New Commission Plan on Energy Efficiency Dovetail with Irish Intentions

27 Oct 2009

Joseph Curtin

Not so long ago on this blog I suggested that the EU had missed an open goal by not making the energy efficiency target of 20% savings by 2020 legally binding.

Why make the hard stuff – 20% renewables in total energy consumption and 20% emissions reductions – binding and leave the easy stuff voluntary? Especially when, as was pointed out “asking nicely has never worked before”  - no voluntary environmental target has ever worked.

Practically everyone agrees that energy efficiency make a lot of sense, not just on environmental and energy grounds, but because investing in energy efficiency can create jobs, improve national balance of payments, lead to health improvements etc.

This has lead the International Energy Agency, in a report published October 15 to ask: “Why is it that IEA member countries have not implemented the full suite of cost-effective energy efficiency policies or equivalent measures their leaders endorsed?”.

In fairness to Ireland, we are keeping our head down in the middle of the pack when it comes to implementing energy efficiency initiatives. In attempting to answer its own question the report notes that energy efficiency “continues to face pervasive barriers” and in economically challenging times, energy efficiency investment may have to compete with other funding priorities such as health, employment programmes etc.

Well it now seems that some in the European Commission agrees. A view has emerged that member states are falling behind on achieving targets – on current trends, savings of only slightly more than half of the 20% savings identified in the original plan would be achieved. In June 2009 the Commission launched a new consultation with a view to developing a revised plan, which is due to be published in November.

While the original plan identified twenty or so measures, the revised plan, entitled '7 Measures for 2 Million New EU Jobs', seeks to add focus to the original plan by concentrating on a seven effective measures.

Most significantly, in a leaked draft, the new plan would introduce mandatory energy-saving obligations on member states "in line" with the objective of using 20% less energy in 2020. Targets would be either sector-specific, or cover the entire economy.

An impact assessment of various policy design options would decide how the aggregate measures would be shared among member states. Several member states do not share the Commission’s view that measures would be cost-effective and are said to be concerned at the costs of implementing energy efficiency measures. Others object to additional legally binding measures in light of existing targets for emissions and renewables.

Buildings – responsible for 40% of the EU’s energy use - are given the highest priority in the draft. The sector represents 40% of Europe's energy consumption, but so far little has been done to harness the immense savings potential.

The Commission proposes the retrofitting of 15 million buildings, which it estimates would save Europe 66 million tones of CO2 and create 300,000 direct and 1.1 million indirect jobs each year.
While no EU funds are earmarked, the establishment of National Energy Efficiency Funds with revenues from emissions trading to improve the efficiency of their buildings is identified as an option. It also suggests that unused EU monies could be earmarked for the project.

Another proposal would oblige member states’ utilities to establish trading schemes for energy efficiency permits.

While the proposals would certainly have profound implications and would merit further exploration in the Joint Oireachtas Committee on European Affairs, several plans are afoot in Ireland which dovetail the Commissions direction.

The Commissions proposals fit exactly with a plan outlined in the IIEA’s latest report which calls for a National Energy Efficiency Retrofit Programme for Ireland’s residential housing sector. This programme proposes four options for leveraging the estimated €14.5 billion investment which would be required, including a utility driven instrument, a range of regulatory measures and use of carbon taxation revenues.

A proposal closely reflecting some of the options presented in this report will, according to the Sunday Business Post, be brought to cabinet and could feature in the December budget.

The Irish government is also said to be considering a proposal that would see the upgrade of thousands of public buildings over a five-year period. The department of Energy along with Sustainable Energy Ireland have their hands full between now and the December budget. Getting the technical policy design details right is essential.

A number of international organisations and EU member states are said to be very closely monitoring developments in Ireland, which is now seen as attempting to move from the middle of the pack on energy efficiency and the green economy, to a position in the vanguard.

There certainly remains much room for improvement.

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