Eurofuel newsletter #6

Dear reader,

Welcome to the sixth edition of the Eurofuel newsletter of 2023. While we fast approach the end of this eventful year, we look at the critical discussions ongoing both at EU and international level that are bound to affect not only our industry, but also the common global effort to achieve the climate objectives introduced by the Paris agreement.

On the one hand, high inflation and a growing political backlash to green policies are pushing the EU co-legislators to consider new approaches to slashing the emissions of homes that would effectively water down the ambition of the Energy Performance in Building Directive. A position that seems to clash with the Commission’s own warning in the state of the Energy Union that the progress reported my Member States on buildings renovations and emission reductions does not appear to be sufficient to achieve the objectives of the EU Green Deal.

On the other hand, assessing the commitments of the EU towards achieving its ambitious climate targets is ever more relevant as we move closer to COP28, where the EU, as usual, is expected to take a leadership role in pushing for higher ambitions to wean the global economy off fossil fuels.

Against this backdrop, we are pleased to share with you the latest developments through our newsletter, while continuing to advocate for a balanced and fair approach to the energy transition, one that considers both technological innovation and consumer interests.

Yours sincerely,
Dr. Ernst-Moritz Bellingen
President, EUROFUEL


Parliament and Council looking for a compromise on EPBD


Despite months of bickering and rumours of growing risks that the proposal could even be shelved for good, as a result of growing political and social pressure a new consensus seems to have emerged between the European Parliament and Member States on the level of ambition for the reform of the Energy Performance in Building Directive. Due to the altered political landscape caused by the persisting high inflation and the looming European Elections, the Parliament has in fact made significant concessions to align with the Council more moderate approach, culminating in a package deal discussed during the latest trilogue on 12 October addressing some of the more controversial issues, including minimum energy performance standards, zero-emission buildings, financial incentives, and performance certificates.

Concerning minimum energy performance standards (MEPS), the new-found consensus advocates for an average approach across the building stock, rather than targeting individual buildings. This revised structure would empower Governments to achieve tangible energy and emission savings, alongside reduced energy bills. Moreover, the agreement would mandate a majority of renovations, 55%, be carried out among the worst-performing buildings, defined as the lowest 43% in national stock, with specific energy saving targets set for 2030 and 2035.

For zero-emission buildings (ZEB), national standards would be established based on cost-optimality calculations by the Member States, with new buildings prohibited from on-site fossil fuel emissions. Nevertheless, various heating and cooling power options would be permitted, including carbon-free sources and, where this was not technically or economically feasible, other energy sources from the grid. From 2030, all new buildings will be required to have their life-cycle global warming potential calculated, with maximum thresholds and methodologies to be nationally determined within an EU framework.

On performance certificates, the energy performance class system would be set at a national level, with a common EU template. Additionally, the certificates would run from A to G with a possibility for Member States to include an A+ category that exceeded the zero-emissions standards.

Finally, regarding financial incentives, the agreement indicates that incentives used for renovations should target as a priority vulnerable household, people affected by energy poverty, and people living in social housing. Moreover, Member States will have to address the risks of eviction through renovation and establish a one-stop shops for free renovation advice. To further support renovations, the negotiations also agreed on introducing a delegated act to encourage financial actors to provide for green lending products. Meanwhile, subsidies for stand-alone fossil boilers should be phased out by 2025, with a grandfathering for agreed ongoing EU funding schemes.

Ultimately, the discussed compromise would allow Member States enough flexibility, provided the renovation ambition level didn't fall below the Commission's initial proposal. An approach that, while not ideal, does answer some of the concerns raised by consumers and industry alike over the risk of too stringent measures at a time of rising costs of living and uncertainty regarding the EU ability to achieve its ambitious energy targets. In this respect, and conscious that the agreement is not set in stone, we remain vigilant and steadfast in our efforts to ensure that the final text will retain a balanced and proportionate approach, allowing citizens to choose between different heating systems, adapted to their circumstances and needs (weather, type of building, cost, etc.).

With the next trilogue scheduled for 8 December, the journey towards a consensus continues to be a complex interplay of economic, political, and environmental considerations, and Eurofuel will closely monitor the process to ensure that the stated principle of technology neutrality remains a cornerstone of the final text.


Member States agree on negotiating mandate for COP28


In just a month's time, the spotlight will be on Dubai as world leaders gather for the 28th United Nations Conference of the Parties (COP28). The agenda is hefty: strategizing on how to transition the global economy away from fossil fuels. With the EU set to play a pivotal role in the discussions, the stakes are high, and the ramifications for the heating sector could be significant.

The road to COP28 saw EU environment and climate ministers embroiled in extensive deliberations in Luxembourg, finally culminating on 16 October with a call for an explicit phaseout of “unabated fossil fuels.” This stance forms the cornerstone of the bloc's negotiating mandate for the upcoming climate talks. Although the final wording retains the core message on phasing out fossil fuels, it omits references to unabated energy production, aligning with a broader Commission vision. This vision advocates the use of CCS technologies solely to tackle unavoidable industry-related emissions.

Moreover, the mandate urges the energy sector to be “predominantly free of fossil fuels well before 2050,” and expedites the move towards a “fully or predominantly decarbonised global power system in the 2030s.” The narrative also underscores the urgency to phase out fossil fuel subsidies that don't alleviate energy poverty or facilitate a just transition. It re-emphasizes the global imperative to triple installed renewable energy capacity to 11 TW and to double the pace of improvements in energy efficiency by 2030, albeit “while respecting each country’s national energy mix”.

By intertwining the call for a “global phase-out of unabated fossil fuels” to attain collective net-zero emissions around mid-century with robust safeguards on ‘abatement’, the EU is positioning itself to champion a strong resolution at COP 28.

These discussions weren't without contention. A rift between progressive EU states like Denmark and the Netherlands, who are advocating for an outright phaseout of dirty fuels at COP28, and more circumspect nations such as the Czech Republic, Hungary, Poland, and Italy, led to extended negotiations. This divergence also resulted in the EU ministers' failure to augment the EU’s nationally determined contribution (NDC) to a greenhouse gas reduction of 57 percent by 2030, as opposed to the initial 55 percent. Nevertheless, Spanish Ecological Transition Minister Teresa Ribera signaled that exceeding the 55 percent emissions reduction is within the realm of possibility.

Wopke Hoekstra, the freshly minted commissioner for climate change, vouched for the robustness and ambition encapsulated in the COP28 mandate. He voiced confidence in the EU's ability and willingness to spearhead change and inspire global counterparts. Now remains to be seen if he’ll succeed in inspiring the other delegations.