All posts by Jasmine Siu

Renovating … are we?


Tough negotiations ahead for EU Energy Efficiency Directive buildings clause

By Jasmine Siu

It was 14 December 2010.


“The time has come I think for us to put up our hands and admit we got it wrong in 2008. We should have made the target binding then, and we really need to go forward now and find ways of making it possible,” said Liberal Democrat MEP Fiona Hall at the occasion of the European Parliament’s Energy Efficiency Action Plan debate.

Now, a year on, how far are we headed for energy efficiency.

Let’s get started

When EU presented “Europe 2020”, it was meant to be a package of policies that will set out the goals and tasks for its member states to meet by 2020. Some targets are binding, some not, and the extent of implementation differs from sector to sector, country to country.

In the field of climate change and energy, three specific goals were set, with the first two being binding ones, namely, 20% reduction of greenhouse gas emissions, 20% increase in renewable energy, and 20% increase in energy efficiency.

“So far, the sad fact is that where we are on track to meet the binding renewables target and the binding Co2 reductions target, we are very far from on track meeting the non-binding energy efficiency target,” said Connie Hedegaard, European Commissioner for Climate Action, “There we should be on track to meet the 20%, but there we are not even on track to meet 10%.”

Hall said, “We need to recognize we failed and binding target is usually what succeeds. We look at renewable energy, which is a binding target, member states are on track pretty well to achieve what they were set out to achieve.”

In light of the progress on meeting the energy efficiency target, on 22 June 2011, the European Commission tabled a proposal for a new Energy Efficiency Directive, which aims at helping member states to meet the 20% improvement in energy efficiency by 2020.

The renovation goal

The original Directive proposal came in 82 pages, specifying targets for the public buildings sector, energy companies, governments and municipalities to follow.

In particular, the proposed annual buildings renovation rate of 3% for public buildings over 250m2 marks the first of its kind as it sets out specific requirements on how and when buildings should be renovated.

“It is symbolically an important article, it tackles a sector that is very important cause buildings consume 40% of energy in the EU and that’s where the biggest saving potential is,” said Jacek Truszczynski, Directorate-General for Energy at the European Commission.

“As far as buildings are concerned, to get the public bodies doing something with their own buildings, particularly doing some deep renovation, that’s important because the market is very under-developed at the moment,” said Hall.

Define “Public”

However, the buildings renovation proposal has hit a major setback as the European Council and the Parliament define “public buildings” differently.

On one hand, ministers and heads of states at the European Council have narrowed the definition to “central government buildings”, meaning buildings occupied by the central administration.

On the other, while members of the European Parliament have lowered the renovation rate from 3% to 2.5%, they maintained the ambition of defining “public buildings” as “publicly owned buildings”, which would also include municipalities, schools, and hospitals.

Such a sharp division in views then places the keyword “public buildings” on a pivotal point, determining the ambition and success of the Directive article.

“I am disappointed,” said Truszczynski, “Central government buildings are just a few percentages of the public bodies buildings. The Council has adopted a position which would probably lead, almost, to no results.”

“’Central government buildings’, that’s a difficult phrase,” said Hall, “Given that some countries have very federal structures, so there are not very many central government buildings in Belgium, for example, or indeed in Germany which has a very decentralized structure.”

The nature of the Directive being a co-decision legislation meant its final text has to be one that both the European Parliament and the Council will agree on, “So we need to find something which incorporates enough buildings for it to have any effect on the growth of the market in this,” said Hall.

Money, money, the next big thing

“The biggest challenge right now is money. Because public money is scarce, all member states are cutting their deficits and so on so they are not willing to spend. And what we tell them is that we can use other sources, other structures of financing,” said Truszczynski.

Hall explained there are many financial mechanisms available for buildings renovation but quite often member states are not aware of it or they have not strategically utilized the different schemes that could bring money in.

“There is money available from the Emissions Trading Scheme, there’s money from the structural funds, and there are some very new and innovative financing mechanisms like the UK screen deal where you pay back the renovation using the money that you’ve saved,” explained Hall.

Why renovate?

Challenging and ambitious as it may sound, the buildings clause alone is estimated to have a job effect of 2 million all over Europe, which according to Hedegaard fits the much needed youth employment and the low employment in the buildings sector.

“That is good economics, why don’t we do it? I mean it’s not rocket science, it’s not very complicated, does not take years to educate people to do it, we know how to do it,” said Hedegaard.

Oliver Rapf, Director of Buildings Performance Institute Europe (BPIE) further points out that higher energy efficiency benefits the quality of living.

“When we look at the buildings sector, when you renovate a building to high efficiency standard, then you normally also improve the quality of that building dramatically,” said Rapf, “As human beings we spend most of our living time in buildings, and I think we should really aim at making these buildings as livable and energy efficient as possible.”

On top of all, improving Europe’s energy efficiency by 20% will help reduce dependence on energy imports, saving 368 million tonnes of oil equivalent each year.

“It is a policy to reduce the dependence on energy exports,” said Rapf, “it is also a policy which makes a country more resilient against energy price fluctuations. I think more and more governments in Europe will recognize these additional benefits of energy efficiency.”

So are we renovating?

The European Parliament will begin its negotiations starting from 26 March 2012.

“I think it’s going to be really tough negotiations, but I’m reasonably confident because I think there’s a lot of will on the side of the Presidency, on the side of the Parliament and on the side of the Commission to make sure this thing goes through, and maybe even amongst the member states,” said Hall.

“It is a tough task ahead of us, but basically this will be on the top of our agenda,” said Nicolai Wammen, Danish Minister for European Affairs.

“Can I promise you today that we will have a conclusion within the Danish Presidency? No. Can I promise you that we’ll do everything to achieve this? Yes.”

Should the Directive be successfully voted pass during the Danish Presidency, member states will have to begin renovations starting from 1 January 2014.