CEPI meets Marie Donnelly, Director at the European Commission, DG Energy.

At the beginning of December, within the framework of our series of interviews "CEPI meets", we asked the European Commission some questions concerning the new European Directive on energy efficiency which was adopted on 25 October 2012. We would like to thank Marie Donnelly, Director at the European Commission, DG Energy for having kindly accepted our invitation.

CEPI encourages its member associations to follow the implementation of the Directive in their own countries and to take an interest in the measures being introduced. What message would you like to give to them as to issues to which they should pay attention?

Member States have until June 2014 to transpose the Energy Efficiency Directive. This may seem far ahead but in reality it is not. Given the width of requirements under this legislation, important resources will need to be mobilised to ensure a thorough and timely implementation. The Commission is assisting Member States in this task by providing administrative support and guidance on the interpretation of several provisions.

However, the success of this process will equally depend on the role of stakeholders operating at national level since often they have both the necessary knowledge of local conditions and access to local decision-makers. I therefore strongly encourage you to follow and get involved in the implementation process, as several requirements have a direct and indirect impact on the real estate sector. The implementation of certain provisions of the Directive will need to be preceded by a proper consultation with stakeholders. A good example is Article 4 which requires Member States to establish long-term strategies for mobilising investments in the renovation of buildings. Note that this strategy needs to be ready by April 2014. This means that the debate at national level on what is necessary to speed up renovation needs to start right away.

Property professionals, and particularly property managers, are closely involved on a daily basis in decisions being made concerning the fabric of buildings and their energy use. What do you see as being the most important steps which they can take to make these decisions most effective?

It is important to make investment decisions on the basis of the life-cycle cost of a building and consider using Energy Performance Contracting as a vehicle for these investments. A first step would logically be a proper energy audit showing the different options for reducing the energy consumption of a building. Subsequently, the choice of improvement measures should not only look at the return on investment from a strict financial perspective but should also take into account additional benefits such as increased comfort and health conditions leading to enhanced productivity of people occupying the building.

Of course, an energy-related building renovation should possibly be tied in to the most opportune moments such as during an ownership or tenant change-over or when a 'normal' refurbishment takes place. This reduces the additional costs (e.g. of moving people out of the building) and makes the investment more sustainable.

The Energy Efficiency Directive mentions the issue of split incentives which is fundamental for property managers. They have to deal with different owners and also landlords and tenants and are only too aware of the difficulties which can arise. Are there any particular ways in which you can demonstrate that the EU is working to try and solve this problem? Do you see practical solutions which we can promote?

Several Member States already address this issue. In France, when energy saving renovations are undertaken by a landlord within the private and/or common parts of a dwelling, a contribution for sharing the saved energy costs can be asked of the tenant of the relevant dwelling as from the end of the renovations, provided that the tenant directly benefits from the renovations made and these have been explained to him/her. This participation, limited to 15 years maximum, is specified in the rent agreement and cannot exceed 50% of the energy saving made. Under the UK 'Green Deal' programme, the investment in renovation is provided by a third party and paid back by whoever pays the energy bills. On our end we will work with MS as part of the so-called Concerted Action to ensure that such best-practice examples are applied elsewhere, while taking into account local conditions.

This Directive establishes a common framework of measures for the promotion of energy efficiency within the Union in order to ensure the achievement of the Union’s 2020 20 % headline target on energy efficiency and to pave the way for further energy efficiency improvements beyond that date. It lays down rules designed to remove barriers in the energy market and overcome market failures that impede efficiency in the supply and use of energy, and provides for the establishment of indicative national energy efficiency targets for 2020.

We are aware that there is untapped potential in the building sector for further energy savings and that more initiatives at EU level are likely. Can you tell us what future measures are planned with regard to the sector and also when these may be expected?

With the recently adopted Energy Efficiency Directive (EED), the recast of the Energy Performance of Buildings Directive (EPBD) and the relevant implementing measures under the Ecodesign and Energy Labelling Directives (e.g. for boilers and lighting), a comprehensive regulatory framework for energy efficiency in buildings is now in place at the EU level.

We now need to focus on two issues; implementation and finance. Regarding implementation, we face the challenge that the majority of Member States have not yet fully transposed the EPBD – despite a deadline of 9 July 2012 - and where they have done it, the quality is often insufficient, especially as regards energy performance certificates of nearly zero-energy buildings.  We need to ensure, including through infringements, that the transposition of relevant EU law improves. We will also closely monitor the implementation of the EED over the coming year and a half.

Regarding financing, the Commission has proposed to increase the amount of available EU funds for energy efficiency and renewables – mainly through cohesion policy funding – while ensuring that these funds are used as a lever to attract more private sector investment.

We will also review the rules for state aid as applying to energy efficiency with the aim to create a clear framework for financial support for energy efficiency measures, amongst others, in buildings.

Finally, I believe that energy performance contracting (EPC) holds a lot of promise, especially for the public and real estate sectors. To facilitate the further development of the ESCO/EPC market, DG Energy launched an EPC campaign to promote and build capacity for Energy Performance Contracting and Energy Services Companies throughout Europe. 

The aim of the EPC campaign is to enable country-specific discussion and capacity building of the core stakeholders, which should enable better understanding of the business model, its challenges and opportunities, increase confidence regarding its reliability and effectiveness, and help Member States in establishing a legal and financial framework for the market with energy services.