New Energy Efficiency Directive

The European Commission last week proposed new legislation on energy efficiency.

The proposal includes obligatory energy efficiency targets for Member States, specific requirements for public bodies and measures to ensure energy supply efficiency.

Background

The EU’s energy efficiency target of 20% by 2020 is a key objective of the EU 2020 Strategy for smart, sustainable and inclusive growth.  After the Commission’s latest estimations that the EU could achieve only half of the 20% target by 2020, both the European Council and the European Parliament called for a new Strategy on energy efficiency.

On 8 March 2011 the new Energy Efficiency Plan was adopted, introducing measures that would ensure further savings in energy supply and use.

The proposal of a Directive on energy efficiency is in line with the Energy Efficiency Plan.

Key Points of the Proposal

Energy Efficiency Targets

Member States must set a national energy efficiency target, taking into account the EU overall target of 20% by 2020.

Public Bodies

Member States must ensure that from 1 January 2014, public buildings renovate 3% of their floor areas every year in order to reduce energy consumption. The 3% will be calculated on the floor area of buildings with a total floor area over 250 m2 owned by the public bodies. Public bodies must only purchase energy efficient products, services and buildings.

The proposal also requires public bodies to set up energy efficiency schemes, according to which all energy distributors or all retail energy sales companies will ensure that their energy savings per year correspond to 1.5% of their energy sales which took place in the previous year. This provision excludes, however, energy when it is used in transport.

Member States may exempt small energy distributors and small retail energy sales companies which distribute or sell less than the equivalent of 75 GWh of energy per year, employ fewer than 10 people or have an annual turnover or annual balance sheet total that does not exceed €2,000,000. In addition, the proposal allows Member States to apply other measures to achieve national energy saving targets.

The proposal also states that Member States must promote financially accessible energy audits, especially for households and small-medium sized enterprises. It also obliges Member States to develop an efficient metering system, where energy companies will accurately measure their actual energy consumption. Member States may also impose penalties in cases of non-compliance.

Energy supply efficiency

Member States are required to launch energy efficient heating and cooling plans, which they must notify the Commission about every five years. To this end, they must develop an efficient heating and cooling infrastructure which will be used for high-efficiency cogeneration as well as for the heating and cooling from waste heat and renewable energy sources.

National bodies on the other hand are required to make sure that thermal electricity generation installations whose input exceeds 20 MW are equipped with high-efficiency cogeneration in order to efficiently deal with waste heat recovery. They should also ensure that installations are situated in areas where waste heat can be used.

The proposal also states that Member States need to include an inventory of all related data regarding installations which conduct the combustion of fuels with total thermal input of 50 MW, as well as all installations that refine mineral oil and gas in their territory, according to the conditions set out in Annex X to the proposed Directive. This list should be updated every three years and must be sent to the Commission.

National authorities meanwhile must also take measures to ensure that energy regulation authorities include energy efficiency factors in their decisions regarding gas and electricity infrastructure. They should also make sure that network regulation and network tariffs provide grid operators with significant advantages if they use energy efficiency criteria when they provide their services.

Other provisions

Other provisions in the proposal include the obligation of Member States to issue certification schemes to energy suppliers, energy audit providers and to those who contribute to energy efficiency improvement measures by 1 January 2014. The proposal also urges national bodies to adopt measures that will encourage energy services market as well as the access of small and medium-sized enterprises to this market, such as providing model contracts or information on energy service contracts.

Finally, by 30 April of each year, Member States are required to provide the Commission with reports on the progress made with regard to national energy efficiency targets.

Annexes

The proposal includes 14 Annexes which set out rules on:
• The calculation of electricity from cogeneration
• Methodology for determining the efficiency of the cogeneration process
• Energy efficiency requirements for purchasing products, services and buildings by public bodies
• Energy content of selected fuels for end use–conversion
• Energy efficiency obligation schemes
• Metering of individual energy consumption and the frequency of billing based on actual consumption
• Planning for efficiency in heating and cooling
• Siting of thermal electricity installations and industrial installations
• Guarantee of origin for electricity produced from high efficiency cogeneration
• Inventory of energy efficiency data of energy transformation installations
• Energy efficiency criteria for energy network regulation and for network tariffs set or approved by energy regulatory authorities
• Energy efficiency requirements for transmission system operators and distribution system operators
• Minimum items to be included in energy performance contracts with the public sector
• General framework for reporting

Next Steps

The proposal has been sent to the European Parliament and Council for examination in accordance with the ordinary legislative procedure. Discussions are expected to continue throughout the remainder of 2011