The International Network
for Sustainable Energy

Created: September 2011 by Kyle S. Herman

Energy Efficiency Directive
On June 26, 2011, the new Energy Efficiency proposal was announced. The proposal effectively repeals Combined heat and power (CHP) (2004/8/EC), Energy Services Directive (2006/32/EC), and also the articles 9(1), 9(2) of Energy Performance in Buildings (2010/32/EC).
In sum the new directive (EED) is proposed to combine energy efficiency into one coherent structure. The proposal underscores primary reasons for including a robust strategy for energy efficiency in accordance with the EU´s commitment to reach its goals for 2020.

The most important aspects are an increased focus on public sector savings, such as renovation of public buildings and purchases of energy efficient products, and also required metering so that consumers can be aware of real time energy use.
Other initiatives include the dissemination of best practices, mandatory energy audits for large companies, and options for waste heat recovery.

All material for the Energy Efficiency Directive (EED) can be found here.

New Methodology for Energy Efficiency
The methodology for determining CHP is outlined in Annex I of this directive. The methodology includes some guidelines for high efficiency co-generation, primary energy savings, and an alternate calculation of energy savings. Each Member State must submit a progress report in April 2013, and thereafter every three years. In November of each year Member States must submit statistics on national electricity and heat production, as well as statistics on primary energy saved with co-generation.

What does the EED proposal indicate?
This new methodology touches upon the fragile subject of Member State sovereignty and perhaps binding targets aside from the 2020 initiative. The proposal states that if, by 2014, Member States submit data that indicates targets will unlikely be met by 2020, legislature will be enacted ´´laying down mandatory national targets.´´ While binding targets are welcomed by many, there is a growing concern that the EU should not create arbitrary binding targets that may contribute to unfair distribution of renewable energy and unequal favoring of technologies.

The EED has the potential to be the most cross-cutting EU energy legislation but the proposed language is far too ambiguous to effectively enforce binding targets for individual Member States. Without binding targets incentives and assurance is missing for citizens and investors. It appears that the EU is waiting to force binding targets on Member States until they either voluntarily relinquish more sovereignty or demonstrate inadequate implementation to reach 2020 targets. Either way the language fails to assure investors and policy makers.

The language in the Directive should focus on speeding up the process by making deadlines sooner in order to increase probability of reaching 2020 targets. Ideally it needs to make binding targets now, rather than the ´wait and see´ approach that will inevitably reveal Member State non-compliance (because no targets to create incentive). With binding targets all stakeholders involved, including citizens, Member States, businesses, investors, and local policy officers, could creatively build strong plans for the next decade.

Guarantees of Origin
Guarantees of Origin (GO's) for electricity from CHP have been clarified, if only slightly. Guarantees of Origin are data that represent the time and place of the energy production and if it is coming from a renewable energy source.

The language in the proposal takes away some previous ambiguity to the Guarantees of Origin definition. For example, the proposal requires that all Member States accept other States GO's in an ´´objective, transparent, and non-discriminatory´´ manner, and if there is such a reason for refusal the EC may be summoned for review.

The problem arising from GO's is the concern that a uniform guideline for technologies is applied. This means that ´cash cow´ technologies will be unequally supported while innovative technologies could take the back seat.

Also there remains a problem with applying GO's across all Member States uniformly. This is another issue that could impinge on Member State sovereignty and also create unwanted bottle necks in the supply chain. In sum, technology specific GO's would potentially increase innovation and competition while uniform GO application ends in more proven and lower cost technology, and mostly rent seeking by larger producers.

Public Energy Sector: massive potential savings
It has been noted in the EED (in the EED proposal) that the public sector uses an enormous amount of energy and therefore offers a great opportunity for savings in both energy and money. Similarly the public sector is quite visible to citizens and could create a more positive image for energy efficiency.

One scenario estimates that investments in energy efficiency in the public sector will cost the EU €1.6 billion in while potentially saving €1.92 billion by understanding energy savings as monetary savings (SEC(2011) 780 p. 5). For that reason a 3% per annum rate of renovation for public buildings has been proposed. Also there are stricter requirements for public bodies to buy more energy efficient supplies and equipment.

However a few lines in the EED indicate that energy efficient purchases need not be obligatory if they aren´t economically sound. This language should be amended since it will most certainly counter any potential public sector purchases in energy efficiency (because the public sector is in a habitual unsound economy).

Progress Report on Energy Efficiency Plan (EEP) (Formerly EEAP)
The EEAP from 2006 was reevaluated (3/8/2011) in the Commission Staff working paper SEC(2011) final 275. Main points from the evaluation were: (i) a revised target for action is imperative, (ii) cross-cutting measures are needed to develop finance tools, (iii) National Action Plans could become policy tools. The progress report indicated that long term binding targets must be met for any successful future legislation: ´´An overarching energy efficiency with a long term perspective is needed to trigger lasting political committment...with also clear priorities without getting too technical.´´ (p. 48)

Considering the EEP and the Proposal for EED
More informational feedback loops could become a powerful tool for the new EED. For instance a solid base for energy information exchange between consumers and energy suppliers, as well as exchanges between Member States and the Commission, will not only give more clarity to legislation but also demonstrate best practices on a broader stage.

Also the Member States should transparently exchange information with citizens and local governments in such a way that the information becomes policy in itself. In other words, all data can be exchanged and collected, then published as an up-to-date baseline each year, thereby guiding standards and targets for the following year.

Though this mainly is carried out at the Member State level, the EU should try to acquire all pertinent information regarding this knowledge transfer and in turn enter the data into an EU-wide policy centered on current advancements in implementation. Then clarity could be achieved from a top-down and bottom-up scope. This information could then be disseminated into the international arena, such as the IPCC and the UN climate negotiations.

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