EU Energy Package: Improved local energy efficiency financing but far from Paris commitments

The European Commission published yesterday its 1.000-page “Clean Energy for all Europeans” package featuring new legislative proposals for the energy future of the EU, supposed to lead the bloc to the implementation of the Paris Agreement.

Climate Alliance selected for its members the most important points:

Local authorities recognised, but few concrete proposals
The centerpiece of the proposal, the Communication, champions cities and regions as the places where “a major part of the transformation will actually happen” and points out that they have been subject to a particular attention by the Commission. While local authorities are mentioned throughout the proposals and a number of improvements can be seen, the Commission still falls short on addressing a series of key demands of cities and regions which are needed to tap the full potential of cities in order for the EU to fulfil its commitments under the Paris Agreement.

Renewable Energy- some good news for local energy generation
For the first time, the proposal recognises “local energy communities” and specifically includes local authorities, acting as shareholders or members. Moreover, the Commission calls on the member states to ensure that these entities are able to participate in the energy market without being penalized by “disproportionate charges”. Compared to the current situation, where a number of local energy initiatives face hurdles especially when trying to sell their electricity, this represents progress. At the same time, the Commission proposes to scrap the renewable energy right to get priority over other, polluting energy sources on European electricity grids. Furthermore, it remains possible to subsidise the capacity function of coal and nuclear energy.

Energy Efficiency- increased financing for local energy renovations
In contrast to its plans for renewable energies, the Commission proposes a target of 30% energy savings by 2030 which is binding at the EU level.  This is progress compared to the 27% suggested in 2014, but even the Commission’s own analysis had indicated that a higher target would be preferential to tap into the tremendous economic, social and environmental potentials of ambitious actions in energy efficiency. In 2014 the Members of Climate Alliance voted in favour of a 40% target, just like the European Parliament has already done at two occasions.  

As part of the package, the EU executive also presented its plans to accelerate clean energy in buildings, hailed as the “Smart Financing for Smart Buildings” initiative. This initiative features an increase of the part of the European Fund for Strategic Investments (EFSI) dedicated to climate, energy and environment actions. Further support is planned to improve the capacities of players at the national levels, as well as managing authorities, banks and local and regional energy agencies to make better use of the available EU funds and support the local level by pooling investments. In order to support the development of national platforms to accelerate energy efficiency projects, the Climate Alliance coordinated initiative, ‘Sustainable Energy Investment Forums’, will support the Commission as well as national and regional ministries in this objective.

Good news is the pledge to increase the budget for Project Development Assistance facilities such as ELENA by one third as early as next year, and the launch of a platform disclosing the technical and financial performance of energy efficiency projects in buildings in order to provide investors with evidence of the real risks and benefits of these schemes.

Climate Alliance also welcomes the announcement that the EU’s statistic body, Eurostat, will investigate the consequences of energy efficiency related investments on the balance sheet of public authorities. The statistical treatment of these investments is currently a major hurdle for local governments to invest in energy efficiency, as frequently highlighted by Climate Alliance. The Commission suggests coming up with solutions in spring next year.

Energy Union Governance - a missed chance to build on local energy and climate plans
Proposals on the future planning and reporting of national climate and energy actions for the first time combine mitigation and adaptation actions of EU member states.
Climate Alliance regrets however that the Commission does not valorise the existing local plans especially as many of them (some 7.000) are developed and implemented in the framework of the European Commission- led initiative Covenant of Mayors. The regulation should be used as an opportunity to provide a systematic framework for cooperation between the different levels of government as this is of crucial importance for achieving both EU and international climate objectives.

The way forward
Now the ball is in the court of the European Parliament and the national governments to improve the proposals of the Commission. It seems clear that the current pledges are not in line with the Paris Agreement and the frontrunner role Europe would like to play.

Climate Alliance will work with the European institutions and its partners to ensure that the legislation will be enhanced in order to provide a suitable framework and support for local authorities and to be in line with the Paris Agreement.

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