COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 29.04.1998
COM1998 246 final
COMMUNICATION FROM THE COMMISSION
Energy Efficiency in the European
Community Towards a Strategy for the
Rational use of Energy
1. The need for renewed efforts to promote Energy Efficiency
There is an urgent need to reinvigorate commitment both at Community and Member
State level to promote energy efficiency more actively, especially, but not only, in the
light of the Kyoto agreement to reduce C02 emissions. Improved energy efficiency
will lead to a more sustainable energy policy and enhanced security of supply, as well
as to many other benefits. It is important to underline, however, that it will play a key
role in helping the Community to meet its challenging Kyoto target economically. The underlying assumption behind this Communication is that, whilst energy intensity
has decreased slowly but surely over recent years, it is essential to take the necessary
steps to ensure that energy efficiency is substantially improved, and reflected in a
significantly reduced level of energy intensity. The role of Member States and of
regional and local authorities will be crucial in this context as much of the action on
energy efficiency takes place at national level. The Commissions objectives in presenting this Communication at this point in time,
can be summarised as follows
-To underline the economic potential for energy efficiency which exists. -To present both the successes and failures of the policies followed so far, and draw
the necessary conclusions. -To highlight the need for more action at Member State and regional level in parallel
with action at Community level. -To refocus attention on promoting energy efficiency and stimulate discussion
towards a more detailed Action Plan. -To prepare the ground in this specific field for common and coordinated policies and
actions which will need to be undertaken in the light of the Kyoto Agreement. Saving energy has been a stated policy objective of the Community and its Member
States since the first oil crisis in 1973, when energy security became of paramount
concern and saving energy was an important element of the strategy to reduce oil
imports, particularly in a context of high energy prices. However, as these pressures
disappeared, so has much of the effort to improve energy efficiency. A more long-term view of energy demand reduction led in time to the realisation that
it was possible to delink economic growth and energy consumption, allowing GDP
to increase without commensurate increases in energy consumption. Market barriers
and falling prices, however, have limited the scope and extent to which delinking has
occurred, especially regarding the final or end-use of energy.
However, at the same time,
increased competition as a result of the internal energy market is likely to lead to a
tariff structure for the electricity industry which will better reflect true production
costs without hidden cross-subsidies. It is clear that in a period of generally falling
energy prices, specific measures to promote energy efficiency are more critical than
ever. After price signals, lack of or incomplete information is usually the first barrier to
energy efficiency which one encounters. It is also the most ubiquitous. Imperfect
knowledge of the product and lack of foresight on price development on the part of
consumers, manufacturers and other stakeholders hampers the introduction of
efficiency measures. Consumers receive inadequate or incomplete information from
the service sector on running costs. Purchases are then often based on lowest initial
cost or other criteria. Information on system applications of energy technology is also often unavailable or
inaccessible. As a result, equipment is often over-sized or incorrectly installed. There
is also often a lack of technical skills and training in the energy maintenance and
service sector. Because of expectations of relatively low and stable end-use energy
prices, information on efficiency has also become less important in the planning and
purchase of automobiles, appliances and other equipment. Poor feedback of information to energy consumers also acts as a disincentive. This is
particularly true for consumers who see no immediate or appreciable change in energy
costs after haven chosen energy-efficient alternatives. At a different level, lack of
harmonised and comparable evaluation methods for analysing the results of energy
efficiency initiatives can also be a barrier. There are numerous institutional and legal barriers to greater energy efficiency. One example is found in the energy supply industry, where the institutionalised
energy planning mind set has proven difficult to change. This tends to associate
greater credibility with highly centralised power production than with more
decentralised demand-side measures to meet increases in demand. Yet, least-cost
analyses have shown that investments in demand-side energy efficiency are often
more cost-effective than production-side investments. One of the most difficult
institutional barriers to overcome today is the continued
practice of selling energy in the form of kWh instead of as energy services such as
heating and cooling, lighting and power. Services are invariably what the energy
consumer actually wants, not energy for its own sake.
This is one of the arguments in
favour of the development of energy service companies and the use of integrated
resource planning. Other institutional barriers include things such as the practice among builders and
landlords in some Member States to choose and install appliances with low initial
costs but high running costs for energy, costs which are usually incurred by the home-
buyer or tenant. The landlord-tenant problem of split-incentives,, is a classic example
of this type of institutional barriers. Lack of political commitment can also be said to constitute an institutional barrier. As
energy efficiency occurs in small increments, there is never a grandiose ceremony
associated with it as is the case when a new power station or highway is opened. Politically motivated incentive structures in the form of taxes and subsidies are also
often based on short-term or fiscal goals. There are also many different types of technical barriers to energy efficiency. Countless energy-efficient technologies have been held back from the market due to
inadequate support in the form of technicians, consultants, trained repairmen etc.. leading to lack of confidence on the part of the consumer, either regarding product
reliability or maintenance of the equipment. Barriers also arise because many manufacturers of equipment and appliances and
builders are not specifically in the efficiency business and thus have different
priorities in designing and selling their refrigerators, pumps, buildings etc. Low
energy prices have contributed to this. Reaching sufficient production volume for economies of scale to make the cost of a
new product competitive is another common technical barrier. The lack of standardised components, spare parts and fixtures for energy-efficient
solutions is a barrier which the lighting, building and other industries have
experienced. Community standardisation measures and programmes are helping to
alleviate this problem, with the single market in mind. Financial barriers such as lack of up-front capital are major barriers to cost-effective
investment in energy efficiency. Self-financing capacities and loan facilities have
traditionally been far better for energy producers than for energy consumers. Banks
e.g., do not include reduced energy costs resulting from extra investment in energy
efficiency in the calculations upon which they base the size of their loans. The above list of barriers is not exhaustive. Its purpose is rather to illustrate the main
categories of barriers to energy efficiency in order to address the question of how to
remove them.
4. Existing Measures for Energy Efficiency
Future measures have to build on existing initiatives, overcoming weakness and
pursuing successful experiences. It is important to underline that initiatives, with
varying degrees of effectiveness, have been undertaken at Community level since the
late 1970s. However, by the late 1980s the Commission concluded that the different
energy efficiency instruments passed by Council in the 1970s and early 1980s had not
fulfilled expectations. More effort was then required from the Member States. In
1986, the Council adopted a Resolution concerning new Community energy
objectives, which inter alia, called for a 20 improvement in energy intensity of final
demand by the year 19953. A 1987 Communication entitled Towards a continuing
policy for energy efficiency in the European Community COM87233 final
proposed 14 energy efficiency measures to Member States to help achieve the 1995
target. In the 1990 SAVE proposal which followed, it was recognised that this
Communication had had no appreciable effect, and it was necessary for the
Commission to act at Community level. The Commissions proposal of 13 November 1990 COM90365final for a Council
Decision concerning the promotion of energy efficiency in the Community stated that
Community action in this field is revived in the light of changes in economic trends
for energy and the need for greater environmental protection. In the energy policies
pursued by,most Member States, energy efficiency generally has become a lesser
priority. The 1990 proposal stated further that the majority of Member States have
reduced or even completely abolished their programmes which directly support
energy efficiency-linked investments. This conclusion led, among other things, to the
approval in 1991 of the multi-annual SAVE Programme for energy efficiency. In spite of SAVE, for the Community as a whole, the overall rate of decrease in
energy intensity was not significant. By 1995, the improvement was only 12 , far
short of the target of 20 . Even more alarming was the fact that the pace of
improvement had slowed down to only -0.6 per year between 1990 and 1995,
compared to -2.0 per year between 1985 and 19904. An important factor underlying the slow penetration of energy efficiency measures
continues to be the relatively low priority attributed to energy saving by Member
States, despite the Community efforts in this direction as described below. There has been recognition at Community level, that technological programmes can
play an important role m providing the basis for energy efficient technologies. In the
JOULE-THERMIE programme launched in 1995 as a specific programme of the
Fourth Framework Programme for RTD, 280 MECU were devoted to energy
efficiency, representing 27 of the total budget and contributing to substantial
achievements, especially in the reduction of energy intensity in buildings, transport
and the process industries. A recent evaluation of THERMIE indicates that this
Community programme is very well known amongst stakeholders on Community
3 Council Resolution of 16 September 1986 concerning New Community Energy Policy Objectives for
1995 and Convergence of the Policies of theMember States. OJC 241 of 25 September 1986.
4 Eurostat 1997. Energy intensity for final energy consumption is only an indicator for energy
efficiency, because it also includes economic restructuring, changes in fuel mix, etc. energy markets and that it has impacted on market shares for energy-efficiency
technology.5
However, the principal focus of the Communitys action has been the SAVE
Programme. After evaluation of the results of SAVE I, the SAVE II programme was
adopted in December 1996 with an indicative budget of 45 MECU for five years. Its
aim is improving energy intensity of final consumption by a further one percentage
point per annum over that which would have been otherwise attained. Compared with
the original SAVE Programme, SAVE II was enlarged by the addition of the regional
and urban energy efficiency programme and an electricity end-use programme.6 and in
March 1998, the Commission adopted its decision opening up the SAVE programme
to Bulgaria, Lithuania, Poland, Romania, Slovakia and the Czech Republic. One of the major elements of the Commissions non-technological efforts relates to
the development and adoption of legislation having a Community-wide scope. The
legislative programme largely relates to traded goods and, as such, is essential in
completing the internal market. Evaluations of the effects in Member States of the
Community labelling programme indicate that the programme has had a positive
impact both on the share of energy-efficient models in EU manufactures assortment
of products and the market share of sales of efficient models. An extrapolation of the
present trend of improvement in the energy intensity of cold appliances as a result of
labelling, for example, indicates a reduced average intensity of 15 for the entire EU
cold appliance market by the year 2010. That this improvement is in large measure a
result of labelling is supported by the fact that there was no significant rate of change
before labelling was introduced. An important element of SAVE has been its focus on helping to build the necessary
capacity and infrastructure for energy efficiency and to improve policy analysis. SAVE provides support for pilot actions and information dissemination activities in
the areas of appliances, buildings, CHP, DSM, education training, industry and
transport. Over 350 pilot actions and studies have been carried out for this purpose,
and the asessment of their effectiveness has indicated the areas of priority action
where there is Community added-value. Programme evaluations show clearly that the
SAVE programme has played a significant role in capacity-building in the energy
sector but we have still not reached the stage where this has produced sufficient
results in practice. A separate component of the SAVE Programme which supports the
creation of energy agencies at regional, local and island level has proved to be
significant. To date 140 such SAVE agencies have been set up throughout the
Community, and their impact is starting to be felt at a local level. One of their roles,
which needs to be strengthened is the exchange of experience and best practices. A further important element of Community action has been support for investments
in less developed regions. The European Regional Development Fund ERDF and the
Cohesion Fund have the possibility to contribute to increased energy efficiency. This
s Horizontal Evaluation of DGXVII Energy Programmes, Report to the Commission, December 1996. 6 Council Decision 96737EC of 16.12.97 concerning a multiannual programme for the promotion of
energy efficiency in the Community - SAVE II. is possible in both Objective 1 and Objective 2 areas, where national as well as
regional energy programmes usually include specific measures to improve energy
efficiency. However, a greater interest needs to be shown by Member States in these
possibilities.
Evaluations of the programmes indicate that the programmes dealing with energy
efficiency have had an impact on reducing energy intensity but have not been in
themselves sufficient to bring about changes on a scale necessary. THERMIE is
judged to have contributed significantly to meeting the Community goal of increased
industrial competitiveness, especially among SMEs. The SAVE Programme has had
measurable effect on capacity-building for energy efficiency and in CHP through
replication of focused pilot projects. Through its legislative programme, SAVE has
been judged to have made an important contribution to the improvement of energy
efficiency. Estimates of the C02 abatement effects of different actions in SAVE and
THERMIE support the claim that the programmes are producing tangible results.7. The main conclusions drawn point to the need to better focus and coordinate
Community and Member State measures, to improve and strengthen existing
measures, to facilitate exchanges of experience and best practice, and to select priority
areas of action, in order to bring about the increased rate of improvement in energy
intensity which individual and societal benefits and costs fully justify. It should also be noted that efforts to improve energy efficiency outside the Union are
important in the context of international cooperation, especially in the light of the
global reduction of C02 emissions. The PHARE and TACIS programmes, intended to
support reform and restructuring in the CEEC and CIS countries, respectively have
promoted energy efficiency. INCO-Copernicus, an element of the Fourth Framework
Programme intended for non-member countries, promotes both the efficient use of
energy in buildings, industry and transport, as well as the clean and efficient
production of energy from fossil fuels, through joint research and demonstration
projects. INCO-DC has provided support to JOULE-THERMIEs accompanying
measures in developing countries, aiming at promoting the use of clean and efficient
energy in these countries. SYNERGY also supports energy efficiency projects in non-
member countries. However, the economic energy efficiency potential in countries
outside the Union is also far from being realised, and needs to be further encouraged. 5. Towards a Strategy for the Rational Use of Energy
The fact the Union is not realising the full cost-effective potential for energy
efficiency improvements, raises the question of why this is not happening. There are
two important points to consider. First, it is clear that the market is still not
functioning properly because there are market failures and barriers which hinder
expected investments and actions. Secondly, the policies and programmes that the
Community and its Member States have put in place have fallen short either because
they were not sufficient, not fully effective or not adequately co-ordinated, or a
combination of these. If we are to achieve, as a minimum, the economic potential for
- Horizontal Evaluation of DGXVII Energy Programmes, Report to the Commission, December 1996. energy efficiency, a renewed Community-wide commitment at Community, national,
regional and local level is essential in order to implement the appropriate policies and
measures as part of a wider strategy. We need to build on the foundations for a comprehensive Community energy
efficiency strategy which are already in place. A number of Community initiatives are
already running, one of which is the SAVE Programme and the activities arising from
it. Member States have programmes in place, as shown in Annex 2 which have had a
greater or lesser degree of success. Numerous evaluations of energy efficiency
programmes have been carried out in Member States, which show clear cost-effective
increases in the market shares for energy-efficient lighting, appliances, heat-pumps
and other energy-consuming equipment, often after only a few years of programme
activity. Extrapolated over the life of the investments undertaken as a result of the
programme, these activities impact on the energy intensity of individual end-use
sectors by factors of up to 65. The proposals made in this Communication build on
documented successful experiences, and aim to ensure that they are more widely taken
up. A number of coordinated measures need to be taken. Progress will need to be closely
monitored. One of the shortcomings of the current energy efficiency programmes is
the insufficient monitoring and evaluation of results. Monitoring will become even
more important in the future as it will be necessary to track the progress in meeting
the Kyoto commitments. The Commission will continue to strengthen its activities in
this area. An energy efficiency strategy cannot be successfully implemented without the co
operation and support of a wide variety of actors throughout the Community. Increased co-operation with Member States must be sought as well as with the energy
service industry, manufacturers, distributors, installers, industry associations, branch
organisations, utilities, consumer organisations and NGOs. Member States must be encouraged to promote awareness on energy efficiency. Particular importance should be given to increasing consumer awareness of the many
cost-effective energy efficiency opportunities and new emerging technologies. OPETs, SAVE Agencies, consumer networks and other Community-supported
dissemination networks can be more effectively used to increase co-operation in
pursuit of such common objectives. Better coordination of actions is very important, facilitated by the existence of a
special forum where energy efficiency policies are discussed.
If a group on
convergence of national energy policies is established by Council as already proposed
by the Commission, then a sub-group on energy efficiency with a special emphasis on
improved co-ordination of national and Comnrmity measures will be foreseen. Alternatively an appropriate forum may need to be established to promote a re-newed
impetus and commitment io energy efficiency, permit experience to be shared and
follow and review progress at EU and Member Sta ? eve!. There is clearly a need to identify and raise the profile of improving energy efficiency,
giving it a more positive thrust both at Community and Member States level. It must
be placed on an equal basis with energy supply options. While energy and
environmental policy objectives cannot be achieved by demand-side options alone,
neither can they be achieved solely by supply-side options. Energy efficiency
programmes must be put in place and implemented effectively, but at Community and
Member State level. Below is a first outline of what can be cost-effectively
undertaken
5.1 Promoting Energy Efficiency in Other Policies
Greater focus needs to be placed on promoting energy efficiency via other policies. The regional and urban dimensions of energy efficiency must be developed more
fully. Integrated regional and urban partnerships involving a wide variety of actors
from different sectors need to be promoted as part of the activities undertaken under
SAVE. The European Regional Development Fund and the Cohesion Fund must
continue to contribute to increased energy efficiency by including specific policies
and measures, but Member States must also ensure that they submit appropriate
proposals. Transport is another priority area for energy efficiency. Without appropriate policy
action, emissions from transport will increase by about 40 between 1990 and 2010. The European Union has adopted a strategy on C02 and cars, which aims to reduce by
30 the average C02 emissions of new cars to 120gkm in 20052010 against the
8, the Commission
1990 baseline. In the recent Communication on Transport and C02
made an assessment of how to reduce energy use and hence C02 emissions from
transport. The measures proposed concern four principal elements further action on
vehicle fuel economy progress with fair and efficient pricing in transport completion
of the internal market in rail transport as well as measures for better integrating the
various modes of transport.
It can be expected that those measures represent a cost-
effective policy approach capable of halving the growth in C02 emissions by 2010. Beyond 2010, the large-scale introduction of new technologies e.g. hybrid cars, fuel
cells and alternative fuels will reduce the use of fossil fuels and cut emissions
significantly.Energy efficiency needs to become an integral part of transport policy. Internalisation of externalities through taxation and fees, where appropriate,
continues to be considered as a means to allow energy prices to reflect true costs.
Market liberalisation benefits in the form of lower prices should partially accrue to
environmental improvement when appropriate. The Commission tabled a tax proposal
to the Council in 1997 concerning taxation of energy products, which would establish
a broader minimum tax base. The Council is currently examining this proposal, which
includes provisions for possible tax-exemptions for energy efficiency investments. It
is important for progress to be made on this proposal. In parallel, Member States
should be encouraged to examine what special tax incentives they can provide for
energy-saving. 8 COM98204 final of 31.3.98
10
Science Research and Technology Policy also has a role to play in the energy
efficiency strategy. The Fifth RTD Framework Programme forsees two specific key
actions for cleaner energy systems, including renewable energies and economic
and efficient energy for a compétitive Europe. Actions to be carried out by the JRC
are also foreseen, for example, on new materials for high efficiency power generation
system on prospective studies on upcoming technologies.The Community and
Member States must pursue intensified research and development efforts on energy
efficiency. International Commitment and Cooperation for energy efficiency is also critical. The European Union is fully committed to participate in the implementation of the
Energy Charter Protocol on Energy Efficiency and Related Environmental Aspects. Increased co-operation with other international organisations such as the International
Energy Agency must be sought. Strengthened co-operation with international banks
will allow more leverage for Community programmes and projects. Ensuring that the
accession countries of Central and Eastern Europe and Cyprus are adequately
prepared in the field of energy efficiency prior to membership, as identified in the
Accesion Partnerships with each of the countries concerned, is also a high priority. 5.2 Specific Priorities For Action
On the basis of an assessment of the economic potential for greater energy efficiency
and an évaluation of the effectiveness of actions already undertaken, the following
areas for action are proposed as priorities for the short to medium-term. This is not
intended to be an exhaustive list of actions, but rather indicate the main directions to
follow, coordinating action at Community and Member State level.
! Energy-Efficient Buildings
Buildings account for 40 of the EUs energy requirements. The building sector
offers one of the largest single potentials for energy efficiency and should thus be a
major focus for action. In addition to installed components and equipment, energy
conscious design and use of buildings and new concepts in building renovation,
refurbishment and life cycle analysis and costs are important. Initiatives which can be undertaken under the SAVE Programme include e.g., the
development of simple tools to help installers to design appropriate systems, training
and certification in their use of these tools. This must be combined with information
schemes providing the final customer with clear and reliable information about the
performance of the energy systems they may be considering. Further measures in this
field will include the review of Council Directive 9376EEC below which needs to
be strengthened to improve energy efficiency in buildings.9 It is important for Member
States also to review their national standards for energy efficiency in buildings, to
identify where improvements might be made. 9 The development of harmonised European standards under the Construction Products Directive
89106EEC for products such as thermal insulation, windows, heat emitters, etc. can lead to the
adoption of standards and indications in the form of information on inter alia product energy economy
and heat retention properties. 11
ii Review of Council Directive 9376EEC to Limit Carbon Dioxide Emissions
Council Directive 9376EEC has the potential to improve substantially energy
efficiency and reduce carbon dioxide emissions by helping overcome a number of
barriers. Results to date indicate, however, that many Member States have not given
the Directive sufficient priority. This is attributed in part to the subsidiarity in the
Directive. The Directive requires Member States to develop actions in six programme
areas, such as individual metering and billing of energy use, and energy audits in
industry but allows considerable flexibility regarding which instruments to choose
and how. Member States are also required to monitor and report on the impact of the
measures. Strengthening specific articles in the Directive will enhance its impact. Making it
more focused and precise is also necessary. Therefore, a directive amending Council
Directive 9376EEC will be proposed by the Commission. The main areas of the
present Directive which need to be strengthened include energy certification of
buildings to include existing buildings and not only new buildings, further standards
for the installation of insulation and proposals for inspections and energy audits. iii Energy-efficient Household Appliances and Other End-use Equipment
The technical barriers to energy efficiency need to be overcome. For domestic
appliances, labelling has been established for a number of years and should be
extended to cover all the major appliances. For rninimum efficiency requirements,
progress has been slower due to the long decision process and lack of cooperation
from manufacturers. The refrigerator directive 9657EC, was a first example,
followed by negotiated agreements for washing machines and televisions, as
mentioned below. In the near future energy-efficiency standards for electric water
heaters and room air conditioners will be negotiated. In the commercial and industrial sectors there is no labelling scheme, and therefore
negotiated minimum efficiency requirements are necessary. Proposals to introduce
minimum efficiency requirements should be developed, for example, for ballasts for
fluorescent lighting, electric motors, pumps, compressors, fans and commercial
refrigeration equipment. For office equipment a voluntary quality mark to indicate the
most efficient equipment for large purchasers public authorities and large commercial
enterprises such as banks, insurance companies, etc is under discussion, based on
world-wide harmonised technical specifications and the logo, Energy Star. Incentive schemes
in favour of the.
most efficient appliances, together with
disincentives for inefficient appliances, should be promoted as a means of ensuring
rapid market penetration of energy-efficient equipment. in industry through minimum efficiency
iv Wider Use of Negotiated and Long-Term Agreements
There is a large savings potential which can be realised by the removal of technical
requirements or equivalent
barriers
negotiated
for
manufactured goods. Therefore these instruments should be strengthened and
expanded to other appliances and equipment, especially in the commercial and
industrial sectors. Adequate funding under the SAVE Programme to allow detailed
establishing minimum
requirement
agreements
efficiency
12
technicaleconomic analysis and mandates
CENCENELEC is necessary to implement this strategy. to
the standardisation bodies
Several Member States have insisted on the use of more flexible instruments such as
negotiated agreements between manufacturers to reach the same objective as
mandatory minimum efficiency requirements. Negotiated agreements are considered
a valid alternative to the introduction of legislation if they include commitments by
a large segment of the manufacturers in a branch at least 80, stipulate quantified
commitments to improvements in the appliances and equipment they produce and if
they include an effective monitoring and self-regulating scheme and non-compliance
procedures. Currently two agreements have been negotiated by the Commission
with appliance manufacturers, for the reduction of energy consumption of stand-by
losses of TVs and VCRs and for washing machines. A wider use of negotiated
agreements should be sought, with targets corresponding to or exceeding any
objectives set for energy intensity. These agreements concern tradeable goods such as
appliances and equipment, but the inclusion of energy services should also be
considered. Should negotiated agreements fail to deliver the expected results,
mandatory standards must be implemented. The Commission has adopted a Communication on Environmental Agreements
COM 96 561, which aims to promote and facilitate the use of effective and
acceptable Environmental Agreements as part of the effort to broaden the range of
co-operation with industry. Long-Term Agreements LTAs with industry branches,
are a specific type of Environmental Agreement, characterised by the fact that the
industrial trade association in question and its members commit themselves to a
quantified target for energy efficiency in their manufacturing processes.
Wider use
of this instrument should be made. v Increased Dissemination of Information
Information dissemination must remain a high priority under the SAVE Programme
and in Member States programmes, in order to remove the information barriers
mentioned above. A renewed Community information campaign is planned, focusing
the attention of consumers and other stakeholders on the fact that energy efficiency is
more essential than ever and on how it achieves benefits. This campaign would
require the active participation of all the energy stakeholders including consumer
organisations. The current successful programme of energy efficiency labelling of household
appliances needs to be expanded to include other energy-using equipment, including
building components. Information on this must be made more readily available. Consumer organisation participation in the dissemination of consumer information
should be increased. There is a need to increase the use of information technology and other innovative
methods
to reach new audiences with labelling and other information on energy
efficiency and energy-efficient technology. For Commission projects, a greater
emphasis will be placed on dissemination of results through e.g., new and existing
13
Çommunity-wide networks. It is also recommended that training and certification on
the use and maintenance of energy-efficient technology be expanded. A new system of awards for energy efficiency, to be developed in cooperation with
relevant organisations under the SAVE Programme, is being considered. This could
be offered yearly for the institutions, organisations, authorities or persons in Member
States making the most important contribution to energy efficiency. The system
should be under the auspices of the Commission, with strong Member State
participation. It is also important to strengthen information dissemination on best practices in
Energy Efficiency.
Under the SAVE Programme, a European Energy Efficiency Best
Practice Programme,in cooperation with Member States will be proposed. viThird-party Financing, Guarantee of Results and Other Creative Financing
Schemes
Financial barriers require special attention. Third-party financing has been promoted
for several years by the Commission in both the SAVE and THERMIE programmes
as a means of removing such barriers. Model contracts have been prepared for all
Member States and several projects have been carried out. Council SAVE Directive
9376 requires Member States to develop actions related to third-party financing in the
public sector. While this has been reasonably successful, the full potential of this
instrument has not yet been achieved. The instrument needs to be strengthened by use
in larger public sector undertakings and expanded to cover private sector needs. Therefore, new ways must be sought to promote the instrument and to increase the
interest of commercial banks in assuming the role of guarantor for energy service
companies ESCOs considering third-party contracting. In addition to increased
commercial bank participation, new contract forms may need to be developed, such as
the guarantee of results procedure which has been successfully used by the ALTENER
programme. Energy efficiency investment project clearing houses will also need to be
tested as a means of providing commercial banks with independent evaluations of the
viability of proposed investments.
Studies and pilot actions in these specified areas
need to be carried out. vii Energy Efficiency in the Electricity and Gas sectors and CHP . It is important to overcome the institutional and legal barriers identified. Integrated
resource planning or rational planning techniques are an important tool, especially in
the context of liberalisation of the electricity and gas markets. The institutional
barriers in these sectors may or may not be removed by increased competition. The
Commission remains of the view, especially in the light of Kyoto, that IRP is an
important component of the EUs energy efficiency strategy to increase the focus on
the electricity and gas industrys role in providing energy services. There is a
modified Draft Directive on Rational Planning Techniques which, while strongly
supported by the European Parliament has yet to obtain sufficient support in the
Council for adoption.
The Commission continues to consider this Directive important,
especially in view of the development of energy services arising from market
liberalisation, and will consider the best way to proceed. 14
The use of combined heat and power in industry, the domestic and tertiary and the
power sectors is critical for energy efficiency and must continue to be promoted by
the Community and the Member States. The recent Communication on Cogeneration
COM97514 final outlines the barriers and strategy for the European Union, and
was endorsed by Member States in December 1997 in the form of a Council
Resolution. It should be noted that the forthcoming proposal for a revision of Council
Directive 88609EEC on polluting emissions from large combustion plants will
require that new plants apply CHP where feasible, make provisions for the use of. biomass and promote efficient production with fossil fuels. More generally, there is a need to expand the promotion of energy efficiency
undertaken by both electricity and gas utilities. A voluntary partnership will be
developed whereby utilities support EU initiatives such as the labelling and appliance
efficiency programmes through negotiated agreements. The Commission will
continue to promote DSM through pilot projects and dissemination activities under
the SAVE Programme. Commitments will be sought from utilities to market energy
services and energy efficiency as part of their corporate goal. viii Energy Management and Technology Procurement. In order to promote energy efficiency in the public sector, the Commission intends to
present a Proposal for a Directive on Energy Management, in which Member States
and EÙ Institutions agree to follow established guidelines for purchasing cost-
effective energy-efficient technology whenever constructing, repairing or furnishing
buildings owned or leased by them. This should include all EU and Member State
nationally-owned energy-using equipment, including automobiles. The intention is for
public bodies to take the lead by setting examples regarding energy efficiency. Corporate commitment based on best practices programmes will be a logical
extension of this. This work will be co-ordinated with the Community environmental
management and audit scheme EMAS. It will also include life-cycle cost analysis
LCC.
Compatibility with
in
implementing the programme will be assured. The potential in the building sector is
judged to be large and the institutional barriers to realizing this potential are well
known. An energy management programme for public buildings and property of this
type is deemed to be an effective way to remove these barriers. The Commission will
also continue to examine and improve its own energy management practices. the Commissions public procurement
rules
Cooperative technology procurement is an instrument to specify and aggregate the
demand for energy efficiency in technology. It has been shown to work well in
removing several different types of technical barriers. Technology procurement aims
at encouraging new products to meet a demand in this case for energy efficiency
that existing products on the market are unable to fulfil. Technology procurement is
used to match producers and consumers perspectives in order to make the market
function more efficiently with regard
to energy efficiency. A group of
knowledgeable and influential purchasers, defined as a buyers group, formulate
product specifications with the help of technical experts, and initiate competition
among producers to meet these demands. Technology procurement has been used
successfully by several Member States. The feasibility of an EU-levcl procurement
has been studied by the SAVE programme and the concept applied in a THERMIE
15
project. A new pilot project is now being considered and ways will be sought to
broaden and increase this instruments areas of application.
6. Next steps
A strong commitment and clear signals from all decision-makers and stakeholders
regarding the importance and priority of energy efficiency is needed if any significant
energy saving is to be made, particularly in the light of the Unions commitment,
undertaken in Kyoto, to reduce C02 emissions. Apart from a Community Strategy, Member States will need to develop their own
national strategies. In this context, consideration will need to be given to setting an
objective to reduce energy intensity at Community and national levels, as well as in
different sectoral activities. It has been estimated that if a basic package of measures such as those proposed
above, is implemented in an effective and co-ordinated fashion, it would have a
measurable impact on reducing energy intensity in the Community over and above the
trend of recent years -0.6 p.a.. If an additional annual reduction of energy
intensity of 1 were to be achieved with the win-win measures proposed which is
realistic, this must be regarded as an achievement against the background of expected
continuing low energy prices. The focus of our strategy over the next years has to be the full realisation of the
significant economic potential for the improvement in energy efficiency which exists
in the EU, estimated to be, by 2010, as much as 18 of 1995 energy consumption. This Communication is a first step in such a strategy. In the light of further discussion
and input on the basis of the ideas presented in this Communication, the Commission
intends to produce an Action Plan for Energy Efficiency. 16
Annex 1. Changes in Energy Intensity Total Final ConsumptionGDPtoeMECU 1990
1985
1990
1995
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
Sweden
United Kingdom
wwifjij. 161.5
202.1
143.0
196.8
143.5
177.4
230.6
201.1
128.4
409.9
192.8
217.1
145.8
166.9
177.2
aao
Source 1997 Annual Energy Review, European Commission, September 1997.
159.6
210.1
133.8
216.9
142.7
154.8
231.4
161.9
128.4
318.2
196.5
234.3
154.5
181.4
173.1
.18I9S-
181.2
223.5
152.8
205.8
160.0
204.3
253.4
216.7
129.7
443.3
222.1
229.3
152.7
192.9
194.7
15fiU13S1S1
Annual
Change
9085
-2.3
-2.0
-1.3
-0.9
-2.2
-2.8
-1.9
-1.5
-0.2
-1.6
-2.8
-1.1
-0.9
-2.9
-1.9
vH ,
Annual
Change
9590
-0.2
0.8
-1.3
2.0
-0.1
-2.7
0.1
-4.2
0.0
-4.9
0.4
1.5
1.2
1.7
-0.5
K 4 V
17
Annex 2. Outline of Member State Programmes and Measures for Energy
Efficiency
Austria
There is an Agreement between the Federal Government and the Federal Provinces
Article 15a of the Federal Constitution on Energy Conservation which came into
force on 15 June 1995. The article provides for the possibility of a common approach
to energy policy throughout the country. The agreement covers heat conservation in
buildings, energy-saving hot water preparation, subsidies, individual heat cost billing,
labelling of household appliances, certification of boilers and energy conservation in
the industrial sector. An agreement with the Association of Austrian Energy
Consumers provides for energy consultancy to companies with energy use of at least
20 TJ per year.
Austria has adopted targets for 2000, in relation to 1991 in order to
decrease energy for heating and water by 20, decrease specific industry use of
energy by 20 and decrease energy consumption of transport by 10. m
Belgium
Energy efficiency is the responsibility of the regional governments. In 1993, the
region of Wallonia adopted a decree to promote energy efficiency in all sectors by
creating a coherent legal framework. The region adopted the thermal efficiency
standard used in the Flemish region in 1997. Since 1992, the Flemish region has
adopted a series of actions related to energy efficiency including thermal efficiency
standards, energy agreements and consultancy services.
The regions have a variety of
subsidy and information programmes. Denmark
Energy 21, the most recent action plan for energy, was published in 1996. The main
purpose is to contribute to sustainable development. A high priority of Energy 21 is to
promote more efficient use of energy. The objective of Energy 21 is to achieve a 20
per cent improvement in energy intensity between 1994 and 2005. There is also a
longer-term objective to improve energy intensity by 55 between 1994 and 2030. There is a heavy reliance on carbon taxes in combination with a full range of policy
measures. Denmark is a pioneer in the use of energy labelling for buildings and
recently revised the programme to improve effectiveness.
It gives a high priority to
encouraging cogeneration and in 1996 it established the Electricity Saving Trust to
support electricity conservation initiatives. Finland
The most recent energy policy was sent to Parliament in June 1997. It calls for further
improvement of energy efficiency. The goal is to bring the growth of total energy
consumption to a halt in the next 10 to 15 years which means more specifically to
increase energy efficiency by 10-20 by 2010. A Government Decision on the
Implementation of Energy Conservation from December 1995 states that energy
conservation has been a key of Finnish energy policy for the past two decades and will
continue to be in the future. Finland is giving high priority to voluntary agreements
with industry and municipalities. Finland also relies on the use of carbon taxes to help
18
encourage energy efficiency and has an extensive information programme and major
technology development programmes. France
Energy efficiency has been a major element of French energy policy since the 1970s
and France has traditionally had one of the most comprehensive approaches in the
European Union. In recent years, there have been government cutbacks which have
affected the overall thrust of the programme.
However, there are indications that there
will be a significant budget increase starting in 1999. Since 1993, ADEME, the
executive agency for energy efficiency, and the national utility, EDF, have had joint
demand-side management programmes. ADEME also has one of the most effective
regional networks in the EU and has had an effective consumer information
programme for all end-use sectors. Germany
Energy efficiency policies are largely designed to support the climate change and
related environmental strategies as well as meet EU obligations. Germany has
traditionally had a strong energy efficiency effort, both at the federal and state levels. The policies include regulations and voluntary agreements, combined with a strong
emphasis on relying on the market mechanism. Germany was one of the first EU
countries to require consumption-based billing of costs of central heating and hot
water. There is also an important energy advisory service undertaken by the consumer
association AgV which provides service in 330 cities. The government has voluntary
agreements with 19 industry associations.
Many Lander promote demand-side
management. Greece
In recent years, Greece has improved its energy efficiency programme, linking it
closely to environmental objectives. Energy efficiency is being promoted through the
Global Action Plan and the energy conservation sub-programme of the National
Environmental and Energy Programme. The Global Action Plan, entitled Energy
2001, is the national action plan for energy conservation in the built environment. There are a number of subsidy programmes and energy audits which are undertaken
by CRES. There are also voluntary agreements with energy -intensive industries.
Support is being provided to encourage the development of energy service companies
ESCOs. Ireland
Energy efficiency is one of the three pillars of Irish energy policy. It is an important
element in the governments climate change strategy and strategy towards sustainable
development. Ireland has developed an energy rating system for buildings and created
the National Irish Centre for Energy Rating to deliver the programme. There are two
major audit programmes for industry and a programme to
fund measures
recommended by the audit. The Irish utility, ESB, has an important demand-side
management programme. 19
Italy
The 1988 National Energy Programme PEN gives high priority to energy efficiency. Most of the policy instruments being used result from Law No. 1091, entitled
Regulations for the implementation of the National Energy Plan with regard to the
rational use of energy, energy savings and the development of renewable energy
sources. It is a framework law to introduce regulations aimed at improving energy
efficiency in all end-use sectors.
Many of the regulations are still not completely in
place. One, however, requires energy managers in companies and organisations
consuming more than 10,000 toe industry or 1,000 toe other. A number of subsidy
programmes ended in 1995 due to lack of funding. Luxembourg
Parliament adopted the general Energy Efficiency Law of August 5, 1993. The law
gives authority to several energy efficiency measures to be implemented, including
new thermal efficiency standards that came into effect in 1996. A Grand Ducal decree
requires the promotion of energy efficiency in municipalities. There are various
subsidies for industry as well as mandatory energy audits
in industrial enterprises
consuming more than 3 GWh per year. The Netherlands
Energy policy gives high priority to both energy efficiency improvements and
developing a sustainable energy economy. The Third White Paper on Energy Policy,
published in 1996, set a target of an energy efficiency improvement equivalent to one-
third of energy consumption within the next 25 years 33 improvement between
1995-2020, equivalent to 1.7 per year. Energy efficiency policies focus on three
end-use groups manufacturing industry, homes and buildings, and traffic and
transport. The Netherlands has been one of the pioneers in the use of voluntary
agreements in all sectors and provides a variety of subsidies to support the
agreements. There are also several environmental taxes to encourage energy
efficiency. The 1995 Action Plan for Sustainable Construction calls for revisions in
the thermal efficiency standards in 1998 and 2000. The government has actively
supported cogeneration. The utilities implement the Environmental Action Plan
MAP which covers a range of subsidies and information programmes related to
energy efficiency. Portugal
The Energy Programme, created in 1994 and partly funded by the EU, is primarily
designed to provide financial incentives for energy efficiency. The objectives are to
increase the use of indigenous energy sources and to improve energy efficiency. The
Energy Programme for Buildings came into effect in 1995. Enterprises consuming
more than 1,000 toe per year are required to establish energy management systems
and their energy use patterns must be examined every five years. The five-year plans
must be approved by the government. The Strategic Programme for the Expansion
and Modernisation of Portuguese Industry provides incentives and voluntary actions
to help industry both modernise and meet environmental goals. SIURE, the Regional
Incentive System for the Rational Use of Energy, encourages investments in energy
efficiency through audits, investment support, demonstration and information. 20
Spain
The most recent energy policy is laid out in the National Energy Plan 1991-2000
PEN, approved by Parliament in April 1992. The PEN gives high priority to energy
efficiency. The goal of the energy efficiency plan is to reduce projected final energy
demand by 7.6 per cent in the year 2000 compared to 1991 by decreasing 7 in
industry, 9.6 in transport and 5 in the residential sector. There are a variety of
subsidy programmes. IDAE, the Institute for Energy Diversification and Savings,
provides third-party financing for hospitals and industry. The government launched a
DSM programme in 1995.
IDAE negotiated the first voluntary agreements with
industry in 1996. Sweden
Sweden has traditionally had an ambitious energy efficiency strategy. The 1997 Bill
on Sustainable Energy Supply gives a strong emphasis to energy efficiency using
technology procurement. The goals for Swedens 1997 energy policy are to secure the. long-term and short-term supplies of electricity and other energy in internationally
competitive terms. Until the 1997 Bill on Sustainable Energy Supply, the most recent
official Swedish energy policy dated from 1991. Sweden also relies on a variety of
environmental taxes, including a tax on carbon dioxide emissions. Sweden provides
support for municipal energy management and requires municipalities to prepare
energy plans. United Kingdom
The energy policy in the United Kingdom is based on ensuring secure, diverse and
sustainable supplies of energy in the forms that people and businesses want, and at
competitive prices. It is the governments view that this can be achieved through
competitive energy markets working within a stable legal framework. Energy
efficiency has been a major element of energy policy since the 1970s. The Energy
Saving Trust was established to encourage investments in energy efficiency. The
1995 Home Energy Conservation Act requires all local housing authorities to identify
measures that will improve energy efficiency in public and private housing. The
United Kingdom is one of the leaders in developing a Best Practice Programme,
which provides technical information for professionals in all sectors.