What does materiality in Article 7 EED mean?

This description of materiality from the EC Guidelines will be followed up by examples of problems Member States face, challenges and solutions, in defining materiality of certain measures.

To report savings, Member States need to satisfy the ‘materiality’ criterion. The automatic roll-out of EU legislation or autonomous improvements because of market forces or technological developments (for example) cannot be taken into account, as Member States may not count actions that would have happened anyway

The activities of national public authorities in implementing the policy measure must be ‘material’ to the achievement of the energy savings claimed; in other words:

  • they must have contributed to the individual action in question; and
  • the subsidy or involvement of the obligated, participating or entrusted party must clearly have had more than a minimal effect on the end user’s decision to undertake the energy-efficiency investment.

Therefore, Member States need to show that the savings are caused by a policy measure designed to trigger end-use energy savings. Measures taken pursuant to Regulation (EU) 2018/842 on binding annual greenhouse gas emission reductions can be considered material, but Member States have to show that they result in verifiable and measurable or estimable energy-efficiency improvements.
For financing schemes, for example, an indication of the amount of subsidy is not enough to demonstrate materiality, since this alone does not prove that subsidies have influenced end-users’ investment decisions. The role played by actors involved in the actions may in principle be proved without a subsidy as a benchmark; standardised actions (e.g. creation of  installation standards for products, energy advice and energy audits followed by the actual implementation of actions) could be an important materiality indicator.

To ensure compliance, Member States could set general materiality requirements under an EEOS or alternative measures and verify these on a project-by-project basis. These could establish that parties (e.g. when applying for a ‘white certificate’98) must document and prove a direct contribution to the implementation of the action.
Obligated parties could be required to prove:

  • whether the contribution has been delivered directly or indirectly (i.e. by intermediaries); and
  • whether it has been decided prior to the installation of the action.

Member States could also require, for example, that:

  • a contract be concluded between distribution system operators (i.e. the obligated parties) and third parties;
  • energy savings not be generated before the contract is issued;
  • parties can count savings only where they have been directly involved in the implementation of the measure (e.g. by providing energy audits, subsidies, etc.); and
  • agreements are drawn up covering the whole chain from obligated actors to energy end-users.

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