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Focus on Regulation

EU Agrees to First Energy Efficiency Directive

 Authored by Christopher Norton and Camilla Shires, Hogan Lovells London Office

Against a background of growing dependency on energy imports and the recognition that the EU is currently not on track to meet its 20% energy saving target by 2020, European policymakers have finally reached agreement on the first-ever Energy Efficiency Directive.  The Directive is intended to force Member States to step-up efforts to use energy more efficiently in the expectation that improved energy efficiency will result in more security of supply, greater cost competitiveness for EU industry and reduced CO2 emissions.

 The EU’s proposed measures, which apply across all sectors, are simple but ambitious.  There will be a legal obligation to establish energy saving schemes in each Member State: energy distributors or retail energy sales companies must save 1.5% of their energy sales by volume every year.  Public sector bodies will be expected to lead by example by purchasing and encouraging businesses to purchase energy efficient buildings, products and services.  Consumers will be empowered to better manage energy consumption through easy and free-of-charge access to accurate data, for example through the use of smart meters. There will be incentives for small and medium enterprises (SMEs) to undergo energy audits, whilst large organisations will face mandatory energy efficiency audits and a requirement to adopt energy management systems to help identify where reductions in energy usage can be made.  Finally, in order to improve efficiency in energy generation, Member States will be required to establish a national heat and cooling plan to serve as a basis for the sound planning of efficient heating and cooling infrastructures, with the aim, inter alia, of recovering  waste heat. Reaction to the Directive has been generally positive, but the Directive has not been without its critics. In particular, environmental groups are unhappy that there is no overall binding energy saving target and that instead, Member States will be allowed to set their own non-binding targets for energy efficiency.

 The Directive, adopted by the Committee of Permanent Representatives, must first be put to an Energy Committee vote, and then a plenary one, before it would come into force in January 2014.  If, in 2014 it does not look as if  Member States are collectively on track to achieve the 20% energy saving target for 2020, the Commission must propose “binding targets” in accordance with the new Directive.  More information and related documents on the Directive are available in English and other languages on the European Commission’s website.