EU agrees energy savings text, still needs to sign it

BRUSSELS Thu Jun 14, 2012 3:36am EDT

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BRUSSELS (Reuters) - European Union negotiators agreed early on Thursday the text of a law designed to make governments and utilities improve energy efficiency and lower the bloc's fuel bills.

The legislative proposal was agreed by representatives of the Commission, the European Parliament and the presidency shortly after midnight, EU sources said. It still needs the approval of diplomats from the 27 member states and would then have to be rubber-stamped by ministers.

Months of intense debate diluted the ambition of the original proposals from the Commission and the European Parliament, which had aimed to cut energy use by 20 percent compared with projected levels by 2020.

A final round of negotiations, which began late on Wednesday, forged a deal more likely to put the bloc on course for roughly 15 percent savings. Its champions said it can still change the status quo to the benefit of consumers' and nations' budgets.

"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," said Claude Turmes, a Green member of the European Parliament, who has led the parliamentary contribution to the legislation.

The Danish presidency, with backing from the Commission, has made energy efficiency a priority for its six months at the head of EU debate, which concludes at the end of this month.

Denmark, which has a deep domestic commitment to energy saving, has argued lowering consumption to curb reliance on imported oil and gas can play a major part in tackling EU debt, as well as creating jobs in building renovation and limiting greenhouse gas emissions.

Commission figures show the EU spent more than 84 billion euros ($104.72 billion) on imported energy in 1999, representing 1 percent of the bloc's Gross Domestic Product. By 2011, the bill had risen to more than 488 billion, or 3.9 percent of GDP.

Opponents have attacked the draft Energy Efficiency Directive on the grounds it could hobble growth and there is no money available for the upfront spending required to bring about the longer term savings.

EU sources said it was Britain, whose government has claimed to be the nation's greenest yet, which was the final obstacle as it haggled to weaken a central clause.

According to the Commission's original proposal, the article would have required utilities to deliver energy savings equivalent to 1.5 percent of annual sales.

Even after member states had watered down that clause to closer to 1 percent, Britain introduced an amendment that would mean savings from future and past years could be taken into account, effectively exempting it from additional action.

The British representation in Brussels declined to comment.

ANOTHER EU ROAD MAP

To help compensate for the weakened central clause, Turmes introduced a road map 2050 to steer investment decisions and identify cost-effective ways to making buildings more efficient.

The EU already has a statute on its books mandating that from 2020 all new buildings should consume "near zero energy."

But the challenge is retrofitting existing buildings, which account for roughly 40 percent of EU energy use.

The Commission's original proposal for the Energy Efficiency Directive included provisions for renovating public buildings.

Again the ambition was reduced over the course of the debate, meaning very few buildings would be covered by the final text. Britain, for instance, added defense and military buildings to a long list of exemptions.

The 20 percent efficiency target is one of a set of three green EU energy goals set in 2007 and it is the only one that is not binding. Without the Energy Efficiency Directive, the EU is only expected to meet about half of the target.

The other two mandatory goals are to cut carbon emissions by 20 percent and to increase the share of renewables in the energy mix to 20 percent.

Officially, the EU is on track to meet those two, but its Emissions Trading Scheme (ETS) has sunk to record lows, removing incentives for low carbon investment.

The energy efficiency debate became entangled in discussion on how to prop up the EU's carbon market after some politicians argued a better record on energy saving could add to a surplus of carbon allowances that has weighed on the ETS.

The Danish presidency was keen to distinguish the two arguments and the European Commission has said separately that it is reassessing the ETS auctioning timetable to try to reduce the surplus of permits.

(Editing by James Jukwey)

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