Split incentives included in the new energy efficiency proposal

The Commission has published a proposal for a new Directive on energy efficiency, as part of its Energy Efficiency Plan. CEPI is glad to see that it deals with obstacles to the renovation of the existing building stock based on the split incentives between landlords and tenants…

The proposal aims to make a significant contribution to the EU’s 2020 energy efficiency target and establishes a common framework for promoting energy efficiency in the EU.The building sector presents opportunities for further energy savings, and there is a strong focus on buildings in the proposed directive. There are a number of requirements imposed on the public sector, regarding the renovation of buildings and also the application of high energy efficiency standards to the purchase of buildings, products and services. It requires Member States to establish national energy efficiency obligation schemes, requires regular mandatory energy audits for large companies and lays down a series of requirements on energy companies regarding metering and billing.

The importance of an adequate supply of competent professionals in the field of energy efficiency is recognised and the proposal requires Member States to put in place certification schemes for the providers of energy services. It looks to identify and remove regulatory and non-regulatory barriers to the use of energy performance contracting and other third-party financing arrangements for energy savings. It promotes efficiency in heating and cooling by requiring Member States to establish, by 1 January 2014, a national heating and cooling plan, and take measures to develop efficient district heating and cooling infrastructure.

We are very pleased to see that it also looks to deal with obstacles to the renovation of the existing building stock based on the split incentives of different parties. This includes the different interests of landlords and tenants and also split incentives between owners. Member States are required to evaluate and take measures to remove regulatory and non-regulatory barriers to energy efficiency to make sure that the parties are not deterred from making efficiency improvements by the fact that they will not individually obtain the full benefit or by the absence of rules as to the division of costs.

The issue of split incentives is a very important one which we have drawn attention to for some time. We hope that the Commission will promote the supply of information about the different ways in which this problem is being addressed in different countries and continue to look for best case examples.