ECI's contribution to the combined evaluation roadmap/Inception Impact Assessment of the EU energy efficiency directive (EED)

ECI’s contribution to the combined evaluation
roadmap/Inception Impact Assessment of the EU
energy efficiency directive (EED)
21 September 2020

The European Copper Institute, representing the copper industry, welcomes the opportunity to provide input
on the review of the EU energy efficiency rules, initiated by the European Commission.
The European Copper Institute wishes to bring the following elements to the attention of the European
Commission:

Evaluation of the effectiveness of the framework of the EED
1. The revision of the EED should safeguard the competitiveness of the European copper industry as copper
   is a key component in the clean energy transition and has a crucial role in delivering substantial carbon
   reductions in the downstream industrial, residential, service and transport sectors of Europe.
     a.    The European copper industry has already reduced its energy consumption per unit by over 60%
           (compared to 1990) and has implemented best available techniques for energy reduction. With the
           decreasing quality and increasing complexity of recycling raw materials, the energy intensity of the
           production processes is likely to go up. Further reduction of the energy consumption per unit
           produced, would require disruptive technologies. The revision of the EED should therefore also trigger
           clear support mechanisms for innovation on this field.
     b.    The EED should be revised in a consistent way with other pieces of regulation and conflicting
           regulations should be avoided. Material efficiency, recycling, and environmental protection implies a
           higher energy intensity for material processing. This should be acknowledged in any manner for the
           concerned industries. A higher energy intensity shouldn't be a synonym of higher emissions, as
           carbon-free energy vectors can be progressively integrated, for which a sustained support is needed.
     c.    For each of the policy options and sub-options analysed, the impact on energy intensive industries’
           carbon leakage exposure should be assessed, and reciprocal carbon leakage measures proposed.
2. The revision of the EED should focus on those economic sectors and application domains with vast
   untapped cost-effective energy efficiency improvements.
     a.    Some energy-using sectors have stayed under the radar so far. The evaluation should provide the basis
           for prioritisation of sectors that should be targeted by a revision or non-regulatory measures,
           considering marginal abatement costs, length of investment cycles, exposure to global competition
           and their role in delivering emission reductions along the value-chain. This would enable more
           ambitious energy efficiency targets, while reducing the cost of the energy transition and maintaining
           competitiveness of industrial energy consumers.
     b.    The EED should facilitate and incentivize the uptake of energy saving measures that are highly cost-
           effective but often go unnoticed. As an example, the installation of building automation and control
           systems (BACS) in public buildings should be incentivised. BACS prevent poor energy performance of
           buildings. They ensure continual energy performance monitoring, enable control and fault detection

European Copper Institute        Avenue de Tervueren 168, b-10

                                 1150 Brussels - Belgium

                                 Phone: +32 2 777 70 70, Fax: +32 2 777 70 79, info@copperalliance.eu, www.copperalliance.eu

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         of technical building systems, and drive optimal user behaviour. It would also allow for linking
         renovation financing for public buildings to energy performance.
    c.   The segment of the small and medium-sized companies (SMEs) should catch up on energy efficiency.
         With the current definition of SME (only based on financial and employment criteria), SMEs with high
         energy consumption may not be subject to a mandatory audit. SMEs also experience many difficulties
         in finding appropriate information on energy audits (certified auditors, best practices, funding
         opportunities).
3. On the efficiency in the heating and cooling sector, a vast untapped potential remains in the recovery of
   heat; where economically feasible supply of industrial excess heat to district heating networks, and
   waste water heat recovery from sanitary hot water, are the same order of magnitude (adding up to
   almost 400 TWh). We recommend the European Commission and Member states to map the potential
   for recovery of both types of heat, which is currently wasted.
    a.   Industrial excess heat - Comprehensive assessment of the potential and cost-benefit analysis of
         industrial installations generating waste heat is a good start but this potential needs to be realised.
         Member States should be required to invest in infrastructure (district heating networks) to capture
         economically feasible industrial excess heat and make it available to industrial and residential
         consumers. Innovative regulations should ensure that industrial excess heat is available at prices
         competitive with fossil fuel-based heat sources.
    b.   Renewable-based district heating - A switch to renewable energy sources for district heating and
         cooling (DHC) can help meet rising urban energy needs, improve efficiency, reduce emissions and
         provide cost-effective temperature control. In the right conditions, DHC offers a cost-effective and
         energy-efficient option for residential and commercial buildings. However, DHC supply is currently
         dominated by fossil fuels, such as coal and gas. There is significant potential to upgrade existing
         systems and create new, decentralised networks using solar thermal, ambient heat, geothermal
         technologies, industrial excess heat and sustainably produced biofuels, with significant benefits for
         energy security, human health and climate change mitigation.
    c.   Member States should set specific targets for efficient, renewable-based district heating and cooling
         energy (4th generation DH) and create a level playing field between conventional and renewable
         heating and cooling options. Encouragement of the implementation of demonstration projects may
         raise investor and customer confidence.
4. More companies should become engaged with energy management.
    a.   The effectiveness of the way in which energy audits are implemented, is questionable. The usefulness
         of energy audits depends to a large extent on the expedient and effective implementation of their
         resulting recommendations. Member States are required to develop programmes to “encourage SMEs
         to undergo energy audits and the subsequent implementation of the recommendations from these
         audits”. However, many of these recommendations never got implemented, even not highly cost-

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         effective ones. We suggest that the Commission assesses differences in the quality of the
         recommendations (due to differences in national implementation), to what extent audits are repeated
         over time and whether companies implement the cost-effective recommendations.
    b.   The evaluation of the EED should investigate the barriers that withhold companies from the uptake of
         energy management practices. Energy management systems (such as ISO50001 or equivalent) bridge
         the gap between products and systems and stimulates to continuously keep improving energy
         efficiency. They are a comprehensive approach to address the behavioural, technological and
         regulatory requirements to energy efficiency. Companies that intend to implement an energy
         management system should be given sufficient time to properly set up such a system and not be
         pressurized by deadlines to go for poorly used energy audits (just to be compliant with formal
         requirements). Simplified schemes should be developed to engage SMEs. The savings potential at
         (even non-energy intensive) SMEs is substantial and with the introduction of new scalable energy
         monitoring technologies in the market in recent years, a pragmatic approach towards energy
         management is within reach for even small organisations.
    c.   The EED should incentivize investment decisions based on Life-Cycle Cost Analysis (LCCA) and not on
         simple payback terms as is often the case. The capital cost used in the LCCA should reflect the low risk
         profile of energy efficiency investments.
5. The Commission should encourage Member States to streamline the implementation of the EED at
   national level and build capacity via knowledge sharing and co-creation of indicative benchmarks for
   member states, who can always adapt to match their national policy objectives and context.
Today, the implementation of the Directive, and in particular of art.7 and art.8, have resulted in too much
diversity.
6. The public sector should be strengthened in its role of leading by example.
The 3% renovation rate requirement for buildings owned and occupied by central governments only covers a
small part of the public building stock (initial Commission proposal) to "only buildings owned and occupied by
central governments". Moreover, these renovations are not deep renovations. The objective of the article, to
ensure public buildings play an exemplary role in building renovation, is not happening.
7. Digitalization is key to energy efficiency.
The collection of operational data would increase trust in energy efficiency investments. Metering and
submetering at end-uses level have proven feasible and cost-effective and would make it possible to include
actual consumption data (as opposed to deemed savings approaches) into energy performance ratings. An
accessible online data repository for national energy performance data would improve knowledge for policy
making, monitoring and planning energy services. Enhanced digitalisation would also support the
establishment of energy service markets (such as Energy Service Companies or ESCOs), which play an important
role in accelerating energy efficiency but are still very far from their potentials.

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Impacts to assess under Option 2 (Non-regulatory measures)
    1.   Options to streamline the implementation of the EED (mainly art.7 and art.8) at national level, so as to
         enhance knowledge sharing and co-creation of indicative benchmarks for member states.
    2.   Member States should regularly assess their energy efficiency encouragement mechanisms. The
         effectiveness and cost-effectiveness of national energy efficiency improvement programs needs
         regular evaluation and adaptation to evolution and changed context.
    3.   On Article 7 (Energy savings obligation) in particular, public authorities have been asking for support in
         the harmonisation of energy savings calculations, to overcome issues related to calculations and
         monitoring & verification that act as a barrier to the uptake of potentially more advanced technical
         energy saving actions that offer significant savings and that have been under-used so far. We refer to
         the Horizon 2020 streamSAVE project (Streamlining Energy Savings Calculations) and its main
         objective to build capacity through the creation of an open dialogue that will focus on streamlining
         calculation methodologies to estimate bottom-up savings and to assess cost effectiveness of technical
         energy savings actions with high energy saving potential and considered as a priority issue by national
         public authorities. Examples are heat recovery (excess heat from industry, waste water heat recovery);
         Building Automation and Control Systems (BACS); and e-mobility.
    4.   Member States should be required to set up adequate monitoring systems to follow-up on the
         implementation of energy audit recommendations. The quality of the audits should be verified (by an
         independent and verified third party), based on a representative sample of the audit reports.
    5.   Establish and promote a national, easy-to-access information hub to support SMEs in their search for
         information on energy audits and (pragmatic) energy management practices.
    6.   Extend deadlines for companies implementing an energy management system to avoid incentives to
         go for poorly used energy audits for compliance reasons only.
    7.   Encourage more companies to act on audits’ recommendations systematically, via incentives for
         companies, mechanisms for risk sharing, or even making energy efficiency actions mandatory under
         specific conditions (as is already the case in several Member States).
    8.   Focus national investment and pricing mechanisms on supporting heat recovery from various sources
         (both industrial and from buildings), that would otherwise be wasted.

Impacts to assess under Option 3 (Revision of the EED)
    1.   For each of the policy options and sub-options analysed, the impact on energy intensive industries’
         carbon leakage exposure should be assessed, and reciprocal carbon leakage measures proposed.
Article 5 (Exemplary role of public bodies’ buildings)
    2.   Extend the scope to all public buildings (not only central government, but also regional and local level),
         and ensure deep renovations (not just in line with minimal energy performance requirements).
Article 8 (Energy audits and energy management systems)

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    3.   Add level of energy consumption to the application criteria for mandatory energy audits (as an
         addition to the current definition of SME).
    4.   Mandatory requirement to implement the cost-effective (from a life-cycle perspective)
         recommendations identified by an energy audit.
    5.   Incentive/Mandatory requirement to implement an Energy Management System as an approach to
         guide investments from the total cost of ownership perspective.
    6.   Mandatory requirement for all large non-residential building to have an energy management system
         in place.
Article 9b (Metering and submetering)
    7.   The Energy Efficiency Directive should require the installation of sub-metering of major end-uses at
         technical building systems level (such as lighting, domestic hot water, hvac systems), both in new and
         existing buildings. European funded projects (such as iSERVcmb) have demonstrated that it is both
         feasible and very cost-effective in terms of measured energy savings achieved, to collect operational
         data at the level of individual sub-meters; and even identified this type of measurement as more
         important than the current provisions on dwelling, room or heat emitter based measurements.
Article 14 (Promotion of efficiency in heating and cooling)
    8.  Member States should be required to invest into infrastructure (district heating networks) to capture
        industrial excess heat and make it available to industrial and residential consumers.
    9. Innovative regulations should ensure that industrial excess heat is available at prices competitive with
        fossil fuel based heat sources.
    10. Encourage Member States to include waste water heat recovery systems (sanitary hot water) in their
        energy efficiency and renovation programs.