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COMMISSION RECOMMENDATION

of 29 March 1988

on third party financing

(88/285/EEC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Economic Community and in particular Article 155,

Whereas the Commission submitted a communication of 29 March 1988 entitled 'Accelerating energy efficiency investments through third party financing';

Whereas the Energy Council of 2 June 1987 which examined the Commission communication 'Towards a continuing policy for energy efficiency in the European Communities' welcomed the general approach of the Commission to the achievement of the Council's 1995 energy efficiency objective;

Whereas the conclusions of the Energy Council of 26 November 1986 called for the promotion of new financial instruments for investments in energy efficiency which would reduce recourse to public funds;

Whereas the Council resolutions of 9 June 1980 (1) and 15 January 1985 (2) called for increased efforts in the Community to save energy and to reduce oil consumption and oil imports, and recommended guidelines to Member States for a basic energy-saving programme;

Whereas Council recommendation 82/604/EEC (3) encouraged investments in the rational use of energy;

Whereas the considerable improvement recorded in the efficient use of energy in the European Communities during the period 1973 to 1985 has not been maintained during the period 1985 to 1987;

Whereas the significant reduction in the price of energy has led to a reluctance by investors to make discrete investments in the efficient use of energy;

Whereas there still exists a major unexploited potential for economically viable investments in this field;

Whereas the achievement of the Council's 1995 energy efficiency objective will require a substantial acceleration in such investments;

Whereas third party financing could be a promising mechanism for the Community to mobilize the significant amounts of private capital required to carry out discrete energy efficiency investments;

Whereas the financial engineering methods developed by the Commission form a particularly useful means to mobilize private capital towards priority Community objectives;

Whereas the European Investment Bank already dedicates an important part of its resources towards the development of rational use of energy and it is appropriate to encourage it in pursuing this action,

HAS ADOPTED THIS RECOMMENDATION:

Article 1

Member States should take the following steps to promote the use of third party financing for energy efficiency investments:

(a) the removal of legislative or administrative obstacles to the use of third party financing for energy efficiency investments, in particular those restricting the ability of local authorities to use third party financing services;

(b) the active promotion of the use of this technique within the public sector;

(c) the establishment of national model third party financing contracts along the lines of those prepared by the Commission;

(d) the encouragement of public or private sector enterprises, particularly those involved in energy supply, to play an expanded role by providing third party financing services;

(e) measures to encourage and promote the provison of third party financing services by gas and electricity utilities, particularly for the tertiary and multiple residential sectors, and for small and medium-sized companies;

(f) the provision of grants to multiple dwellings and smaller commercial or industrial enterprises to defray the costs of audits carried out by recognized energy service and third party financing companies;

(g) measures to accelerate the creation of third party financing enterprises in the energy efficiency field by means of financial incentives such as access to deferred interest loans, direct State equity participation or financial guarantees;

(h) the establishment of comprehensive information programmes designed to promote the use of third party financing for energy efficiency investments in all sectors of the economy;

(i) cooperation with the Commission and other Member States in regular reviews of progress and of the possible need for additional measures in this field.

Article 2

Member States should cooperate with the Commission in carrying out reviews, every two years for the next eight years, of the measures taken on the basis of this recommendation.

Article 3

This recommendation is addressed to the Member States.

Done at Brussels, 29 March 1988.

For the Commission

Nicolas MOSAR

Member of the Commission

(1) OJ No C 149, 18. 6. 1980, p. 3.

(2) OJ No C 20, 22. 1. 1985, p. 1.

(3) OJ No L 247, 23. 8. 1982, p. 9.