EED accounting tricks vol 2: crediting savings before they've been achieved

We call it salami tactics: the EU Council is cutting away the Energy Efficiency Directive slice by slice. One tactic is to count savings made prior to the directive’s implementation (see our story on ‘early action’ ). Another is to credit savings before they have actually been achieved.

How this works: several member states are trying to set the 1.5% target in Article 6 so that each year’s required savings would actually be delivered over a 15-25 year timeframe. This means that real annual savings would be just a fraction of the official savings reported to the Commission.

We’re still not sure exactly how many member states are in favour of this definition of ‘lifetime savings’. But it seems the UK is one of them. This at least is what officials from the UK’s Department of Energy and Climate Change (DECC) told us in a meeting in London on March 21st. See below for our follow up email to Tom Bastin, Sarah Meagher and James Acord, three of the DECC officials leading the UK’s work on the directive.

Our figures are in terawatt hours. 1000 TWh are equivalent to 85 million tons of oil equivalent (mtoe). See IEA conversion table

“Dear Tom, Sarah, James,

Thanks again for a very interesting meeting on Wednesday. We’re writing to follow up the discussion on the 1.5% target in Article 6 and in particular the lifetime savings model you described.

If our understanding of your lifetime model is correct then we’re seriously concerned that the statistical savings are totally disconnected from the real savings. Your point – if we understood it correctly – is that each year’s target does not have to be met by real savings delivered in that year. Instead, measures would be put in place that would deliver the savings over their whole lifetime.

As the Commission puts it in their non-paper, this means “ claiming savings that will, in reality, not materialise for many years to come ”.

Let’s try this out with some numbers:

The UK’s final energy consumption (minus transport) is very roughly 1000 TWh / year. In order to meet the 1.5% target the UK would have to achieve 1 ^st year savings of 15 TWh. According to the method you described in the meeting these 15TWh would be met by installing measures that over their lifetime would deliver 15TWh. Assuming a lifetime of 20 years this means the real 1 ^st year savings would actually be 1/20 of 15 TWh = 0.75 TWh.

If this is your understanding of the 1.5% target then we have some serious problems. The most obvious is that the benefits that result from energy savings would be lost. Take GHG reductions: savings of 15TWh roughly correspond to 3 million tons of CO2 equivalent. But savings of 0.75 TWh are the equivalent of just 0.15 MT CO2e. A huge difference – especially given the scientific case for large short term GHG reductions.

Please get back to us as soon as possible on this issue! Our position: a 1 ^st year target of 15 TWh must be met with 15 TWh real on-the-ground savings in that year”.

Does DECC fully realise the implications of what it’s calling for? We’re still waiting for their reply. The point is that if accounting tricks to meet the 1.5% target are disastrous for greenhouse gas emission cuts, they’re equally bad for cost savings and energy imports. Salami tactics indeed.

The views expressed in this column are those of the columnist and do not necessarily reflect the views of eceee or any of its members.