EU/Netherlands: measures to reduce energy consumption

Everyone, from the whole of Europe to individual countries and from companies to households alike, has been confronted by the impact of gas and electricity prices having reached record levels in 2022. Not surprisingly, in her 2022 State of the Union Address, European Commission President von der Leyen emphasised the need to put forward measures for Member States to reduce their overall energy consumption.

Though reducing energy consumption has gained particular importance since the Russian invasion of Ukraine, which forced the European bloc to reduce its dependence on fossil fuels, energy efficiency and reducing energy demand have been cornerstones of European’s energy transition for more than a decade.

Energy efficiency was one of the priorities of the European Green Deal in December 2019. In its proposed recast of the Energy Efficiency Directive (“EED”) (see our previous blog post) the European Commission introduced the energy efficiency as first principle. Furthermore, the European Commission proposed to its Member States that they further collectively increase the EU energy efficiency target, which includes efficiencies in the Member States’ primary and final energy consumption. The EDD embraced that energy audits and energy management schemes have a substantial role to play in improving energy efficiency in the end-use sectors.

Since spring 2022, there has been renewed interest within Europe on energy savings and efficiency. In its REPower EU plan (see our previous blog post), the European Commission stated that saving energy is the cheapest, safest and cleanest way to reduce our reliance on fossil fuel imports from Russia. In addition, the EU Council Regulation on Coordinated Demand Reduction Measures for Gas, which entered into force on 9 August 2022, requires EU Member States to use their best efforts to reduce their national gas consumption between 1 August 2022 and 31 March 2023 by at least 15% compared to their average consumption during that period in the last five years (see our previous blog post). Finally, the Proposal for an emergency intervention to address high energy prices published by the European Commission in September 2022 includes an obligation for Member States to reduce electricity consumption by 5% during selected peak hours as well as a reduction of overall electricity demand by 10% until 31 March 2023. 

Also, Rob Jetten, the Dutch Minister for Energy and Climate (Energie en Klimaat), reiterated the urgency for European countries to save on energy consumption. Essentially, the Dutch government is calling for mandatory energy savings measures. Below, we examine the current legal framework on energy audits and the energy saving obligation that apply in the Netherlands. This legal framework is subject to further amendments, partly due to Europe’s energy crisis.

Energy audits

Pursuant to the Implementation Act EU-directives energy efficiency (Wet implementatie EU-richtlijnen energie-efficiëntie, in Dutch), companies in the Netherlands must mandatorily perform an energy audit if they employ at least 250 persons or have an annual turnover exceeding EUR 50 million and an annual balance sheet total exceeding EUR 43 million. Energy audits must be performed every four years and reported to the Dutch Minister for Energy and Climate. Audit reports must be sent within four weeks after having been drawn up and finalised. The Energy Audit Decree (Besluit energie-audit, in Dutch) sets out the substantive requirements for energy audits and elaborates on the reporting requirements.

The recast of the EED obliges companies with an average annual consumption higher than 100TJ of energy over the previous three years and taking all energy carriers together, to implement an energy management system. Companies with an average annual consumption between 10TJ and 100TJ can opt for either implementing an energy management system or an energy audit. The Dutch government prefers to maintain a threshold of 10TJ for energy audits. If this proposal succeeds, more companies will have to implement an energy management system, and a lower number will be subject to mandatory energy audits.

Energy saving obligation (Energiebesparingsplicht)

In the Netherlands, important energy efficiency measures as set out in the EED have been implemented in the Activities (Environmental Management) Decree (Activiteitenbesluit Milieubeheer, in Dutch). In general, an energy savings obligation (energiebesparingsplicht) applies to companies and organisations consuming more than 50,000 kWh of electricity or 25,000 m3 of natural gas equivalent. Qualifying companies must implement all possible energy-saving measures with a payback period of five years or less.

Though the energy audit and the energy saving obligation have existed for a long time, their potential remains unfulfilled and there is room for improvement. Hence, over the summer, the Dutch Minister for Energy and Climate announced various measures to strengthen the current energy savings obligation (Kamerstuk kst-1041076, in Dutch) A stricter energy savings obligation could result in a potential CO2 reduction of 3.2 megatonnes CO2 by 2030. Such measures include:

• Extending its scope by adding measures regarding renewable energy generation and electrification measures with a payback period of five years or less to the energy savings obligation.
• Expanding the target group covered by the energy savings obligation requiring large energy users, including companies that participate in the EU ETS, from 2023, to implement all energy sustainability measures with a payback period of five years or less.
• Updating the Approved Measures Lists (Erkende Maatregelenlijsten (EMLs)) to the latest best available techniques, investment costs and current energy prices. Companies and organisations can fulfil their energy saving obligations by implementing the applicable measures listed in the EMLs.
• Large energy users must conduct a mandatory four-yearly study on their sustainable energy use. This will require such users to identify process measures with a payback period of five years or less, list those in a plan and implement any processes identified.
• Supervision and enforcement of the energy saving obligation will rest with the relevant environmental service (omgevingsdienst) on behalf of the specific province or municipality as competent authority. The intensification of supervision and compliance activities requires further funding. A total of EUR 76 million will be earmarked for the period 2019 – 2026.
• Finally, technical details, such as bringing greenhouse horticultural companies under the energy saving obligation, which will be investigated further, the payback methodology (terugverdientijdmethodiek) and the introduction of competent authorities being able to request regional grid operators to share user data, will also be part of updating and strengthening the energy saving obligation.