EUROCITIES position on clean energy for all Europeans package. May 2017

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1 EUROCITIES position on clean energy for all Europeans package May 2017

2 Executive summary As European cities, we play a crucial role triggering energy transition at the local level, often surpassing the national level energy ambitions. As the level of government closest to citizens, we engage actively in making energy transition a reality in our cities, demonstrating that change is possible and feasible. The governance mechanisms should be strengthened to recognise and integrate the roles and ambitions of city authorities in delivering the energy union objectives. National targets should be developed and robust adjustment mechanism activated should implementation gaps be identified. City authorities embrace the efficiency first principle and the flexibility to decarbonise using a combination of building and system level solutions. Energy performance certificates and energy efficiency audits should be revised to achieve greater harmonisation and avoid red tape. At the same time it s important that metering is fit for purpose to avoid undermining the directive s objectives. Increasing the recognition and support of the role for district heating and waste heat solutions in the renewable directive will allow cities to utilise and maximise the use of local energy sources. Supporting renewable energy companies will also help achieve the same objective of deployment of renewable energy. Finance will be crucial to assist cities in realising energy transition, but there are currently many barriers that prevent full deployment of finance instruments. Financing challenges could be overcome through aggregation of demand and increased communication and capacity building. City authorities deploy different instruments to address energy poverty and this level of ambition should be matched in the EU s legal framework. Additionally emphasis on consumer empowerment should be matched by allowing corrective mechanisms to be deployed in case of market failures. May EUROCITIES position on clean energy for all Europeans package 2

3 Introduction In 2013, the world s urban areas accounted for about 64% of global primary energy use 1, illustrating the crucial role that cities play in this transition. We are responsible for the implementation of European directives and policies. As the level of government closest to the citizens, we demonstrate that energy transition is possible and feasible. However, we also encounter several legal and societal barriers preventing further progress when seeking to speed up the energy transition at the local level. The clean energy package is an important framework under which the EU implements its Paris agreement obligations. Acknowledging the need for a well-functioning Emissions Trading System (ETS), effort sharing regulation and for long term post-2030 EU and national energy targets, there are several aspects in the package that should be revised: Governance We need a strong governance mechanism acknowledging the role and ambitions of city authorities, in the delivery of energy union objectives, to ensure the full implementation of the EU s commitments under the Paris agreement. Although local actors have made ambitious commitments under the Covenant of Mayors initiative and are powerful allies in bridging the gap between the EU ambitions and citizens, their role in energy union governance is limited. We recommend the following changes in the proposal: recognition and integration of cities commitments - when member states design their national energy and climate plans (NECPs), they should integrate and report on commitments made by cities, such as sustainable energy action plans (SEAPs) for signatories of the Covenant of Mayors. This would lead to an increased awareness of the local reality and future projection at EU and national level, and could lead to better policy integration - although the proposal has a dedicated chapter on regional cooperation between neighbouring member states, it fails to provide stronger guidance of how member states can improve cooperation and coordination across the different levels of government. The public consultation requirement is welcome but a more systematic and holistic cooperation approach should be encouraged to allow cities to co-design NECPs, which would increase their coherence and effectiveness. robust adjustment mechanisms If gaps are identified between the actions taken by member states and the EU s international climate commitments, action should be taken quickly to ensure fast delivery of results. 1 Energy Technology Perspectives Towards Sustainable Urban Energy Systems May EUROCITIES position on clean energy for all Europeans package 3

4 Energy efficiency and energy performance of buildings City authorities embrace the efficiency first principle and strongly advocate that energy efficiency efforts need to be considered across the whole energy system and not just at the building level. This approach gives city authorities the flexibility to decarbonise in the most cost-effective way, by using a combination of building and system level solutions to reduce primary energy demand. The long-term vision for energy savings post 2020 should help mobilise investment and support national policies. Maintaining the 3% renovation target of public buildings owned by the national government can contribute to achieving the objectives but expanding the scope may lead to sub-optimal or ineffective renovations. Strong support should be directed towards releasing renovation investments rather than specific goals for renovation, and improving the skills of the renovation builders to avoid indoor air quality issues. We recommend the revision ensures: more effective energy performance certificates Energy performance certificates (EPCs) should be revised to be a better indicator that consumers can rely on. EPCs should also be suitable for complex buildings and their reliability ensured. The EPCs in the energy performance of buildings directive (every 10 years) and energy efficiency directive audits (every 4 years) should be harmonised to avoid duplication. Buildings where audits have been completed should not require an EPC, as the scope of an audit is broader. Training of auditors should be harmonised and financed appropriately. focus on buildings as part of a system Primary energy savings can be made at both the building and system level, creating a more integrated energy system where district heating and cooling networks utilising waste heat and renewable energy sources can be considered as part of the overall solution for decarbonising buildings. Harmonised calculation methodologies of the reductions in primary energy from both building and system level solutions and between electricity and heating are also required to allow greater integration into buildings. metering fit for purpose The obligation for consumers to be provided with individual metering and accurate billing for thermal energy can empower consumers to make conscious choices about their consumption. It is important in the case of district heating networks that individual metering does not adversely impact on the overall heating strategy for multi-family buildings/flats or the performance of the heat network itself as this could increase costs for consumers. This situation is particularly relevant in countries with mature district heating markets. We also believe that EU metering requirements should be voluntary where there is a good commercial or operational reason as to why individual billing should not be required. In May EUROCITIES position on clean energy for all Europeans package 4

5 cases where the central heating system of a building is managed by the building s owner and heating costs are included in the tenant s rent, individual metering would be counterproductive. Many of the most effective energy saving measures such as better insulation, better heat recuperation and better ventilation, are outside the control of consumers if they are tenants and the transfer of economic incentives from owners to tenants would make the implementations of such measures less likely. Strong provisions should be in place to ensure that the citizens data is secured and protected if remotely readable meters are deployed. smart indicator development City authorities manage extensive portfolios of public buildings and as there are legal energy efficiency requirements on public buildings, cities should be consulted and involved during the development of the smart indicator proposal. flexibility in provision on electric vehicle (EV) charging points Overly prescriptive requirements for (EV) charging points may not fit local needs and can be counterproductive, it is also important that measures are cost-effective. There needs to be a close relationship with the distribution network operator to ensure that the local electricity network and sub-stations have the capacity to support the charging points. Renewable energy The ambition to make the EU a global leader in renewable energy with a minimum 27% EU level target is welcome, although specific national targets would provide more longterm investment stability. The increased focus on consumer empowerment and guarantees of origin will help renewable energy generation at local level. The objectives of the directive could be strengthened by: increasing the recognition for the role of district energy and waste heat solutions The emphasis on decarbonising heating and cooling systems by encouraging the uptake of renewable energy and use of waste heat and cooling sources is helpful. There should also be a greater recognition of and support for the role that district heating and cooling networks can play in the transition to an integrated zero-carbon energy system. District heating and cooling networks allow cities to re-use sources of waste heat and cooling by using them as heat sources for networks and allowing consumers heat demand to be met while also delivering major reductions in primary energy demand. A broader, more holistic, definition of waste heat is required to further encourage its use and give cities greater flexibility to use all available heat resources. This definition should also encompass recovered heat from commercial sources, including waste streams that cannot be recovered. Renewable fuelled district heating combined with electricity production should be encouraged along with the conversion of existing heat only systems into advanced systems, particularly in areas with large potential such as Eastern Europe. May EUROCITIES position on clean energy for all Europeans package 5

6 acknowledging that district heating and cooling systems are local Although it s important to strive towards a breakdown of monopolies and foster free competition among district heating operators, the final objective should result in a better outcome for the consumer and the environment. It is important that authorities have the flexibility to evaluate, on a case-by-case basis, the best outcome in each situation and how it fits the local context. recognition of renewable energy communities The acknowledgement of renewable communities is a very positive step, specifically the incentive to reduce red tape and costs for local renewable energy production, consumption or storage. A national indicative target on energy generated by energy communities would unlock the potential of local sustainable energy production. flexibility in priority dispatch The market maturity of renewable energy across the EU varies significantly and a degree of flexibility and subsidiarity is still required in cases where ETS fails to deliver. role of bioenergy in energy mix The new sustainability criteria for biomass is a safeguard to ensure the sustainable sourcing and use of biomass but we would discourage further sustainability criteria limiting the sustainable use of biomass, especially from cropland that is unused and abandoned. Energy poverty The obligation for member states to report on the number of households in a situation of energy poverty is welcome. Specific guidelines on how to define energy poverty and how to measure its different components (energy affordability, energy uses and housing patterns) would help public authorities to comply with the obligation, while considering local specificities. In order to enable cities to better protect its citizens against energy poverty, we call for: more targeted housing renovation The inclusion of energy poverty measures in the national renovation strategies and the obligation to have social requirements in energy efficiency obligation schemes is useful. However, we would like to see a more ambitious and systematic examination of energy poverty, such as a specific and minimum earmarking of energy efficiency obligation schemes and alternative policy measures for energy poor households. flexibility to address market failures Given the growing evidence of cold-related mortality it is crucial to ensure more measures to guarantee the continuity of supply and energy connection for vulnerable consumers during extreme cold periods. Countries that have effectively targeted vulnerable groups through public intervention measures should be allowed to retain them. Consumers should be able to switch supplier and to terminate contracts without May EUROCITIES position on clean energy for all Europeans package 6

7 fees, to protect the most vulnerable consumers. Finance The proposed smart financing for smart building initiative that considers allocating additional budget to energy efficiency projects is helpful at a time when investment is below pre-crisis level. The proposed funding initiative should be complemented by: breaking down of barriers There needs to be a better alignment between EFSI and ESIF regulations and application procedure, avoiding contradictions and pitfalls. We encourage the Commission to examine the possibility to distinguish debt related to long-term investments from functional spending; explore how to address the impact of local public investments related to energy, transport, affordable housing, on the debt and deficit of governments and ensure that strategic investment costs are spread across construction time rather than one budgetary year. aggregating demand EIB instruments can become an important financial resource, but to unleash its full potential it is important to design a framework at regional and national level that aggregates demand and scale capacity of local authorities. alignment and mainstreaming of energy efficiency projects City authorities need flexibility in the available financial products. Overly prescriptive eligibility criteria and strictly thematic financing are not beneficial at local level, as they undermine synergies between energy efficiency and improved air quality, mobility and social inclusion. more communication and capacity building We would welcome further communication about the advisory hub and the fi-compass, for example through capacity building events at national and regional level, involving cities directly. We would also welcome further communication about these initiatives at national level through regional capacity building events. We support the increase in technical assistance from 23 million to 38 million but the leverage factors required to access it are still too demanding. Empowering consumers The recognition and empowerment of consumers will allow them to be active actors in generating, storing, consuming and selling self-generated electricity. The recognition of local energy communities, design principles for capacity mechanism and proposals under the demand response and contract with aggregators are crucial pillar of the enabling framework to ensure a transition towards a low carbon and resilient economy. We recommend the following changes to accelerate and consolidate the transition: May EUROCITIES position on clean energy for all Europeans package 7

8 look beyond the electricity market The proposals on market design place great emphasis on the electricity market, however increased focus on heating and cooling should also be pursued particularly when it represents 50% of the EU's annual energy consumption. develop mitigation actions The proposals rely on the market and the right price signal to achieve energy transition. It is important to supervise the progress of the demand response allowing corrective mechanisms to be deployed to correct any market failure. Eco-design The eco-design working plan for goes a long way into recognising the importance of product design as an essential element to improve resource efficiency in the EU. The commitment to creating a toolbox for eco-design offering guidance through examples of how resource and material efficiency aspects will be taken into consideration for new products. This will contribute to a more effective implementation of the eco-design directive. We would encourage a more ambitious list of products to boost the potential of eco-design, which includes not just industrial products with the most energy saving potential, but also a wider list of consumer products with a strong focus on durability and resource efficiency. May EUROCITIES position on clean energy for all Europeans package 8