May 8, 2017
BRUSSELS INSIDER #1 by Sonja van Renssen
European Parliament hatches radical “energy governance” plan
May 8, 2017
Nothing is more crucial for EU energy policy than how its “governance” will be organised, i.e. who will be in charge: Brussels or the member states. From the European Parliament now comes a plan to take the moderate governance proposals from the European Commission to another level: it wants the EU to identify “renewable and energy efficiency projects of European interest” and to establish an EU carbon budget that will prescribe what each EU member state has to deliver.
It’s struck me in recent weeks how “governance” crops up more and more at events in Brussels on the EU’s Clean Energy Package. One of the eight legislative proposals in this package is for a new regulation on governance for the Energy Union, but it has until now hardly been a flashpoint for debate. How exciting can a call and template for national climate and energy action plans be after all? Quite, it turns out.
On 16 May, charismatic Green MEP Claude Turmes, who recently unveiled a widely praised insider account of 15 years of EU energy and climate policy, will publish his vision for the new governance regulation. Or rather, Turmes and his Green counterpart on the European Parliament’s environment committee, French MEP Michèle Rivasi, will publish a joint vision since it looks likely that the Parliament’s environment and energy committees will share competence on this file (to be confirmed on 11 May).
The Turmes-Rivasi report – they are the lead MEPs on this file – will form the basis for an intra-Parliamentary debate and they will ultimately lead negotiations with the EU Council of Ministers to agree the final form of the new law. Turmes is clearly in the driving seat on this one however, and he has ideas that go far beyond how to amend the European Commission’s proposed template for national climate and energy action plans out to 2030.
If we take a step back, the purpose of the governance regulation has always been to define the power relationship between Brussels and the EU-28 (or soon to be EU-27) when it comes to meeting common goals such as a 27% EU renewable energy target for 2030.
The Commission’s proposal basically requires member states to produce climate and energy plans for the period 2021-30 according to quite a detailed template that covers all five dimensions of the Energy Union: energy security, the internal market, energy efficiency, climate action, and research and innovation. First drafts are due at the start of next year. There is also an unprecedented call for member states to develop longer-term plans that look 50 years ahead. These are due at the start of 2020.
In addition, the Commission suggests what to do if it looks like the EU will miss its 2030 targets. For renewables, it proposes that member states could then raise their ambitions on heating or transport, or contribute to an EU fund for renewables projects, for example.
The draft governance regulation also promotes dialogue and cooperation at every level. In the run-up to its release last November, Guy Lentz from the Luxembourg permanent representation in Brussels – who kick-started work on this file under the Luxembourg EU presidency in the second half of 2015 – called it “a very good start”. Other experts agreed.
In a way, the Commission recognised the fundamental importance of governance right from the start: this is the raison d’être for an ongoing second Energy Union Tour by Commission Vice President Maroš Šefčovič after a first tour in 2015 to launch the concept of the Energy Union. Once again, Šefčovič is visiting every European capital, this time to remind them of the importance of their national climate and energy plans.
But Turmes intends to take the file to another level. In a working paper that is currently being fleshed out into legal proposals, he says that the primary objective of the new regulation is to establish (or restore) certainty for clean energy investors. For him this means that the EU needs to establish a carbon budget for 2050, work backwards from that to determine what each member state needs to deliver in 2030, and translate those objectives into nationally binding renewables and energy efficiency targets. The governance regulation is “the key element” to align Europe’s domestic ambitions with the Paris Climate Agreement.
Turmes also wants national plans for 2030 to include provisions for phasing out “polluting assets”. He wants 2030 and 2050 plans to undergo a “truly iterative process” at national level with participation of all stakeholders. He suggests that “hard governance” for 2030 renewables and efficiency targets could be counterbalanced by “softer governance” for other issues such as grid planning and security of supply.
What is perhaps most innovative however, is his proposal to identify renewables and energy efficiency “projects of European interest”, à la the Projects of Common Interest (PCIs) in gas and electricity infrastructure. These benefit from fast-track access to permits and sometimes EU funds. Turmes suggests his projects could be anything from support for energy cooperatives and the reconversion of coal regions, to a meshed electricity grid in the North Sea and electro-mobility corridors, to the modernisation of district heating systems and large-scale building renovation projects.
There is much in here to give EU member states a fright. To be fair, some of the proposals are likely to be no more than bargaining chips – Turmes knows full well that nationally binding targets may fly in the Parliament but will crash and burn in Council. The idea of clean energy PCIs meanwhile, will probably have to wait until discussions get going on the next EU multiannual financial framework (budget) for after 2020.
The real prize for Turmes at this stage is probably a better integration of the national 2030 and 2050 plans, with as their starting point an EU carbon budget in 2050 (Energy Post understands that this would be based on “net zero emissions” as per the Paris Climate Agreement) and stronger governance around the EU’s renewables and energy efficiency targets for 2030.
In Council, the debate is just starting. A first handful of member states have sent in written comments which reflect none of Turmes’ radical approach – except for an innovative idea from the Czech Republic for nationally binding “corridors”, rather than targets, for renewables.
Over the next few months, governance, renewables and energy efficiency are likely to be negotiated in parallel since they are linked together by the targets for 2030. The rest of the Clean Energy Package is about electricity market design and will be debated after. Votes in Parliament on the governance regulation are only foreseen for October. The Estonian EU presidency that takes over on 1 July will have to flesh out a position in Council. Inter-institutional negotiations on all three topics – governance, renewables and efficiency – are unlikely to start in earnest until early next year.
Getting it right on governance is crucial to maintaining the momentum of the energy transition – without governance structures that are clear, forward-looking and adaptable, Europe will not attract investors. The new governance regulation is important enough that European utilities, represented by Eurelectric, have adopted a position on it. They say it “should not intervene in setting EU climate and energy targets” but focus on “effective implementation and monitoring” of those targets. Turmes could argue that this is exactly what he is doing.
BRUSSELS INSIDER #2 by Sonja van Renssen
Energy Efficiency First gets a reality check
May 8, 2017
For all the apparent logic of putting energy efficiency first, EU member states appear far from convinced that this is what will bring jobs, growth and competitiveness. They insist on lowering annual energy savings targets rather than strengthening them, as the European Parliament and European Commission would like to see. Transport in particular could be more efficient – but member states are allowed to exclude it from their energy efficiency targets – and almost all of them do.
Last week, the Maltese EU Presidency took the unusual step of justifying its proposal to lower annual energy savings targets in Europe after 2020. The justification came in response to an accusation from the Coalition for Energy Savings, a multi-stakeholder platform dedicated to energy efficiency, that the Presidency’s proposal could destroy more than 100,000 jobs.
Malta aims to unite the EU-28 around a common position on a revised EU energy efficiency directive and EU energy performance of buildings directive by the end of its mandate on 30 June. Together with a regulation on governance, this trio of laws is the first tranche of the European Commission’s Clean Energy Package that EU lawmakers are sinking their teeth into. The International Energy Agency (IEA) estimates that two-thirds of the EU’s low-carbon investments from now to 2040 need to be in energy efficiency to keep alive the goal of limiting global warming to 2ºC.
No wonder campaigners are frustrated therefore that in its latest compromise proposals for the new energy efficiency directive, Malta sticks to its suggestion to lower an annual energy savings target for end-use from 1.5% to 1.4% of energy sales a year after 2020. It has “proven difficult” to implement the 1.5% savings, it explains. Member states are “requesting flexibility” to take into account “economic realities and cost-effectiveness”. About half of the EU-28 also wants an overarching 30% energy efficiency target for 2030 to be indicative, not binding, Malta says.
The Coalition for Energy Savings argues that the 1.5% energy savings target is the “cornerstone” of the energy efficiency directive and needs to be strengthened, not weakened. In practice, the flexibilities already in place mean that member states deliver only about half of the mandated savings per year, it argues. The Presidency’s proposal only threatens to make things worse. “[It] could destroy more than 100,000 local jobs in the future, at a moment when citizens need to see the benefit of the energy transition,” warned Stefan Scheuer, Secretary General of the Coalition for Energy Savings in a press release.
The Coalition sees a particular opportunity in transport. So far, every member state except Sweden takes advantage of the possibility to exclude transport when calculating their energy consumption baseline for the 1.5%. This means they need to deliver a smaller absolute saving. But it ignores an important potential in the sector, argues the Coalition. In a new study released on 25 April, it shows that the transport sector could deliver more than enough savings to cover removal of the exemption.
National transport efficiency measures could deliver up to five times more energy savings per year (or 4.5 million tonnes of oil equivalent) in 2021-30 than in 2014-20, the study finds. These measures – which must be additional to any EU standards – could range from better public transport to driver training to company car tax reform to the promotion of electro-mobility. With mounting pressure to do more to include transport (and heating and cooling) in the energy transition, the proposal has its logic. All the more so because member states are already free to count energy savings in transport towards their 1.5%, even if they do not include the sector in the baseline!
If there is little interest from member states – and indeed utilities – in creating a stronger push for energy efficiency at European level, the European Parliament is a staunch proponent of it. MEPs have repeatedly called for a 40% binding energy efficiency target for the EU for 2030. Most of them want to close off “loopholes” like transport. The Commission too, is clearly on the side of the Parliament on this one, with EU Climate and Energy Commissioner Miguel Arias Cañete calling the 1.5% target “absolutely crucial” to attract private capital at a conference organised by the Coalition for Energy Savings in Brussels on 2 May.
Yet dissenting voices persist, even outside the Council of Ministers. Belgian right of centre MEP Anneleen Van Bossuyt, who is helping lead debate on the new energy efficiency directive in the Parliament, told the same summit that she supports a 27% energy efficiency target for 2030 on the grounds of “affordability”. Her native Flanders is still paying a €9 billion bill in solar PV subsidies. Moreover for her, ambitious targets are more ends than means, and she suggested that investors did not require them – a company like IKEA has decided to go 100% renewable even in their absence, after all.
Harry Verhaar, Chairman of another European energy efficiency network, the European Alliance to Save Energy (EU ASE) and Head of Global and Government Affairs at Philips Lighting, summed up the majority view of those present however that “if you cannot afford to save you cannot afford to waste it”. Rebecca Minch from the Department of Communications, Climate Action and Environment in Ireland, emphasised the need to look beyond the energy sector to make progress on energy efficiency. Ireland’s “Warmth and Wellbeing” project makes a link to the health sector by providing energy efficiency upgrades to people in energy poverty living with chronic respiratory diseases.
The emerging polarisation between the Parliament and Commission on the one hand and the Council on the other looks set to be replicated on the revised energy performance of buildings directive (never mind governance – see preceding article).
In his draft recommendations from the end of April, the MEP leading debate on this in the Parliament, Danish centre-right MEP Bendt Bendtsen, called for stronger requirements for national long-term renovation strategies for example. Member states prefer to see these remain vague and specifically want to relax the Commission’s proposal to mandate the installation of electric vehicle charging points in private buildings. “We cannot put the whole onus on vehicle manufacturers,” Cañete countered on 2 May, citing the new buildings directive as “the most obvious piece of legislation to support deployment [of charging points] in the private domain”.
This is going to be a long slog. The Parliament’s recommendations on the new energy efficiency directive are due out in the next two weeks, after which EU energy ministers will battle it out on energy efficiency at their informal council in Valletta, Malta, on 18 May. That is a prelude to a formal decision on their energy efficiency position at Malta’s EU energy council in Luxembourg on 26 June. The Parliament won’t adopt its position until the autumn.