The Federal Cabinet has presented a draft for a new German Energy Efficiency Act. This will transpose the updated EU Energy Efficiency Directive into national law.
In July 2021, the European Commission had submitted a proposal for an amendment of the Energy Efficiency Directive (COM 558 final) (Energy Efficiency Directive, "EED") as part of the "Fit for 55" package. The Council and the European Parliament agreed at the beginning of March 2023 on the proposal; however, the amended EED has not yet entered into force. Nevertheless, the German three-party coalition government has already taken action and wants to transpose the provisions of the EED with a draft German Energy Efficiency Act (EnEfG-E) into national law ahead of schedule. According to the respective explanatory memorandum, the reason behind this is that if a legislative initiative is further delayed achieving the national energy efficiency targets would be very unrealistic.
The draft Energy Efficiency Act was passed by the Federal Cabinet on 19 April 2023 and is currently going through parliamentary procedure.
The EED relies on individual measures instead of binding national targets
The linchpin of the amended EED is the setting of binding European energy efficiency targets. This commits the European Union to reducing its primary and final energy consumption by more than a third by 2030 compared to the 2007 levels. However, the setting of binding national efficiency targets for the member states was deliberately omitted. Instead, the European Commission is relying on a series of individual measures which, in combination with the binding European efficiency target, aim to ensure an increase in overall European energy efficiency.
The central aspect of the draft Energy Efficiency Act is the reduction of primary and final energy consumption
By presenting the draft Energy Efficiency Act, the Federal Cabinet would now like to create a framework law that will be the basis for individual efficiency-enhancing measures at federal and state level. The draft Energy Efficiency Act, therefore, focuses on setting energy efficiency targets for primary and final energy consumption in Germany. Final energy consumption is to be reduced by at least 26.5 % by 2030 compared to 2008 (section 4 (1) no. 1 EnEfG-E). In terms of primary energy consumption, the savings are expected to amount to 39.3 % in the same comparison period, which slightly exceeds the European target. At the same time, there are concrete annual savings commitments for the federal government and, depending on population numbers, for the states (section 5 (1), (2) in conjunction with schedule 1 EnEfG-E).
In addition, the federal government has used the opportunity to create long-term national targets for energy efficiency that go beyond the temporal scope of the EED. Therefore, the draft Energy Efficiency Act includes a further reduction in primary and final energy consumption by 2040 and 2045; however, this is only a target that is not (yet) linked to any mandatory measures for the public sector or for private companies. With this target, the federal government is anticipating future legislative acts at European level, as the European Commission will continue to consistently implement the principle of "energy efficiency first". It is, therefore, to be expected that the Union's energy efficiency targets will not only be maintained beyond 2030 but that they will also be tightened.
The role of the public sector in increasing energy efficiency needs improvement
The amended EED places a special focus on energy efficiency measures in the public sector, as it serves as a role model for other sectors. The federal government has accepted this and is increasing the sector-specific target set by the Commission for public bodies at national level from 1.7 % energy savings per year to 2 % (section 6 (1) p. 1 EnEfG-E). As in the EED, the term "public body" is to be understood in a broader sense (section 3 no. 22 EnEfG-E). It is worth noting in this respect that public housing (construction) companies are exempt from the energy saving commitments (section 6 (4) EnEfG-E). The justification for this is that the creation of living space is particularly worthy of protection and must, therefore, as in the case of private housing companies, take a back seat behind the goal of environmental protection by saving energy. Consequently, the federal government apparently does not see any decisive leverage for implementing energy efficiency measures in the (residential) real estate sector, which must be viewed critically in light of the savings in energy costs on the part of consumers.
In addition to general energy savings targets, the EED also details the extent to which energy efficiency in the public sector should be more closely integrated in the decision-making process. This includes, for example, the standardisation of energy efficiency as a decision criterion within the framework of national public procurement law. The draft Energy Efficiency Act has not yet adopted this. Rather, it requires the public sector to set up so-called "energy and/or environmental management systems" (section 6 (4) EnEfG-E). These systems will be used to ensure compliance with DIN EN ISO 500001:2018 (cf. section 3 no. 16 EnEfG-E) or the Regulation (EC) No. 1221/2009 (cf. section 3 no. 29 EnEfG-E) by monitoring, analysing and optimising the energy use or environmental protection measures in a specific (corporate) unit. It is, therefore, a monitoring instrument that public institutions of the federal government and the individual states can use to decide for themselves which measures they will take to achieve the aforesaid 2 % energy efficiency target (cf. section 6 (2) sentence 1 EnEfG-E). It is doubtful whether this alone will be enough to give the public sector the push it needs in terms of efficient energy consumption. It is possible that the federal government will have to make improvements in this area, or that further legal acts will be required at federal and state level.
Private companies are also obliged to review their energy efficiency
The EED stipulates that energy-intensive companies are also obliged to set up energy or environmental management systems (article 11 EED). This obligation will be transposed accordingly into national law by the draft Energy Efficiency Act for companies with an annual average total final energy consumption of > 15 GWh (section 8 (1), (2) EnEfG-E). The companies concerned have a period of 20 months after the draft Energy Efficiency Act enters into force to implement this obligation (section 8 (2) sentence 1 EnEfG-E). In addition, there are specific requirements that are particularly relevant for the industry for recording the potential for the use of waste heat and other energy-saving measures (section 8 (3) EnEfG-E).
In a second step, the companies must then draw up concrete implementation plans to improve their energy efficiency. This obligation already exists with an average annual total final energy consumption of > 2.5 GWh (section 9 (1) EnEfG-E), even if in this case only energy audits in accordance with the German Energy Services Act (EDL-G) must be carried out (cf. section 9 (1) no. 3 EnEfG-E in conjunction with section 8 (1) sentence 1 German Energy Services Act (EDL-G)).
The Federal Office of Economics and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle) will in future carry out spot checks to determine whether the aforesaid measures have been implemented in full and on time (section 10 EnEfG-E). A breach is subject to an administrative fine and is, therefore, not trivial (section 19 (1) nos. 1-3 EnEfG-E).
Waste heat is to be better used in the future to increase energy efficiency
The draft Energy Efficiency Act places an additional focus on the importance of waste heat. Currently, waste heat generated in, for example, industry or the operation of data centres is usually not yet reused efficiently. The potential behind this will increase visibly when industrial (production) processes are electrified in favour of a reduction in emissions. An important part of the draft Energy Efficiency Act is, therefore, to reduce waste heat which is technically unavoidable (section 16 (1) EnEfG-E). The technically unavoidable waste heat should then be better utilised by either consuming it in close proximity to where it is generated (e.g. on the company premises) or by supplying it to third parties (section 16 (2) EnEfG-E).
For this reason, all companies with an average annual total final energy consumption of > 2.5 GWh are obliged to critically examine their internal waste heat processes. However, if provisions of the German Emission Control Act (Bundesimmissionsschutzgesetz) relating to avoiding and using waste heat are relevant, these will take precedence (section 16 (3) EnEfG-E). The federal government has also taken the entire heat value chain into account by obliging companies who produce waste heat to provide the operators of heat grids or district heating supply companies with information on possible potential for using waste heat (section 17 EnEfG-E).
Further discussions about data centres and energy efficiency in the building sector are to be expected
Stricter legal energy efficiency requirements for data centres have been extensively discussed within the industry since autumn of last year. It is, therefore, expected that changes will be made to the corresponding detailed requirements of the draft Energy Efficiency Act in the legislative process. Things also remain exciting in the area of energy efficiency in the building sector. The proposal to amend the EU Directive on the Energy Performance of Buildings (EPBD) is in the final stages of trialogue. On a national level, in addition to the draft Energy Efficiency Act, the amendment to the German Buildings Energy Act (GEG) was also passed by the Federal Cabinet on 19 April, which includes some provisions for increasing energy efficiency in the building sector.