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EU national governments set to slash energy efficiency aims: EC

Highlights

The European Commission's directive on binding measures to ensure the EUmeets its goal of boosting energy efficiency by 20% by 2020 is set to beseriously watered down by national governments, according to an internal ECanalysis seen by Platts.

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National energy and environment ministers are meeting this week inHorsens, Denmark, to discuss binding measures to meet the energy efficiencygoal, which is currently only voluntary. The EC has forecast that withoutbinding measures, the EU would only boost energy efficiency by 10% by 2020.

But the EC's initial analysis of the revised text preferred by thecouncil -- which represents national governments -- would only bring about38% of the energy savings targeted in the EC's original draft.

"The council's version of the Directive is thus estimated to reduceprimary energy consumption by about 58.1 millions of mt of oil equivalent,while the commission's proposal would deliver a saving of 151.5 million mtoe,which is needed to close the gap ... to achieve the 20% target," the ECanalysis states.

The binding measures seek to boost energy efficiency between 2013 and2020. They include an obligation on all energy suppliers to cut energy salesto end-users by 1.5% year-on-year and for the public sector to refurbish 3%of buildings by floor space to the highest energy efficiency standard eachyear.

SUPPLIER OBLIGATION CUT

But according to the EC analysis, the text being discussed by ministerswould water down the obligation on energy suppliers to just 1% or 1.25% ayear for four of the seven years up to 2020.

It would also allow suppliers to factor in some of their own energysavings, not just end-user savings, and it would exempt up to 40% of heavyindustries covered by the EU emissions trading system, while allowing energysavings made already up to five years ago to be included. The EC said thattogether this would cut energy savings to just 29.1 million mtoe comparedwith 74.9 in the EC proposal. It also waters down the public buildingsobligation, with national governments seeking to limit this just to centralgovernment buildings, cutting the projected energy saving to 0.4 million mtoecompared with 4.2 million mtoe.

Similarly, the EC proposal that energy efficiency must be considered inall public procurement becomes voluntary in the Council version and onlyapplies to the largest contracts, cutting projected energy savings to just0.6 million mtoe from 4.8 million mtoe. Other changes affect combined heatand power, which the EC wanted to make mandatory because of its greaterefficiency -- potentially saving 25 million mtoe of energy over seven years.The version being discussed by ministers would require just a cost-benefitanalysis rather than an obligation, which the EC says would save just 8.3million mtoe.

But on the plus side, ministers have proposed an additional requirementto boost the efficiency of existing power plants, which could deliver furtherenergy savings of 3.3 million mtoe. And they also want individual metersinstalled in apartment blocks that have communal metering.

National governments and the European Parliament need to agree on theproposals before they become law and the current Danish presidency, whichrepresents national governments, is hoping to hammer out a compromise byJune. It has started three-way talks with the EC and parliamentrepresentatives and these are set to continue in late April.

But the center-left group in the parliament has already slammedgovernments for their lack of ambition.

--Paul Whitehead, paul_whitehead@platts.com