The Energy Efficiency Directive and Germany: almost best friends?

CERRE expert workshop: Energy Efficiency First : easier said than done? Brussels, 15 November 2017 The Energy Efficiency Directive and Germany: almost best friends? Dr. Stefan Thomas Director, Research Group Energy, Transport and Climate Policy

Energy efficiency targets of Germany adopted for the Energiewende (energy transition) 15 November 2017 The EED and Germany 2

Energy efficiency potentials in Germany Potential for 50% of energy savings is there already by 2035 Source: Fraunhofer ISI 2012a, p. 182 TR: Transport; IN: Industry; TE: Tertiary sector; HH: Residential sector; FED: Final energy demand 10 October 2017 IPIS/IPE/FES/WI workshop: Decarbonising the Iranian energy system 3

Germany s Energy Efficiency Policy and the implementation of the EED (1)! Germany has adopted Energy Efficiency First principle too.! Has strong energy saving targets national and in EU context and plans how to achieve targets:! NEEAPs for EU and! National Action Plan EE (NAPE) plus National Action Programme Climate Protection 2020 (NAPCP) for national;! 2016 Green Book on further EE measures, White Book expected 2018! EED Art. 3 target: improve energy productivity by 2.1 % per year => 276.6 Mtoe of primary and 194.3 Mtoe of final energy " expected for 2020 (NEEAP 2017): 273.8 Mtoe primary energy (OK), 211.6 Mtoe final energy (fail!) 15 November 2017 The EED and Germany 4

Germany s Energy Efficiency Policy and the implementation of the EED (2)! EED Art. 7 and target:! No EEOS, alternative measures only! Target: 1,758 PJ by 2020, using 25 % discount (early action)! NEEAP 2017 expects savings of 1,694 PJ from existing quantifiable measures (of which 30 % from energy tax of 2002); plus impact of non-quantifiable, state, and local measures?! EED Art. 8: implemented; interacting with conditions to have energy management in place for exemptions from RES levy and energy tax; stimulating implementation through financial incentives! EED Art. 4: National EE Strategy for Buildings, including KfW programmes and individual renovation roadmap! EED Art 9 to 11: smart meters (phased) and EE campaign 15 November 2017 The EED and Germany 5

Energy efficiency watch (EEW): Constant feedback on progress in national energy efficiency policy Managing partners Three phases: EEW1: 2006-2009 EEW2: 2009-2013 EEW3: 2014-2017 www.energy-efficiency-watch.org Co-financed by: 15 November 2017 The EED and Germany 6

Will your country achieve the annual target of new savings of 1.5 % of the energy sales to final consumers? EU28 Austria Belgium Bulgaria Croatia Cyprus Czech R. Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Lux Malta NL Poland Portugal Romania Slovakia Slovenia Spain Sweden UK 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% target is likely not be achieved target is likely be achieved not aware of this target 15 November 2017 The EED and Germany 7

Expert Survey (IIIa): How do you rate overall ambition of the energy efficiency policies in your country? EU28 Austria Belgium Bulgaria Croatia Cyprus Czech R. Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Lux Malta NL Poland Portugal Romania Slovakia Slovenia Spain Sweden UK 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% generally, rather low ambitious in a few sectors, less so in most others ambitious in a range of sectors, less so in a few others generally, rather high 15 November 2017 The EED and Germany 8

Germany s Energy Efficiency Policy and trends findings from the EEW country report Sector Policies and trends Governance framework NAPE and NAPCP; agencies dena and BfEE; EE Funds (200M - too small) and alternative measures; no change in energy taxation Public sector Working on renovation roadmap for federal government since 2011; many cities and states EU frontrunners since 1980ies Buildings Appliances Industry and commercial Transport Continuous improvement of energy audit and KfW soft loan and grant programmes; remain at ca. round 1 % p.a. renovation rate Mostly rely on EU Ecodesign and labelling; National Top-Runner Initiative and some advice&grants for low-income consumers Sector with most new incentive programmes (electricity end uses, KfW for buildings) and 500 networks initiative Little progress (consumption and GHG emissions increase!); more money for rail and some action on electric vehicles 15 November 2017 The EED and Germany 9

The Governance Framework for Energy Efficiency Policy package to increase energy efficiency with selected German/EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Energy Efficiency Targets: official Energiewende targets; EU: Article 3 & 7, EED Roadmaps and Strategies: e.g. Energiekonzept 2050, NAPE (national action plan energy efficiency); energy efficiency strategy for builidngs Energy Agencies: Deutsche Energie-Agentur (dena, federal energy agency), state and local energy agencies; KfW and BAFA (agencies to issue grants and loans to investors) Energy Efficiency Funds: Energy Effiiciency Funds under the Energy and Climate Funds; normal budget allocations Energy Saving Obligations: not implemented Energy services: energy service law, advice, loan guarantees Energy / CO2 taxation: Energy Taxes, Fuel taxes Emission Trading: EU Emissions Trading Scheme Specific policies for each sector Regulation Planning Information and Advice Incentives and Financing Capacity Building and Networking Research and Development and BAT promotion 15 November 2017 The EED and Germany 10

The policy package for private households (buildings and appliances) Policy package for energy efficiency in private households with selected German/EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Specific policies Regulation Planning Information and Advice Incentives and Financing Minimum energy performance standards and other regulation: German building code (EnEV) based on EU EPBD; EU Ecodesign Directive (MEPS for appliances and equipment); Article 5 & 9, EU EED Heat/Cold supply concepts for districts: no EU policies implemented Mandatory comparative labelling scheme: EU Energy Labelling Directive Energy Performance Certificate: German law based on EU EPBD Energy advice and energy audits: many support programmes Provision of targeted information: many activities Voluntary endorsement labelling scheme: EU Ecolabel Regulation, EU Energy Star Regulation, Blue Angel Financial incentives: KfW programmes for energy efficiency in buildings (loans and grants); state and local programmes Capacity Building and Networking Education and training: several programmes by private actors; no government programme to support but requirements for energy consultants Energy efficiency network: some local schemes; no government programme to support Research and Development and BAT promotion Funding for R&D projects: German programmes and EU Horizon 2020 Public sector programmes: yes, at federal, state, local levels 15 November 2017 The EED and Germany 11

Policy package for energy efficiency in the industry sector Policy package to increase energy efficiency in industry with selected German/EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Specific policies Regulation Planning Information and Advice Incentives and Financing Capacity Building and Networking Research and Development and BAT promotion Minimum energy performance standards: German building code, (EU Industrial Emissions Directive weak); EU Ecodesign Directive Energy audits and energy management: Energy audit obligation for non-smes, based on Article 8, EU EED; no energy management obligation but allowed as alternative to audit Voluntary Agreements with commercial organisations: : Voluntary agreements for climate change mitigation (little EE impact) Heat-/Cold-/Power supply plans for commercial areas: no policies implemented Provision of information: by energy agencies (dena, states) Energy advice: financial support by KfW and some states Financial incentives: KfW loan programmes for EE in industry; BAFA cross-sectoral technology grant programme; reduction in energy tax and renewables FIT levy for having energy management Education and training: several programmes by private actors; no government programme to support Energy efficiency clusters and networks: 500 peer networks by 2020 Funding for R&D projects: German programmes; EU Horizon 2020 BAT promotion: some energy efficiency award schemes 15 November 2017 The EED and Germany 12

Germany s Energy Efficiency Policy: recommendations from the EEW country report Sector Governance framework Policies and trends Increase in EE Funds (double from current 2.5 billion ) and staff needed to achieve target: eg from ETS and higher fuel taxes Public sector Finalise and implement renovation roadmap for federal government; support cities and states; nzeb for new build! Buildings Appliances Industry and commercial Transport Double renovation rate (funds x2; focus on deep renovation; further integrate audit and KfW and embed in local networks) (Financial incentives for some A+++ appliances) Increase incentive programmes (more funds); ensure meeting 500 networks targets; obligation to implement audit results? Double (or more) public transport investments, from higher fuel taxes and abolish/reform commuter and company car allowances; speed limit 15 November 2017 The EED and Germany 13

Conclusions on the EED! Evaluation shows well-implemented policy packages can achieve around 2% per year of additional energy savings we need more policy evaluation (incl. multiple benefits) to convince policy-makers and increase Art. 7 target from 1.5 to 2 % per year (to be consistent with 40% headline target for 2030!)! EE policy is an excellent investment can even bring net benefit to government budgets! However: Many Member States lack budget and staff to implement policies! EU needs to enable MS to fund EE policies and staff for achieving EE targets (EEOS can help but need staff for supervision too!)! => More earmarked use of energy tax and ETS revenues, with higher minimum levels; exempt certain policy investment from counting as public debt according to EU financial stability pact? 15 November 2017 The EED and Germany 14

Dr. Stefan Thomas stefan.thomas@wupperinst.org Thank you for your attention 15 November 2017 The EED and Germany 15

28 Country reports Overall conclusions (1) More new and improved policies implemented than abandoned or weakened since 2011 Unclear whether the savings targets of Art. 7 will be met (Art. 3 yes?) Speed of implementation too slow - some progress, but not at necessary speed, re-inforcement of EU policies remains key Energy Efficiency Obligation schemes take time to implement and to increase to levels required to meet the 1.5% target Alternative measures and all policy implementation appear to suffer from a lack of funding and staff 15 November 2017 The EED and Germany 16

28 Country reports Overall conclusions (2) Survey showed enormous disparity among MS in levels of ambition and progress of energy efficiency policies Ups and downs in policy progress - 2 main reasons in the last 3 years: austerity policy and political changes (EU policy ensures that there is at least minimum progress!) "older" policy instruments perceived to have most impact (energy efficiency requirements and certification of buildings, product labelling) Focus on building renovation in the past years shows some impact, however, continues to be a key area for action with a package of financing and regulatory instruments with the paradigm shift of decentralisation and the changing role of energy consumers to prosumers, the involvement of the regional and local level gets even more important 15 November 2017 The EED and Germany 17

Why do we need governance for energy efficiency? To overcome the plethora of barriers! Energy efficiency = many small to medium technical improvements - lack of oversight (where to start?), - lack of information (both consumers and technology providers!), - sometimes small financial gains from an improvement! => lack of priority! sometimes lack of funds! Energy prices too low (subsidies?) => Energy cost savings too low! split incentives between investors and users or between technology/ building providers and buyers! => make energy efficiency easy, attractive, and eventually the default! => policy packages with more information, practical guidance, regulation, and financing support needed ( the sticks, the carrots, and the tambourines ) 15 November 2017 The EED and Germany 18

EU policy recommendations: Background and methodology! Study for the German environmental agency (UBA), with Ecofys and Ifeu-Institut! Provide information to the agency (and the energy and environment ministries) about good practice and how to develop EU energy efficiency policies further! For use in EU negotiations, eg on Winter Package! Methods: (1) started from knowledge on sectoral policy packages to overcome multiple barriers, including institutional/governance framework (from literature and projects, eg Energy Efficiency Watch (EEW) and bigee.net)! (2) Policy gap analysis: Compared existing EU-level policies with these packages to identify complete gaps and weak instruments (policies with shortcomings)! (3) Developed proposals for filling gaps with new EU policies (if EU policy make sense) or for strengthening existing policies (also using EEW, Coalition etc - our science-based wishlist - not necessarily the position of UBA or the German government) 15 November 2017 The EED and Germany 19

The Governance Framework for Energy Efficiency Policy package to increase energy efficiency with selected EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Energy Efficiency Targets: e.g. 20/20/20 targets, 27% energy savings by 2030 (Conclusion on 2030 Climate and Energy Policy Framework SN 79/14), Article 3 & 7, EED Several Roadmaps and Strategies: e.g. Clean Energy For All European; A policy framework for climate and energy in the period 2020 to 2030; Energy Efficiency Plan; Heating and Cooling Strategy Energy Agencies: DG Energy, Concerted Action, European Energy Network, Joint Research Centre Energy Efficiency Funds: Structural and Investment Funds, Cohesion Fund, Energy Efficiency Fund, Article 20 EED Energy Saving Obligations: Article 7, EED Energy services: Article 18, EED Specific policies for each sector Energy / CO2 taxation: Energy Tax Directive Emission Trading: EU Emission Trading Scheme Regulation Planning Information and Advice Incentives and Financing Capacity Building and Networking Research and Development and BAT promotion 15 November 2017 The EED and Germany 20

The Governance Framework for Energy Efficiency: Proposals for improvement of EU-level policies Governance Framework Highest priority Binding target of 40 % until 2030 and differentiated targets for each Member State, adding up to 40% overall Extend and adapt Article 7 (EED): increase annual energy savings to 2 % for each MS, elimination of exemptions, include transport, adjustment of calculation methods, energy efficiency sub-targets for the main sectors Secure and increase budget and human capacities for energy efficiency policies - EU and MS level (in ministries, agencies, etc.) Increase minimum rates of energy taxes, use tax and EU-ETS revenues for energy efficiency policies as needed Strengthen monitoring activities for all energy efficiency policies and measures including control and enforcement Compulsory implementation of energy efficiency obligation scheme (Article 7) and an energy efficiency fund (Article 20) but freedom in share of Article 7 target achieved by either, except for a minimum of e.g. 10% for each Targets for MS to develop energy services markets, with clearer definitions Obligation for all MS to set up national and support regional and local energy agencies Lowest priority 15 November 2017 The EED and Germany 21

Policy package for energy efficiency in private households Policy package for energy efficiency in private households with selected EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Specific policies Regulation Planning Information and Advice Incentives and Financing Minimum energy performance standards and other regulation: EPBD; Ecodesign Directive; Article 5 & 9, EED Heat/Cold supply concepts for districts: no EU policies implemented Mandatory comparative labelling scheme: Energy Labelling Directive Energy Performance Certificate: Article 11-13, EPBD Energy advice and energy audits: Article 8, EED Provision of targeted information: Article 12 & 17, EED Voluntary endorsement labelling scheme: EU Ecolabel Regulation, EU Energy Star Regulation Financial incentives: Article 10, EPBD; Article 7, EED Capacity Building and Networking Education and training: BUILD UP Skills; Energy efficiency network: BUILD UP Portal Research and Development and BAT promotion Funding for R&D projects: Horizon 2020 Public sector programmes: Article 6, EED 15 November 2017 The EED and Germany 22

Policy package for energy efficiency in private households: Proposals for improvement of EU-level policies Private Households Highest priority Develop building strategy until 2050 with concrete (interim) targets, for climate-neutral building stock. Also address living space Ambitious Ecodesign standards and accelerated regulatory processes; resource aspects; top runner roadmaps for all products For new build and renovation: Harmonized and ambitious definition of nzebs throughout Europe; also minimum requirements for net zero or plus energy buildings towards 2030 Improved conditions for standardized high quality energy advice, with training and certification for energy efficiency experts. Linked to: Effective financial support for deep renovations Improvement of EPCs: clear energy classes and recommendations for deep renovations; public database (key indicators for each building) Building-specific refurbishment roadmaps out of energy audits to make nzeb the standard in comprehensive or partial renovation too Return to the energy labelling classes A to G; related to the real energy consumption; public database for all labelled products Specific electricity consumption target for sector private households Heating and cooling strategy: concrete targets and transformation paths Obligation for MS: Promotion and implementation of local/regional networks for the refurbishment of buildings and whole districts. Lowest priority 15 November 2017 The EED and Germany 23

Policy package for energy efficiency in the industry sector Policy package to increase energy efficiency in industry with selected EU policies Governance framework Targets and Concepts Infrastructure and funding Eliminating distortions Specific policies Regulation Planning Information and Advice Incentives and Financing Capacity Building and Networking Research and Development and BAT promotion Minimum energy performance standards: Industrial Emissions Directive; Ecodesign Directive Energy audits and energy management: Article 8, EED Voluntary Agreements with commercial organisations: Article 7 (9c), EED: Voluntary agreements Heat-/Cold-/Power supply plans for commercial areas: no EU policies implemented Provision of information: no EU policies implemented Energy advice: Articles 7 and 8, EED Financial incentives: Article 7 (9b), EED Education and training: Article 7 (9f), EED Energy efficiency clusters and networks: no EU policies implemented Funding for R&D projects: Horizon 2020 BAT promotion: New Entrants Reserve (NER) Programme 15 November 2017 The EED and Germany 24

Policy package for energy efficiency in the industry sector: Proposals for improvement of EU-level policies Industry Highest priority EU-wide strategy for industry => a climate-neutral economy, including a strategy for key technologies From energy audit requirement (Art. 8 EED) to obligation for energy management systems for all companies above X GWh/year Obligation to implement proposed actions (that meet certain criteria), also from an energy management system Obligation for MS to promote energy audits and energy management systems also for SMEs below the energy consumption threshold Obligation for MS: promotion of energy efficiency networks of companies Obligation for companies to build up and to fill-in database with the aim to identify benchmarks (then: elaboration of standards and benchmarks) Specification of requirements and targets to MS for information campaigns, advice programmes and the promotion of investments Minimum standards and obligation for MS to implement capacity building programmes for energy experts; certification of energy auditors Industrial Emissions Directive: delete Article 9(2) => requirements for emission reduction and energy efficiency also ETS installations; include binding and ambitious energy efficiency requirements into BAT BREFs Quota for low-carbon demo projects under NER 300 innovation fund Lowest priority 15 November 2017 The EED and Germany 25

Policy package for energy efficiency in the transport sector Policy package for energy Efficiency in the transport sector with selected EU policies Governance Framework Targets and Concepts Infrastructure and Funding Eliminating Distortions Energy Efficiency Targets and Strategies: Cooperative Intelligent Transport System (2016); Low-Emission Mobility (2016); Clean and Energy Efficient Vehicles (2010); Air Transport and the Environment (1999); White Paper (2011); Action Plan on Urban Mobility (2009) Agencies and other actors: European railway agency; European energy and transport forum Energy Efficiency Funds: Structural and Investment Funds and Cohesion Fund; Connecting Europe Facility Specific Policies Regulation Planning Information and Advice Incentives and Financing Energy Tax: Energy Tax Directive Road charging: Road charging of heavy goods vehicles Capacity Building and Networking Research and Development and BAT promotion Minimum energy Deployment of Information on Traffic based taxes: Education Funding for performance alternative fuels energy efficiency in Communication with and training R&D projects: standards and infrastructure, Trans- the purchasing respect to taxation of of car Horizon 2020, other regulation: European Transport process: Labelling of passengers cars; no salespersons Establishing EED, fuel quality, Network (2013), Single tyres with respect to policies implemented on energy the Clean Sky clean vehicles, European railway area, fuel efficiency, in regard to an uniform efficiency: no CO2 emission Air traffic management Labelling of cars with taxation of passenger policies performance system, Sustainable respect to fuel cars/ company cars implemented standards for urban mobility plans economy and CO2 throughout the EU passenger cars (SUMPs) emissions Financial purchase and light-duty Integrated mobility Eco-driving: no incentives: no vehicles (fleet concepts (overall policies implemented policies implemented targets), test transport modes): no cycles used to policies implemented Mobility measure management/ 15 emissions November 2017 education: The EED no policies and Germany 26 implemented

Policy package for energy efficiency in the transport sector Proposals for improvement of EU-level policies Transport Highest priority Implement transport sector White Book and 2016 strategy; advance it to an EU integrated strategy for sustainable mobility, with targets and measures: reducing traffic, modal shift, decarbonisation, energy efficiency Mandatory inclusion of transport sector in Article 7 EED in the calculation of the saving target and saving measures Change basis of assessment for fleet targets and energy labelling: use vehicle basis area Harmonised taxation of motor vehicles and fuels on the basis of CO 2 emissions and energy consumption/content across EU Realistic test methods for fuel consumption, CO 2 emissions, pollutants Harmonise road charges for heavy duty vehicles and introduce for buses: based on distance driven and greenhouse gas emissions Shift TEN funds from road to rail; revival of European night trains Introduce fleet targets for heavy duty vehicles Harmonized taxation of company cars: incentives for energy efficiency Consider mobile air conditioning systems in the Ecodesign Directive Obligatory implementation of SUMPs by MS across European Union Develop public product database on EE of vehicles and components Lowest priority 15 November 2017 The EED and Germany 27

Potential in the EU Efficiency First too! Energy Demand and saving potentials in EU by 2050: 57% on final energy => worth 500 bn per year in 2050 15 November 2017 The EED and Germany 28