Presently, the EU has a non-binding energy efficiency reduction target of 20% by 2020 but this is about to change as the Commission is planning to set mandatory energy-saving targets. Aiming at improving energy efficiency, on 18 November, the Council and the European Parliament reached a behind closed doors agreement on the Energy Labelling Directive and on the Energy Performance of Buildings Directive. An agreement on energy labelling of tyres was reached last October. The compromise texts still have to be formally approved by the Council and the European Parliament which is expected to vote on the two proposals in January.

Currently, the Energy Labelling Directive applies to household appliances, but last year the European Commission proposed a draft Directive on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related an product which recasts the existing Directive. The Commission proposed to extend the Directive’s scope to energy-using products used in the industrial and commercial sectors and other energy-related products which have an impact on energy consumption during use such as hot water taps and showerheads. The European Parliament endorsed the Commission proposal but it has specified that the directive would also apply to construction products, such as window glazing and outer doors. The member states were majority in favour of extending the scope of the Energy Labeling Directive to "energy-related products", however several member states could not accept the European Parliament’s amendment. Under the compromise agreement the Directive will apply to energy-related products, which have a significant direct or indirect impact on the consumption of energy during use. Hence, label requirements will apply to energy-consuming and energy related products for commercial and industrial use. Moreover, although a reference to construction products is not included in the Directive there is a statement by the Commission, annexed to the Directive, whereby the Commission while preparing a priority list of energy-related products that might be covered by implementing measures, “(…) will give due attention also to energy-related construction products.”

The energy consumption and other information concerning the product would be measured in accordance with harmonized standards and methods. The precise information that must be displayed on the label as well as modalities of the label would be defined on a product-by-product basis in implementing measures, through the comitology procedure.

The compromise text allows for additional classes to be added to the existing A to G classification, “if required by technological progress”, such classes will be A+, A++, and A+++ for the most efficient products. Consumers might found this confusing. The Council and the European Parliament representatives agreed that the new classification will be reviewed once “a significant proportion of products” have achieved class A+++ or A++. The majority of the member states rejected the European Parliament amendment under which the energy label classification of product would only be valid for 3 to 5 years. The system proposed by the European Parliament would have resulted in a complex re-labelling requirement for manufactures and retailers.

The European Parliament was able to include in the compromise text a new provision stipulating that advertisements promoting technical specifications of an energy related product will have to indicate the product's energy consumption or energy savings or include a reference to the energy class as well as the requirement that any technical promotional literature on energy related products, such as technical manuals and manufacturers’ brochures shall provide information on energy consumption or include a reference to the energy label of the product.

According to the Commission the criteria for products to be eligible for public procurement or incentives differs among the EU Member State. Hence, the draft amending Directive would establish a harmonised base for public procurement and incentives provided by the EU and the Member States. The implementing measures (comitology procedure) would establish label classes below which Member States would not be able to provide incentives to purchase, and public authorities would not be able to procure. Under the compromise text contracting authorities “shall endeavour to procure” only the highest energy efficient products but this provision would not apply to smaller contracts.

The draft Directive also defines the responsibilities of Member States and introduces new provisions for compliance checking. Member States would be required to monitor compliance with this Directive particularly the responsibilities of suppliers and dealers to properly display labels. Under the draft proposal, Member States must protect the label through market surveillance and enforce it through administrative law such as fines or banning of the product.

The Commission adopted in November 2008 a proposal for a Directive on the energy performance of buildings whose main objective is to recast Directive 2002/91/EC. The Commission’s proposal extends the scope of the Energy Performance of Buildings Directive to all existing buildings and not just those over 1,000 square metres. Moreover, all buildings undergoing major renovations would also have to meet minimum energy performance requirements.

The draft proposal also introduces minimum energy performance requirements for systems, such as boilers, water heaters and air conditioning installed in buildings. According to the Government, although the UK has already adopted the majority of the proposed measures the provision of control systems for energy performance certificates and inspections of heating and air conditioning systems will have financial implications.

Member States are required to take the necessary measures to ensure that new buildings meet the minimum energy performance requirements namely Member States must ensure that, before construction starts, high efficiency alternative systems are taken into account. The European Parliament and Council representatives also agreed that the same shall be required in relation to buildings undergoing major renovation. Moreover, Member States are also required to encourage the installation of intelligent metering systems.

Under the proposal, Member States are required to establish a system of certification of the energy performance of buildings. Nevertheless, the Commission will adopt by 2011 a voluntary common EU certification scheme for the energy performance of non-residential buildings. Then, member states would be encouraged to use this scheme.

The energy performance certificate for buildings must include the energy performance of a building as well as the annual energy consumption for non residential buildings and the percentage of renewable energy in the total energy consumption. It shall also include recommendations for improvement of the energy performance of a building. Such certificates must be issued for buildings or building units which are constructed, sold or rented out to a new tenant as well as for buildings where a total useful floor area over 500m2 is occupied by a public authority. However, under the compromise text this threshold will be lowered to 250 m2 five years after the date of entry into force of the directive. The Commission has proposed to reduce from 1000m2 to 250m2 the area above which energy performance certificates have to be displayed in a public building. According to the compromise text the threshold of 500m2 will be lowered to 250 m2 five years after the date of entry into force of the directive. Ian Austin, the Parliamentary Under-Secretary of State at the Department for Communities and Local Government, has said to the European Scrutiny Committee that the number of public buildings affected by such extension would rise from 42,000 to 64,000. Moreover, such requirement would entail annual costs of £8 million whereas benefits would be around £1.3 million.

The Council and European Parliament representatives agreed that only small houses, holiday homes used for less than four months a year, buildings for religious activities, temporary buildings, agricultural buildings with low energy demand and historic buildings when an energy efficiency measure would “unacceptably alter their character or appearance” are excluded from the directive's energy efficiency requirements.

Under the compromise deal each member state will be responsible to set minimum requirements for the energy performance of buildings and building elements. However, the Commission will adopt by 2011 a comparative methodology framework for calculating cost-optimal levels of minimum energy performance requirements which should then be used by the Member States to compare the results with the minimum energy performance requirements which they have adopted. Moreover, if there are discrepancies between the calculated cost-optimal levels of minimum energy performance requirements and the minimum energy performance requirements in force, Member States would be required to justify the difference or to take measures to reduce the discrepancy.

The Commission proposed that member states should draw national plans to identify targets for increasing the minimum percentage of buildings which consume low or zero energy. The European Parliament has called on the Commission to establish by the end of 2010, a detailed common European definition of "net zero energy buildings.” Moreover, the MEPs have voted for EU Member States to be required to ensure by 31 December 2018 that all new buildings produce as much energy as they consume on-site. According to the European Parliament Member States should also set intermediate national targets for minimum percentages of zero-energy buildings for existing buildings, by 2015 and by 2020. According to Ian Austin the adoption of the definition of low and zero carbon buildings and the target to increase the number of these buildings raise subsidiarity issues and would entail further costs.

The majority of the Member states could not accept the reference to zero-energy buildings, therefore, it was agreed to add the word ‘nearly.' The MEPs proposal for a common definition of net zero-energy buildings was also rejected. A "nearly zero energy building" is “a building that has a very high energy performance” and “The nearly zero or very low amount of energy required should [] to a very significant extent be covered by energy from renewable sources, including renewable energy produced on-site or nearby.” Under the compromise text, Member States must ensure that by 31 December 2020, all new buildings are “nearly zero energy buildings.” Moreover, public authorities will have to comply with high efficiency standards by the end of 2018, they are, therefore, required to own or rent only “nearly zero energy buildings.” The European Parliament was therefore able to include sspecific target dates.

The Council also accepted the European Parliament’s amendment requiring Member States to present national plans to increase the number of ‘nearly zero energy' buildings. In those plans, Member States will include their “detailed application in practice of the definition of nearly zero energy buildings, reflecting their national, regional or local conditions” as well as “intermediate targets for improving the energy performance of new buildings.” Unsurprisingly, the member states’ plans will be evaluate by the Commission.

Moreover, and as required by the MEPs, Member States must list by June 2011 financial instruments and other incentives for improving the energy efficiency of buildings, such as free or subsidized technical assistance and advice, subsidies, low-interest loans, fiscal rebates. Furthermore, the Commission will carry out an analysis of the EU funding used for increasing energy efficiency in buildings and then it may decide to propose, in accordance with the multiannual financial framework, further Community instruments.

Under the Commission’s proposal the new provisions would come into force by the end of 2010 for buildings occupied by public authorities, and by the end of January 2012 for all the other buildings. However, the majority of the member states could not accept such unrealistic dates and they asked more time to apply the directive. Hence, under the compromise text, member states will have to apply the provisions concerning buildings occupied by the public authorities two years and six months after the entry into force of the Directive and the provisions concerning the other buildings three years after.

The compromise text represents an improvement comparing to the previous drafts, nevertheless the draft directive entails further administrative burdens for member states and owners.