Up to 80% of the EU energy efficiency investments do not fulfill their original purpose

Teresa Parejo Navajas
Professor of Law
Universidad Carlos III de Madrid (Spain)

Mr. Harald Wögerbauer, Member of the European Court of the Auditors (ECA), recently gave a press conference outlining the results of the ECA special report on energy efficiency in the EU. The Court found that the projects selected by Member State authorities for financing did not have rational objectives in terms of cost-effectiveness. Though all the projects were implemented according to plan, the cost with respect to the energy saving potential was very high and more importance was placed on public buildings’ comfort and refurbishment needs, such as door and window replacement or wall and roof insulation, than on achieving maximum energy efficiency. In fact, 4 billion out of the 5 billion Euros disbursed by the 27 States for the energy saving objective, ended up going to projects in which energy efficiency was, at most, a side effect.

The report also indicates that the planned payback of the funds is 50 years on average and 150 in extreme cases. This payback period is clearly excessive, given the more limited lifespan of the renovated components as well as of the building itself. These investments are therefore a loss from an energy efficiency perspective.

During on-site investigations at the Czech Republic, Italy and Lithuania—the countries that received the most EU contributions for the 2007-2013 period—the Court concluded that the concept of profitability was not a key factor in decisions made regarding allocation of the funds.

To improve investments in the future, the Court has recommended that the European Commission impose several requirements on funded projects: an adequate assessment of the real efficiency needs of a site, regular monitoring, and the use of comparative performance indicators. Also, the Court proposed the use of transparent criteria for the selection of the projects and the fixing of an upper limit for the depreciation period.