Energy performance certificate system needs to reform in France

The France Insider website writes about the energy performance certificates, required under the EU Energy Performance of Buildings Directive need to be reformed according to the French national auditor. What are your views? Are they effective in your country?

Energy Saving Certificates Under Fire

The system of energy savings certificates has been heavily criticized by the French national auditor.

What are CEEs?

Energy saving certificates (Certificats d’économies d’énergie – CEEs) have been around for nearly 20 years, with the express aim of reducing the production of greenhouse gases. A similar system operates in many other countries of Europe.

In France, the CEEs are a grants system which form part of a wider grants and loans system for energy conservation.

Under the system, carbon energy suppliers and fuel sellers must directly or indirectly finance energy-saving actions. It’s a compensation mechanism, pure and simple: suppliers, by selling carbon products, contribute to the emission of greenhouse gases. In return, they must help reduce the consumption of the products they sell.

The government sets an energy savings target for each energy supplier to be achieved for a multi-year period, under penalty of fines. To achieve these objectives the suppliers can carry out energy-saving operations themselves, or encourage consumers (whether individuals, companies or communities) to carry out work (insulation, installation of heat pumps, etc.) that they support with grants. Most grants are not subject to means-testing.

Since the launch of the scheme the energy savings target set for the suppliers has continued to increase, and in order to comply with European obligations to reduce greenhouse gas emissions, the government plans to double the level of the obligation for the next period (2026-2030).

Who Pays?

On paper, the system seems virtuous. In reality, this is not the case, as energy suppliers do not absorb the additional cost of the CEEs but pass it on to customers.

The French national auditor, the Cour de Comptes, in a report just published on the system, puts it bluntly: “The CEE mechanism seems at first glance to force energy suppliers to finance energy savings. But, in practice, they pass on all the costs necessary to obtain the certificates (…) in the selling prices of the energies. As a result, the cost associated with CEEs is ultimately borne by households and companies in the tertiary sector.”

The auditors estimate that each household finances the scheme to the tune of an average of €164 per year. With around 30 million households in France, that is equivalent to €5 billion a year… i.e. 82% of the cost of the scheme for suppliers.

The auditors conclusion: the CEE mechanism amounts to nothing more and nothing less than a “tax on energy consumption”.

Moreover, the auditors consider the energy savings estimated by the government of 6.5% of total energy consumption are overstated, in particular because “the volume of certificates issued does not correspond to the actual energy savings”.

In addition, the system is very complex, having undergone multiple adjustments to include objectives such as support to particular households in need, or temporary subsidies for certain operations such as the boiler change, making it unstable and difficult to operate.

According to the auditors, there is “massive fraud”, which only gives rise to “modest and belated” sanctions.

Abolition of CEEs?

The auditors therefore consider that the system cannot continue without a major reform, or that it should be abolished – as has occurred in Denmark. If this solution is not adopted, the auditors recommend “profound structural reforms”, including greater transparency, regulatory stability, an overhaul of the method of calculating energy savings, and a determined fight against fraud.

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