EUROPEAN COMMISSION Brussels, 18.11.2015 SWD(2015) 243 final COMMISSION STAFF WORKING DOCUMENT Monitoring progress towards the Energy Union objectives - Concept and first analysis of key indicators Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK State of the Energy Union {COM(2015) 572}

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Monitoring progress towards the Energy Union objectives –

Concept and first analysis of key indicators 1. Introduction 2. Methodology 2.1. Overall approach 2.2. Definition and rationale for the selected indicators 2.2.1. Macroeconomic relevance of the energy sector 2.2.2. Energy security, solidarity and trust 2.2.3. A fully integrated internal energy market 2.2.4. Energy efficiency and moderation of demand 2.2.5. Decarbonisation 2.2.6. Research, innovation and competitiveness 2.2.6.1. Research and innovation 2.2.6.2. Competitiveness: EU and major trading partners' energy prices and costs developments 2.2.7. Cohesion Policy investments supporting the Energy Union 2.3. Summary 2.3.1. The selected scoreboard indicators 2.3.2. Areas for additional work in preparing and selecting key indicators 3. Descriptive analysis 3.1. Macroeconomic relevance of the energy sector

3.1.1. Value Added and Employment 3.1.2. Consumer Prices 3.1.3. Energy and transport related taxes 3.2. Energy security, solidarity and trust 3.2.1. Import dependency 3.2.2. Supplier concentration index 3.2.3. Contribution of renewables to energy security 3.2.4. Net trade balance of energy products 3.2.5. Security of gas supply 3.2.6. Security of electricity supply 3.3. A fully integrated internal energy market 3.3.1. Electricity interconnection capacity 3.3.2. Concentration on wholesale markets 3.3.3. EU energy market coupling and convergence in wholesale prices 3.3.3.1. Prices developments on EU electricity markets 3.3.3.2. Price developments on EU gas markets 3.3.4. Retail market functioning 3.3.5. Electricity tariff deficits 3.3.6. Vulnerable consumers 3.4. Energy efficiency and moderation of demand

3.4.1. Evolution of primary and final energy consumption 3.4.2. Primary energy intensity of the economy 3.4.3. Energy intensity of industry 3.4.4. Energy intensity in the residential sector 3.4.5. Energy efficiency in transport 3.5. Decarbonisation 3.5.1. Monitoring greenhouse gas emission reductions in the non-Emission Trading Systems sectors 3.5.2. Monitoring other greenhouse gas emission reductions developments 3.5.2.1. Greenhouse gas intensity of the economy 3.5.2.2. Greenhouse gas emissions per capita 3.5.2.3. Sectoral share of greenhouse gas emissions 3.5.2.4. Share of emissions within the Emissions Trading System in total greenhouse gas emissions 3.5.3. Renewable energy developments 3.5.3.1. Overall renewables developments 3.5.3.2. Renewable energy in electricity 3.5.3.3. Renewable energy in heating and cooling 3.5.3.4. Renewable energy in transport 3.5.3.5. Renewable energy deployment at local level 3.6. Research, innovation and competitiveness 3.6.1. Research and innovation

3.6.1.1. Investments in R&D (a) Public support to R&D (b) Corporate R&D in low-carbon technologies 3.6.1.2. Innovation trends in low-carbon and sustainable energy sectors 3.6.2. Energy prices and costs in a global perspective 3.6.2.1. EU and major trading partners energy price developments (a) Wholesale electricity prices (b) Wholesale gas prices (c) Retail prices paid by industrial users 3.6.2.2. EU and major trading partners energy cost developments 3.7. Cohesion Policy investments supporting the Energy Union 4. Annex: 4.1. Scoreboard of selected indicators 4.2. Definition and sources for selected indicators 4.2.1. Macroeconomic relevance of energy sector 4.2.2. Energy Security, solidarity and trust 4.2.3. A fully-integrated internal energy market 4.2.4. Energy Efficiency and moderation of energy demand 4.2.5. Decarbonisation 4.2.6. Research, innovation and competitiveness

4.2.7 Cohesion Policy investments supporting the Energy Union Figure 1: Value added of the energy sector - percentage of gross value added (total economy) in 2012 Figure 2: Turnover of all renewable energy sectors (% GDP 2013) Figure 3: Employment in the energy sector – percentage of total employment in 2012 Figure 4: Employment of all renewable energy sectors in the EU Figure 5: Employment of all renewable energy sources sectors - 2013 (per 1000 inhabitants) Figure 6: Consumer Price inflation (%) across the EU in 2014 Figure 7: Harmonised Indices of Consumer Prices (HICP) in EU28 and its energy components' evolution (%) Figure 8: Energy and transport related taxes in the EU, % of GDP, 2012 Figure 9: Import dependency (% of net fossil fuel imports in gross inland consumption and bunkers, based on tonnes of oil equivalent) for EU Member States Figure 10: Share of purchases of natural uranium by EU utilities by origin, 2013 (%) Figure 11: Aggregate (gas, oil, and coal) country specific concentration index Figure 12: Relative reduction of gross inland consumption of fossil fuels Figure 13: Net trade balance of energy products - % of GDP Figure 14: Member States' position as regards the N-1 criteria (2015) Figure 15: Electricity interconnection capacity (% of total generation capacity) - 2014 Figure 16: Market concentration in power generation capacity in EU Member States Figure 17: Market concentration in Member States' wholesale gas markets Figure 18: Difference between the highest and the lowest regional wholesale electricity price Figure 19: Comparison of average wholesale baseload electricity prices, first quarter of 2015

Figure 20: Wholesale day-ahead gas prices on gas hubs in the EU Figure 21: Comparison of EU wholesale gas price estimations Figure 22: Comparison of EU wholesale gas prices in the second quarter of 2015 Figure 23: Annual switching rates for households on retail electricity markets - 2013 and average 2008-2013 Figure 24: Annual switching rates for households on gas retail markets - 2013 and average 2008-2013 Figure 25: Concentration on retail electricity markets Figure 26: Concentration on retail gas markets Figure 27: Electricity smart meter Penetration rate achieved in households (%) – 2013 Figure 28: percentage of population at risk of energy poverty Figure 29: Share of energy products in households' expenditure, as used for the calculation of HICP Figure 30: Evolution of EU28 Primary and Final energy consumption Figure 31: Primary and final energy consumption per Member State in 2013 (2005 = 100) Figure 32: Average annual growth of GDP and average primary energy consumption developments in % in the period 2005-2013 Figure 33: 2005-2013 Average improvement rate of primary energy intensity in % Figure 34: Energy intensity for industry Figure 35: Final energy consumption per m2 (koe/m2) Figure 36: 2005-2013 Average annual change of final energy consumption in transport in % Figure 37: Final energy consumption in the transport sector of EU28 Figure 38: average CO2 emissions from new passengers cars Figure 39: Gap between greenhouse gas emissions in the non-ETS sector and targets

Figure 40: Greenhouse gas intensity of the economy, 2013 Figure 41: Greenhouse gas emissions per capita, 2013 Figure 42: Share of greenhouse gas emissions by economic sector, 2012 Figure 43: Share of emissions within the ETS in total GHG emissions Figure 44: Share of energy from renewable energy sources in gross final energy consumption Figure 45: Member States’ growth in total gross final energy consumption (total; RES) and RES Shares between 2005 and 2013 Figure 46: Share of energy from renewable energy sources in electricity generation Figure 47: EU renewable electricity generation in 1990-2013 Figure 48: Share of energy from renewable energy sources in heating and cooling Figure 49: Share of energy from renewable energy sources in transport Figure 50: Residential PV capacity Figure 51: Share of energy and environment in total public civil R&D spending Figure 52: Public R&D intensity support to energy (R&D budget/ GDP, 2011-2013) Figure 53: Split of public support to R&D in various energy fields (2005 – 2012) Figure 54: Split in public R&D support in various energy fields - international comparison, 2011 Figure 55: Absolute investment from the corporate sector in R&D per technology and country for 2011. Figure 56: Absolute figures and relative contribution of national, EU and corporate funding to R&D for the nine technologies examined in the year 2011. Figure 57: Number of low-carbon technology patent applications, per million inhabitants, 2011, Figure 58: Geographic distribution of the top 10 most prominent industry and academic players and the frequency that they appear in 100 energy priorities Figure 59: Evolution of levelised costs of electricity generation broken down by key cost components for selected representative technologies for the past, present and future

Figure 60: Global trends in renewable energy investments, by region Figure 61: Global trends in renewable energy investments, by sector Figure 62: Wholesale electricity prices in the US, Japan, in comparison to the European composite average (PEP) Figure 63: International comparison of wholesale gas prices Figure 64: Electricity end-user prices paid by industrial customers (without VAT and rec. taxes, second half of 2014) Figure 65: Gas end-user prices paid by industrial customers (without VAT and rec. taxes, second half of 2014) Figure 66: Real unit energy costs (% of value added) in the manufacturing sector (excl. refining) Figure 67: Contribution to annual growth rate 2000-2009 – Manufacturing excl. refining) Figure 68: Share of the national ERDF and CF allocations to energy-related Energy Union areas out of the total Cohesion Policy allocations for the 2014-2020 period Figure 69: Share of the national ERDF and CF allocations to transport-related Energy Union areas out of the total Cohesion Policy allocations for the 2014-2020 period



1.Introduction The Energy Union aims to ensure that European consumers – households and businesses – have secure, affordable, competitive and sustainable energy. It is made up of five closely related and mutually reinforcing dimensions, progress against which should also be measured through key indicators. This Staff Working Document presents a concept, methodological approach and first analysis for setting up such key indicators for the Energy Union. It includes a proposal as regards concrete indicators to monitor and assess progress towards meeting the Energy Union objectives. This Staff Working Document will be the basis for further exchanges, which will be taken forward over the next months. The selection of indicators can therefore further evolve in the future to take account of new or better indicators being made available or suggested to address the issues at hand. In its Communication on the 2030 Climate and Energy Framework, the European Commission proposed to develop a set of key indicators in order to measure progress towards a more competitive and secure energy system in a 2030 perspective and get a facts base for policy action over time. A meaningful specification of these indicators is crucial for their policy relevance and future development of potential accompanying measures. Discussions with Member States in the Energy Council showed that the list of indicators made in the 2030 Climate and Energy Framework would benefit from selected amendments and from being extended by further key objectives in the context of the Energy Union. The March European Council provided a first orientation by Member States regarding a possible prioritisation among the indicators. According to the Council conclusions, affordable energy prices and industrial competitiveness, security of supply and the development of interconnections are key parameters for ensuring a coherent European energy and climate policy until 2030. The Annual State of the Energy Union is an opportunity to monitor and assess progress as regards Energy Union targets and objectives. In fact, systematic monitoring with key indicators is needed to assess progress over time and to provide a factual base for potential policy response.

The indicators should form the basis (i) for assessing the specific impacts of the 2030 climate and energy policy targets and (ii) for a more holistic assessment of progress towards a competitive and secure energy system, as enshrined in the Energy Union Strategy objectives. This need was confirmed by the European Council conclusions, stating that the governance system should step up the role and rights of consumers, transparency and predictability for investors, inter alia by systematic monitoring of key indicators.



2.Methodology 2.1.Overall approach The selected key indicators aim to transparently inform on past developments, including potential discrepancies with Energy Union objectives, while allowing for the anticipation of future trends and potential impacts of policy options. This way, inconsistencies between market and policy developments and overall objectives can be detected at an early stage, allowing for swift implementation of response measures at EU and Member State level. As part of the kick-start of the implementation phase of the Energy Union Strategy, country factsheets have been prepared, relying on a series of indicators available at Member State level for each dimension of the Energy Union. Building on this initial work, this Staff Working Document complements the Member State specific analysis by providing a cross-country assessment approach. For each Energy Union dimension, a factual snapshot of the situation across the EU and its Member States is provided. Given the wide array of issues to be considered, the analysis combines a specific focus on some key indicators, summarised in a scoreboard, together with complementary indicators or analysis along the five dimensions of the Energy Union, as well as considerations on the macroeconomic relevance of the energy sector and on the use of EU funds towards Energy Union objectives. The proposed indicators allow assessing progress vis-à-vis: 1.Energy security: monitoring the relative dependency of EU Member States to specific energy sources and/or trading partners as well as the overall reliability of the energy system (i.e. its overall ability to supply energy without interruption). 2.Internal energy market: monitoring progress of developing the EU internal energy market in terms of competition, cross-border trade and consumer empowerment. 3.Energy efficiency: monitoring progress in terms of energy savings and energy intensity improvements at macroeconomic and sectoral level, including for transport. 4.Decarbonisation: monitoring progress towards greenhouse gas emission reductions, renewable energy and greenhouse gas intensity developments. 5.Research, innovation and competitiveness: monitoring research, development and innovation activity; monitoring EU energy prices and costs differentials with main trading partners. No scoreboard can on its own provide a comprehensive assessment of progress made towards Energy Union targets and objectives. Some issues, such as market integration or interconnections, are pan-European by nature and must rely on data and information at regional or even EU level. In addition, some policy goals do not easily translate into quantitative objectives and, as such, require additional qualitative assessment. Finally, there are areas with some data constraints where additional indicators will need to be developed over time. Therefore, this Staff Working Document highlights, where relevant, areas where: i/ regional or EU-wide indicators and analysis is needed; ii/ qualitative assessment is essential in addition to quantitative indicators; and iii/ additional indicators would need to be developed and/or more systematically collected across EU Member States. 2.2.Definition and rationale for the selected indicators The objective is to present in a synthetic manner latest data and recent changes for most relevant issues in each one of the five dimensions of the Energy Union. For each dimension, a limited number of indicators are selected for inclusion in the overall scoreboard. In addition, complementary indicators are also presented to provide a more comprehensive assessment for each Energy Union dimension. Beyond the Energy Union dimensions as presented in the Energy Union Strategy, information is also collected on the macroeconomic relevance of the energy sector, and on the use of EU funds for Energy Union objectives. 2.2.1.Macroeconomic relevance of the energy sector The Energy Union is calling for a significant transformation of the energy sector over the next decades that will impact the European economy as a whole and for which proper monitoring at macro-economic level is required.

On its own, the energy sector is a sizeable industrial sector and source of wealth and employment. Significant investments are expected in the context of the decarbonisation of the energy sector not only to replace the ageing EU energy infrastructure by low carbon technologies and smart and efficient appliances, but also to develop new energy services that will transform the energy market. These investments are expected to create economic value and jobs, while re-structuring the current energy sector. To monitor these effects, the Value Added and Employment of the energy sector indicators are used, as they measure the wealth creation triggered by capital expenditure in the energy market both in monetary and labour terms. The Value Added of the energy sector calculates the value added generated by the supply of electricity, gas, steam and air conditioning over the total value added of the economy. Value added refers to the value of goods and services produced, less the value of consumption of intermediate inputs. The Employment in the energy sector indicator covers all persons engaged in the supply of electricity, gas, steam and air conditioning. Employed persons are either employees or self-employed. In addition, energy prices are a significant cost element for businesses, and energy bills represent an important item of the household budget. In this context, the Consumer Prices Index is used to give an indication of the relative contribution of energy to price increases. The Harmonised Indices of Consumer Prices (HICPs) indicator measures the change over a year of the prices of consumer goods and services acquired by households. In this exercise, it measures the relative contribution of energy to inflation for the countries and country groups for which it is produced. This set of indicators provides only a high level overview of the place of the energy sector in the economy. It is based on traditional sectoral classification which does not include equipment manufacturing and does not always capture the emergence of new sectors in energy equipment and energy services. It will need to be complemented in the future by more detailed indicators that monitor the macro-economic variables at the level of the main components of the energy value chain and that are able to capture the heterogeneity of the impact of the energy transition across the EU economy and continent. In particular, there is a need to better assess the impacts of renewable and energy efficiency policies on net employment and the distributional effects of the energy transition across sectors and countries. For the time being, additional information is presented in the next chapter on the (direct and indirect) employment and turnover in the renewables energy sector. A specific focus is also put on the energy and transport related taxes. The ratio between energy and transport taxation and GDP is often used to provide indication on whether and to which extent tax instruments are used to incentivise economic operators to decrease energy consumption and reduce emissions. 2.2.2.Energy security, solidarity and trust Much progress has been made in the last few years to enhance Europe's energy security. Despite these achievements, Europe remains vulnerable to energy supply shocks. Energy security is therefore a permanent priority and at the centre of the Energy Union strategy. In particular, the 2030 Climate and Energy Framework referred to the need to monitor the diversification of energy imports and the share of indigenous energy sources used in energy consumption over the period up to 2030. S1: Net import dependency: this indicator measures the level of net imports divided by gross inland consumption and bunkers (i.e. what is consumed and stored in a country or region over a year). This indicator on its own cannot capture all determinants of the vulnerability of Member States and the EU to energy supply shocks. In particular, it does not provide information on the degree of diversification of import sources, as well as on the relative significance of various import and fuel sources in the energy mix. Therefore, a country specific supplier concentration index (SCI) is used in this Staff Working Document to complement the analysis on energy security across the EU and its Member States. A country-specific supplier concentration index by fuel is computed as the sum of squares of the quotient of net positive imports from a partner to an importing country (numerator) and the gross inland consumption of that fuel in the importing country (denominator). Smaller values of SCI indicate larger diversification and hence can be seen as a proxy for lower risk to energy supply shocks. All else equal, SCIs will be lower in countries where net imports form a smaller part of energy consumption. They will also be lower in a country using a well-balanced source of imports. Hence, even if SCIs are often correlated with the commonly used metric of net import dependency, they also provide additional insight on the level of diversification in import sources and the relative importance of a given fossil fuel in the country's energy mix. For each country, the following index is presented: S2: Aggregate country-specific Supplier Concentration Index looking at total fossil fuel imports to a country from outside of the European Economic Area (EEA), thus disregarding flows within the EEA area in the volume of imports of a Member State. Imports of uranium and nuclear fuels are not included in the energy imports statistics used to compute the above-mentioned indicators. Hence, complementary information is provided in the next chapter on import routes for uranium and nuclear fuels. Similarly, aggregated information is provided on trade patterns of petroleum products. In addition to indicators measuring the relative imports of a country as compared to gross inland energy consumption, it is useful to add an assessment of the impacts of energy import bills in a macroeconomic perspective. An indicator is therefore used which measures net import energy bills divided by the GDP of a given country. As such, the lower the indicator (in absolute terms), the less vulnerable the economy of a country is to energy price shocks. The Energy Union Strategy also calls for specific attention to security of gas and electricity supply. Regarding gas, an important element to consider is how robust and resilient the gas system is in the event of a disruption of the largest infrastructure (e.g. pipeline, storage, production facility). S3: N-1 rule for gas infrastructure: The so-called N-1 is an indicator of infrastructure adequacy as it tests the resilience of the system ensuring that gas demand on extremely cold days can be covered even if the largest infrastructure fails . Regarding electricity, attention should be paid to the overall resilience of the electricity system. This means looking into the following aspects: Adequacy, i.e. the ability of the electricity system to supply the aggregate electricity demand; Security, i.e. the ability of the electricity system to withstand external perturbations (due to natural/accidental and malicious events)

Quality, i.e. the ability of the electricity system to ensure continuity of supply, both in the technical sense (by ensuring voltage quality) and in the commercial sense (which relates to the speed and accuracy with which commercial requests are being dealt with). At this stage, there are no commonly agreed standards or indicator which would allow for a monitoring of the overall resilience of the electricity systems throughout Europe on a comparable basis. This issue is therefore not further investigated in this Staff Working Document. Regarding the specific issue of generation adequacy however, the European Network of transmission system operators for electricity (ENTSO-E) is mandated under EU legislation to publish a yearly pan-European seasonal and a long term adequacy assessment. These are known as the Summer/Winter Outlook Reports, and the Scenario Outlook and Adequacy Forecast (SO&AF) respectively. Although there is a need to further improve the existing methodology used by ENTSO-E, with in particular in mind the design of a common set or menu of indicators to measure generation adequacy, it is still possible at this stage to report on some of these considerations. Finally, security of supply considerations also relate to emergency oil stocks, as the main instrument to be used in case of a supply disruption. A statistical summary of Member States' oil stocks is presented in the Staff Working Document: "Overview of emergency oil stock in the European Union". 2.2.3.A fully integrated internal energy market The 2030 Climate and Energy Framework mentioned the need to monitor: Deployment of smart grids and interconnections between Member States, with particular urgency between those that are further away from meeting the already agreed objective for Member States to ensure a level of electricity interconnections equivalent to or beyond 10% of their installed production capacity. This includes the electricity interconnection target of 15% between Member States for 2030. Intra-EU coupling of energy markets, building on the liberalisation of gas and electricity markets achieved already by EU legislation. Competition and market concentration on wholesale and retail energy markets both at the national and (for regions with functioning coupling) at the regional level. Regarding interconnections, the selected indicator measures the electricity interconnection capacity, as % of installed capacity. No specific indicator is used in this Staff Working Document as regards gas interconnections, but the N-1 rule for gas infrastructure presented above offers a good proxy. In addition, the state of implementation of Projects of Common Interest (for gas as well as for electricity) remains highly relevant and important to monitor. Regarding deployment of smart grids, no readily available indicator could be identified and this will therefore require additional work. S4: Electricity interconnection capacity: this indicator divides the electricity interconnection capacity of a given Member State by its total generation capacity. This indicator could be complemented with additional or more refined analysis, for instance taking account of peak capacity rather than overall capacity, or also better capturing the impact of intermittent renewable energy on the need for interconnections. Competition and market concentration on wholesale energy markets can be monitored at Member State level. The following indicators are considered: S5: Market concentration index for power generation: this indicator is based on the Herfindahl Hirschman Index (HHI) and is defined as the sum of the squared market shares of the three largest electricity generation companies measured in percentages of total installed capacity, with 10,000 corresponding to a monopoly. S6: Market concentration index for wholesale gas supply: this indicator is based on the Herfindahl Hirschman Index (HHI) and is defined as the sum of the squared market shares of the wholesale gas supply companies measured in percentages of total wholesale gas supply, with 10,000 corresponding to a monopoly. The above two indicators provide indications as regards the degree of competition on wholesale energy markets. The lower the values, the higher the degree of potential competition is. Implementing the internal energy market objectives of the Energy Union also means considering additional elements than market concentration at Member State level. It is for instance important to monitor wholesale gas and electricity price developments across Member States. S7: Wholesale electricity prices: this indicator presents electricity prices as available on wholesale markets, based on data and methodology developed in the European Commission's Quarterly Reports on European electricity markets. S8: Wholesale gas prices: this indicator presents an average of annual gas prices for a country, based on data and methodology developed in the European Commission's Quarterly Reports on European gas markets. However, there are some limitations with the use of such prices as part of the monitoring exercise. As regards gas, available price data are not fully comparable across Member States, as for some, hub prices can be used while for most of the others, estimates of average import prices are used. Moreover, beyond individual price developments, it is also essential to monitor potential convergence across European prices. This is why an additional analysis is provided on the intra-EU coupling of energy markets. Hence, evidence is presented in the next chapter on energy price convergence and on energy flows across borders. Still, there is a need to reflect on the potential need for additional indicators and/or analysis on regional integration.

Regarding retail energy markets, the two indicators below are good proxies to assess the degree of empowerment of consumers on retail energy markets, and whether they have the option of switching retailers and/or exercise this option in order to benefit from better conditions. S9: Annual switching rates on electricity retail markets: this indicator measures the percentage of final electricity consumers changing suppliers in a given year. S10: Annual switching rates on gas retail markets: this indicator measures the percentage of final gas consumers changing suppliers in a given year. The next chapter's analysis also includes more specific considerations on competition at retail level. In addition, some information is also collected and presented as regards smart metering. Smart metering can positively affect consumers' engagement with the market and ultimate energy consumption. More specifically, two indicators are used measuring the percentage of final electricity and gas household consumers equipped with a smart meter. A broader set of indicators could also be considered to monitor energy retail market functioning , in areas such as customer satisfaction, market condition or distribution system operator services. Many national regulators are indeed analysing these various areas but no source could be identified covering in a consistent manner such indicators and analysis across all EU Member States. Developing the Energy Union also means better protecting vulnerable consumers against energy poverty risk. Estimating energy poverty depends on the definition given. As there is no single agreed definition at EU level, it is difficult to identify the most appropriate indicator. Still, a variety of factors contribute to energy poverty, which includes high energy bills, low income and poor energy efficiency of the building envelope . A composite indicator is used to cover these various factors. It is based on the only indicators currently available across the EU: S11: Energy poverty index: this indicator calculates the average of the percentage of households in a given year: i/ facing arrears on utility bills; ii/ who are unable to keep their home adequately warm; iii/ and/or living in dwellings with leakages and damp walls.It is based on the information collected by Eurostat in the EU Statistics on Income and Living Conditions. The share of population with arrears in accounts provides some insights into energy affordability. The ability to keep the home adequately warm can inform on the need to constrain spending on heating. Dwellings with leakages and damp walls provide some indication of building quality. The higher the value of the indicator, the most significant energy poverty issues are expected to be in a given Member State. In addition to the energy poverty index, information is presented in the next chapter on the estimated share of energy products in total households' expenditures, as used by central banks to calculate inflation. This is useful additional information as regards potential vulnerabilities to e.g. energy price shocks. 2.2.4.Energy efficiency and moderation of demand The first element to monitor concerns primary energy consumption at Member State level. S12: Primary energy consumption (2005 = 100): this indicator monitors the evolution of primary energy consumption in EU Member States, using 2005 as the base year. In addition, information is also provided on final energy consumption developments. Measuring progress in terms of energy efficiency also requires monitoring energy intensity developments. It allows assessing energy consumption in view of other macroeconomic considerations, such as GDP, value added changes or population growth. Energy efficiency must also be considered at sectoral level, and therefore indicators monitoring energy intensity developments in the residential and industrial sectors are taken into account. The following indicators are selected: S13: Primary energy intensity of the economy: this indicator divides primary energy consumption by GDP at constant 2010 prices in a given year. It measures the energy intensity of the economy and can capture changes over time in terms of decoupling energy consumption from economic growth. The lower the value, the more energy efficient the overall economy is. This indicator does not make corrections for differences in climate conditions. S14: Final energy intensity in industry: this indicator divides final energy consumption in the industry (including construction) sector by total gross value added for industry, buildings and construction sectors (at constant 2010 prices). It measures the energy intensity of the industrial sector and therefore can reflect both potential specialisation in energy intensity sectors and effort in decoupling industrial growth from energy consumption. All else equal, the lower the value, the most energy efficient the industrial sector is. However, this indicator could also be refined by also measuring final energy consumption per amount of physical output, so as to e.g. capture potential changes in the industrial value chain which are not easily observable by comparing energy consumption to value added. S15: Final energy consumption per square meter in residential sector, climate corrected: this indicator measures energy consumption in buildings, and can inform on the relative efficiency of the buildings stock and of energy equipment. When the value of the indicator decreases, it can be considered that the buildings sector becomes more energy efficient. In addition to the above-mentioned indicators, it might also be relevant to monitor the uptake of energy efficient equipment. However, indicators on e.g. market diffusion of efficient heating or efficient appliances remain scarce and could not be compiled in the context of this Staff Working Document. Regarding transport-related issues, which are covered under the same heading than energy efficiency in the Energy Union Strategy, specific energy intensity for passenger and freight transport would be necessary to provide an in-depth analysis of the evolution of energy efficiency in transport. These two indicators correspond, respectively, to the energy used (expressed in ton of oil equivalent) per passengers- kilometres and tonnes- kilometres travelled within a Member State. Therefore the lower the value, the more energy efficient the transport sector is. Currently, Member States do not provide Eurostat with the split of final energy by passenger and freight transport and the traffic activity expressed in passenger-kilometres and tonne-kilometres cannot be aggregated. In addition, it is problematic to calculate intensities due to the fact that final energy consumption in transport is based on fuel sold rather than on fuel used within a Member State. Also, the methodology followed for reporting the traffic activity for passenger and freight transport does not always follow the territoriality principle, which renders the calculation of the intensity indicators even more difficult. Furthermore, in addition to pure energy efficiency considerations, information is also collected as regards decarbonisation in the transport sector. The following indicator is proposed. S16: Average CO2 emissions from new passengers cars: this indicator measures the average CO2 emissions from new passengers cars sold in a country in a given year, in order to observe progress towards an energy-efficient, decarbonised transport sector. As such, it provides indications as regards developments of a low-carbon fleet of passenger cars. The lower the value, the less carbon intensive new sold cars are, leading to a general improvement of the fuel economy. It could also be complemented with an additional indicator on the average CO2 emissions from new light commercial vehicles (vans). A long-term target of 95 g CO2/km to apply to the average new fleet from 2021 and of 147 g CO2/km applicable from 2020 has been set for passenger cars and for light commercial vehicles respectively. More indicators on e-mobility and deployment of hybrid cars, as well as on the availability of alternative fuels and related infrastructure should be included in this analysis. However, at the current state, the data available is very fragmented across community-based websites and data observatories, some important data is missing or there are concerns regarding its reliability.

2.2.5.Decarbonisation The decarbonisation dimension of the Energy Union is very much driven by efforts towards meeting the EU and Member States greenhouse gas emissions reduction and renewable energy objectives. In particular, the EU Emission Trading System (ETS) constitutes the key instrument for limiting greenhouse gas (GHG) emissions in the power sector, energy intensive industries and aviation in the EU. While the EU ETS provides an EU-wide cap, the Effort Sharing Decision (ESD) sets national binding targets to be met through mitigation action in the non-ETS sectors (transport, buildings, small businesses and services, agriculture and waste). The following indicators are used to monitor progress in the sectors not covered by the EU-ETS: S17: Gap between greenhouse gas emissions projections and target in 2020 in the non-Emission Trading System sectors. This indicator monitors progress of each Member State towards its EU-2020 GHG emission target. The projections for the year 2020 in the non-ETS sectors are estimated by the Member States taking into account existing measures. The EU-2020 target is set by the Effort Sharing Decision (ESD), which provides national binding targets from 2013 to 2020 for each Member State. The gap is expressed as a percentage of base year emissions (2005). S18: Gap between latest proxy inventory of non-Emission Trading System greenhouse gas emissions and targets. This indicator measures the gap between the latest approximated inventory emissions available and its respective non-ETS target expressed as a percentage of base year emissions (2005). S19: Share of renewable energy in percentage of gross final energy consumption: this indicator monitors progress towards renewable energy developments. The overall renewable energy (RES) share indicator is complemented with information regarding RES share developments at sectoral level, namely in electricity, transport and heating and cooling sectors. Analysis is also provided on RES initiatives and developments at local level. Additional indicators on regional integration of renewable energy could be developed in the future. Beyond the information provided on GHG emissions in the non-ETS sector and on RES developments, data is also collected on other variables related to decarbonisation. In particular: S20: Greenhouse gas intensity of the economy: this indicator represents Member States' emissions relative to Gross Domestic Product. A lower value indicates that a particular economy is less carbon intensive. Additional information is also provided regarding GHG emissions per capita, share of GHG emissions for the different sectors, and share of emissions covered by the EU ETS with respect to the total GHG emissions in each Member State. Further analysis is also provided on key sectorial aspects of the decarbonisation agenda, such as transport-related emissions under the section on energy efficiency and transport. 2.2.6.Research, innovation and competitiveness 2.2.6.1.Research and innovation The 2030 Climate and Energy Framework refers to the need to monitor technological innovation (R&D expenditure, EU patents, competitive situation on technologies compared to third countries). In addition, the Energy Union Strategy recalls the objective of the EU to become the world's number one in renewable energy. The transition to a low-carbon economy requires the development and implementation of new technologies. Such technologies will emerge via an innovation process, starting with R&D spending followed by innovation and deployment. Unfortunately, lack of available data does not yet allow properly monitoring all dimensions of the innovation process In the coming years, more accurate data and analysis will be channelled through the monitoring mechanisms embedded in the Integrated Strategic Energy Technology (SET) Plan, where it is proposed to monitor annually on the level of investment in research and innovation (both private and public sector), trends in patents, and the number of researchers active in the energy sector. Participation of Member States in joint actions will also be monitored, including through contractual Public Private Partnerships (cPPPs) or Joint Technology Initiatives. For now, some indicators are provided, based on available data, mostly focusing on public R&D spending and patent applications. They are complemented with additional analysis as accessible and relevant, but some important gaps remain. In particular, it would be interesting to closely monitor energy investment and deployment across the world, to assess in detail the competitive position of the EU in this area. Various indicators could be considered, including e.g. the share of world's renewable energy patents held by EU companies, the EU share in operational and service business (e.g. assembling, maintenance, repairs) in RES installations worldwide, renewable energy finance flows or the comparative advantage of EU RES technologies worldwide. S21: Share of energy and environment in total public civil R&D spending: this indicator divides public R&D spending in the field of energy and environment by the total public R&D spending in civil research (therefore excluding military public R&D spending). Whilst R&D spending does not always translate in the use of new technologies, it can be assumed that the latter will benefit from such spending. Yet, the choice of this indicator has some drawbacks. First, it does not cover corporate (or private) R&D spending, which is an essential component of overall R&D efforts in a given country. This is because no readily available data could be identified at Member State level on private R&D efforts in the field of energy. Some evidence is provided in the next chapter as regards private R&D in the field of low-carbon technologies, but information is still quite scarce. Second, this indicator does not indicate the overall effort of a given country towards energy and environment. To close this gap, some information is therefore presented in the next section about the public R&D intensity of Member States in the energy field. Comparison is also provided with R&D intensity in the energy field for main EU trading partners. Third, complementary indicators are presented to identify specialisation in R&D efforts within the energy field (e.g. between energy efficiency, nuclear or renewable energy) in the EU and EU trading partners. S22: Low-carbon technology patents application per million inhabitants: this indicator divides the number of patent applications in the field of low carbon technologies by the number of inhabitants in a given country. It provides information regarding the level of low-carbon technology innovation in a given country, adjusting absolute levels by taking account of the size (number of inhabitants) of the country. Regarding deployment of innovative technologies, information on investments in renewable energy generation is presented in the next chapter, putting recent developments in the EU in perspective with developments in the rest of the world. Estimates on the evolution of costs for fossil fuel and renewable energy technologies are also presented.

2.2.6.2.Competitiveness: EU and major trading partners' energy prices and costs developments On the issue of competitiveness, the 2030 Climate and Energy Framework recalled the need to monitor energy price differentials between the EU and major trading partners, building on the report on energy prices and costs. Due to statistical issues, identifying relevant indicators that can be compared across (including non-EU) countries is difficult. In addition, broad variations exist within the industrial sector, with energy prices and costs having significantly different impacts depending on the sub-sector considered, even within a single Member State. Analysis of competitiveness should be complemented with additional and more detailed considerations. Indicators on wholesale price differentials between EU Member States and main trading partners are considered in a first step. Wholesale prices are considered for two reasons: first, comparability is much easier as differences with trading partners often happen due to different statistical treatments of transmission and distribution costs; second, wholesale prices are usually considered a relatively good proxy of the price actually paid by large industrial users, that is, typically consumers most affected by international competition. Wholesale price indicators are complemented with information on final energy prices paid by a range of industrial users, combining data from Eurostat for EU Member States and from the International Energy Agency (IEA) for trading partners and for the EU Member States who are also members of the IEA. When monitoring the impacts of energy prices on competitiveness, it is also important to consider a more holistic approach, which takes account of overall energy costs. Therefore, the following indicator is being proposed. S23: Real unit energy costs: This indicator measures the amount of money spent on energy sources needed to obtain one unit of value added for the manufacturing sector, excluding the refinery sector. As such, it provides a more comprehensive approach regarding competitiveness issues related to energy costs, as it combines the impact of energy prices and of energy intensity level, when comparing to value added. The higher the value of this indicator, the higher the energy cost component is in the overall cost structure of the manufacturing sector of a given Member State. There are some drawbacks with the choice of this indicator. The most significant one is that data is outdated, since information is only available up to 2011. Therefore, the Commission is working on updating this indicator in view of future monitoring of real unit energy costs across the EU and main trading partners. 2.2.7.Cohesion Policy investments supporting the Energy Union EU Cohesion Policy makes a key contribution for delivering the Energy Union objectives on the ground, including significant financial allocations from the European Regional Development Fund (ERDF) and the Cohesion Fund (CF), totalling EUR 68.9 billion over 2014-2020 for investments related to all five dimensions of the Energy Union. With the strategic policy framework and the important financial allocations which will be complemented by national public and private co-financing, and also with the technical assistance and capacity building provided, the conditions are there to use the full potential of the funding for investing in the Energy Union in Europe's regions and cities. To make this a reality, the development and implementation of high quality projects is crucial. Therefore, it is important to monitor progress in Cohesion Policy investments supporting the Energy Union. This can be done by dividing the amount of ERDF and CF allocations allocated to specific projects by the end of each year, or a certain cut-off date, by the total amount of planned allocations 2014-2020 for ERDF and CF investments supporting the Energy Union in a given country, i.e. the project selection rate. It provides information regarding progress in Cohesion Policy investments supporting the Energy Union in a given country, controlling for the size of the allocation. This information will be provided from autumn 2016 onwards and will be included as part of the scoreboard indicators. 2.3.Summary 2.3.1.The selected scoreboard indicators An overview of the selected main indicators included in the scoreboard is presented in Annex to this Staff Working Document, including latest available data per Member State regarding each selected indicator. Energy security, solidarity and trust S1: Net import dependency S2: Aggregate country-specific Supplier Concentration Index S3: N-1 rule for gas infrastructure A fully integrated internal energy market S4: Electricity interconnection capacity S5: Market concentration index for power generation S6: Market concentration index for wholesale gas supply S7: Wholesale electricity prices S8: Wholesale gas prices S9: Annual switching rates on electricity retail markets S10: Annual switching rates on gas retail markets S11: Energy poverty index Energy efficiency and moderation of demand S12: Primary energy consumption S13: Primary intensity of the economy S14: Final energy intensity in industry S15: Final energy consumption per m2 in residential sector, climate corrected S16: Average CO2 emissions from new passengers cars Decarbonisation S17: Gap between non-Emissions Trading System greenhouse gas emissions projections and target in 2020 S18: Gap between latest proxy inventory of greenhouse gas emissions in the non-Emissions Trading System sector and targets S19: Share of renewable energy in percentage of gross final energy consumption S20: Greenhouse gas intensity of the economy Research, innovation and competitiveness S21: Share of energy and environment in total public civil R&D spending S22: Low-carbon technology patents application per million inhabitants S23: Real unit energy costs 2.3.2.Areas for additional work in preparing and selecting key indicators The following table summarises the coverage limitations identified so far. It can help identify areas where additional indicators could be developed, and/or when a regional focus would seem appropriate to complement the Member State specific analysis. Dimension Main area of relevance Identified needs Macroeconomic relevance of energy sector Contribution to economic growth Need for additional focus on distributional effects across sectors and countries Contribution to employment Need to better assess impacts of renewable and energy efficiency policies on net employment Energy security, solidarity and trust Security of electricity supply Need for harmonised indicators across EU MS A fully integrated internal energy market Electricity interconnections Additional information could be added in the future on implementation of PCI projects and on the uptake of smart grids considering for instance the extent of smart metering deployment as a first quantification of developments in smart grids related infrastructure Gas interconnections Energy market coupling Need for deeper analysis based on additional indicators as regards intra-EU market coupling and energy trade flows Retail market functioning Need for additional and more comprehensive indicators across EU Member States. Vulnerable consumers Additional indicators/analysis could be developed for a pan-EU assessment of energy poverty Energy efficiency and moderation of demand Energy intensity - transport Need to develop robust indicators on energy and carbon intensity developments in the transport sector Energy intensity – residential Need to work on the comparability of available indicators across Member States Transport Additional data and information is needed to better assess energy intensity and decarbonisation trends in the transport sector. Decarbonisation Greenhouse gas emissions Additional sectoral and cross-country related indicators could complement and improve a comparability analysis Renewable energy Indicators on the cross-border integration of renewable energy could be further developed Indicators on local deployment of renewables and self-consumption could be further developed Indicators on the sustainability of biomass for energy use (incl. impacts inside and outside the EU) to be further used Research, innovation and competitiveness Public R&D Need to collect more up to date information on public R&D investments from all Member States Private R&D Limited consistent data regarding corporate investments in R&D for low-carbon technologies. Need to expand coverage so that it is comparable to that available for public sector R&D Researchers Need to work on data collection on the number of researchers active in the energy sector Innovation deployment Lack of indicators, including regional or EU-wide ones, on the deployment of innovation in low-carbon sectors and competitive position of such sectors on global markets Competitiveness Need to update data on real unit energy costs





3.Descriptive analysis This chapter presents a cross-country descriptive analysis of the current situation and recent trends for the five dimensions of the Energy Union, complemented by information and analysis on the macroeconomic relevance of the energy sector and on the use of EU funds to meet Energy Union objectives. It builds on the selected indicators included in the scoreboard, complemented with other relevant information when possible and necessary. 3.1.Macroeconomic relevance of the energy sector 3.1.1.Value Added and Employment In 2012, the energy sector accounted for 2.01% of the total value added of the economy in EU27 (Figure 1). These shares vary significantly across countries, with relative shares generally higher in Eastern Member States. Over the period 2005-2012, these shares grew the most in Ireland, Spain, Cyprus, Latvia, Romania and United Kingdom, while they decreased in Denmark, Greece, France, Lithuania, Luxembourg, Austria and Slovakia. Source: Eurostat – National Accounts The EU is in the lead when it comes to turnover of renewable energy companies. In 2013, the RES sector has generated a 138 billion€ turnover, with a 6% increase compared to the previous year. Source: EurObserv'ER In terms of employment, the energy sector represented 0.56% of the total employment in EU-27 in 2012. It has remained broadly stable at EU level over the period 2005-2012, although the share increased in Belgium, Denmark, Spain, Cyprus, Slovenia, Sweden and the United Kingdom. The share in employment decreased the most in Bulgaria, Czech Republic, Lithuania, Luxembourg, Poland, Romania and Slovakia. Source: Eurostat – National Accounts European renewable energy employs over a million people, i.e. more than 2 renewable jobs per 1000 capita, which is twice the world average. Despite the financial and economic crisis, employment has grown in the renewable energy sector, with almost half a million additional jobs in EU-27 between 2008 and 2013. Source: EurObserv'ER

A growing trend can also be observed worldwide, with a 17% increase in renewable employment in 2013. In Europe, new momentum for job creation might emerge from exports towards rapidly expanding markets like Asia, South America and Africa. Source: EurObserv'ER, REN21 Renewable energy technologies are, in general, more labour-intensive than conventional energy technologies. Therefore, increased implementation of renewable energy technologies is likely to lead to increased employment in the future, at least in the sectors directly connected to the manufacture and operation of such technologies. However, expansion of renewable energy technologies is also expected to lead to new types of jobs and skill requirements, especially in the power sector . The transition thus needs to be met with training and education, notably in positions related to research and engineering . 3.1.2.Consumer Prices Consumer price inflation has decreased on average by five times since 2011 at EU level. Energy products have contributed significantly to this trend, notably in 2014 through the sharp drop in oil prices. Source: Eurostat – National Accounts Since 2011, energy inflation has experienced a significant reduction. Overall at EU level, this decrease has led to a price reduction in 2014 for transport and other liquid fuels and to a lesser extent for gas. For electricity, prices have overall continued to increase although at a slower pace. These trends vary strongly across Member States as it depends on their economic outlook, the electricity and overall energy mix, the share of the transport and petrochemical industries in the economy. For instance in 2014, electricity prices have decreased in 16 Member States (Belgium, Bulgaria, Czech Republic, Estonia, Croatia, Cyprus, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Poland, Romania, Slovenia, Slovakia, Sweden), while gas increased in 10 Member States (Ireland, Spain, Croatia, Malta, Poland, Portugal, Romania, Slovenia, Sweden and United Kingdom). Source: Eurostat – National Accounts 3.1.3.Energy and transport related taxes Environmentally related taxes, including taxes on energy and transport, serve both a fiscal and an environmental objective. By targeting different sources of pollution, taxation provides incentives to reduce emissions and enhance efficiency. Despite some challenges in terms of political economy, experience has proven that environmental taxes can be effective and efficient instruments for achieving environmental policy objectives. Environmentally related taxes are also among the taxes considered to be least detrimental to growth, and could thus be a source of revenue that can be used to improve public finances or to facilitate a tax shift away from labour taxation. Taxation of energy, both in the form of taxes on carbon and energy products, currently generate the most revenue of these taxes. Transport related taxes excluding fuels include registration taxes (levied on the purchase of a car) and circulation taxes (levied most often annually on car ownership). Both these forms of vehicle taxation can be used by Member States to encourage fuel efficiency and emissions reduction by making the tax rate dependent on the carbon dioxide emissions of the vehicle. Source: DG TAXUD, Taxation Trends in the EU annex A

In 2012, energy and transport related taxation amounted on average to 2.3% of GDP in the EU28. This revenue ratio to GDP has fallen slightly since 2005, when it amounted to 2.4% for the EU28. This decrease can be attributed to revenue from transport fuel taxation. Energy taxes on motor fuels, including carbon taxes where relevant, account for the greatest share of these revenues, i.e. 61% corresponding to 1.4% of GDP on average in 2012. In several Member States, notably Slovenia, Luxembourg, Bulgaria and Estonia, fuel taxation actually account for more than 2% of GDP. The tax revenues from heat and electricity taxes amount on average to 0.4% of GDP. Denmark, Sweden, Finland and the Netherlands tax electricity and heating as part of their climate and energy policies, which results in revenue shares at or above 0.7% of GDP. Finally, Member States differ greatly in their use of vehicle taxation as a revenue and policy instrument. The tax burden on vehicles in Denmark, Malta and the Netherlands amount to more than 1% of GDP, while it is 0.1% or below in Lithuania, Estonia, the Czech Republic and Luxembourg. This data indicate that there is scope for several Member States to make better use of tax instruments in their energy and climate policies, in particular to achieve better energy and carbon efficiency. 3.2.Energy security, solidarity and trust 3.2.1.Import dependency The EU imports about 53% of its fossil fuel needs from the rest of the world. This value slightly increased over the 2005-2013 period, notably due to the depletion of EU fossil fuel reserves. Figure 9 illustrates the net import dependency levels in 2005 and 2013 across EU Member States (% of net fossil fuel imports in gross inland consumption and bunkers, based on tonnes of oil equivalent). Source - Eurostat Import dependency greatly varies across EU Member States, some countries being almost exclusively dependent on imports while others can rely on national resources. Over the 2005-2013 period, import dependency increased most in Denmark, Lithuania, Poland and United Kingdom. In the case of Denmark and the United Kingdom, it is notably due to depleting national fossil fuel resources. Conversely, import dependency significantly decreased in Estonia, the Netherlands and Romania. Moreover, the EU imports 40% of its uranium and other nuclear fuels. In 2013, it imported more than 17 000 tU. Out of it, 45% came from Russia and Kazakhstan. Source: Euratom Supply Agency Regarding trade patterns for petroleum products, although the EU has enough and even excess gasoline production capacity, it is at the same time unable to meet the demand for gas/diesel oil. Therefore, the majority of the refined products import in 2013 was gas/diesel oil: 44 million tonnes from extra-EU countries, a figure which almost tripled from 2000 (16 million tonnes). The total amount of gasoline exported extra-EU in 2013 was 44 million tonnes which is more than double compared to 2000 when the export amounted to 19 million tonnes. In 2013 most exports, more than 13 million tonnes, went to the United States. 3.2.2.Supplier concentration index Only focusing on import dependency own does not provide enough information on the degree of diversification in import sources, as well as on the relative significance of various import sources in the energy mix. Therefore, the analysis of the previous section is complemented with information on energy import supplier concentration. In the in-depth study accompanying the European Energy Security Strategy, a country-specific supplier concentration index (SCI) by fuel was computed as the sum of squares of the quotient of net positive imports from an extra European Economic Area (EEA) country to an importing Member State (numerator) and the gross inland consumption of that fuel in the importing Member State (denominator). Smaller values of SCI indicate larger diversification and hence lower risk. An aggregated indicator, combining information on SCI for oil, gas and coal, is used in this Staff Working Document. The value of this indicator is influenced by two factors: the share of non-EEA country sources in a Member State's energy mix, as well as the degree of diversification of the Member State's energy mix. As such, it combines information regarding import dependency, the number of countries from which such imports come and the relative balance in a Member State's energy mix between various energy sources. A Member State importing most of its fossil fuel sources, but from a wide range of countries, such as Spain, shows relatively low levels of supplier concentration. In addition, all else equal, a Member State in which fossil fuels represent a limited share of the overall energy mix, such as France, also shows relatively lower values for this indicator than a Member State solely relying on energy imports.

Source: European Commission services calculations, based on Eurostat At EU level, the indicator is low, showing a good degree of diversification of import sources and a balanced energy mix when considering the EU as a whole. However, the indicator has slightly increased over the 2005-2013 period, a sign of small additional concentration in import sources. Concentration in fossil fuel import sources is particularly high in Bulgaria, Estonia, Finland, Lithuania, the Netherlands and Slovakia. Regarding changes over the 2005-2013 period, it can be noted that concentration increased in most countries over the period, a potential sign of increased vulnerability to single supplier or fuel source. The aggregate concentration index however hides more encouraging signs when focusing on specific fuels, such as gas, as this specific supplier concentration index has decreased over the period for a majority of Member States. 3.2.3.Contribution of renewables to energy security The European Energy Security Strategy (EESS) has already underlined the significant cost-effective potential for a fuel-switch to indigenous renewable electricity and heating sources to further reduce the use of natural gas in a number of sectors by the end of this decade. For this purpose, renewable heating and cooling is highly prioritised and can displace significant amounts of imported fuels. At present, almost 17% of the heating and cooling demand in the European Union is covered by renewable energy sources. Currently, renewables in Europe are already playing a key role for energy security. The increased consumption of renewable energy compared to the 2005-level has enabled the EU to cut its demand for fossil fuels by 98MToe, the equivalent of the energy consumption of Poland. In 2012, the EU's gross inland consumption of fossil fuels would have been 7% higher without the introduction of large amounts of RES. Coal was the fuel most substituted by renewables across Europe (consumption would have been 13% higher without the introduction of a large amount of RES), followed by gas (7% higher without RES). At country level in 2012, 12 Member States saw reductions of their gross inland consumption of fossil fuels of 7 % or more, in response to RES increases since 2005 (Austria, Belgium, Denmark, Estonia, Germany, Finland, Italy, Latvia, Portugal, Slovenia, Spain and Sweden). Source : EEA, Renewable energy in Europe - approximated recent growth and knock-on effects, 2015 3.2.4.Net trade balance of energy products Source: Eurostat The above indicator shows the influence of energy import bills from a macroeconomic perspective. It is one of the indicators that can provide additional information as regards the potential vulnerability of Member States to energy price shocks, including via negative implications on external macroeconomic imbalances. Since 2005, the situation has deteriorated for many Member States, in particular for Bulgaria, Croatia, Italy, or Latvia. However, the decrease in international fossil fuel prices in the second half of 2014 have reduced energy trade deficits of most Member States, in particular when compared to 2013 data. 3.2.5.Security of gas supply Regulation 994/2010 aims to safeguard the gas supply to the customers in the event of a supply disruption (e.g. interruption of external gas supplies, failure of infrastructure) or exceptionally high gas demand. The Regulation defines an EU-wide infrastructure standard that all Member States should fulfil, the so called "N-1". The N-1 standard aims at ensuring a certain redundancy in the system so that in the event of a disruption of the single largest gas infrastructure, the capacity of the remaining infrastructure is able to satisfy the total gas demand during a day of exceptionally high gas demand occurring with a statistical probability of once in 20 years. It is also possible to fulfil the N-1 rule on a regional level if relevant Member States establish a joint Risk Assessment and a joint Preventive Action and Emergency Plan and define "the single largest gas infrastructure of common interest" for the region.

The number of Member States who comply with the N-1 rule has been increasing over the years and currently stands at 20. (1) FI: Fulfils the N-1 using demand-side measures (2) IE: Fulfils the N-1 at regional level (UK-IE) (3) SE, SI, LU: Exempted from the N-1 rule Source: Member States' Risk Assessments and Preventive Action Plans 3.2.6.Security of electricity supply In addition to fossil fuel trade patterns, security of energy supply considerations also need to pay attention to the quality of electricity supply and of potential generation adequacy issues. Such issues are usually addressed by energy regulators or transmission system operators (TSOs). The ENTSO-E Winter Review 2014/15 highlighted that during the winter 2014/2015 temperatures across the whole of Europe were near average. As a result, demand was around seasonal average in most countries. In Greece, Croatia and Serbia, snow, ice and strong wind caused some difficulties and damages to the transmission network. However, no critical situation related to system adequacy occurred in Europe last winter. The ENTSO-E Winter Review 2015/16 will be published on 1 December 2015. The Scenario Outlook and Adequacy Forecast (SO&AF) report aims at providing stakeholders in the European electricity market with a Pan-European overview of generation adequacy with a five to ten year time frame. In the latest report, the regional analysis shows that from a Pan-European system point of view, the level of imports necessary to maintain adequacy is feasible and within the level of forecast cross-border interconnectivity for the period 2016–2025. 3.3.A fully integrated internal energy market 3.3.1.Electricity interconnection capacity Source: European Commission based on ENTSO-E scenario outlook and adequacy forecast 2014 Being aware of the benefits of energy interconnections, Member States have increased their interconnection capacities during the last decades. For instance, the launch of the Estlink2 interconnection has increased remarkably Baltic States' connectivity with the Nordic power market. However, currently eight Member States remain below the 10% electricity interconnection target and by increasing interconnections would further benefit from the internal electricity market. In this context, the EU has gradually been equipping itself with the right policy tools to enable necessary investments in grid infrastructure, investments in interconnection being paramount among those. As underlined by the European Council, the interconnection target should mainly be reached through implementation of the Projects of Common Interest. 3.3.2.Concentration on wholesale markets

Source: Commission services calculations, based on Platts data Source: ACER At EU level, market concentration remains significant both on electricity and gas markets. However, at least for electricity, Concentration levels have decreased in wholesale electricity markets over the last 10 years, on average by 19%, a sign of greater competition. Concentration levels also vary across Member States. Most concentrated markets for electricity can be found in Cyprus, Estonia, Croatia, Latvia and Malta, while for gas, it is in Estonia, Spain, Lithuania, Latvia and Slovakia. Most significant decreases in concentration levels were observed in Greece, Italy, Ireland, Belgium, Spain or Romania. 3.3.3.EU energy market coupling and convergence in wholesale prices 3.3.3.1.Prices developments on EU electricity markets As can be seen in Figure 18 , wholesale electricity prices showed signs of convergence during the last few years, as the difference between the cheapest and most expensive wholesale electricity market prices decreased in the EU. However, differences between the price levels still remain and temporary price divergences may occur in the future, as a consequence of sudden shifts in local power demand and supply, owing to changes in electricity mixes in different markets or availability of infrastructure and interconnection capacities. Source: European power exchanges, own computations More specifically, when observing latest trends, Figure 19 shows there were significant price differences in the wholesale electricity prices across the EU in the first quarter of 2015, ranging from 28-29€/MWh in Denmark and Sweden to 58 €/MWh in Greece. Local market prices may significantly differ from each other even in a coupled region, as the Central Western Europe (CWE) region gave a good example for this in the first semester of 2015. Due to record high wind power generation in Germany local prices were lower than in France, Belgium and the Netherlands, where local particularities of the fuel mixes (the availability of nuclear generation and gas-fired plants) significantly impacted wholesale prices. In the Nordic region and in Spain and Portugal the availability of hydro reserves can impact the wholesale electricity price level and can result in price volatility across different seasons of the year. Besides domestic generation mixes, the existence of sufficient level of interconnection capacities also exert significant influence on the local price level. Source: European wholesale power exchanges As the market integration moves forward, expectations rise towards full price convergence. However, it must be noted that the existence of fully converged prices over time is not a precondition to a well-functioning internal electricity market in the EU as regional differences stemming from the aforementioned reasons will probably result in temporary divergences in the future, even if the market integration is complete and all necessary interconnection infrastructure is built. A better measure for a good functioning internal market is the disappearance of the non-economic power flows (when electricity flows from the higher-priced area to the lower-priced one), as these non-economic power flows result in welfare losses in cross-border electricity trade. Market coupling is the main tool for achieving the elimination of non-economic power flows through implementing implicit cross border electricity trade auctions. By mid-2015 most of the EU electricity markets are coupled to one or several of their neighbours; the most significant coupling area is the North West European coupled area, stretching from the Iberian-peninsula to the Nordic and Baltic markets, including seventeen EU markets plus Norway that cover about three quarters of the total EU electricity trade volume. Between 2009 and 2014 four markets in Central and Eastern Europe (Czech Republic, Slovakia, Hungary and Romania) have been gradually coupled, and as of February 2015 Italy has been coupled with Austria, France and Slovenia.

3.3.3.2.Price developments on EU gas markets Source: Platts Regarding gas, the situation is more contrasted. Figure 20 presents the evolution of European hub day-ahead natural gas prices in the period from January 2009 until July 2015, showing the convergence in the day-ahead price on major European gas hubs. Nevertheless, in spite of the convergence, some differences remain, often caused by infrastructure bottlenecks, e.g. between Northern and Southern France. However, not all gas consumed in Europe is traded on day-ahead markets. In particular, taking account of gas imported via pipelines, the signs of price convergence are less obvious. The price of gas imports under long term contracts, especially from Russia, is often linked to the price of oil products (usually with a 6-9 month time lag). The level and dynamics of such "oil-indexed" prices can be quite different to that of hub prices. A comparison of a selection of estimated border prices of gas deliveries from the main exporters to the EU – Norway, Russia and Algeria – shows significant variations in price levels and, to a smaller extent, in price dynamics. After the increasing price divergence in 2014, prices converged again in the first half of 2015 as oil-indexed prices started to decline. With the continuing weakness of oil prices, oil-indexed prices are set to decrease further, projecting a continuation of price convergence in the coming months. Source: Eurostat COMEXT and European Commission estimations, BAFA, Platts Source: European Commission estimations 3.3.4.Retail market functioning Retail market functioning is described below by looking first at switching rates, before briefly mentioning the use of end-user regulated prices, and then describing competition levels on retail markets. Finally, some information is provided on the deployment of smart meters.

Source: ACER Source: ACER An available proxy indicator to assess retail market functioning is the annual switching rates on retail gas and electricity markets. At the EU level, the switching rate for households is above 5% for both electricity and the gas markets. In addition, switching rates in 2013 were above the 2008-2013 average, a sign of additional competition and consumer empowerment on retail markets. Large discrepancies are still observed between Member States. In many cases, switching rates are equal to 0%, meaning that consumers do not have the right to switch retailers or do not exercise it. In addition to information on switching rates, it can be added that at the end of 2013, household end-user price regulation existed in 15 countries for electricity and in 15 countries for gas. Monitoring retail market functioning also requires considering competition levels, and in particular the cumulative market shares of main electricity and gas retailers. The graphs below show the cumulative market shares and the number of main retailers on each market. Source: Eurostat Source: Eurostat Regarding electricity markets, in Cyprus, Estonia, Greece, Bulgaria, Slovakia and Malta, there are only one or two main actors on the market, which cumulate a very high market share between them. Conversely, there are at least 6 main companies active on retail electricity markets in Austria, Hungary, Lithuania, Poland, Slovakia and United Kingdom. Regarding gas markets, there are at most 2 major companies active on the market in Bulgaria, Estonia, Finland, Finland, Lithuania, Latvia, Poland and Slovakia. Conversely, there are at least 6 major companies active in the Czech Republic, Spain, Hungary, Ireland, Romania and the United Kingdom. To facilitate the integration of distributed generation, the deployment of smart metering solutions is crucial. Some information based on available data is presented below regarding the penetration rate of smart electricity and gas meters in households. Information is only available for 15 Member States as regards electricity and 4 Member States as regards gas. On this basis, it can be seen that some countries, such as Sweden, Finland or Italy, have already achieved a full roll-out of electricity smart meters. This corresponds to close to 45 million smart meters already installed in these three Member States. Other Member States, such as Denmark, Estonia or Malta are close to or above a 50% roll-out. Conversely, deployment rates are much lower, and well below 10%, in other Member States. Information is even patchier as regards penetration rates for gas smart meters. Denmark, the United Kingdom, Italy and the Netherlands have begun a roll-out for a small share of consumers, but only in the Netherlands does it seem that deployment of gas smart meters has made some significant progress.

Source: ACER/CEER market monitoring report 2014 A final dimension for which additional information will be needed in the future concerns self-consumption of renewable energy. It will be important to monitor the pace of deployment of small scale renewable energy projects so as to better understand and anticipate their implications on the electricity market functioning. 3.3.5.Electricity tariff deficits An electricity tariff deficit can be defined as a shortfall of revenues in the electricity system. It emerges when tariffs covering the regulated components of the retail electricity price are set below the corresponding costs of the energy companies. In general, it has been driven by both macroeconomic and energy market related factors. Over the recent years, electricity tariff deficit has emerged in some Member States. In 2007, only four countries displayed a tariff deficit, while in 2013 there were 12 countries. Tariff deficits differ in scope and size among the respective Member States. In some (e.g. Germany and Italy), the tariff deficits were temporary and caused by a mismatch between forecasted and actual costs for the renewable electricity production. In both cases, subsidies to renewables have increased substantially during 2010-2012 and were not matched by a sufficient increase in tariffs. Similarly, in other Member States where the economic crisis was particularly severe (Spain and Portugal), cumulative deficits turned into tariff debts, which reached 2 to 3% of GDP in 2013, while the tariff debts of France and Greece (0.2-0.4% of GDP) were much lower. In Bulgaria, Malta and Hungary tariff deficits emerged as a result of low regulated end-user prices (especially for households), while in Romania, Latvia and Belgium the grid tariffs were not sufficient to cover the corresponding costs. In some cases the tariff deficit has been recognized by the authorities (e.g. Spain, Portugal, Greece, France, Italy, Germany, Belgium). When it is not recognised, it risks leading to accumulated losses for the electricity companies, usually electricity suppliers or distributors. Where the tariff deficit has been acknowledged, reforms have normally been undertaken to address it, but the policy context differs across countries. Most of the reforms have aimed at reducing and controlling the cost of support schemes to renewable energy and co-generation. For example, Spain, Portugal, Greece, Italy and Germany tried, among other things, to reduce the level of remuneration (i.e. feed-in tariffs) and the period of support, as well as to allocate various revenue sources (tariff increases, various levies etc.) to finance the deficits. In addition, Spain and Portugal have also securitised the accumulated tariff debt. As a result, Germany and Italy had managed to address their deficit by early 2014. Spain and Greece are considered to have control of their tariff debts and are avoiding new deficits. Based on current projections, they are expected to achieve balanced systems from a revenue-cost perspective in 2015. France and Portugal have defined policy roadmaps with the aim to eliminate the tariff debt and achieve tariff sufficiency. 3.3.6.Vulnerable consumers Developing the Energy Union also means better protecting vulnerable consumers against energy poverty risk. There is no EU-wide agreed definition and/or measure to assess energy poverty issues and the vulnerability of consumers to energy price shocks. Still, a variety of factors contribute to energy poverty, which includes high energy bills, low income and poor energy efficiency of the building envelope. A composite indicator is used to cover these various factors. It is based on the currently only available indicators across the EU, which relate to the percentage of households in a given year: i/ facing arrears on utility bills; ii/ who are unable to keep their home adequately warm; and/or iii/ living in dwellings with leakages and damp walls.The indicator is calculated on the basis of the information collected by Eurostat in the EU Statistics on Income and Living Conditions. The share of population with arrears in accounts provides some insights into energy affordability. The ability to keep the home adequately warm can inform on the need to constrain spending on heating. Dwellings with leakages and damp walls provide some indication of building quality. The higher the value of the indicator, the most significant energy poverty issues are expected to be in a given Member State. On average, based on the proxy indicators considered for this analysis, 12% of EU households can be considered at risk of energy poverty. Energy poverty issues seem particularly relevant in Bulgaria, Greece, Cyprus, Latvia, Lithuania, Hungary and Portugal. Comparing trends since 2005, it must be noted that the situation deteriorated in Austria, Denmark, Malta, Greece, Slovenia, Ireland and Italy, as well as in the United Kingdom. Source: European Commission calculations, based on Eurostat There is no readily available indicator on the share of energy products in households' expenditure. However, the weights used to calculate the Harmonised Index of Consumer Prices (HICP) can be used as proxy. The information used to calculate the weight of each product group is collected mainly by means of household budget surveys and cross-checked and updated with information from other sources (e.g. VAT revenue statistics and national accounts). The product group weights are representative for the average household consumption expenditure at national level. As such, for each country they capture national consumption habits, which may depend on climate, product taxes, lifestyles, cultural traditions and other factors (e.g. product availability). It is important to note that the HICP takes into account the consumption expenditure of all the households in a country and not some “typical” household. This indicator does not allow either to isolate the share of energy expenditures for low-income households. Considering all energy products together (electricity, gas and other fuels, as well as fuel and lubricants for personal transport equipment), they represent more than 10% of average households' expenditure in the EU. The higher the share, the more vulnerable consumers become to energy price hikes. Furthermore, this share increased at EU level by more than 20% since 2005. The share is highest in Poland, Latvia, Slovakia, Croatia and Hungary. It has increased for most Member States since 2005, except in Denmark, Poland, Portugal, Romania, Slovakia and Sweden. Source: Eurostat 3.4.Energy efficiency and moderation of demand 3.4.1.Evolution of primary and final energy consumption

Source: Eurostat The long term evolution of primary and final energy consumption at EU level shows similar trends. Consumption peaked around 2006 before declining in the past few years, under the influence of both the economic crisis, which decreased economic growth and therefore the need for energy, and of more efficient and ambitious energy efficiency policies. Final energy consumption (FEC) of EU28 dropped from 1186 Mtoe in 2005 to 1105 Mtoe in 2013. This equals a reduction of final energy consumption by 18.6% compared to 2020 projections. The absolute final energy consumption of all Member States except Estonia, Germany, Lithuania, Malta and Poland has declined since 2005. Looking at the short term trends, final energy consumption increased from 1102 Mtoe in 2012 to 1105 Mtoe in 2013. There were increases in Austria, Belgium, Czech Republic, France, Germany, Hungary, Ireland, the Netherlands, Slovakia and the United Kingdom. Primary energy consumption (PEC) of EU28 dropped from 1709 Mtoe in 2005 to 1567 Mtoe in 2013. This equals a reduction of primary energy consumption by 15.5% compared to 2020 projections. The absolute primary energy consumption of all Member States except Estonia and Poland has declined since 2005. The average reduction was more pronounced compared to EU28 in Bulgaria, Ireland, Greece, Spain, Croatia, Italy, Cyprus, Lithuania, Luxembourg, Hungary, Malta, Portugal, Romania and the United Kingdom. Between 2012 and 2013, the latest years for which data are available, most Member States lowered their primary energy consumption to close their gap towards the 2020 target. However Belgium, Denmark, Germany, Estonia, France, Poland, Portugal and Slovakia increased their primary energy consumption in 2013 compared to 2012. Source: Eurostat 3.4.2.Primary energy intensity of the economy When describing efficiency trends it is meaningful to compare absolute trends with trends in terms of economic output, not only because energy consumption and economic growth are correlated, but also because a decoupling of these two indicators can be considered as a proxy for increasing energy efficiency. As shown in Figure 32 , many Member States significantly reduced on average their energy consumption from 2005 to 2013, while at the same time increasing their economic output. Source: Eurostat Estonia is the only Member State where average primary energy consumption increased more than the average increase of GDP from 2005 to 2013. Thus, the primary energy intensity for the whole economy of Estonia grew on average over the period between 2005 and 2013, whereas it decreased in all other Member States. Bulgaria, Czech Republic, Cyprus, Greece, Hungary, Lithuania, Luxembourg, Malta, Poland, Romania, Slovakia, Spain, Sweden and the United Kingdom reduced their intensity on average by more than 2% in this period. Source: Eurostat 3.4.3.Energy intensity of industry

Source: Eurostat Measuring energy intensity of the industry can help to see if the value added in industry has been produced with less final energy over time, which was the case for the EU28 from 2005 to 2013. In Figure 34 , it can be observed that there is a significant difference between the most energy intensive Member State, Bulgaria, and the least energy intensive ones, Denmark and Ireland. Whilst this is influenced by the share of energy-intensive industries, most Member States decreased energy intensity in industry from 2005 to 2013, the exceptions being Greece, Hungary, and Latvia. Given the significant impact that the structure of industry has on the overall energy intensity, it is worth performing a decomposition analysis, which strips out the impact of three variables on the changes in energy consumption: changes in production activity (volume produced), changes in the structure of production, and energy efficiency improvements. The outcome of the decomposition analysis performed in 2014 shows that, in absolute terms, 45 Mtoe were saved in the industry sector across the EU28 in the period 2008-2012. The main reason was a decrease of industry activity, followed by the impact of energy efficiency improvements on the energy consumption of industry, which was almost three times bigger than the impact of changes in the structure of the industry. 3.4.4.Energy intensity in the residential sector Source: Odyssee-Mure When looking at the residential sector different factors influencing energy consumption must be taken into account. For example, the climate variations over the years, changes in consumption in terms of comfort and a change in the size of dwellings. In addition, consumption might be driven by the economy, by demographics and by concrete efficiency measures, such as building renovation or the installation of efficient equipment or equipment assisting consumers in optimising their energy use. The indicator above focuses on energy consumption per square meter of the residential sector. It is corrected for climate variations across Member States. As these data are not collected by Eurostat, findings from the Odyssee-Mure project are taken into account. The data from Odyssee-Mure show that between 2005 and 2013 energy consumption per square meter decreased in all Member States except in Italy where it grew by 10% and Estonia where the value remained constant. Additional indicators or analysis can also be considered to assess energy consumption improvements in the residential sector, for instance to better capture changes in the fuels used for heating purposes. Some information is presented below when describing developments in the share of renewable energy for heating and cooling purposes. 3.4.5.Energy efficiency in transport As explained in section 2.2.4, due to data availability and other methodological issues, it is not possible to provide sound indicators for monitoring the energy intensity trends in transport. However, some high level analysis is provided below drawing on the final energy consumption in transport and transport activity, while keeping in mind the caveats mentioned in section 2.2.4. Final energy consumption in transport in the EU28 decreased from 370 Mtoe in 2005 to 349 Mtoe in 2013 (decrease of 6%). When focusing on the first three years 2005-2007, final energy consumption in transport increased by 4% during this period, but has been decreasing quite rapidly since 2007 (-9% for 2007-2013). According to the findings of the Odyssee-Mure project, about 40% of the 2007-2013 reduction is estimated to be due to the economic crisis, with the stabilisation of passenger traffic and the decrease in freight traffic. The remaining 60% mostly originates from improvements in energy efficiency of passenger cars. Energy efficiency improvements for road freight have slowed down after 2007, driven by the fall in traffic and the less efficient operation of the vehicle fleet i.e. as shown by the lower load factors. In relative terms, the highest reductions in final energy consumption in the transport sector were registered in Greece, Ireland and Spain in the period 2005-2013. Consumption increased slightly in Croatia, Finland and Germany and a considerable increase in relative terms was recorded in Lithuania, Malta, Poland, Romania, Slovakia and Slovenia. Most of the increase originated from road transport. Comparison between Member States can however be influenced by other factors as well. This is because final energy consumption is based on the fuels sold rather than on the fuels used on the territory of a country. Therefore, factors other than energy efficiency come into play e.g. the degree to which a given Member State is a ‘transit country’ for road transport or a hub for aviation. Source: Eurostat

Comparing 2012 and 2013 data, final energy consumption in transport increased in Austria, Croatia, Finland, Germany, Ireland, Latvia, Lithuania, Malta, Slovakia, and Sweden. Source: Eurostat, DG MOVE Transport in Figures Findings from the Odyssee-Mure project show that the majority of transport measures undertaken at Member State level concern the passenger modes. The energy efficiency improvements seem to be mainly related to three sets of measures, i.e. measures concerning the energy and CO2 standards for new cars, measures addressed to the renewal of the car fleet, and measures addressed to traffic management. For road freight, significant energy efficiency improvements took place between 2000 and 2007, driven by an increase in the efficiency of vehicles and by a more efficient management of freight transport (e.g. higher load factors and a shift to larger trucks), according to the findings of the Odyssee-Mure project. However, since 2008, despite continuous improvements in vehicle efficiency, empty running increased and trucks were less loaded. Focusing more specifically on CO2 emissions in road transport, EU legislation sets mandatory emission reduction targets for new cars and vans leading to significant improvements in the fuel economy of light duty vehicles sold on the European market. The average emission level of a new car sold in 2014 was 123.4 g CO2/km (provisional data), i.e. significantly below the 2015 target of 130 g CO2/km, according to provisional data from the European Environment Agency. This is a 24% decrease compared to 2005. As a result of both EU and Member State level measures, the specific fuel consumption of passenger cars EU fleet average went down from about 7.4 l/100km in 2005 to 6.8 l/100km in 2012 according to the findings of the Odyssee-Mure project. Source: European Environment Agency The countries for which average CO2 emissions from new passenger cars are highest include Bulgaria, Cyprus, Estonia, Lithuania and Latvia. Conversely, lowest emissions for new passenger cars are recorded in the Netherlands, Greece, Portugal and Denmark. The countries with the highest percentage reductions since 2005 are Denmark, Ireland, Greece, Sweden and the Netherlands. 3.5.Decarbonisation 3.5.1.Monitoring greenhouse gas emission reductions in the non-Emission Trading Systems sectors According to the projections submitted by Member States, 24 Members States are projected to meet their 2020 targets in the non-ETS sectors with existing policies and measures. However, four Member States - Ireland, Luxembourg, Belgium and Austria - will need to make additional efforts to meet their 2020 targets for the non-ETS sectors at home or to make use of the flexible mechanisms provided for in the Effort-Sharing Decision (ESD). This includes transfers of unused emission allocations from one year to another, the use of international project credits or transfers of unused emission allocations between Member States. For all Member States, 2013 emissions and estimates for 2014 are expected to be below their respective 2013 and 2014 targets under the ESD. 3.5.2.Monitoring other greenhouse gas emission reductions developments 3.5.2.1.Greenhouse gas intensity of the economy The greenhouse gas (GHG) intensity of the economy is the ratio of greenhouse gas emissions to Gross Domestic Product (GDP). In the EU, real GDP increased by 46% between 1990 and 2014 while emissions decreased by 23%. Subsequently, the GHG intensity of the EU economy decreased by almost half during this period of time. The GHG intensity of all the Member States has also been decreasing since 1990.

Bulgaria, Estonia, Poland, the Czech Republic and Romania are the five Member States with the largest greenhouse gas intensity of the economy. This reflects the large share of energy intensive industries in their economy and also for some of the Member States concerned the importance of coal in their energy mix, in particular in the power generation sector. With the exception of Luxembourg, which imports most of its electricity, the countries with the lowest greenhouse gas intensity (Luxembourg, Austria, France, Denmark and Sweden) have also a high share of low-carbon technologies (renewable and nuclear) in their electricity mix. 3.5.2.2.Greenhouse gas emissions per capita The GHG emissions per capita indicator is the ratio between emissions and population. Croatia, Portugal, Sweden, Hungary, Romania and Latvia have the lowest emissions per capita in the EU while Luxembourg, Estonia, Ireland, Czech Republic, the Netherlands, Finland and Germany have the highest. Luxembourg's high per capita emissions are explained by the high level of road transport emissions (representing more than two-thirds of total non-ETS emissions) due to low excise duties on motor fuel as well as to a large number of commuters and transit traffic. High per capita emissions in Estonia, Czech Republic, Finland and Germany reflect their industrial specialisation and the share of solid fuels in the energy mix of some of these countries. High per capita emissions in Ireland reflect the importance of the agricultural sector in the economy, but also the lack of public transport and the underutilisation of Ireland's renewable potential. 3.5.2.3. Sectoral share of greenhouse gas emissions (% share of total emissions)

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