; and

(c) Proposal for a Regulation on the Governance of the Energy Union, amending Directive 94/22/EC, Directive 98/70/EC, Directive 2009/31/EC, Regulation (EC) No 663/2009, Regulation (EC) No 715/2009, Directive 2009/73/EC, Council Directive 2009/119/EC, Directive 2010/31/EU, Directive 2012/27/EU, Directive 2013/30/EU and Council Directive (EU) 2015/652 and repealing Regulation (EU) No 525/2013: (38352), 15090/16 + ADDs 1–5, COM(16) 759.

Previous Committee Reports

Thirtieth Report HC 301–xxix (2017–19), chapter 3, chapter 4 and chapter 6 (6 June 2018); Fifth Report HC 301–v (2017–19), chapter 2, chapter 3 and chapter 5 (13 December 2017); Fortieth Report HC 71–xxxvii (2016–17), chapter 4, chapter 5 and chapter 7 (25 April 2017); Twenty-ninth Report HC 71–xxvii (2016–17), chapter 2, chapter 3 and chapter 5 (25 January 2017).


162 “Commission proposes new rules for consumer centred clean energy transition”, European Commission, 30 November 2016.

163 Letter from The Rt Hon Claire Perry MP to Sir William Cash MP, dated 12 June 2018.

164 Letter from The Rt Hon Claire Perry MP to Sir William Cash MP, dated 12 July 2018.




Published: 11 September 2018