UK legislation impacts - UK regulatory framework

4.3 UK regulatory framework

4.3.5 UK legislation impacts

Climate Change and Sustainable Energy Act 2006 contains several measures to monitor and promote energy efficiency in buildings.⁴⁵¹ The green certificate scheme further improves the generation of electricity from renewable sources. As part of monitoring the progress of energy efficiency, mandatory requirements of energy efficiency reporting from residential sector is enforced. The Energy Act 2013 reiterated the UK’s commitment to expand its renewables energy mix in building stocks and makes a meaningful impact on energy efficiency of buildings.

4.3.5 UK legislation impacts

With emissions falling at a rate of 0.6% per year, UK is making limited impacts on building stock emissions mainly due to legislation void. The rate needs to accelerate to 2–3% to meet the 2020 target. There is lack of ambitious legislation targeting key elements of buildings. Hopes are however pinned on the proposed enforcement of MEES (effective 1^st April 2018) that will prohibit the leasing of propertyrating below an E, thus targeting over 20% of UK commercial properties.

As further noted above, UK has limited regulations targeting energy efficiency renovations (Chapter 4.3.3) and there is limited legislative movement targeting over 80% of buildings that will

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448 Michal Grantham Institute 2015. p.13.

449 Michal Grantham Institute 2015. p.6.

450 Michal Grantham Institute 2015. p.6.

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have sub-optimal standards beyond 2020. UK is failing to follow through its 2008 Climate Change Act long term ambitions aiming to achieve net zero emission target of buildings by 2050. The potential for emission reduction and energy saving in buildings is not properly harnessed.

Although UK has been achieving the 3% yearly public buildings renovation targets which has been instrumental in the overall reduction of emissions from buildings, this is not sufficient to be on the path of Germany and Finland. The future of UK’s energy efficiency in buildings is bleak after Brexit. EU law has shaped the UK energy efficiency legislation and outside the EU, UK can adopt less stringent laws, measures and regulations which can reverse its progress.⁴⁵²

In conclusion, the UK has the least energy efficient buildings amongst the three Member States examined. Its ambitions on legislation is limited. Finland and Germany have been ambitious in going beyond the minimum requirements set by the EU energy efficiency laws and Germany alone has an ambition to reduce emissions from buildings by 67% by 2030. Germany has higher emission reduction and energy savings rates (Chapter 4.1.5) and is leading amongst the three countries.

Energy efficiency regulations are credited for reducing into half the energy use of buildings since 2002 with a projected decline to be between 70-72 million tonnes of CO₂ by 2030 from 119 million tonnes of CO₂ in 2014 (Chapter 4.1.5).

A common challenge shared by Germany, Finland and the UK is the fragmentation of legislation resulting in inconsistent legislation implementation and compliance. Germany has realized that and its working on harmonising and simplifying the existing legislation and introducing the Buildings Energy Act to promote easy monitoring, enforcement and avoiding overlapping.

On funding of energy efficiency renovation Finland has a leading and efficient system. It has a grant system (Chapter 4.2.2) that subsidizes household energy efficiency improvements between 15% to 25% of the total cost. This is a motivational tool to increase the uptake of energy efficiency and its impact has been positive on heating systems insulation, ventilation and district heating networks. Such household subsidies are not available in Germany and UK. As discussed above

452 Energy & Climate Intelligence Unit. Made in China: Importing higher energy bills. ECIU 2017.

(Chapter 4.1.3), Germany offers financial support through KfW Development bank for national energy efficiency initiatives and measures while the UK Green deal was not a successful financial support system. In contrast with the Finnish incentive and the Germany energy efficiency funding that constitutes state funding, the UK funding and incentives fail to meet the requirements of the EU law particularly EU competition and WTO law.⁴⁵³

Of the three Member States Germany seems to have effective construction and renovation policies and measures. Of great interest is the tenancy law (Chapter 4.1.4) that aims to promote energy modernization of the rental housing stock through shared responsibility for energy conservation investment. Landlords can share the costs of energy related renovations with their tenants. Tenancy law is also supported by the tax relief on renovation work. This legislation is lacking in Finland and UK jurisdictions. Tenancy law has proved to be efficient in Germany although there is still low rates of renovation around 2.2% per year.

Germany, UK and Finland EPCs have made great contributions towards energy savings and emission reduction in buildings and have a critical role in making building stocks nearly zero-energy by 2021. They all provide useful recommendations on zero-energy savings although the UK EPCs are criticized for providing little and insignificant information to influence householders’

decisions on energy efficiency. The enforcement of MEES, effectively from April 2018 is expected to further strengthens the role of EPCs in UK (Chapter 4.3.2). Another notable difference is Finland’s EPCs coverage. Finland EPCs exempt holiday homes, industrial premises, protected buildings and churches limiting their coverage and making them weaker compared to Germany (Chapter 4.2.1).

As the environmental impact from buildings becomes more apparent, the EU's optimistic future lies in the proposed EPBD update. It is therefore prudent to conclude that, increasing the uptake of energy efficiency is fundamental in addressing the ongoing and future climate change challenges in the EU and lowering the demand for energy use. EPBD implementation remains

453 Altrock et.al..Renewable Energy Law and Policy Review 2012. p.17.

patchy amongst Member States and it’s difficult to have a common approach with consistent results across the EU even in future.

5 CONCLUSIONS

This thesis has examined and given an account of the EU and three Member States’ energy efficiency legislation that governs the building stocks to promote green buildings and combat climate change. The main objective of the thesis was to explore and examine how EU law regulates energy efficiency in building stocks to achieve EU wide energy and climate change mitigation objectives in the context of green buildings as transposed by Member States. Helping to address this main objective was the key question: what is the EU legal framework applying to energy efficiency in buildings? Subsidiary questions were asked to examine the climate change mitigation potential for energy efficiency of building stocks in Finland, UK and Germany exploring how the laws are implemented and whether this will lead to reduction of emissions from buildings. The concluding remarks will further highlight the legal prospects and challenges for regulating energy efficiency of buildings. These lessons could be relevant for future EU energy efficiency legal reforms bearing in mind that the success of energy efficiency should be driven by a robust legal framework.

In light of the EU legal framework of energy efficiency of buildings, the thesis identified the EED and EPBD as the principal legislative instruments. They are an important part of the efficiency first principle that demonstrates the EU’s ambition on energy efficiency of buildings. The EED and EPBD remains the core legislation framework of climate change mitigation through green buildings to achieve the 2020 objective targets. These two key legislative instruments have been mandated to set-out key obligations to Member States towards the decarbonization of the EU as discussed in Chapter 3. As further noted in (Chapter 3.2) the EED establishes a common framework of measures that addresses key elements of buildings such as public buildings renovation obligations, efficiency in heating and cooling and metering and billing. The EPBD (Chapter 3.3) advances the concept of NZEB, EPCs, technical building systems etc, thereby offering a direct response to energy savings and security in EU building stocks. As noted in the thesis (Chapter 3), there is a high level of significance in the ambitions (targets, goals and measures) set in these legislations in demonstrating that climate change is an energy related impact that can be addressed through energy efficiency. It is therefore possible to conclude that the EED and EPBD provides proper and directional legal frameworks that addresses energy efficiency as a

climate change mitigation tool. They provide guidance and direction in EU climate change responses based on energy efficiency.

The strength of the EED and EPBD also lies in their ability to empower consumers as key players in energy efficiency. The Commission placed the burden on energy consumers to shift the market toward environmentally friendly technologies. EU energy consumers have an important role to play in deciding on equipments and technologies to adopt. One can safely conclude that the Commission’s reliant on market behaviors on complex energy efficiency creates environmentally responsible citizens. In the same line it can also be argued that relying on the market behaviour can reverse the legislative gains through the rebound effect. It has been widely noted that, “an energy efficiency strategy for climate change is futile or even counterproductive due to the rebound effect in which consumers may use products more intensively as products become more energy efficient.”⁴⁵⁴ The rebound effect is not addressed in relation to market behaviors in the directives and this has a high possibility of compromising the future success of energy efficiency in the EU as products become more energy efficient. Drawing lessons from the UK’s Green Deal scheme and accompanying legislation, it will be practical to conclude that the role of market on their own will not be adequate to “deliver all cost-effective energy efficiency savings.”⁴⁵⁵ The case studies have shown that energy efficiency requires capital investment. Finland, Germany and UK have invested in different schemes that supports their regulatory instruments. It is worth to note that the EU intervention through the EED and EPBD cannot bring rapid improvements in energy efficiency and emission reductions in buildings without a carefully managed combination of capital investments and markets support.

There are a few weaknesses of the energy efficiency directives (EED and EPBD) as highlighted in the previous chapters. One of the weaknesses that affects emission reductions efforts is their narrow focus. The EU energy efficiency legislation is focused on promoting zero-energy buildings to curb energy consumption and GHGs production while narrowly focusing on operative energy and undermining all life cycle phases, including production of building material, transportation,

454 Maxwell et al.. 2011. Addressing the Rebound Effect, a report for the EC DG Environment.

455 Mallaburn Energy Efficiency 2014. p.35.

building site activities, maintenance and deconstruction. The lack of focus on the complete life-cycle has a potential to increase emissions from building related processes.

The thesis further argues and concluded that although the EED and EPBD remains the key legislative instruments, alone they are insufficient to effectively address EU energy efficiency of buildings and cannot be assessed in isolation. Their relationship to other relevant instruments such as EU ETS, RED and Eco-Design Directive is important in addressing hurdles to achieve energy efficiency in buildings. The deployment of a mix of legislative instruments is a further testimony that the EU is dedicated to target other parts of the problems out of reach of the EED and EPBD to ensure that its broad objectives to reduce emissions from buildings are met. Peeters argued that the deployment of many legislative instruments is a clear sign of the challenges to finding the optimal regulatory approach by the EU.⁴⁵⁶ Although this argument holds water, it fails to realize that the other intervention instruments are supply side instruments harnessing the best available technology (BAT), investments and innovation that benefit the building stocks.

One can be tempted to ask why the EU energy efficiency laws are ever changing? It will be a premature conclusion to state that the proposed update of the EED and EPBD demonstrates the EU energy efficiency of buildings regulatory failure. In my opinion and based on the thesis findings, this is further testimony that the EU is dedicated to ambitious long term decarbonization goals beyond 2030 that involves stronger mitigation action. The EU energy efficiency regulation is still evolving over time and although the legal framework does not give the ultimate solution it remains part of a wider solution. The position of the EU seems to be clear about thriving for rigorous updating of legislation to remain relevant and consistent to climate change challenges.

Furthermore, the EU is ambitious in seeking an adequate and stable regulatory approach that paves way for the block as a prominent global leader on energy efficiency of buildings. As a conclusion it seems that the Commission will continue to drive energy efficiency of buildings as a targeted counter measure to dependency on energy imports to enhance future energy supply security and mitigate the challenges from climate change. It is therefore relevant to note that the ongoing proposed amendments of the EED and EPBD demonstrate the increase in ambition to strengthen them. Although the update promotes the realization of the EU’s long-term climate change

456 Peeters Climate L 2014, p.139.

objectives by providing enormous potential to reduce GHG emissions from buildings, this does not guarantee the reduction of emissions from buildings. Ambition alone is not the solution for reducing emissions from buildings. Although the thesis falls short of examining the infringement cases of energy efficiency of buildings, literature review points out that the EU lacks rigorous compliance and effective penalties on infringements. In my opinion further efforts in implementation, compliance and monitoring should match the legislative’s ambitions.

How likely is the EU current legislation to lead to emission reductions from building stocks? There is significant impact of the EED and EPBD on emissions from Finland, UK and Germany. An overall conclusion is that the outlook in Finland, Germany and UK energy efficiency achievements shows that the current legislation has been successful in reducing emissions in building stocks. It is worth to note that there are variations between these Member States. Germany and Finland are on the course to meet their energy efficiency targets while UK is lagging. UK’s position is further weakened by Brexit. The EU has witnessed progress of energy efficiency of buildings over the years. The 2010 Commission Staff assessment indicated that the EU will achieve an 8.9%

reduction in primary energy by 2020.⁴⁵⁷ Ongoing efforts indicate that the EU will continue to ratchet up ambition to technological innovation, stakeholder cooperation, financial support, regulation enforcement, coordinated comprehensive response and a collective endeavour.⁴⁵⁸ The EU through energy efficiency laws has demonstrated how effective it is to use law to bring positive behaviour on how its members use energy and energy resources as demonstrated by emissions reduction in Finland and Germany. Although the impact has been positive, the legislation lacks the ambition to bring rapid reductions beyond 2020. It is more likely that the current legislation proposal to reinforce and combine the existing fragmented measures of the EED and EPBD as discussed in Chapter 3 will bring further improvements in terms of both energy access and energy efficiency.

Concerning future improvements, it is apparent that there are still some hurdles to be overcome in promoting energy efficiency in Finland, Germany and the UK. Much potential still lie in existing

457 eur-lex.europa.eu Section State of Play in the EU Energy Policy: Energy 2020.

458 Burleson ASIL INSIGHT 2016. p.17.

building stocks that needs to be renovated, a very demanding, costly and complex process.⁴⁵⁹ As highlighted above, more stringent compliance measures are needed to improve the energy performance of the existing building stock in line with the climate change and energy efficiency objectives.⁴⁶⁰ Around a quarter of the EU’s existing building stock was built prior to the middle of the last century.⁴⁶¹ These historical buildings are energy inefficient as a result of preserving their unique character and identity. Directive 2010/31/EU allows Member States to exempt officially protected buildings from observance of energy performance requirements for the rest of the building stock (Article 4.2).⁴⁶² Finland and the UK should join Germany in setting up regional or national guidelines on the energy efficient renovation of historic buildings⁴⁶³ to further tape the opportunities that lies in historical buildings.

The thesis also addressed the question on how the EU energy efficiency law is implemented in three EU Member States. As noted in Chapter 4, energy efficiency is a shared responsibility between the EU and Member States. The EED, EPBD and supportive directives have provided a variety of instruments to realize the EU energy efficiency objectives resulting in substantial energy savings and efficiency in Germany, Finland and the UK. Member States have shown the will to harness the energy savings potential from energy efficiency through transposing the directives into national laws and this resulted in similar energy efficiency objectives across the three jurisdictions.⁴⁶⁴ The EU has mandated Member States to comply with the energy efficiency ambitions, targets and goals as outlined in the EED and EPBD directives. The case studies have further demonstrated that although energy efficiency legislation is in place, its transposition and successful implementation depends and varies among Member States. The legal challenges and prospects of implementing energy efficiency between the EU Member States vary significantly.

Looking at the variations on energy efficiency goals and targets amongst UK, Germany and Finland, one can safely conclude that not all members carry the same ambitious goal of the

459 Parejo-Navajas, Seattle J. Envtl. L 2015. p.405.

460 Parejo-Navajas, Seattle J. Envtl. L 2015. p.407.

461 Parejo-Navajas, Seattle J. Envtl. L 2015. p.372.

462 Directive 2010/31/EU.

463ec.europa.eu Section Secure, Clean and Efficient Energy.

464 Pölönen Climate Law 2014. p.301.

Commission and this has led to uneven implementation of the energy efficiency legislation in the building stocks. Germany’s ambitious legislation on energy efficiency and renewable energy programs are complex and can prove to be hard to transpose to other EU Member States. In a nutshell, lessons from German have demonstrated that a strong, enforceable legal standard is critical in promoting energy efficiency of buildings to underpin change.⁴⁶⁵ This is done on the basis

“that any regulatory and policy instrument can fail if its design, implementation and enforcement are compromised.”⁴⁶⁶

Conclusively energy efficiency has played an important role in climate change mitigation strategies towards achieving the EU 2020 initiatives, establishing smart, sustainable and inclusive growth anchored on a resource-efficient economy. The thesis builds on prior conclusions that the

“extensive benefits derived from energy efficiency of buildings unequivocally establish the case of ambitious energy efficiency regulation.”⁴⁶⁷ It is also significant to note that energy efficiency regulations alone are not sufficient to reduce the energy demands of the EU, but the directives are however, crucial ‘wedges’ in the larger climate change puzzle.⁴⁶⁸ Most importantly the EU ambitious direct regulation is continuously required “to increase energy efficiency uptake and unlock its enormous potential for promoting economic growth, strengthening energy security and reducing GHG emissions.”⁴⁶⁹ The case studies have demonstrated that energy efficiency is one of the most significant parts of the EU legal framework of climate change mitigation and it is one of the most difficult, “because of the complexity of human behaviour in using energy and the overall

In document Climate change mitigation through green buildings : energy efficiency in EU climate change law (sivua 91-100)