Country Report. Energy Efficiency Policies in Europe. Czech Republic

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1 Energy Efficiency Policies in Europe Analysis of National Energy Efficiency Action Plans and Policies in EU Member States 2014 Country Report Czech Republic Co-funded by the Intelligent Energy Europe Programme of the European Union

2 Key Points and Recommendations This report is one of 28 Country Reports published in 2015 by the Energy Efficiency Watch project. It addresses 1) the changes in policies implemented since 2011 by EU Member States (MS) and their plans, based on the National Energy Efficiency Action Plans (NEEAP) published in 2014 and other official, as well as 2) the feedback that was received from the quantitative survey and expert interviews on how effective policy implementation actually is (see more at efficiency- watch.org). Based on these results, it also offers recommendations on how the Czech Republic s sectoral and overall energy efficiency policies could be further improved. Overview of Findings For the Czech Republic, medium progress was observed between the second and the third NEEAP. Two thirds of experts think that the ambition of energy efficiency policies is rather low or ambitious only in a few sectors. The NEEAP screening shows that few but important measures have newly been implemented such as setting up an Energy Efficiency Department of the Ministry of Trade and Industry, implementing Article 5 and 6 of the Energy Efficiency Directive (EED), and mandatory audits for large energy end- users. However, energy efficiency can be considered to be hindered by an outdated energy strategy as of 2003 as well as a lack of awareness, funding, and human capital. Sectoral Progress The sectoral progress of policies is as follows: According to experts, the overarching energy efficiency governance framework in the Czech Republic is based on a relatively old energy strategy and weak energy efficiency objectives with hardly any link to EU objectives. However, the government s strategy for building renovation is reported to be of high quality. The document screening shows that the saving target for 2020 was updated according to the EED. Since the last NEEAP, a new department for energy efficiency was founded at the Ministry of Trade and Industry. The introduction of a White Certification Scheme is (still) planned, but nothing is said about the concrete implementation. To comply with Article 7, the Czech Republic has opted to implement a set of alternative policy measures. To further support the energy service market, the certification of Energy Service Companies (ESCOs) was included in the energy management law. A methodology for energy performance contracting is being prepared. Regarding the public sector, the implementation of Article 5 and 6 of the EED has taken place suggesting that the public sector starts to lead by example. A list is available to purchase energy efficient products. To increase the energy efficiency of public buildings, a scheme to provide soft loans for municipalities is ongoing. The promotion of the introduction of energy management was improved and an operational programme to support the retrofit of buildings was recently developed. However, building renovation is still lagging behind in many municipalities. A lack of human capital can be considered a key barrier in this respect. The effectiveness of EE policies the residential buildings sector can be considered as mixed. Generally, public awareness of energy efficiency in buildings is low and households lack the financial means to realise refurbishment. Moreover, regarding the implementation of the nearly zero energy building (nzeb), a substantial amount of experts believes that there is space for enhancement. However, in comparison to other instruments, EE requirements for new buildings are considered to be quite effective. Apart from the prolongation of the Green Saving Programme, further funding and financing instruments are planned and implemented, while, for instance, the provision of soft loans via building society savings schemes is ongoing but with reduced subsidies. 1

3 The third NEEAP did not provide any additional measures regarding the for appliances compared to the second NEEAP. The package is mainly characterised by EU Directives like the Ecodesign Directive and the Energy Labelling Directive. Furthermore, the Energy Star was implemented as well as an information campaign to promote energy saving appliances. All these measures are ongoing. While the appears to be balanced, some important measures like financial incentives are still missing. In the industry sector most measures are ongoing, such as the voluntary energy saving commitments and the provision of investment aid to increase energy efficiency in industry through the Operational Programme Industry and Enterprise (OPIE). There are also measures in place to promote energy audits and energy management systems. However, financial support for energy audits or advisory services, which could improve compliance with the regulation, is missing. As regards the transport sector, most measures appear to be ongoing although information is missing on several instruments. Some planning instruments, voluntary agreements to improve the energy efficiency of new vehicles as well as economic incentives are in place, but generally without further improvements. The latter include a feebate system for new vehicles according to the absolute level of CO 2 and a mandatory flat rate charge for the highways usages by cars and lorries. Information and advice programmes are not mentioned. Experts report that electric and hybrid cars are prioritised by some municipal governments (e.g. in Prague). Recommendations Further improvements to the could be the following: Regarding the overarching energy efficiency governance framework, the government is adviced to take into account an update of its energy strategy and its overall energy efficiency objectives given the critique voiced in the expert survey. The new Energy Efficiency Department should be supported with funding and human capacities. Energy Efficiency Obligations should be implemented well and quickly. For the public sector, it is key to design an implementation plan for renovating public buildings. Financing and human capital (i.e. through training) should be enhanced for building renovation to take place at the subnational level. In order to enhance energy efficiency in residential buildings, the government should increase public awareness on the benefits of energy savings, while also establishing funding and financing mechanisms easing energy efficiency investments. For appliances, it appears crucial to establish an education and training scheme for retail staff, so that end- users benefit from better and more comprehensive information regarding the energy consumption of appliances. Furthermore a financial incentive programme is missing and should be developed to promote the best available technology. In the industry and tertiary sector, the need for financial support for energy audits and advisory services should be assessed. This may improve compliance with energy audit requirements and provides an opportunity to realise private sector investments in energy efficiency. With respect to transport, information is missing to assess the NEEAP fully. It seems that this sector is not a priority in the Czech Republic. Information and advice programmes should be established. No clear economic incentive programme is in place. Policy Developments according to Official Documents The next tables present 1) the policies that were implemented in 2011 in the Czech Republic and 2) the policy changes after The policies are listed as the result of a document screening. Primarily, the screening takes into account the second and third NEEAP as well as Article 4, 5 and 7 communications of the Energy Efficiency 2

4 Directive to achieve meaningful results. The ODYSSEE- MURE database has also been a valuable source of information. Depending on the quality of information given in the official it has been analysed whether policies have been ongoing, abandoned/weakened or improved. It was not possible to assess how well these policies are implemented and which results they achieve. The changes in the policy design are illustrated with the following symbols: - means that the measure is ongoing without significant changes, - shows that the policy is new, - illustrates a policy that was abandoned, - ý shows a policy that is ongoing but that was weakened significantly, - þ presents a policy that is ongoing but that was improved significantly. Overarching Energy Efficiency Governance Framework Element of the Long- term EE target(s) and strategy Involvement of non- governmental and market actors, and sub- national authorities Energy agencies and climate protection agencies EE funds for overall coordination and funding of policies and measures EE obligation schemes for overall coordination and funding of policies and measures Favourable framework conditions for energy services Energy taxation higher than EU minimum requirements The State Energy Policy does not set any binding energy efficiency targets Framework to promote energy savings is updated annually Incorporation of issues of energy savings and their financial support into regional programmes Promotion of voluntary energy saving commitments The State Energy Inspectorate and the Ministry of Industry and Trade (MIT) are responsible agencies since Furthermore, there are regional energy agencies focusing on energy savings and renewable sources MIT and ČSOB rotating fund for the financing of energy saving projects Introduction of White Certification Scheme is planned Announced Energy Performance Contracting for the public sector Information on energy service companies is available on the website of the Association of Energy Service Providers The energy tax rate is at the EU minimum R&D support þ Update of State Energy Policy with an indicative saving target for 2020 set accordingly to Art 3 of EED and binding target set accordingly to Art 7 of EED Incorporation of issues of energy savings and their financial support into regional programmes Promotion of voluntary energy saving commitments Creation of a new department for energy efficiency at the ministry of industry and trade MIT and ČSOB rotating fund for the financing of energy saving projects To comply with Article 7, the Czech Republic has opted to implement a set of other policy measures in accordance with Article 7(9) of the EED No information on developments regarding Energy Performance Contracting for the public sector. Information on energy service companies is available on the website of the Association of Energy Service Providers Provisions for the certification of ESCOs are included in the revision of the energy management law Preparation of an Energy Performance Contracting methodology The energy tax rate is at the EU minimum 3

5 Public Sector Element of the Public sector strategy The public sector is partly covered by No information on developments the State Energy Policy, but there are regarding a public sector strategy no visions or targets for the public sector Public procurement Clear responsibilities as well as Clear responsibilities as well as requirements for purchasing and replacing equipment based on a list of energy efficient products requirements for purchasing and replacing equipment based on a list of energy efficient products Public buildings Requirements to use energy audits and implement the resulting cost- effective recommendations in public buildings Scheme to provide soft loans to municipalities for the repair and upgrade of publicly owned multi- family buildings R&D support Requirements to use energy audits and implement the resulting cost- effective recommendations in public buildings Scheme to provide soft loans to municipalities for the repair and upgrade of publicly owned multi- family buildings is ongoing, however expected to end in 2016 Promotion of the introduction of energy management in regions and towns including Energy Performance Contracting (EPC) feasibility analysis via the umbrella programme on the Promotion of Energy Savings and the Utilisation of Renewable Energy Sources (EFEKT) Operational Programme Environment to support energy efficient retrofits of public buildings Residential Sector Buildings Element of the Minimum Energy Performance Standards (MEPS) MEPS are in place and tightened in 2010 Energy Performance of Buildings Directive (EPBD) recast has been fully implemented. nzeb standard set on low level Other Regulation Mandatory inspections of boilers and air- conditioning systems in accordance with the EPBD Mandatory inspections of boilers and air- conditioning systems in accordance with the EPBD 4

6 Element of the Grants, tax incentives Financing instruments Energy performance certificates (EPCs) Energy advice and audits The Green Savings Programme financially supports heating energy saving actions, new construction to nearly zero energy standard and use of renewable energy sources for heating and hot water PANEL/New Panel Programme provides financial assistance for the repair of highrise pre- fabricated buildings Financial promotion of EE measures under the Operational Programme Environment (OPE) Provision of soft loans to households for refurbishment investments via building society savings schemes Scheme to provide soft loans to municipalities for the repair and upgrade of publicly owned multi- family buildings An obligation to evaluate the energy status combined with energy performance certificates (EPCs) for buildings is in place Regulation on training and examination of persons eligible to produce energy performance certificates for buildings Energy audits are mandatory for public and commercial buildings that exceed a given consumption threshold There are several institutions (e.g. regional energy agencies, Energy Consulting and Information Centres) offering energy advice Continuation of the Green Savings Programme with the New Green Savings Programme 2013 and the New Green Savings Programme for the period ; please note that the programme design changed in such a way exacerbating a positive or negative development PANEL/NEW PANEL Programmes are continued with the PANEL Programme þ Continued financial promotion of EE measures under the OPE for the period of and extension of scope to owners of single and multi- family buildings Joint Boiler Replacement Promotion Scheme providing subsidies for the replacement of manually filled boilers running on solid fuel with new efficient low- emission heat sources in households Plans to provide grants for investments improving the energy performance of multifamily buildings through the Integrated Regional Operational Programme ý Provision of soft loans to households for refurbishment actions via building society savings schemes is ongoing, but with reduced support Scheme to provide soft loans to municipalities for the repair and upgrade of publicly owned multi- family buildings is ongoing, however expected to end in 2016 JESSICA programme offers soft loans for the reconstruction and upgrading of multi- family buildings Obligation to produce energy performance certificates for buildings is ongoing Regulation on training and examination of persons eligible to produce energy performance certificates for buildings Energy audits are mandatory for public and commercial buildings that exceed a given consumption threshold There are several institutions (e.g. regional energy agencies, Energy Consulting and Information Centres) offering energy advice From 2014 on electronic collection of energy- saving proposals to form a database based on the results of each audit 5

7 Element of the Information tools for investors and users The state supports awareness campaigns and activities leading to the reduction of thermal energy consumption in households Demonstration projects Demonstration projects regarding the construction of model buildings are planned Education and training for building professionals Education and information on the possibilities of reducing energy consumption in the buildings sector is provided through seminars, conferences, exhibitions and targeted training Qualification, accreditation and certification of energy auditors through the Czech Chamber of Chartered Engineers and Technicians. Plans to promote changes in approaches to the teaching of future professionals in the construction industry including the organization of practical courses and the promotion of cooperation with professional organizations and chambers (Czech Chamber of Architects, Czech Chamber of Chartered Engineers and Technicians) Plans to promote international exchanges of information and know- how in cross- border projects, across the EU, participation in specialized projects of the International Energy Agency R&D support Plans for promoting the development of the technological design of components suitable for zero energy building Ongoing implementation of campaigns to raise awareness among households for heat consumption No information on developments regarding the plans on demonstration projects regarding the construction of model buildings Education and information on the possibilities of reducing energy consumption in the buildings sector is provided through seminars, conferences, exhibitions and targeted training Qualification, accreditation and certification of energy auditors through the Czech Chamber of Chartered Engineers and Technicians No information on developments regarding the plans to promote changes in approaches to the teaching of future professionals in the construction industry No information on developments regarding the plans to promote international exchanges of information and know- how in cross- border projects No information on developments regarding the plans for promoting the development of the technological design of components suitable for zero energy building Residential Sector Appliances Element of the Minimum Energy Implementation of the EU Ecodesign Implementation of the EU Performance Standards (MEPS) Directive Ecodesign Directive is ongoing Economic incentives Energy labels Implementation of the EU Energy Implementation of the EU Energy Labelling Directive Labelling Directive is ongoing Inspections of energy labelling on appliances in shops and checks on information content of the labels by tests of appliances The Energy Star label was implemented for office equipment Inspections of energy labelling on appliances in shops and checks on information content of the labels by tests of appliances Implementation of the Energy Star Label is ongoing 6

8 Element of the Information tools In addition to the labelling schemes Information campaigns to promote information campaigns exist to energy saving appliances are ongoing promote energy saving appliances Education and training for retail staff and other supply chain actors R&D support Industry, Tertiary Sector, and Agriculture Element of the MEPS and other standards for equipment, production process, products Energy savings and action targets for individual companies Energy management systems and other obligations Economic incentives for investment Additional to the Ecodesign Directive there is a minimum efficiency standard for cogeneration. Promotion of voluntary energy saving commitments with the industry Provision of investment aid to increase EE in industry through the Operational Programme Industry and Enterprise (OPIE) Financial support for energy advice and audits Energy labelling Implementation of the EU Energy Labelling Directive R&D support Implementation of the EU Ecodesign Directive and the minimum efficiency standard for cogeneration is ongoing Promotion of voluntary energy saving commitments with the industry Obligation for large enterprises to conduct an energy audit every four years or alternatively introduce an energy management system Continued provision of investment aid to increase EE in industry through the OPIE Implementation of the EU Energy Labelling Directive is ongoing Transport Sector Element of the Planning instruments Programme for integrated transport systems National strategy for the development of cycling: cross- ministerial coordination; three mainstream projects; active cooperation with regional, local governments, business sector and non- governmental organisations; co- financing of cycling infrastructure Modernizing the railway infrastructure and wagon stock Operational Programme Transport: modernisation of railway and road networks ( ) National strategy for the development of cycling: construction and maintenance of cycling infrastructure, interlinking of cycling with public transport; max. budget CZK 150 million (around EUR 5 million) per year 7

9 Element of the Regulatory instruments Voluntary instruments, and, where Voluntary agreements on the appropriate, (statutory) regulation in order to reduce the emission and energy intensity of passenger vehicles implementation of technological actions to improve energy efficiency of new vehicles placed on the market Economic incentives Feebate system for the sale of new vehicles according to the absolute level of CO 2 emissions/km Programme to promote the replacement of public transport vehicles and regular bus services Mandatory flat rate charge for the highways usages by cars and lorries. (Flat rate for vehicles to the total weight of 3,5 tonnes, vehicles over 3,5 tonnes have to pay a toll) Information and advice R&D support Programme to increase energy efficiency of vehicles (especially more efficient motors) Feebate system for the sale of new vehicles according to the absolute level of CO 2 emissions/km, and possible adjustment of the current form of road tax similarly. Mandatory flat rate charge for the highways usages by cars and lorries. No information on changes or additional measures. Policy Developments according to the Expert Survey In order to provide a fuller picture on energy efficiency progress made, this chapter makes use of information gained through quantitative surveys and qualitative interviews. For each country assessed in the EEW project, three experts were interviewed orally, while 31 national energy efficiency experts participated in the quantitative survey for the Czech Republic. The experts work with the business sector, universities/research organisations, public sector or energy agencies. All findings below are solely based on the assessments made by these experts. This also includes the country progress indicators, which helps to compare the progress across countries and policy fields. It was calculated from five relevant questions of the quantitative survey (see annex for the questionnaire), namely question 1 (ambition of energy efficiency policies), question 2 (progress in the last 3 years), question 4 (annual savings target), question 7 (NZEB target) and question 8 (improvements in key energy policy areas). The answers were weighted (the most positive answer by 100, the least positive one by 0). According to the Czech experts, the Czech Republic is among the Member States that have made medium progress in energy efficiency policies since the second NEEAP (country progress indicator: 15 out of 28 - see page 81). The rate of progress was significantly higher than in the three preceding years (2012 survey: country progress indicator: 25 out of 27). Although the majority of experts considers the overall ambition of the energy efficiency policies as rather low, one third consider it at least ambitious in a range of sectors - significantly more than in the 2012 survey. Regarding progress, 45% see at least a range of additional policies in the past years. Given the current policy and institutional framework, experts consider the implementation of the EED as very challenging. At the time of the survey, new programmes and also some institutional changes were under preparation. As a positive development, experts observe an increased awareness of energy efficiency in different sectors. 8

10 Czech Rep.: overall ambidon of the energy efficiency policies 3% Czech Rep.: progress of the energy efficiency policies in the last 3 years 6% 31% 35% 29% 39% 31% generally, rather low ambimous in a few sectors, less so in most others ambimous in a range of sectors, less so in a few others generally, rather high 26% no or very linle progress a few addimonal policies a range of addimonal policies many addimonal policies Only 18% of experts believe that the EED savings target (new savings of 1.5% of the annual energy sales to final consumers) is likely to be achieved, while 39% consider this unlikely. Experts report that the Czech Republic decided not to introduce an Energy Efficiency Obligation scheme for the moment with the option of introducing it at a later time should current measures turn out to be insufficient to meet the savings target. Opinions among the interviewees are divided as to whether the Czech Republic is on track or not to meet its obligation under the EPBD that all new buildings be "nearly Zero Energy Buildings" by Czech Rep.: achievement of nadonal 1.5 % energy savings target (EED) Czech Rep.: on track towards the "nzeb" obligadon 18% 10% 43% 45% 39% 45% not aware of this target target is likely not to be achieved target is likely to be achieved I don't know No, we are lagging much behind Yes, the implementamon is well underway 9

11 In the field of public buildings, experts reported the finalising of the list of central government buildings (as a basis for the 3% renovation obligation foreseen in the EED). They observe a lack of activity in building renovation in many municipalities. On the positive side, a change in procurement rules should support an increase in energy efficient public buildings in the future. The "Green for Savings Programme" continues to play an important role in triggering investment in residential buildings. Operational programmes that provide energy efficiency funding for the service and industry sector were mentioned. Czech Rep.: improvement in actual implementadon Decreasing fuel poverty 64% 29% 7% Consideramon of energy efficiency in public purchasing 52% 44% 4% Energy efficiency in transport 50% 50% no progress Exemplary role of public buildings Funcmoning of the energy service market 28% 24% 55% 59% 17% 17% some progress good progress Energy efficiency in industry 23% 70% 7% Building renovamon 13% 54% 33% 0% 20% 40% 60% 80% 100% Regarding specific energy efficiency instruments, energy labelling of products as well as energy efficiency requirements for new and renovated buildings are seen as the most effective in the Czech context (rated respectively 81%, 77% and 77% partly or very effective). The highest rating for "not effective at all" was given to programmes for local energy planning (50% "not effective at all" among the lowest ratings of all Member States). 10

12 Czech Rep.: effecdveness of different policy instruments Energy labelling of products 4% 15% 58% 23% EE requirements for new buildings 4% 19% 50% 27% EE requirements for renovated buildings 8% 15% 73% 4% Energy cermficamon of buildings 35% 65% Financial incenmves for private households 12% 27% 38% 23% Energy audits for companies 20% 24% 44% 12% Financial incenmves for SMEs 19% 27% 46% 8% Targeted advice for households 15% 35% 42% 8% Inspecmon heamng/air- condimoning systems 12% 38% 50% Namonal Energy Efficiency Funds 34% 19% 35% 12% Energy taxamon 42% 31% 27% Smart metering 46% 31% 19% 4% Programmes for local energy planning 27% 50% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% not implemented not effecmve at all partly effecmve very effecmve Good Practices In several sectors, the Czech Republic introduced new instruments, which deserve recognition. In particular, the residential sector stands out the PANEL programme, formerly known as PANEL and New PANEL programme, offers financial assistance in the form of grants to multi- family buildings for a variety of energy- and non- energy- related measures including the modernisation of the heating system or the insulation of roofs. According to the third NEEAP (2014, p. 73) [o]ne of the requirements is that the heat and technical parameters of buildings required by the relevant standard must be met. Moreover, as a result of the renovation works, the building must obtain an energy performance certificate rating of C or better. The programme is financed by the national budget, safeguarded by the Ministry of Regional Development, and both the State Housing Development Fund and the Czech- Marovian Guarantee and Development Bank act as implementing organisations. The Green Savings Programme, like the PANEL programme, offers support for energy efficiency in residential buildings. It offers financing for, among other things, the installation of renewable energy- based heating technologies or for the construction of a nearly zero- energy buildings. However, given that the Programme s budget is dependent on emission trading and, thus, exposed to a volatile market, it cannot be assumed to qualify as Good practice without limitation. 11

13 Disclaimer The sole responsibility for the content of this publication lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the EASME nor the European Commission are responsible for any use that may be made of the information contained therein. The analysis performed here is based almost exclusively on the information provided in the NEEAPs. Consequently, a low score for any of the criteria analysed could also be the result of a NEEAP lacking detailed information. Furthermore for some countries, national experts were consulted to review the reports. However, an expert was not available for every country and a full analysis of the policies and measures was only possible for a limited number of reports. The purpose of this assessment is not an absolute policy overview among Member States but is focusing on each Member State s individual conditions. The Project The Energy Efficiency Watch Project aims to facilitate the implementation of the Energy Efficiency Directive but also related policies like the Energy Performance in Buildings Directive (EPBD) and the Ecodesign (ErP) Directive on the national, but also on the regional and local level. This country report shows the progress made in implementation of national energy efficiency policies identified via a screening of NEEAPs and an extensive EU wide expert survey. efficiency- watch.org The Authors Stefan Thomas, Felix Suerkemper, Thomas Adisorn, Dorothea Hauptstock, Carolin Schäfer- Sparenberg, Lena Tholen, Florin Vondung (Wuppertal Institute) Daniel Becker, Lucie Tesniere, Charles Bourgault, Sonja Förster (Ecofys) Christiane Egger (OÖ Energiesparverband) with contributions by Reinhold Priewasser (University of Linz), Nils Borg (eceee), Dominique Bourges (Fedarene), Peter Schilken (Energy Cities) List of Abbreviations EE Energy Efficiency, EED Energy Efficiency Directive, EPC Energy Performance Certificates, EPBD Energy Performance of Buildings Directive, ESCO Energy Service Company, EU European Union, EEW Energy Efficiency Watch, MEPS Minimum Energy Performance Standards, MURE Mesures d Utilisation Rationelle de l Energie, NEEAP National Energy Efficiency Action Plan, nzeb nearly Zero Energy Buildings, R&D Research and Development 1