|13 October 2021 |
Welcome to ASHRAE’s European Policy Update! This monthly publication features information on policy activities of interest to ASHRAE members in Europe. Archives of previous updates are available from the ASHRAE European Policy Updates webpage.
EU Regulatory Updates
EU National Updates
United Kingdom Updates
EU Regulatory Updates
European Commission delays Communication to address soaring energy prices
Given soaring energy prices across the continent, the EU has decided to take action, within the limits of its powers. On 4 October the Commission announced its decision to postpone the publication of the Communication on how to address soaring energy prices to 13 October due the absence of consensus among EU Member States.
Consensus is in fact needed on the ‘toolbox’ of measures that Member States can take without breaching EU energy rules.
In the meantime, on 6 October, the European Parliament’s Plenary was debriefed on the issue by Energy Commissioner Kadri Simson, who stated that measures such as support to consumers, direct payments, and cutting energy taxes can all be taken under EU rules. Furthermore, on that same day, EU environment ministers also discussed the energy crisis upon request of Greece, Poland, and Spain, which presented their own proposals to solve the problem. Afterwards, Environment Commissioner Virginijus Sinkevicius gave some examples of the measures the Commission will include in the upcoming toolbox.
Given the link between the energy prices and the gas supply and demand dynamics, ministers from the Czech Republic, France, Greece, Romania, and Spain signed a common statement calling for an investigation on the functioning of the EU’s gas market, the reform of the EU’s electricity market, and coordination for gas purchases. In particular Luxembourg energy minister, Claude Turmes, met with Commissioner for Competition, Margrethe Vestager, to try to convince her to use the Commission’s upcoming revision of the EU third energy package for gas to include strengthened rules on speculative behavior by natural gas traders to reduce companies’ exposure to natural gas price risk.
“Fit for 55” legislative update
The “Fit for 55” package contains multiple legislative proposals to bring the EU regulatory framework in line with the increased EU climate ambition of reaching 55% CO2 emissions reductions by 2030 and carbon-neutrality by 2050. The following files of relevance to ASHRAE have been reviewed by the Commission and have now been put forward to the Parliament for discussions:
On the Renewable Energy Directive (RED), the Parliament’s Industry, Research, and Energy (ITRE) Committee will lead with centre-right MEP Markus Pieper as rapporteur and liberal MEP Christophe Grudler and social-democrat MEP Nicolas Gonzalez Casares as shadow rapporteurs. As a reminder, the RED proposal is important for ASHRAE, as it includes the promotion of a flexible energy system with efficient renewables integration through targeted measures, including renewables integration in district heating and cooling and use of waste heat.
Regarding the Energy Efficiency Directive (EED), the Parliament’s Energy (ITRE) Committee will be leading, with social-democrat MEP Niels Fuglsang as rapporteur, and centre-right MEP Pernille Weiss and liberal MEP Nicola Danti as shadow rapporteurs. The EED proposal is relevant for ASHRAE, as it strengthens energy efficiency and decarbonisation of heating & cooling requirements included in the renovation of public buildings through public procurement.
As for the Emission Trading System (ETS) proposal, the Parliament’s Environment (ENVI) Committee is in charge with centre-right MEP Peter Liese as rapporteur, and social-democrat Jytte Guteland, green MEP Michael Bloss and liberal MEP Emma Wiesner as shadow rapporteurs. This proposal is relevant to ASHRAE as the ETS will be extended to cover also emissions coming from buildings.
We expect discussions to take off in the course of Q4 with a presentation of timelines for each file, including expected deadlines for tabling amendments and dates of the votes. ASHRAE members will be interested to know that no compromise on any of the above-mentioned files is foreseen before Summer 2022.
European Commission publishes recommendation and guidelines on the energy efficiency first principle
The European Commission published a new recommendation and guidelines on the energy efficiency first principle to put it into practice. Indeed, the principle was eventually enshrined into EU law with the adoption of the 2019 Governance Regulation, which obliges the Member States to submit to the Commission their National Energy and Climate Plans.
Both the recommendation and guidelines build on the provision in the Energy Efficiency Directive (EED) requiring energy efficiency solutions in both energy systems and non-energy sectors planning, policy, and investment decisions.
Of interest to ASHRAE members is that the guidelines provide concrete examples of how the energy efficiency first principle is to be understood for in-building applications. For instance, the Commission recommends making climate control appliances (air conditioning, heating, cooling) and solutions (passive heating and cooling via building orientation, green roofs/walls, etc.) an element of technical design. This includes also providing technical expertise which would identify the necessary design of building envelope isolation, air conditioning system, or a radiator/heater to be purchased based on the premises features (e.g., geographical area, building insulation, orientation).
In the meantime, the Commission held a special event to launch the work of the Energy Efficiency Financial Institutions Group (EEFIG) Working Group on Energy Efficiency First, which is meant to explore and facilitate the application of the principle in the finance sector. During the event, Paula Pinho, Director of DG ENER, revealed that now the Commission is finalizing guidance with concrete examples per sector on how to collect data and monitor the general efficiency development. The EEFIG working group on energy efficiency first is being established at the moment and members are being recruited. It will run from now until April 2023.
EU National Updates
European Commission endorses Romania’s recovery and resilience plan
In the aftermath of the COVID-19 pandemic, EU Member States have submitted national recovery and resiliency plans to the European Commission to obtain funding. This funding stream is made conditional on achieving EU policy objectives i.e. decarbonization and digitalization.
In this context, Romania submitted its national plan on 31 May 2021. Of relevance to ASHRAE, the Romanian recovery plan foresees the establishment of a Renovation Wave Fund with €2.2 billion at its disposal with the aim of renovating at least 4 million metres squares of multi-family building and at least 2.5 million metres squares of public buildings to reach a medium-depth level renovation in accordance with the Commission’s Recommendation on Building Renovation.
On 27 September, the European Commission endorsed the Romanian recovery plan, as its analysis found that it devotes 41% of funding for the green transition and 21% for the digital one, thereby complying with the Recovery and Resilience Facility Regulation. Furthermore, on that same day, the Commission also adopted a proposal for a Council Implementing Decision.
As for the next steps, the Council will approve the Commission proposal by the end of October, which will allow for the disbursement of €3.8 billion as 13% pre-financing of allocated EU funds. Afterwards, the Commission will authorize further disbursements upon fulfilment of milestones and targets outlined in the national plan.
Italian government adopts decree to contain the increase in energy and gas prices
On 27 September, the Italian government adopted a decree setting out measures to address the increase in energy and gas prices.
According to the legal document, the most vulnerable consumers will not bear additional costs in their electricity and gas bills. In parallel, all other consumers will benefit from a reduction in the VAT rate, which is now set at 5%. The decree entered into force on 28 September. As a rule, the Italian Parliament has 60 days to transpose it into ordinary law.
Spain announces temporary and permanent measures on energy to protect consumers
Due to the skyrocketing energy prices observed in the EU since the end of August, on 14 September, the Spanish government approved a decree meant to reduce electricity bills by 22% for final consumers until the end of 2021. According to the Spanish Minister for the Ecological Transition, Teresa Ribera, the average price for electricity will be the same as the one paid in 2018.
Furthermore, the Decree foresees conjunctural measures, such as the extension of the reduction in special energy taxes and the suspension of the tax on the production of energy until the end of 2021. In parallel, the Decree also sets out measures to protect the most vulnerable consumers, such as a 4-months extension of the prohibition to cut energy services in case of non-payment.
Nonetheless, the Decree intervenes on gas prices, given that it limits the increase in gas tariffs (TUR) even in presence of higher prices for natural gas, as well as on permanent measures, such as the upcoming launch of tenders for the supply of energy.
As for the next steps, the Ministry for the Ecological Transition will approve a calendar for tenders, with the first one taking place before the end of 2021.
Spain and Greece present their own proposals to address the energy prices crisis at the Environmental Council
On 6 October, in the context of the Environment Council taking place in Luxembourg, environmental ministers from Greece, Spain, and Poland presented their proposals to address the increase in energy prices.
The Spanish Minister for the Ecological Transition, Teresa Ribera, pushed for the creation of an EU-centralized platform for natural gas supplies and re-called on the Commission to present guidelines on the feasibility of measures that the Member States can adopt to face the current crisis.
Differently, the Greek Minister for the Environment and Energy, Kostas Skrekas, proposed to source revenues from the ETS allowances through exceptional additional auctioning of allowances or, alternatively, to advance payment of expected future EU ETS revenues.
Apart from the abovementioned proposals, the European Commission has already planned to publish a toolbox setting out measures that Member States can adopt to face the current crisis without breaching EU law next 13 October.
United Kingdom Updates
UK government launches £500 million support scheme for vulnerable households On 30 September, the UK government announced the creation of a £500 million Household Support Fund to help vulnerable citizens pay to also utilities, given the surge in prices.
The aid program complements the £140 discount extended to 2.2 million low-income household for heating their homes, and the £25 weekly benefit paid out to poorer families in case of temperatures below zero.
UK government will shift green surcharges from electricity to gas bills to incentivize lower-carbon technologies
Later in October, the UK government will present plants to shift green surcharges from household electricity to gas bills in order to nudge consumers towards lower-carbon alternatives. As a result, the proposal would increase gas bills for those citizens using gas boilers and lower electricity bills of those driving electric cars.
According to the government’s plan, the policy will be phase in over a long period. However, the proposal is likely to raise concerns at a time when household and industrial gas bills have already increased by 12%. Nonetheless, the proposal seems to be coherent with the UK pledge to ban the sale of new gas boilers by 2035.
Renewable Heating and Cooling Platform organizes annual conference
On 28 October, the Platform on Renewable Heating and Cooling will host its annual conference.
During the conference, industrial stakeholders will share views on renewable heating and cooling systems in buildings, cities, districts and industries, as well as on innovative technologies to deploy 100% renewable heating and cooling systems. The program of the conference is available here as well as the list of invited speakers. The link for registration at the virtual even is available here.
EUROPEAN COMMISSION: The European Commission is made up of 27 Commissioners, 1 for each Member State, and represents the interests of the EU as a whole. Every Commissioner is in charge of a Directorate-General (DG) that can be compared to a Ministry at national level. The European Commission proposes legislation in the form of Regulations and Directives and submits them to the Parliament and Council for discussion and adoption.
EUROPEAN PARLIAMENT: The European Parliament is made up of 705 MEPs (see below) that are directly elected by EU citizens in 27 Member States.
MEP: Member of the European Parliament, a co-legislator within the EU that is made up of representatives from political parties throughout Member States.
COUNCIL OF THE EU: Co-legislator, made up of representatives from Member State Governments. Has a six-month rotating presidency, currently held by Slovenia until the end of December 2021.
EUROPEAN COUNCIL: The European Council is made up of the leaders of the EU member states, commonly known as EU27. It defines the EU’s overall political direction and priorities but does not pass laws.
REGULATION: EU legislative act that is binding in its entirety and is to be applied in its entirety across the EU by all EU Member States.
DIRECTIVE: EU legislative act that sets out a goal that all EU Member States must achieve. However, it is up to the EU Member States to adopt their own laws on how to achieve the EU goals enshrined in the Directive.
HORIZON EUROPE: is the next EU Research and Innovation programme for the period of 2021-2027. The amount of the funding (which will be higher than Horizon 2020) is currently being discussed between the European Parliament, the Council of the European Union, and the European Commission.
INVESTEU: The InvestEU Programme builds on the successful model of the Investment Plan for Europe, the Juncker Plan. It will bring together, under one roof, the European Fund for Strategic Investments and 13 EU financial instruments currently available. Triggering at least €650 billion in additional investment, the Programme aims to give an additional boost to investment, innovation and job creation in Europe.
EUROPEAN GREEN DEAL: is a set of policy initiatives by the European Commission with the overarching aim of making Europe climate neutral in 2050. The plan is to review each existing EU law on its climate merits, and also introduce new legislation on the circular economy, building renovation, biodiversity, farming and innovation.
FIT-FOR-55-PACKAGE: In the European Commission work programme for 2021, the revisions and initiatives linked to the European Green Deal climate actions and in particular the climate target plan’s 55 % net reduction target are presented under the Fit for 55 package.
REHVA: is the association of European heating, ventilation and air-conditioning associations, based in Brussels.
BILL: A bill is a proposal for a new law, or a proposal to significantly change an existing law. A bill may start in either the Commons or the Lords and must pass a series of stages in each Houses. Once the bill has been agreed by both Houses, it receives Royal Assent and becomes an Act of Parliament.
HOUSE OF COMMONS: the House of Commons is the lower house and de facto primary chamber of the Parliament of the United Kingdom. Like the upper house, the House of Lords (see below), it meets in the Palace of Westminster. The Commons is an elected body consisting of 650 members known as members of Parliament (MPs). Members are elected to represent constituencies by the first-past-the-post system and hold their seats until Parliament is dissolved.
HOUSE OF LORDS: The House of Lords scrutinises bills that have been approved by the House of Commons. It regularly reviews and amends Bills from the Commons. While it is unable to prevent Bills passing into law, except in certain limited circumstances, it can delay Bills and force the Commons to reconsider their decisions.
For additional information on European policy issues, please contact Brusselsoffice@ashrae.org.