European Commission must be more ambitious in its energy efficiency targets says building sector

The European Commission should set a target for retrofitting all of the continent’s existing buildings to a “Nearly Zero Energy” standard by 2050. That is the request in a letter to the Commission signed by the chief executives of 42 major building firms and six industry trade associations.

The target would be enshrined in the upcoming revision of the Energy Performance of Building Directive and the Energy Efficiency Directive, which are currently under review.

Arguing that “businesses, investors, citizens, governments, all need a clear 2050 vision to put the ambition level of the Paris Agreement into practice”, they state that doing so would provide an opportunity to create jobs and economic growth.

The letter reads: “It is clear that the Paris commitment cannot be honoured without drastically reducing energy consumption in our buildings; the EU building stock emits over one-third of our CO2 emissions, three-quarters of our buildings are inefficient, and up to four-fifths will still be in use in 2050. We need EU wide action to drive the transformation of our inefficient building stock and make it a resilient component of the energy system of the 21st century.”

It continues: “EU wide leadership and action in the construction and building sector will spur European jobs and growth (in particular for SMEs, which make up 90 per cent of the construction sector). A high level political commitment for renovation will give industry the much needed signal and certainty to unlock investments, in turn removing some of the market failures.

“Most of all, making Europe’s buildings better through a mass EU-wide renovation movement will bring invaluable benefits to the whole of society by helping deliver something that every European citizen wants and deserves: a comfortable, safe and affordable home. This is a ‘win-win’ for Europe.”

This target is in line with the aims of the World Green Building Council’s Advancing Net Zero project to make all the world’s buildings ‘net zero’ of emissions by 2050. It builds on a push to double efficiency by 2030.

Launched in June, this program involves Green Building Councils from Australia, Brazil, Canada, Germany, India, Netherlands, South Africa and Sweden who will develop clear action plans, with an aim to launch a national net zero certification.

Energy efficiency package postponed

Despite the backing of the European Parliament, the European Commission appears reluctant to back energy efficiency.

At the beginning of this week it was slammed by the Coalition on Energy Savings for its announcement that the energy efficiency package will not be launched before the end of the year.

The package will define a target for energy efficiency for 2030 and extend the main elements of the Energy Efficiency Directive beyond 2020, as well as discuss buildings’ energy performance and financing.

“This delay undermines the credibility of the European Commission to drive forward the EU with big and compelling projects like energy efficiency, which delivers benefits for people and business and which is the EU’s first action to fight climate change,” secretary general of the Coalition for Energy Savings Stefan Scheuer said.

“[European Commission] president [Jean-Claude] Juncker must not hesitate to deliver on his promise to propose a more ambitious and binding energy efficiency target for 2030.”

The European Parliament has repeatedly called for a binding 40 per cent energy reduction target by 2030 in line with the already identified cost-effective potential for implementing energy saving measures. The target is currently set at a reduction of 20 per cent in energy use by 2020.

Energy efficiency mortgage scheme

Further backing the increasing desire for making European buildings more energy efficient, a new financing initiative, that would potentially offer better borrowing rates on mortgages for homebuyers purchasing more energy-efficient homes or carrying out energy-saving retrofits within properties, was presented by energy and building sector professionals from across Europe last week.

The European Energy Efficiency Mortgage was launched at the World Green Building Council’s “Build Upon” summit in Madrid by the European Mortgage Federation, which consists of the European Covered Bond Council with partners.

• See EU residents set to get cheaper home loans for energy efficient houses

The scheme effectively creates a “pan-European mortgage financing system” in order to make energy efficiency measures more accessible and affordable for home-buyers.

For banks and investors, the mortgage could allow for loans that represent a lower risk on the balance sheet and could therefore qualify for a better capital treatment.

It could also ensure that banks are able to recognise “energy-efficient” assets in their risk-profiling, which would begin to help the market price-in the added value of energy-efficient real estate.

The project is the first time a group of major banks and mortgage lenders have sat down with businesses and organisations from the building and energy industries to address the concept of energy efficient mortgages.

Creating a private bank financing mechanism to encourage the energy efficient improvement of households would be a key means of helping the EU to meet its energy saving targets.

Alongside the EMF-ECBC, the project partners are the Ca’Foscari University of Venice, RICS, European Regional Network of Green Building Councils, E.ON, and SAFE Goethe University Frankfurt.

Over the coming months, they will begin a mapping exercise in relation to existing or past financing initiatives, energy efficiency indicators and valuation practices, with a view to identifying best practices with which to move the project forward. It will explore the link between energy efficiency and borrower’s reduced probability of default and the increase in value of energy efficient properties.

The experts will meet again in Brussels in February 2017, followed by a public event at which the next stage will be decided.

Europeans can also generate half their energy at home

Continuing the news from Europe on energy and buildings, it also emerged last week that half of EU citizens – including local communities, schools and hospitals – could be producing their own renewable electricity by 2050.

A study by Dutch consultancy firm CE Delft that evaluated the potential of decentralised power generation across the continent found that 264 million people in Europe could be producing their own renewable electricity by 2050 and meet 45 per cent of the EU’s energy demand, provided the right regulatory framework is put in place.

Sweden looks like leading the way, with an estimated 79 per cent of the population being able to produce their own energy in 2050.

Germany and other EU countries like the Netherlands already champion energy production by households, which can sell surplus electricity back to the grid at a guaranteed price.

“But in Spain, there is a ‘sun tax’ which makes it very expensive to install solar panels on your roofs or have energy storage at home. And there is only a handful of cooperatives,” said Sebastian Mang, climate change and energy officer at Greenpeace EU, which is among the organisations behind the study. “Yet across Germany, you see solar panels on the roofs and hundreds of energy cooperatives flourishing.”

The organisations are calling for the European Commission to enshrine so-called “energy citizens” at the centre of the EU’s Energy Union initiative.

David Thorpe is the author of:

• Best Practices and Case Studies for Industrial Energy Efficiency Improvement (with Oung, K. and Fawkes, S. UNEP, 2016)
• A London Conversation: Business Briefing on Green Bonds (The Fifth Estate, 2015)
• The One Planet Life (Introduction: Jane Davidson. Routledge, 2015)
• Earthscan Expert Guide to Energy Management in Buildings (Earthscan, 2013)
• Earthscan Expert Guide to Energy Management in Industry (Earthscan, 2013)
• Earthscan Expert Guide to Solar Technology (Earthscan, 2011)
• Earthscan Expert Guide to Sustainable Home Refurbishment

Large companies to be forced to implement energy efficiency

Shadow Chancellor Ed Balls last night criticised the Government for not doing enough to promote energy efficiency.

Proposals for an Energy Savings Opportunity Scheme (ESOS) have been published by the Government that will make it compulsory for large companies to undertake energy audits.

The aim is to enable companies to identify opportunities for saving on their energy bills through improved energy efficiency. The Department for Energy and Climate Change (DECC) estimates that up to £1.9 billion could be saved.

The proposals form part of the Government's implementation of the EU Energy Efficiency Directive, under which large enterprises have to identify cost-effective ways to invest in energy efficiency. These ESOS assessments will be carried out by approved assessors.

The proposed scheme would apply to all large enterprises in the UK, including charities and any other UK organisations outside the public sector, if sufficiently large. Small and medium enterprises (SMEs) will not be required to participate, unless they are part of a large corporate group enterprise, but could do so on a voluntary basis.

An ESOS assessment would undertake a review of the total energy use and energy efficiency of the organisation, including the measurement of an energy intensity ratio (e.g. energy use per employee or per unit of output) and, as appropriate, considering the variation in energy use over time within key buildings, key industrial operations, and key transport activities (exempting de minimis energy use).

The review would need to be proportionate and sufficiently representative “to permit the drawing of a reliable picture of overall energy performance” of the organisation and present clear information on potential savings, which identify and quantify cost-effective energy savings opportunities.

These should be, wherever practical, based on life cycle assessments (LCA) instead of simple payback periods (SPP), as the former are more realistic.

All procedures for doing this are outlined under the international standard for energy management, ISO 50001, with which all energy and facility managers are encouraged to become competent.

The Government has come under sustained criticism recently for failing to do enough to promote energy efficiency.

Last night, speaking at a Green Alliance event, promoting their report, which said that £180 billion of new infrastructure is at risk without political leadership, the Shadow Chancellor, Ed Balls, promised that Labour, if elected, would set a decarbonisation target and do more to promote energy efficiency.

He attacked the Chancellor George Osborne for “scaring away” green investment in infrastructure and energy efficiency.

He said that on energy efficiency the government had “failed to deliver. The construction industry is crying out for clarity on the next steps in Labour’s successful zero-carbon homes strategy. The Green Deal, which replaced previous successful domestic energy efficiency schemes, has so far helped just four households this year".

He added: "We will also put an end to the mixed signals that are causing confusion and deterring investment by posing a false choice between gas and renewable energy. We support efforts to secure new domestic gas supply, although there are real environmental concerns that must be addressed. We will need a secure gas supply in the decades ahead.

"But while 'fracking' has had a major impact on energy prices in the US, most experts believe any impact in Europe is uncertain at best. Any balanced and low-carbon energy strategy for the years ahead will need gas, renewable energy and, in our view, nuclear too," he concluded.

DECC's consultation will close on 3 October 2013.


Shadow Chancellor Ed Balls last night criticised the Government for not doing enough to promote energy efficiency.

Britain ahead of game as ministers approve Energy Efficiency Directive

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 pricing

The 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.

Watered down Energy Efficiency Directive still represents a "step change"

Martin Lidegaard, Denmark's energy and climate minister, a keen cyclist, says: "It’s only 17% because that was possible to get"

Britain helped to water down the final text of the Energy Efficiency Directive being finalised today, which will set a new legal target of 17% reductions in energy use by 2020.

Martin Lidegaard, Denmark's energy and climate minister, will today present the final text of the Energy Efficiency Directive (EED), to the Energy Council meeting for ratification.

The European Parliament, the Council and the EU Commission reached a political agreement on the Energy Efficiency Directive yesterday. Today, the Permanent Representatives Committee or Coreper approved it. The European Parliament and the Council still need to give their approval.

If it does, it will be the first time ever that Europe has had a mandatory energy efficiency target.

Securing this has been the Danish Presidency's flagship project during its six-month term, which concludes at the end of this month, and it is pleased to get a resolution. However it is disappointed that the target for reducing Europe's energy consumption will be set at 17% rather than 20% as originally hoped.

In a statement, the European Commission said: “The cheapest energy is the one we do not consume. The countdown to achieve Europe's 20% energy efficiency target for 2020 has started. Without the Energy Efficiency Directive, Europe would only achieve approximately 10% out of 2020. With the legally binding measures introduced by the energy efficiency directive, it is estimated that the EU could reach approximately 17%."

"There have been tough negotiations," commented Lidegaard. “It’s only 17% because that was possible to get. We fought like lions. We started at 13%, and now we have 17%, and that is actually something we are proud of,” Lidegaard said. Since it is a minimum directive, member states can actually go further than 17%.

What the Directive says

The main core of the compromise final Directive is an obligation on energy companies to help their customers save energy. The industry and the energy sector will have a shared responsibility to deliver concrete savings in, for example, energy production, particularly through co-generation and district heating, through building insulation and using energy efficient appliances.

The Directive also requires the public sector to take the lead in the form of requirements for the renovation of state buildings and the promotion of green public procurement.

Under the Directive, Member States must also develop long term renovation strategies for the whole building stock, including policies to stimulate deep renovations.

Its opponents have charged that it could impede growth and that there is no money during the economic crisis to invest in the technology required to save money in the longer term.

Climate Commissioner Connie Hedegaard was today putting a brave face on the deal: "Although the Commission wanted to go much further with our proposal, this deal is an important step forward in our climate efforts," she said.

"The directive will help reduce our dependence on imported fossil fuels, for which the EU paid EUR 573 billion last year, and also create hundreds of thousands of local jobs in Europe. Now it is up to Member States to deliver, and bridge the gap between what was agreed yesterday and our 20% energy efficiency objective."

If all foreseen energy efficiency measures can be implemented within the next decade, every household in Europe could save up to € 1,000 every year.

"This is a big step ahead," Energy Commissioner Günther Oettinger affirmed. "For the very first time we have legally binding energy efficiency measures. Europe is now much better placed to achieve its 20% energy efficiency target for 2020."

But commentators said that instead it is likely to lead to energy savings of 15%.

Britain weakened the Directive

EU sources said it was Britain, not Poland, which was the final obstacle to an improved deal, as it tried at the last moment to weaken a core target.

In the original proposal, utilities were to deliver energy savings equivalent to 1.5% of annual sales from 2014 to 2020. But even after member states had reduced this closer to 1%, British negotiators demanded an amendment that would mean savings from four years before and three years afterwards could be taken into account, which has the effect of exempting it from taking any further action.

WWF-UK criticised the government for "cynically undermining" the Directive, saying that it had "effectively scuppered" the potential for energy savings across Europe.

Friends of the Earth energy campaigner Dave Timms said this was achieved "by opposing an overall binding energy saving target and, at the last minute, insisting on loopholes so it could claim credit for old policies as a way of meeting its future obligation.

"Undermining European efforts to promote energy efficiency while proclaiming the benefits at home is both dishonest and damaging, especially from a self-proclaimed 'greenest government ever'."

The British representation in Brussels declined to comment, but the UK energy secretary, Ed Davey was yesterday claiming credit for the UK in taking a "central role in not only brokering a deal but also increasing its ambition".

"It signals a step change in energy efficiency and for the first time sets legally binding energy saving targets," he said.

"Our experience of our own energy efficiency policies has helped ensure that the Directive promotes practical and cost-effective action that will deliver real savings – and that it strikes the right balance between prescription and the flexibility necessary to allow for national circumstances and for innovative policy approaches.

"The UK supported the move to ambitious, binding, energy saving targets throughout the negotiations and played a crucial role in defining this target so that progress can be clearly and effectively demonstrated."

But Erica Hope from Climate Action Network Europe, said: "Governments have let energy companies off the hook by forcing through a number of exemptions. The Commission must follow-up on this to ensure efficiency measures remain as effective as possible and to prevent abuse of exemptions".

Where the Directive will fail

Paolo Di Stefano of the Coalition for Energy Savings Coalition for Energy Savings (CES) said "The coalition's Gapometer shows that the deal for a Directive would only close half of the gap to the EU’s 20% energy savings target for 2020, as many efficiency measures proposed by Parliament have been watered down significantly".

This half is around 190 Mtoe [mega-tonnes of oil equivalent] of the EU energy saving target of 368 Mtoe by 2020. The coalition calculates that the text agreed would realise around 15% savings by 2020 as follows:

• Most savings result from the annual savings under the efficiency obligations schemes; these will be reduced by up to 25% if actions be for 2014 are taken into account


• Requirements for renovating public buildings and procurement have been limited to central, rather than local, government, which significantly reduces their impact


• Auditing is mandatory, but metering and billing information is now largely voluntary.

"The restriction of public building renovation and procurement obligations to central government reduces them to mere symbolism," commented Jan te Bos, director general of Eurima and Chair of the CES.

New EU efficiency measures in the pipeline, like improved eco-design for boilers and water heaters, or planned, like new CO2 standards for cars, can help to further reduce the gap.

Opportunities for a new business model

Claude Turmes, a Green member of the European Parliament, who has led the parliamentary contribution to the legislation, nevertheless said it represented progress: "We are changing the business model. The future business model of energy companies would also be energy efficiency service business. This is about a cultural business model change and that is why the fight is so brutal."

The cogeneration sector sees opportunities: "With this deal [member states] will not only have to reassess the economic potential for CHP [combined heat and power plants] but will also have to put forward measures to trigger investment decisions," said Fiona Riddoch, Managing Director of COGEN Europe.

The requirements for CHP and improving the efficiency of the energy system are slightly improved over existing rules.

"A competitive market is much better than a regulated market, it is faster and cheaper,” Claus Fest of RWE Effizienz GmbH in Germany told a workshop organised by industry group Eurelectric. “We don’t need anyone to tell us to do energy efficiency, we are doing it right now."

Yet, “the only problem is that we have tried this approach before with the Energy Services Directive, but it didn't work,” countered Brook Riley of Friends of the Earth Europe.

The Prince of Wales's EU Corporate Leaders Group on Climate Change (EU CLG), which represents companies including Alstom, Tesco, Unilever, Philips, Kingfisher and United Technologies, said: “The Energy Efficiency Directive strikes the right balance: it does not place unnecessary or burdensome regulations on businesses, especially where those measures already exist at the national level. Those countries that question the rationale for the Energy Efficiency Directive should think about the impact of doing nothing."

Fatih Birol, the chief economist of the International Energy Agency, repeated his call to EU countries to cease the "absurd" strategies they use to subsidise fossil fuels and adopt the Directive. “Not to push the energy efficiency measures is another way of asking for higher emissions, higher energy import bills and higher energy insecurity," Birol said.

"We all have to push the energy efficiency measures throughout the energy supply chain,” he said. “Europe being a champion of climate change [policies], it needs also to be a champion of energy efficiency.”

"I think member states still have their heads in the sand. The [European] Parliament is doing what it can to oblige member states to face reality and recognise the benefits. But I think the Council will move,” Riley said.

In 2014, the Commission will assess national targets and there will be further measures. In 2016 there will be a review of progress towards the 2020 obligations.

Job creation potential of the Energy Efficiency Directive

The crucial Energy Efficiency Directive is being discussed at today's meeting of the Transport and Energy Council in Brussels.

Martin Lidegaard, the Danish Minister of Climate, Energy and Buildings, a key helmsman of the EED, said yesterday that, “As Presidency, we will do our utmost to deliver on this request to get an agreement on energy efficiency by the end of June 2012, and to make sure that the current gap to the 20% Energy Efficiency target in 2020 is closed”.

Some of Europe’s largest investors and private enterprises, including 1E, Danfoss, Knauf Insulation, Philips Lighting, Schneider Electric, Siemens, the European Climate Foundation and Kyoto Club have called upon national Energy Ministers to change tack on the Directive in advance of the meeting.

Donald MacDonald, a trustee director of the BT Pension Scheme, Britain's largest at ￡36 billion, and Chairman of The Institutional Investors Group on Climate Change (IIGCC), said, "The issue of carbonisation is totally embedded into every single asset class. Failure to take this up in investment policies could be a failure of fiduciary duty."

"Energy efficiency is critical to the wider effort to mitigate climate change," MacDonald added. "For private investment to flow, policy makers must focus on removing barriers to investment inherent in sectors such as the real estate market.

"This requires policies that provide regulatory certainty to investors and are targeted enough to take the complexity of the market into account. The Energy Efficiency Directive will remain crucial to achieving this."

Nick Robins, head of HSBC's Climate Change Centre of Excellence, has said he is optimistic about the EED's implementation, and claimed that opposition to green investment was "bottoming out" after being fuelled by the economic crisis.

"We have the beginnings of a case for being more quietly optimistic. We are recognising the case for energy efficiency," he said.

The EED proposes market based energy efficiency obligation schemes such as the renovation of 3% of public buildings each year.

Research has demonstrated that these schemes could create half a million jobs and save around €50 billion (annually) in primary energy imports by 2020, as well as achieving half of the energy savings needed to close the 20% energy savings gap by 2020.

And the construction industry estimates that the equivalent of up to 530,000 full time jobs would be created in Europe through an ambitious strategy to improve energy efficiency in buildings by 2020.

As for financing the measures, to top up the EU-ETS carbon price investment, a new IEA report, Policy Pathways: Joint public-private approaches for energy efficiency finance, suggests three particular kinds of public-private partnership agreements which could be of use:

1. Dedicated Credit Lines, established by a public body (such as a government agency and/or donor organisation) to enable financing of energy efficiency projects by a private-sector organisation (like a bank or financial institution)
2. Risk-Sharing Facilities, involving a kind of partial credit guarantee established by a public body to reduce the risk of energy efficiency project financing to the private sector and
3. Energy Saving Performance Contracts (ESPCs), which can condition the performance of energy service companies (ESCOs) using targets and private-sector financing.

Is the UK about to support weaker energy efficiency measures?

Tory Energy Minister Charles Hendry has appeared to indicate support for a weaker European law on energy efficiency than former Lib-Dem Energy Secretary Chris Huhne had suggested Britain would hope to achieve.

A draft text of the Energy Efficiency Directive, produced by Denmark and released yesterday, has no binding targets, nor any “meaningful review” in 2014 which could have triggered legal action.

It does contain a voluntary imperative on member states to force their energy companies to make a total of 1.5% energy savings each year.

The Danish presidency is steering through the legislation and has made it the top priority of its six month tenure.

The issue will be on the agenda of the European Energy Council in Brussels on 14 February, which is to consider the contribution of energy efficiency and renewable energy to growth and jobs.

At this meeting, the Presidency will report on progress of negotiations over the draft Directive, and during lunch Ministers will discuss potential areas of concern in terms of scope, requirements and implementation, and how they can be best addressed, before negotiations begin with the European Parliament.

In advance of the meeting, Energy Minister Charles Hendry has issued a statement saying, "We support the general level of ambition in the draft Directive although we have concerns over the level of prescription. We are pleased with the direction of discussions in Council, which reflects these concerns."

If "prescriptive" is an interpretation of "legally binding", then this stance is in contrast to former Energy Secretary Chris Huhne's previous line, which indicated support for the Directive's target to be enshrined in law.

As Ed Davey's energy efficiency team gets down to work, getting the correct wording of the Directive is likely to be high on his agenda, as UK industry will have concerns over any unilateral investments in energy saving it would have to make that could give it competitive disadvantage in Europe as a whole.

The timing is tight, since, following next week's meeting, the Parliament committee on Industry, Research and Energy (ITRE) votes on the Energy Efficiency Directive on 28 February, with the whole European Parliament plenary vote taking place a month later.

Cumulative savings

The draft text says that the 1.5% savings would have to accumulate each year, in contrast to existing legislation, such as the Energy Service Directive (2006), which allows member states to count savings from the previous decade towards their annual targets.

However, the text includes an option for member states to count savings from the energy transformation sector towards the target.

This point was criticised by the campaign group Climate Action Network-Europe. “This particular target was meant to trigger savings at the end use, not in the transformation sector,” said spokeswoman Erica Hope.

"Europe's GDP will be higher if the 20% savings target is met, according to the Commission's Impact Assessment accompanying the EED," she continued. "This is besides the other benefits listed in the energy efficiency plan such as, for example, two million new jobs and €1,000 annual savings on energy bills."

The European Commission had asked for a 2014 review to be built into the Energy Efficiency Directive, at which point, if certain criteria had not be met, mandatory national targets would be introduced.

The Danish text fails to include this, instead introducing weaker assessment points in 2013 and 2015 deadline, which would simply determine whether the European Union is on track to achieve its 20% by 2020 energy efficiency target.

The Danish draft takes account of the previous, Polish presidency’s concerns, that a directive would be costly to their coal-dependent energy regime, by curbing industry interference over how member states' individual targets are distributed.

The draft represents a victory for the lobbying power of conservatives such as Business Europe and German Liberal members of the European Parliament, who oppose binding targets and argue that market forces, rather than regulators, should dictate policies.

A grouping of Conservative politicians had called for the 20% target to be achieved either through a cut in primary energy use of 368 million tonnes of oil equivalent (Mtoe) or by a cut in EU energy intensity.

But this would be unacceptable to Europe's more coal-dependent, less rich nations, while richer ones like Germany are already closer to the target.

"An energy intensity target is a lose-lose situation," said Brook Riley, climate justice and energy campaigner for Friends of the Earth. "It might not provide an adequate incentive to improve further."

The UK is well placed to meet the concerns of the EED already. Buildings consume 40% of total final energy in the EU, and improvements in their performance will form a core part of the Directive.

The Green Deal and consequent expansion of the use of Energy Performance Certificates will be crucial to achieving reductions.

Financing the measures

On the issue of financing the Directive's measures, an amendment to the draft Energy Efficiency Directive being considered would mandate the set aside of 1.4 billion emission allowances (EUAs).

This would, according to a submission by oil company Shell, push up the EU-ETS carbon price to around €23/tCO2.

Since this could also generate extra revenues for governments, which could be invested in low-carbon technology, the extra value created by the increase in price is expected to be more than the value of the allowances that would be set aside.

The amendment is intended "to restore the price mechanism to levels envisaged in the impact assessment on which basis [the energy efficiency directive] was agreed".

Fifteen companies and lobby groups, including Dong Energy, Alstom, Vestas and Shell, wrote to the president of the EU Commission in support of the amendment.

The Commission has so far shied away from interfering in the carbon credits market, although policymakers said yesterday that carbon prices should rise to no higher than 30 euros through a one-off market intervention, while another coalition of industrial high carbon emitters urged European Parliamentarians to reject any proposal to give the European Commission the power to slash the supply of carbon permits.