“klima:aktiv energieeffiziente betriebe” (climate:active energy efficient companies)

“klima:aktiv” is the climate change program of the Austrian Federal Ministry of Agriculture, Forestry, Environment and Water Management. The aim of “klima:aktiv” is to reduce CO2 emissions as well as reinforce renewable energy in Austria. To achieve these goals more than 20 programs for renewable energies and energy efficiency were created – “energy efficient companies” being one of them.

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Implementation aspects of the EU Directive on energy end-use efficiency and energy services in Germany

The EU Directive 2006/32/EC on energy end-use efficiency and energy services (ESD) became effective on 17 May 2006. Now the Member States have to develop strategies and policies for the national implementation of the Directive, which sets a national indicative energy savings target of 9 % for the ninth year of the Directive’s application. This target is to be met using measures to improve energy efficiency. The Member States have to present their first energy efficiency action plan (EEAP) under the ESD by 30 June 2007, which must contain the national overall target for energy saving.

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How to kick start a market for EPC Lessons learned from a mix of measures in Sweden

In less than five years Energy Performance Contracting has conquered at least 5 % (<4 million m2 of ~80 million m2) of the public building stock in Sweden and the number of contracts is rapidly increasing. The paper analyses the strategy that has led to this dynamic development.

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Are we running out of energy efficiency?

Based on a Discussion Webinar, Friday 20 June 2008

Improving energy efficiency has been a constant concern ever since the oil crisis of the seventies. Today, it is seen as one of the solutions for mitigating climate change and improving energy security. Many numbers for energy saving potentials circulate, but how realistic are these? Despite the current high oil price, energy efficiency improvements these days are not as big as they were during the first oil crisis. Why is energy efficiency so hard to pursue? Have we really exhausted the energy savings potential? And, if not, which technical or economic potential is still available?

These and other questions were addressed during a Discussion Webinar on 20th June 2008. The following are a few of the major points from that discussion.

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9. Notification of the national action plans

LE: Is the European Commission verifying the quality of the National Action Plans before they are voted in the parliaments of the Member States?

RB: The Commission will review the National Action Plans and write a report on them. Such a report was adopted by the Commission early in 2008. This review can be said to be similar to a summary of the notification process, although not all the national Action Plans had been received by the Commission at that time. In addition, for the other Articles in the Energy Services Directive, the Member States have to send copies of their proposed laws to the Commission, and if they are not strong enough to fulfill the objectives, they can be rejected. Normally they are accepted, sometimes with requests for small adjustments. This can be done even after the transposed laws have been sent to the national parliaments.

But here again there is a problem of human resources: at national level as well as within the Commission, there is an increased need for more staff to work with energy efficiency because of all the new policies and measures.

This is important since Member States that adopt unsatisfactory legislation risk missing their objectives and will later be accused of breaching the agreement that was made when the Directive was adopted.

Let’s hope this won’t happen and by 2016 the whole of the EU will be at least 9% more energy efficient than it would have been without the additional measures being put in place.

The Commission should also have more people available for preparing EU legislation as well as managing the notification procedures. A lot of new staff has been placed in the units working with energy efficiency, but demand for new personnel still seems to outrun supply. But some improvement has been made. And more is in the pipeline.

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8. Lack of qualified people could become drawback

LE: When talking about using systems correctly to save energy, one talks about education. If we would implement all cost efficient energy efficient technology that is available on the market today, the EU would easily achieve 20 per cent energy savings. So there is a huge energy savings potential in improving the education of both users and installers. So why does the Energy Efficiency Action Plan talk so little about education and training?

RB: Education and training, as well as authorization and certification and standards for technicians are mentioned in the Action Plan, although not in a very systematic way. Education and training can also be stimulated in an indirect way. For example, the EU energy savings target can lead to a national or regional audit system, which in turn leads to increased demand and hopefully better training for those people who will execute those audits. But in general I think you are right, there could have been a stronger focus on education in the Action Plan, as well as in the revised Directives.

The shortage of qualified people could already be problematic in many Member States. Because of the subsidiarity principle, the Commission leaves a lot to the Member States. This implies that each country or region needs a local energy agency that is capable of implementing the new Energy Services Directive, implementing the Buildings Directive and its forthcoming revision, as well as drawing up the National Energy Efficiency Action Plans. This also requires leading the troops, and putting all mechanisms in place. I have doubts whether many smaller Member States can attract enough properly qualified staff for running such an expanded agency and for implementing all the new measures satisfactorily. A well functioning internal market for such services is needed.

In some Member States, the assignment of writing the Action Plan was given to a ministry. Other countries have had a strong National Energy Agency dealing with it, and still others are said to have hired consultants for this task.

The Local and Regional Energy Agencies are in some cases involved in the implementation of the measures in the field. In many cases, those agencies already have well qualified staffs who have already implemented some of the former energy efficiency measures. But if they have to deal with a large number of new tasks and measures, they might also need reinforcements of qualified staff.

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7. The European Commission as a role model

LE: If there is one institution that should present a role model, it is certainly the European Commission itself. Are the buildings of the Commission energy efficient? The Berlaymont surely is, but doubts have been expressed about the other buildings.

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6. The public sector as a role model

LE: The Energy Services Directive explicitly calls for the public sector to act as a role model on Energy Efficiency. But apart from legal obligations, some public authorities are still struggling to find an incentive for making efforts.

RB: They have a great incentive: it saves money! The Directive is only asking that they carry out the cost effective energy savings measures. The problem is that in the public sector, there is often a lack of up-front financing. New financing models, such as third-party financing, are therefore also promoted in the Directive. Often, in national governments, the public departments that pay the energy bill are often different from those who can invest in energy savings measures. So one important institutional measure will be to bring those departments together and change the budget cycle.

LE: To show the benefits of energy efficient equipment, a Life Cycle Costing calculation should be done before procurement. Will it become mandatory for the public sector to incorporate LCC in their terms of reference?

RB: It would be a good idea to do so, and it is actually suggested in the Energy Services Directive to do so when appropriate. Using different types of eco-labelling as a basis for public procurement, on the other hand, does involve certain risks. This type of labelling could favour certain brands and create a trade barrier for others, something the Commission surely doesn’t want. But by making LCC mandatory, LCC calculations could more easily be harmonized and in this way minimize the risk of trade barriers.

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5. How to monitor implementation and results

LE: The Joint Research Centre (JRC) of the European Commission, mainly the one at ISPRA, will monitor and review the National Action Plans for Energy Efficiency. They will then issue reports on all of the National Action Plans as well as prepare an umbrella document, comparing the plans. Parallel with that, the Energy Efficiency Watch of the European Parliament is carrying out a similar job. Why this two-track monitoring system?

RB: The Energy Efficiency Watch is using a very simple method to monitor implementation, based on a checklist of what has to be included in those National Action Plans that they select for an in-depth study. If they can do these screenings quickly, it will be of great use to the Commission and a complement to the slower but more thorough work of the JRC. The Energy Efficiency Watch also has the advantage that it involves the national parliaments of the Member States.

LE: Monitoring and calculation methods for measuring the final results of measures for meeting the 9% target set out in the Action Plans will be developed by the EMEEES project. How big is the risk that the measurement systems will be too complicated to be implemented within a reasonable time frame?

RB: We are not yet in that phase. It is still a bit too early to monitor the results, but the time will soon be here.. But in any case, much progress has been made to develop a rigorous methodology that is now being adapted to Member State needs. It is partly a matter of finding ways to explain the methodology to politicians. Most of the experts who will work with the methodology have been involved in its development. Several national governments have good measurement systems in place that can be placed into the general framework developed by EMEEES, so not everyone will have to start from scratch.

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4. Following the subsidiarity logic

LE: Finland has been praised for their well-functioning, reliable audit system. Why have no other examples of good audit systems been created throughout Europe in the meantime?

RB: In fact, this is a Member State issue and not the concern of the European Commission, since it doesn’t want to bias Member States regarding which measures they should take. An audit system, often connected to a voluntary agreement, if well constructed and self-regulating can be an effective way to stimulate energy efficiency. It can be a powerful instrument, but it is no guarantee of success. For instance, if there is insufficient follow-up of the audits, a lack of tax or financial incentives, results can be poor. Another way to overcome this drawback is by reimbursing the audit cost only if the recommendations of the audit have been carried out.

But once again, according to the subsidiarity principle, the Commission doesn’t want to impose anything on the Member States insofar as what incentives they should create for reaching their objective. Each Member State should also be able to decide individually regarding who has to pay the bill for the incentives (subsidies, tax rebates) and for the energy saving measures. It can be the consumers, local governments, utility companies, or a mixture of all of these. The EU is not financing the implementation of the Directive, but only providing guidelines on financing mechanisms, providing support in the form of pilot projects and information platforms and so-called Concerted Actions, where Member States exchange best practices.

LE: One of the more controversial financing mechanisms is that of differentiated VAT rates. A green paper on taxation is currently being written by the Commission. This initiative has been praised as significant, but will it have any real influence on the energy efficiency domain?

RB: There has been some resistance within the Commission to differentiated VAT rates because the Commission and some of the Member States did not want to further complicate the system. There is also the fear that the lower VAT on energy-efficient equipment may be used by the retailers to increase their profit margins. This is a delicate issue and very difficult to reach agreement on, but now there seems to be a breakthrough on the part of the UK and France. So, yes, I expect differentiated VAT to become a subject for discussion and possibly one of the more important incentive mechanisms.

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3. What is the baseline and how far does it go back?

LE: When the Energy Services Directive was ratified, it was immediately criticized for being a hollow box, since it imposed an annual energy saving of 1% without defining the baseline for this percentage.

RB: Yes, but in the meantime, a definition has been worked out. Currently a committee and a major project set up by the European Commission are defining how it should be applied and how much the baseline can differ between the various Member States. The ideal is, of course, to harmonize the baseline as much as possible by providing guidelines and methodologies, in addition to those set out in the Annexes to the Directive.

LE: Another often heard critique is that the Energy Services Directive allows the inclusion of benefits from measures that go back as far as 1991.

RB: This was the subject of much discussion. Some Member States had already established very complicated tax systems to steer consumption in the early nineties. They wanted to include the results from measures taken under these systems. To allow this, in some cases measures from 1991 and 1995 are accepted, but only under certain circumstances and if they are able to prove that the measures still have a significant effect today. Proving this can be very difficult, so the use of this clause will remain limited. The critique of this exceptional clause is thus a bit exaggerated.

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2. An Energy Efficiency Action Plan against time

LE: The Energy Services Directive requires all Member States to write a National Energy Efficiency Action Plan. But the Commission has also written its own EU Energy Efficiency Action Plan (EU EEAP). Should this be seen as a guideline for the national action plans?

RB: Yes, in part, but it is more than that. Besides providing guidelines to the Member States, it also tries to map all areas in which the European Commission itself can initiate energy efficiency measures. And perhaps even more importantly, it also provides information on plans on the revision of existing EU directives to bring them in line with the new more ambitious energy savings goals that are expected.

The idea was to strengthen existing legislation, because the legislative process was making it more and more difficult and time consuming to create new legislation. Revising existing legislation is often faster. And the clock is ticking, as you know, on climate change as well as on security of energy supply.

By revising existing legislation, you can correct the mistakes that have become apparent over the course of time. In my opinion, we have only partly succeeded in doing this. There is still work to do on such issues as the scope of and compliance with Directives. What is the use of ambitious, well-written legislation if a large share of the potential is not covered? What if there is little or no control regarding whether or not the secondary legislation (such as building regulations) is being correctly implemented? This is the main flaw in several EU directives. There is currently an ongoing discussion on how we can improve this.

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1. The Energy Services Directive versus the EE Action Plan

Leonardo Energy (LE): Mr. Bowie, what is the main target of the European Union regarding energy efficiency. At first glance, there is the Energy Services directive setting a goal of 1% energy savings per year, while the more recent second Energy Efficiency Action Plan has set the target of 20% energy savings by 2020, in line with 20% renewables and 20% CO2 emission reduction.

Randall Bowie (RB): There are two main differences between these two targets. First, the Energy Services Directive talks about energy end-use efficiency, that is, final energy use. The Action Plan is about savings in primary energy. Second, the Energy Services Directive sets a strong indicative target for each individual member state — 9% energy savings between 2007 and 2016 or 1% per year, while the Action Plan expresses the objective of 20% energy savings by 2020 as an average for the whole of the European Union.

That means that the 20% energy efficiency objective is not mandatory, but rather an objective. This is in contrast with the 20% renewables and 20% CO2 reduction targets. The Member States feared that external factors, not in their own hands, would prevent them from reaching the energy efficiency target. Since CO2 reductions can be achieved in many different ways, there was less fear of failure due to force majeur in that domain. This objective includes all primary energy, including energy production and transmission. It thus includes the emissions trading sector. It is also calculated as being in addition to business as usual, or above a baseline.

The Energy Services Directive target of 9% is almost mandatory in the sense that countries are obliged to make a measurable and verifiable effort to reach the target. This effort must also be reported on. Therefore the figure of 1% per year, while it is not mandatory that it actually be achieved, measures and programmes must be put in place and real efforts made to reach the target. Member States that fail to meet the target will thus be required to explain why they are not able to reach it. This places a number of mandatory elements in the target. The scope of the 9% target excludes the emissions trading sector. However, it is also calculated as being in addition to business as usual (or above a baseline), just as the 20% target is.

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Randall Bowie on the Energy Services Directive

The following article is the result of an interview with Randall Bowie and provides a brief overview of the efforts of the European Commission to improve the energy end-use efficiency throughout the EU. The article is published as an eBook so you can scroll the different pages using the titles below. The full article in further reading.

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Where is the ESCO industry going?

Last week, European ESCOs (Energy Services Companies) gathered in Nice for the ESCO Europe 2007 Conference. Energy services and energy management professionals exchanged ideas and presented concepts on drivers and opportunities, emerging tools and technologies for effective projects, energy performance contracting, access to financing and many other issues.

Even though the sector has made quite significant progress in the last few years, there are still barriers to tackle.

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Geopolitics of Energy with Samuele Furfari

The Leonardo ENERGY Program launches its interview program with energy experts by interviewing Samuele Furfari on Geopolitics of Energy. The following article is the result of the discussion and provides a brief overview on current energy issues. The article is published as an eBook so you can scroll the different pages using the titles below.

Samuele Furfari has been an official of the European Commission for over 25 years. He has built his entire career on the energy sector, working in the Directorate General for Energy and Transport. There, he participated in the development of the European energy policy and its application at community level, particularly through the creation of local and regional energy agencies and a number of initiatives like the Intelligent Energy Executive Agency and the ManagEnergy Program.

Furfari also teaches Geopolitics of Energy at the Free University of Brussels, where he graduated as a Chemical Engineer and subsequently obtained a PhD in coal gasification. He was born in 1953, has Italian nationality, and is married and the father of two children.

Samuele Furfari has recently published Le Monde et L’Energie. Enjeux Politiques. 1. Les clefs pour comprendre. This book was written over a five year period and is the first of a two volume series covering the geopolitics of energy. Furfari’s intent is to help people understand and form their own opinion about energy issues; hopefully one that is free from political correctness and media bias. He states his mission very clearly in the very last paragraph of this first volume:

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