After lengthy, extremely complicated negotiations, a target of 20% energy savings for the EU as a whole by 2020 has been set, as European ministers formally adopted the Energy Efficiency Directive yesterday.
Member states now have to propose, by April next year, their national indicative targets and how they will achieve them. The Commission then has to calculate whether, together, they will total 20% for the continent as a whole by 2020.
Britain does not currently have any target for reducing energy use, but DECC has said that one will be published by April.
Under the legislation, energy companies will have to reduce their sales to industrial and household customers by 1.5% every year, meaning that they will have to recalibrate their business plans so that selling energy efficiency advice becomes increasingly a part of the services they offer.
The Directive also stipulates that 3% of public buildings that are owned and occupied by central government must be renovated every year, and each member state must draw up a roadmap on how it will make the entire building sector more energy-efficient by 2050.
Britain is already way ahead on this compared to its European counterparts with the establishment of the Green Deal, Zero Carbon Homes and the Green Investment Bank.
There are also requirements for energy audits and energy management by large firms, which are already encouraged here under mandatory carbon reporting.
A formal assessment of the potential for district heating and combined heat and power generation (CHP) throughout the EU must be made by 2015.
The final vote in the Council saw Portugal and Spain opposing and Finland abstaining. The directive enters into force in November. The European Commission will undertake reviews of progress in 2014 and 2016.
Energy Commissioner Günther Oettinger welcomed the news, and said: “I call upon member states and stakeholders for extra efforts to bring its provisions into life. The Commission also remains dedicated and committed to continue its support to the process".
Carbon pricingThe Government's policy for zero carbon new homes by 2016 will help to contribute to energy efficiency targets.
Construction companies have been researching the most cost-efficient means of attaining the target, and this week published a set of ‘Allowable Solutions’ that may be taken by home builders.
E.ON's Marco Marijewycz, who is the utility's Strategic Lead in the discussions, commented that "the most striking insight which emerges from this process is the consensus amongst key stakeholders that Allowable Solutions has the potential to catalyse both cross sector innovation and the economic rejuvenation of our communities via a low carbon trajectory."
This boost for jobs and innovation will be found across the board of all sectors affected by the Directive.
But Marijewycz goes on to point out that the price of carbon would be a crucial factor in attaining any targets. "What is emphatically clear is the desire for clarity now on the mechanisms for pricing carbon within any such framework. This clarity is essential so as to enable key market actors to strategically plan now ahead of 2016.”
Certainty about the price of carbon, however, is not going to come soon. Yesterday, the EU Parliament announced in its legislative timetable on its website that it won't be until February that it will vote on whether the Commission has the legal power to intervene in Europe's $148-billion carbon market.
This delays even further a decision on whether it will press ahead with its controversial plan to prop up the moribund carbon trading prices.
The six Allowable Solutions are certainly in line with the Directive, including investing in social housing retrofitting initiatives and district heating, as well as low carbon lighting, particularly LEDs.
Embodied carbon, which is the fossil-fuelled energy cost of manufacturing products, also figures, and this is covered by the Directive's pressure on energy utility companies.