Fiona Hall MEP writes: Behind the scenes – negotiating the EU Energy Efficiency Directive

While the UK Draft Energy Bill is creating headlines in the UK as it makes its way through Parliament, the EU agreed on what is regarded as the biggest ever piece of legislation in the field of energy efficiency earlier in the summer. The adoption of the Energy Efficiency Directive (EED) was preceded by a whole year of tough political scrutiny and weeks of negotiations between the European Parliament and Member State ministers in the Council, led by the Danish Presidency. Both Chris Huhne and later Ed Davey were heavily involved in these negotiations for the UK, which was one of the most active and vocal Member States during the whole process.

The EED’s aim is to ensure that the EU 20% energy savings target agreed back in 2007 by all 27 Heads of State and Government is actually reached. Using less energy is the cheapest way of cutting carbon emissions while also making the economy more efficient and creating jobs. The European Commission, in charge of producing the original draft of the EED proposal last year, estimated that cutting EU energy consumption by 20% by 2020 would result in savings of 6 billion EUR annually on avoided energy infrastructure costs, 38 billion EUR annually on reduced energy imports and the creation of 2 million new jobs.

The negotiations on the text took place against a backdrop of severe austerity in Member States, leading to a reluctance by national ministers to agree to measures that would increase spending in the short term even when the longer term economic benefits were indisputable. The legislative text finally agreed should lead to roughly 17% savings overall. This falls short of the 2010 Liberal Democrat manifesto target of improving UK energy efficiency by as much as 30% by 2020, but represents a major improvement on the status quo which was set to deliver an energy efficiency gain of only 9%. The Commission has promised to present some extra measures, particularly on eco-design requirements for energy efficient appliances, to close the remaining gap.

Member States’ insistence on flexibility was driven not only by budget constraints but also by a wish to ensure that various national energy efficiency measures already in place did not have to be rewritten. The UK was particularly keen for the Green Deal and the Energy Company Obligation (ECO) to count in the delivery of year-on-year savings. Until the very last moment on the final day of the negotiations it was unclear whether the Parliament and the Danish Presidency would be able to reach a deal given the huge divergence in ambition between the positions of the Parliament and the Council. It was in part thanks to the late night personal intervention of UK Energy and Climate Change Secretary Ed Davey that a deal was finally reached. By agreeing that the UK could manage with a year’s less time to deliver its savings, Ed broke the deadlock and saved the Directive.

The key new measure in the EED is a requirement on all Member States to put in place obligations on energy suppliers to achieve annual savings. This measure was modelled on the UK’s Carbon Emissions Reduction Target (CERT), which is seen to have been effective in promoting insulation and the installation of energy efficient appliances and thus in dampening the rise in household energy bills.

Another important new element in the Directive – introduced not by the Commission but by MEPs – is a requirement for Member States to adopt long-term comprehensive plans for the “deep” – i.e. very substantial – renovation of existing buildings. In the UK our building stock accounts for more than a third of our total energy consumption and carbon emissions. Given that 80% of the existing buildings in the UK are likely to still be standing in 2050, a long-term plan for how to bring those buildings up to high standards of energy efficiency is vital to the achievement of Zero Carbon Britain.

The final Energy Efficiency text will soon be available in the Official Journal of the EU.

* North East England MEP Fiona Hall led the negotiations on the EED for the ALDE (Liberals and Democrats) Group in the European Parliament.

* Fiona Hall is Leader of the UK Liberal Democrat Delegation in the European Parliament and MEP for the North East of England.

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  • Richard Dean 29th Aug '12 - 12:32pm

    This looks interesting and good. The EU working as it should – as a mechanism of negotiation between sovereign nations. But I am puzzled as to how cutting energy consumption would result in the creation of 2 million new jobs. How does this happen? Reducing infrastructure spending by 6 billion annually presumably reduces employment in construction. Are the jobs created by freeing the 38 billion that would otherwise go to paying for energy imports?

  • Alex Macfie 29th Aug '12 - 1:33pm

    This is all very technocratic. I think our MEPs have a tendency to forget that they are elected politicians whose brief includes promoting to the public the liberal/ALDE/Lib Dem message in the European Parliament, and seeking to maximise the vote for the Lib Dems in European elections based on their own records. I don’t see any of that here. Fiona may be standing down in 2014, but she should be using this column to make the case for supporting her successor at the next election.

    She mentions one element in the EED that was introduced by MEPs — which MEPs supported it, from which parties?
    A lot is said about the negotiations between the EP and the Council/Commission, but how did the Parliament arrive at its position? Which groups supported deep renovation, or any other amendments? How did the Lib Dem/ALDE position contrast with the Conservative/ECR and the Labour/S&D positions? That is what we need to know in the European Parliament. In 2014, our European Parliamentary election campaign needs to point to specific things that our group has supported in proposed EU laws, say why they are good from a liberal PoV, and contrast them with what the other parties do. That is the only way we are going to do well in 2014.

  • David Pollard 29th Aug '12 - 8:28pm

    This is all good stuff. In answer to Richard, I once calculated that the amount of business generated in reducing energy consumption in buildings was little different from building new power stations to supply the additional load to new buildings and of course insulation is labour intensive when compared with the capital intensive nature of power plant. And of course, when energy bills are reduced, money is released to spend on other things like shoes and handbags.

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