On November 30, 2016, the European Commission ("Commission") published its long-awaited legislative package to accelerate the EU's clean energy transition. The proposals have three main goals: putting energy efficiency first, achieving global leadership in renewable energies, and providing a fair deal for consumers.
The Commission hopes to achieve these goals by improving energy efficiency in buildings, enhancing the energy performance of products (ecodesign), and providing better information to consumers (energy labeling). The proposed building measures aim to speed up the renovation rate of existing buildings with a view to decarbonizing the EU's building stock by the mid-century. The ecodesign and energy labeling measures are designed to ensure that only energy-efficient appliances are sold in the EU. The Commission is also launching a "smart finance for smart building" initiative to unlock private financing for energy efficiency and renewables in buildings at a greater scale. As an encompassing element, the Commission has also proposed a binding EU-wide target of 30 percent for energy efficiency by 2030.
The Commission is clear that the core reason why it has taken action now is economic growth, noting that in 2016, clean energy attracted a record global investment of more than €300 billion, six times the amount in 2004. The Commission hopes that the proposed measures will unlock energy savings that can boost growth in the EU's economy, investment, and job creation. The binding EU-wide energy efficiency target is intended to reduce the EU's fossil fuel imports and create more jobs and greater domestic output.
The proposals are primarily packaged in a vast series of communications and draft revised laws, including a draft revised Energy Efficiency Directive and Energy Performance of Buildings Directive. However, there are a handful of brand-new proposed regulations, including an Energy Union Governance Regulation, which brings together a range of planning and reporting obligations that are currently spread across different pieces of legislation.
The proposals are, however, far from final. Over the next 18 to 24 months the EU Council and EU Parliament will review and vote on the measures. As they make their way through the EU's political process, we are likely to see amendments based on member-states' own priorities. Additionally, even when the revised directives have passed through the EU's political process, they will need to be implemented by national laws passed in each member-state.
The final nature of the proposals will also depend on industry and other stakeholder perspectives. The present proposals have received a mixed response. The European Association of Craft, Small and Medium-sized Enterprises is largely supportive of the proposals, noting in particular that it welcomes energy audits for SMEs remaining voluntary. Commentators have also reacted positively to the regulatory clarity promised by the Energy Union Governance Regulation.
However, environmental groups have denounced the proposals as not going far enough. The World Wildlife Fund ("WWF") has stated that the proposals undermine renewables by leaving the door open to subsidies for existing coal plants until 2026 at the latest. Additionally, it is observed that the 30 percent energy efficiency target is binding only at the EU level. Without national binding targets, it unclear how the Commission will ensure the target is met. The WWF has said it is "now up to the European Parliament and to the Council to add some backbone." Given the numerous other issues on the EU Parliament and Council's plate, it will be interesting to see if they take up this challenge. A long road lies ahead, and the final destination is unclear.
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