Brussels - A draft European Union law on energy saving is
one of the most complex pieces of legislation fighting its way to approval in
Denmark, current holder of the rotating EU presidency, has
made getting a deal on the law during its six-month tenure a priority and has
also admitted it is a major challenge.
This week, EU ambassadors have been debating the most
contentious articles to help prepare Denmark's negotiating stance. Talks will
resume next week.
The following looks at some of the issues.
What's the aim?
EU leaders endorsed an energy savings target in 2007 as part
of a set of three 2020 goals to push the 27-member bloc towards a lower carbon
Two of the goals are binding, and the EU is said to be on
track to meet them.
The target to improve energy efficiency by 20% was not
binding, and the EU is not expected to achieve more than half of that level
unless the Energy Efficiency Directive can be agreed to force change.
What's at stake?
The commission has thrown its weight behind energy saving as
a means to spur growth, create jobs in areas such as building renovation,
reduce household bills, provide a route to cutting carbon and reduce reliance
on oil and gas imports.
Many firms are embracing energy saving with, for instance,
smart metering and other technology to improve efficiency.
Some of those keenest to achieve efficiencies including
Siemens, Philips and Schneider Electric have grouped together in the European
Alliance to Save Energy, set up in 2010.
"We just don't understand why this isn't something that
every minister supports when we have an economy that desperately needs to get
going and a construction industry on its knees," Tony Robson, chairperson
of the alliance and CEO of British firm Knauf Insulation, told Reuters.
Others in business, chiefly big utilities and energy
intensive industries, have resisted the need for upfront investment and the
prospect of reduced profits.
Energy intensive industries, such as the aluminium sector,
are looking on nervously as many of the advocates of efficiency are also
exploring ways to support the carbon market.
It is trading far below levels needed to drive low carbon
investment, and greater energy saving would only add to a surplus of carbon
allowances that have depressed prices.
An expected consequence of the energy efficiency bill would
therefore be that the commission would draw up a plan on intervention to drive
up carbon prices.
How does the new law seek to close the gap?
In simple terms, the law seeks to make member states
implement sufficient energy saving measures to close the shortfall from the
One article calls on every member state to set up an energy
efficiency obligation scheme, meaning utilities would have to achieve annual
savings equal to 1.5% of energy sales.
Another article of the commission's proposal demands member
states ensure that 3% of the total floor area owned by public bodies is
renovated each year beginning on January 1 2014.
A compromise text hammered out in the European Parliament
from hundreds of proposed amendments reduced the 3% to 2.5% but added a demand
for deep renovation, which would amount to 75% of energy reduction in a
Environmental groups said it would be a struggle to retain
that requirement and also noted a growing list being proposed, in which public
buildings would be included.
What happens next?
Following a parliamentary vote last month that established a
compromise text, representatives of the three EU institutions - the parliament,
the commission and the council of member state governments - will negotiate
further towards achieving consensus.
Denmark, as president, wants a final text to be agreed in
What are the obstacles?
Many member states are niggling over details and arguing about
how, for instance, the 1.5% should be calculated.
Environmental campaigners have accused them of
"accounting tricks" in trying to claim credit for energy savings
already achieved, rather than pursuing genuinely new efficiencies.
Among individual nations creating complications, Germany has
been talking about targets for energy intensity, or units of energy used per
unit of gross domestic product, rather than targets based on consumption.
Politicians say that change would favour efficient countries
such as Germany, which have already made strides in lowering energy intensity
and would have little progress to make.
For countries with nuclear power, including Britain and
France as well Finland, which is building new nuclear capacity, environmental
campaigners say efficiency is a problem.
Nuclear power plants are only about 30-35% efficient in
converting the energy they produce into electricity, compared with the most
efficient new gas-fired plants, which can turn around 50% of the energy
produced from burning gas into power.
For renewable energy, no energy is lost in the process of
generating electricity because sun and wind have no cost. Biomass, however, can
be problematic because converting coal-fired plants to burn biomass in efforts
to achieve renewable targets is not efficient.