S.4.1. The Renewable Energy Directive

D.2.2. The Internal Energy Market

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EU strikes deals on energy efficiency targets and governance rules

Friday, June 22, 2018

On 19 June 2018, the negotiators from the EC, EP, and the Council reached an important agreement on the Energy Efficiency Directive before proceeding with the lengthy debates on the Regulation on the Governance of the Energy Union, which also culminated with a deal in the early hours of 20 June.

While the previous fifth trilogue on the Energy Efficiency Directive (EED) fell apart (see news of 15 June 2018: ‘EU strikes deal on new RES Directive after trilogue on Energy Efficiency fails’), the sixth round of talks emerged successful after the MEPs made some important concessions. The co-legislators agreed on a 32,5% energy efficiency target by 2030, as well as a 0,8% target for real annual savings for 2021-2030.

The discussion on the RES and energy efficiency Directives displayed some similarities. However the negotiators agreed on a legally-binding EU-wide 32% RES target, while the 0,5% efficiency higher “headline” target is indicative and non-binding, this in spite of previously being identified by the as one of its main red lines. Both the RES Directive and the EED will include a 2023 review clause, which is expected will further align the new legislative act towards meeting the goals set forth by the Paris Agreement on climate change.

The negotiators also settled on a number of important additional measures such as requirements for long-term planning and coordination to achieve the Paris agreement objectives, as well as a new compulsory requirement to use efficiency measures to tackle energy poverty. Furthermore, the new legislation would allow the EC to monitor achieved and adopt remedy measures as needed.

As had been the case for the RES Directive, the concessions and determination on all sides to conclude the discussions on energy efficiency were criticised by environmental NGOs and some MEPs, who claimed that the newly agreed “headline” energy efficiency target is insufficient for the EU to meet its commitments under the Paris Agreement. Many will now concentrate their efforts on the review clause to try to convince the legislators to adopt a higher 2030 target in 2023.

The agreement on EED allowed to start another major trilogue, namely the one on the proposed Regulation on the Governance of the Energy Union. The negotiations on the so-called “umbrella Regulation” were finalised in the early morning of 20 June after another all-night session similar to the final trilogue on the RES Directive the week before.

The new legislative proposals would replace some of the nationally binding targets (e.g. the RES target) with EU-wide goals. The Governance file thus aims to alleviate the issues that may arise from the transition by providing a legal framework for fulfilling the EU commitments under the Paris Agreement through regular monitoring, check-ups, and progress reviews. Additionally, the new Governance Regulation will allow links between the RES Directive and EED while enhancing their functionality. This is expected to increase the overall effectiveness of the new energy laws.

One of the MEPs’ “red lines” coming into the final trilogue was the objective to achieve net-zero emissions by 2050. In this scenario, carbon emissions and reductions are expected to balance each other out. However, during the debate the lead EP negotiators, Green MEPs Claude Turmes and Michele Rivasi, had to make some concessions by agreeing to substitute the fixed date by a more ambiguous “as early as possible”.

The co-legislators also agreed that the EC will need to propose by 01 April 2019 a 2050 EU strategy for greenhouse gas emissions in line with the Paris Agreement. The analysis of said strategy will need to take into account: (i) the global and EU carbon budget to keep the increase in global warming below 2°C; and (ii) scenarios for how the EU would achieve the goal of net-zero emissions by 2050. The EC is expected to deliver the updated new strategy by the end of 2018.

In a recent interview, Claude Turmes, who was officially sworn in on 20 June as the new secretary of state for sustainable development and infrastructure for Luxembourg, mentioned that by the end of 2019, national governments “will have to present both 2030 and 2050 National Energy and Climate Plans (NECPs)”.

Furthermore, the new Regulation sets the path for Member States to contribute to the EU-wide RES target of 32% by 2030. According to the agreement, the EU members must achieve together 18% of the EU-wide RES goal by 2022, 43% by 2025, and 65% by 2027 before reaching 100% of the objective in 2030. A similar “gap-filler” mechanism was also adopted for the EED. There are, however, differences in the mechanism: under the EED, the EC has the exclusive right to “intervene” and decide on the measures to “fill the gap” if and when a Member State is not on track with its commitments, while under the RES Directive, the EC may only “intervene” by requesting that national authorities adopt the required measures.

At the same time as the dialogues took place on 19 June 2018, the Official Journal of the EU (OJ) included the first published legislation of the “Clean Energy for All Europeans” Package, namely Directive 2018/844 also known as the Energy Performance of Buildings Directive (see news of 14 May 2018: ‘First parts of the “Clean Energy for All Europeans” legislative Package adopted’). The new Directive was adopted and will come into force on 09 July 2018. Because it relies heavily on the EED and Governance Regulation, the reaching of an agreement on the latter two means that the Energy Performance of Buildings Directive can now be implemented with less uncertainty.

The provisional agreements reached by the EP and Council negotiators still need to be adopted by their respective EP Committees then endorsed by the EP (expected during the October EP Plenary session) then finally approved by the Council of the EU, after which the proposed legislations will be published in the OJEU. The Governance Regulation will become immediately applicable to all Member States upon publication, while Member States will have 18 months to transpose into national law the EED from publication.

In the coming months, the negotiators will proceed with the trilogues on the remaining four files of the Package, starting with the ‘Regulation on the Electricity Market’ and the ‘Directive on Common Rules for the Internal Market in Electricity’ (see news of 15 June: ‘Upcoming Austrian Council of the EU Presidency presents energy priorities for next six months’).