The Implementation of the Energy Efficiency Directive: The European Parliament Report

Italy has implemented the Energy Efficiency Directive 2012/27/EU [1] by Legislative Decree 102/2014.[2] The European Parliament during the last Plenary Session held in Brussels on 22 June 2016, voted a Motion for a Resolution[3] relating to the implementation of the Directive.

The Report is subdivided in four sections: a) The Directive is inadequately implemented but provides framework for delivering energy savings; b) Competing legal provisions slow down environmental progress, create red tape and increase energy use; c) Energy legislation needs to be more coherent; d) More energy efficiency - more jobs and growth.

Criticisms on Article 7

The Report notes that todate the 2012 Energy Efficiency Directive and the 2010 Buildings Directive remain to be fully implemented by the Member States and notes also that the deadline for transposition of the EED was on 5 June 2014. Furthermore, the Resolution considers that cutting costs and reducing energy consumption are in the interest of citizens and businesses alike. It highlights the importance of a strong regulatory framework consisting of targets and measures to incentivise and enable investment in energy efficiency and low energy consumption and costs, while supporting competitiveness and sustainability.

The Report underlines that it is expected that Member State will only have achieved 17,6% of primary energy savings by 2020, and that the 20% target is at risk unless the existing EU legislation is not fully implemented, efforts are not accelerated and barriers to investment are not removed. It also noted that any assessment of the implementation of the EED can at this stage offer only a partial picture, given its relatively recent entry into force and deadline for transposition: it is urgent that Member States implement fully and rapidly the Directive and consequently the Commission must act promptly in making requests, where necessary, for national plans to be aligned with the objectives of the Directive, and to use all legal means to ensure that Member States provide up-to-date and precise information.

In alliance with the principle of subsidiarity, Local Authorities have a crucial role to play in enabling implementation of the Directive, by engaging in ambitious energy saving measures through local action plans, for example in the framework of the Covenant of Mayors for Climate and Energy. The Resolution considers that data from local action plans, such as the energy efficiency policies and measures outlined in more than 5000 Sustainable Energy Action Plans in the covenant of Mayors, can effectively contribute in terms of co-designing and raising the ambition of national energy efficiency targets.[4]

The Report stresses and emphasizes the Directive’s flexibility that has allowed many Member States to embark on energy efficiency measures, and believes this flexibility in alternative measures is crucial for member States to implement energy efficiency programmes and projects in the future and demands that loopholes in the existing Directive which are responsible for underachievement of the Directive, especially in Article 7[5] be removed while keeping adequate flexibility for Member States to choose among the measures.

Relating to Article 7, the Report underlines that the chief weakness of the existing Directive is that most of the measures will expire in 2020 unless amended, which means, inter alia, that Article 7 (and other main provisions) should be extended not only up to 2030 but also beyond, and that it is in this context that the current Directive is to be assessed, with objectives to be established in line with developments (results obtained, technological and market innovations, etc.).

Article 7 represents the main objective of the critical approach of the Report to the Directive 2012/27/EU: phasing-in and early actions under Article 7(2) are no longer valid and it is expected to deliver more than half of the 20% target set by the Directive; new title for the Article that could be changed to “Energy saving support schemes” in order to emphasise the need of the Member States to help consumers, including SME’s, to save energy and reduce their energy costs and put in place measures that enable such savings to be achieved by means of energy obligations schemes and other measures.

The criticisms of Article 7 and its implementation in Member States also highlights the provision whereby Member States may require a share of energy efficiency measures to be implemented as a priority in households affected by energy efficiency measures or in social housing, has only been taken up by two Member States.

Finally, the Report notes that 16 Member States have chosen to establish an energy efficiency obligation scheme (Article 7(1)) and that 24 Member States have made use, to varying degrees, of the possibility of alternative measures and 18 Member States have preferred alternative measures to the renovation quota.

Criticisms of the Environmental dimension of the Directive and Better Regulation

The Report underlines that energy reporting obligations are essential to evaluate the progress and implementation of existing energy efficiency law. Consequently, a strong reporting obligation was imposed on business, energy producers, consumers and public authorities. These obligations limit the potential for growth and innovation. It is stressed also that reporting duties should wherever possible be simplified in order to reduce administrative burdens and costs.[6] The Report criticises the fact that data obtained in reporting is often not comparable across the EU due to the different methodologies and standards. The Commission now calls for a reduction in the administrative burden related to reporting obligations and to establish more guidelines on data comparability for better data evaluation and for aligning energy demand projections in line with cost-effective saving potential in key sectors. It believes also that cutting red tape will speed up the implementation of energy efficiency measures.

The Report asks the Commission to review the conversion factor for electricity in Annex IV to the Directive, in order to better reflect the on going transition of electricity generation.

Increasing energy costs

The Report stresses the lack of coordination between different provisions of national law can hinder effective energy efficiency solutions that provide the best possible results in terms of cost-effectiveness, and cancels out the price advantages obtained through energy saving. The Parliament calls on Member States and Commission to draw up coordinating measures for the full realisation of energy efficiency potential, which would lead to more coherence between Member States without restricting their ability to tailor policy according to their local energy market and prices, available technologies and solutions, and national energy mix.

It is necessary to improve the energy efficiency of the public sector and to this end there must be more integration of energy-saving initiatives into public procurement. In fact, European Parliament in some Resolutions and Reports noted that energy efficiency requirements in public procurement are not fully understood by all procurement agents and calls the Commission to provide clearer guidelines to facilitate compliance with Article 6 of the Directive,[7] as well as better integration into the wider EU rules on public procurement.

The Report is to be welcomed as a good overview of where the EU stands on achieving its ambitious Energy Efficiency goals.

[1] In OJEU L 315/1 – 14.11.2012

[2] In GU SG n. 165 – 18.7.2014

[3] Rapporteur: Markus Pieper, Committee on Indutry, Research and Energy

[4] The Report regrets the unambitious nature of the target (a minimum 27% improvement in energy efficiency by 2030) adopted by the European Council in 2014. It considers tht this target is mainly justified by an extremely unrealistic high discount rate contained in a previous impact assessment and calls the Commission to move a comprehensive cost-benefit analysis taking into account the multiple benefits of energy efficiency.

^[5] Pursuant to Article 7: ”Within the energy efficiency obligation scheme, Memeber State may: a) Include requirements with a social aim in the saving obligation they impose, including by requiring a share of energy efficiency measures to be implemented as a priority in household affected by energy poverty or in social housing; b) permit obligated parties to count towards their obligation cirtified energy savings achieved by energy service providers or other third parties, including when obligated parties promote measures through other State-approved bodies or through public authorities that may or may not involve formal partnerships and may be in combination with other sources of finance. Where Member States so permit, they shall ensure that an approval process is in place which is clear, transparent and open to all market actors, and which aims at minimising the costs of certification; c) allow obligated parties to count savings obtained in a given yearsas if they had instead been obtained in any of the four previous or three following years”.

^[6] See the ”Interinstitutional Agreement on Better law-Making”, 13 april 2016.

^[7] Article 6 in its point 1: “Member States shall ensure that central governments purchase only products, services and buildigs with high energy-efficiency performance, insofar as that is consistent with cost-effectiveness, economical feasibility, wider sustainability, technical suitability, as well as sufficient competition, as referred to in Annex III”.