Europe should adopt a 30% energy efficiency target for 2030, the European Commission finally announced on 23 July – without specifying whether that target should be binding or not. That decision it left to European leaders when they meet on 23-24 October. There, they are set to decide on a 2030 climate and energy package for Europe. But certainly for energy efficiency, the path is far from clear and any legislative follow-up is at least three years away. Sonja van Renssen reports.
It wasn’t quite waiting for the smoke to go white, but not far off: for weeks policymakers and lobbyists have battled it out in Brussels over whether – and what – energy efficiency target the EU should adopt for 2030. The calls went from a binding target of 40% (civil society groups, the former European Parliament and those in the efficiency business) to no target at all (other businesses) to a non-binding target of 25-27% (outgoing Commission President José Manuel Barroso and his chief advisor Catherine Day).
EU Energy Commissioner Günther Oettinger put an end to the suspense on 23 July by announcing that the Commission recommends an energy efficiency target for Europe of 30% for 2030, below business-as-usual as projected from a 2007 baseline.
“It is ambitious and at the same time it is realistic. The energy efficiency strategy will complete the 2030 framework on energy and climate which has been presented in January 2014.”
-Günther Oettinger, EU Energy Commissioner
The Commission does not recommend whether the target should be indicative or binding, handing that decision over to national heads of state and government when they meet on 23-24 October in Brussels.
A decision on an energy efficiency target has been the missing pillar of the EU’s climate and energy package for 2030 – proposed back in January and consisting of a 40% greenhouse gas emission reduction target plus 27% renewables target – since the Ukraine crisis. Using less energy is a no-brainer for energy security. Every extra 1% of energy savings should cut EU gas imports by 2.6%, the Commission points out.
With the energy efficiency proposal, EU heads of state and government now have a full 2030 package to endorse at their October summit. There is “very good chance” of a deal, Oettinger said on 23 July.
But the energy efficiency proposal had no easy birth. The meeting of all 28 Commissioners in Brussels – their last before the summer break – dragged on for two hours longer than it should have. Ironically, the most vocal opponents of the 30% compromise were Commissioners from Central and Eastern European countries that are most dependent on Russian gas, according to one EU source. Their biggest worry about an EU energy efficiency target is the upfront investment required.
“We have to take account of investment plans in member states and what they can do.”
-Günther Oettinger, EU Energy Commissioner
Other commissioners took the line of wanting no energy efficiency target at all, but rather a single greenhouse gas emission reduction goal (this is also the UK position). Some want less Europe and some said it is too early to be talking about energy saving measures for 2030 when it remains unclear whether the 20% efficiency goal for 2020 will be met.
The Commission calculates Europe is currently on track to an 18-19% saving for 2020 and believes full implementation of existing legislation can fill the gap. “20% in 2020 is still achievable,” Oettinger said at the energy efficiency paper launch. He also said he “doubted” an emission reduction target alone was the best approach to deliver on EU industrial policy goals such as growing exports of new products and technologies.
Despite diverging views, the Commissioners unanimously agreed on a 30% target in the end. That figure is far from 40% and below the 35% the Commission itself calculated would maximise benefits in a leaked draft impact assessment, yet it is more than the 25% that the Commission calculates would be most cost-efficient from an emission-reduction perspective. Incoming Commission President Jean-Claude Juncker’s support for 30% last week may have made a difference.
“A binding 30% energy efficiency target is for me the minimum.”
-Jean-Claude Juncker, incoming European Commission President
If 30% seems an inevitable compromise, this did nothing to stop a flood of angry reactions from NGOs, businesses, academics and policymakers.
“The European Commission is missing an opportunity to tackle both energy security and climate change,” said WWF, which advocates a 40% target. Friends of the Earth Europe called the target “bafflingly low”. The Coalition for Energy Savings, which brings together NGOs and businesses, said the outgoing Commission had failed to produce a relevant vision for a 2030 energy-efficient Europe. “The weak 30% figure cannot drive policies and investments further,” said Secretary General Stefan Scheuer.
“In an era of rising energy prices and concerns about reliance on Russian gas this makes no sense at all. The European Council asked the Commission to develop an energy efficiency framework that made energy efficiency a priority in tackling the EU’s energy import dependence. The Commission has failed in that task. Let’s hope the incoming President and College of Commissioners can make an early start on sorting this mess out.”
-Ingrid Holmes, Associate Director at E3G
Think tank E3G pointed out that the Commission’s own impact assessment shows a 40% efficiency target would deliver a fourfold increase in GDP compared to a 30% target, triple the number of jobs and an additional €200 billion in savings on the EU energy import bill.
“Nobody should be deceived by the spin, what the Commission is proposing today on energy efficiency is devoid of true ambition, is not cost-effective and will prolong Europe’s dependency on fuel imports from Russia and other unreliable exporters,” said Green MEP Claude Turmes.
Others however, warned about the costs that a 30% target implies.
“A significant increase in the [energy] efficiency target requires the annual provision of billions in the EU for the next 15 years. The vast majority of national budgets still need to come down from chronic indebtedness. Such mega-investments will not lift them. The 30% brought into play today is surely above what is possible.”
-Herbert Reul, Chairman of the CDU/CSU group in the European Parliament
BusinessEurope, representing European business across the board, repeated its call for a greenhouse gas emission-reduction target only for 2030. “What companies want are immediate actions to reduce our uncompetitive energy prices in the EU,” said Markus J. Beyrer, BusinessEurope Director General. “Insisting on a multi-target approach will again bring inefficiencies and additional regulatory burdens.”
Analysts at Point Carbon said the 30% target would lead to an average carbon price of €25 a tonne in the EU Emission Trading Scheme (EU ETS) from 2021-30, reported ENDS Europe. This assumes a proposed market stability reserve – which would reduce the enormous current surplus of carbon allowances in the market over time – is also implemented from 2021. This carbon price is 9% less than if today’s energy efficiency policies were simply continued, the analysts said.
What happens next? First, European leaders need to endorse the 2030 climate and package, including the 30% energy efficiency proposal, at their October summit. There, they are also due to decide whether the latter should be indicative or binding. Juncker has spoken out in favour of a binding target – as has Oettinger – but most member states are not keen.
The Commission is suggesting that any legislative follow-up should wait until a fresh review of energy efficiency progress in 2017. Legislative follow-up could take the form of burden-sharing (especially if the target is binding) or sectoral measures. Certainly EuroAce wants a sectoral target for efficiency in buildings. Others, such as Reul, warn against expensive mandatory refurbishments imposed by Brussels.
“If we only see the 30% as an indication then we are in any case going to have to continue on the basis of the [2012 energy efficiency] directive but if we want to have a legally binding measure throughout Europe… then further measures are going to be necessary.”
-Günther Oettinger, EU Energy Commissioner
In any case, in the years between now and 2017, the Commission is due to revisit parts of the Energy Performance of Buildings directive, such as defining “nearly zero-energy buildings”; this is a requirement for all new buildings from 2021. The EU’s Eco-Design and Energy Labelling directives for products are also currently up for review. These have attracted some controversy – think phasing out incandescent light bulbs – but they will account for a third of energy savings by 2020. Without them, it is “inconceivable” that a 30% target could be met, Oettinger said on 23 July.
Transport remains a black hole to date with no specific measures proposed for post-2020, either on vehicle efficiency or fuel quality. Oettinger said the 30% efficiency target would make a “clear contribution to reducing diesel and petrol use by cars”. How it will do this – and through which mix of national and EU measures – remains to be seen.
What the Commission has said it will do at this stage is investigate whether additional indicators should be used to express and monitor progress on energy efficiency. This could be energy intensity, which takes better account of GDP. Similarly, it is investigating new indicators for competitiveness and security of supply. The problem is that if these indicators report a problem in 2017, the companies to fix it may already be gone. Indicators are just a tool. The ball is now in EU leaders’ court to align words with action, for the first time, at their summit in October.