As EU makes strides, German energy efficiency law continues to stall

While EU lawmaking progresses at a breakneck pace, government infighting in Germany has stalled a revised energy efficiency law for over a year, adding a failed parliament vote to its list of woes.

Energy efficiency is deemed vital to achieving climate goals. The International Energy Agency estimates that the rate of energy use per unit of economic output must drop by 4.2% across the globe to stay on the path towards net zero. 

The EU has been at the forefront of this effort, and for more than a decade, the bloc has set – and missed – energy efficiency targets. In 2018, a new push created an obligation to ensure final energy use savings of at least 0.8% per year from 2021 to 2030.

On Tuesday (11 July), the European Parliament voted to boost this ambition to an 11.7% energy use reduction by 2030 and to make the target legallly binding on EU member states, pending final approval by EU countries on 25 July to make the law official.

Meanwhile, the world’s fourth-largest economy is lagging in every way.

Germany, a self-proclaimed climate leader, has struggled to boost its energy efficiency. From 1990 to 2021, economic output per energy unit increased by a mere 0.3% on average – driven by industry output dropping and a switch to renewables. 

Transposing the 2018 energy efficiency directive into law was one of the stated aims of the German government, in place since November 2021. 

But the law immediately got off to a bad start due to government infighting, which stalled the finished law for months. A compromise was crafted to unblock it, with the German parliament expected to rubber-stamp the law on Friday (7 July).

It could not – because there were not enough MPs sitting on their chairs on that sunny Friday afternoon to sign the law into force. At least 50% of MPs must be present for the parliament to be able to decide on new laws, a number that was missed by more than 120 on Friday.

Now, the efficiency law has added another two months delay to its history as German politicians head into summer break. That puts Germany into austere company amid Austria and Slovenia, who were already urged by the European Commission to pick up speed on energy efficiency.

“The Commission has started an infringement procedure by issuing a letter of formal notice back in November 2020 for non-communication of the transposition of the Directive,” a European Commission spokesperson explained to EURACTIV.

Since then, the EU executive has been “in close contact with the German authorities” on the energy efficiency law.

“Germany has later notified new measures transposing the 2018 Directive,” the spokesperson added.

“The Commission is assessing these measures and will decide on the way forward in due course,” the spokesman noted.

Fear of ‘degrowth’

In January 2022, German Vice-Chancellor Robert Habeck highlighted the need to boost energy efficiency in order to meet climate targets. 

Quickly, a law to transpose the EU directive in full and create concrete measures was put to paper – but already then, ministries linked to the business-friendly FDP and the left-wing SPD showed concern.

For months, the law was left to gather dust in the drawers at Habeck’s economy and climate action ministry. In October 2022, finally, the law received an unexpected boon: it became a bargaining chip in the government’s fight over extending nuclear power.

As part of the final compromise, Chancellor Olaf Scholz ordered his government to stop squabbling and present a “very ambitious law to increase energy efficiency,” unblocking the way for the stalled law – in theory.

Again, the FDP raised concerns internally. “Energy efficiency must not be a cypher for degrowth ideas, nor will it be achieved with regulatory micromanagement,” the party warned in a position paper in early April. 

Finally, the FDP’s concerns were alleviated by removing a paragraph that would have made economically sensible energy efficiency measures mandatory for larger companies, allowing the law to enter parliament.

The parliamentarians changed some more – watering down energy efficiency rules imposed on large data centres, a novel feature central to the new law.

“Only the very largest data centres are regulated in the Energy Efficiency Act, and network nodes are completely exempt from regulation,” explained Leonard Burtscher, an energy policy expert at the Umweltinstitut Munich, adding that these changes resulted in a mere 1% of the data centres in Germany being covered by the energy efficiency rules.

Others found a lot of good in the changes made by parliament. 

“From our point of view, it is positive that the threshold for energy and environmental management in companies has been lowered to 7.5 GWh,” said Christoph Noll, the CEO of the industrial energy efficiency initiative Deneff. 

Above all, Noll welcomed the fact that “Germany is getting an energy efficiency law with binding targets for the first time”.

Now, German energy advocates wait for autumn, when the law could get voted on again – and fear that lobbying over the summer may see MPs return with ideas for new changes to the law.

“It is crucial for investment security that the Bundestag adopts the law unchanged in autumn and that politicians quickly initiate measures to implement it,” he added.

[Edited by Alice Taylor and Frédéric Simon]

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