UK and EC drag themselves towards net zero emissions

In both London and Europe, the effort to reduce emissions summons up a picture of a person, put on a diet by a doctor, eying a cream pie: the head knows it shouldn't eat it, but the body has to be dragged kicking and screaming away from the table.

 A version of this piece appeared on The Fifth Estate six days ago.

That's the picture I get after studying three recent developments – in the UK's climate change legal framework, the EU's Energy Performance of Buildings Directive, and its Climate Action Regulation.

All three developments embody the praiseworthy aspiration to reach net-zero greenhouse gas emissions around the middle of the century (in line with the Paris Agreement on climate change), but the fine words are not yet backed up by measures that will achieve that goal.

UK sets aim for 'net zero'

Claire Perry

The UK's Energy and Clean Growth Minister Claire Perry made a significant and unexpected announcement that she will ask the country's Committee on Climate Change (CCC) for ideas on how to adopt the goal of the Paris Climate Agreement to limit global warming to below 2oC above pre-industrial levels, with an aspiration to keep it below 1.5oC. This means achieving net zero emissions by 2050.

She made the announcement at a meeting of the Commonwealth Heads of Government last week. "After the IPCC report later this year, we will be seeking the advice of the UK’s independent advisers, the Committee on Climate Change, on the implications of the Paris Agreement for the UK’s long-term emissions reduction targets," she said.

The independent Committee on Climate Change (CCC) exists to set five year plans for the UK to meet its legally binding target under the Climate Change Act (2008) of reducing carbon emissions by 80% by 2050 compared to 1990. It then monitors and reports on the UK's progress.

Perry's announcement was welcomed by the low carbon industry and campaign groups, but they cautioned that legislation is needed soon.

Dustin Benton, policy director at thinktank Green Alliance said, "The Government has made real progress on some issues, such as diesel cars and offshore wind, but there are glaring holes in areas such as energy efficiency and onshore renewables," adding waste, housing and transport to the list.

Greenpeace executive director John Sauven said this would mean the end of plans for a new runway at Heathrow. "No new runway at Heathrow will fit inside our carbon budget. The data show that the challenges posed by emissions from transport – land, sea and air – and our reliance on gas for heating will have to be confronted as a matter of urgency."

The CCC itself recently challenged the Government’s policies, saying that they do not go far enough even to meet current targets.

They want to see "urgent action" on the Clean Growth Strategy (published in October 2017), and to see detail on a long list of ideas that have been adopted by the government  to reduce emissions but which are not accompanied by substance on strategy.

These include: phasing out sales of petrol and diesel cars and vans by 2040, increasing the energy efficiency of homes by 2035 and the energy efficiency standards of new buildings, how to phase out installation of gas and oil, to generate 85% of the UK’s electricity from low-carbon sources by 2032, and deploying carbon capture and storage technology.

They highlight also a need for new policies to close the remaining ‘emissions gap’ in the fourth and fifth carbon budgets.  Even if delivered in full, existing and new policies, including those set out in the Clean Growth Strategy, miss the fourth and fifth carbon budgets by around 10-65 MtCO2e – a significant margin.

The CCC says, "There is a particular risk around meeting the fourth carbon budget which begins in just five years’ time, including completion of Hinkley Point C nuclear power station". This is looking increasingly unlikely due partly to EDF's problems on completing a similar reactor at Flamanville.

Energy Performance of Buildings Directive

Meanwhile, on 17 April, the European Parliament approved the Energy Performance of Buildings Directive. This will target the renovation of buildings, and the creation of smarter energy systems for new buildings, acknowledging that around 75% of buildings in Europe are currently energy inefficient and that buildings are the largest single energy consumer in Europe, using around 40% of final energy.

The revisions to the previous version of the Directive form the first of eight proposed steps towards the EU’s Energy Union ambitions and include advocating the use of smart technologies to introduce automation and control systems which could ensure buildings operate efficiently, the use of a 'smart readiness indicator' which can measure a building’s capacity to integrate new technologies, support for the introduction of new infrastructure for e-mobility in new buildings, and a path towards zero-emissions buildings by 2050.

There are also mechanisms to create the investment needed to renovate existing buildings to make them more energy efficient: at least 40% of infrastructure and innovation projects financed by the European Fund for Strategic Investments should contribute to the Commission's commitments on climate action and energy transition in line with the Paris Agreement. There is also funding under the European Investment Bank's Smart Finance for Smart Buildings Initiative. This aims to unlock a total of €10 billion in public and private funds between now and 2020 for energy efficiency projects.

The European Commission Vice-President for the Energy Union, Maroš Šefčovič, said: "As technology has blurred the distinction between sectors, we are also establishing a link between buildings and e-mobility infrastructure, and helping stabilize the electricity grid.”

The Council of Ministers have yet to finalise agreement of the Directive before it enters into force. Member States will have to transpose the new elements of the Directive into their national laws within 20 months. If the UK eventually Brexits, it will not have to.

I have already reported here and here on how the Directive has been watered down compared to what it might have been.

New EU Climate Action Regulation

A new European Climate Law is also edging closer. The Climate Action Regulation (formerly known as Effort Sharing Regulation) covers almost 60% of all greenhouse gases and establishes annual carbon budgets between 2021 and 2030 for each EU country, covering sectors like surface transport, buildings, agriculture, small industry and waste, as follows:

How effective it is as will depend on the policies adopted by each Member State, who, in the coming months, are supposed to develop National Energy and Climate Plans to show how they expect to meet their commitments under the directive.

The European Council already has an overall GHG reduction target for the EU, of reducing emissions 40% by 2030 compared to 1990, with a subtarget for sectors not included in the emissions trading system (ETS) of 30% reduction compared to 2005. The CAR gives each country an individual target to implement that target. France and Germany have by far the highest targets. Eastern European and other less industrialised countries such as Greece and Portugal will be able to continue to increase emissions [for the full list see the table on page 5 of this analysis.

This is not as straightforward as it might seem. The CAR is meant to contain flexibilities to let nations meet targets more cost-effectively, but, according to separate analysis by three think tanks (Sandbag, T&E and Öko Institut), this means it is full of loopholes that allow countries to get out of their commitments, meaning it will only lead to 25-26% reductions compared to 2005. Furthermore, they say, it does not provide the incentives to put the EU in line to fully decarbonise these sectors by 2050.

In respect of action on reducing emissions, the UK was one of the EU's high performers. With it out of the Union, the rest will have to try harder to achieve that 40% target. However, T&E says they won't make it. "Countries that will not meet their 2020 targets will be rewarded by being allowed to emit even more".

It cites the example of Ireland, whose emissions since 2011 have steadily increased. Rather than the CAR giving it a baseline starting point for emission reductions of the 2020 target of 20% relative to 2005 levels, it is being given a 2018 level, which means, because it is failing to reduce emissions to badly, it has to achieve just 5% relative to 2005 emissions. Austria, Belgium or Finland could also be among the countries that will benefit from this starting point.



To return to the picture described in my opening paragraph, at least the head has drawn up rules; whether it can implement and enforce them effectively is another matter entirely.

David Thorpe's two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference.  He's also the author of Energy Management in Buildings and Sustainable Home Refurbishment.

Top retailers demand zero carbon building standard

A group of retailers – whose members include Aviva, BT, Cemex, Ikea, Kingfisher, M&S, Nestle, Sky and Tesco – have criticised the UK government for not doing enough to improve energy efficiency in non-domestic buildings and asked for a zero carbon building standard to be set.

This piece first appeared on The Fifth Estate on 19 March 2018

They want to see a target for the UK’s building stock to be nearly zero carbon by 2050, and the establishment of a new zero carbon buildings target to be enforced by 2020, to be followed by a truly net zero carbon buildings standard.

Known as the Aldersgate Group, they took a year to look at structural challenges in financing the creation of low carbon infrastructure, and, based on interviews with businesses and investors, found that a chief problem is a lack of clear policy goals to help unlock private sector finance in order to meet decarbonisation targets.

As part of 30 recommendations for government, business and investors in their new report, Towards the new normal: increasing investment in the UK’s green infrastructure, they are urging the UK government to commit to support the growth of green investment over the long term, set better targets and to “enforce more strictly” existing energy efficiency policies.

They want an increased ambition to upgrade the UK’s domestic buildings to EPC band C by 2035 broadened to apply to commercial buildings.

Alex White

Alex White, the report’s lead author and senior policy officer for the Aldersgate Group, said: “Over the next three decades, the UK needs hundreds of billions of private investment in green and resilient infrastructure to meet the objectives of the Clean Growth Strategy, Industrial Strategy and 25 Year Environment Plan. But investment isn’t happening fast enough on its own.

“The government must catalyse action on green infrastructure investment now to move the financial system towards a new normal if we are to meet our policy goals cost effectively while maximising benefits for UK plc.”

The group’s report suggests government could engage a wider base of investors by establishing the potential size of the market, and creating tax breaks for energy efficiency investment by businesses. It says government could help boost the uptake of service agreements with energy supply companies by offering short-term guarantees on contractual risks, such as one of the parties going bust.

Government should also lead by example and mandate greater energy efficiency across all publicly owned building stock, the Aldersgate Group says. This would create a project pipeline, increase investment flows and potentially lower costs for private sector firms.

Other recommendations include adjusting financial regulations to encourage long-term investment in green infrastructure, such as introducing a legal duty for all fiduciaries (such as pension fund trustees) to consider financially material environmental and social governance (ESG) risks.

All planned infrastructure spending should pass a “green” test with sustainability requirements in all public procurement, including supporting local government with standardised power purchase agreements and energy management services contracts, Aldersgate Group says, to avoid locking in emissions for the future and to maximise resilience against flooding and future climate-related risks.

Finally, the group wants to see the issuing of a sovereign green bond and municipal green bonds to help fund the delivery of low carbon projects and address a potential drop in financing from institutions such as the European Investment Bank.

The report is released in conjunction with four separate briefings, which explore in detail several of the specific barriers and solutions to key types of green infrastructure investment:

• Increasing investment in domestic energy efficiency
• Increasing investment in commercial energy efficiency
• Increasing investment in low carbon power
• Increasing investment in natural capital

Steve Waygood, chief responsible investment officer for Aviva Investors, welcomed the call to “use the dormant assets within the insurance and investment sectors to introduce a national financial literacy campaign to educate people about how their money is invested and how this shapes the world they retire into”.

“This would help create sustained demand for sustainable investment, helping to grow the UK economy on a longer term and more sustainable basis for the future.”

Emma Howard Boyd

Emma Howard Boyd, chair of the UK Environment Agency, commented that “some businesses are already alive to the risks and opportunities presented by climate change, but not enough”.

She said that the UK could show international leadership “with financial innovation to counter increased risks from droughts and storms”.

“The government’s Green Finance Taskforce is currently discussing how to accelerate investment in resilience, so this report is timely and helpful.”

Boyd is a member of the taskforce herself, which is a cross-departmental initiative working with industry to accelerate the growth of green finance. She says there are plenty of investment opportunities presented by climate resilience.

“Flood protection is good for the economy,” she argued recently. “It allows companies to do business in severe weather by keeping their properties open, and their supply chains moving, as well as the transport links that bring in customers and trade.”

Are pension funds ready for climate change?

But fiduciary bodies such as pension funds have a long way to go before they can appreciate the risks. A self-selecting survey carried out by the trade magazine Professional Pensions suggested continuing widespread misunderstanding. It found that 53 per cent of trustees, scheme managers and pension professionals did not see climate change as a financially material risk to their own or their clients’ portfolios.

Similar, qualitative research by the pensions law firm Sackers indicates that many trustees do not pay significant attention to ESG issues: “[Trustees]… consider ESG and external governance reviews to be low priorities. Some participants were not sure what ESG meant … Some see ESG as a distraction or potentially detrimental to achieving the scheme’s goals.”

The Financial Conduct Authority is currently considering whether to make reviews of such risks mandatory.

Mary Creagh

As part of a wider inquiry, Mary Creagh, the chair of the UK’s cross-party Environmental Audit Committee, last week wrote to the top 25 pension funds in the UK to ask how they manage such risks.

She said in her letter: “The climate change risks of tomorrow should be considered by pension funds today. A young person auto-enrolled on a pension today may be 45 years away from retirement. Over that timescale these climate change risks will inevitably grow. We are examining whether pension funds are starting to take these risks into account in their financial decision making.”

Pension funds have yet to respond to her, as has the government to the Aldersgate Report’s recommendations. Business as usual will not change without concerted effort and stimulus, and legislation, procurement strategies and tax breaks are three tools the government should deploy.

David Thorpe’s two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference.  He’s also the author of  Energy Management in Building and Sustainable Home Refurbishment.

In a massive sustainable investment market, energy efficiency offers huge returns

One in every five dollars invested professionally in the US is now invested sustainably. And while investment in projects that reduce greenhouse gas emissions are rising globally, the market for energy efficiency remains under-satisfied compared to its potential and the market for renewable energy investment. Here’s why.

A version of this piece appeared in The Fifth Estate on 6 March 2018

The size of the market

It can be confusing for beginners. There are green bonds; sustainable, responsible and impact investing (SRI); and environmental, social and governance (ESG). But whatever you call it, more and more investors are seeing the benefit of putting their money into sustainability.

According to the last Global Sustainable Investment Review, at the start of 2016, global sustainable investment assets reached US$22.89 trillion (AU$29.47t), a 25 per cent increase from 2014. Europe accounted for over half of these assets (53 per cent) and the United States 38 per cent.

The market size of SRI investing in the United States alone was US$8.72 trillion (AU$11.23t) as of 2016 – double what it was just four years previously – representing one in every five dollars invested, according to SIFMA, an association of broker-dealers, banks and asset managers for businesses and municipalities.

How it works

Impact investing refers to investments “made into companies, organisations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return”.

The Global Impact Initiative is a global champion of impact investing, dedicated to increasing its scale and effectiveness around the world. It was founded by Giles Gunesekera in 2015. Speaking alongside last month’s Cayman Alternative Investment Summit he said he started it “to provide investors – foundations, family offices, pension funds, endowments – with bespoke solutions that would allow them to allocate to impact investing strategies”.

“We map these bespoke impact investing strategies to the UN Sustainable Development Goals (SDGs) and utilise professional investment managers alongside social impact investment firms to ensure the strategies we build for clients meet their financial and social impact targets.”

Schemes often use the ESG framework:

• Environmental: How is the company disposing of hazardous waste? Is it managing carbon emissions? To what extent is it meeting environmental regulations?
• Social: Does the company support philanthropic and community-focused initiatives? Are employees provided with access to health care and other key benefits? Is leadership promoting diversity?
• Governance: Are company leaders appropriately qualified for the role, and are they communicating a coherent strategic vision? Are their compensation packages appropriately aligned with performance? Is the C-suite communicating effectively, and transparently, with shareholders?

Gunesekera says that pension funds hold the key to doing impact investing at scale. Australian and US pension funds are behind those in Europe and Canada when it comes to embracing impact investing because their trustee boards behave very conservatively due to their size. But he adds that “it will only be a matter of time before they catch up”.

His colleague Don Raymond of Alignvest Investment Management believes that “impact investing should be integrated across all investments, and not just part of a separate portfolio.”

Increasing demand and the problem with energy efficiency

While all are in agreement that impact investing is increasing, it must be driven by demand, part of which is the issuing of green bonds by, for example, municipalities to promote investment in energy efficiency.

According to Steven Fawkes of the Investor Confidence Project (Europe), this too is increasing, but he says that “more investing in energy efficiency is going on outside of the green bonds market because green bonds themselves are limiting in terms of what you can use the money for”.

There are also greater transaction costs, principally in terms of verification. Fawkes cites by way of example the fact that in the US “many more buildings are constructed according to the LEED gold standard (the highest certified standard for new energy efficient buildings) than are publicised because while the standard in itself is open access certification is expensive and it is easier for developers not to bother to certify”.

Investment in these projects would not be recognised by impact investment or green bond statistics because they would likely be financed in a more conventional investment market.

For the market to grow, therefore, transaction costs need to be reduced and offerings become more investor-friendly.

It is presently much easier for investors to invest in a renewable energy project than an energy efficiency one because the capital investment, project management, technology and return on investment (ROI) are much more easily accountable. This is partly because the ROI on energy efficiency is less predictable due to the influence of human behaviour on the outcomes.

This is exemplified by the following graphs:

The growth of the portfolio of the GCPF and the types of projects invested in. Renewable energy investments have secured more than double the CO2 savings of those in energy efficiency (buildings and industrial processes), according to their annual report for 2016, (although this is by outcomes not by investment type, which the report does not quantify).

Moreover, especially in developing countries, which are typically way behind in terms of understanding and implementing energy efficiency, the early rewards for implementing an energy efficiency program typically yield between seven per cent and 50 per cent returns in just a few months – without any capital investment at all. The savings come from changes in behaviour. Fine for the company, but of no interest to investors.

Yet this is where the greatest potential lies. Non-OECD economies have a higher energy intensity than OECD economies, partly because they tend to be more focused on growth at all costs, and on energy-intensive industries such as the manufacturing sector.

Returns can be even better than 50 per cent. According to Bettina Schreck, a project manager for the South American industrial energy efficiency program of the United Nations (UNIDO), in Ecuador “a government macroeconomic study assessed the cost-effectiveness of its monetary contribution to an industrial energy efficiency program in terms of direct energy savings by analysing the average savings for all sizes of industries”. This was based on her organisation’s experience in other countries.

The conclusion?

“Whether the viewpoint was from private or public sector, and calculated over the three years of the project or the lasting benefits beyond, the internal rate of return ranged from 50 per cent to 170 per cent and the payback period was approximately one year. The conclusion was that investment was beneficial from both social and private enterprise perspectives.”

For any investor, that would be a massive benefit.

The size of the market for energy efficiency

The potential size of the market for energy efficiency is huge compared to other sectors in impact and climate finance. The global energy efficiency opportunity will require global investments of around US$50 billion (AU$64.4b) a year over the next few decades according to the Global Climate Partnership Fund (GCPF). It also represents a lower cost investment for the same emissions reduction than other types of investment such as renewable energy.

There are many global trends requiring such investment: the increase in energy demand management, storage, renewable and on-site generation, and net metering; the development of value chains in climate-friendly technology; sustainable cities; reducing wastage in the water sector; the growth of the circular economy; and the growth of digitisation – cheaper metering and sensors, the Internet of Things (IoT), cloud computing and big data analytics.

But there is a huge challenge to make unlocking energy optimisation easier than it currently is. It is not always investor-friendly.

In a recently conducted survey, the Global Climate Partnership Fund investment manager responsAbility asked green lending experts from the developing world about their expectations and experiences in the area of green lending. They found that the main drivers were client demand and international support – green branding and regulatory incentives.

Awareness has also improved.

“The most important change is in the knowledge of clients. Previously, most of them had no idea what energy efficiency financing is. Now they know a lot more about it,” head of green lending Luke Franson said.

A lack of green lending expertise was perceived among survey respondents as the greatest threat to scaling-up energy efficiency finance – not, surprisingly, low fossil fuel prices.

“The mindset of entrepreneurs who see capital expenditure as a waste and not a measure to drive efficiencies is a challenge,” said Gustavo Adolfo Calderón Palma of Banco Pomerica.

Impact investment tools are constantly being refined and developed to make these transactions and their attractiveness easier and easier to see.

UNIDO, for example, is working on a more standardised assessment method for projects with cost-benefit analysis at national and business levels, and ways of measuring the non-economic benefits of EnMS implementation at both levels to build the business case. This will include a software tool for companies to identify multiple sources of added value.

The benefit of an EnMS

For energy efficiency, it is vital that a company or organisation has an energy management system (EnMS) in place that uses the ISO 50001 standard.

ISO 50001 was designed “to enable an organisation to establish the systems and processes necessary to improve energy performance, including energy efficiency, use and consumption”.

It is applicable to all types and sizes of organisations irrespective of other conditions and can be applied in all sectors. It dovetails with other management standards such as ISO 9001 (quality management) and ISO 14001 (environmental management).

Although the introduction of EnMS always leads to no-cost and low-cost savings, long-term and larger energy savings will come about through investment projects. According to Marco Matteini, another UNIDO project manager who also worked on developing this standard, “Adopting ISO 50001 can help boost investment by better preparing firms to receive external investment as well as optimising capital expenditure. The use of EnMS also improves the ongoing monitoring of project performance after investment.”

This is because having an EnMS helps management to recognise the value of energy efficiency, therefore making approval of energy saving capital projects more likely.

Presently only 10 per cent of energy efficiency projects are externally financed, and industrial companies often find difficulties with decision making in areas beyond their core business. According to UNIDO’s Rana Ghoneim this means that a desirable tool for investment in the future will be “some kind of underwriting toolkit and templates for energy efficiency investment”.

One new tool is a new version of the European SRI Transparency Code, which is geared towards guiding asset managers to meet relevant requirements for their products in SRI. It’s been developed by Eurosif to be in line with the recommendations made by the Task Force on Climate-related Financial Disclosure.

A free, online database for investors and financial advisors has also just been published by Impact Assets, a subsidiary of Calvert Impact Capital, listing 50 private capital fund managers that deliver social and environmental impact as well as financial returns. If you’re new to this, then it’s a good place to start to begin research on the impact investing sector.

Impact investment is clearly growing, from being a small kid on the block to a major player.

David Thorpe’s two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference. He’s also the author of Energy Management in Building and Sustainable Home Refurbishment.

Financiers tell EU to get radical on financing green projects

A high-level group on sustainable finance has advised European regulators to incentivise a more favourable treatment for energy saving loans and mortgages, which could unlock billions in lending for green building renovation programs and other green projects.

Note: This article first appeared on The Fifth Estate on 19 February.

The group’s final report says that almost three-quarters of the EU’s 2030 clean energy investment gap – estimated at around €130 billion a year (AU$204b) – is accounted for by energy efficiency in buildings, most of which is concentrated in central and east European countries where the leakiest buildings are found.

It calls on policymakers to support efforts to “exploit potential links between energy efficiency savings and mortgage loan performance”.

Some banks are already looking at ways of providing better approaches to financing energy saving programs, such as building renovation loans to homeowners. For instance, the European Mortgage Federation is developing a standardised “energy efficient mortgage”, which links efficiency improvements with a lower probability of default of borrowers.

Europe already has an energy efficient mortgages action plan.

The high-level group believes that directing investment into long-term, sustainable projects will also improve the stability of the financial system as a whole. It proposes:

• a classification system, or “taxonomy”, to provide market clarity on what is “sustainable”
• clarifying the duties of investors’ when it comes to achieving a more sustainable financial system
• improving disclosure by financial institutions and companies on how sustainability is factored into their decision-making
• an EU-wide label for green investment funds
• making sustainability part of the mandates of the European Supervisory Authorities
• a European standard for green bonds, with the establishment of a new Green Bonds Technical Committee in 2018, to develop a long-term governance structure for the EU Green Bond Standard

It also recommends:

• supporting the growth of social enterprises and the financing of social-related projects
• revaluing natural and environmental capital in economic and financial decisions
• re-orienting agriculture to a way that is more sustainable for the economy, the environment and public health

Radical advice

It’s quite radical for a bunch of high-level financiers.

The EU executive is to follow up on the report’s recommendations during the first half of March with a comprehensive action plan on green finance that will include more steps to encourage investments in energy efficiency. This will include a “harmonised taxonomy” for banks to classify different types of financial products according to their environmental performance and to prevent “greenwashing”.

Christian Thimann, head of sustainability at French insurer AXA, who chaired the group, said: “There is no claim that everything green is necessarily less risky. But the group does make the claim that taking account of environmental and climate risk and long-term sustainability may have – and in some cases must have – a positive impact on your risk analysis.”

Energy efficiency investments affect the value of a building or industrial facility “by more than just the present value of the expected energy savings”, the authors note, saying banks should be able to better identify these multiple benefits. Measuring those “would help de-risk energy efficiency investments”.

EU can easily miss its 2020 energy efficiency target

The report is timely because the EU is in sore danger of missing its target of a 20 per cent reduction of energy consumption by the year 2020 compared to baseline projections, according to the latest figures.

EU28 primary energy consumption: progress towards the energy efficiency target between 1990 and 2016

Meeting the target would mean achieving a primary energy consumption of no more than ,483 million tonnes of oil-equivalent (Mtoe) and a final energy consumption of no more than 1086 Mtoe in 2020.

But, in fact, primary energy consumption, while going lower in the interim, has decreased between 1990 and 2016 by just 1.7 per cent.

Consumption of solid fossil fuels (coal and coal products) decreased by 47 per cent and oil (including petroleum products) decreased by 12 per cent. Renewable energy use increased by 200 per cent, natural gas and manufactured gases by 31 per cent and nuclear by six per cent.

Overall energy efficiency gains in European countries since 2000

Final energy consumption in 2015 was approximately the same as in 1990, but in 2016 it had risen to 2.1 per cent above that level.

The actual final energy consumption in year 2014 was lower than the 2020 energy efficiency target level of 1086 Mtoe, but it’s gone up since then. This temporary dip was most likely due to the economic recession.

Overall energy efficiency gains in European households since 2000

Figures also show that 8.7 per cent of Europe’s 28 countries’ population on average is in fuel poverty, down from a 10.8 per cent peak in 2012, but this varies wildly by nation, with Greece being amongst the worst performers, and Norway and Switzerland amongst the best.

As a result, the high-level financiers’ report recommends that the new Sustainable Infrastructure Europe body should have a particular focus on the Central and Eastern Europe area, and have Eastern European offices.

David Thorpe’s two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference. He’s also the author of Energy Management in Building and Sustainable Home Refurbishment.

UN and IEA tell building sector: 'go zero carbon'

Near-zero energy, zero-emissions buildings must become the global construction standard within the next decade for the world to have a chance of adequately fighting climate change, a joint statement by the International Energy Agency and UN Environment has warned.

“While the energy intensity of the buildings sector has improved it is not enough to offset rising energy demand,” International Energy Agency executive director Fatih Birol said at the launch of the Global Alliance for Buildings and Construction’s Global Status Report 2017 this week.

The floor area of buildings worldwide was 235 billion square metres in 2016. By 2060 a staggering further 230 billion square metres will be added – roughly the floor area of all of Japan’s buildings each year.

Global floor area additions by 2016 by key regions

The report said the urgent task was making these buildings energy efficient to stop them leaking cash and carbon for decades.

“The building sector is seeing some progress in cutting its emissions, but it is too little, too slowly,” UN Environment head Erik Solheim said.

“Realising the potential of the buildings and construction sector needs all hands on deck – in particular to address rapid growth in inefficient and carbon-intensive building investments.”

The increase in demand is caused by population growth but also greater demand per capita for floorspace and a greater demand for energy services.

Erik Solheim

Fatih Birol

The report said more than half of buildings that will be around in 40 years time will be constructed during the next 20 years, and two-thirds of those will be in countries that don’t have adequate building energy codes in place.

“Over the next 40 years, the world is expected to build 230 billion square metres in new construction – adding the equivalent of Paris to the planet every single week,” Dr Birol said. “This rapid growth is not without consequences.”

Pledges by individual countries to meet the ambitions of the Paris climate change agreement are still not sufficient to meet the 4.9 gigatonnes of carbon dioxide (GtCO₂) annual emissions reduction that could be achieved if countries were to pursue strategic low-carbon and energy-efficient building technology deployment.

CO₂ emissions from buildings and construction rose by almost one per cent a year between 2010 and 2016, with the report saying a dramatic increase in energy intensity was necessary to arrest this.

Energy-carbon intensities for the building sector by country in 2015

The bottom line is that near-zero energy, zero-emissions buildings need to become the construction norm globally within the next decade.

In addition, the rate of energy renovations for existing buildings also needs to improve from one to two per cent per year to over three per cent a year in the coming decade, particularly in developing countries where around 65 per cent of all of the building stock expected to be around in 2060 has already been built.

What is to be done

The report goes on to demonstrate many opportunities to install energy efficient and low carbon features and buildings, supported by many examples across the globe.

Four things are needed to achieve these goals, the report said:

1. Ambitious and transparent commitment with policies and market incentives that encourage the construction sector to meet the sustainable development goals
2. Much better building energy codes and certification, labelling and incentive programs, everywhere, with rigorous enforcement
3. Wide-scale adoption and investment in high-performance, low-carbon, energy-efficient solutions
4. A major shift in financing and investments, with a solid business case for investors, information and financing tools that minimise risk and uncertainty

The report also identifies nine areas for priority action:

1. Urban planning policies for energy efficiency and renewables
2. Improve the performance of existing buildings
3. Achieve net-zero operating emissions
4. Improve energy management of all buildings
5. Decarbonise building energy
6. Reduce embodied energy and emissions
7. Reduce energy demand from appliances
8. Upgrade adaptation for climate-change related risks
9. Increase awareness with training and capacity building

Achieving the 2°C-limit for global warming scenario requires a major shift to put global buildings on a highly energy-efficient and net zero carbon pathway to 2060, as seen in the graphic below:

Final energy consumption by scenario and fuel type for the building sector between 2016 and 2060

About half of the emissions reductions will come from decarbonising the power sector. But equally vital are improvements to the building envelope, such as energy renovations that improve energy intensity from inefficient to efficient technologies such as LEDs and heat pumps.

How to reduce emissions in the global buildings sector up to 2060

Energy efficient and low-carbon heating and cooling technology investments would reduce final energy demands in buildings by 25 per cent over current levels, the report said. Air conditioning performance is a crucial area to improve.

And although LED sales are now massive, in the residential lighting market less efficient technologies still prevail.

Guidance is available for a global strategy for the buildings sector for high-efficiency product deployment and fossil-fuel phase out, in the GABC Global Roadmap.

One of the buildings highlighted as an example for others to follow is the Edge building in Amsterdam, which uses digital technologies to maximise energy efficiency.

The zero energy building was designed to maximise natural light intake as well as solar electricity production. Smart technologies such as intelligent ventilation systems and connected LEDs allow people to interact with the building and for it to respond to real-time data sensors or occupants’ commands. This means that lighting levels, humidity and temperature can be adapted to the preferences of the occupants while at the same time improving building energy performance.

Many other examples are in the report from different climate zones.

The report – prepared by the IEA and published by the Global Alliance for Buildings and Construction for UN Environment – can be downloaded from http://bit.ly/2jwEjZ7.

David Thorpe’s two new books are Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference. He’s also author of Energy Management in Building and Sustainable Home Refurbishment.

Europe inches closer to strong energy efficiency target

Members of the European Parliament’s industry and energy committee have voted by a narrow margin for a legally binding 40 per cent energy efficiency goal and a 35 per cent renewable energy target for 2030.

{Note: a version of this article appeared one week ago on The Fifth Estate]

The energy efficiency vote was won by only one vote (33 in favour and 32 against). German conservative Markus Pieper (above) sided with the ECR Group, a 74-strong Eurosceptic alliance of European conservatives and reformists, and the far-right Europe of Nations and Freedom group, which includes France’s National Front and the coal-favouring Visegrad Group.

Pieper’s compatriot, Socialists and Democrats Group member Martina Werner, siding with the committee’s rapporteur Adam Gierek, hailed the vote as “a great political victory after a fierce battle between the political groups”.

“We had to face serious attempts to water down the Energy Efficiency Directive. Even the Commission acknowledged that their amendments, for example on the annual savings rate, would amount to 0 per cent, for the period 2021-2030. This is not acceptable.”

With the European Council having already agreed on its approach on the Energy Efficiency Directive, the three European institutions must now agree on one joint position under the Bulgarian presidency next January, after the adopted report has been passed by a full plenary session.

Renewable energy sails through

By contrast, the Renewable Energy Directive vote was backed by 43 in favour and only 14 against. However, this motion already contained compromises. Although Members of the European Parliament (MEPs) wanted to increase the Commission’s 27 per cent target to 35 per cent, many, including the Greens, believe that 35 per cent is “the strict minimum” needed to let the EU meet its commitments under the Paris Agreement.

WWF Europe renewable energy expert Alex Mason slammed the proposal as “toothless” and claimed that the inclusion of a 10 per cent “flexibility margin” sent a signal to investors that “the EU is scaling back on renewable energy”.

Adair Turner, chair of the Energy Transitions Commission (ETC), a coalition of leading organisations from the worlds of business, energy and finance, said the ETC had come to the conclusion that a 100 per cent renewable energy system was now clearly within reach – probably sooner than we think.

“We are pretty confident that in 10 or 15 years you would be able to do a near total renewable system – 85 or 90 per cent – based on intermittent renewables. We said 2035 but this is probably ludicrously conservative.”

Energy efficiency remains controversial

But opponents of the target vowed to fight on to prevent it from becoming law. Opposition to the target is based on the belief that energy efficiency is not cost-effective.

Van Bossuyt, chair of the European Parliament’s internal market committee and member of the ECR Group, after the vote said: “We all want to see an ambitious strategy for improving efficiency, but there is no point introducing targets and policies if countries and companies are unable to implement them.

“A policy that is affordable and works in one country may be completely inappropriate and expensive in another. Governments and local authorities need to step up efforts to renovate their building stocks but this is expensive and places huge pressure on budgets that are already stretched.”

But this belief is not shared by industry. Philippe Dumas, secretary general of geothermal heating association EGEC, said: “The vote … puts the heating and cooling sector on track to be freed from fossil fuels. Decarbonising the heating and cooling sector can only be done by exploiting synergies between energy efficiency and renewable policies in terms of actions, technologies and ambitious policies.”

French energy group Engie’s CEO, Isabelle Kocher, said she supported the 40 per cent target: “We are very supportive of setting energy efficiency targets that are both very high and which are binding.”

So did members of the European Alliance to Save Energy, who include Veolia, Siemens, Philips Lighting and Danfoss, who had said that any target below 40 per cent energy savings “would set policy goals below the business-as-usual energy efficiency improvement trajectory and will have no impact on the ground”.

And the CEO of the Institutional Investors Group on Climate Change, Stephanie Pfeifer, said the 40 per cent target would “send a clear and positive signal to investors swiftly enough to ensure a smooth transition to a low carbon economy”.

The Coalition for Energy Savings welcomed the energy efficiency vote. Its secretary general Stefan Scheuer said: “Energy efficiency policies have been the bedrock of the EU’s common energy policy, and a major tool to address environmental, competitiveness, social and geopolitical challenges.

“MEPs across the political spectrum who acknowledge these benefits should overcome their divisions and agree on a solid common energy efficiency policy post 2020 in view of the negotiations with the Council.”

He said the EU could achieve this energy efficiency target cost-effectively, according to research findings presented in the impact assessment for the Energy Efficiency Directive revision proposal.

The need for investment

Seventy-five per cent of the EU’s building stock is inefficient and buildings account for 40 per cent of the EU’s primary energy demand. Even if the target becomes law, a major obstacle to increasing the rate of renovation is access to finance, an issue for both businesses and households.

The Energy Efficiency Financial Institutions Group (established by the European Commission Directorate-General for Energy and United Nations Environment Program Finance Initiative) says that to reach the EU 2030 energy and climate targets about €379 billion (AU$591.7b) is needed each year between 2021 and 2030.

Where could such a massive amount come from? Part of the answer might be from energy companies themselves, who stand to save hundreds of billions of dollars from the easing of network constraints and of the need for new infrastructure that is being caused by the ongoing digitalisation of the energy sector.

Those savings are highlighted in a recent report from the International Energy Agency, which puts the savings to be achieved from a more connected, intelligent, efficient and reliable energy system at around US$80 billion (AU$105b) – approximately five per cent of total annual generation costs worldwide.

Furthermore, it says that as much as US$270 billion (AU$355b) in necessary infrastructure costs could be saved by realising up to 185GW of worldwide flexibility via smart demand response.

These savings could usefully be translated into investments in energy efficiency programs, which would achieve a return on investment over similar long time frames.

Another, admittedly much smaller, type of solution is to be found in places like Bucharest, where EU investment programs have contributed to the renovation of around 1200 flats. The Dutch approach of “Energiesprong” undertakes housing retrofits and installing photovoltaic panels and boilers in order to create Net Zero Energy houses, focusing on the social housing sector. In the Netherlands there have so far been about 1800 refurbishments with a further 15,000 in the pipeline.

If the European Union does finally succeed in setting the 40 per cent energy efficiency goal in law next year, that will only be the beginning. It will be up to the market to step up to the challenge of meeting the requirements.

David Thorpe is author of Passive Solar Architecture Pocket Reference and Solar Energy Pocket Reference.

British homes could cost-effectively halve energy demand by 2035

British homes could cost-effectively halve energy demand by 2035, according to a new report.

A version of this article appeared on The Fifth Estate on 18 September.

In Britain, as a result of efficiency savings in products and efforts to make homes more efficient, homes now use 23 per cent less gas and 17 per cent less electricity than in 2008. Moreover, the average dual fuel household bill was £490 lower in 2015 than it was in 2004, according to the report from the UK Energy Research Council (UKERC).

The report says homes could save a further average of £270 a year at current energy prices, totalling about 140 terawatt-hours (TWh) – or the rough equivalent of the output of six Hinkley C-sized nuclear power stations – in heat and electricity.

This implies that the UK government would be much better off rekindling its home energy efficiency program – moribund for six years – than investing in new nuclear power stations – although much more electricity will be needed to charge the growing number of electric vehicles.

The report (using the government’s own guidance for policy appraisal) says that such investments would deliver net benefits worth £7.5 billion to the UK economy. This could rise to £47 billion if benefits such as health improvements and additional economic activity are counted.

The UKERC is therefore calling for the government to set a long-term target for energy efficiency – as it did on 26 July with a target to ban petrol and diesel cars by 2040 (a target beaten by eight years by the Scottish Government’s announcement to phase them out in 2032, made five days later).

The Committee on Climate Change believes that as much as 85 per cent of potential carbon emission savings in buildings are at risk of not being realised due to poor take-up of measures, implementation or standards enforcement.

The UKERC report makes an estimate of which of these savings are achievable under three scenarios of increasing ambition:

This makes clear that more efficient appliances and boilers are easy wins – mostly thanks to EU policies (we won’t mention the ironies of Brexit here) driving greater efficiency in household appliances and boilers, and a new EU Regulation setting a framework for energy labelling, which simplifies and updates the energy efficiency labelling requirements for products sold in the EU.

The tough ones are help with insulation – particularly of walls and floors – and heat pumps. It is here where government support could therefore be most usefully targeted.

This graph shows where savings could be made over the next 18 years, and how much impact savings in different areas will make, compared with making no savings at all (the top dotted line):

Source: CCC dataset

What is the cumulative value of this investment in the energy efficiency of the housing stock? The report analyses this in the “cost-effective” scenario. In the graph below, anything below the horizontal line is a cost compared to current levels, and anything above is a saving.

It shows that while the core savings come from energy use and a reduction in emissions and pollution, this has a knock-on benefit in health savings and GDP.

Source: produced from BEIS, 2016 using outputs from CCC dataset model

The headline takeaways are that “one quarter of the energy currently used in UK housing could be cost-effectively saved by 2035”, and that, “allowing for falling equipment costs and including the wider benefits of energy efficiency improvements, it should be possible to cost-effectively halve energy demand in UK homes.

“With innovation in technology and delivery, appropriately supported by government, it is likely we can go significantly further than this too.”

But to do so there needs to be significant policy change and public investment. The report points to the forthcoming opportunity in the expected (and delayed) Clean Growth Plan and National Infrastructure Assessment. Plus, to fill the current policy vacuum a new white paper on heat and energy efficiency is urgently required.

Two years after the government scrapped its Green Deal energy efficiency loan scheme, it has yet to announce a replacement. The company which bought the Green Deal Finance company (and some of the Green Investment Bank's investments from Macquarie) is also yet to announce a new scheme.

David Thorpe is the author of Energy Management in Building and Sustainable Home Refurbishment.

European battle continues over 2030 energy efficiency target

Members of the European Parliament’s environment committee have voted for a legally binding target of a 40 per cent increase in energy efficiency by 2030, as well as for the closing of a number of loopholes that undermine annual energy savings.

A version of this was published first on The Fifth Estate on 11 September.

In doing so they have set a challenge to the disappointing compromise of 30% delivered by EU energy ministers in June – a non-binding target.

Will the EU eventually settle on a 30% or  40% target when it votes later this year? Battle is raging in Brussels between lobbyists of differing persuasions. It is particularly the coal industries of eastern European countries who are most vociferous in arguing for low targets.

You can tell your Member of the European Parliament what you want them to do by writing to them. Find out who they are here.

The environment committee wants to see Europe's nations being much more ambitious on saving energy in order to reach the Paris Agreement targets. They want to see a change in the text of the redrafted Energy Efficiency Directive from:

"Member States should set their national indicative energy efficiency contributions taking into account that the Union’s 2030 energy consumption has to be no more than 1321 Mtoe [million tonnes of oil equivalent] of primary energy and no more than 987 Mtoe of final energy."

to:

"Member States should set their national binding energy efficiency targets taking into account that the Union’s 2030 energy consumption has to be no more than 1129 Mtoe of primary energy and no more than 825 Mtoe of final energy."

This would represent a saving of 162 Mtoe – or 1884 million megawatt-hours of final energy use.

That’s equivalent to the output of 129,041MW of coal-fired power stations operating at a capacity factor of 60 per cent!

Seen in this way, it’s easy to understand the importance of this battle that is raging between the leaders of European countries and their environmentally inclined  MEPs.

Because of their concern that extreme weather events such as heatwaves, floods and droughts are expected to affect many parts of Europe more frequently, the environment committee also called for cities to create their own sets of targets for addressing climate change.

These would represent a system of Locally Determined Contributions, directly linked and complementary to their host countries’ National Determined Contributions, which are what every country has to produce to detail how it will help to meet the goals of the Paris Agreement.

Target low-income households

Buildings constitute a substantial potential for increasing energy efficiency and the buildings sector accounts for 40 per cent of Europe’s energy consumption, making it a sector of prioritised importance for achieving further substantial energy efficiency gains.

The MEPs said they wanted a significant share of the 40 per cent energy efficiency target to be aimed as a priority at improvements to the energy efficiency of buildings that particularly benefit low-income consumers at risk of energy poverty, because they won’t have the means to make the necessary investments themselves.

“Investments in households at risk of energy poverty will reap significant benefits for those households and wider society,” they said. “With around 50 million households in the Union being affected by energy poverty, energy efficiency measures must be central to any cost-effective strategy to address energy poverty and consumer vulnerability and are complementary to social security policies at the Member State level.”

One loophole MEPs want closed is to let Member States have the discretion to decide how best to design measures providing better feedback on energy consumption for occupants of units in multi-apartment or multi-purpose buildings who are supplied with heating, cooling or hot water from a central source.

MEPs also ramped up the target for publicly owned buildings. They want to see three per cent of publicly owned buildings over 250 square metres to be eco-renovated a year – up from the current draft’s target of three per cent of central government-owned buildings over 500 square metres.

Even more crucially, they want to see sales of energy used in transport to be fully included in the targets.

Energy performance of buildings

The committee also called for a strengthening of the new Directive on the Energy Performance of Buildings to ramp up the current slow annual renovation rate of European buildings (around 0.4-1.2 per cent depending on the Member State).

Currently, there is an urgent need for widely available financing products that would include and support the positive aspects of energy efficiency renovations, such as the higher asset value and healthier living conditions for the occupants.

If adopted, this would call upon Member States to establish a long-term strategy for mobilising investment in the renovation of residential and commercial buildings, both public and private, to decarbonise the total building stock by 2050.

Spanish energy firm Iberdrola’s director of climate change, Gonzalo Saenz de Miera, has said his company would support this target by “improving the insulation on windows that will reduce the consumption of gas, or by improving the efficiency in the transport sector”.

“We’re not going to provide insulation services ourselves. Energy efficiency businesses will sell their services to companies that are obliged to make the reductions” and make those available using a system of white certificates, he said.

The next step in the European legislative process will be taken on 28 November when MEPs in the energy and industry committee are due to consider it.

Dora Petroula, energy savings policy coordinator at Climate Action Network Europe, commented: “This position brings us much closer to meeting the Paris Agreement goals which require the EU to up its game on energy efficiency. The industry committee needs to follow suit and support a 40 per cent efficiency target and a strong set of rules to ensure all EU countries limit energy waste.”

David Thorpe is the author of Energy Management in Building and Sustainable Home Refurbishment.

EU loses nerve to tackle climate change, fuel poverty & slashes 2030 energy efficiency goal

Energy efficiency – you know it makes sense, right?

While paying lip service to the Paris Agreement, the European Union has let a minority of countries slash its energy efficiency targets by 90 per cent on the grounds that even modest targets are too expensive. The EU’s commitment to tackling climate change and fuel poverty is now seriously in doubt.

A version of this article was first published in The Fifth Estate on 5 July.

At a meeting of the Energy Council of EU energy ministers on 26 June, where several energy efficiency policies were discussed, agreement on the energy saving target from 2020 to 2030 was hard to achieve, and reaching consensus came at great cost to the level of ambition.

The new target

Currently the energy saving target is a non-binding one of 20 per cent by 2020, compared to baseline projections. A legally binding target of achieving 30 per cent energy use reduction by 2030 had been on the table.

Originally the European Parliament was calling for a 40 per cent target because the EU is already on track to achieve 24 per cent savings by 2030, and deeper savings are easily available and cost-effective. Earlier this year there was wide expectation that the final compromise might be between 30 per cent and 40 per cent.

But at the meeting, some countries demanded that the target should be only voluntary – and other countries demanded that it should be as low as 27 per cent.

In the end a non-binding 30 per cent target was agreed.

This compromise means the new target is less ambitious than the current 20 per cent by 2020 target. Currently countries would have to save 1.5 per cent energy a year. A 30 per cent target by 2030 decreases it to just one per cent between 2026 and 2030, assuming all countries co-operate.

Further loopholes were also added, specifically permitting:

• the double counting of energy savings from new buildings standards/codes – even though those are already covered by the Energy Performance in Buildings Directive
• double counting in the period 2021-2030 savings from energy efficiency measures installed before 2021 with lifetimes longer than 23 years – as if they were new savings
• 15 per cent of on-site renewable energy generation to be treated as energy savings
• excess savings from the current Article 7 (Energy Efficiency Obligation) period 2014-2020 towards the minimum savings 2021-2030

Observers Jan Rosenow and Richard Cowart calculate that together this will reduce the actual energy savings mandate in the EED from an effective level of 443 million tonnes of oil equivalent (Mtoe) a year to just 52 Mtoe – a reduction of almost 90 per cent.

Rogues and heroes

The rogue countries that argued for this result were the UK, which allied itself with eastern states Poland, Bulgaria, Hungary, Slovenia, Slovakia and Romania. The WWF said these countries “could not even support the final weak deal”.

The British negotiator was Conservative MP Richard Harrington. Where other countries sent their secretaries of state for energy, Britain sent an under-secretary from the business, energy and industrial strategy department, who had only been appointed a week earlier.

Richard Harrington

The heroes of the day were France, Germany, Luxembourg, Sweden and Ireland, who were congratulated by Greens MEP Claude Turmes for fighting hard for a strong deal. He said afterwards that he would use his place on the European Parliament’s Industry Committee to “raise the ambition” of the targets.

EU Energy and Climate Commissioner Miguel Arias Cañete commented that finding agreement on the Energy Efficiency Directive was “not easy” and that as a result it fell “below the ambition of the Commission”.

Miguel Arias Cañete

Others were equally disappointed. Clémence Hutin, climate justice and energy campaigner at Friends of the Earth Europe, said: “These negotiations should have been about ramping up the EU’s climate efforts for 2030, instead we are risking a decade of inaction. EU governments have expressed deep regret at Donald Trump’s withdrawal from the Paris Agreement, yet they are turning their backs on the main tool for cutting emissions – energy efficiency.”

Benedek Jávor, Greens/EFA MEP said: “There is an engaged energy efficiency community that stands ready to raise ambition levels and invest massively in the energy transition. They just need the right signals from policymakers. To fully unlock this potential, all member states need to give their support. Where some countries lag behind, there is a real risk of higher energy costs and serious competition gaps.”

The European Parliament’s own Impact Assessment had shown that higher levels of ambition would deliver significantly greater benefits, as revealed in the table below.

Level of energy savings:	30 per cent	33 per cent	35 per cent	40 per cent
Reduction in gas imports	12 per cent	23 per cent	29 per cent	41 per cent
GDP increase in 2030	0.39 per cent	1.45 per cent	2.08 per cent	4.08 per cent
Additional jobs	396,950	1,587,800	2,428,400	4,856,800
Savings in fossil fuel import bills (bn) for 2021-2030	69.6	147.3	199.3	287.5
Reduction in pollution control and health damage costs (bn/year )	4.5-8.3	15.2-28.4	19.9-36.6	30.4-55.9
Total GHG emissions reductions ( per cent to 1990)	41 per cent	43 per cent	44 per cent	47 per cent

These are consistent with figures from the De-Risking Energy Efficiency Platform (DEEP) database, which contains close to 6000 individual energy efficiency projects across the member states of the EU. Overall, it shows the cost per kilowatt-hour saved in buildings is 2.5 eurocents and in the industry sector 1.2 eurocents.

Fuel poverty is an issue in all member states. It affects tens of millions of Europeans (between 50 million and 125 million depending on how you measure it). Of the main causes – low income, high energy costs and poor insulation of European dwellings – the directive could do much to affect the latter two.

The Energy Union strategy and the Paris Agreement

The Energy Efficiency Directive forms part of the EU’s Energy Union Strategy.

The general aim of the Energy Union strategy is to move towards the decarbonisation of the EU economy by 2030 and beyond, while strengthening economic growth, consumer protection, innovation and competitiveness. The Commission proposal on energy efficiency updates the current Energy Efficiency Directive 2012/27/EU and was presented in November 2016.

Buildings are the largest single energy consumer in Europe, consuming 40 per cent of final energy.

Even before this meeting, the EU was not on a trajectory to meet its self-assigned 2030 greenhouse gas emissions reduction target of “at least” 40 per cent by 2030 below 1990 levels under the Paris Agreement.

According to Climate Action Tracker – which monitors individual countries’ plans to achieve the global aims of the Paris Agreement of limiting warming to 1.5°C – the EU’s domestic emissions are projected to be cut by only 30-39 per cent.

The EU’s target is, anyway, not consistent with limiting warming to below 2°C, let alone with the Paris Agreement’s stronger 1.5°C limit, says Climate Action Tracker. Extrapolating the current trend to 2050 would give an emissions reduction of 64 per cent below 1990. The EU’s goal is 80-95 per cent.

Looking at energy savings alone, by totalling the amount of savings reported by member states in 2014 and 2015, the total savings target is currently on track to be less than zero.

Factoring in the new, seriously unambitious targets under the Energy Efficiency Directive would make achieving Europe’s goal under the Paris Agreement much harder and more expensive to achieve.

The extra expense comes because it is cheaper to take action now than in the future, and because it is generally cheaper to install measures to save energy than to build new generation plant.

The European Union is now seriously lacking credibility in its position on tackling climate change. What is always puzzling is why energy efficiency – which has been shown innumerable times to have multiple benefits and mostly be more cost-effective than building more generation capacity – has so few friends.

Perhaps we should stop energy ministers deciding such matters and let those unswayable by lobbying from energy suppliers do so instead.

David Thorpe is the author of a number of books on energy efficiency, building refurbishment and renewable energy. See his website here.

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