Institutional investors urge Energy Ministers to set strong ambition for EU Energy Efficiency Direct
Ahead of the upcoming Energy Council (26 June, 2017) institutional investors who manage more than €19 Trillion in assets have written to Energy Ministers across the EU urging them to agree an ambitious framework that includes a bold long-term decarbonisation objective to 2050 aligned with the objectives of the Paris Agreement.
London, Thursday 22 June 2017
Publishing a letter to all policy makers ahead of key talks on the Energy Union Package, Stephanie Pfeifer, CEO of IIGCC said:
“We are concerned about the potential disagreement at Council on the unresolved matter of EU ambition in the revised Energy Efficiency Directive. We urge Energy ministers to make ambitious decisions that closely reflect the specific recommendations from institutional investors set out in our letter to Energy Ministers (12 June, 2017).
“In the light of the recent US decision to withdraw from the Paris Agreement, it is vital the EU steps up to deliver global leadership on climate action. As Commissioner Canete made plain on June 20th in his speech to EU Sustainable Energy Week, a robust regulatory framework for energy efficiency is essential to give investors the confidence necessary to ensure they direct many trillions of capital towards the low carbon transition across the EU.“
IIGCC members call for the EU Energy Efficiency Directive to include the following four key elements as a minimum:
- A long-term decarbonisation objective embedded into Clean Energy Package legislation, aligned with the Paris Agreement and containing an investment strategy that includes the role of private finance.
- A minimum and binding EU energy efficiency target of at least 30% - to send a clear and positive signal to investors, banks and companies, and to allow Member States to decarbonise swiftly enough to ensure a smooth transition to a low carbon economy. To reassure those with cost-effectiveness concerns, it should be noted that 30% is already overly conservative because it assumes unrealistically high investment costs through use of a single, 10% discount rate rather than a more realistic, nuanced cost and benefit analysis.
- Support for the extension of annual energy savings obligations post 2020 and recommend increasing ambition beyond the current level of 1.5%.
- Throughout the package, green and energy efficiency investment must be properly identified and 'tagged', and measurement must be based on actual - rather than ‘designed’ - energy performance. This is necessary to develop, evaluate and improve financial instruments.