Public Funding for Energy Efficiency Picking Up

Structural reforms needed to close the EU’s investment gap

New research by Ecofys reports that the total public funding for energy efficiency in the EU grew from about €6 billion in 2012 – when the Energy Efficiency Directive (2012/27/EU) was approved, to about €7.1 billion in 2014. This trend, which can also be observed in Central and Eastern Europe, is encouraging, but a lot still needs to be done to break down barriers to energy efficiency investments.

As the European Parliament is discussing the first results of the Investment Plan for Europe, a new study by Ecofys “Public funding for energy efficiency in the EU” reports that Member States are increasing funding for energy efficiency – a trend which will hopefully be continued and a sign that resources are shifting to what could become a defining project for Europe.

The study shows that the trend can also be observed in some countries in Central and Eastern Europe. Slovakia, for example, has the highest level of funding per capita across the Member States monitored. Nevertheless, many investments which would make economic sense are still not realised, and a lot needs to be done to ensure that the legislative framework encourages these opportunities.

“The increase in public funding for energy efficiency in the EU is encouraging, but it is only one element of what is needed to trigger real investments”, said Stefan Scheuer, Secretary General of The Coalition for Energy Savings. “Member States and the European Commission’s financial efforts to support energy efficiency will not lead to major market uptakes unless they are accompanied by significant structural reforms, including in the areas of public deficit accounting and state aid, and by high ambition for 2030”.

The European Commission has indicated its willingness to break down barriers to investments with its Investment Plan for Europe. As a multi-stakeholder Coalition, uniting 31 European business, civil society, consumer, professional, trade union and local government organisations, The Coalition for Energy Savings calls on the European Commission to propose a 40% target for 2030 in line with the cost-effective potential for energy savings and to place energy efficiency first in reviewing policies such as state aid and public accounting rules.

Notes

• The study, published by Ecofys can be downloaded here. Data-gathering for this study was based on the analysis of the 2014 National Energy Efficiency Action plans (NEEAPs) and 2015 Annual Reports submitted by Member States to the European Commission and published on the Commission website. The data obtained for this study is subject to large uncertainties and therefore should be interpreted carefully. The present study covers a period of three years, from 2012 – when the EED was adopted – until 2014.
• According to a 2014 report by Fraunhofer ISI et al, on behalf of DG ENER, the EU could save at least 40% of its overall final energy demand by 2030 if it made of all the cost-effective efficiency improvements across all sectors of the economy.
• According to a briefing from The Coalition for Energy Savings on “Energy Efficiency First”, the EU State Aid framework and rules on public accounting and budgeting should be revised so that they incentivise, rather than hinder, energy efficiency investments. This can be done by reviewing the State Aid General Block Exemption Regulation to permanently increase energy efficiency exemptions to 100% of eligible costs (matching those for infrastructure). Energy efficiency funds should be redefined under State Aid rules as economically sound entities pursuing a goal of economic viability and cost recovery rather than profit making. Barriers to energy efficiency in the public sector, including rules on public accounting and budgeting and rules on public procurement that are detrimental to comprehensive energy efficiency services contracts should also be removed.

Source: Coalition for Energy Savings