Summary and implications

On 11 May 2011, the European Commission produced an unofficial draft of a proposed new Directive on energy efficiency, amending and subsequently repealing the Cogeneration Directive and the Energy Savings Directive. The Directive is intended to make a significant contribution to meeting the EU’s target of 20 per cent primary energy savings by 2020. The draft proposal transforms relevant elements of the Commission Energy Efficiency Plan which was adopted on 8 March 2011 into binding measures which include:  

  • The establishment of national energy efficiency targets for 2020;  
  • Rules designed to remove barriers and overcome market failures that impeded efficiency in the supply and use of energy;  
  • The application of high energy efficiency standards to the renovation of buildings and the purchase of buildings, products and services;  
  • The requirement for Member States to adopt national cogeneration plans for developing the potential for high-efficiency generation and efficiency district heating and cooling.  

Background to the proposals

The EU Commission has made estimations, taking into account national energy efficiency targets for 2020, that individual Member States have set, that the EU will only achieve half of the 20 per cent primary energy savings target by 2020.  

With the backdrop of growing EU imports of energy at rising prices, the Commission is concerned that the access to energy resources, could, in the medium term, seriously compromise EU economic growth. Further, they consider that energy efficiency is the most cost-effective and fastest way to increase security of supply and is an effective way to reduce the greenhouse gases emission responsible for climate change.  

The existing Directives (the Cogeneration Directive: 2004/8/EC) and the Energy Services Directive (2006/32/EC) are considered by the EU to have failed in fully tapping the energy savings potential. Therefore, it is proposed that both these Directives are repealed (bar some minor transitional provisions) on entry into force of the new Directive.

Proposals impacting consumers

The proposed Directive focuses on measures which would establish high energy efficiency standards in respect of the renovation of buildings and the purchase of buildings, products and services.

The proposal would require Member States to establish energy saving obligations schemes and regulate mandatory energy audits for large companies and would establish a series of requirements on energy companies with regards to metering and billing.

Proposals impacting energy supply sector

The proposal would require Member States to adopt national cogeneration plans for developing the potential of high-efficiency generation and efficient district heating and cooling.

Member States would also be required to adopt authorisation criteria to ensure that installations are located in sites close to heat demand points and that all new electricity generation installations and existing installations that are substantially refurbished, are equipped with high-efficiency CHP units.  

Further, the proposals would require Member States to introduce measures to develop district heating and cooling infrastructure, through spatial planning and the development of regional and local heat plans.

There would also be requirements with regards to priority/guaranteed access to the grid and priority dispatch of electricity from high-efficiency cogeneration and the connection of new industrial plants producing waste heat to the district or cooling networks.

Additional measures

The proposals also include efficiency requirements on national energy regulators, requirements concerning the availability of certification schemes, actions to promote the development of energy services and an obligation on Member States to remove obstacles to energy efficiency, notably in respect of the development of energy performance contracting and the split of incentives between the owners and tenant of a building or among building owners.

Potential impact

The UK is already on the way to implementing a number of the measures suggested, for example through its roll-out of smart meters and its Zero Carbon Buildings programme. However, there are some aspects of the proposals that could see a significant change in the way energy is produced. For example, the introduction of requirements as to the location of energy plants near heat demand points, the requirement for installations to be equipped with high-efficiency CHP unit, and the requirement to develop heating and cooling infrastructure, could see greatly increased development of distributed generation and district heating schemes. This could provide a welcome boost to the UK’s CHP industry, which is viewed by some as an essential component in the shift to low-carbon energy generation.

Next steps

The draft proposal is currently being examined by several Commission Directorate Generals and is expected to be adopted and published towards the end of June 2011.

The Commission will assess in 2013 whether progress is being made to reaching the target of 20 per cent primary energy savings by 2020. If Member States are not on track, they intend to lay down mandatory national targets.