2 non-legislative EU initiatives for industrial energy efficiency

Finance

I

16 August 2017

I

Rod Janssen

2 non-legislative EU initiatives for industrial energy efficiency

The industrial energy efficiency community was downcast late last year after the European Commission published its clean energy proposals. There were no legislative proposals related to industry and little attention given to the sector overall. In fact the Commission’s impact assessments show that the highest cuts in energy demand are projected to take place in the residential and tertiary sectors while the industry sector is projected to achieve the lowest reductions in energy demand.[1] This is particularly true for energy-intensive industries.[2]  

In some ways, this lack of attention becomes an advantage.  

The 2012 Energy Efficiency Directive had a few measures that were directly for industry – mandatory audits for large industry, promotion of energy management systems, support for SMEs and promotion of the use of waste heat, to name the main ones. The Commission could have built on those for the recent changes but did not. We will never fully understand why. The Commission certainly wants its Emissions Trading Scheme to be the main driver for improvements in large industry but it is well understood that, regardless of what success EU ETS has had, it has not driven improvements in energy efficiency.  

But this is not to mean that industry is completely neglected. There are two initiatives that deserve our attention and that give us hope for significant impact.  

Energy Efficiency Financial Institutions Group  

The Energy Efficiency Financial Institutions Group (Energy Efficiency in Industrial Processes is a member), to identify the barriers to the long-term financing for energy efficiency and propose policy and market solutions to them. The purpose of that group is to get the financial institutions and other relevant stakeholders to help find ways to overcome the financing blockage. There is financing available, banks have poor capacity and interest to finance energy efficiency and consumers (in this case industry or businesses or institutions) are reluctant to decide to undertake such measures. While there are some investments, for sure, they are not at a scale that will have a real impact that is needed to meet our long-term objectives. One of the problems is that there is a lack of standardisation in project development and documentation and that is seen as one of the major barriers to increasing investment into energy efficiency.  

Its 2015 final report provided important recommendations on industrial energy efficiency to policy makers:  

  • The policy framework should positively support strong corporate energy efficiency investment choices at key points in their investment cycle
  • Public resources and facilitation should be engaged to establish dynamic and effective systems for sharing information and technical experience
  • Ensure EU and national policies and resources are working effectively together to drive R&D and optimal energy efficiency outcomes
  • Support the clarification of the regulatory, fiscal and accounting treatment and standardisation of Energy Performance Contracts
  • Energy efficiency opportunity identification and investible project pipelines should be supported with Project Development Assistance facilities for SMEs  

Are we satisfied with the results to date?  No, but we are starting to see some action but a couple of these recommendations are addressed by projects such as the Investor Confidence Project that will be discussed below.  

First, it is important to note that EEFIG will be organising an event in October in Brussels on industrial energy efficiency.  This will be an opportunity for the industrial energy efficiency community to raise its voice to EU institutions and other relevant stakeholders. You will hear more in the near future.  

Investor Confidence Project for Industry, District Energy and Street Lighting  

The Investor Confidence Project was brought to Europe to develop a system to give confidence to all active stakeholders. There are still concerns that investing in energy efficiency is risky. ICP is designed to change that. ICP started with investments in buildings and is now broadening the scope to include industry, district energy and street lighting through a two-year project funded by the European Commission.  

The concept of ICP is relatively simple to understand. A potential project in a factory or a district heating system, for example, is identified. Someone has to do the necessary calculations to determine the viability. Someone has to be identified to install it (often the same organisation). And some organisation needs to fund it. What this project does is standardise the procedures so that all players gain confidence in the system. The factory owner is happy. The developer/auditor/installer is happy. The financial institution is happy. There are protocols in place and third party monitoring to ensure everything is done correctly. The protocols are developed by interested experts and not by commercial interests.  

The project will work with all of those involved in the project cycle from owners through to project developers and verifiers. They all have a key role to play.  To ensure that the protocols are robust, technical forums are being set up to review the draft protocols and provide important technical input to their development.  

ICP was funded by the European Commission in part to address the recommendations that EEFIG identified.  It is important that we design the entire certification process to the satisfaction of all stakeholders.  

For owners or managers, the ICP approach will provide transparency of the process and will give them the confidence in implementing the measures.  

For the project developer, ICP provides a process that is understood and accepted by all participants. This will reduce transaction costs and should minimise any misunderstandings. 

For the financial community, the ICP approach will standardise the project development process and bring the necessary confidence to undertake the investments.  


Call to join Technical Forum  

To develop such protocols, we would like to invite you to join our Technical Forum to review and comment on the development. 
First drafts will be send around in September 2017 – so there is still time to join.  

In case you are interested, please just register via http://europe.eeperformance.org/technical-forum.html
You can also contact me anytime under Rod.Janssen@ee-ip.org   

 

Related Articles

[1] OpenEXP, Clean Energy for All Europeans Package – Do the Commission’s Impact Assessments Assign the Right Role to Energy Efficiency?, Paris, 2017, p. 14.

[2] Ibid., p. 24

About the Author

Rod Janssen is the President of Energy Efficiency in Industrial Processes (EEIP).