Czech energy efficiency – an open goal demanding more EU funds ambition
Bankwatch Mail | 8 August 2014
The Czech government’s plan to phase out part of its lignite-fired power plant fleet by 2025 has hit the news recently with total annual power output from this climate-damaging source set to drop from 40 TWh in 2015 to 18 TWh by 2035.
However the increased electricity consumption projected in the very same planning scenarios, that over time will eliminate the country’s current high energy export share and shift it instead onto an import dependency path, places an unfortunate question mark over just how serious the Czech Republic is about its transition to becoming an energy efficient, low-carbon economy.
This article is from Issue 60 of our quarterly newsletter Bankwatch Mail
Moreover, while heat consumption is set to decrease steadily, though slowly, the Czech Republic’s energy efficiency potential is not being fully exploited, according to the State Energy Strategy’s optimal scenario. Despite all the efforts to improve energy efficiency, not to mention the relevant EU targets and financing provided for these efforts, final energy consumption in the country is predicted to actually increase from 1,119 PJ in 2015 to 1,145 PJ by 2035. Instead of bolder support for energy savings and domestic renewables, the Czech plan is now to import more energy to cover this expected rise.
But why opt for this scenario when you are committed to decrease energy consumption under the EU’s Energy Efficiency Directive (EED), and when you receive substantial EU funding for this into the bargain?
Little wonder, then, that the European Commission has asked the Czech Republic, during the formal negotiations for the forthcoming 2014-2020 EU funding period, to provide “quantified and structured data to justify planned interventions within individual priority areas”. Environmental and energy infrastructure are two acute areas in urgent need of such analysis.
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Indeed, such data should have already served as a basis for the formulation of the Czech Partnership Agreement that is supposed to underpin and shape how EU-funded investments are selected and how they will materialise over the next seven years. Alas, at the eleventh hour, this kind of data can still serve to evaluate the validity and sincerity of Czech claims concerning planned support for low-carbon development.
One thing is already evident, though, based on a comparison of available energy efficiency data contained in the Czech National Energy Efficiency Action Plan (NEEAP) and the EU spending proposals to date: EU funding and the measures planned for 2014-2020 will not deliver sufficiently for energy savings in housing and public buildings.
The rapid, deep renovation of residential buildings, the optimal scenario identified in NEEAP calculations, requires total investment of 6.5 billion euros between 2014 and 2020.
Yet the allocation of EU funds planned for residential building renovations is not likely to provide a strong push in this area. Only 0.48 billion euros from the EU funds pot is planned for the energy retrofit of residential buildings, with investment spin-offs from the EU component expected to release a further 0.55 billion. The situation is similar in the public buildings sector, where required investment stands at 1.6 billion euros, with EU funds projected to provide only 0.52 billion euros.
Using EU funding for energy efficiency stands as the most important of the so called alternative measures that will be taken to comply with the binding energy end-use savings target set by the EED. Another major source of funding for residential buildings, the new Green for Savings Programme, financed by revenues from the EU’s Emissions Trading System (ETS), is struggling with lack of funding as a result of the outage of incomes caused by the backloading of ETS allowances, as well as by the continuing low ETS carbon price.
In the public building sector meanwhile, the EU funds are in fact the only source of finance dedicated to energy efficiency. Although mayors and local authorities may well be planning some essential work in properties under their control, without dedicated financial support they will not be willing to invest scarce public budget money into energy efficiency measures even if they would like to. A lack of finance from EU funds for energy efficiency in buildings may inevitably lead to non-compliance with the energy end-use savings target in 2020.
The time to sort out the financing and to establish the conditions so that the end-use savings target is fulfilled in 2020 is now. As a result of the flawed EU funding framework and spending regime established in the 2007-2013 period, the Czech Republic has notoriously created many problems for itself. Let’s hope the forthcoming funding period is programmed correctly, and that the results achieved are visible in terms of an improved environment, instead of the continued prevalence of a range of cases ultimately revealing Czech non-compliance with EU legislation.