Energy companies reject binding EU efficiency targets

European energy retailers resisting a mandatory 1.5% annual efficiency target prefer to find their own way to improve productivity – through higher electricity prices or subsidies from the public sector – EurActiv heard at an industry conference.
“We don’t need anyone to tell us to do energy efficiency, we are doing it right now,” said Claus Fest of RWE Effizienz GmbH in Germany.
Energy companies are reluctant to accept binding targets and highlight their own efforts to promote energy saving – through home energy audits, technology and training – company representatives told a workshop organised on 7 March by industry group Eurelectric.
The issue puts many in the industry at odds with EU efforts to lock in targets in the draft Energy Efficiency Directive which is to be debated soon between the Parliament and the Council.
Parliament’s energy committee last month backed legislation that would require EU countries to set binding efficiency targets. Under the proposal, energy companies would have to achieve “cumulative annual end-use energy savings equal to at least 1.5% of their energy sales” averaged over the most recent three-year period.
For German companies that put energy efficiency at the core of their strategic goals, the draft directive will not offer flexibility for customers, Fest said.
“A competitive market is much better than a regulated market, it is faster and cheaper,” he said.
Energy companies prefer to use market pressures –charging more for inefficiency, for example – to encourage customers to switch to conserve and switch to energy-saving technology. They also back public tax breaks and incentives to encourage customers to be more efficient.
A good way to stimulate the demand for energy efficiency services would be to create a sense of urgency among customers, said Paolo Quaini, of Italian energy company Edison. “If customers do not have an urgent obligation, they will not take up energy efficiency,” he said.
Defence of binding targets
EU officials say voluntary targets to achieve a 20% improvement on energy efficiency standards on 2005 levels are not enough.
“We have tried this in the past and it does not work on a voluntary basis,” said Marlene Holzner, European Commission spokesperson on energy. “Only this 1.5% savings obligation will bring us forward to achieving the 2020 energy savings targets of 20%.”
With eight years to go, the EU is only half way to meeting its 2020 goals.
The Commission argues it wants to make the energy efficiency bill as flexible as possible. “We do not expect a cut and paste solution,” said Krzysztof Gierulski, the Commission’s energy efficiency policy officer.
Industry support for legal targets
And not all companies resist binding targets, as experiences at the national level have shown.
Martin Lidegaard, Danish minister for Climate, Energy and Buildings, said many Danish companies opposed binding measures five years ago, when the country’s obligation scheme was introduced.
“Nowadays they urge us to double the obligations because there’s so much money in it,” Lidegaard said.
Public incentives may also help encourage efficiency. Finland and Sweden have used subsidies and tax incentives to encourage moves efficiency moves.
However, using public money has mixed results. In the Netherlands, a voluntary agreement set up in 2008 between the government, utilities and the construction industry reached its limit after refurbishing some 400,000 houses by 2011. Problems in reaching customers and financing barriers brought an end to the scheme.
The Danish presidency says it hopes it can offer member states as much flexibility as possible, without compromising the ambition of the proposed directive.
“The energy savings obligation is a very important article for the directive. It takes a large portion of the target and if we don’t have that article it’s going to be very hard to achieve the 20% target,” said Lidegaard, who as Danish climate and energy minister speaks for the rotating Danish presidency.
Positions:
“There is no obligation on the consumer side,” said Energy spokesperson Marlene Holzner. “We have to make sure that Europe saves energy and we have looked into different options and of all options this turned out to be the most efficient scheme and now there are discussions to deal with it.”
Commenting on the impact higher electricity targets would have on customers, European consumer organization BEUC said: “The real urgent issue which needs to be addressed is the increasing number of European households who cannot manage to pay their energy bill. The first consequence of higher energy prices would not be an increase of energy efficiency but an even bigger number of people who need to make choices between warming their homes, buying food or paying clothes for their children.”
“Consumers will be paying for energy obligation schemes through their energy bill. Instead of focusing on how to make them pay twice by using taxpayers’ money as incentive for energy companies, the question should be about how to help consumers reduce their energy consumption.”

Euractiv, 09.03.2012