EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 16.7.2008 
SEC(2008) 2110 
  
COMMISSION STAFF WORKING DOCUMENT 
accompanying the  
 
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
 
on the Sustainable Consumption and Produc tion and Sustainable Industrial Policy 
Action Plan 
  
IMPACT ASSESSMENT  
{COM(2008) 397 final} 
{SEC(2008) 2111} 
 
EN 2   EN This impact assessment report accompani es the Proposal for a Communication on a 
Sustainable Consumption and Production and Sust ainable Industrial Policy Action Plan. This 
Action Plan is the overarching element of a package of meas ures that will also include 
concrete legislative proposals. This impact a ssessment focuses on a proposal for an extended 
Integrated Package, which could improve the environmental performance of the European 
Union through the promotion of production and consumption of environmentally better 
performing products. 
The IA identifies several market failures that EU policy currently already addresses or where 
there could be a need for some  form of public intervention: 
• Environmental externalities resulting from prices not reflecting the negative 
environmental impacts of the production or consumption of products, 
• Information asymmetries due to high transaction costs for consumers to obtain 
relevant information on product characte ristics that influence environmental 
performance, 
• Bounded rationality meaning that even well informed consumers do not always 
act rationally in the sense of taking a long term view when  making purchasing 
decision, 
• Principal agent problems as a result of  a misalignment of incentives between 
economic actors , 
• And negative effects of thes e market failures on innovation.  
In addition there are what can be described as regulatory failures as, for example, some 
Member States' actions in the area of procur ement or fiscal incentives can fragment the 
internal market for products. 
Although there are already policies in place on greenhouse gas emissions, air and water 
quality, waste, product policy, en ergy efficiency, etc. that a ddress these market failures, 
several problems remain. The analysis shows th at some environmental externalities could be 
avoided without incurring additional costs.  More important however is evidence that 
information asymmetries are not being addressed sufficiently by existing tools and that even 
when they are, there is evidence that wit hout updating the information provided by labels 
(such as the energy efficiency label) they lose their informational value, and thus usefulness, 
over time. Moreover, there is evidence to sugge st that even if consumers have all the 
necessary information to make pur chasing decision based on what is in their best private and 
social interest, they fail to do so because of short-sighted behaviour. Principal agent problems 
persist in the area of  housing and existing policies related to energy performance of buildings 
cannot reduce them substantially in the near futu re. Due to the existence of remaining market 
failures, incentives to innovate are less than socially optimal.  
Furthermore, a multitude of diverging national cr iteria exists with respect to Green Public 
Procurement rules and fiscal incentives. This le ads to fragmentation of the internal market 
that should be avoided. Finally, the policies in place are not sufficiently aligned and linked 
with each other to realise synergies but send conf licting signals and have gaps that lead to a 
fragmented regulatory framework rather than a consistent one.  
The general objective of the acti on plan is to render the EU’s product policy more effective, 
thus contributing to the goals of the Lisbon St rategy and those of the Reviewed Sustainable 
Development Strategy.  
 
EN 3   EN More specifically: to rais e dynamically the market sh are of products with more 
environmentally performing feat ures; to provide consumers w ith relevant information on 
product performance; to help overcome problem s caused by a misalignment of incentives and 
to reduce the potential for suboptimal outcomes as a result of myopic consumer behaviour; to 
avoid fragmentation of incentives and stimuli (e .g. fiscal incentives and public procurement); 
to remove barriers to trade to ensure that Environmental Industries can benefit from the 
advantages of the Internal Market; and to maximize the environmental contribution of the 
EU's standards internationally whilst ensuri ng that the possible shor t run incidence on the 
competitive position of EU industry is addressed, where necessary. 
Three options were considered to address thes e objectives: no further ac tion or the baseline 
scenario (no change of existing policies) a nd two alternative pack ages of measures.  
The no further action option would imply that the identified market and regulatory failures 
would not be addressed .  
The first alternative package is mostly focused on enhancing the role of the voluntary eco-
label scheme and linking it with other policies.  This option would promote a combination of 
instruments that would reinforce voluntary actio ns (Eco-label, Open Method of Coordination 
for the use of incentives), promote Environm ental Management and Audit Scheme, Green 
Public Procurement and identify internal ma rket barriers for eco-industries (competitiveness 
screening). The different mark et and regulatory failures would essentially be addressed 
through the provision of information and the de velopment of voluntary incentives. The co-
ordination of existing polic ies would be done within the existing framework.  
The second alternative package consists of a set of measures that  are centred around an 
extended Integrated Package. This option would integrate a set of instruments to extend the 
scope of mandatory actions (Eco-design Di rective for Energy Using products, Energy 
Labelling Directive, including mandatory level of product performance for public 
procurement) and link them with voluntary acti ons (Eco-label, Green Public Procurement, 
Environmental Management and Audit Scheme).  The use of incentives by Member States 
would be further harmonised and internal ma rket barriers for eco-industries would be 
identified (competitiveness screening). The difference to option 2 is that this option places greater emphasis on mandatory requirements.  
The analysis of the impacts of each option pr esents a qualitative assessment of the positive 
and negative impacts. It gives an indication on  the extent to which each of the options can 
resolve the remaining market and regulatory fail ures established in the problem definition as 
well as indications of potential drawbacks or costs. A quantitativ e estimation of the effects on 
product prices, resource us e, life-cycle costs and CO2 emissi ons are provided for a number of 
product categories for which data is available.  The analysis is indicative only since a 
comprehensive quantitative assessment would requ ire large amounts of deta iled data, which is 
not currently available, and complex m odelling that would go beyond the scope of 
proportionality for this impact assessment.  
Given that the Action Plan does not represent a concrete legislative proposal and that the 
detailed impacts of any measures that may s ubsequently be adopted will be analysed in 
separate impact assessments, th e level of analysis is deemed proportionate. Individual impact 
assessments will be carried for each of the envisaged measures  and more detailed analysis 
will be provided for these.
 
The conclusion for this impact assessment is  that the second pack age of measures is 
preferable, which rests on an extended Integr ated Package based on the Ecodesign Directive 
and a more harmonised use of criteria for Publ ic Procurement and fiscal incentives across the 
 
EN 4   EN European Union. This option would enable subs tantial improvements in resource efficiency 
and reduce environmen tal externalities. 
The action plan will be regularly monitored in  order to adapt the actions and optimise the 
impacts in a cost-effective manner. 
 
EN 5   EN TABLE OF CONTENTS 
1. Procedural Issues and Consulta tion of Interested Parties ............................................ 7 
1.1. Organisation and timing............................................................................................... 7 1.2. Consultation and expertise ........................................................................................... 7 1.2.1 Studies.................................................................................................................. ........ 7 
1.2.2. Stakeholder Consultations............................................................................................ 8 1.3 Opinion of the Impact Assessment Board.................................................................... 9 2. Problems and underlying drivers ................................................................................. 9 2.1. Background and context............................................................................................... 9 2.2 The problem ............................................................................................................... 1 1 
2.3. Negative Externalities ................................................................................................ 11 2.4. Other market failures.................................................................................................. 12 2.4.1. Information asymmetries ........................................................................................... 12 2.4.2. Bounded rationality.................................................................................................... 1 2 
2.4.3. Principal agent problems............................................................................................ 13 2.5. Impacts of the above mark et failures on Innovation.................................................. 13 
2.6. Internal market fragmentation due to uncoordinated public intervention.................. 14 
3. Current situation and existing po licy responses to challenges................................... 14 
3.1. Internalising greenhouse gas emissions ..................................................................... 14 3.2. Air quality, industrial emissi ons and waste legislation.............................................. 15 
3.3 Product policy ............................................................................................................ 1 6 
3.4. Energy Efficiency....................................................................................................... 17  
3.5. Other policies ............................................................................................................ . 17 
4. Remaining Problems, taking account of existing policies ......................................... 17 4.1. Externalities............................................................................................................. ... 18 
4.2. Information asymmetries ........................................................................................... 18 4.3. Bounded rationality and principal agent problems .................................................... 19 4.4. Impacts of the above mark et failures on Innovation.................................................. 19 
4.5. Regulatory failures..................................................................................................... 20  
4.5.1. Internal market fragmentations due to uncoordinated public intervention ................ 20 
4.5.2. Fragmentation of existing policy measures................................................................ 21 5. EU's right to act.......................................................................................................... 2 1 
5.1. Treaty establishing the European Community........................................................... 21 
5.2. Policy background...................................................................................................... 22 
6. Objectives.................................................................................................................. . 22 
 
EN 6   EN 7. Options ..................................................................................................................... .. 24 
Option 1: No policy change (baseline)..................................................................................... 24 Option 2: Strengthen the role of Eco- label (mostly voluntary measures)................................ 24 
Option 3: Strengthen the role of Prod uct Policy (mandatory measures).................................. 25 
8. Analysis of Impacts.................................................................................................... 27 9. Comparison of options ............................................................................................... 37 10. Cost-effectiveness ...................................................................................................... 39 11. Monitoring and evaluation ......................................................................................... 40 
 
EN 7   EN 1. P ROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Organisation and timing  
This Impact Assessment accompanies the Co mmunication on Sustainable Consumption and 
Production and Sustainable Industrial Policy Action Plan (SCP/SIP). This document is 
prepared as a basis for comments and does not pr e-judge the final form of any decision to be 
taken by the Commission. 
An internal DG Environment Taskforce and tw o Inter-Service Groups (one on Sustainable 
Consumption and Production, th e other one on Sustainable Industrial Policy) were 
established, involving relevant Commission serv ices. The aim of the Communication is to 
present the global objective and cohe rence in both fields of action.  
Specific actions to be presented together w ith the Action Plan will be accompanied with 
separate Impact Assessments as needed.  
1.2. Consultation and expertise 
This impact assessment is based on the results  of dedicated stakehol der consultations and 
consultations on specific actions to be proposed ; as well as on a broad range of studies and 
consultations carried out with respect to re lated policies (Annex I). This includes the 
Integrated Product Policy (IPP), the Thematic  Strategy on the sustainable use of natural 
resources, the Thematic Strategy on the preventi on and recycling of waste, the Environmental 
Technology Action Plan and others. It also take s stock of the work un dertaken by the High 
Level Group “Competitiveness, Energy and Envi ronment”. A more comprehensive overview 
of existing EU policies rela ted to the Action Plans can be found in the Annex III. 
1.2.1 Studies 
The results of a number of studies  have been considered. Some of the most important are: the 
EIPRO project1, the SUSPROC initiative2, the IMPRO project3, several waste and recycling 
related studies (e.g. on End of Waste criteria ); Tools for Environmentally Extended Input-
Output Analysis (EE-IO) for Europe4, Environmental Product Declarations and work of the 
Life Cycle Assessment platform5, the European Environmental Agency's (EEA) work on 
Household Consumption and th e State of the Environment6, and the Environmental Input-
Output Analyses based on NAMEA data7, ASCEE and SCORE projects8 funded by the 
Directorate General for Research, Directorate General Transports and Energy studies on the 
Energy using Products (EuP) Directive9, work of the Directorate General EUROSTAT Task 
Force on developing indicators10, a DG Enterprise (ENTR) study on fostering EU internal 
market for Competitive Technologies for a low carbon economy11. 
                                                 
1 http://ec.europa.eu/environment/ipp/identifying.htm 
2 http://www.jrc.es/activities/sustainable_development/susproc.cfm 
3 http://ec.europa.eu/environment/ipp/identifying.htm 
4 http://ec.europa.eu/environment/ipp/identifying.htm 
5 http://ec.europa.eu/en vironment/ipp/lca.htm 
6 http://reports.eea.europa .eu/eea_report_2005_11/en 
7 http://www.jrc.es/publications/pub.cfm?prs=1366 
8 http://ec.europa.eu/research/environment/pdf/global_change_ecosystem.pdf p.403 and 
http://www.score-network.org/s core/score_module/index.php 
9 http://ec.europa.eu/energy/demand/legislation/eco_design_en.htm 
10 Implementing measure of the Resource Thematic Strategy COM(2005) 670 
11 http://ec.europa.eu/enterprise/environment/sip_en.htm 
 
EN 8   EN In addition relevant studies and other expert inputs in particular  when related to the climate 
policy dimension of Sustainable Consumpti on and Production and Su stainable Industrial 
Policy have been continuously analyzed and th eir results considered when developing this 
Impact Assessment. 
External environmental reports have provided further important input. Examples include the 
Organisation for Economic Co-operation and Development (OECD) Environmental 
Outlook12, UK Department for Environment, Food and Rural Affairs (DEFRA) Sustainable 
Consumption and Produc tion research studies13, European Roundtable on Sustainable 
Consumption and Production14, The European Environm ent - State and Outlook 200515, 
Worldwatch Institute16, Europe's Environment – 4th Assessment by the EEA17 and the UK 
Stern report18. 
More detail in particular about  studies and research launched by the services responsible for 
drafting the Action Plan is given in Annex I. 
1.2.2. Stakeholder Consultations 
DG Environment (ENV) and DG ENTR launched a joint internet stakeh older consultation on 
Sustainable Consumption and Production (SCP) a nd on Sustainable Indust rial Policy (SIP)19. 
The consultation was based on a background document20 drafted by DGs ENV and ENTR 
(Annex II). DG ENTR also launched a dedicated consultation of companies participating at 
the “European Business Test Panel”21. 
Two stakeholder meetings were orga nised in September and October 200722. Stakeholders 
from Member States, industry, Non-Government al Organisations, private companies, trade 
associations, and management consultancies participated. In parallel, DG ENV targeted 
selected stakeholders to  obtain feedback on specific aspects of the Plan. 
Three workshops with sel ected experts were held: Japanese  Top Runner  (to better understand 
its transferability to the European market); Retailers (to explore the potential for greening 
supply chains and sustainable consumer behaviour); and Green Private Procurement  
(exploring opportunities in  the private sector). 
DG ENV also established an EU Member Stat es' Experts Group on Sustainable Consumption 
and Production, which will meet twice a year. The biannual "Integrated Product Policy Regular Meetings" with Member  States and key stakeholders
23 w e r e  a l s o  u s e d  t o  d i s c u s s  
elements of a Sustainable Consumption and Production Action Plan. Th e latter were also 
discussed at the Environment Policy Review Gr oup (EPRG) which brings  together high level 
Member State environment representatives. 
                                                 
12 http://www.oecd.org/LongAb stract/0,3425,fr_2649_37465_38126171_119693_1_1_37465,00.html 
13 http://www.defra.gov.uk/environment/business/scp/research/ 
14 http://www.erscp2007.net/cms/ 
15 http://reports.eea.europa.eu/stat e_of_environment_report_2005_1/en 
16 http://www.worldwatch.org/ 
17 http://www.eea.eur opa.eu/pan-european/fourth-assessment 
18 http://www.hm-
treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm 
19 http://ec.europa.eu/environment/eussd/escp_en.htm 
20 http://ec.europa.eu/enterprise/environment/sip.pdf 
21 http://ec.europa.e u/yourvoice/ebtp/ 
22 http://ec.europa.eu/environment/eussd/escp_en.htm 
23 http://ec.europa.eu/environment/ipp/meetings.htm 
 
EN 9   EN DG ENTR took advantage of the recomm endations of the High Level Group on 
“Competitiveness, Energy and Environment” when  identifying the different activities to 
include in the Action Plan.  
1.3 Opinion of the Impact Assessment Board 
This impact assessment report was drafted following the remarks in the request for 
resubmission of the Impact Assessment Boar d (4 December 2007) and the Final Opinion of 
the Board on the final draft issued on 8 April 2008. The following improvements have been made: 
The problem definition has been substantially reworked to explain the nature of the existing 
market and regulatory failures, how the policies in place aim to address them and what problems are still unsolved. The need for action at  EU level has been illustrated more clearly 
by pointing out the risk of a fragmentation of the internal market resulting from diverging 
criteria at national level with respect to the provision of fiscal incentiv es and for purposes of 
Green Public Procurement. 
The objectives have been revise d to strengthen the link between  the remaining problems and 
the policy options. 
The options have been redesigned to reflect two different policy choi ces (in addition to the 
baseline option): a largely voluntary approach based on the existing eco-label or one that 
relies mostly on cost-effective mandatory m easures by extending the existing eco-design 
framework (including several flanking measures).  The presentation of the options has been 
revised to emphasize even more the voluntary ve rsus mandatory character of each scenario, 
and to make the synergies between the activitie s included in each option more visible. More 
attention has been given to specify the adde d value of presenting a package of measures 
instead of a set of individual ac tions. With respect to the potential for simplification it should 
be noted that this has not been an objective of the initiative. The justification for maintaining 
complementing labelling schemes has nevert heless been further developed. Subsequent 
impact assessments will establish references to  this impact assessment to ensure coherency 
and maximize synergies between the actions.  
It has to be emphasized that the present document assesses only whether strengthened 
voluntary or mandatory existing instruments are lik ely to successfully achieve the objectives 
of the Action Plan. It does not prejudge the future analysis of the measures nor the legal form 
of individual actions. The report  clearly points out that future  impact assessments of the 
specific actions will have to be undertaken to sh ow their necessity and pertinence. References 
to alternative legal instruments have been  removed from the text. The Monitoring and 
evaluation section has been expanded to be more precise on the scope of indicators. 
A glossary has been added in Annex VI explai ning the essential abbreviations and technical 
terminology. 
2. P
ROBLEMS AND UNDERLYING DRIVERS  
2.1. Background and context 
Continuing economic growth of the world econ omy will lift millions ou t of poverty in the 
coming decades, but coupled with  an increasing world populati on from 6 billion in 2000 to 
8.3 billion in 2030 there will also be pressures on resources and on the environment. Consumption and production can lead to negative  environmental consequences. For example, 
the use of fossil fuels in produc tion has been the biggest contri butor to increa ses in total 
 
EN 10   EN greenhouse gas emissions and the concentration of CO2 in the atmosphere (Graph 1) which 
cause global climate change and temperatures to rise (graph 2). And fossil emissions are 
expected to continue to grow if no action is taken (see Graph 1, lin e POLES WETO baseline 
2001).  
Graph 1: Historic development of car bon emissions and the POLES projection.  
 
Source : JRC ( http://energy.jrc.ec.europa.eu/ ) 
Graph 2: Historic temperature development 
 
Source: Impact assessment accompanying th e Communication "Limiting Global Climate 
Change to 2 degrees Celsius The way ahead for 2020 and beyond", p. 14.  
To combat climate change the EU has set ambitious targets for reducing greenhouse gas 
 
EN 11   EN (GHG) emissions by 20 %24 by 2020. At the same time, the EU is heavily dependent on 
imported energy and natural resources. On cu rrent projections, e.g. assuming no further 
action, energy consumption in the EU is likely to increase by 9% from 2005 to 202025. And 
compared to 200026 the use of natural resources in th e EU-15 is expected to grow by around 
19% in EU 15 and 60% in the EU 10 by 2020. 
The challenges related to climate change and to the use of and access to natural resources are 
directly linked to how we produce and the efficiency of the products we consume27. 
Projections show a doubling of total household c onsumption in terms of expenditure in the 
EU-25 by 203028. This leads to significant contribu tions to greenhouse gasses, pollution, 
material use, and natural resource depletion. Fo r example, even though air quality in Europe 
has been steadily improving, air po llution contributes to 750,000 year s of life lost each year in 
Europe29. More progress to diminish  risks related to the use of hazardous materials and 
substances is still needed. Public interven tion is needed to decrease these negative 
environmental externalities wh ile fostering economic growth. 
2.2 The problem 
Rationales for public intervention are genera lly found in market an d regulatory failure 
arguments. Energy generation and industrial proce sses, transportation acti vities and household 
energy consumption generate GHG emissions, po llution, waste and other negative effects on 
the environment whose costs are not always reflect ed in market prices or, when they are, do 
not trigger the desired demand response.  
2.3. Negative Externalities 
Consumers when making their cons umption choices do not necessari ly act in the interest of 
society as a whole. This can happen if pri ces of goods do not reflect the total cost of 
environmental pollution to society and rational co nsumers maximise private utility rather than 
social welfare. Free-riding becomes a dominant strategy and the result is a collective action problem: while everybody agrees th at it would be better to a void the negative environmental 
and thus health impacts, no-one has a suffi ciently strong incentive to act accordingly. 
Negative externalities arise not  only during the production and consumption of a product but 
also when it is disposed. Greenhouse gas and pollutants emissions, for example, lead to 
climate change, acid rain that degrades fore sts and air and water pollution which lead to 
negative health effects. Toxic substances can be released when wast e is burned and require 
expensive abatement technology to prevent envir onmental harm. By and la rge, there is often 
no incentive for consumers to pur chase products that generate less hazardous waste as the 
disposal costs are not charged to the consumer individually but to taxpayers.  
                                                
 
24 30% in the case of an international agreement 
25 COM (2008) 30 final Annex  
26 Europe's Environment Fourth Assessment (EEA, 2007) 
27 EIPRO study Joint Research Centre and NAMEA EEA. These studies show that in the EU, the 
consumption areas of eating and drinking, housing,  and travelling bear between 70% to 80% of all 
environmental impacts, and where "housing" includes: heating, water, and domestic appliances – and these account for 24% of all environmental impacts. 
28 EEA, 2005 
29 Health Aspects of Air Pollution (WHO, 2004) 
 
EN 12   EN 2.4. Other market failures 
2.4.1. Information asymmetries Consumers - in a wider sense - do not always make decisions ba sed on what is in their own 
long term interest or benefit. For example, consumers often fail to buy the products that are 
cheapest over their entire life span but rather  make their decisions based on the purchasing 
price of a product. This kind of seemingly ill-info rmed behaviour is partly due to a lack of 
information. A majority of companies (80.3%) th at responded to the European Business Test 
Panel
30 survey indicated that the lack of consum er awareness was the main reason as to why 
demand for better performing products is not  higher, while 62% of respondents of the 
SCP/SIP public internet consultation31 also raised lack of inform ation as an important issue. 
If producers do not provide the necessary inform ation on the life-time performance of their 
products and if it is costly and time consuming for consumers to acquire that information, this 
so-called information asymmetry may lead to  more resource effici ent products not being 
bought. The consequence is unnecessary energy c onsumption leading to avoidable emissions 
of greenhouse gases and pollutants  
Similar information issues exist in the housi ng market. Finding out about a building's “energy 
value” is difficult as there is only r very limited information available in terms of, for example, potential renovation costs, not least “due  to a lack of standardised information about 
the energy consumption of the bu ilding (such as a certified label
32)". So that "as a result there 
is no specific demand for energy efficient build ings which could induc e owners to improve 
the Energy Efficiency of their buildings ” (Jakob 2007, for the case of Switzerland). 
But information asymmetries also pertain to pub lic procurement decisions: A questionnaire by 
the OECD on green public procurement reveal ed that 17 of the 19 responding States saw a 
lack of information about the long term financial benefits as a main barr ier to the uptake of 
green public procurement33. 
In summary, demand for energy efficiency curren tly is very limited with the result that the 
formation of a distinguished (higher valu e) market segment often does not occur. 
2.4.2. Bounded rationality 
However, even when the relevant information is easily available (and consumers have access 
to credit if that is needed to finance purchas ing a more expensive produ ct) they may still not 
decide rationally but act  in a myopic (i.e. short-sighted ) way and buy the low price – high 
lifetime cost product. Empirical studies and labo ratory experiments show  that individuals do 
not always make optimal decisions despite ha ving all the necessary information. The cause 
for this lies in the limited cogniti ve capabilities to process the relevant information needed for 
drawing the correct (rational) conclusions. In  the economic literatu re this phenomenon is 
sometimes referred to as bounded rationality. 
As pointed out by the High Le vel Group on Competitiveness, En ergy and the Environment, 
bounded rationality “in the large non-energy inte nsive sectors and the public sector…" is 
                                                 
30 European Business Test Panel Sustainable Industrial Policy – Sustainable Consumption Policy 
(17.09.2007 – 17.10.2007) Aggregate results 
31 SCP/SIP public internet consultation (27 July – 23 September 2007) 
32 Building certification and labelling is part of the European Directive of Building Performance (EPBD) 
and is also being discussed in Switzerland, cf. Baumgartner et al. (2004) and Rieder et al. (2006). 
33 OECD (2007) Improving the environmental performance of public procurement: report on 
Implementation of the Council Recommendation. 
 
EN 13   EN mainly due "to a lack of awareness and poor motivation, complexity of contracts and the 
difficulty of measuring savings”34. 
The Stern report also mentions that “some econo mists have suggested that people use simple 
decision rules when faced with complexity, uncertainty or risk.35 For example, many people 
are unable to calculate the l ong-run value of energy savings, wh ich will depend in any case of 
the frequency of use of the devise, or have di fficulties determining ap propriate responses to 
risks and uncertainties around future energy cost s or the potential impact s of climate change. 
As a result, individual s and firms commonly make decision s which simply meet their short-
term needs, rather than undertaking complex analysis to determine the best possible decision
3637”. 
The result is that despite the availability of the relevant information and the potential for 
internalisation of negative externalities, cons umers may still not behave in a privately and 
socially optimal way.  
2.4.3. Principal agent problems 
Aside from information asymmetries, a misali gnment of incentives between economic agents 
may induce inefficient long term behaviour. A t ypical example is the owner renter problem 
(Jakob 2006; Econcept 2002; UNDP /WEC/UNDESA 2000). The owner (the agent) rents out 
the house or the apartment and mostly provides some  appliances with the rented property such 
as water heaters, boilers, and refrigerators. Yet, it is the tenant (the principal) who has to pay 
the energy bill. Although tenants would benefit from more energy efficient appliances or 
better insulation, landlords have no incentive to invest in more energy efficient products and 
instead maximise their utility by buying the product with th e lowest price. 
Another example is television set-top boxes. A set-top box is  an electronic device that 
receives a video signal and converts it for disp lay on a television. The se rvice provider (the 
agent) provides the consumer (the principal)  with a box as part of the subscription. The 
service provider selects the set-top box and the consumer pays the electr icity bill. The service 
provider seeks to minimise the cost of thes e boxes and does not care about energy efficiency. 
Studies demonstrate that currently a simple set top box uses 800 kwh over its life cycle and has a life cycle cost  of €83. However, there are already se t top boxes with a life cycle cost of 
€56 on the market using only 134 kWh
38. 
2.5. Impacts of the above market failures on Innovation 
The production of environmentally friendly g oods tends to be more complex so that 
production is typically high up th e learning curve (leading edge technology). Due to their 
higher production costs these products often have higher upfront co sts (a higher purchase 
price) than those made by using conventional technology and may in thei r initial stages of 
being introduced on the market have higher life- time costs. However, because of learning 
effects and economies of scale future producti on costs could be lower thus bringing down 
                                                 
34 http://ec.europa.eu/enterprise/environment/hlg/hlg_en.htm 
35 Kahneman & Tversky (1979, 1986, 1992) developed the idea of ‘prospect theory’ in which people 
determine the value of an outcome based on a reference point. 
36 See Simon, H.A. (1959) for concep t of ‘satisficing’. See also transc ript of 2005 Bowman Lecture: 
Energy Demand - Rethinking from Basics, Professor David Fisk submitted to Stern Review Call for 
Evidence http://www.hm-treasury.gov.uk/med ia/F7E/46/climatechange-fisk_1.pdf  
37 See p 380 of Stern (2007) Stern Revi ew: The Economics of Climate Change. 
38 Technical study for the implementing measures on simple set top boxes (study 5 and study 7) 
http://www.ecostb.com/ 
 
EN 14   EN life-cycle cost to a leve l below that of conventional (older) products. But getti ng to this lower 
level of production costs can be problema tic as producers may be unwilling to incur 
temporary losses in order to sponsor the ne w technology until sufficient learning has taken 
place and critical mass is reached, while on the c onsumption side, perhaps due to the market 
failures outlined above, demand is limited . This prevents a move down the learning curve. 
The outcome is that the initial phase during which the product is more costly is not overcome 
and these new products do not become competi tive in the longer r un and that overall 
investment in new leading edge technologies is suboptimal. It is worth noting that these 
specific problems come on top of the usual mark et failures identified for innovation, such as 
imperfect appropriation of benefits of  innovation due to knowledge spillovers. 
Another reason for too low innovation speed ha s been pointed out by the High Level Group 
on Competitiveness, Energy and the Environment: "L ong term policy predictability is seen as 
essential for (…) industries as well as for energy suppliers, since in vestment cycles are 
long39", particularly in the building sector. Pr edictability can be improved by sending out 
clear policy signals assuring th e market that innovation will be rewarded in the future, 
particularly if uncertainty prevents  the emergence of new technologies.  
2.6. Internal market fragmentation due to uncoordinated public intervention 
Many member states provide financial incentives, such as grants for substitution of electricity 
for heating (Sweden), ecological tax reform (G ermany), refunds for Category A++ appliances 
(Belgium) that intend to indu ce consumers to buy more environmentally friendly products. 
However, the criteria that these products ha ve to meet can differ substantially from one 
country to another. The result is a fragmentation of the inte rnal market for the products 
concerned, since no harmonised approach exists  that would send consistent signals to 
producers and consumers and allow a level pl aying field for environmentally friendly 
products across the EU. Similarly, some Member  States link their procurement policies to 
national labelling schemes which can equally cau se a fragmentation of the internal market. 
While the cause of this problem is not a mark et failure, it may be de scribed as a regulatory 
failure.  
3. C URRENT SITUATION AND EXISTING POLICY RESPONSES TO CHALLENGES  
A number of policies are alr eady in place to address negativ e environmental impacts of 
production and consumption. This section presen ts the major ones and illustrates how they 
deal with the market failures described above. A more detail ed analysis can be found in 
Annex III. The policies listed below are not exhaustive. There are other policies on some of the market failures identified in the previous se ction, but those policies are not relevant as far 
as the scope of the present initiative is concerned.  
3.1. Internalising greenhouse gas emissions 
The European Union is committed to a 20% reduction of greenhouse gases [or 30 % if an 
international agreement is reached] , a 20% share of renewable energy and a 10% biofuels 
target by 2020
40: 
• The Emission Trading Scheme (ETS) will be expanded to cover: all greenhouse gases as 
compared to only CO2 emissions. All major i ndustrial emitters will be included in the 
                                                 
39 http://ec.europa.eu/enterprise/environment/hlg/hlg_en.htm 
40 Presidency conclusions (2007) 7224/1/07 
 
EN 15   EN ETS, covering 40% of the greenhouse gas emi ssions in the EU. The establishment of 
unified EU wide rules that repl ace the national allocation plans.  
• For sectors not covered by ETS a target of 10% reduction from the 2005 levels is set to be 
reached by action at MS leve l and at Community level. 
• The setting of modulated targets for renewabl e energy at Member States level, fostering 
the internal market for renewable energies , updating the regulatory framework and creating 
a comprehensive system to promote sustainabl e biofuels production for which a target of 
10% is set 
• A 10% biofuels target is set. 
These measures are expected to lead to hi gher production costs for products that are very 
energy intensive in their production. It is likely  that these additional production costs will be 
passed on to consumers. In particular energy pric es are expected to rise by 10 Euro/MWh for 
a CO2 price of 20€/tn CO2 equivalent41. This will give a price signal to consume less energy 
and make investment in environmental t echnologies leading to lower greenhouse gas 
emissions more cost effective. However, this price signal might not be  sufficient to address 
bounded rationality and prin cipal-agent problem. 
3.2. Air quality, industrial emis sions and waste legislation 
Apart from the internalisa tion of greenhouse gas emissions  there is command & control 
legislation in place to regulate the environmen tal pollution of the production and waste stage 
and specific legislation re lated to air quality.  
• The directive on industrial emi ssions aims at minimising pollu tion from various industrial 
sources throughout the European Union taking into account the whole environmental 
performance of the plant, covering e.g. emissi ons to air, water and land, generation of 
waste, use of raw materials, energy effi ciency, noise, prevention of accidents, and 
restoration of the site upon closure. About 52.000 installations are covered. Environmental 
pollution during the production stage is controlled by this. 
• The environmental pollution during the waste stage is covered by general legislation on 
waste management, e.g. the Waste Framework Directive, the Hazardous Waste Directive, 
the Waste Shipment Regulation and the La ndfill and Incineration Directives and by 
legislation to regulate the management of sp ecific waste streams (waste oils, PCBs/PCTs 
and batteries). Recycling and recovery targets ha ve been set for some key waste flows, i.e. 
packaging, end-of-life vehicles (ELVs) and waste electrical and electronic equipment 
(WEEE). Heavily polluting landf ills and incinerators are being cleaned up. Hazardous 
substances are being removed fr om vehicles and electrical and electronic equipment. The 
levels of dioxins and other emissions  from incineration are being reduced. 
• The future directive on Ambient Air Qual ity and Cleaner Air for Europe, which 
implements the thematic strategy on air pollution, sets targets for Member States to reduce 
environmental pollution stemming from partic ulate matter, ammonia, nitrogen oxides, 
sulphur dioxide, volatile organic compounds  and ground level ozone. The Thematic 
Strategy on Air Pollution will drive down air pollution significantly with reductions between 27% and 82% of the fi ve main polluting substances. 
                                                
 
41 McKinsey 
 
EN 16   EN 3.3 Product policy 
The Community has a number of building blocks  in place that affect the environmental 
characteristics of products that can be put on the internal market and influences to some extent 
consumer choice through the provision of information: 
• The Eco-Design of Energy-using Products Dir ective defines conditions and criteria for 
setting, through subsequent implementing me asures, minimum requirements regarding 
environmentally relevant product char acteristics of energy using products. 
• Voluntary Green Public Procurement ai ms at making public procurement more 
environmentally friendly. It does so by aiming at  average levels of GPP similar to those in 
the best performing Member States [voluntary targets for Member States] and by providing 
information to public procurers on green pub lic procurement and environmental friendly 
products. 
• The Eco-label is a voluntary scheme that iden tifies products or services with the highest 
overall environmental performance based on lif e cycle considerations  (production, use and 
disposal). Similar labels are also awarded in some Member States (such as the Swan label 
in Sweden, Blauer Engel label in Germany) 
• The Energy Labelling Directive (ELD) impo ses a mandatory label for energy using 
household appliances that account for a signific ant proportion of electri city consumption in 
households. The label provides information on the consumption of energy and of other 
essential resources dur ing the use phase.  
• The Energy Star label is a voluntary U.S. label covering energy usin g and energy saving 
products/materials42. Only those products that can offset  higher initial purchase prices by 
energy savings during their expected life span ar e awarded the label. The label is also used 
in the EU for Personal Computer systems a nd imaging equipment and it is mandatory for 
public procurement.  
Green public procurement and the mandatory procurement under Energy Star contribute to 
solving the information asymmetries for public  procurers. The labelling schemes solve the 
information asymmetries for the covered products  by showing the 'hidden' costs of use over 
the expected life span. For exam ple, the EELD has contributed to 34 Terrawatthours (TWh) in 
primary energy savings from 1995  until 2006. Half of the sa vings would be due to the 
labelling43. Once the implementing measures of th e eco-design directive are introduced 
                                                 
42 The current list of products covered include: Ap pliances (Battery Chargers, Clothes Washers, 
Dehumidifiers, Dishwashers, Refri gerators & Freezers, Room AC, Room  Air Cleaners, Water Coolers ) 
Heating & Cooling (Air-source Heat Pumps, Boilers, Central AC, Ceiling Fans, Dehumidifiers, 
Furnaces, Geothermal Heat Pumps, Home Seali ng (Insulation), Light Commercial, Programmable 
Thermostats, Room AC, Ventilating Fans) Home Enve lope (Home Sealing (Insulation and Air Sealing), 
Roof Products, Windows, Doors, & Skylights), Home  Electronics (Battery Charging Systems, Cordless 
Phones, Combination Units, Digital-to-Analog C onverter Boxes (DTAs), DVD Products, External 
Power Adapters, Home Audio, Televisions, VCRs), Office Equipment (Computers, Copiers and Fax Machines, Digital Duplicators, Notebook Computer s/Tablet PCs, Mailing Machines, External Power 
Adapters, Monitors, Printers, Scan ners, and All-in-Ones), Lighting (Compact Fluorescent Light Bulbs 
(CFLs), Residential Light Fixtures, Ceiling Fans, Exit Signs), Commercial Food Service (Commercial 
Dishwashers, Commercial Fryers, Commercial Hot Food Holding Cabinets, Commercial Ice Machines, 
Commercial Solid Door Refrigerators & Freezers,  Commercial Steam Cookers), Other Commercial 
Products (Battery Charging Systems, Exit Signs, External Power Adapters, Roof Products, Vending 
Machines, Water Coolers) 
43 SEC(2006)1174 
 
EN 17   EN information asymmetries and bounded rationali ty should no longer pose problems for energy 
using products, since the consumer will buy those pr oducts that have the lowest life cycle cost 
whether he is informed or not. Principal-agent problems will be solved for energy using products since agents do not have the possibility to buy products which are not in the interest of the principal. Furthermore, the minimu m requirements will limit negative externalities 
caused by energy using products to the extent that  they are covered by the standards. It is 
expected to avoid 200 mio tonne  of CO2 per year by 2020, comp ared to today’s emissions. 
3.4. Energy Efficiency 
The action plan on energy efficiency aims to improve energy efficiency: 
• The Energy Performance of buildings directiv e (EPBD) promotes the improvement of the 
energy performance of buildings. Member St ates are requested to identify minimum 
requirements regarding the energy performance of new buildings and the refurbishing of 
existing buildings bigger th an 1000 m². The EPBD can solve negative externalities 
resulting from poor energy performance, info rmation asymmetries a nd bounded rationality 
problems with respect to new buildings. 
• The eco-design directive, the energy star  label and the EELD described above are 
important pillars of the action plan. 
The action plan is set to re alise a 20% saving potential in EU annual primary energy 
consumption. The Action Plan recognises that th e achievement of this objective will require a 
significant further strength ening of product policy.  
3.5. Other policies 
• ETAP is a European strategy for eco-innova tion and environmental technologies. It is 
composed of actions around three main themes: Getting from Research to Markets; 
Improving Market Conditions; Acting globall y. Actions include increased and more 
focused research, demonstration and dissemination activities within the 7
th Framework 
Programme for Research, support to the activ ities of the Technology Platforms and the 
setting up of a verification scheme. 
• The Eco-management and audit scheme (E MAS) certifies through an independent 
verification mechanism that a firm complies with environmental legislation and has an 
environmental management system. Compliance w ith EMAS, even if costly, facilitates the 
identification of green producers. 
• Member States promote the uptake of ener gy and environmental efficient products by a 
variety of fiscal incentive schemes.  
• The Enterprise Europe Network and other di ssemination channels encourage SMEs to 
adopt environmentally friendly a nd energy efficient solutions.  
4. R EMAINING PROBLEMS , TAKING ACCOUNT OF EXISTING POLICIES  
The current initiatives go some way towards addressing the market failures outlined in 
Section 2 and hence align better our consumpti on and production with the socially optimal 
outcome. However, further issues remain and they need to be dealt with. This section sets out 
what they are, who is affected and explains their causes and drivers.  
 
EN 18   EN 4.1. Externalities 
A study44 undertaken for the Joint Research Centre estimates that due to negative 
externalities, the social cost of per capita consumption at EU level is between EUR 219 and 
EUR 946 per year. The biggest contributor s are direct greenhouse gases (169€), 
eutrophication (12€), phothochemical oxidation ( 11€) disaminities caused by landfilling (10€) 
and human health effects caused by dust (9€). Greenhouse gas emissions are thus by far the 
most important externality.  
In its current form the EUP directive addres ses energy using products. According to the study 
mentioned above, per capita externalities of thes e products account for only 38 to 43% of total 
externalities. The potential to deal with externalities genera ted by the use of other products 
not covered by the EUP Directive, both in te rms of greenhouse gases and other environmental 
impacts, is somewhat limited.  
EMAS could help avoid externalities through better consideration of the environmental 
impacts when identifying production processes.  However, the uptake of EMAS remains 
limited and costly. For example,  the results of a consultati on undertaken for a recent study45 
indicate that almost half of the respondent s believed that the monetary costs of EMAS 
outweighed the benefits, even if more than tw o third of the respondents considered EMAS as 
a success when comparing the financial as well as non-financial benefits and costs. In 2007 
3,935 organisations were registered in Europe . These organisations have 6,000 registered 
EMAS sites employing 1.34 Million people – 0.6% of total employment in EU-27. The same 
study points out that 62% of all respondents think that EMAS re mains regarded and used as 
"best practice" for environmental management among industrial sectors or other types of 
organisations. EMAS thus provides a sign alling function and can reduce information 
asymmetries to some extent but due to its vol untary nature and limited participation, it does 
not appear to have the potential to overc ome most problems related to information 
asymmetries, particularly as it relates to the production process and not to the characteristics of the actual products. 
4.2. Information asymmetries 
In spite of the labelling schemes in place, information asymmetries remain, meaning that 
consumers are lacking important information or are given information whose value has 
declined.  
The current Energy Efficiency Label only solves information asymmetries with respect to one 
aspect, namely the amount of electricity that a product uses over its ex pected life-span. Other 
environmental aspects are not covered, such as the amount of energy required and pollution 
caused to produce the device or ne gative impacts related to its di sposal. In addition, only very 
few product categories are covered by the labe l. The limitation of the scope of the EELD 
labels to household appliances does not address the information asymmetries faced by professional buyers of energy using products. This is partic ularly true for SMEs that 
sometimes lack the time or expertise to judge  the energy performance of, for example, motor 
systems. Similarly, the scope of the energy star label in the EU is limited to office equipment 
and there presently is no li nk with the EuP directive.  
                                                
 
44 Labouze et al (2003) Externali environmental effect s related to the life cycle of products and services. 
Bio-intellince Service – O2 FRANCE 
45 EVER study: "Perceptions of EMAS Registration – A summary report". p.3 
 
EN 19   EN The EELD are also updated at t oo low a pace. As a result the market penetration of Category 
A for most of the labelled products is ve ry high - between 47 and 81% depending on the 
appliance - (Annex IV, Table 2), even if it varies  among Member States (79% of appliances in 
EU15 belonging to categories A an d A+, 67% of mostly category A in 8 new Member States 
and Candidates Countries (JRC, 200746) (Annex IV Figure 1). This means that the current 
information content of the label has been devalu ed since the majority of products are in the 
same category.  
There is also a lack of information of other environmental impacts. Only the eco-label, based 
on life-cycle analysis, could in theory solve th is information asymmetry but it is a voluntary 
scheme and there are only 25 pr oducts groups that  use this label, with  so far only around 400 
companies producing Eco-label products. Total sales of Eco-labelled products amount to 
around €800 million per year. This represents less than 1% of the potential EU market47. 
Given that 99% of the products on the market  are not covered by ec o-label, information 
asymmetries are currently barely ad dressed by the Eco-label scheme.  
Moreover in a recent Eurobarometer Survey48, only 11 % of the res pondents correctly said 
that it is a label for ecological products a nd services. In comparison, 80 % of Germans know 
the Blue Angel and 67 % of  people in the Nordic c ountries understand the Swan.49 The 
Eurobarometer also found that apart from being widely unknown the logo is also confusing to 
consumers.  
4.3. Bounded rationality and pr incipal agent problems 
As explained above, reducing information asy mmetries alone might not be sufficient.  
Principal agent and bounded rationality probl ems for products beyond energy using ones 
remain unsolved as they are not subject to mini mum standards as energy  using products are. 
Take insulation and the landlord / tenant case: incentives for installing the optimal level of insulation, once renovation has been decided, can  be distorted if the costs of installing 
insulation are not borne by the one who reaps the benefits. The typical case is that of the 
landlord and the tenant already mentioned above. A case study for the residential house 
market in the Netherlands demonstrates that less  insulation is installed in rented houses. For 
example, 48% of private rental s are equipped with insulated gl azing, while 70% of privately 
owned dwellings have this insulation feature (Annex IV, Table 3). Since 47% of all houses 
are rented the incentive problem is of a substantial nature.  
Currently the Energy Performance of Buildings Directive does not solve this problem either. 
Indeed, the energy efficiency of buildings di rective does not cover refurbishments below 
1,000 square meters, which thus excludes most resi dential housing. This is precisely the area 
where, due to the significant presence of house holds, principal agent problems are of serious 
concern.  
4.4. Impacts of the above market failures on Innovation 
The internalisation of CO2 costs that is for in stance due to the ETS and other measures (see 
above) will aid innovation to the extent that it reduces the initi al phase during which the new 
technology may not be competitive. In Graph 3 be low this is represented by a move from A to 
B as a result of the upward shift of the gree n line. Thus it may not fully solve the issue of 
                                                
 
46 http://sunbird.jrc.it/energyefficiency/pdf/EnEff%20Report%202006.pdf 
47 Proposal for on a revised Community Ecolabel award scheme, forthcoming. 
48 http://ec.europa.eu/environment/ecolabel/pdf/studies/eurobarometer_survey.pdf 
49 Source: http://www.svanen.nu 
 
EN 20   EN certain innovations having relativ ely high prices in the early st ages of the learning curve. 
During these early stages it is unlikely that there will be sufficient demand as prices are too high, thus deterring consumers from making purc hases, and companies may not be able to 
generate the revenue to stay afloat. However, it  is in the public interest to move along the 
learning curve to generate the CO2 savings of lower energy and resource use that otherwise 
would be foregone. Randon and Naimzada (2006) in dicate that the rate  of decreasing costs 
has a strong influence on reaching a steady state
50, which supports pub lic intervention to 
accelerate the rate. The existence of the othe r market failures described above however 
impedes innovation. 
Graph 3: Interaction between car bon pricing and deployment support 
 
Source: Stern Report (2007) p. 359  
Innovation will only occur if there is suffi cient demand for innovative products. In the 
absence of the market failures mentioned a bove (information asymme try, bounded rationality, 
principal agent problems), environmental exte rnalities would be better internalised by 
consumers and there would be a higher demand fo r products that use less  resources (energy, 
water, etc). This demand would provide incentive s for firms to invest into new technologies to 
improve product characteristics. However, the presence of the market failures leads to lower 
demand than is socially optimal and t hus to too low levels of innovation. 
4.5. Regulatory failures 
4.5.1. Internal market fragmentations due  to uncoordinated public intervention 
Green Public Procurement 
Green Public Procurement has not been uniformly successful (Annex IV Graph 2). The 
degree of uptake shown by the study “Take 5”51 is in some cases qui te substantial (around 
50% of procurement) while in other cases it is quite low (Annex IV Graph 2). Some Member 
States link Public Procurement to national labels , which can create market barriers for foreign 
producers. 
Fiscal incentives 
The differences in national fiscal incentive scheme s with respect to eligibility criteria persist. 
The following table illustrates for the example of roof insu lation and energy saving windows 
                                                 
50 Randon E., Naimzada A. (2006) Dynamics of the non linear learning curve with spillovers in a 
differentiated oligopoly: effects on industry structure. J Evol Econ (2006) 17: 95–106 
51 http://www.ec.europa.eu/envi ronment/gpp/pdf/take_5.pdf 
 
EN 21   EN how fiscal incentives in countri es with similar climate conditi ons are based on quite different 
performance criteria. For example, a produ cer that supplies windows with a U value52 of 2.0 
will benefit from increased demand due to fi scal incentives only in Belgium but not for 
example in Luxembourg or Germany (Annex IV Ta bles 4 and 5). This limits the economies of 
scale that the producer could realise if fiscal in centives were harmonised to foster the highest 
performance across Member States for similar climate conditions.  
4.5.2. Fragmentation of existing policy measures 
An additional problem is that the policies described under point 2 are currently not 
sufficiently aligned and linked with each other. Current labelling systems, such as the energy 
efficiency label, the national “green” labels and the eco-label that coexist but are not part of 
an overall scheme that would foresee a particular role to play for each label. This creates gaps 
- some products do not carry any label despite ca using significant enviro nmental externalities 
- which prevents solving informati on asymmetries in a satisfactory way. 
Furthermore, policies that aim at fostering e nvironmental performance are not linked to each 
other and thus do not inform and reinforce each other. Green Public Procurement measures for example do not include a uniform provision th at only products carryi ng a particular label 
should be purchased. Rather, a multitude of nati onal or regional approaches  exists that due to 
diverging requirements can send conflicting signal s to producers and can cause fragmentation 
of the internal market. The same applie s to diverging fiscal incentive schemes. 
Thus producers are faced with a complex regulat ory environment with a multitude of national 
requirements that hinder an efficient product design on an EU-wide le vel. This leads to 
foregoing economies of scale that could be realised if an internal market with uniform criteria 
existed.
 
5. EU' S RIGHT TO ACT  
5.1. Treaty establishing th e European Community  
Article 94 & 95 of the EC Treat y state that the Council shall adopt the measures for the 
approximation of the provisions laid down by law, regulation or administrative action in 
Member States which have as their object the establishment and functi oning of the internal 
market. This applies to all aspects of pr oduction, products and consumption in the EU.  
Article 174 of the EC Treaty stat es that Community policy on the environment shall include: 
• Preserving, protecting and improving th e quality of the environment. 
• Protecting human health 
• Prudent and rational use of natural resources 
• Promoting measures at international leve l to deal with regional or worldwide 
environmental problems. 
Patterns of production and consumption are manife st at global, European, national and local 
level and are integral to each  of the considerations above. 
                                                 
52 The U-value describes how well a building material cond ucts heat. It measures the rate of heat transfer 
through a material of known thickness over a given area under standard conditions. 
 
EN 22   EN 5.2. Policy background 
Specific impetus to act was recognised by the European Council in June  2006 when it adopted 
the renewed EU Sustainable Development Strategy (SDS). This identifies unsustainable consumption and production patterns as one of the key challenges for the EU and called upon 
the Commission to develop an Action Plan on Sustainable Consumption and Production, to: 
• identify and overcome barriers for Sustainable Consumption and Production, 
• ensure better coherence between the different related policy areas
; 
• rise awareness among citizens and change unsustainable consumption habits. 
Actions on Sustainable Industrial Policy and on  Sustainable Consumption and Production lie 
at the heart of furt hering the Lisbon Growth and Jobs Agenda. 
In the Mid-term review of the industrial policy53 thrust is provided for a new initiative on a 
sustainable industrial policy, envi saged to help industry contribu ting to solve the challenges 
while also benefiting from the emergence of ne w markets in environmental technologies. The 
main thrust is to turn  potential challenges into  opportunities for EU indus try, in order to lead 
the transition towards a low carbon and resource efficient economy. 
More globally, the need for action was clea rly voiced at the Worl d Summit on Sustainable 
Development in 2002. The Johannesburg Plan of Implementation (JPI) signed at this Summit 
urged all countries to promote sustainable co nsumption and production patterns, with the 
developed countries taking the l ead. This calls for countries to  promote the development of a 
10-year framework of program mes on Sustainable Consumpti on and Production (10YFP). At 
global level, the EU is committed to international efforts to develop the 10YFP, the 
"Marrakech process"54. 
Subsidiarity and EU added value  
Action at the Member States level is unlikely to address environmental performance either 
efficiently or effectively. The impacts of clim ate change and air and water pollution are of a 
global or at least a cross border nature. Member  States may fail to take into account the 
effects of domestically genera ted pollution which impacts outside its national borders and 
carry out insufficient abatement. 
Individual Member States action risks leadin g to fragmentation of the internal market, 
particularly if that means implementing diffe rent standards and labelling or verification 
schemes. Where necessary, homogenous labelling or standards schemes avoid internal market 
fragmentation, facilitate the realisation of economies of scale and increase consumer understanding and acceptance.  
6. O
BJECTIVES  
The general objective  of the action plan is to  contribute to the goals  of the Lisbon Strategy 
and to help achieve the policy aims of the Su stainable Development strategy of the European 
Union by rendering product policy in the EU more effective. More concretely, the goal is to 
allow industry to transform environmental challenges into ec onomic opportunities by 
fostering sustainable production and consump tion on the basis of a strong framework for 
                                                 
53 COM(2007)374 
54 http://www.un.org/esa/sustdev/sdissues /consumption/Marrakech/conprod10Y.htm 
 
EN 23   EN product policy. This requires an integration  of different building bloc ks and a strengthening, 
where necessary, of the different tools to ensure that: 
– For products with significant environmental ex ternalities, notably wi th regard to energy 
use, thresholds are set as a minimum requi rement for putting products on the internal 
market that lead to a more  socially desirable outcome; 
– For products with significant environmental ex ternalities placed on the Internal Market 
consumers are provided with relevant in formation on the differentiation in this 
performance; e.g. through an appropriate labelling scheme; 
– Fragmentation of incentives and stimuli (e.g. fi scal incentives and public procurement) for 
consuming products with more environmentally performing features in the Internal Market 
is avoided; 
– Barriers to trade across the Internal Market ar e identified and eliminated to ensure that 
Environmental Industries can benefit from the advantages of the Internal Market; 
– Innovation with regard to environmentally pe rforming products is f acilitated by removing 
market and regulatory failures and by provi ding early information on top performing 
products; 
– Ensuring a regular updating of the key para meters defining the framework for product 
policy to ensure that, as innovation picks up, the framework remains relevant to products 
actually sold on the Internal Market; 
– Maximising the environmental contribution of the EU's standards internationally whilst 
ensuring that the possible short run incidence on the competitive position of EU industry is 
addressed, where necessary. 
This is to be done on the basis of a coherent  set of measures centred around a strengthened 
Integrated Package which builds on existing tool s, strengthening them where appropriate and 
providing for better linkages. In deed, the operational objectives are to focus on existing tools, 
such as EuP, EELD, Eco-label and others. They are: 
(1) To investigate ways of making better use of eco-labelling to help overcome 
information asymmetries  
(2) To assess possible developments of the EUP di rective so that it can better deal with 
bounded rationality and principle agent problems as well as reduce internal market fragmentation 
(3) To examine if and how GPP and EELD can help find solutions to innovation 
difficulties and help contribute to addressing internal market/market fragmentation issues 
(4) To see where further measures are needed and to help develop them. 
The Action Plan therefore does not aim at enviro nmental legislation for industrial processes or 
at air quality legislation. It also does not targ et the use of economic instruments to internalise 
externalities per se. It is important to note  however that should su ch a pricing policy be 
developed it would be compleme ntary and consistent with th e above defined objectives for 
product policy since the thresholds for putting products on the markets are set such that a 
more socially desirable outcome will be ach ieved. A pricing policy would obviously further 
strengthen incentives for innovation. 
 
EN 24   EN These objectives  of the initiative follow directly from the market and regulatory failures 
outlined above and the problems they lead to in terms of negative environmental impacts. The possible actions that will follow from the propos als resulting from this action plan will be 
subject to further, detailed impact analysis wh ere considerations such as costs and benefits, 
efficiency and effectiveness in achieving the ob jectives will form the fundamental basis upon 
which they will be judged. At that stage, more  specific objectives that each of the concrete 
actions are then to achieve will be spelt out.  
7. O
PTIONS  
These further impact assessments will of course also include a baseline (or no policy change 
option) as a real alternative against which the new measures will be analysed. Moreover, 
detailed analysis pertaining to, for example, th e impact on administrative burdens will be 
carried out when the individual measures are asse ssed. Thus the role of the current action plan 
is to identify ways and measures for further an alysis so that the objec tives of the previous 
section can be attained. In accordance with th e present set of Commission IA guidelines, the 
options and the analysis of their impact in what follows hereunder is proportionate in the 
sense that there is sufficient detail to show  how the options can achieve the objectives and 
why, based on the preliminary analysis presented hereunder, they deserve (or do not deserve) 
further, more detailed analysis. 
Three mutually exclusive options that seek to contribute to solving the market and regulatory 
failures identified in the problem definition and improve environmental performance will be analysed. The baseline option consists of con tinuing current policy (a set of voluntary and 
mandatory actions). The second option pla ces much more emphasis on voluntary action 
whereas the third option makes use of mandatory  measures based on exis ting legislation with 
some limited support in the form of voluntary action. 
Option 1: No policy change (baseline) 
This option consists of the policies currently in place as described in the problem definition 
(see current situation). To summa rize, product policy as it sta nds would introduce via the eco-
design directive mandatory standards for a lim ited set of energy-usin g products, while the 
energy efficiency label and eco-label would cont inue to provide information to consumers and 
procurers on the energy use of appliances a nd life-cycle performance of a limited number of 
products respectively. The energy star label would facilitate the procurem ent of more efficient 
computers. The energy efficiency action plan w ould foster improvement in energy use, in 
particular through the implementation of the Energy Performance Buildings Directive. The 
Environmental Technologies Action Plan a nd EMAS would promote improvements in 
environmental performance, notably of produ ction processes. Gree nhouse gas emissions 
reduction would be addressed through the Climat e package. Air pollution would be tackled by 
the directives on industrial emissions on ambient air quality and Cleaner air for Europe. Waste 
related environmental impacts would be covere d by waste directives. No new measures would 
be introduced. 
Option 2: Strengthen the role of Ec o-label (mostly voluntary measures) 
This option would promote a combination of inst ruments to reinforce voluntary actions (Eco-
label, Open Method of Coordination), promote Green Public Procurement
 and identify 
internal market barriers for eco-industries (competitiveness sc reening). The different market 
and regulatory failures would essentially be ad dressed through the provision of information 
and the development of incentives. New regulatory action setting mandatory requirements 
 
EN 25   EN would not be developed and the co-ordination of  existing policies would be dealt with within 
the existing framework.  
The actions would consist of: The main building block would be the Eco- label regulation, substa ntially revised. The 
revision would consist of simplifying the mech anisms for granting it while maintaining its 
voluntary character. The new Eco-label regulati on would promote a reduction of the number 
and stringency of criteria to be applied for the identification of eco-labelled products, by 
concentrating only on the most important environmental impacts from a life-cycle 
perspective. A simplified pro cess and the use of more lim ited criteria, regularly updated, 
would allow more product groups to apply fo r the eco-label, thus reducing information 
asymmetries on environmental impacts of prod ucts not addressed by EUP. The Eco-label 
would become a voluntary “label of commo n environmental sta ndard” throughout the 
European Union. The Energy Efficiency Label c ould be repealed if th e extended number of 
products covered by Eco-label became sufficiently large.  
Implementing measures for EUP would be de veloped that include  not only minimum 
requirements but also indicate the expected date of revision of these requirements to introduce 
a dynamic adjustment mechanism into the proce ss to take account of developments and to 
provide predictability for the sectors concer ned. Energy performance would continue to be 
used as the main criterion to set minimum requirements for energy using products, while it 
would be one of the criteria of Eco-label for these products. 
Measures to reinforce Green Public Procurem ent would include utilis ing Eco-label as an 
indicative criterion of procurement for some specific products such as portable computers, 
appliances, etc.  
The Commission would promote the use of the open method of coordination by those 
Member States that would like to harmonise the use of economic incentives to promote eco-
labelled products and more generally identify  benchmarks, share best practices and develop 
guidelines for green public procurement.  
A strong effort would be put in promoting th e use of EMAS by companies to improve their 
environmental performance. 
A study would be launched to carry out a co mpetitiveness screening of barriers to the 
expansion of eco-industries to identify internal market problems for this sector. On the basis 
of the results, the Open Method of Coordina tion could be mobilised to set up a common 
approach by Member States to eliminate thes e barriers. Finally, exis ting instruments (EuP, 
labelling, GPP etc) would be better coordi nated by developing conc rete measures by the 
Commission and the use of the Open Method of Co-ordination. 
In summary, this option foresees no new mandatory measures. The emphasis is on the 
voluntary provision of information coupled with a more dynamic approach to already planned 
mandatory measures such as EUP. 
Option 3: Strengthen the role of Product Policy (mandatory measures) 
This option would integrate a set of instrument s to extend the scope of mandatory actions 
(EUP, EELD) and link them with voluntary ac tions (Eco-label, EMAS, GPP). The use of 
incentives by Member States would be furthe r harmonised. The main element would be an 
Integrated Package that provides informati on to consumers about life-cycle costs and 
establishes a harmonized level of ambiti on for the use of incentives to promote 
environmentally better performing products. The difference to option 2 is that this option 
 
EN 26   EN consists of a greater emphasis on mandatory re quirements, whilst also  including voluntary 
components.  
The main building block of the Integrated Package would be the Eco-Design Directive. The 
scope of the directive would be extended beyond energy using products. The implementation would comprise, besides mandatory minimum re quirements, the identification of indicative 
advanced performance benchmarks. Requi rements and benchmarks would evolve 
dynamically. The impact assessments of the im plementing measures for each product would 
identify key environmental criteria to be fulfilled.  
Another important building block of the Integrat ed Package would be an enhanced labelling 
framework. The Eco-design Directive would be  accompanied by a revised Energy Labelling 
Directive (ELD) which would be further deve loped to cover energy-using products (except 
vehicles
55) and energy related products (such as wi ndows). The ELD will focus on the energy 
consumption/conservation in the use phase while taking into account other environmental impacts where appropriate. This scheme woul d be mandatory and would reflect the evolving 
boundaries of the advance performance benchm arks. The implementing measures of the 
Labelling Directive will define, where appropr iate, the precise modalities of the label. 
Labelling will be used for indicating, , on the one hand, use phase energy consumption/savings and, on the other hand, other significant and relevant environmental 
parameters of the product, . 
Distinct form these mandatory labelling schemes, the voluntary Eco-label would be 
complementary by indicating environmental exce llence, providing the benchmark levels for 
top performance. In order to achieve this, the Eco-label re gulation would be revised to 
simplify the procedures of obtaining the labe l and reducing fees, as  well as improve its 
coverage of other product groups and boost mark eting. Eco-label criteria would be used to 
inform the process of identification of adva nce performance benchmarks for the Eco-design 
Directive. 
The final building block of the Integrated Package would relate to economic incentives and 
Public Procurement. The labelling system w ould fix mandatory level of product performance 
for public procurement. Besides, and to avoid fr agmentation of the Internal Market, the use of 
economic incentives by Member States would also be linked to this level of product 
performance. Member States could continue to  use economic incentives of their choice, such 
as tax credits, reduced tax rates, lower interest ra tes for specific loans, cash subsidies, etc. but 
would have to base them on this  level of product performance. 
The accompanying measures would include actions to address environmental performance in 
production processes and reinforce existing le gislation. A strengthened and inter-linked 
EMAS scheme would aim to increase functionali ty and up-take of the EMAS scheme through 
the revision of the existing Regulation (EC)  No 761/2001 to enhance the possibilities for 
companies, particularly SMEs, to apply EMAS and to  establish best practise benchmarks for 
operating and managing enterprises. An Envir onmental technologies verification scheme 
would be set up to act as framework to provide  technology developers w ith the possibility of 
having a reliable third-party ve rification of the environmenta l performance of their new 
technologies, thus increasing their credibility vi s-à-vis customers and f acilitating their up-take 
by the market. Moreover, actions would ai m at developing content for training and 
dissemination of tailor made information on subject of energy saving and environmental 
                                                
 
55 Already addressed by other Community legislative initiatives. 
 
EN 27   EN compliance in SMEs. Other voluntary measures  and targets to promote uptake of Greening 
Public procurement would be set up. 
As in option 2, a study would be launched to identify competitiveness issues for eco-
industries such as internal market barriers. Howe ver, in case of proven barriers, action would 
be taken to remove them w ithin the framework of the Co mmission’s industrial policy, 
accompanied with a thorough impact assessmen t of the possible options and their 
consequences. Table 1 summarises the actions w ithin each option and the market failure they 
address.  
Table 1: identified market failures and proposed  actions to address them in each option.  
Market failure Option 1 Option 2 Option 3 
Information 
asymmetries Ecolabel/EELD/E
nergyStar Enhanced Ecolabel 
Promotion of EMAS Revised EELD, Eco-label, 
enhanced EMAS, Environmental 
Technologies Verification 
Scheme 
Bounded 
rationality EUP Dynamic 
Implementing 
measures EUP Extended EUP 
Principal Agent 
problems EUP Dynamic 
Implementing 
measures EUP Extended EUP 
Innovation CIP/FP7/EnergyS
tar/Enterprise 
Europe Network Voluntary GPP at 
Ecolabel level Mandatory product performance 
for public procurement. GPP 
Fragmentation 
of Internal 
Market EuP GPP at Ecolabel level 
(Open Method of 
Coordination), EUP, 
Screening of single 
markets barriers Mandatory product performance 
for public procurement. GPP. 
Harmonised requirements for 
national incentive schemes; 
enhanced EuP; screening of 
single market barriers 
8. A NALYSIS OF IMPACTS  
Option 1 (baseline): 
As mentioned above, under the ' no policy change' scenario, several policies already partially 
address the identified market failures. The following table summarizes the positive and 
negative impacts in the fu ture, compared to the status quo .  
Table 2: Current policies and their impacts  
Market 
failure Actions Positive impacts  Limitations and negative 
impact 
 
EN 28   EN Information 
asymmetries Ecolabel/EELD/
EnergyStar Positive impact on 
energy efficiency for products covered Limited coverage. Outdated 
performance criteria (EELD) 
Bounded rationality EUP Can be solved for 
energy using products by implementing measures Not solved for energy related 
products.  
Higher purchase prices (but 
offset by savings over lifespan of product) 
Firms not being able to meet 
minimum requirements have to exit the market 
Principal Agent problems EUP Can be solved for 
energy using products by implementing measures Not solved for energy related 
products.  
Higher purchase prices (but 
offset by savings over lifespan of product).  
Firms not being able to meet 
minimum requirements have to exit the market 
Innovation CIP/FP7/ 
EnergyStar Enterprise 
Europe Network Improved learning 
curves leading to lower costs for new technologies. SMEs networking for innovation. The persistence of market 
failures for non-energy using products hinders innovation. Insufficient information for SMEs not tailor-made.  
Fragmentation of Internal Market EuP Can partly be solved 
for energy using products by implementing measures Where national criteria for GPP 
or fiscal incentives are not granted based on uniform criteria high risk of fragmentation of internal market 
Option 2: Strengthen the role of Eco-label (mostly voluntary measures) 
Overall, the impacts of this option would depend on the degree of participation of companies 
in the voluntary schemes. Their participation would be promoted by a simplified access to the 
eco-label scheme and increased demand for more  environmentally friendly products in those 
Member States adopting the eco-label as criter ia for public procurement. A more proactive 
promotion of EMAS would also advocate it s voluntary uptake and improve environmental 
performance. Additional demand would be stimul ated by fiscal incentives in those Member 
States that decide to coordinate their actions  and ambitions. However, the remaining presence 
of low performing, low priced products on the markets would slow down the move towards 
improved environmental performance. 
Positive impacts: 
 
EN 29   EN The information asymmetries identified above w ould be dealt with by ex tending the scope of 
the still voluntary basis. Less stringent criteria for Eco-label as well as lower cost of compliance would induce a large number of eco-labelled products  on the market thus enabling 
the consumer to take better info rmed decisions. The success of th is in terms of leading to a 
more efficient outcome depends on the number of  products with the eco-label and the number 
of consumers making use of the information. . Environmental performance of companies would be clearly identified fo r those companies adopting EMAS. 
Public procurement would benefit from the additi onal information so that procurement criteria 
could be linked to the eco-label. Moreover, making eco-label a volunta ry criterion for public 
procurement and coupling it w ith more ambitious indicative  targets should increase the 
demand for these products and reward those who use the eco-label. The reference to a 
harmonised label across the EU could prevent fr agmentation of the internal market through 
Green Public Procurement. 
Member States could use the open method of c oordination to prevent a fragmented approach 
to giving incentives. Using the ec o-label as a criterion for gran ting fiscal incentives would 
further stimulate demand, facilita te the use of economies of s cale, and reward those producers 
who participate in th e eco-label scheme.  
Bounded rationality and principal agent problems would be deal t with through the adoption of 
implementing measures for energy using products  within the framework of the current EuP 
Directive complemented by self-regulatory approaches. 
Barriers to innovation would be partly offset by using dynamic criteria for ecolabel products 
and the use of dynamic minimum requirements in the implementing measures under the EuP 
Directive. Increased demand fo r these products and GPP would provide additional stimuli to 
innovation. 
Internal market barriers for eco-industries w ould be identified by the screening exercise. 
These would be addressed as far as possible w ithin the framework of the industrial policy.  
Voluntary compliance with eco-label criteria would in addition drive up the environmental 
performance of companies from outside the Eu ropean Union willing to put Eco-labelled 
products on the European market. 
No additional short-term financial burden wo uld be imposed on Low income households 
because they would be able to cont inue purchasing less performing products. 
The different measures contained in this optio n are complementary in that each of them 
improves demand for eco-labelled products by addressing the above mentioned market 
failures and by decreasing mark et fragmentation. Higher dema nd should allow the realisation 
of economies of scale in production th at otherwise would not be feasible. 
Negative impacts 
Information asymmetries would be solved only for products covered by Eco-label. A 
substantially simplified pr ocedure would make it more attrac tive to participate in the scheme, 
however the problem remains that participation is voluntary. Unless a significant fraction of 
consumers buys eco-label products, the incentive for producers to participate would remain 
somewhat limited. 
High cost of compliance with EMAS would rema in, even if the sche me would be better 
known by companies. 
 
EN 30   EN The magnitude of the impacts on bounded rationali ty and principal agent failures would be 
restricted to those covered by the EUP Directiv e. In comparison to the baseline option, the 
only difference would be that the implemen ting measures and the minimum requirements 
would be updated more regularly. However, many products with significant environmental 
impacts would remain outside the scope of th e Directive and many ba dly performing products 
would remain on the market and be bought du e to, for example, bounded rationality and 
principal agent problems 
The effects on innovation would be constrained by the voluntary nature of GPP and depend 
on how much use public authorities make of the criteria. It is doubtful whether this would lead 
to sufficient demand for triggering major investments in innovation. 
A fragmentation of incentives w ould only be addressed by Member States participating in the 
Open Method of Coordination. Due to the voluntary nature of this approach it is likely that the 
fragmentation of the internal market would persist, although probably at reduced levels 
compared to the baseline. 
Products with superior performance are likely to have higher purchasing costs. Low income 
households would not be able to benefit from the long term life-cycle gains if they are not 
able to finance the initial investment. 
The impacts on administrative burden cannot be  assessed at this st age but the impact 
assessment reports that need to  be prepared for any legislat ive proposals that might follow 
would address this. 
Table 3 summarizes the envisage d actions and their impacts.  
Table 3: Actions and their impacts under option 2. 
Market 
failure Actions Positive impacts  Limitations and negative 
impact 
Information 
asymmetries Enhanced 
Ecolabel Extended coverage but 
impact remains limited 
(voluntary labelling), 
reduced cost of compliance 
for participating firms Could lead to higher prices 
but limited impacts on low 
income households 
Bounded 
rationality Dynamic 
Implementing 
measures for 
EUP Can be solved for energy 
using products, regularly 
updated efficiency 
improvements to maintain 
incentives to innovate Limited scope, higher 
purchase prices (but offset by 
savings over lifespan of 
product), firms not being able 
to meet minimum 
requirements have to exit the 
market 
Principal 
Agent 
problems Dynamic 
Implementing 
measures for 
EUP Can be solved for energy 
using products, regularly 
updated efficiency 
improvements to maintain 
incentives to innovate Limited scope, higher 
purchase prices (but offset by 
savings over lifespan of 
product), firms not being able 
to meet minimum 
requirements have to exit the 
market 
 
EN 31   EN Innovation Voluntary GPP 
at Ecolabel 
level, Dynamic 
Implementing 
measures for 
EUP Higher uptake induces 
economies of scale, 
incentives to innovate via 
dynamic criteria for 
ecolabel Budget impacts for 
governments purchasing 
leading edge technology 
Fragmentation 
of Internal 
Market GPP at Ecolabel 
level (Open 
Method of 
Coordination), 
EUP, Screening 
of single 
markets barriers Help avoiding 
fragmentation of internal 
market Limited to Member States' 
participation with high 
impact on Member States 
budget 
Option 3: Strengthen the role of Product Policy (mandatory measures) 
Overall, this option would induce the strongest  impact on environmental conditions given the 
mandatory character of the measures and syne rgies flowing from the combination of the 
actions in the Integrated package. Although some initial costs of this op tion such as purchase 
prices might be higher, it is expected that in th e long term product prices would go down due 
to learning effects and economies of scale and th at life cycle costs in particular would be 
lower l. 
Positive impacts 
The revised Energy label and th e Eco-label would provide info rmation on the environmental 
impacts for a broad range of products. The dynami c elements envisaged for those labels also 
guarantee that the information that is provide d is relevant. An improved EMAS and the 
environmental technologies veri fication scheme would recognise more environmental friendly 
production processes by awarding a certificate.  All these measures would substantially 
contribute to solving information asymmetries. 
The enlarged scope for Eco-design would decr ease bounded rationality and principal agent 
problems through the implementation of mandat ory minimum requirements for an extended 
number of products, beyond energy-using ones, such as insulation material that have 
significant environmental impacts. This can not be said of pricing policies such as ETS, as 
explained above. Mandatory mini mum requirements would remove from the market products 
inefficient from a life-cycle perspective whenev er their impact would lead to a desirable 
social outcome. The dynamic nature of the system  would ensure that regular improvements in 
the environmental characteristics of products ta ke place in the future. Both would help 
improve environmental quality and decreasing en ergy consumption. The extent of the impacts 
would depend on the products for which implem enting measures would be adopted and the 
precise nature of the product ch aracteristics. Due to the focu s on least life-cycle cost, for 
minimum requirements the improvements would also be cost effective.  
Predictability for companies and incentives to innovate would be improved by harmonised 
environmental performance criteria for Public  Procurement and economic incentives across 
the EU. Higher mandatory level of performa nce for public procurement would further 
accelerate innovation and reward front-runner comp anies. In addition, the mandatory use of 
the same EU-level of performa nce in these two areas will e liminate a fragmentation of the 
 
EN 32   EN internal market. In the longer term, this w ould allow attaining economies of scale, boost 
innovation and lower product prices for consumers. 
SMEs would have access to more adequate , tailor-made solutions to improve their 
environmental performance and foster innovation. 
The formal linkage between Eco-design and th e labelling scheme, whose criteria would be 
informed by Eco-label, provides a harmonized  and coherent framework to continually 
improve the performance of products on the market  while at the same ti me assuring that this 
is done in a cost-effective way.  
Internal market barriers for eco-industries w ould be identified by the screening exercise. 
These would be addressed as far as possible w ithin the framework of the industrial policy. No 
difference exists in comparison to option 1 in that regard. 
Compliance with minimum requirements would be required from non-EU producers who 
want to market their products in the EU. This could lead to  improved products being offered 
on other markets as well. If consumers elsewher e understand the life-cycl e cost savings that 
can be realised by products complying with EU minimum requirements this might create additional demand for improved products. At the sa me time, the competitiveness of European 
producers on non-EU markets should not be impa ired since EuP product standards only apply 
to products being marketed in Europe. Thus exports to third countries of products not 
fulfilling minimum requirements are still possible. Clearly, however, manufacturers with 
small sales volumes and all single produc tion lines would be more affected.  
The common focus of the enlarged EUP and th e labelling scheme, dealt with by the same 
comitology procedure with common members,  would speed up the process of adopting 
implementing measures and the identification of requirements for the labelling system. 
The different elements of this option are desi gned to complement and reinforce each other. 
The main synergy consists of a strong incr ease in demand for environmentally friendly 
products that satisfy harmonised criteria acro ss the entire EU. This will encourage firms to 
engage in innovation and will allow them to realise economies of scale in production, which 
in the medium term should lead to lower pric es for more environmentally friendly products. 
Negative impacts 
In the short term the prices of products ha ving to fulfil minimum requirements would most 
likely increase, but in the long r un this would be offset by life cycle savings. In particular low 
income households could be affected, either by having to buy more e xpensive products or by 
having to pay higher rent (if landlords need to provide more performing equipment). The 
precise impacts would be carefully analysed in  the impact assessments that would accompany 
each implementing measure. 
Companies that would like to adopt EMAS and utilise the Environmental Technologies 
Verification Scheme would also face additional costs to obtain  the certificate. In comparison 
with the baseline scenario, a larger number of  firms not being able to meet the minimum 
requirements set by the implementing measures  of the extended Ecodesign Directive would 
have to exit the market. For each implementing measure, these effects would be scrutinised 
carefully in the accompanying impact assessment for the measure. 
Mandatory Public Procurement of environmentally performing products would impose some 
upfront budgetary burdens on public authorities. However, the le vel of performance would be 
fixed so as to ensure equal or lower life-cycle  costs when compared with current procurement 
practices.  
 
EN 33   EN Foreign companies whose products do not fulfil minimum requirements have to incur cost to 
change their product design or st op supplying the European market. 
The impacts on administrative burden cannot be  assessed at this st age but the impact 
assessment reports that need to  be prepared for any legislat ive proposals that might follow 
would address this. Producers co ncerned by the extension of the scope of the Ecodesign 
Directive may incur some additional administrative burden, which will have to be considered in the impact assessment of the implementing measures. 
Table 4 summarizes for this option the actions and their impacts.  Table 4: Actions and their impacts under option 3 
Market 
failure Actions Positive impacts  Limitations and 
negative impact 
Information 
asymmetries Revised Energy label, 
Eco-label, enhanced 
EMAS, Environmental 
Technologies 
Verification Scheme Solved also for products 
beyond energy-using ones 
with the highest 
environmental impacts. Lower 
environmental impacts of 
production processes Higher costs for 
companies affected. 
Bounded 
rationality Extended Ecodesign Solved also for products 
beyond energy – using ones, 
regularly updated efficiency 
improvements to maintain 
incentives to innovate Higher purchase 
prices (but offset by 
savings over 
lifespan of product) 
for consumers and 
procurers. Firms not 
being able to meet 
minimum 
requirements have to 
exit the market 
Principal 
Agent 
problems Extended Ecodesign Solved also for products 
beyond energy-using ones 
with the highest 
environmental impacts, 
regularly updated efficiency 
improvements to maintain 
incentives to innovate Higher purchase 
prices (but offset by 
savings over 
lifespan of product) 
for consumers and 
procurers. Firms not 
being able to meet 
minimum 
requirements have to 
exit the market 
Innovation Mandatory level of 
product performance 
for PP, voluntary 
measures on GPP Accelerated market uptake of 
more performing products. 
Induced economies of scale. 
Front-runners rewarded. More 
adequate solutions for SMEs 
available Additional 
budgetary burden  
 
EN 34   EN Fragmentation 
of Internal 
Market Mandatory level of 
product performance 
for PP, Harmonised 
requirements for 
national incentive 
schemes; extended 
Ecodesign; screening 
of single market 
barriers Accelerated market uptake of 
more performing products. 
Uniform product requirements 
for incentives. Induce 
economies of scale. Front-
runners rewarded. Additional 
budgetary burden 
Based on the qualitative reasoning presented so far, it is clear that all three options would help 
reduce the problems to do with the market an d regulatory failures outlined in the problem 
definition of this document. However, the analysis of the baseline that is also contained in that 
section showed that a number of issues w ould remain unaddressed.  Although the discussion 
above points to the baseline option being the one  that produces the leas t amount of initial new 
costs, at least when excluding environmental costs that result from no further action, this option would only very partially achieve the objectives set out in  section 6. To name but two 
objectives, information to consumers would re main very limited and the fragmentation of 
public incentives, and thus trade barrier s, are unlikely to be resolved.  
In spite of the more voluntary nature of the measures foreseen in option 2 and the possible 
extension of mandatory measures in option 3, it would be wrong to assume that option 2 
would be less costly. Indeed, the analysis  below shows that the introduction of new 
mandatory measures, for example in the context of dealing with the principle agent problem explained above, could be less costly. When taking into account the likely benefits, the 
argument tilts even further in favour of option 3 as its mandatory measures mean that in order 
for option 2 to achieve the same benefits one w ould have to assume a hi gh degree of take up 
of its voluntary measures. And such an assumpti on is likely to be much too optimistic since 
uptake rates are typically very low. For exampl e, regarding labelling schemes such as eco-
label, existing schemes in some member states tell us that uptake rates are at best 20%.  
Clearly, a precise quantification of the costs a nd benefits of the different options is not 
possible at this stage, inter alia, since they all depends cr ucially on the supply and demand 
characteristics of the product categories to wh ich the framework would be applied. They will 
be determined through subsequent Impact Assessments. 
However, the likely effects can be illustrated on a case by case basis. The following 
paragraphs provide some illustrative calculat ions based on information that is readily 
available of the expected costs and benefits of using more energy efficient products. The 
methodology for these calculations is presented in  Annex V. The calculations are not intended 
to provide a full cost benefit analysis of all th e measures foreseen in the three options since 
they only focus on water heaters (energy us ing product) and windows (energy related 
product). They do however add further arguments to  the sections above so that a decision can 
be made as to the direction in which further analysis should go – e.g. whether it will be targeted on a set of measures that are esse ntially voluntary or to wards a more mandatory 
approach.  
In the case of energy using products, the first scenario reflects the current situation where 
implementing measures have not yet been adop ted. Option 2 would mean that water heaters 
could apply for the eco-label and that those that correspond with the best performing product 
on the market would receive the label. Optio n 3 would entail, as already expected, the 
 
EN 35   EN inclusion of water heaters in EUP. When looking at the life-cycle costs option 3 turns out to 
be significantly cheaper than option 2. Interestingly though, op tion 3 would mean 
substantially higher purchase costs for the consumer (but also greater benefits in terms of less 
energy use and CO2 emissions) (Annex V, table 4).  
The case of energy related products, e.g. windows, is  even more interesting as, contrary to the 
above analysed case, according to  current arrangements these pr oducts would not come within 
the scope of the EUP. Thus option 1 represents  the baseline with low purchase prices but 
relatively high energy use and CO2 emissions. Sim ilar to the case of water heaters, very low 
emissivity windows would receive the eco-label. That would lead to a more than doubling of 
the purchase price for consumers for this product.  Option 3 envisages roll ing out Ecodesign to 
also include windows with higher insulation perf ormance (for the purpose of the example, 
double glazing windows are considered even if in some cases single glazing could also 
apply)56 , which would result in an increase in th e purchase price of ca . 50%, but lower life-
cycle costs (Annex V, table 8).  
At the aggregate level (Table s 5 and 6), the importance of the impacts of option 2 would 
depend on the degree of market penetration of th e different products. For this analysis, one a 
market penetration of 20 % of eco-labelled products57 is assumed, based on the penetration 
rates of national labelling schemes which so far have achieved at best rates of up to 20%. In 
the case of option 3, mandatory minimum requi rements for products translate into full 
penetration. 
For both examples (energy using and energy re lated) aggregate initial purchase costs for 
consumers and procurers of option 3 would be clearly higher than those induced by option 2. 
This is explained by the fact that under option 2 only a limited share of  all purchased products 
has the highest environmental performance, which makes them more expensive.  
Over time, however, option 3 would pay off in terms of life-cycle costs, energy savings and 
CO2 emissions avoided. Whereas most other environmental policies are implemented at 
positive cost, the measures envisaged in this re port imply cost reductions in the long term, 
positive environmental impacts and lower energy consumption, as shown in the following tables. 
Table 5: Aggregated impacts of  the options for the case of water heaters (covered by EUP) 
 Option 2 (20%) Option 3 
Purchase costs  48.29% 99.19% 
Energy impacts  -7.49% -29.13% 
CO2 impacts  -7.49% -29.13% 
Life cycle cost  -3.19% -16.94% 
                                                 
56 It is clear that this is a simplification for the pur pose of the argument. In many regions in Europe double 
windows might not be required. 
57 These percentages seem justified by the fact that this scheme would remain voluntary but would lead to 
a higher penetration than at the moment due to the simplification of the granting procedures and criteria 
on the one hand and some additional demand from public procurement on the other hand, 
 
EN 36   EN Sources: own estimations on the ba sis of results from Technical  studies for the implementing 
measures of the EuP and data from Prodcom 
Table 6: Aggregated impacts of the option for the case of windows (not covered by EUP) 
  Option 2 (20%) Option 3 
Total purchase price  30.00% 50.00% 
Total energy consumption in lifespan  -6.50% -22.86% 
Total CO2 emissions in life span  -6.18% -20.91% 
Total Life-cycle costs  -1.34% -10.70% 
Sources: own estimations with data from Prodc om, French prices for windows from Lapeyre 
website, and degree of performance by Price Waterhouse Cooper 
Under Option 2, access to better performing products  would be substantially more difficult for 
low income households due to higher purchase cost s. It should be reminded that this category 
of household spend the highest proportion of their income (30.6%) on housing, water, energy 
gas, and other fuels and the lowest portion (5.7%) of their income on appliances and renovation (Annex IV, Graph 3). However, as less performing (low price)  products would still 
be present in the markets, ther efore it is unlikely that thes e households would change their 
consumption behaviour. This would prevent them from energy savings in the long-term. Option 3 would have bigger benefits but may create some adjustment difficulties for low 
income households. Under budgetary constraint s, the decision to re new appliances, or 
renovate buildings might be postponed, implying al so that these households would not be able 
to take advantage of more e fficient products. The use of incen tives by Member States could 
help in overcoming these possible drawbacks for low income househol ds. However in the 
long run Option 3 would guarantee that also these households benefit from lower energy bills.  
Public procurement can help in creating a su fficient level of demand to accelerate innovation. 
Assuming that 5 %
58 of the market for small size wate r heaters (860000 un its per year) are 
bought by public authorities59, even if under option 2, 100% of public purchases would be 
eco-label products (as assumed in table below), it can still be shown that option 3 would lead 
to lower purchase costs and lower life-cycle costs while still achieving a substantial 
improvement of energy use (Table 7).  
Table 7: Impacts of mandatory pub lic procurement for water heaters 
  Option 2  Option 3 
total purchase 241.46% 99.19% 
Total emissions -37.47% -29.13% 
Total energy use -37.47% -29.13% 
                                                 
58 This is a conservative estimation. Pricewater House Cooper (2007) es timates a 7% of market share by 
public procurement of water heaters. 
59 No data is available on the procurement for this item. 
 
EN 37   EN Total life-cycle -15.97% -16.94% 
In terms of use of incentives to promote the most efficient products, the mandatory level of 
ambition identified in the implementing measur es of the Ecodesign Directive or through the 
Ecodesign label would be more pr oactive and reduce the fragmentation of the Internal Market 
than a voluntary approach through the Open Me thod of Coordination, whose impact would be 
limited to the participating Member States.  
It is expected that incentives would induce economies of scale in time due to faster learning 
curves. Lower prices combined with the dynami c approach for requirement of an enlarged 
number of products setting in option 3, in which indicative a dvance performance benchmarks 
would become minimum requirements in a given period of time, are expected to induce very 
significant effects. The case of water heaters shows a strong decrease  of energy use, CO2 
emissions and life cycle costs would be redu ced under the hypothesis of a 3% yearly price 
decrease of the best performing product. Howe ver, this would impose some burden on 
Member States budgets. 
Table 8: Impacts of improving minimum requi rements for the case of water heaters. 
 Aggregate results % compared to BAU
Total energy consumption in lifespan (GWh) 11,083 -87.49% 
Total CO2 emissions in life span (Mt CO2) 7,758,450 -87.49% 
Total Life-cycle cost ( million €) 1,495 -83.19% 
Sources: own estimations from the same sources indicated above 
For all the products considered, option 2 shows higher purchase prices and higher life-cycle 
cost. 
9. C OMPARISON OF OPTIONS  
The table below summarises the results of the previous analysis. 
Table 9: Comparison of the options 
Impact Option 1 (baseline) Option 2 Option 3 
Economic No immediate impact 
but in the long run 
efficiency gains 
would be foregone  
(except for energy 
using products). Fragmentation of the internal market would remain. For energy using 
products same as Option 1. For other products high 
purchase prices likely 
to limit voluntary 
uptake . Fragmentation 
of internal market could continue 
depending on MS 
willingness to cooperate. Financial In the short run price 
increases since less performing products have to exit the market. In the long run significant 
savings on energy  more 
than offset this. Fragmentation of the internal market would be 
reduced. High 
procurement pressure for Member States budget in 
 
EN 38   EN burden for those MS 
voluntarily adopting ambitious Green public procurement and granting incentives for best performing products. the short term but offset in 
the long run by energy savings. High budget pressure for Member States granting incentives for best performing products. 
Environmental Limited  
improvements only 
due to minimum requirements for 
energy using 
products . For energy using 
products same as Option 1. For other products some 
improvements but 
limited by voluntary 
nature . Substantial 
improvements due to mandatory minimum 
requirements . 
Social No major impacts , 
prices of energy using products might rise but offset over time by life cycle savings. No major impacts, For 
energy using products same as Option 1, for other products the high purchase prices limit 
access by low income 
households.  For energy using products 
same as Option 1, for other products increases in purchase prices that could affect low income households, but more  
than offset in the long 
run by energy savings.  
The qualitative analysis has shown that option 3 has the largest positi ve overall impacts. It 
may create some adjustment diff iculties in the short term, particularly on the budgets of 
Member States and for low income households. However, in the long run option 3 leads to 
substantial economic, environmental and social  benefits. Therefore option 3 should be the 
preferred option, which is supported by the illu strative quantitative comparisons as well. 
Table 10 summarizes the set of actions in  each option and whether they would be 
accompanied by an impact assessment. 
Table 10 Summary of the Actions and Impact  Assessments included in each option (In bold 
those Impact Assessment already developed) 
 Option 2 Option 3 
Instrument Action IA Action IA 
Eco-label Comprehensive 
revision Yes Revision to 
simplify Yes 
EUP no change to 
Directive Yes, for each 
implementing 
measure Amend Yes, for the Directive 
and for each 
implementing 
measure 
 
EN 39   EN EELD Eventually 
repeal Yes Extend scope and 
include 
mandatory 
procurement 
levels as well as 
harmonize the 
use of incentives Yes 
Complementary 
labelling scheme / / New instrument 
or through the 
extension of 
scope of existing 
ones Yes 
Incentives Open Method 
of 
Coordination No Included in the 
revised label  
Green Public 
Procurement   Communication 
setting voluntary 
measures for 
products not 
covered by the 
labels Yes 
Competitiveness 
Screening Study No Study No 
EMAS Proactive 
promotion No Revision to 
simplify Yes 
Environmental 
Technology 
Verification 
Scheme   Regulation Yes 
Post-2008 
measures   To be determined If necessary 
10. C OST-EFFECTIVENESS  
The examples presented indicate that option 3 is the most cost-effective from the 
environmental and life-cycle perspective.  
The cost effectiveness of the different actions will be re-evaluated when data becomes 
available through the Impact Assessme nts of the individual actions.  
 
EN 40   EN 11. M ONITORING AND EVALUATION  
Monitoring and evaluation will be an important part of the EU sustainable consumption and 
production policy and the sustainable industrial policy. Progress on the objectives will be monitored both to check the implementation of the measures and the contribution to the objectives of the Climate package, the renewed Lisbon agenda for Growth and Jobs and more 
generally the Renewed Sustai nable Development Strategy.  
To this end, it is foreseen to review the po licy on a regular basis (2-4 years) and to submit 
regular implementation/progress reports to the European Parliament and the Council. 
EUROSTAT already gathers data and estimates indicators related to  Sustainable Production 
and Consumption within the fram ework of the sustainable deve lopment indicators. Indicators 
of particular importance for this Action Plan  are greenhouse gas emissions and projections, 
electricity consumption by households, environm ental management systems, as well as the 
number of Eco-labels. They could be compleme nted with indicators on the market share of 
the different categories of products covered by Eco-design and labelling directives and 
indicators on Eco-industries, such as value added, employment, SMEs and innovation rates. 
 
EN 41   EN Annex I 
 
to the 
 
Impact Assessment on the SCP and SIP Action Plans 
 
Summary of stakeholder consultations 
 
EN 42   EN Table of Content 
1. Section 1: Stakeholder Consultations......................................................................... 44 
1.1. Highlights from the SCP/SIP public intern et consultation, 27 July to 23 September 
2007........................................................................................................................... . 44 
1.2. SCP selected stakeholders c onsultation, August/September 2007 ............................ 47 
1.2.1. General Issues: ......................................................................................................... .. 47 
1.2.2. Better products ......................................................................................................... .. 47 
1.2.3. Leaner production ...................................................................................................... 4 8 
1.2.4. Smarter consumption ................................................................................................. 48 1.3. SCP Stakeholder Meeting, 2 October 2007 ............................................................... 49 1.4. SIP Stakeholder Meeting, 17 September 2007 .......................................................... 49 1.5. Recommendations of the High Level Gr oup (HLG) on Competitiveness, Energy and 
the Environment......................................................................................................... 50 
1.6. SCP Conference organized by the Slovenian  Presidency: "Time for Action-Towards 
Sustainable Consumption and Production in  Europe", Ljubljana, 27-28 September 
2007........................................................................................................................... . 50 
1.7. Environment Policy Review Group m eeting (EPRG), 19 September 2007 .............. 51 
1.8. Integrated Product Policy (IPP) Regular Meetings.................................................... 51 1.8.1. Last meeting, 2 October 2007 .................................................................................... 52 1.8.2. Penultimate meeting, 15 November 2006.................................................................. 52 1.9. European Consumer Consultative Group, 19 September 2007 ................................. 52 1.10. Roundtable on Sustainable Consumption, 20 September 2007 ................................. 53 1.11. Concluding remarks ................................................................................................... 53 2. Section 2: Overview of expertise input...................................................................... 53 2.1. Commission research on the environmen tally most damaging products and their 
potential for improvement (EIPRO and IMRPO projects) ........................................ 54 
2.1.1. The EIPRO project..................................................................................................... 54  
2.1.2. The "Environmental IMprovement of PROducts"  (IMPRO) project ........................ 56 
2.2. Commission research on the environm ental impact of raw materials and 
commodities, the "Environmentally weight ed Material Consumption" (EMC) Study
............................................................................................................................... ..... 57 
2.3. Commission Pilot Projects under Integrated Product Policy ..................................... 57 
2.4. List of main studies .................................................................................................... 58  
2.5. SCP experts' workshops, June and July 2007 ............................................................ 60 2.5.1. Workshop on the Japanese Top Runner scheme........................................................ 61 2.5.2. Workshop on greening retailers' supply chains.......................................................... 61 
 
EN 43   EN 2.5.3. Workshop on Green Private Procurement.................................................................. 61 
2.6. Environmental Product Informa tion Working Group, November 2006 .................... 62 
2.7. Key recommendations from the EPDs workshop (January 2007)............................. 62 2.8. Marrakech process, 3rd International SCP experts meeting, Stockholm, June 2007 63 
 
EN 44   EN 1. S ECTION 1: STAKEHOLDER CONSULTATIONS  
This section presents the main consultations carried out by the Commission in preparation of 
the SCP and the SIP Action Plans. It highlight s key messages received from stakeholders and 
puts them into perspective with regard to the SIP/SCP background document published by DG ENV and DG ENTR on 27 July 2007. This document is available in Annex II to this impact assessment. 
In addition, separate stakeholde r consultations and Impact Asse ssments have been carried out 
for a number of specific actions that are intended to be presented with or are related to the 
Action Plans. These include reviews of the EMAS and Eco-label regulations, a 
communication on Green Public Procuremen t, a Communication on a SME compliance 
scheme and a Communication on Market Base d Instruments. Summaries of the Impact 
Assessments and related documents prepared for these initiatives are available in Annex III. 
Besides, the Action Plans take into considera tion the recommendations of the high level group 
on Competitiveness, Energy and the Environment. 
In addition, substantial input from stakeholders  has been collected by DG ENV over the past 
years in the course of numerous conferences , workshops and other events, related to the 
ongoing development and implementation of EU Waste Policy, the Thematic Strategy on the 
sustainable use of natural resources, the Themat ic Strategy on the prevention and recycling of 
waste, and the Integrated Product Policy (IPP). Stakeholder contributions  to these activities 
have been reported elsewhere and are not rep eated here in detail. They are however an 
integral part of the Commissi on services' considerations in developing the SCP Action Plan. 
1.1. Highlights from the SCP/SIP public internet consultation, 27 July to 23 
September 2007 
A web-based public consultation was carried ou t from 27 July to 23 September 2007. It was 
based on a common background documen t of DG ENV and DG ENTR.  
Responses were given via a multiple-choice questionnaire. In total 658 responses were 
received, of which 479 were exploitable. Re sponses came from industry associations and 
NGOs, trade and consumer associations, priv ate companies, public bodies, academic bodies, 
private companies, SMEs, and indi viduals. Important results include: 
• Stakeholders strongly support the need for Ac tion Plans and the key challenges identified 
in the Commission background document. 
• A large majority see environmental concerns as either equally ("tackle environmental 
problems cost-efficiently"; 70%) or more important ("solve environmental problems 
regardless of costs"; 19%) than cost issu es ("be cost-efficient even if positive 
environmental impact is not maximized"; 7%) 
• Mandatory policy instruments are clearly  favoured over voluntary instruments. 
• Consumption is seen as the most important challenge. 
• A lack of market pull (several questions) is the main barrier to a wider up-take of better 
products. 
• Overwhelming support for (mandatory) gree n public procurement, green private 
procurement to stimulate smarter consum ption and initiative s through retailers.  
 
EN 45   EN • Market based instruments, public procurement and a dynamic system to qualify 
performance are the most important instruments to promote better products 
In more detail: a) 97.5% of respondents ag reed that there is a need for act ion in the fields of sustainable 
industrial policy and of sustai nable consumption and production. 
b) 81% agree with the five key challeng es identified in th e background document. 
c) There is a large consensus that 'consumption' is the most important challenge to 
tackle, followed by 'production', 'innovation'  and 'products' in decreasing order; 
d) A large majority see environmental concerns  as either equally ("tackle environmental 
problems cost-efficiently"; 70%) or more im portant ("solve environmental problems 
regardless of costs"; 19%) than cost issues ("be cost-efficient even if positive environmental impact is not maximized "; 7%) (See also under point i).  
e) Most barriers to "innovation"  point to uncertainty for i nvestments respectively a lack 
of trust in long-term 'market pull'. They  include: lack of long-term policy and 
insufficient stringency of legal instrument s, lack of consum ers' awareness and 
knowledge, and lack of Green Public Proc urement. This leads to high risk of 
investments by industry. Produc tion costs and higher prices  rank significantly lower 
in terms of barriers. Lack of financing available, poten tial pay-off, lack of partners 
and 'red tape' do not appear to be important barriers.  
f) Barriers for the adoption of energy a nd resource-efficient production systems are 
lack of incentives (36.8%), followed by disadvantages to international 
competitiveness (20.8%).  
g) Barriers to wider use of better products ar e lack of incentives to consumers and their 
lack of awareness of long-term pay-o ff as well as a perceived insufficient 
environmental ambition of the "better" products available. The quality of product 
labels, or a lack of trust in la bels are not important barriers.  
h) 65% of all respondents and 75% of the general public are in favor of mandatory 
instruments. Only 25% of all res pondents favour voluntary instruments. 
i) For the choice of products on which one should act, environmental concerns 
including improved resource and energy effi ciency are of highest priority while 
"potential EU market leadership" is of  very low concern (see also under d). 
j) Enhanced eco-design, labeling and stri ct performance sta ndards are of high 
importance for better products. 
k) The options 'eco-design for more products  via an 'extended EuP' and 'additional eco-
design policy' have equal support, but th e EuP option has more explicit opponents. 
l) Top priorities for improved product policy should be: more use of taxation and more 
green public procurement (in both cases ques tions were specifically asked for energy 
and resource efficiency), dynamic minimum requirements together with benchmarks 
for best performers (not dynamic evoluti on of minimum requirements alone), a 
broader range of products covere d and strengthen ed labeling. 
m) Most important instrument to develop su stainable consumption is differentiated tax, 
followed by actions to address misleadi ng advertising and public procurement. 
Consumer educating and traini ng and awareness ranked lower. 
 
EN 46   EN n) Over 70% agreement on questions regarding the need for EU level initiatives to help 
retailers to green the supply chain and impr ove the reliability of their environmental 
claims and stimulating green procurement by private purchasers. 
o) Overwhelming support for public procur ement to concentrate on green products, 
even if they are more expensive ( 80.6%) with 60% considering that green 
procurement should be mandatory. 
p) Overwhelming support to promote Global Sectoral Agreements and for negotiating 
international minimum requirements. 
Core messages from position papers  
During the consultation, some respondents al so submitted position papers. The sixty-six 
written contributions uniformly expressed support in sustainabi lity and overall welcomed the 
European Commission's proposed actions. The cons ultation attracted a wi de range of diverse 
position papers by stakeholders, sometimes resu lting in unavoidable contradictions. Main 
comments received by Member States include the need to clarify the coherence and clear links between the two Action Plans, and explor e the potential of developing a joint SC/SIP 
Plan. In addition, some res pondents sought furthe r clarification on the development of 
indicators, methodologies, timelines etc.  
Many position papers by Member States support the need for clear and more ambitious targets 
for resource efficiency. The majority of indus tries were not fully supportive of the proposed 
targets on the grounds these are already ambitious as many improvements have already been made over the last decades, they were alrea dy developing their own indicators. Companies 
also express the fear that the measuremen t methodologies are not yet well enough developed 
nor the indicators well enough de fined. Further clarification of the methodology to quantify 
impacts should be developed be fore proposing any new regulati ons. There is broad support to 
streamlining existing regulations as well as to learning from former failures. For labelling 
schemes this would also be helpful to prevent consumers’ confusions.  
One of the most important aspects is to ensure  global competitiveness. Further analysis is 
needed on how import and export markets will be affected by any policy.  Regulatory costs for 
companies, notably from regionally differentiati ng regulations, have to be considered before 
implementation. There is agreement that legisla tion should keep the administrative burdens as 
small as possible. 
SIP-SCP consultation through the Eu ropean Business Test Panel (EBTP) 
The EBTP addresses companie s throughout the European Uni on who have signed up to 
participate in surveys related to business c oncerns. The Questionnaire on SCP-SIP was very 
similar to the one for th e open consultation. It was translated in all the official languages of 
the EU and was available for over 5 weeks unt il middle of October, 2007. There were 354 
responses, 309 of those were completed.
60  
Of the companies that filled out the questionnai re the majority saw the need for further action 
towards a more sustainable industrial policy. 61 % fully agreed with th at statement and 29% 
somewhat agreed. About the same accounts for th e need of more sustainable consumption and 
production patterns: the percentage s are respectively 55% and 31%.  
                                                 
60 The companies that did not complete the questionnaire  probably do not feel a ffected directly by the 
policy field. 
 
EN 47   EN According to the companies in the European Business Test panel, the key challenges to 
promote a more sustainable industr ial policy were rated as follows: 
(1) Leveraging innovation  
(2) Designing new products that are pr oduced in a sustainable way  
(3) Leaner and cleaner ways of  current production methods  
(4) Increasing sustainable consumption by consumers  
(5) Creating global markets fo r sustainable products  
The main focus to promote SIP-SCP were a ll rated the same. EBTP members are of the 
opinion that 'cost efficient solutions', 'environm ental issues as main priority' and 'socially 
viable solutions' should all be tr eated with the same importance. 
1.2. SCP selected stakeholders cons ultation, August/September 2007  
Supplementing the general stakeholder consu ltation, industry and consumers associations, 
NGOs, think tanks, academia in addition to Memb er States (via Permanent Representations 
and Waste Directors Group61) were requested for their specifi c comments through a targeted 
mailing action. 48 organizations (industry and consumers asso ciations, NGOs, think tanks, 
academia) in addition to Member States' (via Permanent Representations and Waste Directors Group) were contacted. As res ponses are still being received the following is a preliminary 
summary of responses received until now: 
1.2.1. General Issues 
• Overall supportive responses on the proposed  SCP approach and measures (e.g. on 
coherence, strengthening existing tools, focus on products). 
• Ambition levels need to be high and new additio nal actions need to be added as necessary.  
• Sustainable development needs to  be addressed as a whole. 
• Taking strong action on consum ption is core to SCP. 
• Make best use of different Market-Based Instruments. 
• Provision of and access to robust consumer information is essential. 
1.2.2. Better products Eco-design 
Overall support for strengthening existing eco -design requirements. Support for extending the 
scope of EuP Directive to non energy-using pr oducts; also support for Dynamic Performance 
Requirements. But: before making changes learn first from lessons and experience of the EuP 
Directive; let it mature before moving to ev aluating it; however move on with actions in 
priority areas (food and dri nk, housing, private transport).  It is important to look not only at 
eco-design but also at the c ontinuous environmental improveme nt at all life-cycle stages. 
Environmental Product Declarat ions (EPDS), sustainability  labels and data collection 
Support for strengthening the role, wider appl ication and coherence between the different 
schemes. However, it is important to build on existing experiences; there is no need for 
                                                
 
61 The Waste Directors Group is a non-statutory group of high level officials from Member States and the 
Commission, set up by DG ENV 
 
EN 48   EN developing new EPDs or new labels; some supp ort for extending the FLEGT scheme to other 
products (e.g. soy bean and palm oil).  
Dynamic performance requireme nts through standardisation 
Some support but caution that standa rdization is a lengthy process.  
1.2.3. Leaner production 
Targets: resource & material efficiency, eco-innovation 
A range of different options were  given: Support, but difficult to  achieve; need to distinguish 
targets from instruments to reach the goal; a 3%  overall target rather difficult, but separate 
objectives should be set for res ource efficiency of different areas/sectors; also consider 
competitiveness issues; be ambitious in setting targets 
Reinforce eco-innovation & eco-technologies  
Overwhelming support, including th e technology verification scheme. 
Boost EMAS 
Overall support for a strong EMAS, when revi ewed, especially with regard to improving 
resource efficiency. 
Sustainability labelling of imported products 
Support improving existing labels to  strengthen their coherence,  but not creating new ones so 
as not to confuse the public. 
SMEs support and advice 
Support for existing initiatives to work efficientl y. Any new actions need to carefully consider 
impacts on SMEs and at what leve l they should best be taken.  
1.2.4. Smarter consumption 
Environmental performance agreements with retailers 
Overall support of the principl e and need for action. But it s hould be careful ly considered 
where more value can be added, i.e. at EU or  Member State level. There is no support for 
developing an EU logo of “environmental comm itment' for retailers. Ensure SMEs are not 
discriminated against. Consider developing guidelines to help evaluating environmental 
performance of products. Use more CSR.  
Market-Based Instruments 
A patchy picture was painted. There is some support for reducing/diffe rentiating VAT rates. 
Role of MBIs to boost new markets doubtful. Better consider sharing information on best 
practices and leave taxation matters to Member States.  
EU Eco-label overhaul 
There was full support for a strong revised EU Ecolabel. 
Misleading advertising/false  environmental claims 
There was support for taking action to ensure consumers are not misled.  
Green public and private procurement 
Strong support for strengthening  public procurement and for taking actions to encourage 
private procurement.  
 
EN 49   EN Education/awareness raising campaigns 
Support; overwhelmingly most respondents. But it would need to be care fully considered at 
what level most value is a dded (EU and/or national); also  need to consider economic 
instruments; and to link with actions in othe r consumer related areas (health and safety). 
1.3. SCP Stakeholder Meeting, 2 October 2007 
Following the closing date of the general stak eholder consultation, a meeting was organized 
to inform stakeholders of prelimin ary results and obtain their reactions. 
At the meeting, there was consensus that action needs to be taken to tackle the challenges 
posed by current unsustainable consumption patterns. The added value of the SCP Action Plan will be in building on and strengthening existing instruments, whilst going a step further to meet the SCP challenges and objectives. Howeve r, SCP would have to be addressed within 
the context of the economy, development and society and not solely tackled from an 
environmental perspective. Any future actions should not be taken on the premise that one 
size fits all, but should consider  the specificities of individua l sectors or product groups, and 
should be balancing gains and losses. To do so, the different roles the SCP and SIP Action Plans can play will need to be clearly defined so that they complement each other effectively. 
From the areas to be tackled within SCP, c onsumption represents th e biggest challenge as 
information only is not sufficient to change c onsumer behaviours; different initiatives will 
need to be taken in parallel. To effectively addr ess it, cooperation is need ed, in particular with 
those who are closer to the consumer. In additio n, measures will need to be taken at the most 
appropriate levels. The continuous improvement of  products is also key in SCP, and needs to 
be supported by robust scientific  evidence and research looki ng at their whole life-cycle. 
Overall, opinions voiced at the meeting were very much in line with written contributions of 
both the general and the targeted consultations. 
1.4. SIP Stakeholder Meeting, 17 September 2007 
Around 50 representatives of industr ial sectors participated at th e meeting. In general, there 
was a strong degree of support for the direc tions proposed in the Background document, in 
particular its systemic perspective, even if the participants indicated that the number of 
measures should be limited in the final action plan. The thrust to improve competitiveness and 
decouple growth from environmental degradati on was welcome. Also several participants 
indicated that there is a need to con centrate the activities on a limited number of 
environmental impacts in order to deli ver concrete environmental improvement. 
More specific comments include
 
• Continuing support to SMEs fo r innovation is important.  
• Many outstanding products and technologies  already exist and the process of 
improving the energy efficiency could take place in the short-term.  
• A regulatory approach combined with  voluntary commitments was highly 
appreciated.  
• Implementing measures are essential for achieving a quick success in terms of 
environmental impacts. 
• The promotion of products fulfilling “Advanced performing benchmarks” through 
tax incentives was welcomed.  
 
EN 50   EN • Support to Life Cycle Assessment, scientif ically determined, is essential for the 
identification and comparison of the impact s of products and for the selection of 
those more relevant for action. It was r ecognized though that th ere is no sufficient 
data to carry out LCA for some environmental impacts. The Value chain approach should also be considered.  
• It is very difficult to identify/define “g reen” standards. Eco-design produces better 
results. 
• Front-runners have experienced frustration when dealing with eco-label. It is 
important to identify concrete ways to reward them. 
• More information might not be sufficient to modify consumers’ behaviour. More 
attention should be paid to this issue. But consumers should be free to decide.  
• Affordability of products (“reasonable price”) should be also taken into 
consideration. Enough availabl e income is also essent ial to purchase “better” 
products.  
• Provide retailers and stake holders with information on essential environmental 
impacts to drive Business to Business activities and Business to Public procurement. A Website would be welcome. 
• Support was provided for pushing public procurement towards a limited number 
of products which respond to a dvance performance benchmarks.  
• Public authorities should show the way towards energy efficiency through its own 
actions. 
1.5. Recommendations of the High Level Group (HLG) on Competitiveness, Energy 
and the Environment  
To develop the potential for improving energy e fficiency, the HLG has proposed establishing 
a list of priorities. It would li ke to see closer analysis of the payback time for investments, 
further development of district  heating and wider use of ec o-designs with their minimum 
energy efficiency requirements.  
1.6. SCP Conference organized by the Slove nian Presidency: "Time for Action-
Towards Sustainable Consumption and Pr oduction in Europe", Ljubljana, 27-
28 September 2007 
This Conference, organised by the European  Environment Agency, the Ministry of the 
Environment and Spatial Planning of the Republic of Slovenia and the UNEP/Wuppertal 
Institute Collaborating Centre on Sustainabl e Consumption and Production, brought together 
100 experts from governments in Europe , researchers, NGOs and business. 
Three top-priority recommendations for the forthcoming EU Action Plan on Sustainable 
Consumption and Production were: 
• include clear sustainability targets; 
• make concrete steps to internalise environmental costs into prices; 
• develop legislation on green public procurement.  
Discussions focused on the three consumption ar eas which have been identified by separate 
studies of the European Commission and the European Environment Agency to have the 
highest environmental impacts over their lif ecycle: housing, food and drink, and mobility. 
 
EN 51   EN It was recommended that at the national level, priority action should be taken to internalise 
environmental costs through an environmenta l fiscal reform, to identify 'beacons' of 
sustainable living and to de velop a long term vision of sustainable consumption and 
production. 
Finally, participants recommended that the United Nations' process to develop a 10-year 
framework of programmes on sustainable consumption a nd production, the so-called 
Marrakech process, should encourage nati onal governments to integrate sustainable 
consumption and production objectives into ministries beyond environment. Further the 
Marrakech process should develop communicati ons strategies and campaigns with national 
organisations to reach out to consumers for acti ons and involve financial institutions in its 
process. 
1.7. Environment Policy Review Group meeting (EPRG62), 19 September 2007 
EPRG Members expressed overall support for the elements for an Action Plan under 
consideration by the Commission. Ambitious targets for resource efficienc y, linked to sectors, 
were seen as important, although difficult to es tablish and to agree upo n. The product focus, 
specifically targeted at priority products (foc us should be on cars, food, drinks, housing), was 
supported, as was the need for ambitious, dynami c standards, without there being defined 
views as to the instrument/ process for reachi ng those. Some supported the setting of binding 
eco-design principles. Public procurement: was st ressed to be a leaver , and further concrete 
steps at EU level were need ed, the same for eco-label. So me pronounced support for reducing 
VAT to drive the change to better performing products. The consumption side needs to be further emphasised, also as concerns the rebou nd effect, and benchmarks  should also be set 
for consumption patterns. Initia ting changes to 'different lifestyles' clearly links with 
education, and also advertising deserves to be co nsidered. Retailers are se en as very important 
actors; need further assessment of what is the best level to address them, and how EU 
initiatives could look like. Some considered that choice-editing by retailers needed to be 
considered. Overall, dialogue with  actors, possibly sector-specific was seen as crucial. It was 
also mentioned that there was a need to be more inclusive as regards the focus of SCP 
policies- not only environment, but also includin g, for instance, fair trade and social aspects. 
1.8. Integrated Product Policy (IPP) Regular Meetings 
Integrated Product Policy (IPP) Regular Meetings  consist of Member States' representatives 
and key stakeholders assis ting the Commission in deve loping and implementing the 
Communication on IPP and monitori ng progress in the Member States. They also provide a 
forum for the Commission to in form Member States and stakeholders of its IPP related 
activities, and for Member States and stake holders to report and inform back to the 
Commission. Meetings were he ld once to twice annually since adoption of the IPP 
Communication in 2003
63. Several working groups establis hed under the umbrella of this 
group have treated issues of immediate releva nce to SCP, such as on Environmental Product 
Declarations (EPDs) and indicators  to assess product policy impacts.  
                                                 
62 The EPRG is a regular meeting of Directors Gene ral for the Environment from Member States, chaired 
by the Commission, to discuss environmental issues at  an early stage before fo rmal policy proposals are 
made to the EU legislators.  
63 COM(2003)302 
 
EN 52   EN 1.8.1. Last meeting, 2 October 2007 
The meeting was dedicated to share views a nd discuss in-depth the Commission's proposals 
on the Sustainable Consumption and Production (S CP) Action Plan. The pa rticipants clearly 
recognised the need for action on changi ng unsustainable consumption and production 
patterns in the EU. There was overall support fo r the proposed approach, with emphasis on 
coherence and consistency between the various policy instruments in order to have a robust 
product policy. To do so, the different roles of SCP and SIP would merit from further clarity 
as well as clear roles of all actors, a clear vision with objecti ves, timeframes, monitoring, and 
concrete actions. The need to deal  not only with environment, but also with all three pillars of 
sustainable development was also  mentioned. Consumption was r ecognized as a difficult area 
needing further development; the Commission's pr oposed approach to consumption seemed to 
be more about greening supply chains, an d not about changing consumption patterns. 
Strengthening eco-design was s upported, but by first building on lessons learnt from the EuP 
Directive, given that it is not  mature enough to enable broadening its application. The use of 
economic instruments to get th e prices right was seen as important as were Dynamic 
Performance Requirements to have a long-te rm perspective. With  regard to carbon 
footprinting and labelling, these are initiatives le d by certain retailers, wi thout having been put 
into place yet, measured or piloted. Actions to be taken at EU level include making legislation 
more coherent, sharing best practice on cons umer behaviours, developing standards and 
targets, establishing a European Top Runner scheme, and a strong Eco-label. At Member 
States level include work with retail ers and consumer education in schools. 
1.8.2. Penultimate meeting, 15 November 2006 
A meeting dedicated to preparat ory discussion and exchange of first ideas on a future SCP 
Action Plan. Overall, the Member States and stakeholders from the regular meeting supported 
extending EU eco-design legislation and deve loping product performance targets, based on 
the Japanese top-runner approach, also in cluding chemicals and WEEE products. They 
confirmed that legal performance standards sh ould exclude "bad" products from the market, 
and focus on "priority product" areas from th e EIPRO study (food and dr ink; housing; private 
transport) and on suppliers of products with high impacts. The Group also supported market-
based instruments, financial dr ivers, subsidies an d differentiation, and more emphasis on the 
consumer side, in particular through Green Public and Privat e Procurement and agreements 
with retailers to change products  on the shelves. They also c onfirmed the development of the 
ecological footprint concept, inte gration of different data syst ems, and facilitation of green 
investments. 
1.9. European Consumer Consultative Group64, 19 September 2007 
In its Decision (2003/709/EC) of 9 Octobe r 2003, the Commission created the European 
Consumer Consultative Group (ECCG). This b ody replaced the Consumer Committee as the 
Commission's main forum for e ngaging with consumer organi sations. In the meeting the 
SCP/SIP background document (see Annex II) was discussed. Reference was made to good examples already existing in Member States ; the Commission should set an example in 
making its own policy more sustainable, in pa rticular the Common Agricultural Policy. It was 
pointed out that the social dimension was not  addressed in the consultation document. High 
awareness of consumers about environmental problems does not translate into behaviour 
when buying products. Measures were needed to address the whole production chain, which 
                                                
 
64 http://ec.europa.eu/consumers/cons_org/associations/committ/index_en.htm   
 
EN 53   EN should be more transparent and producer res ponsibility needs to be reinforced (e.g. 
reparability of products poor/insufficient). 
1.10. Roundtable on Sustainable Co nsumption, 20 September 2007 
The debate, organised by the Cabinets of  DG ENV and DG SANCO and The Centre Think 
Tank, focused on the importance of information a nd the necessity of incentives for consumers 
and of "getting the prices right" (not only focu s on carbon). Indicators to  measure progress in 
sustainable consumption. There was a strong plea for including social and economic aspects, 
not only environment. The forthcoming CAP check  will be crucial to see if the Commission is 
willing to apply sustainability criteria to its ow n policy. Examples to push SC were presented, 
such as VAT differentiation, Code for GPP, Tax reduction for enviro nmental investments, 
sustainable wood labels for retailers , mandatory energy label for housing. 
1.11. Concluding remarks 
Summarizing the contributi ons from stakeholders it can be st ated that there is large agreement 
on the need for action towards more sustaina ble consumption and production patterns. There 
is also large support for the approach outlin ed in the SIP/SCP background document and a 
high degree of consensus on several key issu es. They include in a non-exhaustive list: 
• to act on production and consumption issues 
• to employ a mix of approaches, includi ng consumer information, eco-design of 
products, and eco-efficient production 
• to use a tailored mix of policy instruments for each specific problem, including 
market based instrument, fiscal means,  product legislation and voluntary schemes 
• to focus initiatives on products with the strongest environmental impacts, notably 
food and drink, housing and transport 
It appears fair to state that neither the pres ent consultation nor previous consultations on 
related policy initiatives have cast severe doubt on the value of the approach proposed or on 
the level of expectation/support among stakeholders from all parts of society. 
2. S ECTION 2: OVERVIEW OF EXPERTISE INPUT  
This section gives an overview of main sour ces of input of expertise to the present SCP 
Action Plan, notably as concerns studies and workshops launched by the Commission services 
responsible for drafting the SCP Action Plan (ENV G4). 
The large number of highly relevant reports an d other literature of key relevance for the SCP 
Action Plan published by other in stitutions and individuals almo st daily are far too numerous 
to be listed here. They nevertheless form the core of information used  in assessing production 
and consumption trends, the en suing state of the environm ent and proposals for possible 
solutions or actions. Reports by the European Environment Agency, the OECD and UNEP are 
just a small selection of this wealth of in formation to which many research institutes, 
government organizations and other organi zations/initiatives have to be added. 
 
EN 54   EN 2.1. Commission research on the environmen tally most damaging products and 
their potential for improvement (EIPRO65 and IMRPO66 projects) 
In the context of Integrated Product Policy (IPP)  the Commission has carried out over the last 
four years substantial work to identify which products are environmentally most damaging and should therefore receive most attention of policy initiatives. This  work, carried out under 
the "Environmental Impact of PROducts" (EIPRO) project was concluded in 2005. It is being 
followed up by a series of still ongoing projects that identify main options for improving the 
products identified by EIPRO, the IMPRO studies. 
2.1.1. The EIPRO project 
Key findings of the project are: 
• Food and drink products, private transport
 and housing  have the biggest environmental 
impacts across the impact categories inve stigated (global warming, acidification, 
photochemical ozone formation, and eutrophication).  
• Food and drink  is responsible for 20-30% of the di fferent environmental impacts of total 
consumption, and in the case of  eutrophication for even more than 50%. Meat and meat 
products have the greatest environmental impa ct, contributing 4-12 % to global warming 
of all products. The second product grouping is  dairy products, followed by plant-based 
food products, soft and alcoholic drinks, with lower levels of environmental impacts for 
most impact categories considered. 
• Housing  constitutes 20-35% of the total for mo st impact categories, with household 
heating being one of the most important cont ributors for each impact category. Energy use 
for heating, hot water and el ectrical appliances contribu te most to global warming, 
acidification, and photochemical  oxidation. Residential struct ures also have high impacts 
(3–4% of all products), followed by other energy-consuming products. Wooden products 
may also have high impacts on biodiversity or natural resources. 
• Transport  contributes 15% to global warming poten tial and acidification of all products, 
but less to eutrophication and more to photochemical oxidati on. Cars and private cars 
account for about four fifths of the tran sport related impacts of consumption.  
A more detailed overview of the EI PRO project is set out below: 
In June 2003 the European Commission adopt ed a Communication on Integrated Product 
Policy (IPP), in which it committed to identify the products with the greatest potential for 
improvement. However, when the Communication was published, there existed no analytically-based consensus on which products and services have th e greatest impact, and 
hence no consensus on those which have th e greatest potential for improvement. 
On request of DG Environment, the JRC-IPTS  therefore launched the EIPRO study, with the 
objective to identify those products that have the greatest environmental impact throughout 
their life cycle, from cradle to grave. The pr oject was carried out w ith the help of ESTO 
(TNO-CML Centre for Chain Analysis, the Fl emish Institute for Technological Research 
(VITO) and the Danish Tec hnical University (DTU)). 
                                                
 
65 http://ec.europa.eu/environment/ipp/identifying.htm   
66 Environmental Improvement of Produ cts: Passenger cars project (IMPRO -car), Meat and dairy products 
(IMPRO-food), Environmental Improvement Potentials of Residential Buildings 
(IMPRO-building)  
 
EN 55   EN The methodology and the results of the different  tasks were discussed at special workshops, 
followed by meetings with stakeholders. The draft final report was published on the 
Commission’s website in May 2005 with an invita tion for comments. The final results of the 
study were presented to the Member States  and other stakeholde rs in November 2005. 
The methodological approach for this study was to take the results of existing studies and 
combine them with new research. This way, full advantage could be take n of existing research 
and knowledge of impacts, and th e understanding could be devel oped further in key areas to 
close knowledge gaps. As part of the new res earch, an environmentally extended input-output 
model was developed – the CEDA EU-25 Products  and Environment model – that allowed a 
systematic and detailed analysis (dis tinguishing several hundreds of products). 
The review of existing studies showed that  substantial and useful  research had been 
undertaken already, and despite different me thodological approaches and limitations, this 
research could provide quite robust results for ag gregated groupings of products at the level of 
the main functional areas of consumption (c orresponding to the hi ghest level of the UN 
Classification of Individual Consumption A ccording to Purpose – about a dozen product 
groupings) and, to some extent, al so at aggregation levels that  distinguish up to about 50 
consumption domains or produc t groupings. However, the studi es provided far less useful 
information for more disaggregated product gr oupings, and their geographical scopes were 
not at all identical. The review also showed th at existing knowledge did not give a full picture 
of consumption in the EU-25. 
To improve the situation, a model was built th at allowed a systematic analysis of the 
environmental impacts of products for the EU-25 in sufficient detail to distinguish several 
hundreds of product groupings. The CEDA EU-25 Products and Environment model covers 
the environmental impacts of all products cons umed in the EU-25 (produced in EU-25 and 
imported), including the life cycle stages of ex traction, transport, pr oduction, use and waste 
management. 
Although the principle of an environmental IO an alysis is simple, getting the data right was 
challenging. Also, an IO analys is is based on the records of financial transactions between 
productive sectors and to final consumers, whic h do not generally cover the use and disposal 
phases of products. For a cradle-to-grave analysis , specific solutions needed to be adopted to 
cover the use, waste management and recycling stages. 
The model adapts the latest model developed with  United States sector al data (CEDA 3.0) to 
Europe. The resulting CEDA EU-25 Products and Environment model cove rs all resource use 
and emissions in the production, use and disposal  phases of all products consumed in the EU-
25. The analysis used the following eight  environmental impact categories: 
• abiotic depletion 
• acidification 
• ecotoxicity 
• global warming 
• eutrophication 
• human toxicity 
• ozone layer depletion 
• photochemical oxidation 
 
EN 56   EN The results were calculated as a percentage of the EU-25 total for each impact category. 
The study identified products in  the following three areas as  having the greatest impact: 
• food and drink 
• private transport 
• housing 
Together they are responsible for 70-80% of the environmental impact of consumption, and 
account for some 60% of consumption expenditure. 
Food and drink cause 20-30% of the various environmental imp acts of private consumption, 
and this increases to more than 50% for eu trophication. This include s the full food production 
and distribution chain ‘from farm to fork’. W ithin this consumption area, meat and meat 
products are the most important, followed by da iry products. Food and drink were covered by 
only some of the studies so the results for that area should be treated with more caution. 
However, the general conclusions can be take n with a reasonably high level of confidence. 
The contribution of passenger transport to th e total environmental impacts of private 
consumption ranges from 15 to 35%, depending on the impact category. The greatest impact 
is from cars, despite major improvements in the environmental performance in recent years, especially on air emissions. The impact of private air travel is increasing but for 
methodological and data reasons, it has not been possible to adequately quantify its impact on 
the environment. 
The products under the heading of  housing include buildings, fu rniture, domestic appliances, 
and energy for purposes such as room and water heating. Together they make up 20 to 35% of 
the impacts of all products for most impact  categories. Energy use is the single most 
important factor, mainly for room and water heating, followed by st ructural work (new 
construction, maintenance, repair, and demo lition). The next important products are energy-
using domestic appliances, e.g. refr igerators and washing machines. 
All other areas of private consumption togeth er (i.e. excluding food a nd drink, transport and 
housing) account for no more than 20-30% of  most environmental impacts. There are 
uncertainties about the percenta ge contributions of the remain ing products, but most of the 
evidence suggests that clothi ng ranks highest, accounting for between 2 and 10% of total 
environmental impact. 
2.1.2. The "Environmental IMprovement of PROducts"  (IMPRO) project 
Building on the results of the EIPRO work, the IMPRO project identifies possible ways in 
which the life-cycle environmental impacts can be  reduced for some of the products that are 
among those with the greatest environmental impact s. From the interim reports (final reports 
are expected for the end of 2007), improvement options are: 
• Cars:
 options for improvement are weight reduct ion, hybrid cars, using bio-ethanol, power 
train improvements, driving behaviour, smaller car 
• Meat and dairy:  Agriculture: Nitrogen management , cereal intensification; Feed: 
requirement on feed contents; Meal planni ng and home delivery; Prolonged durability 
• Housing : (not yet available) 
It is expected that the IMPRO results, when av ailable in their final form, can give valuable 
input to eco-design initiatives  that will be launched under th e forthcoming SCP Action Plan. 
 
EN 57   EN 2.2. Commission research on the environm ental impact of raw materials and 
commodities, the "Environmentally weig hted Material Consumption" (EMC) 
Study67 
This study approached the problem of greatest environmental impacts of materials that are 
used in the EU 15 economy. As materials are the basis of manufacturing products the 
reduction of environmental impacts of material s production and use would contribute directly 
to more sustainable producti on and eco-design of products.  
The study assessed the environmental impacts of  materials across a number of environmental 
impact categories, such as Greenhouse Gas Emi ssions, resource depletion, eco-toxicity etc. It 
then established a specific impact per kilogr am of each material. Multiplying this specific 
impact by the overall amount of the material used in the economy (based on Direct Material Consumption statistics) it concluded which materials cause the greatest environmental 
impacts overall. It concluded that the fo llowing materials have by far the greatest 
environmental impacts: 
• animal products 
• crops 
• plastics 
• oil, households 
• brown coal for electricity in households 
There is a remarkable coherence with the re sults of the product-based EIPRO analysis. The 
EMC approach is presently further investigated as part of a basket of environmental impact 
indicators of resource use
68. Together with the EIPRO/IMPRO results the EMC results can 
inform future actions on eco-design and raw material choices under the SCP Action Plan. 
2.3. Commission Pilot Projects under Integrated Product Policy 
The Commission, together with Nokia Corpor ation and Groupe Carr efour organized two 
voluntary pilot projects to inve stigate how multi-stakeholder gr oups can work together with 
industry towards the improvement of environm ental impacts from consumer products. The 
projects had a duration of one to  two years and led to concrete action on the side of business. 
• In the case of tropical wood garden furniture  it was recognized that the origin of 
the wood and the distribution by road tr ansport of the furn iture cause major 
impacts. Sourcing of the wood was subs equently changed and more economic 
packaging methods for the pr oducts were investigated. 
• In the case of mobile telephones a numb er of technology/eco-design options were 
identified for improvement. They are pres ently being assessed wit regard to the 
feasibility of implementing them. 
                                                 
67 Policy review on decoupling: development of indicat ors to assess decoupling of economic development 
and environmental pressure in the EU-25 and AC-3 countries CML report 166. Van der Voet, E., L. van 
Oers, S. Moll, H. Schütz, S. Bringezu, S. de Bruyn, M. Sevenster and G. Warringa. 2005. Leiden, The 
Netherlands: Institute of Environmental Sciences (C ML), Leiden University, on behalf of the European 
Commission. 
68 Potential of the Ecological Footprint for monitori ng environmental impact from natural resource use: 
Analyse the potential of the Ecological Footprint and related assessment tools for use in the EU's 
Thematic Strategy on the Sustainable Use of  Natural Resources. Ecologic, 2007. Ongoing. 
 
EN 58   EN Both projects showed also that involving co nsumers is crucial but in many cases faces 
particular difficulties. 
2.4. List of main studies 
A number of further studies are accessible through the Commissi on websites on Integrated 
Product Policy69, the Thematic Strategy on the sustainable use of natural resources70, the 
Thematic Strategy on the preven tion and recycling of waste71 and on EU Waste Legislation72. 
Studies contributing in particular to  SCP Policies in the context of IPP:  
• Support for the Impact Assessment on expect ed environmental benefits and costs 
savings of a European legislative fr amework for the eco-design of products 
(ongoing). 
• Environmental Impact of PROducts (E IPRO) - Analysis of the life-cycle 
environmental impacts related to the fi nal consumption of the EU-25. This study 
supports the development of an EU Inte grated Product Policy by clarifying which 
products that are consumed in the EU have the greatest environmental impacts 
from a life-cycle perspective.73  
• Environmental IMprovement of PROduc ts (IMPRO) is a study identifying 
possible ways in which the life-cycle environmental impacts can be reduced for some of the products that are among t hose with the great est environmental 
impacts, in particular for cars, m eat and dairy products and buildings.
74 
• DG TREN's studies on the Energy using Products (EuP-Directive)75 
• Household consumption and the environment, EEA Report No 11/2005. With an 
aim to provide input for European po licy-making, this report analyses the 
environmental effects of household consumption in Europe. 76 
• SCORE network supported by the EU`s 6th Framework Programme. The 
Network project acts as one of the EU`s central support structures for the UN`s 10 
Year Framework of Programs for Su stainable Consumption and Production 
(SCP). 77  
• ASCEE (Assessing the potential of va rious instruments for sustainable 
consumption practises and greening of the market) supported by the EU`s 6th 
Framework Programme 78 
• Environmentally Extended Input-Output Ta bles and Models for Europe (EEIO). 
This study explores how methodologies ba sed on analysis of environmentally 
                                                 
69 http://ec.europa.eu/environment/ipp/ 
70 http://ec.europa.eu/environment/natres/index.htm 
71 http://ec.europa.eu/environment/waste/strategy.htm 
72 http://ec.europa.eu/environment/waste/index.htm 
73 http://ec.europa.eu/environment/ipp/pdf/eipro_report.pdf 
74 http://ec.europa.eu/environment/ipp/identifying.htm 
75 http://ec.europa.eu/energy/demand/legislation/eco_design_en.htm 
76 http://reports.eea.europa .eu/eea_report_2005_11/en 
77 http://www.score-network.org/s core/score_module/index.php 
78 http://ec.europa.eu/research/environm ent/pdf/global_change_ecosystem.pdf  p.403 
 
EN 59   EN extended input-output tables can be fu rther developed and applied in policy 
making. 79 
• Sustainable Production and Consumpti on (SUSPROC). The objective of the 
action is to support the implementation and further development of the EU 
Strategy for Sustainable Deve lopment, the EU Environm ental Action Plan as well 
as the integration of environmental c oncerns in other European policy areas. 80 
• European Platform on Life Cycle Assessmen t (LCA). The objective of the project 
is to promote life cycle thinking in busi ness and in policy making in the European 
Union by focusing on underlying da ta and methodological needs. 81 
• Making life cycle information and interpre tative tools available. This study is 
looking at the level of awareness regardi ng life cycle thinking in small European 
firms, retailers and consumer organi sations, and their needs for further 
information and support was finalised. 82 
• Development of Indicators for an Integrated Product Policy. 83 
• Evaluation of Environmental Pr oduct Declaration Schemes. 84 
• Study on external environmental effects rela ted to the life cycle of products and 
services. 85 
Studies contributing in particul ar to SCP Policies in the context of the sustainable use of 
natural resource:  
• Potential of the Ecological Footprint for monitoring environmental impact from 
natural resource use: Analys e the potential of the Ecological Footprint and related 
assessment tools for use in the EU's Them atic Strategy on the Sustainable Use of 
Natural Resources. (Ongoing) 
• Strengthening the Knowledge Base for the implementation of the Thematic 
Strategy on the Sustainable Use of Natura l Resources. Forthcoming, on behalf of 
the European Commission. (Ongoing) 
• Work led by Eurostat, with JRC and EEA, on indicators to measure progress, 
identify priorities a nd set targets (Ongoing). 
• Resource Use in European Countries (Zero Study). This study provides the 
baseline data on material flows for th e further development of the "Resources 
Strategy". 86 
• Public Private Interface. This study seek s to find concrete proposals for target 
setting and instrumentation based on the experience of Member States. 87 
                                                 
79 http://www.jrc.es/publications/pub.cfm?prs=1366 
80 http://www.jrc.es/activities/sustainable_development/susproc.cfm 
81 http://ec.europa.eu/en vironment/ipp/lca.htm 
82 http://ec.europa.eu/environment/ipp/pdf/study_final_clean_report.pdf 
83 http://ec.europa.eu/environment/ipp/pdf/eu_incdicators_ipp_final_rep.pdf 
84 http://ec.europa.eu/environment/ipp/pdf/epdstudy.pdf 
85 http://ec.europa.eu/environment/ipp/pdf/ext_effects_finalreport.pdf 
86 http://ec.europa.eu/environment/n atres/pdf/zero_study_final.pdf 
87 http://ec.europa.eu/environment/natres/titles1_2.htm 
 
EN 60   EN • Dynamic View on Resources. This study aims to assess the feasibility of 
decoupling resource use from economic growth. 88 
• Policy review on decoupling and developm ent of resource produc tivity indicators. 
89 
Studies contributing in partic ular to SCP Policies in th e context of waste policies90 : 
• Coherence of Waste Legislation – Assessm ent of Lessons learnt from the EU 
"Recycling Directives" (planned) 
• Study addressing the buildings (considered as one of the consumption area with 
highest environmental impact), in part icular Construction and Demolition Waste 
Management Practices and their Economic Impacts91 
• Studies concerning End of Life Vehicles, to improve their eco-design and waste 
management 
• Studies regarding mining, as one  important production stage  
• A number of studies addressing packaging and packaging waste  
• A number of studies concerning Persistent  Organic Pollutants (POPs), with links 
to some products, production and consumption processes 
• A number of studies on PVC, their us e in product, waste management, etc. 
• Support in the drafting of an ExIA on the Thematic Strategy on the Prevention 
and Recycling of Waste (TSPRW)92 
• The study 'Waste Prevention and Minimisation' examines some of the best waste 
minimisation practices on both indus trial and municipal waste flows. 93 
• The study 'Waste Management Options a nd Climate Change' assess the climate 
change impacts of options for municipa l solid waste management in the EU. 94 
Study contributing to identifying barrier s to and impacts of technology adoption  
• Study on fostering EU internal market for competitive technologies for a low 
carbon economy 
2.5. SCP experts' workshops, June and July 2007 
In preparation of possible specific actions thre e workshops were organized with experts from 
industry, NGOs and other organizations. The pu rpose was to understand  better the potential 
strengths and weaknesses of th e possible actions and the partic ular advice or concerns of 
different stakeholder groups. A summary of  the three workshops is given below: 
                                                 
88 http://ec.europa.eu/environment/natres/pdf/dynamic_view_final_report.pdf 
89 http://ec.europa.eu/environmen t/natres/pdf/fin_rep_natres.pdf 
90 http://ec.europa.eu/environment/waste/studies/index.htm 
91 http://ec.europa.eu/environment/w aste/studies/cdw/cdw_report.htm 
92 http://ec.europa.eu/environmen t/waste/pdf/epec_report_05.pdf 
93 http://ec.europa.eu/environment/waste/studies/prevention_minimisation.htm 
94 http://ec.europa.eu/environment/waste/studies/climate_change.htm 
 
EN 61   EN 2.5.1. Workshop on the Japanese Top Runner scheme  
• In Japan, Green Public Procur ement is obligatory and public authorities have to purchase 
TR products; this helps the demand. 
• Extension of Top Runner from energy ot her environmental aspects such as 
material/resources and hazardous substances c ould be done step by step, in a dynamic 
process, no major obstacles identified fo r establishing a similar concept in EU. 
• Administrative burdens for busin ess would be low as the data, criteria, and format needed 
would be already available.  
• Impacts of the Top Runner to consumers woul d be higher product prices. These would be 
acceptable at business to business le vel and they can go down gradually. 
2.5.2. Workshop on greening reta ilers' supply chains 
• It is paramount to focus on both consumption and production.  
• Choice editing is alr eady happening to some extent alrea dy, but if it were not implemented 
by all competitors, reta ilers would be reluctant to pursue such a concept. A level playing 
field should be established to  guarantee equal treatment. 
• A robust revision of the Eco-label would boost more and better products, quicker process, 
simpler criteria, and would allow nationa l labels to get the Eco-label logo. 
• The Commission should make available user-f riendly science-based information on Life-
Cycle Approach of products. 
• Affordability of products is concern for al l; consumers look at price first. Economic 
incentives for greener products and for innova tion are important to change behaviour. 
• A common framework is needed, with a lig ht touch from the le gislator and strong 
communication (strong communica tion strategy, similar to climate change). A common 
knowledge base would also make it easie r for industry to green supply chains. 
• SMEs need to be engaged through the ri ght incentives for th em, e.g. web portal. 
• Create for SCP a similar mechanism to the UK Corporate Leaders Group on Climate 
Change but by avoiding duplic ation and building on it. 
2.5.3. Workshop on Green Private Procurement 
• A common legal framework (lev el playing field) on what we want to achieve with 
objectives and rules is needed. A framewor k which encourages green leadership in 
industry; ensures harmonised methods, data a nd simple tools for life cycle analysis and 
footprint calculations of products; and sends a clear message to business and industry that 
"legal compliance only would not be enough" if  they want to remain competitive in the 
long run. 
• To change unsustainable beha viours, it is important to know  the key objective (e.g. moving 
towards a low carbon economy); need for pr ioritisation (not to do all in once).  
• A main objective should be ensuring minimum environmental impacts of products; this can 
be done through the Life-Cycle Approach.  
• Frontrunners in industry are al ready practicing some green pu rchasing; the more suppliers 
for a product/service exist, the easier it is fo r industry to impose green requirements. 
 
EN 62   EN • Purchasing is largely driven by price and func tionality. Eco-Label cr iteria should play a 
central role in providing techni cal specifications for products. 
• Carbon footprints would need a standardised  approach and should be established per 
product group. 
The results of these wo rkshops, together with further work , will inform the development of 
possible future actions under the SCP Action Plan. 
2.6. Environmental Product Information Working Group, November 2006 
The European Commission’s Regular Meeting on Integrated Product Policy decided in its 
second meeting in September 2004 to set up  a working group on Environmental Product 
Information. This working group examines the issue of life cycle information throughout the 
product chain. Its objectives are to  identify the needs, examine th e tools, identify the gaps and 
opportunities, and propose how the situation should be improved. In its Final report Making 
Product Information Work for the Environment , the Group recommended that the 
Commission should draw up a "package" c onsisting of three kinds of actions: 
• A clear statement of vision and framework thinking  to set the course for future policy, with 
clear signals to market players. This c ould cover a vision for the role of product 
information in helping to deliver the EU ’s IPP, SCP and sustainable development 
objectives; the roles which governments, busin esses, stakeholder gr oups and household 
consumers are expected to play in deliveri ng these aims; in the case of the governmental 
role, setting an emphasis on framework-setting to  enable, push, reward or correct the way 
that market players deliver the results in th e market, rather than governments trying to do 
the delivery themselves.  
• A plan for supporting administ rative and practical measures  to strengthen the knowledge 
base, the accessibility of relevant and us eful information, the harmonisation of 
frameworks, and the practical measures to achie ve synergies with other EU policies. This 
should cover continued streng thening of the public knowledge base on product impacts and 
the product life-cycle knowledge base available to the market ; keeping the adequacy of 
knowledge-based tools under review – and helpi ng to fill the gaps; keeping the efficiency 
of the whole information ‘system’ under revi ew – stimulating forms of standardisation, 
harmonisation and simplification to make the ta sk as economical as possible for business; 
and building up the administrativ e connections with other ‘systems’ used to deliver EU 
policies – a key example being the green public procurement (GPP) agenda. 
• A proposal for supporting a legal and regulatory framework  that will enable the market to 
deliver, ensuring a fair and competitive market, stimulating standardisation and comparability in key areas, and building up the awareness and use of product information. This should include ensuring a good quality of  product information placed on the market, 
to support market confidence and fair comp etition; establishing an enabling power for 
requiring information on the ke y impacts of certain key produc ts to be declared in a 
standardised form; and setting a duty at natio nal level to promote the awareness of all 
forms of good-quality product information. 
2.7. Key recommendations from the EPDs workshop (January 2007) 
One of the working groups set up under the Integrated Product Policy Regular Meeting 
assessed the way forward for a business-to-business communicati on tool on the environmental 
characteristics of intermediate products, mate rials, components etc. Such "Environmental 
Product Declarations (EPDs) have been suggest ed and developed by a number of actors but 
 
EN 63   EN there is yet no harmonized or generally agreed scheme available. There is an opportunity for 
the Commission to play a co-ordinating role towards a generally accepted scheme. 
At the workshop, it was concluded that: 
• EPDs can be very useful for developing and implementing policies on environmental 
management such as eco-design and green purchasing. 
• The Commission should establish a common EU  harmonisation EPD system with the EU 
Member States in an advisory role  
• The Commission should develop an EU EPD Platform based on common environmental 
product information. 
A full report of this working gr oup is available on the IPP website95. 
2.8. Marrakech process, 3rd International SCP experts meeting, Stockholm, June 
2007 
Outcomes from workshops and disc ussions at the meeting include: 
• Existing policy tools, i.e. EU re gulations, should be more coherent. 
• Develop a better understanding and ensure acces s to markets for sustainable products, and 
mechanisms to overcome market barriers, al so by: developing policie s that set the right 
conditions for products to be labelled as “sus tainable”; and creating a level playing field. A 
regulatory framework with clear parameters a nd a market-driven approach that encourages 
competitive innovation beyond minimum standards, i.e. introducing environmental taxation on unsustainable products, communi cating lifecycle costs and benefits of 
sustainable products to consumers. 
• Regulation is needed to promote innovation, and incentives, awar ds and certification 
systems all will yield competitiveness benefits. 
• Market forces to drive demand for sustai nable products should be identified and a 
distinction between “best in cl ass” products versus the market conditions should be made 
to drive innovation and changes in markets. 
• Phase out unsustainable products  and discouraging demand for and use of unsustainable 
products through building on existing approaches  and processes for example in chemicals. 
• Environmental labels and clea r product information to be  available to consumers  
• A lifecycle approach focusing on products havi ng the biggest environmental impact such 
as food, housing, transport (EIPRO study). 
• Business to provide to consumers informa tion on the life-cycle costs of products (e.g. 
product labelling, transparency for investors from  the financial sector, and corporate social 
responsibility in the supply chain). 
• Make strong links between trade and investme nt policies; governments to work with the 
financial sector to promote socially  responsible investment by industry.  
                                                
 
95 http://ec.europa.eu/environment/ipp/pdf/20070115_resume.pdf 
 
EN 64   EN Annex II 
 
to the 
 
Impact Assessment on the SCP and SIP Action Plan 
(Background Document by DGs ENV and ENTR  on Sustainable Industry Policy and 
Sustainable Consumption and Production Acti on Plans; This document was the basis 
for the public consultation from  27 July to 23 September 2007) 
 
EN 65   EN Background document to the consultation 
On the action plans on 
Sustainable consumption and production 
And 
Sustainable industrial policy 
 
EN 66   EN Table of contents 
1. INTRODUCTION...................................................................................................... 68 
2. KEY CHALLENGES ................................................................................................ 69 2.1. Leveraging Innovation: stimulating the de velopment and commercialisation of low 
carbon, energy and resource efficient tec hnologies, products and services............... 69 
2.2. Better Products: creating a dynamic internal  market for better performing products 69 
2.3. Leaner and Cleaner Production: increas ing the efficiency of EU production ........... 69 
2.4. Smarter Consumption: changing behaviours ............................................................. 70 2.5. Global markets: exploiting first mover adva ntages and levelling the playing field for 
industry worldwide..................................................................................................... 70 
3. ENVISAGED APPROACH TO FA CE THE KEY CHALLENGES........................ 70 
3.1. Focusing on key environmental issues....................................................................... 70 3.2. A product-based approach.......................................................................................... 71 3.3. Building on existing policy instruments .................................................................... 71 3.4. A contribution to policy coherence............................................................................ 71 4. MAIN ACTIONS UNDER CONSIDERATION....................................................... 72 4.1. Leveraging Innovation ............................................................................................... 72 4.1.1. Lead Market Initiative................................................................................................ 72  
4.1.2. Networking of innovation stakeholders and closer cooperation between research and 
industry....................................................................................................................... 72 
4.2. Better Products: creating a strong EU  market for sustainable products..................... 73 
4.2.1. Dynamic Performance Requirements ........................................................................ 73 4.2.2. Environmental product declar ations, sustainability labels  and data collection.......... 74 
4.2.3. Enhanced use of eco-design instruments at EU level ................................................ 74 4.2.4. Standardisation......................................................................................................... .. 74 
4.3. Leaner and Cleaner Production: increas ing the efficiency of EU production ........... 75 
4.3.1. Resource and material efficiency targets ................................................................... 75 
4.3.2. Reinforcement of eco-innovation and environmental technologies........................... 75 
4.3.3. Setting targets for eco-innovation and th e uptake on environmental technologies ... 75 
4.3.4. Review of the legislation on eco-managem ent and audit schemes/pollution from big 
industrial installation.................................................................................................. 76 
4.3.5. Small and medium size enterprises (SMEs)............................................................... 76 
4.4. Smarter Consumption: Changing behaviour.............................................................. 76 4.4.1. Environmental Performance Ag reements with retailers ............................................ 76 
4.4.2. Enhanced use of market-based instruments ............................................................... 77 
 
EN 67   EN 4.4.3. Differentiation of value-added tax rates..................................................................... 77 
4.4.4. Revision of the EU Eco-label Regulation .................................................................. 77 4.4.5. Misleading advertising/fals e environmental claims................................................... 77 
4.4.6. Green Procurement..................................................................................................... 78  
4.4.7. Consumer information/ edu cation and /training campaigns ...................................... 78 
4.5. Global markets: exploiting first mover a dvantages and levelling the playing field 
worldwide for sustainable technologies and products ............................................... 78 
4.5.1. Adapt EU policies to fostering energy and resource efficiency................................. 78 4.5.2. Global Sectoral Approaches....................................................................................... 79 4.5.3. Strengthened international cooperation on sustainable consumption and production79 
 
EN 68   EN 1. INTRODUCTION 
Achieving sustainable consumption and production is a key challenge for the future. Current 
patterns of consumption and production are cau sing major environmental degradation, in 
addition future energy supply and raw materials availability is not guaranteed. The carrying 
capacity of the planet on which our well-being  is based is in jeopardy, with unsustainably 
high rates of energy and raw material us e, soil and habitat degradation. Although 
advancement of technology has in creased the efficiency of pr oducts, in many cases this is 
offset by an even higher consumption level. 
This problem has a global dimension. Alread y many products produced  in the EU have 
components made from resources which are ex tracted, processed and transported from 
elsewhere and their use and disposal is fe lt globally. Furthermore, by 2050, the world may 
have more than 3 billion more people all of whom have a legitimate claim to a comparable 
quality of life to that enjoyed in the EU. To meet this challenge, there is a need for 
advancement in technological development and in innovation. We also need to change our 
consumption patterns. In the near future, climat e change and security of energy supply need to 
be tackled by rapidly moving towards a low carbon economy at global level. 
The EU can foster its contribution to tackle th ese issues through an ambitious industrial and 
sustainable consumption and production policy. On one hand, a sustainable industrial policy 
can aim at turning the environmental challenge s into economic opportunities for society. On 
the other hand, as the EU is one of the biggest consumers at global level and as products are 
traded globally, European policies standards to  foster sustainable c onsumption and production 
will tend to become global benchmarks. By de veloping robust sustainable consumption and 
production policies, the EU can therefore contribute in a conc rete way to sustainability 
worldwide. 
The EU Heads of State and government committed to tackle these challenges in the European 
Council on 8 and 9 March 2007. They set ambitious targets for greenhouse gas reduction, energy efficiency and an increased share of renewable energy. The mid-term review of the 
Industrial policy called for actions in the field of a sustainable industrial policy and 
sustainable production and consumption. The re newed Sustainable Development Strategy 
identified the promotion of sustainable c onsumption and production as one of the key 
challenges. The Council, in June 2007, confir med that environmental technologies and 
ecoinnovations are one of the strongest pillar s of the EU's economy. The EU's economic 
competitiveness will, to a large extent be based on its energy and resource efficiency and its capability to develop appropriate technological solutions. Key to future jobs, growth and 
wealth as well as to environmental protection will be efficient eco-innov ations and resource 
and material efficiency. 
The Commission will contribute to this poli tical momentum by presenting Action Plans on 
Sustainable Industrial Policy and on Su stainable Consumption and Production.  
Since the envisaged Action Pl ans cover products, production a nd consumption, stakeholder 
engagement is crucial. The purpose of this B ackground document is to explain to stakeholders 
and to the public the rationale behind the diffe rent possible actions and ask for feed-back on 
them. Interested parties are invited to par ticipate to the on-line consultation using the 
following link http://ec.europa.eu/y ourvoice/ipm/forms/dispatch?form=SurveySIPSCP . The 
consultation closes on September 23, 2007. 
 
EN 69   EN 2. KEY  CHALLENGES 
Future policy will aim to achieve economic gr owth, whilst respecting environmental carrying 
capacity, find ways to minimise environmental damage and make a sustainable use of the 
earth's resources. Therefore, a shift in incentives is needed for both producers and consumers, so that firms and individuals acti ng in their own interest take so ciety towards sustainability. In 
this way the EU’s goals of bot h continuous prosperity and envi ronmental sustainability can be 
achieved in synergy. 
Policy intends to focus on the following five key challenges: 
2.1. Leveraging Innovation: stimulating th e development and commercialisation of 
low carbon, energy and resource efficient technologies, products and services 
It is clear that technology will need to play a central role in addressing sustainability 
challenges through being successfully translated  into innovative products and services and 
could also provide significant competitive st rengths. This requires an integrated policy 
approach that combines a number of tools, such  as legal framework conditions, investment in 
research and development, intellectual pr operty rights (IPR), technology transfer and 
networking between actors in indu stry, research, finance, etc. 
Therefore, it will be necessary to reflect on how to better use the Communities’ instruments, 
notably the Competitiveness and Innovation Programme, the Framework Programme for 
Research and structural funds, to provide a more targeted stimulus  to finance technology 
development, innovation and encourage the uptak e of environmentally friendlier products and 
services. 
2.2. Better Products: creating a dynamic in ternal market for better performing 
products 
More than 80% of all product- related environmental impact s are determined by product 
design. The Commission intends to develop a strong product policy and remove remaining 
obstacles in the internal market. Promoting "eco -design" for the most significant products will 
be the cornerstone of this approach
96. 
Dynamic incentives for producers are needed to  improve the environmental performance of 
all types of products. For example by fosteri ng lead markets and cr eating incentives for 
frontrunners. This may require appropriate fi nancing instruments and the development of 
market-based instruments that encourage the uptake of environmentally friendlier products 
and services. Environmental management sc hemes and energy services for firms and 
households will also be promoted, supporte d by a simple, user-friendly framework. 
It is paramount that policies which influence the performance of products are coherent and 
reinforce each other, for the continuous improvement of  products’ environmental 
performance. The key challenges of climate change, energy and resource efficiency or carbon 
profile of products should play  an important role in assessing the environmental performance 
of products. 
2.3. Leaner and Cleaner Production: increasing the efficiency of EU production 
Leaner or more efficient produc tion processes reduce resources in tensity, which contributes to 
cost competitiveness of companies. The future policy will need to assist producers to improve 
resource efficiency, promote the uptake and development of  new eco-efficient technologies 
along the whole supply chain and close the "resour ce loop" from manufact ure to the use phase 
                                                 
96 COM(2007) 374 final 
 
EN 70   EN and final disposal, through the utilisation of recycled, reused and remanufactured goods and 
materials and through waste prevention. Also, Information and communication technologies 
are enablers to improve energy efficiency in various sectors. 
2.4. Smarter Consumption: changing behaviours 
Households in Europe are major contributors to environmental problems such as climate 
change, air pollution, water polluti on, land use and waste generation97 – and household 
expenditures are projected to double across the EU-25 by 2030. Although the environmental 
performance of many individual products is improving, increases  in total consumption and 
production often outstrip the progress made. Cons umers therefore play a crucial role in 
moving towards more sustainable consumption patterns by the choices and decisions they 
make. Accordingly, an ambitious mix of polic y measures can enable consumers to make 
better choices in consuming, owning, and usi ng more sustainable pr oducts and services. 
2.5. Global markets: exploiting first mov er advantages and levelling the playing 
field for industry worldwide 
Faster uptake of environmental technologies an d standards for more sustainable technologies, 
products and services in the EU can pave th e way for the development of international 
standards which better integrate environmental aspects, taking a life-cycle approach. This can 
give European companies “first-mover” adva ntages in global competition. International 
sectoral approaches for energy intensive indust ries offer a significant potential to set global 
benchmarks for energy and material efficiency and foster technologies that are meeting these 
benchmarks. Such sectoral approaches, which must comply with competition rules and meet 
environmental objectives, should help create  export markets fo r leading European 
technologies, services and products. They can  be complemented through international or 
bilateral agreements on the diffusion and use of environmental techno logies, by facilitating 
the use of the Kyoto flexible instrument s and through trade and development policy. 
3. ENVISAGED  APPROACH  TO FACE  THE  KEY  CHALLENGES 
The above key challenges cut across a wide range of policy areas and therefore have 
economic, social and environmental aspects.  
Ambitious but well-focused future policies which clearly prioritise key areas are needed. The 
Plans should help shift unsustainable consump tion and production patterns and use industrial 
policy as an efficient tool to create market  conditions conducive to low carbon and sustainable 
technologies, products and services. In part icular, the scope could concentrate on the 
following four elements: 
3.1. Focusing on key environmental issues 
Global climate change and the sustainable use of natural resources are presently among the 
greatest environmental concerns. To be most e ffective, the Commission therefore intends to 
focus on: 
• Climate change and a low-carbon economy; 
• Sustainable and efficient use of natura l resources, energy and materials; and 
                                                 
97 Organisation for Economic Co-operation and Development (OECD), 2002a 
 
EN 71   EN • The SCP Action Plan could also addr ess the further phasing out hazardous 
substances and endangered materials98 from production processes and products. 
The two Action Plans will fully take into account competitiveness, energy, environmental and 
social aspects. 
3.2. A product-based approach 
Recent Commission research confirms that a la rge portion of environm ental impacts in the 
EU are caused by consumer products throu ghout their life-cycle, from extraction to 
production, transportation, consumption and final disposal. A strong product-focus is 
therefore needed, aiming at those product type s where the potential for improving resource 
and energy efficiency is greatest, where the EU  industry could lead the markets worldwide or 
whose consumption causes most environmenta l damage. Such a product-based approach 
would be efficient as it allows addressing competitiveness issues and key environmental impacts of selected products where it is most appropriate in their life-cycles. Thus, it can create a dynamic process of continuous improvement in the environmental performance of products. 
3.3. Building on existing policy instruments 
The approach would build on several existing EU  policies related to products and resources, 
such as the Industrial Policy (as reviewed  in July 2007), Integrated Product Policy
99, the 
ecodesign of Energy-Using Products100, the Sustainable Use of Natural Resources strategy101, 
the Energy Policy for Europe102, Cohesion policy and other produc t legislation and labelling 
schemes.  
While all these wide ranging policy instruments already exist in different policy areas to 
address unsustainable consumption and production the aim is to focus on a selected set of 
existing policy instruments and choose those wh ich are most appropriate to reinforce each 
other and ensure coherence. In pa rticular, these instruments should: 
– reinforce the EU’s competitiveness; 
– have a clear sustainability focus; and 
– be the most suited to address the key challenges. 
A selected number of new instruments might be  considered for achieving the objectives and 
reinforcing the impact of existing policy instruments. 
3.4. A contribution to policy coherence 
The approach will complement policies that already tackle unsustainable consumption or 
production. It will focus on strengthening exis ting and developing new policy instruments, 
identifying gaps, ensuring policy coherence and a voiding overlaps. It will  create a framework 
for better knowledge and information on products, so as to identify policy priorities and 
suitable actions. 
                                                 
98 For example overharvested tropical timber. 
99 http://eur-lex.europa.eu/LexUriServ/ site/en/com/2003/com2003_0302en01.pdf  
100 http://ec.europa.eu/enterpri se/eco_design/index_en.htm 
101 http://ec.europa.eu/environmen t/natres/pdf/com_natres_en.pdf 
102 http://ec.europa.eu/energy/energy_policy/documents_en.htm 
 
EN 72   EN 4. MAIN  ACTIONS  UNDER  CONSIDERATION 
This section provides an overview of the policies and instrument s being considered: 
4.1. Leveraging Innovation 
The improvement of the conditions for innova tion is a priority in the Lisbon agenda. 
The new European Institute for Technology, a nd instruments like the Competitiveness and 
innovation programme (with funding of 430 m illion available for eco-innovation) could 
provide further financial input to leverage innovation. These instruments should be further 
focussed onto those few areas where the EU, co mpared to its competitors could make a 
difference by providing technologies and the ty pe of products needed by carbon-constrained 
economies (low energy housing, e fficient boilers and motors fo r industry, renewable energy, 
renewable raw materials, low emissions cars, etc). 
Investment in research through funding pr ogrammes like the Framework programme for 
research, (FP7), the structur al funds and policy initiatives  like the Strategic Energy 
Technology plan (SET) and the Environmental Technologies Action Plan (ETAP) should be 
used also in support of sustai nable industrial development. 
Joint Technology Initiatives (combining EU and industry funds) and Article 169 measures 
(for pooling national research funds) such as th e Euro Stars initiative,  which seeks to support 
research is small and medium sized companies, were identified as important tools for 
mobilising private and public funds. 
4.1.1. Lead Market Initiative 
The “lead markets concept” is about spurring the growth of markets for innovative products 
and services by creating conducive market conditi ons. The lead market concept has to align 
with potential European industrial strength s where the EU may be  positioned to lead 
worldwide markets and increase industrial competitiveness. 
The Commission has announced103 that it will table in December 2007 a Lead Market 
Initiative. The initiative will tail or policy instruments to a small number of defined areas with 
a lead market potential. 
The measures could be designed to accelerate depl oyment, leading to market acceptability of 
the technology and rapid economies of scale. The select ed areas will contri bute to broad EU 
policy objectives, such as environment protecti on, health or climate change and resource 
efficiency. 
4.1.2. Networking of innovation st akeholders and closer cooperation between research and 
industry 
Supporting networking among innovati on actors, including public priv ate partnerships, is part 
of the innovation policy tools. Cooperation among cl usters is particularly addressed by the EU 
helping enterprises share knowledge and access knowledge intensive services. 
Only the successful translati on of new technologies and re search results into innovative 
products and services can render the desired return on the resear ch investments, be they of 
                                                 
103 ‘Putting knowledge into practice: A broad-based in novation strategy for the EU’ adopted on 13.09.2006 
(COM(2006)502) 
 
EN 73   EN economic, societal or environmental nature. To spur this, the conditions for more and closer 
cooperation between resear ch, higher education and business are crucial.104 
4.2. Better Products: creating a strong EU market for sustainable products 
Measures for improving the environmental pe rformance of products should include an 
ambitious and more dynamic framework for be nchmarking and establishing requirements for 
products. It is important that policies enable all pr oducers, including small and medium sized 
enterprises, to benefit. They should also make  it easier for consumers to identify the products 
with the best environmental performance in th e marketplace and increase the demand for such 
products. In this process, other aspects such  as safety performance of products will be 
considered as appropriate with regard to their contributi on to sustainability. 
To this end, the following actions could be considered: 
4.2.1. Dynamic Performance Requirements 
Product policy could be better used as a compet itiveness and sustaina bility tool. Products 
entering the Internal Market could be subject to demanding but realistic requirements. This 
may require a more strategic approach. 
Advanced performance benchmarks (describing the best performing pr oducts in the market) 
could be coupled with minimum requirements already foreseen in Community legislation 
(notably in the Eco-design of en ergy using products Directive) and market incentives so as to 
reward frontrunners and drive performance upw ards. This approach would be dynamic and 
predictable, driving performance upwards. 
An essential incentive could be to enhan ce product labelling, by giving information to 
consumers on the performance of the product, so as  to facilitate a shift of demand towards the 
most sustainable products. Categorization of  environmental performance and labelling 
requirements can be established for each product group in the different implementing measures being developed within the "Eco-d esign of energy using products" Directive
105. A 
similar approach could be considered for non-energy using products. 
Incentives could be of economic nature, such as taxation policy, or s ubsidies for consumers 
buying better performing products from a sustaina bility point of view. Public procurement, 
which is an instrument that could be geared  towards purchasing the most performing products 
and innovative services, could accelerate mark et development for the highest performing 
products. For this to happen, common prioriti es and approaches fo r taxation and public 
procurement might be developed and agreed  between Member States, through increased 
cooperation within the existing networks. Moreove r, dialogue between users, industry and 
procurers should be encouraged to increase the awareness of pr ocurers, notably local on the 
existence of the most innovative products106. 
EU standards should also be taken to the intern ational level. This should build on the 
advantages Europe has in terms of its regulatory influence. There are several examples of EU 
                                                 
104 See the Communication from the Commission on ‘Delivering on the Modernisation Agenda for 
Universities: 
Education, Research, Innovation’ (COM(2006)0208) ass well as the Communication from the Commission on 
‘Improving knowledge transfer betwee n research institutions and industry across Europe: embracing open 
innovation’ (COM(2007)182). 
105 2005/32/EC 
106 see COMMISSION STAFF WORKING DOCUMENT Procurement: “Guide on dealing with 
innovative solutions in public procurement.”; SEC (2007) 280 
 
EN 74   EN environmental regulation put in place in othe r parts of the world. This can give European 
companies a first mover advantage in global competition. 
The reinforcement of market surveillance should also be considered as a way to ensure not 
only a level playing field within the EU, but also between impor ted and domestically 
manufactured products. 
4.2.2. Environmental product decl arations, sustainability l abels and data collection 
Further developing instruments with the view of informing both producers and consumers on 
the environmental performance of products could be considered. 
It is envisaged to integrat e and expand the existing Europ ean Platform for Life-Cycle 
Assessment into a Data Centre for the envir onmental performance of  products, technologies 
and services. This Data Centre would pool th e relevant knowledge on the best performance 
products on the market and the environmen tal impacts of products in general. 
More standardized European Environment Product Declarations would have multiple 
benefits. In addition to havi ng direct consumer benefits, manufacturers could sell their 
products more easily to other producers on the EU  market and the purchases would not have 
to track the environmental performance of pr oduct on a case by case ba sis. A more robust 
European system of product declarations co uld also prevent false claims and control 
efficiently self-certified declarations. 
European product labelling rules could be stre amlined and reinforced with the objective to 
improve the synergies and coherence between labe lling schemes. This analysis will look at 
the existing labelling schemes such as energy la belling and eco-labels as well as possible new 
labelling such as carbon labelli ng and sustainability labelling fo r key raw materials (e.g. fish). 
The outcome of the ongoing revision of the Energy Labelling Direc tive 92/75/EEC could be 
considered in this context. The objective should be to inform consumers of the best 
performing products, thereby rewarding producer s of the best performing products in the 
marketplace. 
It will also be examined whether additional actions are needed to limit further false 
environmental claims. 
Tackling the international impact s of unsustainable production could include options such as 
extending the applicatio n of the Forest Law Enforcement,  Governance and Trade (FLEGT) 
model to other products, or conceiving similar approach es. This could improve the 
environmental sustainability of the commoditie s production and trading process and enhance 
access to technology in developing economies , especially for th e poorest countries. 
4.2.3. Enhanced use of eco-design instruments at EU level 
A range of EU legislation on the environmen tal performance of products and eco-design 
requirements is already in place. The future policy could consider the need for an enhanced use of the EU's eco-design policy instruments, including broadening thei r scope, in order to 
ensure coherence and reinforce synergies with  existing legislation, which would reduce the 
administrative burden for industry. The Action Plan s could therefore contain an assessment of 
the need for and content of a new policy fo r the eco-design of non energy using products. 
4.2.4. Standardisation 
The future policy could assess possibilities for developing new standards on resource 
efficiency and will ask standardisation bodies to address the environmental dimension of 
European standards, to make best use of t ools for standardisation and to report on progress 
('greening of standards'). It would be necessary to mobilise funding for this. 
 
EN 75   EN 4.3. Leaner and Cleaner Production: increasing the efficiency of EU production 
Actions to support leaner produ ction at EU level should promote more efficient and 
environmentally sound production and cleaner a nd greener technologies. They should also 
aim at improving the provision of informati on about the environmental impacts of the 
components or materials used in production a nd at providing incentives to promote more 
efficient production. All manufacturers should comply with the production requirements, 
irrespective of their location. 
The following actions could be considered: 
4.3.1. Resource and material  efficiency targets 
Progress towards more sustainable consumption and production needs to be measured against 
the right indicators. The Commission has be en and will be working on developing these 
indicators. 
Resource productivity (€/kg) of the EU-15 econo my has developed favourably over the past 
decades. In the period 1980-2000 it increased by 52% , which is 2.2% per year. On the basis of 
this trend, and assuming even a modest furt her increase in resource productivity, it is 
reasonable to expect a rate of 3% resource productivity improvements annually for the period 
2000-2030. Assuming an average economic growth of  3% per year as well, resource use in 
absolute quantities will be more or less stable. It could be considered to set an overall target of 
around 3% annual resource productiv ity gains for the EU to un derpin this development. 
4.3.2. Reinforcement of eco-innovati on and environmental technologies 
The future policy could help maximise the im pact of the Commission's support to promoting 
environmental technologies and eco-innova tion. This could be done through the EU 
Environmental Technologies Ac tion Plan (ETAP) and with th e support of funding of the EU 
Competitiveness and Innovation Programme by doing more to increase demand in 
particularly promising areas such as constr uction, food and drink, tran sport, recycling, and 
waste water.107 
Further initiatives could include a technolo gy verification scheme, providing reliable 
information on the environmental performance of new technologies, which will further 
market confidence in environmental technologies. 
Consideration should be given to  further develop ETAP to give  guidance on decision making 
regarding the financing of mark et introduction of eco-technology. 
There is also room to examine in more deta il how environmental regulation could promote 
even more the uptake and the development eco-innovation and eco-technologies, for instance by developing synergies between reviews of relevant environmental regulation and ETAP 
objectives; specific measures will  be proposed in this regard. 
4.3.3. Setting targets for eco-i nnovation and the uptake on en vironmental technologies 
The work underway on developing indicators for eco-innovation can provide the basis for 
setting measurable targets for eco-innovation and the uptake of environmental technologies in 
the EU. Indicators could be based on a number of aspects such as: uptake levels, public 
procurement levels, investments and financ ing, patent submissions, selected company 
                                                
 
107 For more background information see the ETAP Report 2005-2006: 
http://ec.europa.eu/environment/etap/pdfs/comm_pdf_com_2007_0162_f_en_acte.pdf 
 
EN 76   EN performance, etc. The setting of targets could further enhance, in th e longer term, the EU’s 
share of eco-friendly products and technologies in the global market. 
4.3.4. Review of the legislation on eco-manage ment and audit schemes/pollution from big 
industrial installation 
The Eco-Management and Audit Scheme (EMAS) Regulation is a powerful tool for managing 
and reducing the environmental im pacts of industrial plants and institutions. This instrument 
is currently under review and could be furthe r reinforced to increase and strengthen their 
focus on the energy and resource efficiency and on the reduction of the use of hazardous and 
endangered material and their discharges. 
It will also be crucial that the Directive on Integrated Pollution Prevention and Control (IPPC) 
ensures the uptake of Best Available Tec hniques (BAT) in a more homogeneous way.  
Furthermore, for innovative techniques, be yond BAT, incentives both financially and 
regulatory, should be provided. Market-based inst ruments could also play a role in this 
context. 
4.3.5. Small and medium size enterprises (SMEs) 
Specific actions should target the particular situation of small and medium sized enterprises, 
which are often not sufficiently aware of ne w energy efficient and environmentally friendly 
solutions or do not always have the fina ncial resources required for acquiring new 
technologies. At the same time SMEs are an important source of eco-innovation and new 
energy and resource saving technologies and need  support in bringing th eir innovations to the 
market. 
In the context of the future policy, it coul d be envisaged to en hance existing policy 
instruments to provide market incentives for SMEs to improve environmental performance 
and energy efficiency. The Commission alr eady provides specific financial support for 
research and innovation in SMEs (FP7, CIP, st ructural funds), in pa rticular the Euro-info 
Centres and Innovation Rela y Centres. It could also be e nvisaged to fund a new programme 
providing free advice to SMEs to help them to  sustain their competitiveness, become more 
resource and energy efficient and generate less en vironmental impacts. This could be done by 
making available to SMEs a free  helpline, organising on-site vi sits by expert advisors, and 
building on successful models in Member States. A specific environmental compliance assistance programme for SM Es is also envisaged. 
4.4. Smarter Consumption: Changing behaviour 
EU actions for promoting smarter and more sustainable consumption could introduce and 
reinforce measures to internalise environmental cost into product prices, to improve consumer 
access to information on the environmental perfor mance of products, and to stimulate markets 
for best performing products and the sustainable use of products.  The following actions could 
be envisaged: 
4.4.1. Environmental Performance Agreements with retailers 
The policies and practices of large retailers in the EU could become an important element in 
moving towards more sustainable consumption. Sales of greener products very much depend 
on their availability and promotion at retail outlets. Large retailers can also influence the 
environmental performance of their supply chains, passing on  incentives for green production 
and product design. 
 
EN 77   EN Therefore, in addition to existing initiatives108 it could be explored with  large retailers how to 
promote and purchase better products and how to green supply chains with a view to 
establishing EU-wide guideline s to assess the environmenta l performance of products. 
In order to facilitate these developments, an EU logo of “environmental commitment” for 
retailers could be created. It would reward co mpanies or/and retailers for demonstrating the 
use of energy and material efficient products or  services or selling a given share of highly 
performing products. Therefore, the logo would become an additional incentive for the 
production and use of environmentally better products, including for SMEs. 
4.4.2. Enhanced use of market-based instruments 
As price is one of the main determinants of purchasing choices, market-based instruments can 
help get prices right and inte rnalise environmental costs. EU  proposals to link purchase taxes 
on cars to their climate impact are a step in this direction. Mark et-based instruments could be 
used to address the consumption of natural re sources and the producti on of waste. It is 
considered to facilitate further discussion a nd implementation by coordination of experiences 
in Member States in a Forum on Market-based Instruments.  
At the moment, 47,7% of EU government tax revenue comes from labour and only 7,5% from 
taxes on resource use and pollution.109 Therefore, future policy could set out the potential for 
further fiscal reform, particularly of consum ption taxes based on the recent Green Paper on 
the Use of Market-Based Instru ments in Environment Policy.  
4.4.3. Differentiation of value-added tax rates 
The Commission will examine the opportunity a nd efficiency of differentiating VAT rates 
according to the environmental performance of products. 
4.4.4. Revision of the EU Eco-label Regulation 
Eco-label could further contribute  to shift demand to better performing products The revision 
of the EU Eco-label Regulation will extend the scheme to c over all importan t product groups, 
increase uptake by producers, a nd link it to other policy instrume nts. The key elements of the 
revision are: a mechanism for selecting prior ity product groups, more efficient process for 
developing Eco-label criteria, a flexible decision-making pro cess involving stakeholders and 
simplification of the operation of the scheme . It will be analys ed how the Eco-label 
Regulation links with other EU eco-design po licies and how synergies could be further 
reinforced. 
4.4.5. Misleading advertising/fal se environmental claims 
The provision of clear, understandable and correct information on the environmental 
performance of products should st imulate public and private purchas es of greener products. In 
this context, there is a need to further pr otect consumers against misleading advertising 
practices. The Directive 2005/29/EC  on Unfair Commercial Practices110, applicable as of 
December 2007 aims to protect consumers agains t a broad range of misleading practices and 
claims. It could be explored how the application of this le gislation can be supported by 
supporting environmental product data in orde r to determine the existence of unfair 
commercial practices.  
                                                 
108 Such as the Energy Labelling Directive 92/75/ EEC, eco-label, or other voluntary initiatives 
109 Of which only approximately 0.3% come from pollution taxes. 
110 OJ L 149, 11/06/2005, replacing with respect to business-consumer relations an earlier Directive from 
1984 on 
misleading advertising. 
 
EN 78   EN 4.4.6. Green Procurement 
In 2007, the Commission will propose further guidance to strengthen Green Public 
Procurement (GPP) in the EU. Public procurem ent could be used to accelerate the market 
uptake of the most performing products. The futu re policy could explore whether it would be 
more effective to focus on the most impacting products belonging to lead markets or whether 
it is better to raise the proportion of “green ” products overall in public purchases. Another 
issue is whether such prioriti es should be compulsory for public procurement or remain 
indicative. 
Additionally, initiatives to stimulate large privat e sector purchasers to green their procurement 
could also be considered. 
4.4.7. Consumer information/ educ ation and /training campaigns 
In order to develop smarter consumption, ra ising awareness, edu cation and training of 
consumers is important for them to be able  to make sustainable consumer choices. In 
cooperation with consumer organisations and Member States, future policy could explore 
further appropriate ways, for example through information campaigns, or through education 
and training initiatives, to prom ote sustainable lifestyle choices  and to ensure consumers are 
adequately informed about the products with the best environmental performance. In this 
context, it could be explored, for instance, to further devel op 'on line consumer education 
tools' focusing on sustainable consumption. 
4.5. Global markets: exploiting first mov er advantages and levelling the playing 
field worldwide for sustainable technologies and products 
4.5.1. Adapt EU policies to fosteri ng energy and resource efficiency 
There is little doubt that over time the world will have to e volve towards a low carbon and 
resource-efficient economy. Th e momentum created by adopting climate change policies 
within the EU and the renewed Sustainable De velopment Strategy should be used to drive 
efforts to achieving similar commitments intern ationally. This is a prerequisite for succeeding 
in both, containing climate change, a sustainabl e use of natural resources and preserving the 
EU industrial competitiveness. It requires cohe rence across policy areas and in particular a 
more pro-active use of the EUs tr ade and development policies.  
Several studies are showing that eco-techno logy is a fast-growing market. European 
companies have so far succeeded in taking advantage of these opportunities. 
In the future, low carbon and resource-efficien t technologies, products and services will 
dominate the markets. Internally, a faster de velopment and uptake of ambitious standards in 
the EU can pave the way to the adoption of inte rnational standards, notably if the standards 
are developed with international participation and can in turn help open foreign markets for the benefit of leading European companie s as well as the global environment.  
Trade policy can also contribute to this process, by working towards the elimination of trade 
tariffs for low carbon and reso urce-efficient products and th rough the creation of a global 
trading scheme for carbon. An increased indu strial dialogue with major emitting countries 
could also facilitate this task. The enforcement of the compliance of imports with claimed environmental requirements and labels need also be improved. 
EU development policy can proactively promot e the uptake of low carbon, resource efficient 
technologies, processes and products, in partic ular by fostering investment in clean energy 
and resource technologies. This process will ne ed to be accompanied with decisions on the 
 
EN 79   EN issue of intellectual property ri ghts in technology diffusion to safeguard the protection of 
rights belonging to EU companies. 
4.5.2. Global Sectoral Approaches 
The impetus in adopting climate change and re source efficient policies within the EU should 
be matched by an equal deployment of efforts to  achieve similar commitments internationally, 
which is a prerequisite for succeeding in both containing climate change, a sustainable use of natural resources and preserving our industrial competitiveness. 
Different industrial sectors have started working on global sectoral approaches, with a view to 
agreeing on and committing to specific targets (ene rgy efficiency of the process of production 
or CO2 content of the product). Sectoral approach es could constitute an effective tool both to 
reduce the environmental impact of industry an d to create a level play ing field for industry 
sectors internationally, thus a ddressing the current competitive disadvantage for EU energy 
intensive industries exposed to international competition. At the same time, this provides an effective way to engage developing countries in  action that will help mitigate climate change 
but without placing a co nstraint on growth.  
Public authorities have to play a role in creating an appropriate institutional and legal 
framework to underpin these approaches, in pa rticular by providing a credible monitoring and 
enforcement system and ensuring that targets defined by industry are sufficiently ambitious. 
The compatibility of global sectoral appro aches and the EU Emissions Trading Scheme 
should be ensured. 
The European Union could negotiate bilateral industrial agreements between governments to 
provide industry sectors with such framework. The launchi ng of a pilot project in 2008, 
working with advanced sectors exposed to international competition and the main relevant international partners, is being considered. 
4.5.3. Strengthened international cooperati on on sustainable consumption and production 
International cooperation on sustainable cons umption and production, particularly on work 
and initiatives led by the United Nations under th e Marrakech process, and international co-
operation on the sustainable us e of natural resources coul d be further strengthened. 
 
EN 80   EN Annex III 
 
to the 
 
Impact Assessment on the SCP and SIP Action Plan 
 
Description of current polices 
 
EN 81   EN A number of policies are already in place aimi ng to address negative environmental impacts 
resulting from production and consumption. Th is section presents the major ones and 
illustrates how they intend to address the market  failures described above. It should be noted 
that the policies listed below are not an exhausti ve list and that there are other policies that 
can be related to the market failures described above. These ot her policies ar e however not 
relevant as far as the scope of th e present initiative is concerned.  
Integrated Product Policy 
IPP advocates life-cycle thinking, in order to take  appropriate action at the problem stages in 
the life-cycle. The objective is to avoid shuntin g the environmental impact from one phase of 
the life-cycle to another.  
It promotes the application of Life-Cycle th inking through actions such as Environmental 
Management Systems (like the Eco-Management and Audit Scheme – EMAS) and Product design obligations (such as those requested by the Eco-design of Energy Using Products – 
EUP). On the public consumer side, the I PP Communication underlines the importance of 
Green Public Procurement, Greener Corporate Purchasing and Environmental labelling (like 
eco-label or the energy efficiency label).  
Eco-Management and Audit Scheme (EMAS) 
EMAS certifies through an independent verifi cation mechanism that a firm complies with 
environmental legislation and ha s an environmental management system. It is a voluntary EU 
instrument which acknowledges organisations that improve their environmental performance 
on a continuous basis. EMAS re gistered organisations are recognised by the EMAS logo, 
which guarantees the reliability of the info rmation provided. EMAS helps to minimise 
information costs for purchasers who value environmentally sound production techniques by 
providing them with the possibi lity to rely on the logo when  making a purchasing decision.  
Energy-using Products Directive (EuP)  
Directive 2005/32/EC on the eco -design of Energy-using Products (EuP) covers products 
such as electrical and electronic devices or  heating equipment. The Directive does not 
introduce directly binding requi rements for specific products,  but defines conditions and 
criteria for setting, through subsequent im plementing measures, minimum requirements 
regarding environmentally relevant product charac teristics (such as energy consumption) and 
allows them to be improved quickly and effi ciently. The minimum requirements are set such 
that the combined purchase and use costs are minimised. A key element is that the Directive provides coherent EU-wide rules for eco-desig n and ensures that disparities among national 
regulations do not become obstacles to intra-EU and external trade. 
Taking into account the exclusion of the transport sector, the di rective potentially covers 68% 
of total energy use in Europe. Currently implem enting measures are under preparation for 20 
products in heating and water heating equipment, electric motor systems, lighting in the 
domestic and tertiary sectors, domestic applia nces, office equipment in both the domestic and 
tertiary sectors, consumer electronics an d HVAC (heating ventilating air conditioning) 
systems.  
Once the implementing measures of EuP ar e introduced information asymmetries and 
bounded rationality should no longer pose prob lems for energy using products, since the 
consumer will buy those products that have the lowest life cycle cost whether he is informed or not. Principal-agent problems will be solved  for energy using products since agents do not 
have the possibility to buy products  which are not in the interest of the principal. Furthermore, 
 
EN 82   EN the minimum requirements will limit negative externalities caused by energy using products 
to the extent that they are covered by the standards.  
The minimum requirements of the EuP direc tive will limit the emissions of significant 
environmentally harmful impacts. It is expected  to save 200 mio tonne  of CO2 per year by 
2020 which is approximately 5% of current total emissions. 
Green Public Procurement 
In terms of GPP, the Integrated Product Policy initiated several actions  to stimulate it: 1. 
Determination of the extent of greener public  procurement in the EU; 2. Encouragement of 
Member States to develop by the end of 2006 publicly available action plans for greening 
their public procurement (National Action Plans) ; 3. Elaboration of information measures for 
public authorities- a practical handbook for pu blic authorities (Handbook on Green Public 
Procurement), a Product Group Database , a GPP website.  
The Presidency Conclusions of the Eu ropean Council (7775/1/06 REV 1, March 2006) 
indicated that Member States decided to re view specific actions to bring about more 
sustainable consumption and pr oduction patterns at EU and global level. EU governments 
said this could be achieved by pursuing a variety of actions – from fostering green public 
procurement to promoting environmental criter ia and performance targets. Moreover, the 
Renewed EU Sustainable Development Strate gy (SDS) (10117/06 June 2006) indicated that 
the EU Member States decided to aim at achieving by 2010 an EU average level of Green 
Public Procurement (GPP) equal to that curr ently achieved by the best performing Member 
States. Green public procurement policies cont ribute to limiting negative environmental 
impacts. The EU GPP in addition aims at prot ecting a distortion of the internal market.  
EU Energy Star Programme 
The recently adopted Council Decision on Energy Star fo r office equipment [Council 
Decision 2006/1005/EC] requires that  EU institutions and centra l Member State government 
authorities use energy efficiency criteria no less demanding than those defined in the 
ENERGY STAR programme when purchasing office equipment. The energy star label is a 
voluntary U.S. label covering energy using a ppliances (such as personal computers and 
printers) as well as insulation materials111 that promotes energy efficiency. Only those 
products that can offset higher initial purchase prices  by energy savings dur ing their expected 
life span are awarded the label. The label thus has the potential to solve the information asymmetry regarding these products. The energy st ar label will be used in the EU for office 
equipment within the framework of the EU ENERGY STAR programme following an 
                                                
 
111 The current list of products covered include: Appliances  (Battery Chargers , Clothes Washers , 
Dehumidifiers , Dishwashers , Refrigerators & Freezers , Room AC , Room Air Cleaners , Water Coolers  ) 
Heating & Cooling  (Air-source Heat Pumps , Boilers , Central AC , Ceiling Fans , Dehumidifiers , 
Furnaces , Geothermal Heat Pumps , Home Sealing (Insulation) , Light Commercial , Programmable 
Thermostats , Room AC , Ventilating Fans ) Home Envelope ( Home Sealing (Insulation and Air Sealing) , 
Roof Products , Windows, Doors, & Skylights ), Home Electronics  (Battery Charging Systems , Cordless 
Phones , Combination Units , Digital-to-Analog Converter Boxes (DTAs) , DVD Products , External 
Power Adapters , Home Audio , Televisions , VCRs ), Office Equipment  (Computers , Copiers and Fax 
Machines , Digital Duplicators , Notebook Computers/Tablet PCs , Mailing Machines , External Power 
Adapters , Monitors , Printers, Scanners, and All-in-Ones ), Lighting  (Compact Fluorescent Light Bulbs 
(CFLs) , Residential Light Fixtures , Ceiling Fans , Exit Signs ), Commercial Food Service  (Commercial 
Dishwashers , Commercial Fryers , Commercial Hot Food Holding Cabinets , Commercial Ice Machines , 
Commercial Solid Door Refrigerators & Freezers , Commercial Steam Cookers ), Other Commercial 
Products ( Battery Charging Systems , Exit Signs , External Power Adapters , Roof Products , Vending 
Machines , Water Coolers) 
 
EN 83   EN Agreement between the Government of the US  and the European Community (EU) to co-
ordinate energy labelling of office equipment. It can contribute towards solving a principal-
agent problem in private ente rprises and public administratio ns by mandating procures to buy 
office equipment with the ENERGY STAR label.  
EU Eco-Label 
The Eco-label identifies overall environmental preference of a product or service within a 
specific product/service categor y based on life cycle consid erations (production, use and 
disposal). It is a voluntary scheme designed to encourage businesses to market products and 
services that are more environment friendly and for European consum ers - including public 
and private purchasers - to easily identify th em. Currently, products from twelve product 
categories are covered112. 
For those products that have the eco-label it contributes to solving information asymmetries 
with respect to lifecycl e costs of a product. 
Energy labelling directive (ELD) 
The Energy Labelling Directive (ELD) intro duced mandatory label ling for energy using 
household devices that account fo r a significant proportion of electricity consumption in 
households. The label has to provide informati on on the consumption of energy and of other 
essential resources by using the device. 
It applies to the following types of household appliances, even where these are sold for non-
household uses: refrigerators, freezers and thei r combinations, washing machines, driers and 
their combinations, dishwashers, ovens, wate r heaters and hot-water storage appliances, 
lighting sources and air-conditioning appliances.  
The labelling solves the information asymmetrie s for these products by showing the 'hidden' 
costs of use over the expected life span. With the current sy stem, according to the producers 
34 Terrawatthours (TWh) or 7 million tons of oil equivalent (Mtoe) in primary energy savings 
for appliances have been achieved from 1995 until 2006. It is assumed that more than half is 
due to labelling, the remaining part is due  to structural t echnical improvements113. In the case 
of washing machines, Figure XXX shows the effi ciency gains observed in the last decade. 
                                                 
112 APPLIANCES (washing machines, dishwashers,  refrigerators, vacuum cleaners, TVs AND 
ELECTRICAL EQUIPMENT (television sets, li ght bulbs), HOUSEHOLD FURNISHINGS (bed 
mattresses, textiles), COMPUTERS (personal computers, portable  computers), CLOTHING (textiles 
for clothes and accessories), FO OTWEAR (shoes and boots), PA PER PRODUCTS (copying and 
graphic paper, tissue paper products), DO-IT-YOURSELF (hard floor coverings, indoor paints and 
varnishes), LUBRICANTS (hydraulic oils and gr eases), GARDENING (potting compost, soil 
improvers), CLEANING UP (all-purpose cleaners, detergents for dishwashers, hand dishwashing, detergents, laundry detergents), HOLIDAY ACCOMODATION (campsite service, tourist 
accommodation service). 
113 SEC(2006)1174  
 
EN 84   EN 
 
A study carried out in 2004 analysed the degr ee of public awarene ss about the energy 
efficiency label. It showed that in Slovenia, 43 % of the surveyed public  recognised the label 
for appliances, in Finland, the appliance labe ls is known by 60 %, in Castilla y Leon, the 
number of end consumers recognising energy la bels 36 % and in Upper Austria, the energy 
label for buildings in known by 49 %. 
Thus, a significant fraction of the population is aw are of the existence of the label and it can 
be concluded that for the products covered in formation asymmetry is not a serious concern. 
The effectiveness of the EELD for the products  covered is also acknowledged in the Stern 
Report: “The introduction of an EU labelling sc heme on refrigerators is estimated to have 
delivered one-third of the 29% improvement in the energy efficiency of refrigeration products 
between 1992 and late 1999.114 
The figure below shows a clear and strong evolution of the 
market toward higher-efficiency products sinc e the introduction of the EU label (contrasting 
favourably with the predominantly flat effi ciency trends immediately prior to its 
announcement).” 
                                                 
114 Bertoldi (2000). 
 
EN 85   EN 
 
Source: Stern report  
Environmental Technology Action Plan (ETAP) 
ETAP is a European strategy for eco-innovation and environmental technologies. It is 
composed of actions around three main themes : Getting from Research to Markets; Improving 
Market Conditions; Acting globally. In terms of the first theme, actions include increased and more focused research, demonstration a nd dissemination activities within the 7
th Framework 
Programme for Research, support to the activities of  the Technology Platforms and the setting 
up of a verification scheme. To improve market  conditions, the Commission envisages to set 
environmental performance targets for industr ies, mobilise funding for innovation through the 
use of the Competitiveness and Innovation Programme, use market based instruments to promote adoption, “green” public procurement a nd foster awareness raising and training 
campaigns. Supporting the adoption of eco-t echnologies in developing countries and 
promoting foreign investment are activities envisaged to address “Acting globally”. ETAP 
contributes towards increasing innova tion for environmental technologies. 
Action Plan on Energy Efficiency 
The action plan proposes an energy efficiency strategy for the EU. It aims to realise a 20% 
saving potential in EU annual primary energy c onsumption (equivalent to about 390 millions 
tons of oil equivalent by 2020). The plan underlines the importance of minimum energy 
performance standards for a wide range of appliances and equipment (from household goods 
such as fridges and air conditioners to indust rial pumps and fans), and for buildings and 
energy services. The Action Plan also lists a range of cost-effective measures, such as a 
coherent use of taxation, and the potential use of  tax credits as incentives for enterprises to 
promote the increased production of certified en ergy-efficient applian ces and equipment at 
lower prices for consumers.  
 
EN 86   EN The implementation of the Energy Efficiency  Action Plan adopted in October 2006 will 
continue in 2008. Notable actio ns already adopted in 2007 we re the amended Energy Star 
Regulation115, introducing for the first time an obligatio n to use energy efficiency criteria at 
least as demanding as the Energy Star efficien cy levels in public pr ocurement of office 
equipment; and a Green Paper on urban mobility116, including a proposal on financing for 
market introduction of efficient vehicles. The 3rd internal energy market package reinforces 
the requirements placed on energy regulators concerning energy efficiency. The Strategic 
Energy Technology Plan aims at accelerating the development of promising energy technologies and creating the conditions to bring such technologies to market. On 19 
December 2007, the Commission adopted a pr oposal for a Regulation on emission 
performance standards for new passenger cars
117.  
Energy performance of bu ildings directive (EPBD) 
The Directive promotes the improvement of the energy performance of buildings. This 
Directive lays down requirements as regards: (a) the general framework for a methodology of 
calculation of the integrated energy performan ce of buildings; (b) the application of minimum 
requirements on the energy performance of new buildings; (c) the application of minimum 
requirements on the energy performance of buildi ngs bigger than 1000 s quare meter that are 
subject to major renovation (defined as impl ying a renovation cost higher to 25% of the 
buildings’ value). 
Member States are requested to identify  minimum requirements regarding the energy 
performance of buildings in accordance w ith a common methodology. Thirty one standards 
have been issued by the CEN under the EBPD. They deal notably with the common methodology to calculate the energy performance of buildin gs but it is still up to MS to define 
parameters. It means that, even with a co mmon methodology, the calcula tion of the energy 
performance of a building does not lead  to the same result in all MS.  
The EPBD solves negative externalities resul ting from poor energy performance, information 
asymmetries and bounded rationality problems with respect to new buildings (and large ones 
undergoing renovation) by requiring that the minimum standards are fulfilled. 
Climate policy  
As presented above, Greenhouse ga s emissions contribute to clim ate change. To satisfy the 
EU commitments in terms of emissions reduction (minus 8% when compared with the 1990 emission’s level) within the framework of the Kyoto protocol, th e Commission decided to 
utilise a Market based instrument: the Emissi on Trading Scheme (ETS), addressing mainly 
CO2 emissions. It covers sources for 40% of the Greenhouse gas emissions in the EU, namely over 11.500 energy-intensive installations across  the EU (such as combustion plants, oil 
refineries, coke ovens, iron and steel plants an d factories making cement, glass, lime, brick, 
ceramics, pulp and paper).  
For the post-Kyoto period, the European Uni on adopted the ambitious  target of a 20% 
reduction [or 30 % if an international agreement is attained]  by 2020
118. To reach this target, 
among the tools proposed in the Communicatio n “20 20 by 2020” (COM(2008) 30 Final), the 
following ones will help internalising the externalities into prices:  
                                                 
115 Regulation No 2422/2001 on a Community energy efficiency labelling programme for office equipment 
116 COM (2007) 551  
117 COM (2007) 856  
118 Presidency conclusions (2007) 7224/1/07 
 
EN 87   EN (1) the updating of the Emission Trading Scheme , by extending the scope to include other 
Green House Gases (GHG) and all major industrial emitters; a harmonized ETS covering the whole Union, replacing National Allocation Plans by auctioning or free allocation through 
single EU wide rules; and the use of Clean Development Mechanisms to fulfil the targets;  
(2) the emission reduction effort will also tackle  sectors not covered by ETS, with a target of 
10% reduction from the 2005 levels;  
(3) the setting of modulated targets for renewable energy at  Member States level, fostering the 
internal market for renewable energies, upda ting the regulatory fr amework and creating a 
comprehensive system to promote sustainable biofuels production. 
In 2007, the Spring Council also proposed a manda tory EU target of 20% renewable energy 
by 2020 including a 10 % biofuels target. It also stressed th e need to increase energy 
efficiency in the EU so as to achieve the objective of saving 20% of the EU’s energy 
consumption. 
It is expected that electricity generators will ad apt their dispatch behaviour in order to reflect 
CO2 costs. According to an electricity wholesal e market model for the European power sector 
developed by McKinsey, under fully competitive assumptions the resulting average increase 
of electricity prices across Eu rope would be in the order of 10 Euro/MWh for a 20 Euro/t CO2 
price, assuming a full pass through of the value of allowances to power  prices. The 20 Euro 
CO2 price is consistent with the spot a nd futures (2008, 2012) values observed in EEX. 
Electricity prices in EU  27 (Table 2) have significantly rise n since the first semester of 2005, 
in particular for industries consuming more  than 2000 MWh/year (0.0672 €/kWh in 2005 to 
0.0822 €/kWh in 2007). 
The ETS is expected to lead to higher produc tion costs for products that are very energy 
intensive in their production because producers either have to abate emissions or acquire emission permits. It is likely that these additional production costs will be passed on to consumers which will lead to an internalisatio n of some of the negative externalities caused 
by consumption. 
In term this will make investment in envir onmental technologies leading to lower emissions 
more cost effective. Besides, the possibility  of using Carbon Captur e and Storage technology 
in new power plants and creating conditions to foster public-private partners hips in particular 
through Member States actions will be envisaged.  
Air pollution 
The Community is acting at many levels to redu ce air pollution: via EC legislation, work at 
the wider international level in  order to reduce cross-border pollution, working with sectors 
responsible for air pollution and with national and regional aut horities and NGOs, and finally 
by promoting research in the area. In Sept ember 2005, the Commission adopted the Thematic 
Strategy on Air Pollution (TSAP), projecting significant reductions  of the major air pollutants. 
 
EU-25 emissions in 2020 relative to 2000,  
after the reductions projected by the Thematic Strategy on Air Pollution: 
 
EN 88   EN 100% 100% 100% 100% 100%
73%
49%
41% 40%
18%
0%20%40%60%80%100%
SO2 NOx PM2.5 VOC NH3 2000 2020
 
Source: SEC (2005) 1133 
The Thematic Strategy has set the path and ambition to improve air quality by reducing 
environmental externalities with concrete meas ures. A major step for local air quality is the 
Directive on Ambient Air Quality and Cleaner Air for Europe proposed by the Commission as 
COM(2005)447. It develops a long-term, strategi c and integrated policy advice to protect 
against significant negative effects of air pollu tion on human health and the environment by 
setting clear standards for local air qualit y. Concerning transboundary air pollution, 2020 
emission ceilings for each Member State are under preparation by the Commission services.  
Emission from indus trial installations 
Concerning emissions from i ndustrial installations, the Dire ctive on industrial emissions, 
proposed as COM(2007)843 in December 2007, is th e major implementing instrument of the 
Thematic Strategy on Air Pollution. It includ es a re-cast of the Directive on Industrial 
Pollution Prevention and Control (IPPC). The Di rective aims at minimising pollution from 
various industrial sources throughout the Euro pean Union. Operators of  IPPC installations 
covered by Annex I are required to obtain an authorisation (e nvironmental permit) from the 
authorities in the EU. About 52.000 installations are covered. Several principles drive the 
implementation of the directive, namely:  
(1) an integrated approach, taking into account the whole environmental 
performance of the plant, covering e.g. emissions to air, water and land, 
generation of waste, use of raw material s, energy efficiency, noise, prevention 
of accidents, and restoration of the site upon closure,  
(2) best available techniques (BAT) as th e basis for issuing the permit conditions 
including emission limit values (ELVs),  
(3) the consideration of local conditions in the issuance of permits, specifically 
taking into account the technical characte ristics of the installation concerned, 
its geographical location and the lo cal environmental conditions, and  
(4) public participation.  
It is estimated that the calculated health and environmental benefits from enhanced take up of 
BAT, as proposed with the Directive on industr ial emissions, would greatly exceed the costs 
for installations to comply with  the Directive. The benefits depend on the current performance 
of BAT-based permitting for a region or sector; for example, for Large Combustion Plants the 
 
EN 89   EN EU-wide net benefits are estimated to be € 7 - 28 billion per year, including the reduction of 
premature deaths by 13,000 and 125,000 life y ears gained (excluding any additional 
environmental benefits such as  reduced eutrophication and acid ification) through preventing 
negative externalities. No significant long-term  impacts on competitiveness, social impacts or 
detrimental long-term effects on economic grow th have been identified given possible 
flexibility in well-founded and documented cases. Instead, the analysis shows that a more 
unified application of BAT would help reduc e distortions of comp etition in the industry 
sectors covered by the Directive. 
The Directive on industrial emission is the tool  to internalise enviro nmental externalities 
during the production stage by setting effectiv e requirements based on best available 
techniques, complemented by stri ct minimum ambition levels.  
WASTE   
The Community legislation on waste includes horizontal legisl ation on waste management, 
e.g. the Waste Framework Directive, the Hazardous  Waste Directive, as well as the Waste 
Shipment Regulation. 
These are complemented by more detailed le gislation concerning waste treatment and 
disposal operations, such as the Landfill and Incineration Directives, and legislation to 
regulate the management of sp ecific waste streams (waste o ils, PCBs/PCTs and batteries). 
Recycling and recovery targets have been set for some key waste flows, i.e. packaging, end-of-life vehicles (ELVs) and waste elec trical and electronic equipment (WEEE). 
Waste legislation underpinned substantial prog ress in waste management over the last 30 
years. Heavily polluting landfills and incinerators  are being cleaned up. New techniques have 
been developed for the treatment of hazar dous waste. Hazardous substances are being 
removed from vehicles and electrical and elec tronic equipment. The levels of dioxins and 
other emissions from incineration are being reduced.  
At present in the EU municipa l waste is disposed  of through landfill (49%), incineration 
(18%), recycling and composti ng (33%). The waste management and recycling sector has a 
high growth rate and has an estimated turnov er of over €100 billion for EU-25. The recycling 
industry is providing increasing am ounts of resources to manufact uring industry: at least 50% 
of the paper and steel, 43% of  the glass and 40% of the non-fe rrous metal produced in the EU 
are currently derived from recycled materials. 
However, despite these successes, waste remain s a problem. Waste volumes continue to grow. 
Legislation is, in some cases , poorly implemented and there are significant differences 
between national approaches. The potential for wa ste prevention and recycling is not yet fully 
tapped. The emerging knowledge about the environm ental impact of resource use is not yet 
fully reflected in waste policy. There is evidence  that the complexity of EU and Member State 
legislation tends to discourage r ecycling and recove ry activities.  
The waste legislation internalises environmenta l externalities occurring during the final life 
cycle stages. 
National fiscal incentives in the EU 25:  
Fiscal incentives vary among Memb er States while residential energy use in different EU-
countries has many characteristics in common, such as the need to  heat the dwelling in winter, 
the need for hot water, the use of a number of  standard appliances and the saving measures 
available in the countries. 
 
EN 90   EN The following graphs illustrate the substantial increase in national polic y measures relating to 
improving energy efficiency in Households in EU 15 and EU10.  
Development of active policy measures by type in EU-15 
 
Source: Ademe – Intelligent Energy Europe ( 2007) Evaluation of Energy Efficiency in the 
EU-15: Indicators and Measures) 
Development of active policy measures by type in EU-10 
 
Source: Ademe – Intelligent Energy Europe (2007) Evaluation and Monitoring of Energy 
Efficiency in the New EU Member Countries and the EU-25 
In the new Members States measures are mainly of a legislative character, while in the old 
Members States financial incentives  and taxes are used as well. 
However, the increase in divergi ng national fiscal measures also leads to increased distortions 
of the internal market where criteria for eligibility are not  the same between countries. 
 
EN 91   EN ANNEX IV  
 
to the 
 
Impact Assessment on the SCP and SIP Action Plan 
 
Accompanying tables and figures 
 
EN 92   EN Table 1: degree of coverage of other environmental impacts by EUP 
Significant environmental parameter EuP impact as % of total impact  
abiotic depletion <20 
Acidification <20 
Global warming <20 
Ecotoxicity <10 
Eutrophication <5 
human toxicity <10 
ozone layer depletion <10 
photochemical oxidation <10 
Source: JRC, ESTO, IPTS (2007) Environmental Impact of Products (EIPRO) Analysis of the 
life cycle environmental impacts related to the final consumption of the EU-25 
Table 2: Energy rating of household app liance - percentage of sales – EU 15, 2004-05  
 
Figure 1: Market share of washin g machines according to label  
 
Source: JRC (2007) 
 
EN 93   EN Table 3: Difference in energy efficiency by building segment in the Netherlands 
 
Graph 2: percentage of GPP by some Member States in analysed tenders (‘No criteria’ 
means that no green specifications were found; ‘grey’ means that attempts for green specifications were found, but these would not lead to a green purchase; ‘light green’ means 1-3 clear specificat ions; ‘solid green’ means more than 3 
specifications were found.)  
 
Table 4: minimum requirements and incentives for insulation in some Member States 
The case of Roof insulation  
 Minimum R 
value Amount Cap 
Belgium (Fed) 2.5 tax reduction: 40% of the price 2.60 € 
Brussels 4 20€/ m² 50% of the 
price 
Wallonia 3 4-8€/m² 10.00 € 
France 3 Tax credit: 25 or 40% of the price - 
 
EN 94   EN Luxembourg 4.34 13-15€/m² - 
Germany 4.5 100% interest rate paid by the 
Bund - 
Table 5: minimum requirements and incentive s for insulation in some Member States 
The case of Windows 
  Maximum U 
value Amount Cap 
Belgium (Fed) 2 tax reductio n: 40% of the price 2.60 € 
Brussels 2 25€/m² 50% of the 
price 
Wallonia 2 40€/m² 10.00 € 
France 1.5 - 2 Tax credit: 25 or 40% of the 
price - 
Luxembourg 1-1.35 12-30€/m² - 
Germany 1.3 100% interest rate paid by the 
Bund - 
Austria (Vienna city) 1.9 2-3% of the annual loan cost - 
Graph 3: Share of total expenditures by household income category (1999 – EU 15)  
Share of total expenditures by income category of household 
(1999 - EU15)
05101520253035
First
quintileSecond
quintileThird
quintileFourth
quintileFifth
quintile%Housing, water, electricity, gas
and other fuels
Furnishings, householdequipment and routinemaintenance of the house
 
 
EN 95   EN Source Eurostat 
Figure 2: evolution of prices and energy ef ficiency over time of several type of 
appliances. 
 
Source: Weiss, Junginger and Patel (2008) unpublished 
 
EN 96   EN Annex V 
 
to the 
 
Impact Assessment on the SCP and SIP Action Plan 
 
Economic Analysis 
 
EN 97   EN 
The Case of water heaters 
The Preparatory study119 for water heaters carried out within  the framework of the Eco-design 
directive analyses in deta il each type of appliance present in the market.  
The study identifies three main categories of wa ter heaters in the market: those linked to 
boilers and the direct water heaters, the late r of two kinds, electric and gas-fired. (Table) 
Table 1: market shares for the different type of boilers 
  Millions
Total sales 17.2 
linked to boilers 6.8 
direct water heaters 10.4 
electric 8.3 
gas -fired 2.1 
Source: VHK(2007). Task 5 p 27 
The analysis concentrates on the direct water heaters of small size, which corresponds to the 
average residential water heater  for a single person or very sm all family. The characteristics 
of this segment of the sect or is presented in table  
Table 2: market share, energy consumption and emission 
in 2005 Small WH Total 
market share (*1000) 4105 17143 
Total Energy consumption (PJ) 520 6169 
Electricity consumption (PJ) 471 3725 
Emissions (Mt CO2) 24 298 
Source: VHK(2007). Task 6 p.8 
For this type of water heater, 5 categories of ap pliances where identified in the study, mainly 
of two types: those using gas and electric ity and those using only electricity. Current 
equipments show little efficiency and high life-cycle costs120.  
Table 3: performance and prices for small Water heaters 
                                                 
119 VHK (2007) Preparatory study on ecodesign of water heaters. ( http://www.ecohotwater.org  ) 
120 The study estimated a product life of 17 years and used a discount rateo f 2%. 
 
EN 98   EN 
Sources: same as above. 
The ESWH 30 type, which delivers 16l of water at 40º during 3 to 5 minutes, is assimilated to 
the current situation before the implementation of the EUP. EIWJ 18H (electric instantaneous 
water heater with hydraulic contro l) is assimilated to the EUP gi ven that it presents the lowest 
life-cycle. EIWH 18E (electric instantaneous water heater with electronic control that 
improves efficiency) is assimilated to Eco-label.  This assumption is a simplification, because 
other environmental impacts shou ld be taken into considerati on for awarding the eco-label.  
Table summarizes the finding by appliance in th e case of electrical WH are considered.  
Table 4: prices and performance of the different  water heaters used in the different options 
  Option 1 Option 2 Option 3 
Purchase price (euro) 123 420 245 
Energy use during lifespan (kwh) 21590 13500 15300 
CO2 inpacts (t CO2e) 15 9 11 
life cycle cost without  externalities 2167 1821 1800 
Source: own estimations based on VHK (2007) 
Only electrical water heaters ar e considered because the propor tion of electricity consumption 
over total energy consumption (tab le above) indicates th at they are the predominant type in 
this category. The rest of the analysis consid ers the whole market se gment as electrical 
appliances. 
For the estimation of the aggregated impact s, the following assumptions were undertaken: 
1. all small WH use only electricity 2. for option 2, a 20% market penetration of highest efficient WH, reflecting the 
voluntary approach, the higher prices a nd the higher full life cycle cost. 
3. for option 3, full market penetration of the least life cycle cost type. 
4. a retail energy price of 14 Euro cents per KWh. The results are presented below. Table 5: results of the simula tions for the different options 
 
EN 99   EN   Option 1 Option 2 (20%) Option 3 
Number of WH 4,105,000 3284000 standard; 
821000 High efficient 4,105,000 
Total purchase price (€) 504,915,000 748,752,000 1,005,725,000
Total energy consumption in lifespan 
(KwH) 88,626,950,000 81,985,060,000 62,806,500,000
Total CO2 emissions in life span (Mt 
CO2) 62,038,865 57,389,542 43,964,550 
Total Lifecycle cost € 8,895,535,000 8,611,469,000 7,389,000,000
 Source: own estimations based on VHK (2007) 
In comparative terms with the BAU before implementing EUP, the results are: Table 6: Comparison to the busin ess as usual of the options 
 Option 2 (10%) Option 2 (20%) Option 3 
Purchase costs (euro) 24.15% 48.29% 99.19% 
Energy impacts (kwh) -3.75% -7.49% -29.13% 
CO2 inpacts (t CO2e) -3.75% -7.49% -29.13% 
Life cycle cost without 
externalities -1.60% -3.19% -16.94% 
Source: own estimations based on VHK (2007) 
For the analysis of the impacts of  procurement, no data could be found in terms of the market 
share of procurement for this category of WH. 
Only for illustrative purposes, the following assumptions were undertaken: The share of public procurement compared to the market is 5%.  There is currently no intermediate product fo r WH. Therefore the analysis only compare 
mandatory procurement for minimum requirements (after the implementation of EUP) and for 
the highest performing products. 
Table 7: Impact of mand atory public procurement 
 Option 2 Option 3 
total purchase 241.46% 99.19% 
Total emissions -37.47% -29.13% 
Total energy use -37.47% -29.13% 
 
EN 100   EN Total lifecycle -15.97% -16.94% 
Source: own estimations based on VHK (2007) 
The impacts of the option of imposing perf ormance criteria higher that the minimum 
requirements would be in the in -between of the results pres ented above, depending on the 
characteristics of the appliance. 
It is expected that incentives would induce economies of scale in  time due to faster learning 
curves. Lower prices combined with the dynamic approach for requirement setting in option 
3, in which indicative advanced performance benchmarks become minimum requirements, 
could lead to significant beneficial effects.  
Figure 2 in Annex IV presents price and energy efficiency for several appliances for a given 
period of time. It shows that as efficiency gr ows, prices have systematically decreased. For 
the case of water heaters, we assumed a conserva tive 3% price decrease yearly due to learning 
curves. This implies that in five years time, the price for the most performing water heater 
would evolve from 420€ down to 372€. Even if total initial costs woul d be quite important, 
the improvement in energy use, emissions and li fe cycle costs would be very significant. 
Table 8: Impacts of the dynami c approach on Water Heaters 
 Aggregate results % compared to BAU 
Total purchase price (€) 1,527,060,000 202.44% 
Total energy consumption in lifespan (KwH) 11,083,500,000 -87.49% 
Total CO2 emissions in life span (Mt CO2) 7,758,450 -87.49% 
Total Lifecycle cost € 1,495,041,000 -83.19% 
The case of windows 
Most of the data for this estimation can be  found in the “Study on fo stering EU internal 
market for competitive technologies for a low carbon economy” carried out for DG Enterprise 
by Price Waterhouse Cooper in 2007. 
This study identified the following products with different insulation performance. 
Table 9: performance of the different type of windows 
Typology of windows Units Single 
glazing Double 
glazing Low 
emissivity
U-value W/(m2*K) 4.7 2.7 1.6 
Power consumed for heating per m2 kWh/(m2*year) 270 216 189 
Lifetime Years 30 30 30 
Purchase cost Euro/m2 100 150 250 
Installation costs Euro/m2 23 23 23 
 
EN 101   EN annual CO2 emissions kgCO2/(m2*yr) 208 166 146 
Initial costs Euro/m2 123 173 273 
Discounted heating costs Euro/m2 680 544 476 
Total lifecycle costs Euro/m2 803 717 749 
* U-Value is the measure of the rate  of heat loss through a material 
Source: own estimations from PWC (2007), exce pt for the purchase prices, which correspond 
to retailers prices in Poland and France 
Single glazing makes reference to  the standard window, with a re lative high heat loss. Double 
glazing improves the avoidance of heat transmission, therefor e reducing the energy required 
for heating. The literature indi cates reduction in energy consum ption of up to 35% (Eurima), 
however it was preferred to simulate the re duction by 20%. The Low emissivity windows are 
double glazing windows treated with a special co ating or using alternative gas between the 
two layers, improving even more the performance. The literature indicates energy savings between 30 and 50% (www.nmhydro.ca) and even  up to 65% (EURIMA) , for the simulation 
only 30% savings were analys ed. The rate of replacement for all type of windows in 
refurbishing is estimated to be around 4%  annually, given the lifetime of 30 years. 
For the analysis of the impacts associated with each type of windows, the life cycle takes into 
consideration the purchasing a nd installation costs and the discounted heating expenses 
throughout the lifetime of the wi ndow, using a 4% discount rate . The CO2 emissions reflect 
those associated with electricity gene ration using a factor of 0.7 tn CO2/kWh. 
For the analysis the following assumptions were undertaken: 
• In the case of option 1, all replacement is  undertaken with single glazing windows 
• In the case of option 2, only 0, 8% of th e standards windows are replaced by low 
emissivity is considered. (20% of the 4% refurbishing rate annually), the 
remaining 3.2% respectively are replaced by single glazing windows. 
• In the case of option 3, to simplify the anal ysis, all replacement is undertaken with 
double glazed windows. This overestimates th e potential for this type of windows, 
because in certain climatic conditions they might not be required.  
Table 10: Aggregate results of the simulations  
  Option 1 Option 2 Option 3 
Total purchase price (€) 5,214,160,000 6,778,408,000 7,821,240,000 
Total energy consumption in 
lifespan (KwH) 422,346,960,000 397,006,142,400 337,877,568,000
Total CO2 emissions in life span (Mt CO2) 325,363,584,000 305,966,908,800 259,665,168,000
Total Lifecycle costs € 41,869,704,800 41,306,575,520 37,385,527,200 
Source: own estimation based on PWC (2007) 
 
EN 102   EN Comparing the results with the Business as usual situation, the simulations show the 
advantages of option 3, even if th e initial purchase costs are higher. 
Table 11: Comparions of the options with the Business as usual 
  Option 2 (20%) Option 3 
Total purchase price (€) 30.00% 50.00% 
Total energy consumption in lifespan (KwH) -6.50% -22.86% 
Total CO2 emissions in life span (Mt CO2) -6.18% -20.91% 
Total Lifecycle costs € -1.34% -10.70% 
 Source: own estimation based on PWC (2007) 
 
EN 103   EN ANNEX VI  
to the 
 
Impact Assessment on the SCP and SIP Action Plan 
 
GLOSSARY  
 
EN 104   EN  
Advanced performance benchmarks 
High level of performance on energy consumpti on and other essential environmental impacts 
achieved by a given product cate gory present in the market. 
Best performing product 
A good and/or service that provides the maxi mum performance on energy consumption and 
other essential environmental impacts across its life-cycle.  
Eco-design 
Eco-design means the integration of environmen tal aspects into produc t design with the aim 
of improving the overall environmental perfor mance of the product th roughout its whole life 
cycle. 
Eco-design Framework 
A framework containing environmental life-cycl e oriented principles for the design of 
products in support of existing and future pr oduct policies in order to ensure coherence 
amongst them. Such a framework could define common principles, crit eria and methodologies 
related to the environmental performance of products.  
Eco-Management and Audit Scheme (EMAS) 
EU voluntary instrument which acknowledges orga nisations that improve their environmental 
performance on a continuous basis. EMAS regi stered organisations are recognised by the 
EMAS logo, which guarantees the reliab ility of the information provided.  
Emission Trading Scheme (ETS) 
The EU Emission Trading Scheme is a cornerstone in the fight against climate change. It is 
the first international trading system for CO 2 emissions in the world. It covers over 11.500 
energy-intensive installations across the EU, which represent close to half of Europe’s 
emissions of CO2. The aim of the EU ETS is to  help EU Member States achieve compliance 
with their commitments under the Kyoto Protoc ol. Emissions trading does not imply new 
environmental targets, but allows for cheaper compliance with existing targets under the Kyoto Protocol. Letting participating companie s buy or sell emission allowances means that 
the targets can be achieved at least cost. 
Energy Labelling Directive (ELD) 
The Energy Labelling Directive seeks to incr ease consumer’s awareness on the real energy 
use of household appliances through a liable a nd clear labelling in th eir sales points. It 
currently covers household appl iances such as washing machines, dishwasher, oven, air-
conditioning systems, etc. 
Energy-using Product (EuP) 
A product which, once placed on the market and/or put into serv ice, is dependent on energy 
input (electricity, fossil fuels, or renewable energy sources) to  work as intended, or a product 
for the generation, transfer and measurement of  such energy, including parts dependent on 
energy input and intended to be incorporated  into an EuP covered by the EuP Directive 
(2005/32/EC) which are placed on the market and/ or put into service as  individual parts for 
end-users and of which the environmental pe rformance can be asse ssed independently.  
Energy-using Products Directive (EuP)  
 
EN 105   EN Directive 2005/32/EC on the eco-design of Ener gy-using Products (EuP).  Products such as 
electrical and electronic devi ces or heating equipment are covered by the Directive that 
provides coherent EU-wide rule s for eco-design and ensure that disparities among national 
regulations do not become obstacl es to intra-EU and external trade. The Directive does not 
introduce directly binding requirements for sp ecific products, but defines conditions and 
criteria for setting, through subsequent implementing measures, minimum requirements 
regarding environmentally relevant product charac teristics (such as energy consumption) and 
allows them to be improved quickly and efficiently.  
Energy performance in buildings Directive 
The Directive 2002/91/EC seeks to improve th e energy performance of new building and 
renovations above 1000 m2. The four key poi nts of the Directive are:1. A common 
methodology for calculating the integrated en ergy performance of buildings; 2. Minimum 
standards on the energy performance of new build ings and existing buildings that are subject 
to major renovation; 3. Systems for the energy cer tification of new and existing buildings and, 
for public buildings, prominent display of this certification and other re levant information. 
Certificates must be less than five years old;  and 4. Regular inspection of boilers and central 
air-conditioning systems in buildings and in add ition an assessment of h eating installations in 
which the boilers are more than 15 years old.  
Environment Policy Review Group meeting (EPRG) 
A regular meeting of Directors General for the Environment from Member States, chaired by 
the Commission, to discuss environmental issues  at an early stage before formal policy 
proposals are made to the EU legislators.  
Environmental external costs, negative externalities 
Costs (usually falling on society), e.g. relate d to pollution or resource use, which are not 
included in the market price of the goods and serv ices, thus leading to an inefficient allocation 
of resources, e.g. their overuse. 
Environmental impact 
Impact on the environment and those human health effects that occur via emissions and the 
consequent impact on the natural environm ent and on humans via the uptake of harmful 
substances. 
Environmental Technology Action Plan (ETAP) 
In 2004, based on the aims of the EU Lisbon Agenda, the European  Commission launched 
ETAP with the view of stimulating the developm ent and use of environmental technologies in 
Europe. ETAP is a life-cycle based European strategy for eco-innovation and environmental 
technologies. It is composed of actions around three main themes: Getting from Research to Markets; Improving Market Conditions; Acting globally. A key aspect is the setting of 
quantified and timed performance targets for products, that base upon the technical and 
economic feasibility of their implementation in relationship to the potential improvement for 
the environment.  
Environmental Technology Verification (ETV)  
Systems designed to offer credible verifi cation of the performance and potential 
environmental impacts of new technologies. Th ey are generally voluntary systems, based on 
qualified third parties and recogni sed procedures, ensuring the re liability of their assessment 
of technologies. They are flexib le to meet the different require ments and market situations of 
the technologies addressed.  
 
EN 106   EN European Consumer Consultative Group (ECCG)  
Created in 2003 (Commission Decision 2003/709/ EC), this body repl aces the Consumer 
Committee as the Commission's main forum for engaging with consum er organisations. It 
constitutes a forum for general discussions on problems relating to consumer interests; gives 
an opinion on Community matters affecting the pr otection of consumer in terests; advises and 
guides the Commission when it ou tlines policies and activities ha ving an effect on consumers; 
informs the Commission of developments in consumer policy in the Member States; acts as a source of information and soundboard on Community action for the other national 
organisations. The ECCG meets four  times a year. It consists of  one representative of national 
consumer organisations per country; one member  from each European consumer organisation 
(BEUC and ANEC); two associate members (EUROCOOP and COFACE); and two EEA 
observers (Iceland and Norway).  
EU Eco-Label 
A label which identifies overall environmenta l preference of a product or service within a 
specific product/service category based on life cycle considerati ons. It is a voluntary scheme 
designed to encourage businesses to market pr oducts and services that are kinder to the 
environment and for European consumers - incl uding public and private purchasers - to easily 
identify them. The European Eco-label is pa rt of a broader strategy aimed at promoting 
sustainable consumption and production.  
EU Sustainable Development Strategy (SDS) 
The European Council of June  2006 adopted a renewed EU SDS for an enlarged EU, building 
on the Gothenburg strategy of 2001. It sets overall objectives, targets and concrete actions for 
seven key priority challenges for the coming period until 2010: Climat e change and clean 
energy; Sustainable transport; Sustainable Consum ption and Production; Public health threats; 
Better management of natural resources; Social  inclusion, demography  and migration; and 
Fighting global poverty. The EU SDS recognises the need to gradually change our current 
unsustainable consumption and production patt erns and move towards a better integrated 
approach to policy-making. To improve synergie s and reduce trade-offs a more integrated 
approach to policy making is proposed, based on better regulation and on the guiding 
principles for sustainable development (adopted  by the European Council of June 2005). The 
external dimension of sustainable developmen t (e.g. global resource use, international 
development concerns) is factored into EU in ternal policymaking and there is a commitment 
to integrate sustainable development considerations in all EU's external policies. It also proposes mechanisms for improving the coordina tion with other levels of governments and 
calls upon business, NGOs and citizens to become  more involved in working for sustainable 
development. Education, research and public fi nance are stressed as important instruments in 
facilitating the transition to a more sust ainable production and consumption patterns.  
Green Public Procurement (GPP) 
A process whereby public authorities seek to  procure goods, servic es and works with a 
reduced environmental impact throughout their li fe cycle when compared to goods, services 
and works with the same primary function that  would otherwise be procured. Contracting 
authorities and entities take e nvironmental issues into account when tendering for goods or 
services. The goal is to reduce the impact of the procurement on human health and the 
environment.  
High Level Group on Competitiveness, Energy and the Environment 
 
EN 107   EN In February 2006, the Commission set-up a Hi gh-Level Group specifically to examine the 
relationship between competitiveness, energy and the environment. The Group offered advice to policy-makers and ensure an integrated ap proach to the development of legislation and 
regulation. 
Integrated Pollution Prev ention and Control (IPPC) 
Directive 96/61/EC to prevent or, where that is  not possible, reduce pollution from a range of 
industrial and other installati ons by means of integrating permitting based on the application 
of best available techniques (BAT).  
Integrated Product Policy (IPP) 
An approach that begins by asking how the ove rall environmental performance of products 
(both goods and services) can be improved mo st cost-effectively. It is founded on the 
consideration of the impacts of products throughout th eir life-cycle, from the natural resources 
they come from, through their use and manage ment, recycling to the disposal of any 
remaining waste.  
Life-cycle 
Consecutive and interlinked stages of a product system, from raw materi al extraction, through 
production of materials, intermediates, and pa rts to products, through product use or service 
operation to recycling an d/or final disposal.  
Life-cycle assessment (LCA)  
A process of compilation a nd evaluation of the inputs,  outputs and the potential 
environmental impacts of a product system thr oughout its life cycle. LCA is internationally 
standardized in the ISO 14040 ff, since 1997. It is widely used in industry and a number of 
public bodies in support of strategic and conc rete decisions in product development and 
design, and in policy development and implementation.  
Mid-term review of Industrial Policy 
In the mid-term review of industrial policy , the European Commission identifies that 
globalization and technological change are likely to intens ify in the coming years. 
Furthermore industry needs to ad apt to the challenges posed by climate change and to grasp 
the opportunities of new low- energy and re source saving processes and products. Based on 
the assessment of the current  situation, and building on th e achievements since 2005, the 
Commission envisages strengthening some of the ongoing  initiatives and launching some 
new initiatives  in response to recent challenges. The Sustainable Industrial Policy Action 
Plan is one of the new initiatives called for. 
Product design 
Under the Eco-design Directive for Energy-using Pr oducts (EuP), it is a set of processes that 
transform legal, technical, safety, functional, ma rket or other requirements to be met by a EuP 
into its technical specificati on. In general, the design of a product largely determines its 
overall life cycle environmental performance. The product design hence offers the largest 
leverage for improved consumption and production.  
Product performance requirements 
Under the Energy-using Pr oducts (EuP) Directive, Eco-design requirement  is any requirement 
in relation to an EuP, or th e design of an EuP, intended to improve its environmental 
performance, or any requirement for the supply of information with regard to the environmental aspects of an EuP; Generic eco-design requirement  is any eco-design 
 
EN 108   EN requirement based on the ecological profile as a whole of an EuP without set limit values for 
particular environmental aspects; Specific eco-design requirement is a quantified and 
measurable eco-design requirement relating to a particular environmental aspect of an EuP, 
such as energy consumption duri ng use, calculated for a given unit of output performance. 
(i.e. the product's functional unit).  
SMEs 
Small and Medium Entreprises 
Subsidiarity  
The principle of subsidiarity is defined in Ar ticle 5 of the Treaty establishing the European 
Community. It is intended to ensure that deci sions are taken as clos ely as possible to the 
citizen and that constant checks are made as to  whether action at Community level is justified 
in the light of the possibilities available at nation al, regional or local level. Specifically, it is 
the principle whereby the Union does not take action (except in the areas which fall within its 
exclusive competence) unless it is more effec tive than action taken at  national, regional or 
local level. It is closely bound up with the prin ciples of proportionality and necessity, which 
require that any action by the Union should not  go beyond what is necessary to achieve the 
objectives of the Treaty. 
Sustainable Consumption and Production (SCP) 
Addressing social and economic development with in the carrying capacity of ecosystems and 
decoupling economic growth from environmenta l degradation. In pract ice, SCP is about 
changing the ways we design, produce, distri bute, use and dispose of goods and services, 
minimising the overall environmental imp act taking a life cycle perspective.  
Thematic Strategy on the prevention and recycling of waste 
This long-term strategy (December 2005) aims to  help Europe become an environmentally 
and economically efficient recycling and recovery  society that seeks to  avoid waste and uses 
waste as a resource. It draws on the knowledge  that the Thematic Strategy on resources 
generates.  
Thematic Strategy on the sustainable use of natural resources 
The objective of this EU St rategy (December 2005) is to re duce the overall environmental 
impacts associated with res ource use in a growing economy.