Member states condemn UK efficiency opt-out

Note to readers: In October we explained that, with the collusion of senior officials in the European Commission, the UK is seeking to free-ride on existing measures to meet new targets set by the energy efficiency directive. Its accounting tricks would mean fewer emission cuts and fewer new jobs, but more energy imports and more expensive bills. But the UK's bid for preferential treatment is not backed up by legal provisions in the directive. This fact has now been recognised by Germany, Austria and Finland, who have written to the Commission to call for the UK's special exemption to be rejected. The issue is now with the Commission’s legal service; a decision is pending.

Perhaps some of you remember the embarrassing (for some) story about how the European Union’s 20% renewable energy target came into being? After the renewables directive was agreed, governments belatedly realised they had signed up to meeting a 20% share of energy rather than a 20% share of electricity… It was a much more ambitious target, but it was too late to back out.

Now it turns out that something similar has happened with the EU energy efficiency directive.

Two key agreements – both relating to the binding 1.5% annual savings target – made the deal on the energy efficiency directive possible in June.

The first allowed member states to use four exemptions (read ‘loopholes’), providing these do not lower the 1.5% target by more than 25%. One of these loopholes is to credit savings made before the directive is implemented in 2014. This is a legal accounting trick known as ‘early action’.

The second, but very hush-hush, agreement was that some member states could credit additional early actions on top of the 25% exemption bundle. It was a sort of loophole within a loophole, and the UK was its lead advocate. Without this compromise there would not have been a deal on the directive.

But the condition was that only those member states which already have ‘energy efficiency obligation schemes’ (i.e. savings targets for energy companies) in place, could credit this additional early action. Besides the UK, they were France, Denmark, Italy and Poland.

Now Germany, Austria, Finland, the Netherlands, Portugal, the Slovak Republic, Sweden and other member states have woken up to the fact that, as they don’t have energy efficiency obligation schemes, they don’t qualify for the extra exemption. They are furious, and Germany, Austria and Finland have written [1] to the European Commission to call for the extra exemption to be rejected.

On top of this, we now know that the right to use additional early action on top of the 25% limit was nothing more than a gentleman’s agreement made to secure the deal. It has no legal basis in the directive and should be rejected. If it is, the UK, France, Italy, Denmark and Poland will also have to make significantly (at least a third) more savings than they envisaged.

But will the UK and others be forced to comply? It seems senior officials in the European Commission’s energy department would prefer to respect the gentleman’s agreement unless there is an outcry against it. This is beginning to happen. ClientEarth, a non-profit environmental law organisation, has notified the Commission that the additional early action is legally unjustified. The letter from Germany, Austria and Finland adds additional weight and raises the stakes.

The Commission has referred the issue to its legal services department, which is expected to rule by early January at the latest. A strict interpretation of the directive should preclude granting a special exemption to the UK and the four other member states. But this is a highly politicised issue and this makes the outcome uncertain. The Commission's ruling will say a great deal about its commitment to energy efficiency policies – and the overall credibility of its climate and energy agenda. Governments are essentially seeking to cheat on their savings targets. They mustn’t get away with it.

By Brook Riley (Friends of the Earth Europe) and Erica Hope (Climate Action Network Europe)

[1] Germany, Austria and Finland letter to the European Commission