In November 2014, the Croatian Energy Efficiency Act (Zakon o energetskoj učinkovitosti, "EnergyEfficiency Act") entered into force. The Energy Efficiency Act transposes into national legislation thoseEuropean Union regulations set out in Directive 2012/27/EU regarding energy efficiency, amending theDirectives 2009/125/EC and 2010/30/EU, and repeals Directives 2004/8/EC and 2006/32/EC. The EnergyEfficiency Act supersedes the End-Use Energy Efficiency Act (Zakon o učinkovitom korištenju energije uneposrednoj potrošnji).
The main purpose of the Energy Efficiency Act is to maintain the goals of sustainable energy development,such as reducing negative environmental impact, improving the security of energy supply, meeting theneeds of consumers and fulfilling Croatia's obligations under international treaties.
The Energy Efficiency Act and supporting legislation have fully transposed the requirements set out inDirective 2012/27/EU.
Apart from the Energy Efficiency Act and its supporting legislation, a large portion of Croatia's energyefficiency framework is outlined in the National Energy Efficiency Action Plans, as follows:
-National Energy Efficiency Plan 2008-2016;
-First National Energy Efficiency Action Plan 2008-2010;
-Second National Energy Efficiency Action Plan 2011-2013; and
-Third National Energy Efficiency Action Plan 2014-2016.
In 2014, the Third National Energy Efficiency Action Plan ("NEEAP 3") was developed and supersedes theFirst and Second National Energy Efficiency Action Plans. The most important aspect of NEEAP 3 is theimplementation of the EU Directive. NEEAP 3 recognises the energy saving goals set out by the EUDirective and anticipates that sixty percent (60%) of the energy savings will be achieved throughalternative policy measures and the rest through mandatory savings (Croatia opted for a combinedapproach).
The calculations made by means of the top-down indicators recommended by the European Commissionhave led to the conclusion that in 2012, Croatia's final energy consumption savings amounted to sixty onepercent (61%) of the contemplated savings goals for 2016 – suggesting that the final target set for 2016will be met (the report on whether the target was actually met in 2016 is still outstanding). The highestsavings have been registered in industry and transport, but these improvements are generally a result ofone-time activities or incidental occurrences rather than a result of systematic structural measures -thereby suggesting the need for further improvements.
In addition to the National Energy Efficiency Action Plans, the Croatian Government and its bodies havealso adopted strategic documents governing the energy efficiency framework, the most important of thesebeing the Strategy for Energy Development of the Republic of Croatia ("Strategy") and Long-TermStrategy for Mobilising Investment in the Renovation of the National Building Stock of the Republic ofCroatia ("Renovation Strategy"). Details of these strategies are outlined hereof.
Croatian energy efficiency measures are also implemented through many operational programmes, suchas:
By co-financing the purchase of electric and hybrid vehicles in Croatia, the Croatian Government intendsto have a gradual, but direct impact on reducing harmful emissions in transport. It is possible to receivestate subsidies covering up to forty percent (40%) of the purchase costs of electric, hybrid or plug-in hybridvehicles.
Energy efficient renovation of residential buildings programme
This programme co-finances the: (i) energy inspection of these buildings and energy certification thereof;(ii) preparation of project documentation for energy renovation; (iii) energy renovation of residentialbuildings; and (iv) introduction of individual thermal energy devices in existing residential buildings.
WEEE disposal programme
This programme provides for the disposal of old electrical and electronic devices used by consumers inone of four proper ways: (i) devices up to 25 cm in height can be handed over free of charge to retailerscarrying the waste electric and electronic equipment ("WEEE") sign with no purchase obligation; (ii) largerdevices can now be handed over free of charge to retailers when buying a new device; (iii) devices can behanded over free of charge to recycling yards; or (iv) arrangements can be made for free of chargeremoval of the devices by an authorised collector. In addition, each servicing provider is obliged to takeover WEEE equipment free of charge at their business premises if it is determined that repair of the deviceis not possible or commercially viable.
Energy renovation of family homes programme
The programme for energy renovation of family homes enables an increase in energy efficiency and use ofrenewable energy sources, which saves energy while preserving the environment and jobs. With integralenergy renovations, home energy consumption can be reduced by thirty to sixty percent (30-60%) and byusing renewable energy, these energy savings can be even greater.
Specific provisions of EU Directives transposed into Croatian legislation are as follows:
-Energy distributors or retail energy sales companies must achieve one point five percent (1.5%) energysavings per year through the implementation of energy efficiency measures. EU countries can opt toachieve the same level of savings through other means, such as improving the efficiency of heatingsystems, installing double glazed windows or insulating roofs.
Croatia chose to implement a combination of energy efficiency obligation schemes and alternativepolicy measures.
The energy efficiency obligation schemes are limited to the obligations of the distribution system andsuppliers. These relate to the supply of energy services, the provision of individual metering servicesand the issuance to their customers of invoices with full information. Distributors/suppliers are under noobligation to achieve savings in relation to energy use by their customers.
The Croatian government decided to also employ alternative policy measures (which, according toNEEAP 3, should account for sixty percent (60%) of all energy savings). The alternative policymeasures are described hereof.
The national savings goal is set at 54,250 PJ until 31 December 2020, or 1,938 PJ on an annual level.
-The public sector in EU countries should purchase energy efficient buildings, products and services.
This obligation was transposed into Croatian legislation by the Energy Efficiency Act and correspondingOrdinance on Energy Efficiency Requirements for Energy Related Products in Public ProcurementProcedures (Pravilnik o zahtjevima energetske učinkovitosti proizvoda povezanih s energijom upostupcima javne nabave). Both sources oblige the central government bodies participating in publicprocurement procedures to use certain energy efficiency-based criteria when purchasing energy relatedgoods or using energy related services.
The National Energy Efficiency Plan also sets out the rules for implementation of policies gearedtowards energy efficiency improvement. This Plan contains, inter alia, measures necessary forrenovation of at least three percent (3%) of the floor area in those buildings owned or used by centralgovernment bodies.
-Empowering energy consumers to better manage consumption. This includes easy and free access todata on consumption through individual metering.
The Energy Efficiency Act governs the following topics in detail:
-energy suppliers must provide their customers free of charge, at their request and at least once ayear, information on consumption of electricity, heat energy and gas;
-energy distributors are required to provide their customers with individual meters which accuratelyreflect their consumption; and
-both distributors and suppliers must include information on current prices and actual consumption, aswell as a comparison of current and past consumption of the customer, in their contacts, receipts ortransactions.
-Large companies will make audits of their energy consumption to help them identify ways to reduce it.
This obligation was transposed into Croatian legislation by the Energy Efficiency Act and correspondingOrdinance on Energy Audit for Large Companies (Pravilnik o energetskom pregledu za velikapoduzeća). A detailed analysis is set out hereof.
-Monitoring efficiency levels in new energy generation capacities.
The system for monitoring, measuring and verification of energy savings is generally established within theEnergy Efficiency Act. Additionally, NEEAP 3 sets out specific measures, such as improvement ofefficiency in energy generation through the reduction of self-consumption in those power plants managedby State-owned operators (reconstruction and installation of replacement equipment) and improvement ofenergy efficiency in exploration, production and processing of oil (improvement of production processesand utilisation of additional capacities).
Croatia opted for a combined approach in energy savings, combining energy efficiency obligation schemeswith alternative policy measures.
These alternative policy measures include:
Energy Renovation of Family Housing Units
This measure includes the renovation of family housing units (emphasis on units of up to 400 m2 builtbefore 1987) to achieve low-energy grade standards. The renovation should include the change offacades and windows, as well as replacement of obsolete heating systems with gas condensation boilers.
Energy Renovation of Large Housing Buildings
This measure includes the renovation of large housing units (emphasis on apartment buildings built before1987) to achieve low-energy grade standards. The renovation should include the change of facades andwindows, as well as replacement of obsolete heating systems.
Energy Renovation of Public Sector Buildings
This measure includes the renovation of public sector buildings to achieve low-energy grade standards.The renovation should include renovation of facades, thermal, electric and water supply systems, coupledwith "before and after" energy certificates.
Energy Renovation of Commercial Non-Residential Buildings
This measure includes the renovation of commercial non-residential buildings to achieve low-energy gradestandards. The measure should include "before and after" energy certificates.
Individual metering of heat energy consumption
Individual metering increases consumption awareness and encourages energy savings with resultingfinancial savings for consumers. Since the installation of individual meters may impose a financial burdenon tenants, financial aid is available to assist in the implementation of this measure.
Energy Efficient Public Lighting
This measure includes replacement of obsolete lighting systems with new technologies, financed bycentral government programmes, local government programmes and the services of ESCO companies.
Energy Efficient Vehicles
This measure includes co-financing of electric and hybrid vehicles, as well as vehicles fuelled by liquefiedpetroleum gas and compressed natural gas.
This measure includes raising awareness of the benefits of eco-driving, especially with drivers achievingabove-average annual mileage. The measure includes implementation of eco-driving educational trainingsand programmes.
Vehicles taxation based on CO2 emissions
Taxation of vehicles based upon CO2 emissions coupled with exemptions for electric and hybrid vehicles isaimed at discouraging the purchase of vehicles with high CO2 emissions.
Additional measures include:
-additional education in elementary schools and high schools, educational campaigns aimed atconstruction workers and their additional education and prequalification;
-promotion of energy services provided by ESCO companies, which provide energy saving services andare paid on the basis of achieved monetary savings. The award of energy service contracts must bebased upon public tenders, allowing for transparency, non-discrimination and value for money. Due tothe specifics of financing of ESCO companies, the Croatian Government developed a guaranteescheme to allow for easier financing of those ESCO projects related to public sector building renovation;
-amendments of the construction law regulatory framework with the purpose of implementing therequirements of the EU directives and facilitating the improvement of energy efficiency of buildings;
-increase of the number of buildings with near-zero energy consumption;
-green public procurement – linking energy efficiency to selection criteria and award criteria;
-raising awareness of energy efficiency in industrial segments through consumption analysis and goalsetting;
-introduction of highly-efficient electric motors in industry and associated financing related thereto;
-providing financial aid for energy audits of SMEs;
-improving the regulatory framework to promote intermodal transport of goods and integrated trafficsolutions (car-sharing, smart parking management, public bicycle system, etc.);
-introducing and enforcing strict speed limits, especially in motorway traffic;
-improvement of efficiency in energy generation through reduction of self-consumption in those powerplants managed by State-owned operators (reconstruction and installation of replacement equipment);and
-improvement of energy efficiency in exploration, production and processing of oil (improvement ofproduction processes and utilisation of additional capacities).
Croatia chose a combined approach with an emphasis on alternative policy measures. The projectedcombined effect of these measures was sufficient to meet the requirements of the EU Directive. AlthoughNEEAP 3 confirmed that the actual energy savings were on track to meet the projected energy savings for2016, it was also noted that the savings were to a large extent attributable to a downturn in economicactivities and not only to the energy efficiency measures imposed by the Croatian Government. Since theCroatian economy has shown significant signs of recovery in the past period, it remains to be seenwhether the energy savings measures imposed by the Croatian Government will be sufficient to cope withthis economic growth and offset the corresponding increase in energy demand.
This topic is governed in detail by the Ordinance on Energy Audits for Large Companies, issued by theMinistry of Economy, Entrepreneurship and Crafts, and implementing the requirements of the EU Directive("Ordinance").
The Ordinance establishes the manner by which such audits are conducted, the terms of issuance andcancellation of authorisation thereof, the content and manner of maintaining the register, the audit report'scontent and other obligations related to the audit's implementation.
Large companies are obliged to carry out an energy audit every four (4) years. Companies whichimplement an energy management system conforming to the ISO 50001 standard, evidenced by acertificate issued by an accredited independent body under relevant European or international standardsare exempt.
An energy audit is performed by an independent authorised person, pursuant to the authorisation issuedby the Ministry, for a period of five (5) years, with the possibility of extension.
Croatia has also established legislation for the implementation of the EU Directive. According to theOrdinance, large enterprises are those companies that meet at least two of the following conditions: (i)total assets of at least HRK 130 million, yearly income of at least HRK 260 million; or (ii) at least 250employees on average during the business year. Energy auditors from Croatia and the EU need to provetheir professional competence and be authorised/registered by the Ministry in order to provide theirservices.
Strategy of Energy Development for the Republic of Croatia ("Strategy")
The Strategy seeks to achieve three basic energy objectives: (i) security of energy supply; (ii)competitiveness of the energy system; and (iii) sustainability of energy development. The challenges thatneed to be addressed are the dependence on oil imports, insufficient security of natural gas supply, lack ofsecure supply of electricity, as well as high dependence on its import. The Strategy covers the period up to2020, which coincides with the time frames set out by the EU Directive. Therefore, the Strategy's objectiveis to build a system of balanced contribution to the security of energy supply, competitiveness andenvironmental protection, which will provide a secure and accessible supply of quality energy to allCroatian citizens and the Croatian economy.
Long-Term Strategy for Mobilising Investment in the Renovation of the NationalBuilding Stock of the Republic of Croatia ("Renovation Strategy")
The Renovation Strategy was implemented in 2014 and includes:
-a breakdown of the national building stock by category (large housing units, family housing units, publicsector buildings and commercial sector buildings);
-an analysis of key elements of energy renovation, including heating and cooling systems, lighting, waterconsumption and utilisation of RES capacities;
-policies and incentives for cost-efficient integral building renovation, including domestic and foreignfinancing resources;
-a long-term perspective for managing the decision making process of individuals and the constructionindustry in terms of financial investments; and
-an assessment of expected energy savings and social benefits.
Croatia chose a combined approach with an emphasis on alternative policy measures. The EU Directivecalls for long-term renovation strategies, specifically in the public sector.
The Croatian Government has highly emphasised the need to renovate the buildings in public, residentialand commercial segments, with the savings achieved in these sectors accounting for most of the projectedenergy savings. Further measures include the audits of large industry, improving energy efficiency in thetransportation system (especially through smart systems), renewal of the national car fleet throughincentivising the purchase of electric and hybrid cars), increased efficiency in the industry and higherutilisation of renewable energy sources.
Under NEEAP 3, Croatia defined its energy savings targets as 11.15 Mtoe primary energy or 7 Mtoe finalenergy consumption in 2020.
The EU Directive establishes an indicative target of at least twenty percent (20%) energy efficiency forMember States. Croatia has established energy saving goals correspondent to the EU Directiverequirements, but there is little information indicating if that target is actually going to be reached. A newenergy saving report is scheduled to be published later in 2017, but the earlier projections have indicatedthat the Croatian energy saving goals will be met and exceeded.
2. Specific Provisions of the Law
4. Mandatory Audit of LargeIndustry
This chapter was contributed by: Saša Jovičić (Counsel).