Energy Efficiency Directive Article 8: Where are we and what’s next?

Energy Efficiency Directive Article 8: Where are we and what’s next?
25 September 2017

Energy Efficiency Directive Article 8: Where are we and what’s next?

The story of Article 8 compliance continues with companies still working towards compliance for the first cycle, whilst round two looms large.

For many companies this has proved challenging, firstly keeping track of each country’s regulations as they have been announced and then making sure that specific compliance requirements and timelines are met. 

Through our work with businesses, we know a number of large companies have still not carried out the necessary audits and are at risk of receiving significant fines. If this applies to you – there may still be an opportunity to avoid these penalties.

Even if you achieved compliance previously, the next cycle of Article 8 is going to arrive very soon requiring you to do the same all over again by December 2019!

A refresher on Article 8:

Article 8 of the EU Energy Efficiency Directive (EED) requires all European Member States (MS) to implement regulations that mandate high quality and cost-effective energy audits for all “large enterprises” at least every four years.

Since its inception there has been confusion surrounding Article 8 as the transposition into national legislation has varied significantly, and in some areas there is an ongoing lack of clarity. This has resulted in eligibility and compliance requirements that vary significantly from country to country, and many challenges for large enterprises to manage their risks across European operations.

Where are we now?

The initial default compliance deadline was set as 5 December 2015. Despite many countries extending this, the deadline has now passed in all MS except for Poland (Polish compliance deadline is 1 October 2017). With Poland’s timeline being so far behind all the other countries you might have considered that you had completed everything, but perhaps you still have work to complete?

Many countries are allowing late submissions of compliance documents. We have recently managed a route to compliance for companies with activities in the Czech Republic, France, Germany, Ireland, Italy, Spain and Sweden, and received confirmation that the Energy Authority in Denmark would accept a late audit report for one of our latest clients. If you still have outstanding compliance requirements it is important to act quickly to give yourself the best chance of success.

What’s next in Article 8?

With the first cycle nearly over the European Commission is looking to understand how companies have found the national requirements.  During a study we carried out for the Commission in 2015 we unearthed the differences between the Member States adoption and they now want to know what synergies there are between the schemes. Through an ongoing study we are undertaking, the Commission is seeking to understand how the various regulations and national guidance could be improved. So might we see some changes next time round?

Well, with the next compliance deadline not too far away, we may not see major changes this time, but there will doubtless be tweaks, amendments and new nuance’s to fathom. We will keep you informed as we find out what’s new!

However, regardless of changes to the regulations, there are lessons you can learn from your own experiences. These might be around the skills of those involved, the data collection processes or even just the programming of compliance across all the Member State countries you need to comply in.

For example, some of the challenges have been that companies haven’t been able to use audits from one country in another to demonstrate compliance, but lessons can be learnt.  You might also be able to strategically consider what you audit across your operations at a European wide level so that you get the maximum value from the exercise. Therefore there are a number of ways your organisation could approach it and we would be happy to help you decide which would be most appropriate.

From a strategic approach to a compliance, now is the time start working out a plan.  Some companies may decide to simply carry out the mandated audits. If this is the case then getting it done early can really pay off. From experience we know that as the deadlines draw closer, the cost of audits increases significantly. Dealing with Article 8 sooner rather than later is therefore cheaper, and also removes the stress of trying to gain compliance at the last minute.  

Again one of the challenges last time was understanding the consistency of all the audit outputs. But by running a programme that completes all the audits at the same time you can gain insight and value. We have qualified in-country partners in all Member State countries allowing us to facilitate the required audits for all of your eligible European operations. In doing so, we were able to look at synergies and differences across operations for companies.

Similarly by taking a strategic view of your compliance costs and burden you might find that Article 8 offers you the opportunity to put in place a longer term and valuable solution to sustainability compliance. This could include implementing a bespoke energy management system (ISO 50001 or equivalent) companies become automatically compliant with a range of regulations including Article 8, or thinking about how you fund and monitor energy reduction measures identified throughout all your operations rather than just the proactive ones.

We have experts that would be delighted to help you to carry out a review, design and implement an energy management system specifically tailored to your organisation. This can add genuine value going forwards by providing a more robust sustainability framework and improving efficiencies across your business.

How can Ricardo help?

Through the following services, we can make Article 8 compliance a painless and more beneficial exercise:

  • Identify your company’s eligibility across the EU
  • Determine the compliance requirements in the Member States you operate in
  • Identify potential routes to compliance and help you decide on the best option
  • Take your company through to full compliance

To disucss any of the issues in this article, or for advice on Article 8 contact Ian Behling at ian.behling@ricardo.com