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The EU Ecodesign Directive has been a huge success for householders and businesses alike. It's all in stark contrast to the Government’s Contracts for Difference and Capacity Market Auctions policies, explains Andrew Warren.
The most cost-effective energy efficiency policy for every category of energy consumer covers energy using products. That is according to official UK government statistics.
Policy governing is controlled exclusively by the European Union. However, the UK is set to sever this formal involvement in just two years.
The EU Ecodesign Directive establishes a framework under which manufacturers of energy-using products are obliged to reduce the energy consumption and other negative environmental impacts occurring throughout the product life cycle. The Energy Labeling Directive complements it, providing standardised product information for prospective consumers, under the familiar CE marking.
The genesis of both directives goes back 25 years, to 1992, when the European Single Market for products was first created - ironically with strong backing from a (then as now) Conservative UK government.
Its scope currently covers more than 40 product groups such as air conditioning equipment, ventilation units, computers and TVs, boilers, lighting, domestic white goods like fridges and washing machines. Between them, these products had historically been responsible for around 40 per cent of all EU greenhouse gas emissions.
Official UK government figures show just how much the existence of these directives is saving all of us money on our electricity bills.
The current estimate is that these policies alone already save the average household some £67 a year. Given what is in the pipeline the official estimate for 2020 for each household’s electricity savings each year is £153, including VAT. That will be cutting the assumed average electricity bill by 20 per cent.
Savings for the average small business are reckoned currently to be £700 a year off electricity bills. To put that into context, the annual cost to such businesses of the UK’s unilateral Carbon Floor Price tax is £1,100. By 2020 the product policy will be delivering £1,700 off electricity bills for the average small business.
For larger businesses, of a size to be involved with the Carbon Reduction Commitment, the European product policy is now taking an average £24,000 a year off electricity bills. By 2020 that average is officially reckoned to have soared to £62,000 annually In contrast, the yearly cost to such businesses by 2020 of the UK Government’s unique “Contracts for Difference” and its “Capacity Market Auctions” policies is due to be £133,000.
What about large energy-intensive industries, albeit ones that benefit from all Floor Price exemptions and compensations? Even they are making useful savings. Those with an average £6.4m electricity bill can reckon to be gaining £125,000 each year from these unsung product policies. By 2020 the bonus savings from European product policies is set to be worth some £432,000 a year to companies of this size.
As Brexit doesn’t take place until the financial year 1919/20, all these 2020 savings can reckon to be “in the bank.” But what happens after? Particularly if the UK does quit any formal involvement with the European Single Market?
After all, it has up till now been the exclusive role of the European Commission to police implementation of product policy. Who will replace this role?
As the House of Lords energy and environment committee chair, Lord Robin Teverson, acidly observed, his committee has “found that effective enforcement of existing legislation would be crucial to overcome such ‘short-term vulnerabilities’ “.
And of course, what will happen regarding the introduction of any new categories of products?
The Ecodesign Directive is a framework directive. Meaning that it does not directly set minimum ecological requirements. These are adopted through specific implementing measures for each group of products. Adopted via the so-called comitology procedure, these implementing measures are based on EU internal market rules governing which products may be placed on the market.
Manufacturers who market any energy using product covered by an implementing measure in the EU area have to ensure that it conforms to the energy and environmental standards set out for the measure. And of course from 2019 UK manufacturers are set to be directly excluded from the process of negotiating these standards. In practice, the introduction of any new minimum requirement results in effectively banning all non-compliant products from being sold in the 28 Member States.
It is clear that, regardless of the fuel bill savings forgone, there are many zealots who will wish many of these product standards to be abolished in the UK. Just witness those vituperative stories regarding high-efficiency vacuum cleaners and energy-saving lightbulbs (let alone the toasters that were never included!) printed in the Daily Express, Mail and Telegraph newspapers.
The UKIP 2015 manifesto certainly makes that hostility clear. Remember that UKIP’s was the only manifesto at the last General Election that now accurately reflects present Government policy regarding the European Union.
Be warned. We will need seriously to guard against surrendering those ever increasing savings on all our electricity bills, once we have “taken back control” of our energy-using product policy.