EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 8.3.2011 
SEC(2011) 277 final 
 
COMMISSION STAFF WORKING DOCUMENT 
  
IMPACT ASSESSMENT  
 
Accompanying document to 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 
COMMISSION STAFF WORKING DOCUMENT 
  
Energy Efficiency Plan 2011 
    
{COM(2011) 109} final 
{SEC(2011) 278} final 
{SEC(2011) 279}final 
{SEC(2011) 280} final 
 
ELECTRONIC VERSION ONLY 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction and policy context ................................................................................... 4 
2. Procedural issues and consultation of third parties...................................................... 5 2.1. Organisation and timing............................................................................................... 5 2.1.1. Stakeholders consultation............................................................................................. 5 2.1.2. Studies................................................................................................................. ......... 5 
2.1.3. Opinion of the Impact Assessment Board (IAB) ......................................................... 6 3. Problem definition........................................................................................................ 6 3.1. What is the problem? ................................................................................................... 6 3.2. Why is the savings potential not achieved? ............................................................... 12 3.2.1. Market failures ......................................................................................................... .. 12 
3.2.2. Regulatory failures..................................................................................................... 13 
3.2.3. Other barriers .......................................................................................................... ... 14 
3.3. What policies exist to address the problem?.............................................................. 14 3.3.1. EU policies: assessment of the Energy Efficiency Action Plan of 2006 ................... 14 3.3.2. Current actions in MS ................................................................................................ 16 3.4. How much of the potential will be ac hieved in 2020?: Baseline scenario................. 17 
3.5. The Union's right to act, s ubsidiarity and proportionality ......................................... 22 
4. Policy objectives ........................................................................................................ 23 4.1. General policy objectives........................................................................................... 23 4.2. Specific policy objectives .......................................................................................... 24 4.3. Consistency of the objectives  with other EU policies................................................ 24 
5. Policy alternatives and options................................................................................... 25 5.1. General policy alternatives......................................................................................... 25 5.2. Options analyzed........................................................................................................ 29  
6. Analysis of impact and comparing the options.......................................................... 31 6.1. Residential and tertiary sectors .................................................................................. 32 6.2. Transport sector.......................................................................................................... 44 
6.3. Industry sector........................................................................................................... . 45 
6.4. Energy sector............................................................................................................. . 52 
 
EN 3   EN 7. Conclusion: Outline of the preferred new policy framework .................................... 62 
8. Monitoring and evaluation ......................................................................................... 65 
 
ANNEX I  Report on the public consultation  
ANNEX II  PRIMES 2009 Energy efficiency scenario results 
ANNEX III  Assessment of the Energy Efficiency Action Plan of 2006 (published as a 
separate Commission Staff Working Document accompanying the Energy 
Efficiency Plan 2011) 
ANNEX IV  National Energy Efficiency Ac tion Plans (NEEAPs): update on 
implementation (published as a separate  Commission Staff Working Document 
accompanying the Energy Efficiency Plan 2011) 
 
EN 4   EN 1. INTRODUCTION AND POLICY CONTEXT  
The EU leaders, realizing the important benefits  of energy efficiency and savings to the EU's 
social, economic and environmental agendas, have committed to reach the objective of 20% 
primary energy savings in 2020  compared to the PRIMES 2007 baseline1.  
The Energy Efficiency Action  Plan (EEAP) of 20062, endorsed at the Sp ring 2007 European 
Council, was a major step towards reaching th is objective and aimed at contributing about 
14% reduction in 20203. In the EEAP, it was acknowledged that further  policy measures 
will be needed and, therefore, its mid-term  evaluation and revision was envisaged for 
2009 . The European Council4 and the European Parliament5 have also urged the Commission 
to adopt a new ambitious strategy. 
To provide for a new impetus for energy efficiency and saving, the Commission is 
developing a new Energy Efficiency Plan (EEP) (strategic initiative in CWP 20116). The 
EEP would set the overarching policy framework in  order to put Europe on the right path not 
only for a 20% saving in 2020 but also for longer  term efficiencies in support of the 2050 
goals, by identifying the areas where future EU  action is needed and outlining which policy 
instruments are best suited to addres s the challenges at EU level.  
The aim of this Impact Assessment (IA) is to support EEP preparation. The depth of analysis 
is proportionate to the foreseen gen eral policy level of the EEP itself. The concrete 
legislative and other initiatives following th is overarching policy communication to be 
developed will be accompanied by detailed IAs and 'ex-ante' financial analysis, if required.  
The IA approach is summarized in the figure below. Firstly, it is analyzed whether the cost-
effective potential of at  least 20% energy savings in 2020 will  be met with the current EU and 
national policy mix. Secondly, based on this anal ysis, the remaining potential and policy gaps 
are identified for each sector. Thirdly, policy a lternatives are considered. Fourthly, a number 
of policy options are analyzed for their EU value added also considering the resources 
available, their potential impact and their effec tiveness, efficiency and coherence (E/E/C) with 
other policies. Finally, based on the analysis, the preferred policy framework is outlined. 
 
                                                 
1 7224/1/07, REV 1 
2 COM(2006) 545 
3 SEC(2006) 1174 
4 7880/1/09, REV 1, 11018/1/08, REV 1 and 7224/1/07, REV 1 
5 2010/2107(INI), 2008/2214(INI), 2006/2113(INI) and 2007/2106(INI)) 
6 Commission Work Programme 2011. COM(2010) 623 final, VOL. II 
 
EN 5   EN 2. PROCEDURAL ISSUES AND CONSULTATION OF THIRD PARTIES  
2.1. Organisation and timing  
A broad consultation process and collection of e xpertise has informed the preparation of this 
Impact Assessment. It is based on the expe rience gained from the implementation of the 
EEAP of 2006 and a wide range of informati on sources and inputs from stakeholders. The 
process was supported by an Inter Service Steering Group, lead by DG ENER. In addition, a 
specially dedicated Task Force has been creat ed within DG Energy (DG ENER) to coordinate 
the inputs from several units and the Executiv e Agency for Competitiveness and Innovation.  
2.1.1.  Stakeholders consultation 
A very broad ranging stakeholders consulta tion provided valuable input to this IA. A 
preliminary set of possible approaches were pr esented to Member States on several occasions, 
including at the Bucharest forum (9-10 June, 2009 and 6 – 7 July 2010), the Informal Energy 
Council in Are (23-24 July 2009) and the m eetings of Energy Director Generals on 11 
September, 2009 and 7 October 2010. Member Stat es highlighted the be nefits of increased 
energy efficiency and were very supportive of its higher uptake. A number of good practice 
examples were presented. Nevertheless, some de legations highlighted th at there are a number 
of national differences that n eed to be taken into account. 
In addition a large number of stakeholders' input s were collected, in particular at the EU 
Sustainable Energy Week 2009 (9-13 February  2009 and 22-26 March 2010), the Bucharest 
forum (9-10 June, 2009 and 6-7 July 2010), targeted  meetings with stakeholders on financing, 
buildings and utilitie s in June 2009 and a number of bila teral discussions in 2009 and 2010. 
Many stakeholders called for a more ambiti ous and proactive approach at EU level. 
To further explore policy options, the Co mmission carried out a broad on-line public 
consultation in 2009 with 239 submissions fr om various organizations, companies and 
individuals from across the EU . Whilst stakeholders did ge nerally acknowledge that the 
measures in the current Energy Efficiency Acti on Plan should continue to be implemented, 
the majority argued that the time had come for a more focused and targeted approach in order 
to further promote energy efficiency. A detaile d analysis of stake holders' responses is 
provided in Annex I. 
2.1.2.  Studies 
The analysis for this IA is also based on  a large number of st udies and evaluations.  These 
include the Commission mid-term assessment of  the current EEAP (see Annex III), examples 
of successful projects supported by th e Intelligent Energy Europe programme7, and an 
external study specifically tendere d to provide analysis for this IA. Another important source 
of information and examples of various policies adopted in the EU Member States are the first 
National Energy Efficiency Action Plans, submitted by Member States in 2007 and 2008 
within the reporting obligations  of Directive 2006/32/EC and the their evaluation reports 
prepared by the Commission (SEC(2009)889 final a nd Annex IV). There are also a number of 
studies analysing the benefits and challenges for energy efficiency and energy savings. However, many of the data and information s ources are fragmented as regards the issues 
discussed and countries covered and consequen tly various assumptions were applied to the 
                                                
 
7 http://ec.europa.eu/intelligentenergy 
 
EN 6   EN analysis. As the majority of the policies on en ergy efficiency are rather  new very limited ex-
post studies of the individual pol icy measures are available.  
2.1.3.  Opinion of the Impact Assessment Board (IAB) 
This Impact Assessment was discusse d at a meeting of the IAB on the 15th of December 2010. 
The text was well received and no resubmissi on was required but several recommendations 
were made calling for: 
• Improved analysis on the general policy framew ork and on the justification for the need for 
energy efficiency targets 
• Strengthened analysis of the problems to be  addressed and greater use of the evaluation 
results of the existing acti on plan and national plans 
• Improved description of the baseline assump tions and analysis of the rebound effect 
• Inclusion of a clearer presentation of costs an d benefits (incl. a clear definition of cost-
effectiveness) 
• Better outline the role of transport sector. 
All these, but the last one, were reflected in this report and have helped its improvement. The 
only recommendation that could not be addressed fu lly was the inclusion of further details on 
the transport as the sector woul d is discussed in gr eat detail in the IA for the forthcoming 
White Paper on Transport. Detailed analysis of the costs and benefits of the identified types of 
policy instruments and analysis of various target  options and their interactions with the other 
targets was not prepared as th e definition of the specific policy initiatives and their impact 
assessment  is to be carried out in a cons ecutive IA(s) that will accompany the legal 
proposal(s). 
3. PROBLEM DEFINITION  
3.1. What is the problem? 
The EU target would not be met 
At the Spring Council 2007, th e EU Heads of States a nd of Governments stressed 'the need to 
increase energy efficiency in the EU so as to achieve the objective of saving 20% of the EU's 
energy consumption compar ed to projections for 2020'8. This 20% reduction can be reached 
by introducing cost-effective9 measures which means that the investments made will be paid 
                                                 
8 7224/1/07 REV 1 
9 Cost-effective can be interpreted in different ways. In a study (Boonekamp 2006) for the Energy 
Efficiency Action Plan it is mentioned that the World Energy Assessment 2000 (Jochem, 2000) has 
been used and it refers to the term ‘life cycle costs’. Theref ore, in this IA a measure is considered cost-
effective when the pay-back time of the investment (including the operational costs but minus cost 
savings) is equal or in most cases shorter than its technical lifetime. This is because of the savings on 
the energy bill or reduced need for maintenance. The studies that analyse the potentials (including those 
mentioned in footnote 10) take into account various di scount rates. This means that only measures with 
a positive net present value are considered as cost-effective. 
 
EN 7   EN back from the reduced energy bi lls within, or often much shor ter than, the lifetime of the 
energy savings measures realized10. This would make the EU's  economy more competitive 
saving from imports about €200 bn annually in 202011, create jobs and new business 
opportunities, and EU citizens woul d pay less on their energy bi lls, reducing the number of 
fuel poor households and foster innovation. Ener gy efficiency and savings benefits the EU 
economy as a whole, Member States, businesses and private individuals. 
Energy efficiency also means better use of energy resources and reduced import dependency. 
20% less energy use also means less CO 2 (or reduction of 740 MtCO2eq annually in 202012) 
and harmful emissions, less impact on the ecosyst ems, and better quality of life for people. 
The implementation of energy efficiency measures also creates jobs and offers possibility to 
retain the current ones at local level, particular ly in the construction sect or that has been badly 
affected by the economic crises. It is estimate d that up to 2 million jobs can be created or 
retained because of energy efficiency13. 
However, the EU is not on track to fully  realize this cost-effective energy savings.  Whilst, 
the latest business-as-usual scen ario (see Section 3.4) shows a br eak in the trend towards ever 
increasing energy demand, the reduction in the consumption will be only about 9% in 2020. 
Therefore, if the EU does not double the effort s, it will not reach its 20% target and will 
not realize all the associated benefits fo r the economy, society and environment.  
Energy efficiency vs energy savings 
Even though the terms 'energy efficiency' and 'ene rgy savings' are often used interchangeably 
(including in this IA), there is a significant difference between the two. 'Energy efficiency' 
means that we use less energy inputs while ma intaining an equivalent level of economic 
activity or service. 'Energy savings' is an abso lute decrease of energy consumption and can be 
done through increased energy efficiency, beha viour changes or even decreased economic 
activities. Examples of energy savings without efficiency imp rovements are heating a room 
less in winter, using the car  less, or enabling energy sa ving modes on a computer.  
Gains in energy efficiency do not automatically translate into an overa ll reduction of energy 
consumption. Even though the products and pr ocesses are continuously becoming more 
energy efficient, our total final energy consumpti on continues to grow. This is due to the fact 
that with higher disposable incomes the level of comfort rises, the number of households 
increases, more appliances are bought, longer di stances are travelled with bigger cars and 
planes and homes become bigger and are better acclimatized to the seasons.  
                                                 
10 For example, European Climate Foundation. 2010. Energy Saving 2020; Fraunhofer ISI et al.  2009. 
Study on Energy Savings Potentials in EU Member States, Candidate Countries and EEA Countries; 
Lechtenböhmer and Thomas, Wuppertal Institute. 200 5. The mid-term potential for demand-side energy 
efficiency in the EU. 
11 COM(2006) 545. Calculated savings are 368 Mtoe in 2020; at 88$'08/oil barrel in 2008 this equals 
€ 190 billion. 
12 2 tCO2/toe (based on general CO2 intensity in 2020, PRIMES 2009 ener gy efficiency scenario) 
13  This is rather conservative estimation of the direct  energy efficiency employ ment effects and is based 
on analysis of the results of several EU and national sector specific studies, incl: Ecorys. 2010. Ex-ante 
evaluation of the initiative on the building workforce tr aining and qualification in the field of energy 
efficiency and renewable energy within the In telligent Energy Europe Programme; GHK Consulting, 
Cambridge Econometrics, Institute of European Environmental Policy. 2007. Links between the 
environment, economy and jobs; and Impact Assessments for Ecodesign SEC(2009) 1016, SEC(2009) 
1020, and SEC(2009) 1013 
 
EN 8   EN The EU value added is mainly at triggeri ng energy efficiency improvements. However, 
certain measures that target behavioural change  are also important and have been adopted at 
EU level. For example, the existing energy labe lling of products, build ings and cars, various 
awareness campaigns, financing and fiscal stimu li or dissuasive tools have aimed at changes 
of consumer choices towards more rational use of energy resources. That is why in this IA 
also tools that are aimed at behavioural change will also be studied. 
Cost-effective possibilities remain in each sector 
Based on a number of studies14, cost-effective potential exists in all final energy demand 
sectors as well as in the energy transformation sector. A difference should be made 
between technical potentials  (best available technology irreleva nt of costs) and cost-effective 
potential . The technical potential currently not co st-effective and thus measures for its 
realization will not be discussed in this IA. 
The figure below illustrates that for the fina l energy sectors, even though some of the 
potential is currently being used (i.e. low polic y intensity scenario, see also section 3.3.2), the 
cost-effective savings potential in each sector (i.e. the high policy intensity scenario) would 
not be fully ut ilized in 202015. Further savings (i.e. technica l potential) are possible but not 
cost-effective. 
Figure 1. Final energy savings potential in EU 27 in 202016 
 
0%5%10%15%20%25%30%
Households Transport Industry Tertiary All sectorsLow  Policy Intensity
High Policy Intensity
Technical potential
 
The rebound effect in general leads to a decrea se in the expected savings. However, it has 
been already taken to a significant degree into  account when calculating the existing potential 
sectors (see Box 1) and also in PRIMES model (see Box 2). 
Box 1: Rebound effects in the Fraunhofer et al. (2009) study 
Rebound effects can be charac terised in two categories. 
                                                 
14 For example "Pathways to low-carbon Economy, Version 2 of the Global Greenhouse Gas Abatement 
Cost Curve", McKinsey&Company, 2009 and "Energy Savings 2020: How to triple the impact of 
energy saving policies in Europe" Ecofys and Fraunhofer ISI, 2010 
15 Fraunhofer ISI et al.  2009. The potentials are calculated on the PRIMES 2007 baseline (pre-crisis 
baseline). However it is considered that the percentage savings on the new baseline could roughly the 
same on the post-crisis baseline; however the absolute savings would be lower. 
16 Ibid footnote 35 
 
EN 9   EN Direct rebound effects , i.e. rebound effects which ha ppen directly as a consequen ce of the energy efficiency 
measure. The Fraunhofer et al. (2009) study considers se veral such direct rebound effects, in particular:  
a) increased time of use of energy savings lamps in  residential and commercial applications and  
b) higher heating temperatures or longer heating du ration in well insulated buildings due the increase of 
comfort level.  
c) longer driving distances due to more efficient cars 
d) high speed trains were assumed to have a higher specific consumption per passenger kilometre than 
normal trains due to their higher speed which makes that people opt for this type of transport mode. 
Generally these rebound effects happen directly in conjunction with the energy saving measures and have been 
modelled by reducing the effect of the efficiency improvement. For example in the case of the saving lamps, not 
the full theoretical impact of the savings were assumed but a reduced impact. Similar for the increased heating 
temperatures/increased heating peri ods a partial compensation of the savings was assumed. For cars, an 
increasing mileage was assumed. In th e case of the trains a higher specifi c consumption expressed the rebound 
effect. The most commonly observed direct rebound  effects are taken into account in the study. 
Indirect or econom ic rebound effects : These are rebound effects which oc cur generally because people have 
more money available and spend it partially on more en ergy consuming activities. The main reason for this is 
that in absolute terms the budget spent on energy corrected for the inflation has become smaller and smaller 
compared to the development of incomes (with the exceptio n of the very recent years). So this is not a direct 
impact of a specific energy saving measure  but happens in a way autonomously from it in a general trend. The 
Fraunhofer et al. (2009) study took that into account by considering a certain development in the drivers, 
including: 
a) A rebound effect has been implicitly taken into account by envisaging an increase of the average car 
size (expressed in cubic centimetres) over time. 
b) The square meters living space for apartments and individual houses is increasing due to more 
comfort levels 
c) People use more hot water for sanitary  purposes due to an increased comfort 
d) People use consumer electronics for a longer time due to more time available 
The Odyssee database was used as an essential tool to calibrate such social drivers influenced by increased 
comfort factors, general rebound effects etc. by looking at their changes in past and by assuming a certain development in the future but also by considering certain limits. It is unlikely for example that people would heat 
rooms permanently to 30°C in winter  time because this is not comfor table any more for most persons. 
The current trends and remaini ng potential per sector are summarized in the text below.  
Residential and services (or tertiary) sectors  are responsible for the lion’s share, about 
37%, of final energy use in the EU (i.e. 25% for residential and 12% for the services sector in 
2007). They will be discussed together because th e energy consumption is mostly in buildings 
where energy is predominantly used for buildings' space and water heating, cooling and cooking (i.e. 78% of total needs for servic e sector and 88% fo r residential in 2007
17). The rest 
of the energy consumption is to be attributed to the use of electric appliances and lighting. 
The business-as-usual scenario projects that the fi nal energy use in the residential sector will 
increase with 4.4% over 2008-2020 period and in the tertiary sector with 1%. 
The potential for cost-effective energy savings fo r the two sectors is currently estimated at 
21%18. Some of it (or 13.4%)19 will possibly be realized with the current policies but still the 
two sectors offer the biggest savings potential from the final energy sectors. In addition, most 
                                                 
17 Source: DG ENER statistics. Cooking cannot be separated from the data set.  
18 Study on Energy Savings Potentials in EU Memb er States, Candidate Countries and EEA countries, 
Fraunhofer ISI from 2009, for example 
19  Ibid 18 
 
EN 10   EN of energy efficiency and savings  technologies are cost-effective and on the market but further 
innovation is still possible. Therefore, is an obvi ous first step for reaching the EU’s energy but 
also climate policy objectives.  
Transport sector  uses 32% of the EU's final energy. Since 1990, final energy consumption in 
the sector has been steadily incr easing by 1.8% per year on average20. It now represents nearly 
one third of the final EU energy consumption21 and relies almost exclusively on fossil fuels. 
More than 80% of trans port final energy use is due  to road transportation22. In 2008, cars 
accounted for 72% of all the kilometres travelled by passengers whilst road transport accounted for 46% of the total goods transpor t activities (tkm). For the period 2000-2020, 
freight road transport is expected to grow  by 55% and passenger road transport by 36%.
23 
Freight activities have until now  grown faster than the econom y, with road and air freight 
recording the largest incr ease between 1997 and 200724. Under the business-as-usual 
projections the final energy use in  the transport sector  is expected to in crease by 6% in 2020 
compared to 2008.  
The potential for cost-effective energy savings in transport is also significant: about 21% in 
202025 and only a bit more than half of it (or 12%) is  projected to be realized with the current 
policy mix. Energy efficiency measures in transp ort can therefore contribute significantly to 
the EU's energy policy target as well as to the Climate policy objectives (transport accounts 
for more than 20% of the total EU CO 2 emissions26 with the highest growth rate compared to 
other sectors). In addition, an increased share of clean and energy-efficient transportation also 
reduces congestion, pollution and noise, t hus improving mobility, health and well-being. 
Industry sector accounts for 27% of the final energy demand in the EU. Large primary 
materials industries (chemical, petrochemical, iron, steel, cement, pulp and paper, etc) are 
energy intensive and account for 70% of industrial energy use. 
Considerations for decrease of costs to improve competitiveness have prompted many 
industries, especially the ener gy intensive ones, to make energy efficiency improvements. 
This lead to smaller economic potential in 2020 (about 13%) than the other sectors. The 
majority of this potential has already been used (only 3% remaining economic one). Still the 
opportunities are not fully taken advantage of wh ich is particularly true for small-size and 
even some medium-size industries. For exampl e, some industry sectors, with the right 
technology and support, could make energy sa vings of around 20%. By  changing certain 
production processes, energy savings of 30% and even up to 65% can be obtained.  
                                                 
20 Europe's energy position, markets and supply. DG ENER Market Observatory for Energy, 2010. 
http://ec.europa.eu/energy/observatory/annual_reports/doc/2009_annual_report.pdf   
21 32.6% according to 'EU energy and transport in figures – Sta tistical pocketbook'. European 
Commission 2010. 
http://ec.europa.eu/energy/publications/statis tics/doc/2010_energy_transport_figures.pdf   
22 81.9% in 2007 according to 'EU energy and transport in figures – Statistical pocketbook'. European 
Commission 2010. 
23 ASSESS study for the mid-term review of the EC 2001 transport White Paper, Keep Europe moving , 
2006. 
24 Towards a resource-efficient transport system (TERM 2009), EEA Report No. 2/2010. 
25 Study on Energy Savings Potentials in EU Memb er States, Candidate Countries and EEA countries, 
Fraunhofer ISI from 2009, for example 
26 23.1% in 2007 according to 'EU energy and transport in figures – Statistical pocketbook'. European 
Commission 2010. 
 
EN 11   EN Agriculture and fisheries sectors  are responsible for about 2%  of the EU's final energy 
consumption. Energy savings are possible fr om the introduction of CHP for greenhouses, 
improved energy performance of agricultural buildings. Substantial amounts of energy are 
used indirectly for the production (e.g. pesticides , land cultivation, travel  for fish catch) but 
these are not in the scope of the IA. That is why the two sectors are not  looked at separately 
but some possibilities explored other sectors (i.e. energy generation and buildings) would 
have positive impact for the reduc tion of energy use in the sector. 
Illustration of the cost-effectiveness of a numb er of measures at the final energy use is 
provided in the figure below.  
 
Figure 2. Overall cost-curve for energy efficiency opti ons of end-use sectors in the EU27 in 2020. Energy 
savings are expressed in final energy units. Energy sa vings (X-axis) are relativ e to the baseline (source: 
ECF study based on Fraunhofer et al., 2009). 
Energy sector also offers  possibilities for energy efficiency improvements in the processes of 
energy transformation and also for increased uti lization of recoverable energy. In addition, as 
energy utilities are the closes t to the final energy consumers and have information on the 
energy use of their clients, they could be used as an interlocutor to realize energy savings 
potential in the demand side. 
Increasing transformation efficiency can be achieved by using technologies that better 
transform primary energy into final useful ener gy. 58% of EU-27 electr icity is produced in 
conventional thermal power plants. Around half of  this electricity co mes from coal-fired 
power plants and the rest is mainly produced based on gas combustion. Mo st of Europe’s coal 
plants operate at 36-38% of thermal efficien cy while the best available technologies (BAT) 
deliver an average efficiency of 46%. Gas-fi red plants operate at an average of 47% 
efficiency, while BAT are on average 59%.  
 
EN 12   EN Another way to increase the efficiency of electri city generation is to use the heat that is 
generated by using it in co/t ri-generation and district he ating/cooling. Cogeneration can 
achieve 80–90% efficiency, if all savings, including the avoided network losses are 
calculated. The ex isting economic potential is largely underused and the less than optimal 
utilization of combined heat and power will grow even more pronounced in the future.  
As regards heat production, the overall therma l energy production efficiency of the EU is 
around 40%. Reference technologie s in heat-only-boilers provi de a range of operational 
efficiencies from 70% in the case of biogas to  90% for natural gas, while best available 
technologies can deliver ev en higher performances.  
District heating and cooling (DHC) is partic ularly well placed to use the residual heat 
produced in industrial sources. DHC, especial ly in combination with cogeneration, could 
produce significant primary energy savings, and is a proven and cost-effec tive way to increase 
the comfort of EU citizens at a low cost.  
There are also losses in the transmission and di stribution of electricity, however, these losses 
differ widely between the differe nt Member States from 3.2% fo r Cyprus to 15.7% for Latvia. 
Average losses in transmission and distribut ion for EU27 are calcula ted to be 6.4% in 200827. 
3.2. Why is the savings potential not achieved? 
Cost-effective energy savings potential will not be fully achieved because the market for 
energy efficient products, buildings and serv ices is not developing quickly enough to 
meet the need for increased uptake of the en ergy savings potential. Th is is because of a 
number of market and regulatory failures.  
3.2.1.  Market failures 
Energy market prices do not reflect all costs to society  in terms of pollution, greenhouse 
gas emission, resources' depletion, and geopolitic al dependency. Therefore, end user (and 
producer) choices are made on the basis of a lower energy price that does not reflect the 
environmental costs for the society. Due to lo w price elasticity of some sectors, e.g. 
residential one, price signals are not  always a solution to the challenge. 
There are many examples of split incentives or principal-agent  market failures in the energy 
sector where the decision maker may be par tially detached from the price signals. For 
example, the landlord should invest in buildin g renovation works, but the tenant normally 
pays the energy bill and benef its from its reduction. Energy pr oviders dispose of commercial 
information about the energy use of their client  and could promote energy savings measures, 
but have no economic incentives to do so as it  would negatively affect their turnover and 
profit.  
Asymmetric information on the benefits (e.g. limited knowledge and information) and costs 
(e.g. overestimation of the investment needs) makes people reluctant to make investments 
even though they are cost-effective. Energy bills are also not a major expense in many 
companies, and therefore the possibili ties for improvement are not realized.  Furthermore, 
there is not sufficient and easy to obtain in formation on the possible energy efficiency 
solutions available on the market or the ways in  which they can be carried out or supplied.  
                                                 
27 Eurostat data. 
 
EN 13   EN Missing or incomplete markets  cause another commonly recognized problem which is 
related to the low number of trained professionals  (such as architects, energy auditors, 
builders, installers, sales assistants) and the lack of infrastructure . The lack of a credible and 
mature offering market prevents the emergence of a dynamic demand market which in turn is 
a barrier to the uptake of the offering market. This has a particularly negative effect on the 
uptake of energy services companies (ESCOs) that can provide inte grated energy saving 
solutions together with financing schemes. Th e low demand keeps the prices relatively high. 
Initial costs  are a considerable barrier as judgement s on the profitability of investment are 
done on short pay-back times and improvements that  fail these criteria are not made even if 
they would bring benefits to the consumers but also society in the long-term. Proper financing 
instruments that take fully into account all fina ncial benefits from energy efficiency gains are 
not developed because of a lack of sufficient knowledge of the financing institutions. In many 
cases energy efficiency projects ar e small scale and decentralised which increases the 
transaction costs  and further slows down the upt ake of financial products.  
Harmful subsidies, regulated prices and negative incentives  are other challenges to energy 
efficiency. The IEA’s latest estimates indi cate that fossil-fuel consumption subsidies 
worldwide amounted to $312 billion in  2009, down from $558 billion in 200828. The decrease 
is mainly due to declining energy prices. This is less problematic for the OECD countries but 
the latest available figures from 2004 for the EU15 are still worrying: coal received €13 bn (to 
be phase out at the latest by 2018), oil and gas €9 bn, nuclear €2 bn, and RES were supported 
only by €5 bn29. In a number Member States energy pric es, notably for gas and electricity, are 
still regulated which also pr ovides distorted market signals30. Negative incentives are another 
challenge, e.g. when the value of a building is higher because of energy efficiency 
improvements, higher local taxes have to be paid. 
3.2.2.  Regulatory failures 
Energy efficiency and savings are often consider ed too technical. It is also difficult to 
visualize or measure the avoided use of energ y. Therefore, energy efficiency policies often 
lack political visibility  and are thus not embraced by politicians.  
Although there are certainly positive developments in Member States for the establishment of 
an enabling legislative framework to stimulate energy efficiency and savings, a lot more is 
needed. The lack of a comprehensive policy framew ork including regulatory and support 
instruments, and a poor enforcement is clearly a major problem in some countries. Too 
frequent changes in the legal framework make  the investment climate risky. Some Member 
States lack administrative capacity to develop energy efficiency legislation and wait for its 
advancement at EU level. This has made the EU policies a key driver  for energy efficiency 
legislation in some Member States but also  reduces the national ow nership of the policy 
instruments. 
                                                 
28 http://www.worldenergyou tlook.org/subsidies.asp 
29 EEA. 2004. Technical report: Energy subsidies in the European Union: A brief overview. 
30 Communication from the Commission to the Council and the European Parliament - Report on progress 
in creating the internal gas and electricity market (SEC(2009) 287) (COM/2009/0115 final), at point 
B7. The Member States that have regulated prices for electricity and gas are:  BG, DK, EE, FR, HU, IE, 
IT, LV, LT, PL, PT, RO, SK and ES. In GR, CY and MT there are regulated prices for electricity. FI 
has regulated prices for gas. In most Member States price regulation is not confined to household 
customers. 
 
EN 14   EN 3.2.3.  Other barriers 
The rebound effect  is another major challenge to energy savings. It implies that in spite of 
certain improvements of the efficiency of the individual products (e.g. appliances, cars and 
buildings), overall energy consum ption linked to their use increases due to their increased 
volume, number or usage. This minimizes the sa vings from the efficiency improvements or in 
certain cases even leads to an absolute incr ease in energy consumption. For example, even 
though cars produced today are more  efficient, the overall energy consumption of the car fleet 
grows because we use them more regularly a nd often buy bigger ones. The rebound effect is 
included in the assumptions of the various studie s that make evaluation of the energy savings 
potentials and thus is not expe cted to hamper the possibilities for reaching the 20% energy 
savings target (see Box 1 for more details). Th e rebound effect is difficult to address it at EU 
level because it relates to increased living standards, freedom of choice and consumer 
behaviour. 
The low uptake of new and innovative technologies  in some sectors, su ch as buildings, is 
also a consequence of the long life cycl es and lead times of investments.  
3.3. What policies exist to address the problem? 
3.3.1.  EU policies: assessment of the En ergy Efficiency Action Plan of 2006 
The Energy Efficiency Action Plan (EEAP)31 was adopted in October 2006 for 
implementation between 2006 and 2012. This Ac tion Plan sets the current European 
framework for legislation, policies and measur es conceived to trigger energy efficiency 
improvements and energy savings. It was developed because: 'even though energy efficiency 
has improved considerably in recent years, it is still technically and eco nomically feasible to 
save at least 20% of tota l primary energy by 2020 on top of  what would be achieved by price 
effects and structural changes in the economy, natural replacement of technology and 
measures already in place'32. In this context, the EEAP is to be seen as the major European 
step so far towards the realization of the 20 % saving objective, as it was estimated to 
contribute to a 14% decline in primary energy consumption in 202033. 
The EEAP defined six priority areas with 85 measures addressing key energy using sectors 
(energy transformation, buildings, services, indust ry and transport) and cross cutting issues 
(behaviour, financing and intern ational cooperation). The portf olio of measures is very 
comprehensive in terms of type (e.g. voluntar y, regulatory, market-based, fiscal, support and 
information), issues addressed (sectors a nd horizontal), level for implementation (EU, 
national, regional, city) and stak eholders involved (governments, private sector, citizens). In 
addition, the Commission committed to 10 priority  actions to be init iated immediately and 
implemented as soon as possible for maximum e ffect. This all-encompassing approach of the 
Action Plan reflects the complex nature of energy efficiency. 
At the end of 2010, after 4 years of implementation, a very positive balance can be drawn:  
• The majority of the 85 measures have already  been completed or are in the process of 
being finalized.  Only a few have not been real ized as intended in the Plan . 
                                                 
31 COM(2006) 545. 
32 COM(2006)545, page 5 
33 SEC (2006) 1174. 
 
EN 15   EN • The implementation of the 10 priority acti ons is well advanced wi th the majority of 
them already finalized.  
• The Plan triggered new and improved energy efficiency legislation across Europe. 
With more than 20 legislative measures in its portfolio, the EEAP pushed for the 
implementation and revision of existing key legi slation targeting effi cient uses of energy. 
Finally it proposed also new en ergy efficiency legislation.  
The main lessons learnt from the implementation of the EEAP are: 
• A full and ambitious application of existing  energy efficiency legislation by Member 
States is crucial to deliver energy savings in practice . The Commission should continue 
to provide further support to MS for better and faster implementation. 
• Selected supporting tools need to be strengthened or expanded  further to increase the 
impact of legislation, such as National Ener gy Efficiency Plans,  monitoring systems, 
access to financing and training. 
• An overarching energy efficiency pl an with a long term objective  is needed to trigger 
lasting political commitment towards energy efficiency improvements and energy savings. 
It needs to be streamlined and focused on actions to be taken in key areas . 
If looked from sectoral point of view the progress is as follows: 
Residential and services sectors:  Substantial progress has been achieved in these sectors by 
moving forward with the implementation of ke y legislation, notably the Energy Performance 
of Buildings Directive (EPBD) and the Energy Services Directive (ESD). The Commission 
supported this process by creating Concerted Actions, BUILD UP initative and other fora 
(e.g. Bucharest Forum) helping Member Stat es with their national implementation. For 
energy-using products, the implementation of th e Ecodesign and Labelling Directives were 
essential, inter alia  the adoption of ecodesign regulati on for nine product groups. The EEAP 
also put forward the revision of the EPBD a nd of the Ecodesign and Labelling Directives. 
Energy generation: The EEAP 2006 put forward challengi ng measures to improve the 
efficiency of power generation and distribut ion. Main progress has been made with the 
implementation of the Combined Heat and Power Directive (CHP) and with the development of a Reference Document on Best Available Techniques on Energy Efficiency. Some progress 
has been made with the promotion of the co nnection of decentralized generation with the 
adoption of the Third Legislative Package on  the Internal Energy Markets. However, 
important measures have not been implemented mainly due to the complexity and the strong 
stringency of the required measures, that made  the effort for the time being not proportionate 
to the foreseeable results, taken into account th at this sector is already partially covered by 
market instruments with similar goals, e.g. to trigger energy efficiency improvements. 
Transport: Main progress has been made, among others, with setting emission performance 
standards for new passenger cars (EC 443/2009)  and light-duty ve hicles (proposals 
COM/2009/0593), a new labelling regulation fo r tyres (EC 1222/2009), the promotion of 
clean and energy-efficient road transport ve hicles through public pr ocurement (2009/33/EC) 
and the integration of aviation under the EU Emissions Trading Scheme (EU ETS) as of 2012. 
The review of the Fuel Efficiency Labelli ng Directive was not put forward as intended. 
Despite putting forward most measures of the EEA P in the transport sector, more needs to be 
 
EN 16   EN done to tackle the efficient use of energy in this sector as the consumption is expected to grow 
further. 
Industry:  As industrial installations are mostly covered by the EU ETS, the EEAP did not 
propose direct priority measures for this se ctor. However a range of measures were put 
forward aiming at raising th e awareness of industrial companies, notably SMEs. 
To conclude, the EEAP 2006 is a major step in movi ng towards the achievement of the 
20% saving objective in 2020 . The EEAP assessment also revealed that in order to draw 
better political recognition, an ove rarching, long-term strategic vi sion is required. In order to 
capture the political attention a nd trigger lasting polit ical commitment, it is essential that any 
future Energy Efficiency Plan is better focu sed on the main policy objectives, contain clear 
priorities and is not too techni cal. It is clear that energy savi ngs are realized at national and 
local level. Therefore, the new Plan should aim at steering and mobilizi ng action at all levels 
of governance. Any new Plan should imperatively build upon the experien ces gained with the 
implementation of the EEAP 2006 and propose additi onal policies to close the gap and realize 
its aspiration to mobilise the general public an d policy-makers, and to provide EU citizens 
with energy-efficient infrastructure, buildings , appliances, processes, transport means and 
energy systems. 
3.3.2.  Current actions in MS  
Valuable information of the pr ogress of Member States on en ergy efficiency can be found in 
the National Energy Efficiency Actions Plan s (NEEAP) developed under the Energy End-Use 
Efficiency and Energy Services Directive (E SD, 2006/32/EC). The first NEEAPs were due 
for mid-2007 but many of them were sent  in 2008. Following their submission, the 
Commission communicated its co mments and suggestions to each Member State and a 
number of bilateral meetings were organize d. As a result, some NEEAPs were resubmitted 
after being remarkably strengthened. For many count ries this has been first time they had to 
prepare comprehensive plans addressing energy savings and the feedback received from a 
number of Member States confirmed that the preparation of the firs t NEEAPs has proven to 
be a very useful exercise for them.  
The Commission assessment34 of the first NEEAPs and its recent update (Annex IV) showed 
that they propose a wide diversity of policy p ackages and measures targeting different end-use 
sectors and in some cases supply side measur es. Many of them demonstrate coherent and 
comprehensive strategies towards the intermediate and overall targets, backed by institutional and financial provisions. A number  of NEEAPs clearly identify their priority end-use sectors 
or policy tools. In contrast, some of them  show piecemeal thinking with a scattering of 
fragmented energy efficiency measures. The absence, or s poradic indication of savings 
estimates in the majority of NEEAPs, along w ith the mostly limited degree of detail about 
assumptions made in estimating savings fr om different measures, have impeded the 
quantitative assessment of the NEEAPs and how realistic they are. In addition, for several 
Member States there is a considerable gap between the political commitment to energy 
efficiency and the measures adopted or planned,  as reported in the N EEAPs, and the resources 
attributed to preparing it. 
                                                
 
34 SEC(2009) 889. Synthesis of the complete assessment of all 27 National Energy Efficiency Action 
Plans as required by Directive 2006/32/EC on energy end-use e fficiency and energy services 
 
EN 17   EN Studies show that there is remaining cost-effective energy savings potential in each Member 
State. Indications of the remaining potential are presented in the Figure 3  below35. The 
current efforts and future business-as-usual po licies of Member States broadly fall under the 
Low Policy Intensity (LPI) scenario. If all pro posed measures in the first National Energy 
Efficiency Action Plans (NEEAPs) are implemented then they represent an effort broadly in 
the range of this LPI scenario. The High Po licy Intensity (HPI) scenario describes the 
additional technology diffusion of best energy saving technologies (BAT) to the maximum 
possible, from an economic viewpoint. The T echnical Scenario considers a full technology 
diffusion of BAT to the technical maximum possible (without considering, however, very 
expensive options and still respecting investme nt cycles). The study concludes that under the 
HPI Scenario only savings of 19%, compared to  an autonomous scenar io, are possible with 
measures on the demand side.  
Figure 3. Potential for end use energy savings in 2020 compared to an autonomous scenario36 
0%5%10%15%20%25%30%
EU27
EU15
EU12 AT BE BG CYCZ DK EE FIFR DE EL HU IE IT LV LT LU MT NLPLPT RO SK SL ESSE UKEconomic (LPI) - Total saving pote ntial all se ctors
Economic (HPI) - Total saving pote ntial all se ctors
Te chnical - Total saving potential all sectors
 
3.4. How much of the potential will be ac hieved in 2020?: Baseline scenario  
To project possible future development as regards energy generation and consumption, 
PRIMES - a market equilibrium model for energy supply and demand - was used37. The 
PRIMES 2009 energy efficiency reference scenario (hereafter PRIMES 2009 or baseline) 
has been used as a Business as usual scenario in this IA report  (for details please see box 
below and Annex II). This scenario includes measures that have been implemented by December 2009  and where the adopted legislative provisions are defined in such a way that 
there is almost no uncertainty on how they  should be implemented in the future. The 
modelling gives an indication of the overall progress but not on the indivi dual impacts of each 
measure. To reveal the progress towards reachi ng the target, results of this scenario are 
compared with the PRIMES 2007 which could be  considered as a reference for the 20% 
energy savings objective.  
                                                
 
35 Fraunhofer ISI et al.  2009. Study on Energy Savings Potentials in EU Member States, Candidate 
Countries and EEA Countries. The potentials in this study were calculated with relatively modest 
assumption on energy price development. 
36 Ibid footnote 35. The success of recent policie s such as the recast EPBD and the mandatory CO 2-
Standards for cars, which in the study was still consid ered uncertain and included in the potentials, was 
in this figure however taken for granted and included in the reference development. 
37  http://147.102.23.135/e3mlab/PRIMES%20Manual/The_PRIMES_MODEL_2010.pdf   
 
EN 18   EN Box 2: The PRIMES model and different baselines 
The PRIMES model is a modelling system that simulates a market equilibrium solution for energy supply and 
demand. The model is organized in sub-models (modules),  each one representing the be haviour of a specific (or 
representative) agent, a demander and/or a supplier of energy.  
The Baseline is a complete and internally consistent  energy-economy-transport-environment outlook having the 
features of a development on the basis of current trends and implemented policies against which policy scenarios 
can be assessed. Several EU baselines have been established at different points in time using a framework 
contract with National Technical University of Athens (author and owner of the PRIMES model). 
The indicative 20% target on energy savings refers to projections for 2020, as estimated by the Commission in 
its Green Paper on Energy Efficiency, which used the PRIMES baseline 2005. The ba seline 2005 was a separate 
exercise that was not used for the target setting. The indicative target was set on the basis of a study on energy 
efficiency potentials. The baseline 2005 covers 25 MS, Bulgaria and Romania were modelled separately. The 
PRIMES baseline 2007 already covers EU-27 and gives similar values for primary energy consumption in 
2020 for 27 Member States (1970 Mtoe in 2005 baseline and 1968 Mtoe in 2007 baseline).  
The latest update - PRIMES baseline 2009 was finalized in 2009 and includes the effects of policies adopted 
until spring 2009. It is based on an average GDP growth of 1.7% per year for the period 2005-2030 as opposed 
to 2.2% in the 2007 baseline. The energy projections are based on a relatively high oil price environment 
compared with previous projections and similar to reference projections from other sources, with oil prices of 59 
$/barrel in 2005 rising to 106 $/barrel in 2030 (in year 2008-dollars). This baseline includes only measures that 
have been implemented by April 2009 or where the legislative provisions are defined in such a way that there is 
almost no uncertainty on how they should be implemented in the future. The baseline 2009 includes the 
effects of measures of the current EEAP that have already been implemented, 5 Ecodesign implementing 
measures adopted until end April 2009 and the ETS directive. It also includes policies on energy efficiency such 
as implementation of the building (also the recast EPBD  but limited only to measures for which the concrete 
implementation is provided in the Directive and not left for interpretation to MS), CH P, end-use efficiency and 
energy services, Ecodesign and labelling Directives as well  as national policies on education, information, public 
procurement and CHP. 
As regards other relevant fields the model takes into account the current Energy taxation directive. Some of the 
effects from the new Industrial Emissions Directive have been considered but those which implementation is not 
clear have not been modelled. Art. 10 .3.b of the EU emission trading direc tive, which enables MS to use certain 
part of the revenues from auctioning allowances on m easures aimed at achieving the 20% energy efficiency 
target has also not be included due its volunt ary character and uncertai nty of implementation. 
A so called Efficiency scenario 2009  relies on the same macroeconomic, demographic, price and technology 
assumptions but in additi on to all policy measures included in th e Baseline 2009 takes also into account 
measures adopted between April and December 2009 (4  additional Eco-design impl ementing measures, Recast 
of the Energy Performance of Buildings Directive, Labelling regulation for tyres and Regulation Euro VI for 
heavy duty vehicles). For this scenar io, unlike the Reference one (see p. 21),  it is assumed that neither the RES 
directive targets (Member States need to establish and transmit to the Commission their national renewables 
action plans in 2010; these national action plans will show how Member States intend to reach their targets) nor 
non-ETS targets are fully achieved. However, the curren tly implemented national measures for both targets are 
reflected. In this sense, the approach for this IA as regards BAU is rather conservative one not taking 
achievement of adopted targets for granted.  
The model does not include assumptions from the Reso urce Efficiency Flagship In itiative, the Climate 2050 
Communication, and the Energy Decarbonisation Roadmap as these are under preparation. Nevertheless, there 
has been a continuous discussion between the various Commi ssion services of the possible interactions of the 
various initiatives. 
The model takes into account to a certain degree the e ffects of the rebound effect . For example, it captures 
peoples' desire for more comfort such as bigger cars,  bigger living space, bigger  appliances, etc which is 
reflected for instance in the gradual change in co mposition of car fleet, bigg er spaces to be heated. 
The progress towards reaching the target is evaluated by comparing PRIMES 2007 baseline and 2009 efficiency 
scenarios. This is done because PRIMES 2007 provides a snapshot of the existing measures (until November 
2006) and their impact on energy trends before EEAP 2006 and 20% policy objective were adopted. PRIMES 
2009 Efficiency scenario provides an update of the situation taking into account the policies adopted by 
 
EN 19   EN December 2009 and the latest economic developments. Th is analytical approach to measures the progress 
towards the 20% objective has also been applied in other studies38. 
More details on the modelling approach and the PRIMES 2009 Efficiency scenario and its assumptions can be 
found in Annex II a) and b). 
The main assumptions, indicators and trends in energy consumption in EU 27 under this 
scenario are summarized in the Table below. 
                                                 
38 E.g. ECF and Fraunhover Institute 2010: Energy Saving 2020; Background study for the IA. 2010. 
 
EN 20   EN Table 1: Evolution and projections of main energy indicators 1990-2 020 (Source: ESTAT until 2008 and 
PRIMES 2009 projections from 2010 onwards) 
Main Indicators 1990 2000 2005 2008 2010 2020 Change  
over 
 2005-2020 Difference in 
2020 (PRIMES
2009 vs 2007)
Population (Million) 470 481 489 498 499 514 5.1% 4% 
GDP (in 000 bn Euro'05) 8.1 10.1 11.1 12.5 11.4 14.2 27.9% -9.7% 
Gross/ primary Inland Consumption  1666 1723 1826 1799 1767 1795 -1.7% -8.8% 
Gross/ primary Inland Consumption 
minus non-energy uses (Mtoe) 1562 1611 1709 1685 1655 1678 -1.8% -8.9% 
Final Energy Demand (Mtoe) 1069 1113 1174 1167 1169 1214 3.4% -9.9% 
Industry 366 327 326 318 313 327 0.3% -11.1% 
Residential 264 287 308 297 309 310 0.6% -7.7% 
Tertiary 158 160 177 179 176 181 2.3% -11.9% 
Transport 280 339 362 374 370 395 9.1% -9.9% 
CO 2 Emissions (Mt CO 2, ref approach) 4031 3811 3947 3787 3743 3610 -8.5% -14.9% 
Energy intensity (GIC/GDP (toe/M€'05) 204 171 165 167 155 127 -23.0% 1.3% 
Import Dependency % 45% 47% 53% 55% 55% 60% 13.2% -21.2% 
Total cost of Energy in bn €'2005   995 1161  1215 1740 49.9% - 
Total cost of energy as % of GDP   10% 11%  11% 12% 9.1% - 
The PRIMES energy efficiency scenario projec tions for the first time show a break in the 
trend of increasing energy dema nd. After years of growth, the gross inland consumption39 
excluding the non-energy use of primary fuels (referred hereafter as primary energy ) in 
the EU 27 has stabilized in 2005 and 2006, slig htly decreased in 2007 and 2008. The scenario 
projects 8.9% reduction of primary energy co mpared to PRIMES 2007 and 17% decrease of 
CO 2 emissions which shows increased decarbonisation of energy generation. 
The economic crisis is included in the modelling work. The reduction of energy use is due 
to the economic crisis at the beginning of th e period but after 2012 is also positively 
influenced by the increased implementation of the recent ly adopted energy efficiency 
policies . The economic crisis has a twofold impact on energy consumption. Firstly, it leads to 
its reduction because of the lower level of econom ic activity, but also to a reduced investment 
and capital turnover which slows energy ef ficiency progress. Secondly, the economic 
recovery period translates into higher econom ic activity and energy co nsumption but also a 
faster pace in equipment renewing, hence accel eration of energy efficiency progress takes 
place. 
The final energy  consumption40 is projected to slightly increase  (3.4%) over the period 
2005-2020. While energy consumption in industry  (-12%) declined c onsiderably between 
1990 and 2005, energy consumption in transpor t (+29%), households (+16%) and tertiary 
(+11%) increased over the same period. A ccording to the projections, final energy 
                                                 
39 Gross inland energy consumpti on represents the quantity of ener gy necessary to satisfy inland 
consumption of the geographical entity under consider ation. It is calculated as follows Gross inland 
energy consumption = primary production + recovered products + total imports + stock change - total 
exports – bunkers – non-energy use. The final non en ergy consumption (e.g. in  petrochemicals industry, 
lubricants, asphalt) is also subtracted as this is  not relevant from the energy savings perspective. 
40 Final energy consumption includes all energy delivered to the final consumer's door (in the industry, 
transport, households and other sector s) for all energy uses. It excludes  deliveries for transformation 
and/or own use of the energy producing industries, as well as network losses.  
 
EN 21   EN consumption in all sectors will be slightly hi gher in 2020 than in 2008  with transport having 
the highest growth of almost 6% (over 2008- 2020 period). In 2008, buildings (or households 
and tertiary sectors combined) contribute to 39% of the EU's  final energy use, followed by 
transport (32%) and industry (27%). The relative  shares are projected to stay approximately 
the same until 2030. 
There is a positive development as regards energy intensity  of European economies which 
will decrease  by almost 23% (or 2.0% p.a.) over 2010-2020 period. This confirms that 
economic growth can be achieved with less en ergy resources, however, energy intensity does 
not necessarily translate into reduction of energy use, CO2 emissions and increased security 
of energy supply. 
Difference to the 20% target 
The 20% savings objective agree d by the European Council translates into a reduction 
of primary energy use by 36841 Mtoe in 2020 . According to PRIMES energy efficiency 
scenario the effects of the crisis and im plemented policies until December 2009 will deliver 
164 Mtoe of this savings objective or 8.9% re duction compared to PRIMES 2007 projections.  
Therefore, the EU needs to double its efforts in ord er to reap all the benefits of energy 
efficiency and savings in 2020.   
Another PRIMES scenario (the Reference scen ario) assumes that the two binding targets on 
RES share and GHG emissions reductions are met. The result of the modelling shows that this 
would not have a significant effect on the ac hievement of the 20% savings objective (only by 
additional 0.8% or 14 Mtoe). This is because there is a range of possible measures for the realization of GHG emissions reduction, in additi on to energy efficiency. These, for example, 
include increased use of renewables, fuel switc hing and use of international offsets (CDM/JI). 
Therefore, the objectives of energy efficien cy policy would not be met by the two other 
targets and additional measures to fully reap its benefits are required.  
Figure 4. Development and projection of pr imary energy use for the EU by 2020 
130015001700190021002300
1995 2000 2005 2010 2015 2020Mtoe
No 'decoupling' after 2005
Original projections (PRIMES 2007)
Recent projections (PRIMES 2009)
20% reduction target
 
                                                 
41 Source: PRIMES baseline 2007, calculation: (Gross inland consumption in 2020 (1968Mtoe) - Non-
energy uses (126 Mtoe))*0.2=368 Mtoe achieved 
savings 
remaining 
GAP 'invisible' 
savings 
-20% 
 
EN 22   EN In addition, there are further measures fr om the current policy portfolio (e.g. minimum 
requirements and labelling of boilers, water he aters and air conditioners ) which have not yet 
been adopted and taken into account in the baseline scenario. Thei r impact could not be 
modelled yet but even though they  will deliver additional savings , they will not be sufficient 
to close the remaining gap.  
Gains in energy efficiency do not automatica lly translate into an overall reduction of 
energy consumption.  Even though the products and pro cesses are continuously becoming 
more energy efficient, our total final energy cons umption continues to grow. This is due to the 
fact that the economy grows and with this more energy is used for production of goods. Further, with higher disposable incomes the level of comfort rise s, the number of households 
increases, more appliances are bought, longer di stances are travelled with bigger cars and 
planes and homes become bigger and are better acc limatized to the seasons. To illustrate these 
'invisible' savings on the Figure above, it is assumed that energy consumption grows at the 
same rate as the GDP.  
3.5. The Union's right to act, subsidiarity and proportionality 
The EU's right to act as regards energy efficien cy and savings is institu ted in the Treaty on the 
Functioning of the European Union, Ar ticle 194 (1) which states that:  
'' In the context of the establishment and functio ning of the internal market and with regard 
for the need to preserve and improve the enviro nment, Union policy on energy shall aim, in a 
spirit of solidarity between Me mber States, to: … (c) promote energy efficiency and energy 
saving and the development of new and renewable forms of energy; '' 
Although much responsibility for addressing energy efficiency and savings rests with Member 
States, the EU's right to act has been establis hed because of the importance of energy 
efficiency and savings for realizing the EU's
 climate change, security of energy supply, 
competitiveness and environmental protection objectives . Tackling these requires 
coordinated action and coherent energy efficiency and savings pol icy as one of the responses 
to these challenges. As has been demonstrated in  the previous sections, the various barriers to 
higher uptake of energy efficiency measures a nd the available cost-effective potential is not 
sufficiently addressed at national level and th us the EU action is required to reap the 
remaining potential benefits. EU level action is also essential for the products that are traded 
in the internal market. 
Energy efficiency and savings can be realized in various areas of economic activities and 
everyday life and thus the EU's role needs to  take into account the specificities of the 
challenges, and respect the principles of subs idiarity and proportionality. Member States are 
essential for the realization of the energy effi ciency policy framework and the EU intervention 
should be very well targeted and supportive to Member States' actions. More specifically the EU's role and level of action is in: 
– Setting minimum requirements in areas where there is a risk of internal market 
distortions  if MS take individual measures. This is  applicable to policy areas where there 
is a single market with free movement (e.g. energy-using products, vehicles) where having 
27 national rules, standards and regulations woul d distort its functioning.  For these areas it 
is appropriate to provide a detailed regulat ory framework at the European level. In 
addition, such EU action can be taken if the costs of common approach are lower than 
the costs for 27 national ones  (e.g. the ETS, phase III). 
 
EN 23   EN – Establishing a common framework which creates  the basis for coherent and mutually 
reinforcing mechanisms  for energy efficiency improveme nts while leaving in being the 
responsibility of Member States  to set, in a transparent and comparable way, concrete 
levels that are to be met. This has been applied in areas where there are major national 
differences (e.g. climate, construction traditions , fiscal policies) and there is no need for 
full harmonization of the approaches but onl y for setting of common instruments and 
requirements (e.g. in buildings). This is the global policy approach also in Europe 2020 
Strategy. 
– Creating a platform for exchanging best practices and stimulating capacity building.  
This is for the areas where the EU competences are limited but which can profit from 
dissemination of the experien ce of the more advanced Member States (e.g. awareness 
raising, professional and university training)  
– Using EU instruments to promote energy ef ficiency, e.g. through financing, and to 
mainstream it into the other policy areas. The EU does not dispose of sufficient funds to 
match the need for funding but it can still play  an important role in mobilizing, providing 
visibility and momentum to fill a critical ga p of ongoing initiatives. For example, some of 
the EU funds can be used to leverage third party financing. Furthermore, it would create 
economies of scale and allow for more effectiv e and efficient action. EU action also allows 
for the wide dissemination of information and a variety of eff ective implementation 
mechanisms. 
– Promoting the EU internationally as a forerunner in the area – an activity that is also 
beneficial for EU businesses. In a time of emerging pressure  for action on reduced energy 
consumption the activities at EU level are cl osely followed worldwide and some of the EU 
approaches (labelling, Ecodesign, EPBD) are being adopted by deve loped and developing 
countries. This will contribute to lower global CO 2 emissions and establish the EU as a 
recognized player on the international scene. 
All the options examined in the appraisal section will once again be checked individually 
on whether they respect the principle of subsidiarity and proportionality. 
4. POLICY OBJECTIVES  
4.1. General policy objectives 
The general EU policy objective, as set by EU leaders, is to increase energy efficiency in the 
EU so as to achieve the object ive of saving 20% of the EU's energy consumption compared to 
projections for 2020, as estimated by the Commission in its Green Paper42 on Energy 
Efficiency. This objective is c onsistent with the EU's overall energy policy. Increased energy 
efficiency is an essential element of the new European Energy Strategy 202043. 
This objective is fully consistent with the EU overall energy policy. Increased energy 
efficiency is an essential element of the new European Energy 2020 Strategy which states that 
                                                 
42 COM(2005) 265: P rimary energy savings amounting to 370 Mtoe in 2020 compared to a baseline 
scenario projecting the level of primary energy consumption. The baseline was updated in 2007 to take 
account of two new Member States.  
43 COM(2010) 639. 
 
EN 24   EN ''Energy efficiency is the most cost effecti ve and quickest way to reduce emissions, improve 
energy security and competitiven ess, make the energy process more affordable for consumers 
as well as create employment, also in export industries44". 
More generally, energy efficiency contributes to broader initiatives to achieve climate change 
policy objectives and to stimul ate economic recovery and smar t, sustainable and inclusive 
growth, as outlined in Europe 2020:  A strategy for smart, sust ainable and inclusive growth45.  
4.2. Specific policy objectives  
Based on the analysis of the current policies,  potentials and needs the following specific 
policy objectives need to be addressed:  
• Provide high visibility and stimulate commit ment for energy efficiency at the EU and 
national level 
• Ensure that when public funds are spent, ener gy efficiency consider ations are taken into 
account 
• Promote capacity building, exchange of knowledg e and best practices at national and local 
level 
• Stimulate high quality (deep) energy renova tion of the existing building stock  
• Ensure higher uptake of energy efficient products  
• Support transformation of trans port towards more efficient vehicles, modes and usages 
• Encourage the uptake of energy efficiency improvements in industry (especially for SMEs) 
• Intensify the uptake of energy efficiency im provements in the energy sector (i.e. energy 
generation and transmission) 
• Commit energy companies to take an active role  in energy efficiency improvement with 
their clients 
In addition, the following specific policy objectives  would contribute to the realization of the 
general ones but are not analyzed  in this IA because their imp act is studied in other policy 
documents. These include actions to: 
• Stimulate innovation, development and de monstration of new technologies. 
• Foster the international leadersh ip of EU on energy efficiency 
4.3. Consistency of the objectiv es with other EU policies 
The above-listed general and specific policy obj ectives are in line w ith the existing EU 
policies because they are: 
• Enabling the reduction of greenhouse gas (GHG) emissions  and thus contribute in a 
cost-effective way to reaching the EU's climate objectives. 
                                                 
44 COM(2010) 639. 
45 COM(2010) 2020. 
 
EN 25   EN • Making possible further commitments on greenhouse gas emission reduction.  Massive 
cuts of greenhouse gas emissions of 80 to 95% in 2050 compared to 199046 are needed in 
order to realize the EU's objective to limit the temperature increase to less than 2°C compared to pre-industrial levels
47.  
• Promoting economic recovery and enhancing th e competitiveness of the EU industries 
in line with the Europe 2020 Strategy and also contributing  to the Resource efficiency 
flagship initiative and the sust ainability layer of Europe 2020: The excessive use of energy 
brings additional costs to th e price of the products and energy bills. Therefore, the 
implementation of cost-effective saving measures would increase the competitiveness of EU's economy. But, also know-how on energy efficient technologies and systems is a 
growing export field. 
• Increasing security of energy supply as  called for in the Energy 2020 Strategy
48: less 
energy used in Europe means less reliance on imports. In 2007, our energy dependency meant that €332 bn of EU’s wealth were expo rted mainly to oil and natural gas rich 
countries
49. Reduction of our energy demand would lead to lower imports bill.  
• Creating jobs and fighting energy pov erty in support of th e EU's social agenda : Jobs 
creation or (with the economic cr isis) retention, especially of  people employed in SMEs, is 
another valuable contribution that EE can bring to the EU's economy. Renovation policies 
would target social housing that are the lo west energy performing building and contribute 
to fight against energy poverty. EU citizen s will also benefit from improved living 
conditions, improved transport infrastructure in  the cities, less pollu tion, better buildings, 
and lower energy bills. 
Therefore, energy efficiency policies already interact in a positive way with a number of 
established EU policies. The coherence of each policy option with the current policy mix 
considered in this IA is st udied in detail in Section 6.   
5. POLICY ALTERNATIVES AND OPTIONS  
5.1. General policy alternatives 
Current energy efficiency policy is an integral  part of the overarching climate and energy 
policy, it is one of the headlin e targets of Europe 2020 Strate gy and has a body of legislation 
addressing technical aspects for th e reduction of energy efficiency. 
However, unlike the targets on energy and clim ate, e.g. RES and GHG, the energy efficiency 
one is not legally binding, and thus far has no t been delineated in te rms of individual MS 
targets. This undermines th e credibility of the policy50 and endangers the achievement of the 
political objective of 20% reduction. 
The following global questions are essential in the development of the EU energy efficiency 
policy: 
                                                 
46 4th Assessment report by the Intergovernmental Panel on Climate Change (IPCC) 
http://www.ipcc.ch/pdf/assessment-re port/ar4/wg3/ar4-w g3-chapter13.pdf 
47 7880/1/09 REV 1 
48 COM(2010) 639. 
49 COM(2008) 781. 
50 2010/2107(INI) 
 
EN 26   EN (1) Could binding targets  on Member States (on their ow n) be sufficient to reap the 
remaining potential? 
(2) Would concrete policy instruments  are developed at EU level be sufficient (i.e. 
without targets)? 
(3) Should an approach of targets and measures  be further developed? 
The following considerations have to be take n into account when deciding on the general 
policy approach:  
• EU and national targets , Member States devise the instruments to reach them 
Energy savings take place at local level. In this respect, the ta rgeted energy efficiency at EU 
level could be achieved by overall  and/or sectoral targets at  national level, leaving full 
flexibility to Member States on how to reach these targets.  
This approach would result in a strong deregulation at EU level a nd its direct impact would be 
to abandon framework policies (e .g. ESD, the EPBD, the CHP Dire ctive) that are not essential 
for the functioning of the inte rnal market (e.g. Ecodesign woul d be retained). The energy 
savings which are expected to be delivered by these frameworks  would need to be redeemed 
by national policies alone. The setting of the ta rgets would have to take into account the 
interactions with the existing national green house gas reductions commitments and other 
relevant policies. An essential element of th e approach would be a robust system for the 
follow-up on the progress in meeting the targets.  It would acknowledge the central role of the 
Member States in bringing a bout energy savings and would create a strong and visible 
ownership of energy savings policies.  
However, this approach would require signif icant administrative efforts from the national 
authorities as they would have to develop the legislative measur es themselves and it can be 
expected that some Member States would face difficulties in coping with the challenge alone. 
For example, regularly a number of Member  States and many industries have asked the 
Commission to develop a common framework a nd standards (e.g. on energy performance of 
buildings, Eco-design) as Member States lack  administrative capacity to develop this and 
industries do not want to comply with numerous  different requirements. Such target setting 
would also pose compliance costs and administrative burden on the companies that operate in more than one country as they would have to comply with at least 27 national policy 
frameworks and regulations for each sector and the EU will move away from a single internal 
market for energy services.  
A targets only approach could also possibly have negative impact on the development of 
relevant EU services markets and the mobility of workers and businesses.  
• Detailed EU policy instruments
, Member States implemen t/supplement them, no 
global energy savings targets  
Targets alone do not save energy, only conc rete measures do so. Focussing policy on the 
design of energy savings policies at EU and na tional level might guarantee more action than 
losing time and resources with target formulations. 
In practical terms this appro ach would mean that no further targets on energy efficiency and 
savings are set at EU level but a number of EU individual measures on energy efficiency are 
 
EN 27   EN adopted following the EU competences establis hed by the Treaty of Lisbon. New instruments 
would need to be designed to trigger additio nal energy savings so to harvest the economic 
energy saving potential in all sectors. Member States would still be responsible for their 
implementation and also, where appropriate, setti ng additional ones in order to establish a 
comprehensive policy framework. 
This approach would highlight the need for c oncrete action to bring about savings in the 
different sectors. The measures could be designed to reach the full economic savings potential by 2020, that is some 368 Mtoe primary energy sa vings. However, the lack of general policy 
objectives would make the monitoring of the progre ss difficult. There is also a risk that this 
approach becomes very technical and focused on technical problems and areas and does not 
attract sufficient political attention. The lack  of political mobilization has been one of the 
main political challenges and if the approach of  only developing concrete measures is adopted 
then there is a possibility that the impact is mo re limited and not sufficient resources are put to 
address the problems.  
• Comprehensive policy framework at  Member States' le vel (including 
objectives/targets), EU develops polic y instruments to support Member States 
The two policy alternatives discussed above (tar gets only or measures only) revealed that 
neither of the approaches could fully addre ss the diverse challenges of energy efficiency. 
Therefore, it is worth consider ing a combination of the two.  
Establishing a national/sectoral objective and/or target for energy efficiency can be a trigger 
for enhanced action and creates political moment um for this policy field, which is otherwise 
characterised by a multitude of dispersed technical solutions. Co mplementing this target with 
concrete instruments at national and EU level would ensure that its is met. 
The approach of combining compulsory national energy efficiency action plans with a set of 
partly indicative and part ly binding target values at national and/or sectoral level leaves large 
room to the Member States to define the target/policy combination that fits best to the national situation. At the same time, it is safeguarded  that the biggest avai lable economic saving 
potentials are addressed. Clear objectives and co ncrete measures would create strong signals 
to investors in energy efficiency and thus will ad dress the market failure of incomplete energy 
savings markets. 
Setting policy objectives, detailed measures a nd coordinating national energy efficiency 
policies by the national action plan would incite  Member States to put a stronger focus on 
energy savings and design more ambitious and mo re streamlined measures to reach the energy 
savings objectives. In that respect the coordi nation through the NEEAPs and the political 
commitment to objectives would reinforce the impact of the energy saving measures put in 
place.  
The approach could include: 
• A set of objectives or targets and indicators to  ensure high political visibility and their 
commitment to energy efficiency to be deve loped by the EU together  with Member States. 
These would also allow the monitoring of th e progress. The targets could vary from 
binding to fully indicative ones or a combinat ion of indicative and mandatory ones. The 
best modality (e.g. national or sectoral, linea r decrease for each member State or burden 
sharing, primary/final or energy intensity targ et based on reference y ear or projections) and 
 
EN 28   EN its interaction with the other policy objectiv es (especially with the ETS, non-ETS and RES 
targets) would need to be studied in more deta il. The sectoral targets could be, for example, 
set for the public sector or even for ce rtain economic actors (e.g. energy companies). 
• Comprehensive plans (possibly strengthene d National Energy Effi ciency Action Plans 
(NEEAPs)) where they outline the genera l policy objectives and the concrete 
comprehensive policy mix to be drawn up by Me mber States. These plans could serve as 
main policy drivers, linking the EU policies to the local reality and coordinating and 
streamlining fragmented policies. They should include clear analysis of the barriers to 
energy efficiency in each country  and how to tackle them and ways to actively engage the 
regional and local authorities and various stak eholders. These Plans should also serve as 
the main reporting tool from Me mber States towards the EU. 
• A number of well coordinated individual measures adopted at national and EU level. The 
EU measures could provide Member States with the needed framework based on which 
they could further develop their efforts. Fu rther EU level legislation would also be 
developed for the products and services traded at the EU internal market, where necessary.  
This approach would reinforce the level of am bition of national energy efficiency policy and 
guarantee a set of coordinated measures that ta p synergies. This approach would require a 
certain increase of the administrative burde n on the national authorities, EU and local 
stakeholders for setting this framework in pl ace and also for NEEAPs development but these 
will be compensated many times by the benefits of  the realized energy savings. In addition, if 
NEEAPs turn into a single repor ting obligation for ESD, EPBD and possibly other Directives 
the overall impact could even be a decr ease of the administrative costs. 
As a conclusion, it is proposed that the th ird policy alternative, a policy framework for 
Member States with EU support, is followe d. This would recognize the importance of 
Member States in the implementation of energy savings policies, give the EU an 
important supporting role, and provide for clea r objectives and indi cators to follow the 
progress in the realization of  the energy savings potential.   
In the next sections of the IA the additional policy measures to be  put in place at EU level that 
would support Member States in this approach are discussed. The issues related to the nature 
and concrete setting of the objectives and i ndicators will be further analyzed when the 
concrete legal provisions are developed. 
 
EN 29   EN 5.2. Options analyzed 
The selection of the approach fo r the analysis of the individual  options is based on the fact 
that the aim of this evaluation is to identify what type (regul atory, financial or soft-law 
measures) of EU intervention is needed and suggest which are the best examples or 
possibilities that should be further looked at. Th erefore, for each sector the following policy 
options are analyzed: 
• No additional EU action: implies that no additional measures beyond the existing ones 
are adopted.   
• Voluntary commitments: would mean that active participat ion from the various industries 
and stakeholders is sough through voluntary agreements.  
• Regulatory instruments: implies that additional to the existing ones command and 
control tools are esta blished at EU level  
• Financial instruments: include the provision of various forms of financial support but 
also means for its mobilization and also enc ouragement or regulation for fiscal measures.  
The support for RTD is excluded from the analysis  as this is subject to detailed assessment 
in other policy documents.  
• Awareness and training: at EU level mainly comprise initiatives that  support the 
exchanges of best practices a nd support the development of training and awareness raising 
materials. 
Fiscal instruments  are not discussed in deta il in this Impact Assessment as they have already 
been subject to a separate analysis51 and a possible further initia tive is subject to ongoing 
work of DG TAXUD. However, it should be noted that these could be cost-efficient 
instruments, implemented both at the EU and at  national level. For example, tax exemptions 
can drive the demand for energy efficient products , buildings and services. However, because 
of the low energy price elasti cities for final consumers (esp ecially househol ds/SMEs) the 
impacts would be more prominent at supply side . For example, the tax on the various types of 
fuel would be very important when an in vestment decision for new energy generation 
capacities are made (e.g. district  heating company that has to choose between heavy oil and 
natural gas). Furthermore, there are fiscal inst ruments at Member States level that discourage 
energy efficiency (such as higher property ta xes for good performing buildings) that should be 
carefully looked and phased out, if in creased energy efficiency is sought. 
The types of policy instruments are not mutually exclusive . In energy efficiency, often, 
the best approach is a combination of indi vidual instruments that complement each 
other and create a comprehensive policy mix. Therefore, following the analyses of the 
options, a preferred policy portfolio of best options can be identified in each sector. 
                                                 
51 Costs and benefits related to the use of ta x incentives for energy-efficient appliances, 
http://ec.europa.eu/taxation_customs/common/publications/studies/index_en.htm. 
 
EN 30   EN The table below provides an overview of  the sectors and options analyzed.  
options for the residential  and services sectors  
1 Option A1: No additional EU action (BAU) 
2 Option A2: Voluntary commitments with commercial entities 
 Option A3: Regulatory instruments: 
3 Option A3a: Additional stringent legal obligations for buildings 
4 Option A3b: Additional stringent legal obligations for products  
 Option A4: Financial instruments 
5 Option A4a: Technical assistan ce and risk sharing facilities 
6 Option A4b: Energy efficiency conditi onality on the spending of public funds 
7 Option A5: Awareness  
8 Option A6: Training 
options for the transport sector  
 No options discussed as specific measures fo r the sector are discussed/analyzed in the 
forthcoming Transport White Paper and its IA 
options for the industry sector  
1 Option C1:No additional EU action (BAU) 
2 Option C2:Establish voluntary commitments with industries 
3 Option C3: Regulatory measures supporting the existing climate related legal tools 
4 Option C4: Financial instruments 
5 Option C5: Awareness and training 
options for the energy sector  
1 Option D1: No additional EU action (BAU) 
2 Option D2: Voluntary commitments 
 Option D3: Regulatory instruments: 
3 Option D3a: Generation efficiency 
4 Option D3b: Higher energy recovery from generation 
5 Option D3c: Increased role of energy regulators 
6 Option D3d: Energy companies' role in energy savings of their clients 
7 Option D4: Financial instruments 
8 Option D5: Awareness and training (focusing on t he promotion of energy services companies) 
 
 
EN 31   EN 6. ANALYSIS OF IMPACT AND COMPARING THE OPTIONS  
The depth of the analysis is proportionate to the foreseen general political nature of the 
Energy Efficiency Plan itself.  
For modelling purposes the busines s-as-usual scenario the PRIM ES model was used (Section 
3.4). It is a general equilibrium model and has certain limitations as regards energy efficiency 
(e.g. the impact of individual measures is difficu lt to be distinguished, only policies for which 
there is almost no uncertainty on how they should be implemented are taken into account 
which is not the case for many of the EU fram ework policies on energy efficiency). Due to 
these limitations it was also not possible to use the model for the assessment of individual 
policy options.  
To overcome these limitations, the analysis is ma inly based on case studies of similar policies 
that have been implemented at Member States level or on the result s of various academic 
studies. This allowed for qualitative, and sometimes quantitative, description of the economic, social and environmental impact to be made.  
Based on the description of the impact, qual itative evaluation of how the options will 
contribute to the realization of the policy objectives, as set in Section 4 and also described in 
the businesses-as-usual option for each sector, is  made using the following evaluation criteria:  
• effectiveness – the extent to which options achieve the objectives of the proposal 
• efficiency – the extent to which objectives can be achieved for a given level of resources/at 
least cost (cost-effectiveness). 
• coherence – the extent to which options are cohere nt with the overarching objectives of 
EU policy, and the extent to which they are lik ely to limit trade-offs across the economic, 
social, and environmental domain. 
• respect of subsidiarity/proportionality 
The following symbols were used to describe  the results of evaluation of efficiency, 
effectiveness and overall assessment: 
'=' baseline or equivalent to the baseline  
'+' to '+++' low to high improve ment compared to the baseline 
'-' worsening compared to the baseline  
For subsidiarity/proportionality principles the following symbols are used: respected R
, or 
not respected NR. 
For coherence with the other policies the following symbols used: coherent C , or not 
coherent NC. 
As regards the business-as-usual option under  each sector, only the main developments, 
achievements and needs are presented. Detailed analysis is available in Annex III and IV. 
 
EN 32   EN 6.1. Residential and tertiary sectors 
Option A1: No additional EU acti on (business as usual scenario) 
Several directives and initiatives that are al ready part of the EEAP address the existing 
failures in the two sectors. The main tools used are: original and recast  Energy performance of 
buildings Directive (2002/91/ EC and 2010/31/EU), origin al and recast Ecodesign 
(2005/32/EC and 2009/125/EC) and its implemen ting measures; original and recast Energy 
labelling Directive (92/75/EEC and 2010/125/EC ) and its implementing measures, Intelligent-
Energy Europe Programme, and green public procurement (mostly voluntary). In addition, the Energy Services Directive (2006/32/EC), the E ffort Sharing Decision, the ETS, and the draft 
Regulation on Construction produc ts have indirect impact on the energy performance of 
buildings. Certain financial (e.g. Cohesion and so cial policy funds, Intelligent Energy Europe 
programme and European Local Energy Assist ance – ELENA facility, IFIs funding), and 
fiscal measures (e.g. possibiliti es for VAT reduced rates and state aid exemptions in certain 
cases and conditions) are also at di sposal at EU level. All these have contributed to a different 
extent in decreasing the existing challenges  but according to PRIMES 2009 projections the 
final energy consumption of the sector will increase slightly in 2020 leaving the remaining 
potential unachieved. 
However, the current policy framework does not  oblige and cannot oblig e property owners to 
renovate their buildings or cons umers to change their applianc es. It also cannot require a 
Member State to provide financial and fiscal assistance and training to  buildings workforce. 
Therefore, the main challenge as outlined in  the EEAP assessment is that renovation rates 
remain low (about 1.2% p.a. in 2008), and are fu rther hampered by the crisis, and the impact 
of the recast EPBD cannot be fully realized. The same applies to some appliances – the 
products that offer the biggest energy-saving potential (e.g. boilers, air-conditioning) have the longest lifetimes (15 years and above), and he nce the lowest replacement rates which reduces 
the impact of minimum requirements. Also although the unit efficiency of products is 
growing, the energy use of househol ds is still increasing, due to  purchases of more and bigger 
appliances. Furthermore, in order to harness the full saving potential it is important to address 
not only the efficiency of indivi dual products but also ensure th at these products  are correctly 
integrated into efficient systems, be it 'sma rt metering/smart grids' or automatic energy 
management in buildings. 
The final actors (e.g. EU citizens, public author ities and service compan ies) in both sectors 
face similar market and regulatory failures that limit the uptake of energy savings measures, namely: high initial costs, incomplete market s (lack of trained staff, infrastructure, 
information), lack of information/ knowledge / motivation, split incentives (landlord-tenant 
problem), poor enforcement of legislation, and rebound effect. 
A number of stakeholders have also called for more ambitious policy mix for the two sectors 
with measures on financing, training, awarene ss strongly supported. Some  stakeholders also 
recognize that there are numerous funding opport unities in place, but  that these seem 
confusing and difficult to access which discouraged  participation. Furthermore, there has been 
a strong demand for more activ e engagement of the public s ector than the one currently 
envisaged in the EPBD recast and th e new Energy Labelling Directive. 
The EEAP 2006 has already set the legal fram ework by pushing for the implementation and 
revision of key legislation in these sectors. In  order to trigger the renovation process of the 
building sector, additional measures are needed . With respect to the resulting training needs 
 
EN 33   EN for the buildings workforce, the EEAP 2006 ha d already proposed a vocational initiative on 
energy efficiency, which has not been implemented yet. 
Based on the PRIMES projections  for the two sectors, the anal ysis of the potentials, and 
the EEAP and NEEAPs assessments (as discusse d in sections 3.1 and 3.3) it is evident 
that further measures are needed to be de veloped to tackle the remaining barriers and 
to stimulate increased uptake of energy impr ovements of existing building stock (e.g. 
increase of renovation rates for existing buildin gs) and of energy efficient appliances and 
innovative technologies (e.g. incr ease of replacement rates of  inefficiency appliances).  
Option A2: Voluntary commitment s with commercial entities 
Possible approaches:  Voluntary agreements combined w ith a support mechanism can provide 
a framework for stimulating an increased rate of renovation in the exis ting building stock or 
increased uptake of energy efficient applianc es. These are possible, for example, between 
public authorities and housing associations, or commercial entities  (e.g. chains of 
supermarkets), or organizations of specifi c economic activity (e.g. organization of the 
architects, of construction sector). The Co mmission can facilitate  these by providing 
recognition, support for the preparation of agreemen ts and for the exchange of best practice.  
Impact:  This option can contribute to achieving  the policy objectives. The results of the 
'SABO energy challenge' in Sweden52 reveal that average en ergy use has dropped from 149 
kWh/m2 in 2007 to 144 kWh/m2 in 2008, which amounts to an average saving of 2.3%.  
As regards costs, voluntary agreements and s upport mechanisms are not costly processes. In 
financial terms, the GreenBuilding Programme53 had a simple payback period of between 3-6 
months and the initial investme nts triggered were between 6-7 times the programme costs. 
Extrapolated over the lifetime of  the measures implemented, the cost to promote these savings 
amounts to less than 0.1 €cent/kWh of prim ary energy saved. The measure would be 
particularly cost effective even though the need for upfront investment remains. However, the 
voluntary approach would imply increased costs for monitoring. The social impact (besides 
employment) would include improved living co nditions and well being for occupants: for 
every € 1 invested on energy efficienc y, € 0.42 are saved in health expenses54. This will 
reduce the levels of fuel poverty, increase well being and strengthen the cohesion.  
Option A3: Regulatory instruments 
Option A3a: Additional stringen t legal obligations for buildings 
Possible approaches:  In addition to the current legal framework for the improvement of 
energy performance of buildings  and appliances some very stringent measures could be 
proposed to harness the remaining potential and ensure that major ener gy related renovations 
                                                 
52 SABO members committed in February 2008 to reduce their energy consumption by 20% between 
2007 until 2016. So far, 99 companies, owning ove r 370, 000 apartments have taken the challenge. 
SABO assists them through platform activities for provision of information and exchange of best 
practices. 
53 The evaluation of the GreenBuilding Programme is available at the GreenBuilding website at 
http://re.jrc.ec.europa. eu/energyefficiency/greenbuilding/index.htm . Similar results have also been 
achieved with the GreenLight and Motor Challenge programmes. 
54 CECODHAS figures, see the Copenhagen Offer above – this specific for well being not yet 
substantiated / source not identified. 
 
EN 34   EN and replacement of energy-using products are bei ng carried out. These, for example, could be 
in the form of obligation for improvement of the energy performance of buildings when they 
are sold or rented out, or mapping and manda tory renovation of the poorest segment of the 
building stock. Another possibility is to introdu ce a binding target(s) on Member States, for 
example, to reach certain renovation rates, to  renovate certain percentage of their building 
stock, or to renovate all poor  performing public buildings. 
Impact:  Some quantifications of the possible impli cations are available for the various best 
practices or possibilities presented above. For ex ample, calculations show  that if there is a 
requirement that properties that are of the tw o poorest performance classes cannot be newly 
rented out until their performance is improved, the additional to the baseline primary energy savings in 2020 could be  about 33 Mtoe with CO
2 emission reduction of 65 Mt. The CO 2 
mitigation costs is in the range of -300 to 100 €/t CO 2 and 375 000 jobs will be created and 
maintained55. Similar prohibition on sale would lead to savings of 13 Mtoe in 2020, 26 Mt 
CO 2 emission reductions, with CO 2 mitigation costs in the range of -300 to 100 €/t CO 2 and 
150 000 jobs created an maintained56.  
In the US, city of Berkley, has introduced a ce rtain energy and water efficiency requirements 
to be met when residences above USD 50,000 ar e sold, transferred from one proprietor to 
another, or renovated57. This has reduced residential energy consumption by over 13% 
between 2000 and 2005 and allowed households to save up to USD 450 per year on their energy bills. 
Thus it can be concluded that a strong regul atory approach will bring significant energy 
savings and CO
2 emission reductions .  
The renovations should be cost-e ffective. However, the appro ach might require that some 
renovations are carried out outsi de of the normal refurbishment cycle which could lead to 
suboptimal investments. In many cases low in come people live in po or energy performing 
buildings. Therefore, requirements on their re novation could be additional burden for their 
limited budgets. Similarly such ob ligations could be significan t burden for associations 
owning a number of buildings, especi ally those offering social housing. 
Option A3b: Additional stringent legal obligations for products  
It is expected that by mid-2011 requirements w ill cover almost the entirety of electricity 
consumption and a large part of energy consump tion in the household sect or but there remains 
a substantial saving potential in the tertiary sector whic h could be addressed through 
mandatory minimum efficiency requirements, fo r e.g. in big air-conditioning and ventilation 
systems. It can be also considered to in troduce labelling and/or minimum efficiency 
requirements for certain construc tion materials, for e.g. windows. A third element to consider 
is a regular tightening of require ment to ensure that the effici ency of products is constantly 
improving.  
                                                 
55 Ecorys, Ecofys and BioIntelligence. 2010. Study to Support the Impact Assessment for the EU Energy 
Saving Action Plan. The calculation assumes that th e measure will increase the renovation rates with 
0.5% compared to the baseline (i.e. from 1.7% to 2.3%) 
56 Ibid 55. The calculation assumes that the measure will increase the renovation ra te with 0.2% compared 
to the baseline (i.e. from 1.7% to 1.9%) 
57 RECO (Residential Energy Conservation Ordinance, 1979, adopted in 1987). Source: 
http://www.c40cities.org/docs/casestudies /buildings/berkeley_standards.pdf 
 
EN 35   EN Impact:  Some indication of the impact can be give n by the estimated effects of the Ecodesign 
and Energy Labelling Directives. For example, completing the current requirements limiting the power consumption of appliances in th e standby mode with requirements for devices 
operating in networks (mainly electronic equipmen t) is estimated to result in additional 60 
TWh saved per year in 2020 (or 11.5 Mtoe  primary energy savings), leading to CO
2 emissions 
reduction of 24 Mt of CO 2 and €9.6 bn saved on energy bills annually by 202058. The costs are 
considered negligible. Such approach has proved to be effective but it has certain limits related to the size and complexity of the products - for e.g. large systems su ch as ventilation in 
commercial and public buildings are often cust om-made and therefore difficult to address 
solely through product-level requirements. 
The measures proposed under this option are to be set in cost-effect ive manner. There are 
certain administrative costs but based on the experience with the already adopted 
implementing measures under the Ecodesign Direc tive they are relatively small (requirements 
can usually be met with readily-available technol ogy therefore there is no incremental cost or 
it is minimal. The cost for assessing conformity  with the requirements is in the order of 1000-
2000 euro per model [not product!]. For market surv eillance authorities to this cost must be 
added the cost of purchasing the tested product.  The impacts on jobs cr eation are insignificant 
but there will be considerable reductions on th e energy bill. The annual energy savings due to 
the 11 implementing measures adopted so fa r will be in the order of €50 bn. The annual 
energy savings in 2020 are expected to be 83 Mtoe and the CO
2 emissions will be reduced by 
147 Mt annually. The administrative and other asso ciated costs are considered negligible due 
to the cost-effectiveness of the measures. No problems related to affordability of consumer 
products were observed in  the implementation of the first Ecodesign measures and thus there 
is no reason to expect negative impa cts from further similar measures. 
Option A4: Financial instruments 
Most of energy efficiency investments are good business opportunities. Expected energy 
savings and additional benefits in terms of ec onomic activity and social improvements are the 
basis of sound returns.  
Nevertheless, the initial investment costs, but  also lack of knowledge  on the possibilities and 
capacity to implement the projects are considerable  barriers. For example, it is calculated that 
the energy related investments to increase the average EU renovation rate from 1.2% pre-
crises level (or 1.7% over 2010-2020) to 3% in 2020 are about €29 bn annually over the 2010-2020 period and the total cost for investments (including non-ener gy related investments, e.g. 
painting, scaffolding) are about €43 bn annuall y. The average annual savings over the same 
period are also considerable: €16 bn - and would continue to deliver over much longer periods 
(i.e. the lifetime of the measure implemented). The benefits of such increase of renovations 
would be considerable: primary ener gy savings of 38 to 60 Mtoe in 2020, CO
2 emission 
reductions of 77 Mt in 2020, and direct jobs creation of 300 00059. 
                                                 
58 For the conversion from TWh to Mtoe, the primary energy is obtained by first multiplying final 
electricity use by 2.82 for calculating the gross ener gy needed to generate that quantity of electricity 
(source: Eurostat 2008), and then dividing it by 11.63 to obtain the Mtoe equivalent (source: Statistical 
Pocketbook 2010). Monetary savings are estimated at 0.16€/kWh, CO2 savings at 0.43 kg CO2/kWh 
59 Background study for this IA. The conversion factor tCO2 to ktoe is based on PRIMES EE scenario for 
2020. 38 Mtoe is for increased renovation rates but at the current minimum performance levels. 60 
Mtoe refers to increased renovation rate s to cost-effective performance levels. 
 
EN 36   EN To realize these benefits it is important that funding is mobili zed. The EU disposes of limited 
funds and they should be targeted to the sector s where the EU intervention is essential. As 
majority of the industrial and energy generation companies falls under ETS or are able to gain 
access to the capital (see sections 6.3 and 6.4) it is suggested that buildings, urban mobility 
and small-scale sustainable energy generation projects are tackled. The projects in these 
sectors are numerous, small and decentralized in nature, often responsibility of people who 
are not well aware of the various possibilities and ways to structure the proj ects financially. 
This results in the paradox th at even if a funding is ava ilable it is not fully used.  
The solution to achieve the energy efficiency obj ectives in the EU needs of the development 
and implementation of specific financial instrume nts. The most relevant instruments must be 
devised to tackle programmes rather than single projects, and be result-oriented rather than 
resource-oriented. The limited financial resources at  EU level could be particularly targeted at 
providing technical support to Me mber States and local authorities to structure such 
instruments and at providing funds for the es tablishment of risk sharing and guarantee 
facilities. Providing such assist ance would ensure high levera ge factors for the EU funds 
spent. For further developing this approach, the Commission could rely on the success of 
ELENA facility and on the experience gained with  the other technical assistance initiatives 
(e.g. JASPERS) or the targeted support provide d in the context of the Cohesion policy 
instruments JESSICA and JEREMIE.  
Another aspect as regards financing is the role of public authorities in stimulating the market 
transformation towards more e fficiency products, buildings a nd services. Due to the large 
volume of public spending it coul d be a strong driver for higher market uptake and the 
development of the required skills. For exam ple, public procurement accounts for around 17% 
of EU GDP, or roughly €2,000 bn and public build ings are about 12% of the EU build up 
area. It is also irrational from  taxpayers' point of view that when public money are spent, the 
cost effective energy efficiency possibili ties are not properly taken into account. 
Another possibility for freeing up of financial re sources would be the elimination of harmful 
subsidies for fossil fuels and their redirect ion towards energy efficiency improvements. 
Member States can also take advantage of re venues from auctioning allowances under Art. 
10.3.b of the EU emission trading directive. All these could be an important source of 
financing of energy efficiency pr ojects but due to their political nature will not be analyzed in 
this IA.  
Due to the similarity of the general approach es as regards financing for buildings, urban 
mobility and small-scale sustainable energy genera tion projects, and to avoid repetition in the 
text the possible options are di scussed under this Section and ar e only cross-referred in the 
others.  
Option A4a: Technical assistance  and risk sharing facilities  
Possible approach:  To tackle the challenges of high upf ront costs and the lack of knowledge 
and lack of sufficient technical and financial kn owledge (in project financ ing) in the times of 
economic crisis, the EU support in the form of subventions should not be  a priority (except 
through structural funds). The focused shoul d be on making project bankable through risk 
sharing mechanism that tackles the limited liquidity faced by the market so as to create leverage and attract investment s (in particular from ESCOs a nd private sector). The creation 
of leverage but also allowing for public privat e partnerships would al leviate the deficit on 
national and local public authorities in time of bu dget crisis. Furthermore, to enable financing, 
 
EN 37   EN cross dissemination of best practice at EU level, and good quality of project technical 
assistance should also be supported.  
The successful model of the ELENA technical a ssistance facility could be scaled up in 
dimension and scope, graduall y involving national and regi onal investment banks and 
development agencies in its operation. Funds for this could, for instance, come from the 
technical assistance allocated to Member States under the Cohesion policy funds. Based upon 
the experience with ELENA, it can be estimated that minimum leverage factors of 20 are easily accepted by major IFIs, and make sense in the long run. This technical assistance could 
also be used to structure guara ntee or revolving funds that would particularly work to support 
the energy services companies. It would allow access to financing for local authorities to carry out sustainable energy investme nt projects without increasi ng their debt volumes through 
leverage of financing by the private sector. 
On top of ELENA-like facilities, complementary facilities such as risk-sharing facilities for 
innovative technologies, guarantees, debt an d equity instruments for energy service 
companies and PPP schemes would be necessary albeit with lower leverage factors.  
Furthermore, as most of the competences wi th energy efficiency relevance are local, new 
approaches creating incentives for managing aut horities to allocate resources coming from EU 
funds in energy efficiency must be devised. Th e creation and operation of revolving funds in 
co-operation between various administrations and even private investors look a reasonable 
solution. Another possibility is  to target part of the f unds towards local authorities. 
The approach of combination of technical assi stance and risk-sharing facilities are currently 
being piloted by using the EEPR unspent funds. Th e relevant Regulation has been agreed but 
now the concrete mechanisms are being developed.  
Impact:  The impact would depend on the structure of  the technical and risk-sharing facilities 
and market needs. Recently, a market study for EEPR unspent funds was in itiated in order to 
support the setting of the concrete mechanisms but  no information is available yet. Still, based 
on the experience with ELENA it can be conc luded that each €1 public funds towards 
ELENA-like facilities for energy ef ficiency could mobilize at least € 20 in investments. A 
replication effect of 5 to 1 does seem realis tic with a 2020 horizon. In  terms of job creation, 
the workload-intensive nature of  local energy efficiency would result in direct and induced 
job creation between 60 000 and 300 000 high-sk ill permanent non-delocalisable posts. CO
2 
emission reductions would be between 24 and 120 Mt per year. As a subsequent effect, the 
know-how acquired by authoritie s and financers during the implementation phase will 
gradually reduce the need for technical assistance, in such a way that it will become integral part of energy efficiency programmes at lowe r costs. The measures can also, if properly 
targeted, lead to lifting households out of  energy poverty (e.g. lo w energy demand of a 
building means low heating bill) and thus lim iting the burden of energy subsides for the 
public budget. 
Option A4b: Energy efficiency condition ality on the spending of public funds 
Possible approaches:  Various possibilities should be e xplored in detail upon the development 
of concrete proposals. For example, public proc urement of efficiency products (e.g. based on 
their energy performance class in the Energy Label)  or buildings (e.g. ba sed on least-life cycle 
 
EN 38   EN cost analysis) could be obligatory above certain  thresholds, to be es tablished after careful 
analysis60. As this is a sensitive area for Member States any EU level measures would have to 
be flexible and cost-effective.  This should be easy for central  government institutions, but can 
probably only be voluntary for the lower levels of state. Also conditionality could be introduced on the improvement of energy performance of build ings (e.g. based on the energy 
performance certificate or energy audit) when public funds are spend for renovation projects.  
At present, a number of nationa l or local authorities in the EU apply some form of green 
public procurement. A study of seven best perf orming EU Member States showed that about 
half of the signed contract in 2006/2007 were ‘green’, where ‘green’ means compliant with 
endorsed common core GPP criteria for ten product groups and services
61. Some product 
groups, i.e. overall electricity, o ffice IT and furniture attain the highest scores in 2006/2007; 
while construction, gardening and transport the lowest.  
Furthermore, some banks, including EBRD, re quire certain improvement of the energy 
performance recorded in an Energy Perfor mance Certificate as a condition for providing 
public funding for construction or re novation of buildings projects. 
Impact:  The approach would lead to  purchasing of more efficien t appliances and buildings 
which would ultimately lead to energy savings . However, the approach would have much 
more profound impact. The increased orders c ould lead to economies of scale and would 
support the establishment of a market for energy efficient pr oducts, buildings and services. 
This would lead to further energy savings and job creation. 
There are a number of examples on energy efficient procurement from across Europe. 21 
Member states had already adopted the GPP National Action Plans where they set the GPP 
targets for central, regional or local levels as  well identified the pr iority "green" product 
groups and services. Although the GPP is voluntary instrument most of th e countries put it as 
a mandatory political obligation. Study from 2010 which compares national GPP schemes and 
criteria in 10 countries demonstrated that pr acticing of GPP in these countries is very high 
with their own developed GPP criteria (for example Belgium has 90 GPP criteria, Denmark 
47, Netherlands 52, UK 58 etc)62. All of these criteria were de veloped with the intention of 
reducing the impact of public procurement on the environment. Depending on the product 
group, most of these criteria set requ irements on energy use, among others.  
Requirements on public procurement could also  pose budgetary and ad ministrative burden. 
The use of energy efficiency criteria in procur ement procedures can lead to higher direct 
purchasing costs, it can result in an average de crease of overall costs for public organisations. 
This is because the higher purchasing prices  of efficient goods ar e compensated by lower 
operating costs. Analysis of va rious ‘green’ goods and services63 show that the cost-reduction 
                                                 
60 For more information on the possible approaches refer to: Harnessing the Power of the Public Purse: 
Final report from the European PROST SAVE funded study on energy efficiency  in the public sector 
61 PricewaterhouseCoopers, Significan t and Ecofys. January 2009. Collection of statistical information on 
Green Public Procurement in the EU: Report on da ta collection results. Countries studied: Austria, 
Denmark, Finland, Germany, the Netherlands, Sweden and the United Kingdom. Product groups and 
services: Cleaning products & services, construction,  electricity, catering & f ood, gardening, office IT 
Equipment, paper, textiles, transport, furniture 
62 DG ENV. draft. Assessment and Comparison of National Green and Sustainable Public Procurement 
Criteria and Underlying Schemes. The study covers Austria, Belgium, Denmark, Finland, France, 
Germany, the Netherlands, Sweden, and the United Kingdom and Norway. 
63 Ibid. 61  
 
EN 39   EN (when using Life Cycle costing appr oach) is on average around 1% and CO 2 is on average 
decreased by 25% when using GPP. It is inte resting that two product groups are highlighted 
as leading to significant cost reductions through  GPP: construction and transport. However, 
when also taking into account  the product group that have the relatively higher CO 2 
emissions, construction and electricity are the proposed to be the product groups to focus on. 
Option A5: Awareness  
The awareness and commitment of owners/te nants, building professionals and public 
authorities is paramount to the success of regul atory approaches for efficient energy solutions 
in buildings. While awareness on the contributio n of buildings and equipment to the energy 
and climate change challenge is increasing, th ere are still serious ga ps in knowledge about 
energy efficiency measures64, which limit their concrete implementation on the ground. 
Possible approaches:  most behavioural and capacity-build ing programmes are best developed 
at local, regional or national level,  and not at EU level, as a caref ul analysis of the particular 
target groups and context for their behaviour, is cr ucial. However, the EU could play a role in 
increasing the effectiveness of such programmes65 and in stimulating the adaptation and 
replication of successful schemes across Europe. Such action could target owners/tenants or 
the different actors along the build ing value chain. It coul d take the form of (i) an exchange of 
best practices; (ii) the dissemination of guidelines and informative tools; (iii) the 
reinforcement of the EU-funded BUILD UP platform66; (iv) the strenghtening of market 
surveillance activities to raise consumers' c onfidence; (v) requirements for the provision of 
improved billing and metering information; and (v i) the assistance in the design and launch of 
effective programmes. 
Impact:  Stimulating behavioural cha nge programmes could be an  effective option for the 
EU67. In the United States, changed patterns of behaviours were estimated to reduce 
household energy use by 22%68, through changes in conservati on, lifestyle, awareness, low-
cost actions, and small investments. In Europe, a literature review69 concluded that changing 
energy-related behaviour can potentially save nearly 20% of the energy consumption. In 
addition, on the construction side, whole-system  design approaches could reduce energy use 
by as much as 70%, far more than what can be achieved though attentio n to individual design 
or technical solutions.  
The IEE project,  Eco n'Home70 service advised over 850 households in six European 
countries. On average, the savings achieved in  terms of total energy consumption were 9% 
per household (140 kWh electricity  savings and 0.8 tonne of CO 2 reduction per household). 
An interesting lesson learnt was that even im plementing a "small" measure (e.g. switching to 
                                                 
64 World Business Council for Sustainable Development, "Energy efficiency in buildings, business 
realities and opportunities", October 2007 
http://www.wbcsd.org/DocRoot/qUjY7w54vY 1KncL32OVQ/EEB-Fact s-and-tren ds.pdf 
65 A recent analysis of 41 programme examples show ed that less than 20% of these programmes used any 
form of market segmentation. Bruel, R. (2007) BEHAVE. Meta-evaluation of communicative 
programmes aimed at consumers.  eceee summer study , 2007, 1827-1834. 
66 www.buildup.eu   
67 Allcott, H. & Mullainathan, S. (2010) Behavior and energy policy. Science, 327, 1204-1205. 
68 Laitner, J. A., Ehrhardt -Martinez, K. & McKinney, V. (2009) Ex amining the scale of the behaviour 
energy efficiency continuum. eceee summer study, 2009, 217-223. 
69 IEE supported BEHAVE project 
70 http://www.econhome.net  
 
EN 40   EN low energy light bulbs) could trigger a behavioural change to wards more complex and costly 
measures. The cost effectiveness of the Eco n'Home  service was assessed at 0.15 € per kWh 
saved.  
Another European initiative71 brought together municipalitie s from all new Member States 
with support from organisations in Germany is already bearing direct fruit. For instance, 
municipalities are using the PassivHaus Pl anning Package developed in Germany for 
estimation of scenarios of costs versus energy savings.  
Option A6: Training 
The persistent lack of qualifie d building workforce (e.g. technici ans, installers, craftsmen, 
energy managers, engineers, architects, audi tors) is recognised as  one of the main non-
technological and non-financial barriers to th e application of optimal energy renovations or 
installation of appliances in buildings. Better initial  and continuing  education and training in 
energy efficiency matters is necessary not only to support the EU energy efficiency goals, but 
also to provide thousands of quality jobs across Europe, especially in SMEs.  
Possible approaches:  The EU could facilitate continuous cross-country exchanges of best 
practices on how to embed energy efficiency and renewable energy systems in mainstream 
curricula as well as on how to establish long-term  continuing education and training structure 
for the construction sector. The EU could support  the creation of a platform for the exchange 
of best practices and support th e development of the needed tools (e.g. framework for the 
voluntary agreements, monitoring tools, develo pment of national qua lification roadmaps, 
education and training cu rricula, accreditation and certification schemes) 
Impact: A recent ex-ante evaluation study72 of the skill needs show ed that in 2015, about  
2.5 million workers will be engaged in the im provement of energy efficiency and the 
integration of renewable ener gy for the buildings sector onl y. For low and medium skills 
groups alone, it is estimated that 1.25 million wo rkers need to be trained over the next 10 
years, or over 125, 000 annually. The figure refers  to jobs being created or retained in the 
building sector. Therefore, meeting the training a nd retraining needs would be crucial. This is 
also in line with the conclusi on of the recent CEDEFOP study73. 
According to the study, there is currently no robu st assessment of the impact of qualifying the 
workforce on the energy savings. With a cons ervative estimate that 10% of the energy saving 
potential in the building sector is dependant on the building wo rkforce being fully skilled, the 
loss of energy savings in case of an unski lled workforce would amount to 78Mt of CO 2 or 
€33.7 bn. 
The ex-ante study estimates the costs of traini ng needs related to ener gy efficiency at €1.4 bn 
for low and medium skills workers (compared to the €33.7 bn costs of inaction). Therefore 
there will be initial cost for Member Stat es but then this will create new business 
opportunities and lead to social  benefits in medium and l ong-term. The EU contribution 
would be much lower and would be oriented on ly at creating the right framework. Such an 
                                                 
71 IEE supported INTENSE project, review of 2,000 references in 37 articles and books 
72  Ecorys. 2010. Ex-ante evaluation of the initiative on the building workforce training and qualification in 
the field of energy efficiency and renewable ener gy within the Intelligent Energy Europe Programme 
(Study prepared for DG ENER) 
73  CEDEFOP. 2010. Skills for green jobs. http ://www.cedefop.europa.eu/EN/Files/3057_en.pdf 
 
EN 41   EN initiate would have positive empl oyment aspects from the point of view that it would allow 
for better qualified and matching to th e new legal environment workforce.  
Comparing the options for the re sidential and services sectors 
The following table summarizes the outcomes of the analysis for each policy option.  
Evaluation criteria
 
 
Policy options  
Subsidiarity/ 
proportionality 
Effectiveness 
Efficiency 
Coherence 
OVERALL 
Option A1: No additional EU action (BAU) R = = C = 
Option A2: Voluntary commitments with commercial entities R + ++ C + 
Option A3a: Additional stringent legal obligations for buildings NR ++ + NC - 
Option A3b: Additional stringent legal obligations for products  R ++ +++ C +++ 
Option A4a: Technical assistan ce and risk sharing facilities R +++ +++ C +++ 
Option A4b: Energy efficiency conditionality on the spending of 
public funds R +++ ++ C ++ 
Option A5: Awareness  R + ++ C ++ 
Option A6: Training R ++ ++ C ++ 
From the point of view of subsidiarity and proportionality  only the option to set additional 
stringent legal obligations for buildings (Option A3a)  fails the test because of its strong 
interventionist approach into an area that  is of national and even local competence. The 
setting up of an additional string ent legal obligations for products (Option B3b)  is 
justified on the grounds that it a ddresses products that are traded  at the internal market and 
intervention at MS level would crea te market distortions. The options of voluntary 
approach, financial instruments and awareness and training (Options A2, A4a, A4b, A5 
and A6) respect the two principles because they do not aim to interact dir ectly with the target 
group but to provide enabling framework and support the MS and various stakeholders.  The 
inclusion of energy efficiency condition ality on the spending of public funds (Option A4b) 
is also in line with the princi ples as it would counter the pro liferation of national and local 
approaches on public procurement that could present a barrier to competition. 
Majority of the proposed options are  fully coherent  with the existing EU energy, climate and 
social policies. In particular, the options on financing, awareness and training (A4a, A4b, 
A5 and A6) will be an important tool to support  the uptake of the curren t legislative measures 
on buildings, products and incr eased share of renewables. The support for training (Option 
A6) would also contribute to Copenhagen pr ocess on vocational edu cation and training, and 
would complement the activities of the Euro pean Social Fund and the Lifelong Learning 
Programme.  
However, setting of an additional st ringent legal obligations for buildings (Option A3a)  is 
not coherent  with the recently achieved compromise for the recast EPBD and would require 
its amendment. Frequent changes to the legal framework would delay th eir implementation at 
Member States and local level and would increas e the risk perception for investors and will be 
counterproductive. Furthermore, t he inclusion of energy effici ency conditionality on the 
 
EN 42   EN spending of public funds (Option A4b)  is not fully in line  with the existing voluntary 
approach adopted in two Public Procurement Directives74 and applied in the Commission’s 
Green public procurement initiative and the r ecast Energy Labelling Directive. However, 
there are already precedents of  mandatory public procurement for efficiency goods at EU 
level such as the Clean Vehicles Directive75 and the Energy Star Agreement which could be 
explored further.  
As regards effectiveness  most of the options, with  the notable exception of A1 (BAU) , would 
pave the way towards reaching the objectives of increased renovation rates of buildings and 
higher uptake of efficient products.  
Mobilizing financing  (Option A4a) would bridge an im portant gap fro the realization of 
energy savings measures and thus would unl ock significant energy savings, i.e. have high 
effectiveness (+++) . Better targeting of a public spending  (Option A4b) would have 
considerable direct (i.e. higher uptake on effi cient goods and buildings) and indirect (i.e. 
market transformation) impact and that is why its effectiveness is evaluated as high (+++) . 
Option A3a which implies additional very stringent and detailed provisions on the rate  and 
timing of renovations at EU level that is rated as moderately effective (++) as it would 
certainly bring some energy savings, however, is  not acceptable from subsidiarity point of 
view.  
The option on training (A6) would support the realization of the current policy framework 
and have the potential for unlea shing the remaining potential. However, the EU value added 
in the approach is limited and thus their effectiveness are medium (++) . Further 
strengthening of the legal framework on products (Option A3b) woul d lead to more 
savings due to the limitations as regards the comple xity and size of pr oducts and hence its 
effectiveness is evaluated also as medium (++) . 
Measures of awareness (Option A5) are ranked ' low' effective (+)  as at EU level the 
possibilities for making wide ranging cam paigns are rather limited. Options B2 on voluntary 
agreements also scores low (+)  as regards its effectiveness for reaching the above mentioned 
objectives. This is because there is a lack of sanction mechanisms at EU level and thus there 
is high uncertainty regarding the realization of the commitments. 
As regards efficiency , any voluntary commitments  (Option A2) would focus on realizing 
cost-effective measures but the large number of small individual entities that could be part of 
the commitment could bring up the costs for monitoring, i.e. also medium  efficiency  (++). 
The efficiency of setting additional products requirements  (Option A3b)  is high (+++)  
because the method implies that only cost-effective requirements  are set. Also the existing 
experience shows that the admini strative costs are insignifican t compared to the resulting 
savings and increased volumes of sales . Similarly, highly efficient (+++) is the mobilization 
of financing using technical assistance  (Option A4a) because it en sure high leverage for the 
public funds. Applying energy efficiency conditiona lity to the spending of the public funds 
(Option A4b) is marked as medium efficient (++)  as it would require increased costs at the 
time of purchase and higher administrati ve burden but lower operation costs.  
                                                 
74 Directive 2004/18/EC and Directive 2004/17/EC which permit for certain environmental and social 
considerations to be taken into account in the procurement process but does not makes them a 
mandatory element. 
75 Directive 2009/33/EC 
 
EN 43   EN Measures on awareness  (Option A5) would only focus on the improvement of programmes, 
the launch (not the full implementation) of ne w schemes, and the dissemination of knowledge. 
Their efficiency is therefore considered as medium (++) . Similarly, measures  on training  
(Option A6) are also cost effective but woul d still require public sp ending that would be 
retuned only indirectly from increased reno vation activities and ta x revenues, i.e. its 
efficiency is medium (++) .  
Further stringent legal requirements on buildings (Option  A3a) implies high initial 
investments which in general should pay duri ng the lifetime or shorter of the measures 
realized and hence are cost-effective but the a pproach could lead to some renovations being 
made outside of the normal renovation cycle a nd would also have disproportionately high 
impact on the poor segment of the population or  the housing associati ons. Therefore, the 
efficiency of the option is evaluated as low (+) . 
 
EN 44   EN 6.2. Transport sector 
As mentioned, the transport sector has consider able share in final energy use, is with the 
highest projected growth amongst all final energy use sectors, and there is considerable cost-
effective savings potential untappe d. Therefore, it is essential that it is addressed in any EU 
policy document related to energy efficiency. Howe ver, the concrete possibilities are analyzed 
in great detail in the Impact Assessment for th e forthcoming Transport Write Paper. In order 
to provide consistent approach towards the sect or no further discussion of individual options 
for the sector is provided in this IA. 
 
EN 45   EN 6.3. Industry sector 
Option C1: No additional EU acti on (business as usual scenario) 
There are several directives and initiatives/actions which address, together with other policy 
instruments, the existing failures concerning ener gy efficiency in general and in the industry 
sector in particular. The ETS aims at decreas ing greenhouse gas emissions of energy-intensive 
installations by setting a cap-and-trade system. The covered installations represent close to 
half of Europe’s emissions of CO 2, and include the power and manufacturing (industrial) 
sector. In the third trading pe riod starting in 2013 practically the entirety of the industrial 
sector will be covered by the ETS although a sign ificant percentage of in stallations exposed to 
'carbon leakage' will be receiving emission allocatio ns for free. The sectors judged at risk of 
carbon leakage are estimated to account fo r around 77% of the to tal emissions from 
manufacturing industry76. Additionally due to relatively hi gh transaction costs of the ETS 
combustion installations below 20MW are exclude d from the system. There is more than 
6000 of such installations in  the EU representing about 2.5% of CO2 emissions of 
installations covered by the ETS.  
The forthcoming Industrial Emissions Directive77 aims at setting requirements for industrial 
emissions and the energy-efficiency of large i ndustrial installations, bu t the requirements on 
the latter element are not mandatory if the installations are within the ETS. 
The main barriers that prevent the full uptake of  the remaining energy savings potential in the 
industry sector are the insuffici ent price signals and asymmetric  information, particularly for 
SMEs. In addition, SMEs face challenges such as lack of financial resources and human capital to implement the projects. 
Different views were given by stakeholders on which instruments should be used (ranging 
from very interventionist to provision of in formation only). However,  prevailing majority 
asked for measures to increase the awareness for the SMEs.  
It is important to address this sector as th e EEAP 2006 did not put forward any direct priority 
measures. However it already addressed the need to raise the awareness of industrial 
companies inter alia  by promoting energy management sche mes, developing training toolkits; 
and promoting projects under th e Intelligent Energy Europe Pr ogramme, notably targeting the 
efficient use of energy in industrial SMEs. 
Based on the PRIMES projections  for the sector, the analysis of the potentials, and the 
EEAP and NEEAPs assessments  (as discussed in sections 3.1 and 3.3) it can be 
concluded that the full cost-effective potent ial would not be uptaken  with the existing 
policy framework, even though the industry is making the biggest progress from all 
sectors as regards energy efficiency, and it  therefore should be complemented with 
additional elements. Any fu rther measures should comp lement the existing policy 
framework.  
                                                
 
76 These sectors include about 100 categories, ranging from mining and manufacturing of commodities 
(aluminium, copper etc), food (e.g . fats, alcohol, fish), pharmaceuti cals to the manufacturing of high 
value-added goods (machine tools, engines, domestic appliances etc). Source: http://eur-
lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:001:0010:0018:EN:PDF  and 
http://ec.europa.eu/environment/climat/emission/pdf/faq.pdf  
77 2010/75/EU 
 
EN 46   EN Option C2: Establish voluntar y commitments with industries 
Possible approaches : Voluntary agreements (VA) or Co rporate Agreements with specific 
industrial sectors could be developed at nationa l or EU level. These should be seen as a 
supportive tool for the industry to comply w ith the targets set by the ETS, but without 
distorting the EU ETS.  
Impact:  The existing experience with VA with indus try shows good results in some countries 
(e.g. Netherlands, Finland, Denmark, Germany). For example, Denmark and the Netherlands 
have met their targets, respectively 4.6% abso lute emissions reducti on compared to 1988 and 
22.3% efficiency improvement during the period 1989-2000. Australia and Canada have 
considerably reduced their greenhouse gas emissions (by 14% with the Australia’s 
Greenhouse Challenge) with completely voluntar y programmes. At EU  level, a voluntary 
agreement with the plastic converters i ndustry (with consumption of around 14 TWh, 
comprised of about 50,000 SMEs) is currently be ing prepared in the context of an IEE 
project78. It is estimated that about 14% of the energy consumption of the subsector can be 
reduced over the period 2010 - 2020 in  a cost-effective manner.  
The majority of the agreements are limited only to several countries and so far there was no 
successful voluntary agreement with  industry at EU level. There is also the problem of 'free 
riders' who profit from the benefits of the ag reements but would have  achieved the savings 
anyway.  
It is difficult to determine the potential impact as it depends on many factors, including the 
stringency of the target and the energy consump tion of the sectors includ ed. If, for instance, it 
is assumed that the voluntary agreement leads to 2% efficiency improvements per year, includes all industries a nd is implemented from 2012 then the final energy saving will be 26 
Mtoe in 2020 (or 38 Mtoe primary energy sa vings in 2020) and a reduction of 61 Mt CO
2 in 
202079. 
As regards the economic impact, the agreement itself is not a costly process. However, 
incentives that are used to draw sectors into the VA such as  providing knowledge 
infrastructure and energy tax exemption will lead to higher costs. There are also costs of monitoring. The cost of a VA depends upon its structure and incentives. As an indication: 
during the period 1989-2000 the costs for public bodies that organised the VA (MJA) in the 
Netherlands amounted to €159m. A la rge share of the budget went to
 subsidies devoted to 
raising awareness and the transfer of knowledge. If this exampl e is extrapolated  to the EU the 
cost for saving 2% of energy consumption is approximately €1.4 bn over the total period. 
                                                 
78 IEE project EUPLASTVOLTAGE 'European Plastics Converting Industry Voluntary Long-Term 
Agreement on Energy Efficiency' www.plasticsconverters.eu   
79 Ecorys, Ecofys and BioIntelligence. 2010. Study to Support the Impact Assessment for the EU Energy 
Saving Action Plan. This assumes that the VA are comp lemented by the 'threat', in case of failure, of 
regulatory instruments or energy/greenhouse-gas taxes and a strong negotiation position of the 
authorities. It is assumed that VA results in 8% savings in 2020, with foreseen final EU-27 energy 
demand from industry of 333 Mtoe in 2020. 
 
EN 47   EN Voluntary agreements in industry will also ha ve positive impact on job creation. Using the 
ACEEE Energy stimulus jobs calculator the net employment effect of 2% energy 
consumption reduction is estimated to be 80 000 by 202080. 
Option C3: Regulatory measures supporting the existing climate related legal tools 
Possible approaches: Several regulatory measures could be adopted by the Commission that 
would support the exis ting climate change requirements (under for example ETS and IPPC, 
where relevant) without contradicting to the ba sic principles of the current framework.  
Industry uses standardized and custom-made e quipment. Some of the standardized one is 
already tackled by some implementing measur es (e.g. electric motors) under the Ecodesign 
Directive. However, it appears that there rema ins a considerable cost-effective energy-saving 
potential for a number of products used in industr ial process, such as large pumps or furnaces. 
This approach could not be applied to the cu stom-made equipment (such as machine tools) 
but they could be addressed with a generic en ergy-efficiency requirement, which would then 
be operationalised by the European Standardisation Organisations.  
In general, it is believed, th at industries are introducing energy savings measures as this is a 
measure to reduce the costs for production. Stil l, for several industrie s (e.g. highly-processed 
goods) energy is a minor cost factor therefore market  failures persist. Hen ce, in addition to the 
setting of product-specific requirements anothe r measure that could mobilize the uptake of 
energy savings potential could be the setting of  certain requirements for energy management 
(mandatory independent energy audits an d a mandatory energy manger) for all energy 
consumers above a certain threshold, notably la rge companies. For SMEs information (net 
based energy audit calculators) and assistan ce (audits, training) manage their energy 
consumption could be envisaged.  
Thirdly, product-specific requirements could be complemented with requirements at system 
level, as the way products are fitted within la rger systems has a major impact on the energy 
efficiency. In this case the setting specific requir ements at EU level could be difficult, as local 
conditions matter a lot, therefore a cooperation  with European Standardisation Organisation 
could be envisaged. 
Impact:  As an example it is estimated that se tting minimum efficien cy requirements on 
industrial furnaces could bring 100 TWh savings annually by 2020 (or 24 Mtoe primary energy savings) which is comparable to the annual electricity consumption of Belgium
81. The 
CO 2 emissions reduction is 43 Mt. The setting of  product-specific requirements is highly cost-
effective as significant improvements can us ually be achieved with readily-available 
technology (e.g. the fitting of industrial motors w ith variable speed drives). The forthcoming 
Regulation 640/2009 under the Ecodesign directiv e limiting the energy consumption of 
electric motors is expected to result by 2020 in annual electricity sa vings of 140 TWh (or 34 
Mtoe primary energy savings), and 60 Mt CO 2 emissions reduction. The costs are negligible. 
There are positive examples from the application of energy management programmes. For 
example, in Bulgaria, since 2004, all energy consumers with annual consumption above 3,000 
                                                 
80 Ecorys, Ecofys and BioIntelligence. 2010. Study to Support the Impact Assessment for the EU Energy 
Saving Action Plan. Based on an energy price of €10/GJ final and a simple payback time for energy-
efficiency measures of five years 
81 Ibid footnote 58 
 
EN 48   EN MWh are subjects to obligatory energy efficien cy studies/audits. The decrease of about 10% 
of energy intensity82 of industry since then can be attrib uted partly to such policy measures, 
although it was primarily driven by an increase in the price of energy. In Sweden the government encouraged 100 of the most energy intensive companies to apply energy management scheme
83. It was expected that their managers  are most aware of their energy use 
and of cost reduction opportuni ties. Still, new investment  opportunities, reducing annual 
electricity consumption by 1 TWh, were identified at a total investment of SEK 1 bn. These 
investments were profitable, and in total less th an 20% of the initial investments necessary to 
get the same amount of electricity from  new wind- or nucl ear power plants.  
The cost-effectiveness of putting in place ener gy-management schemes depends on the profile 
of the manufacturer (size, en ergy-intensity), and therefore an y such requirements would need 
to be carefully calibrated. It has the benef it of creating locally-supplied jobs/services. The 
added value of requirements at 'system level' depends on whether they are able to provide a 
common framework which would assist manufactu rers, while providing them with sufficient 
flexibility in implementing specific solutions. 
Option C4: Financial instruments 
Possible approaches:  At present the EU ETS ensures that industrial companies with a net heat 
excess of 20 MW that are not subject to the Leakage Directive could profit from realizing 
energy savings and that the least cost possibiliti es are used. Investment  and/or operating state 
aid is possible for the realization of energy sa vings under strict conditi ons and some EU funds 
are provided to mobilize financing. Therefore,  providing further fina ncing should not be a 
priority and the option is ex cluded from further analysis. 
Option C5: Awareness and training (in particular for SMEs) 
Surveys among enterprises, in pa rticular among SMEs, confirm that  important market barriers 
hinder the realisation of cost -effective energy saving options84. One important barrier remains 
the lack of information and e xpertise about cost-effective en ergy saving possibilities and the 
high transaction costs related to the gather ing of information. Awareness and training 
measures are thus essential to ensure that the available potential is actually converted into savings, that efficient equipmen t is bought and used correctly, that voluntary agreements are 
implemented effectively.  
Possible approaches:  the EU could support awareness and training activities consisting of the 
following measures: (i) empowering multipliers across Europe, such as enterprise associations, to act as one-stop-shops for businesses
85; (ii) disseminating tools and guidebooks 
tailored to the different i ndustry sectors (e.g. online benc hmarking tools to help SME's 
compare their energy consumption with their peer s' and take appropriate actions); and (iii) 
                                                 
82 DG ENER. EU energy trends to 2030, 2009 update 
83 Swedish Energy Agency. 2009. Energy Management Systems – a tool for the continuous improvement 
of energy performance 
84 lately e.g. a survey undertaken by chambers of commerce of 12 Memb er States in the framework of the 
IEE supported project CHANGE, "Energy Efficiency  in SMEs: Success Factors and Obstacles", 2009, 
see www.eurochambres.eu/change 
85 building on EU projects such as CHANGE 
 
EN 49   EN ensuring European-wide offer of high quality training to energy managers, building on the 
successful "European Energy Manager" training programme86. 
All three measures are "gate openers", enabli ng and empowering enterpri ses through targeted 
information and know-how to sa ve energy and costs, often co mbined with improvements of 
quality of the product or the working conditions. The first and second measures are even more 
important for SMEs, where little to no internal capacity and expertise exists. The EU intervention should be limited to supporting the establishment and kicking-off of the 
measures. The Intelligent Energy Europe Progra mme (IEE) as well as the Enterprise Europe 
Network (EEN) could play a leading role to di sseminate the measures and to maximise the 
outreach. The EU portal for tools and guidebooks already offers a large collection of material 
to be disseminated
87.) 
Impact:  Full-scale quantification of the impact of such measures is challenging: Voluntary by 
nature, based on attractive and solid experience, it could be expected that the impact would be 
good. There is long lasting experi ence with industrial  energy audit programmes in some EU 
Member States, Finland in particular, has showed the effectiveness of energy audits88. 
For example, the evaluation of the "Eur opean Energy Manager (EUREM)" training 
programme started in Germany and, supported by IEE, and currently operating in 12 EU 
countries, shows many more saving  options with short payback periods than expected and a 
high implementation rate. 30% of the energy savi ng measures identified have a payback time 
of less than two years and 80% of  the measures are implemented89. EUREM also shows a 
snowball effect: First, certified energy managers  are not stopping after the realisation of one 
measure, but continue. Second, the courses c ontinue and are expanded to more regions.  The 
EUREM.NET project, which transf erred the training course to nine more countries, showed 
that € 0.7 million IEE-funding could trigger investments of about € 90 million in the 
participating companies. This demonstrates that successfully implemented the leverage effect of soft measures such as tr aining can be very high. It is estimated that triggering the 
implementation of the proposed measures across the Member States would require € 80-100 million over the next years.  
                                                
 
86 www.energymanager.eu 
87 www.iee-library.eu   
88 IEE supported project CHANGE 
http://www.motiva.fi/en/areas_of_op eration/energy_auditing/overview_of_energy_auditing_in_finland 
89 IEE supported project EUREM.NET brochure (2009) "Proud to save", p. 9. 
 
EN 50   EN Comparing the options for the industry sector 
The following table summarizes the outcomes of the analysis for each policy option.  
Evaluation criteria
 
 
Policy options  
Subsidiarity/ 
proportionality 
Effectiveness 
Efficiency 
Coherence 
OVERALL 
Option C1: No additional EU action (BAU) 
 R = = C = 
Option C2: Establish voluntary commitments with industries 
 R + ++ C + 
Option C3: Regulatory measures supporting the existing 
climate related legal tools R ++ 
or + ++ 
or + C ++ 
Option C4: Financial instruments 
 - - - - - 
Option C5: Awareness and training 
 R ++ ++ C ++ 
 
The principles of subsidiarity and proportionality  are respected for all options discussed. 
The options on voluntary commitments, financin g and awareness and training  (Options 
C2, and C5) provide for the EU to set a broa d framework and establis h supporting structures. 
As regards measures that relate to products that are traded at the EU internal market  
(Option C3) there is a strong case for setting pr oduct requirements at EU level in order to 
avoid the proliferation of national re quirements. However, in the case of energy 
management and system requirements  (also mentioned in Op tion C3) the Commission 
would have to propose broad frames  without being too prescriptive. 
All options, but Option C4, proposed are coherent  with the current framework. These 
solutions proposed target the i ndustrial sector parts of which is already covered by the ETS. 
However, the measures outlined are complementary to the ETS a nd reinforce it, leaving a lot 
of flexibility to manufacturers and offering a ssistance to them in implementing certain 
solutions.  
As regards the effectiveness , for the voluntary approach (Option C2) there is a lack of 
strong dissuasive tool that would limits the effectiveness (i.e. to low, +) of the approach 
towards reaching the objectives. The product-specific requirements  envisaged under Option 
C3 are usually highly effective but as only a part of products used in industry can be 
addressed in practice its effectiveness is evaluated as medium (++) . The effectiveness of 
energy management and 'system' requirements  also discussed under Option C3  is 
estimated to be lower due to the complexity of setting an effective policy framework, i.e. low 
(+). Due to the non-binding nature of awareness and training initiatives  (Option C5), the 
fact that the information needs to be regularly  updated and the limited financing at EU level 
the efficiency of the approach is medium. 
From the point of efficiency , the options on voluntary agreements and training and awareness 
(C2 and C5) are rated as moderately efficient (++) because the EU costs for their 
implementation are relatively low, the investments will be paid back and social and 
 
EN 51   EN environmental impact could be positive. The product-specific requirements  (Option C3) are 
efficient as they do not require the setting-up of supporting administrativ e structures (except 
for market surveillance) and usually can be  met with readily-ava ilable technology, i.e. 
medium efficiency (++) . Energy management and system re quirements do require the setting 
up of often complex administrative soluti ons and therefore their efficiency is low (+) . 
 
EN 52   EN 6.4. Energy sector  
Option D1: No additional EU acti on (business as usual scenario) 
As mentioned in Section 4.1, three important areas need to be di scussed as regards the energy 
sector: 1) increased efficiency  of energy production through increased generation efficiency 
and utilization of recoverable energy; 2) mo re efficient operation of networks; and 3) 
increased engagement of the sector  in end-user en ergy efficiency.  
Transformation efficiency  is already incentivized by the EU  internal energy market (IEM) 
and the EU emissions trading scheme (ETS). Both frameworks provide price signals to 
reward higher efficiency in energy production, via cost sa vings from reduced fuel and 
emissions expenses. They have recently been strengthened90 and it is expected that they will 
in the future trigger more investment in energy efficiency. The ne w Industrial Emissions 
Directive (IED) would also have  some impact, however, Member States have the possibility 
to choose not to apply energy efficiency require ments for units that ar e covered by the ETS, 
thus significantly limiting its importance for the efficiency of energy generation. 
In spite of these policy developments, at pres ent, price incentives coming from the energy and 
carbon markets are either insufficient or not su itable to overcome the barriers to improving 
the efficiency of the generation capacity. This is  especially the case for the retrofitting or the 
retiring of old and inefficient generation pl ants. The higher operation costs stemming from 
higher fuel input and higher CO 2 emission of old power or heat  generation plants are still 
lower than the needed investment cost combin ed with the lost operating income during the 
refurbishment or retiring process. This leaves important energy saving potentials un-
exploited.  As a hypothetical case, if Europe were to retrofit its coal plants aged between 20-
30 years to improve their effici ency by only 3.5 percentage poi nts, re-power its gas fired 
boilers of the same age and ensure that all ne w coal plants are constructed according to BAT 
by 2020, the annual power sector emissions would fall by 29 Mt, equivalent to 12% of the EU 
ETS emissions reduction required by 2020.  
Some of the remaining potential will be tapp ed from 2013 onwards in phase III of the EU 
emissions trading scheme due to, inter alia, th e tighter, gradually decreasing cap on emissions, 
the use of benchmarking based on the most em ission efficient techno logies and financing 
mechanisms for energy efficiency. However, becau se of the market based approach that it 
entails it is not possible to estimate how ma ny companies will take advantage of the new 
energy efficiency possibilities.  
The residual heat produced in  energy generation, e.g. the recoverable energy , can be used in 
combined heat and power (CHP) units and distri ct heating and/or cool ing solutions (DHC). 
The CHP potential is addressed at EU level by the CHP-Directive and the ETS. The impact of 
the CHP-Directive has so far been limited and th e share of CHP today is  close to the levels 
already reached in the 1990s. This is because the Directive lacks strong instruments for the 
CHP promotion. Current experience shows that the ETS alone is not sufficient to overcome 
regulatory and market barriers encountered by cogeneration, and have created additional 
obstacles, especially for new and expanding coge neration operators. There is no evidence that 
the ETS will provide strong market signals for an increased penetration of CHP.  
                                                 
90 The third IEM package will be applied from March 2011 while the revised ETS-scheme introducing a 
tighter emission cap and commending higher CO2 allowance prices will start operation in 2013. 
 
EN 53   EN At present, there is no EU framework that  specifically promotes DHC. The current EU 
measures are scattered in a large number of di fferent instruments, such as the recast EPBD, 
the RES Directive, the ESD and State aid guid elines, but do not amount  to a coherent and 
targeted framework. The increased deployment of  this highly resource efficient energy supply 
solution is hindered by systemic and complex economic, as well as regulatory barriers, that needs to be tackled with a more inte grated and comprehensive approach.  
Energy companies' role  in reducing the energy consumption of their clients  is covered in 
the Energy Services Directive. However the provisions are in many respects unclear; they 
allow to different interpretations and so far prov ed to be ineffective in  bringing about a more 
developed energy services markets throughout the EU. The split incentives market failure 
reduces the willingness of energy companies to real ize energy savings at their clients. Energy 
companies dispose of important information a bout the energy consumpti on of their clients. 
This commercial information could make them  an important actor in the energy savings 
market but they do not have stimuli to do so as this would mean less sales and revenues for 
them. 
The majority of the stakeholders  consulted were in favour of further measures for the energy 
utilities, including stricter requirement on th em to invest and provide energy efficiency 
services. Energy utilities were also encouraged  by certain stakeholders to invest in Best 
Available Technique (BAT) in their own installa tions. A lot of the stakeholders were of the 
opinion that cogeneration and district heating have to be further promoted.  
The EEAP pushed forward with the implementati on of the CHP Directive, the establishment 
of a legal framework to promote the connection of decentralized genera tion (Third legislative 
package) and the development of Best Av ailable Techniques for Energy Efficiency. 
Based on the PRIMES projections  for the two sectors, the analysis of potentials and 
challenges, and the EEAP and NEEAPs assessmen ts (as discussed in sections 3.1 and 3.3) 
it can be concluded that the focus should be placed on measures that lead to increased 
retrofit or replacement of the existing en ergy generation capacities, increased use of 
recoverable energy, via cogeneration and distri ct heating, and ensure better engagement 
of energy utilities in energy savings at the demand side. Actions to prioritize increased network efficiency should also be considered. It is essential that any proposed measures 
are in line and support the existing policy mix. 
Option D2: Voluntary commitments  
Possible approaches: Energy utilities could be engaged on a voluntary basis to improve the 
efficiency of generation, transformation and al so to support their consumers for carrying out 
energy savings measures. Comm ission could provide recogniti on and promotion of their 
efforts, support for the dissemination of best  practices and also develop guidelines and 
voluntary standards that would support the utilitie s in their commitment. Member States could 
also offer preferential fiscal conditions and financial support, where appropriate, easier access 
to environmental permits and technical expertise.  
Impact:  Certainly some cost-effective energy efficiency improvements will be steered by such 
voluntary agreements. Limitation to this approach is the lack of strong in centives at EU level 
to encourage their participation or threat of further legal requirements if the targets are not 
met. However, the sector is easy to cover an d engage: the number of  major energy companies 
in the EU is small, they have high media expos ure, and could gain trust in their clients and 
 
EN 54   EN new ones by promoting a positive image. Transp arency and accountability  would be essential 
for success of such agreements. The administ rative costs would be low as the companies 
would have the information and resources, and the monitoring of their efforts can be done by 
the civil society. 
Option D3: Regulatory instruments 
Option D3a: Generation efficiency 
Possible approaches:  For new generation capacity, regulat ion could be proposed to ensure 
that only capacities that satisfy the performan ce requirements of at least the best available 
technologies (BAT) are built. This can be done by mandating the benchmarking of new 
electricity and heat producti on facilities against BAT re quirements by the competent 
authorities. As regards existing generation capaciti es, the competent authorities could be made 
responsible to periodically check permit conditions against BAT requirements and take 
measures, if they find that the energy efficiency of a facility significan tly lags behind certain 
benchmarks. Such obligations could also require that when heat load exists, the new capacities should also incl ude co-generation units. 
Impact:  Such requirements could bring some energy use and CO
2 emissions reductions91. For 
example, if 50% of the total fossil-fuel capac ity is to be replaced /built until 2020 assuming an 
average of 10% higher energy efficiency in 2020,  total savings of 43 Mt oe in 2020 and 86 Mt 
CO 2 emissions reduction could be achieved. Due to the higher efficiency of the power plants 
and to rising energy prices, the extra investment  in new power plants is assumed to be cost-
effective. However, the time for return of the investments would depend significantly on the 
primary energy and CO 2 emissions permit prices and under the current conditions it may not 
be short enough for the energy companies. The ad ministrative costs are es timated to be low as 
well as the employment impact.  
Option D3b: Higher energy recovery from gen eration (i.e. promotion of cogeneration -
CHP, and district heating and/or cooling - DHC ) 
Possible approach:  Strengthened regulatory framework c ould support the use of residual heat 
produced in energy generation processes. It should  be designed to increase the uptake of the 
potential and limit the remaining administrative barriers (e.g. preventing the access to heat and electricity networks) and s upporting the investments in the infrastructure. This framework 
could include requirements for integrated energy demand and infrastructure planning by 
national, regional or local authorities, and coul d contain specific timelines and targets and for 
the development of CHP and DH C at the EU and/or nationa l level. Furthermore, the 
possibility for introduction of specific support schemes and funding schemes, as well as 
market incentives, such as the extension of an  energy saving obligations schemes on CHP and 
DHC could be studied.  
Impact: As regards cogeneration, additional economi c potential is around 350 TWh electricity 
output from cogeneration. Assumi ng that this economic potential  is gradually realized by 
2020, this could lead to additional 15-20 Mtoe /p.a. primary energy savings in 2020 and 35-50 
Mt/p.a. avoided CO
2 emissions. Depending on the stringency of the forthcoming policy 
                                                 
91 Ecorys, Ecofys and BioIntelligence. 2010. Study to Support the Impact Assessment for the EU Energy 
Saving Action Plan 
 
EN 55   EN instruments and the availability  of strong price signals possibl y from 20% to 80% of this 
potential could be tapped.  
DHC provides the same comfort temperature to buildings with less primary energy 
consumption, and thus CO 2 emissions, than individual hea ting and cooling. Gas-CHP based 
district heating typically uses three times less primary energy than an individual building heat-
only-boiler; a coal-based district heating system will save at least half of the coal needed for 
the same temperature level with individual coal -fired boiler. District heating with waste 
incineration represents al most zero primary energy consumption. The higher energy 
efficiency of DHC translates into lower CO 2 and other emissions than the conventional 
sources. For example, at present th e electric heating leads to 850 g CO 2 being emitted per 
kWh92. In Helsinki, due to the di strict heating system, one kW h heat leads to only 272 g CO 2 
emissions.  
The increase of the CHP and DHC would require  significant initial investments. These in 
general are cost-effectiv e and justified on the grounds of the overall benefits to the society but 
would still be a barrier and possibilities for th eir leverage should be studied prior to any 
concrete proposal in this di rection. The measures would aim at lower administrative burden 
for these installations than at present. The job creation impact woul d not be significant. 
For example, the cost of installing modern energy efficient district  heating and cooling 
systems based on cogeneration can have a rela tively short pay-back time (6-8 years). A 
medium-sized district heating system based on  a state-of-the-art biomass CHP Plant (with 
installed capacity of 6-7 MWth, 1-2 MWel) requires an investment of about €7-8 mln 
investment for the plant and €15-16 mln for the grid. However, the 8-10-year timeframe may 
still be considered too long fo r certain low-capitalized commercia l operators on the liberalized 
markets, and may represent a barrier in the absence of a ppropriate regulatory framework 
bringing about adequate economic signals as regards the true so cietal value of this highly 
efficient and environmentally fr iendly end-use supply solution.  
Option D3c: Increased role of energy regulators  
The Third Internal Gas and Electricity Market Package provides for a general objective of the 
national regulatory authorities (NRAs) to pr omote energy efficiency as regards gas and 
electricity 93. No specific tasks or powers are however given to the NRAs to implement this 
general objective. As regards h eat network, a large portion of Europe’s existing district 
heating system is old and in need of efficien cy improving investment but there are no specific 
tasks conferred to NRAs in this regard. 
It could be proposed that NRAs  should have a clear specific legal obligation to take due 
regard of energy efficiency in their deci sions and monitoring of the management and 
                                                 
92 Average emissions calculated on the EU overall fuel  mix and 40% efficiency of thermal production. 
93 See Article 36(d) of Directive 2009/72/EC. In add ition, concerning public service obligations, both the 
Gas Directive 2009/73/EC in Article 3(8) and Article  3 (11) of the Electricity Directive 2009/72/EC 
provide for Member States or the regulatory au thority to "recommend" that electricity and gas 
undertakings should optimise the use of gas and electricity for example by providing energy 
management services, developing innovative pricing formulas or introducing intelligent metering 
systems or smart grids where appropriate. The provisions do not however create any legal obligation on 
the Member States nor the NRAs. Regarding TSOs, the Gas Directive only states in Article 13 and Article 12 in the Electricity Directive that the TS Os need to operate the network as an efficient 
transmission. For the distribution, Article 25 in both  the Gas Directive and Elect ricity stipulates that 
each DSO shall take due regard to energy efficiency for their opera tion of the distribution network. 
 
EN 56   EN operation of the infrastructure. Energy regulator could be granted specific tasks and powers to 
give priority considerations to energy efficiency in their network regulations, tariffs setting, giving appropriate allowances for cost recovery and investments. This would include ensuring 
that all possibilities for cost-effective improveme nts of the grid are implemented. In addition, 
smart grids and intelligent metering systems that ensure peak sh aping possibilities and 
optimize the energy demand and supply should be promoted.  
Impact:  With the increased role of NRAs genera tion and transmission losses can be reduced 
and smart grids promoted. In addition, higher ta riffs could create price signals for energy 
efficiency improvements. 
Losses in electricity tran smission/distribution amount to 6.4% in 2008 for EU27 
(corresponding to 17.6 Mtoe and 36 Mt CO
2eq). If energy regulators could reduce these losses 
by 5% this would lead to energy sa vings of only 0.9 Mtoe (1.8 Mt CO 2eq) in 2020. 
However, more significantly more savings are possible through innovative, e.g. smart grid 
technologies and smart meters. It is estimated that Smart Grids could reduce almost 9% of the EU annual primary energy consumption of the energy sector in 2020 which equals to 37.2 
Mtoe or 148 TWh of electricity
94. Based on average prices fo r electricity in 2010, this 
amounts almost €7.5 bn/year of saving. Furthermore, the Smart 202095 study calculated that 
Smart Grids could reduce global emissions by 15%. The EPRI 200896 expects Smart Grids to 
reduce nearly 9% of the total domestic carbon emissions generated by the U.S. power sector 
in 2006.  
This option could lead to higher transmission or distribution tariffs. The tariffs could be 
increased only until certain leve l as very high energy prices  would have negative social 
impacts and slow down the economy. Still, depe nding on the level, this could incentivize 
energy generation, manufacturing industry and some  companies in the tertiary sector to 
implement energy efficiency improvements. Because  of the relatively low price elasticities in 
the residential sector small increase in energy pr ices would not lead to significant investments 
in energy savings measures. The increased ro le of energy regulators would also require 
certain increase of staff numbers but it is unlikely that this would be a significant burden to their budgets. 
Option D3d: Energy companies' role in energy savings of their clients 
Possible approaches: A requirement could be set on certain  energy companies to realize a 
fixed amount of energy savings at their clients in order to encourage investment in energy 
efficiency solutions.  
Several approaches are possible depending on th e level of harmonisation and the choice of 
design for the main element of the scheme. The obligation could be intr oduced as an EU-wide 
                                                
 
94 Bio Intelligence Service. Impacts of Information and Communication Technologies on Energy 
Efficiency, Final Report. September 2008. Supported by the European Commission DG INFSO. 
ftp://ftp.cordis.europa.eu/pub/fp7/ict/docs/su stainable-growth/ict4ee-final-report_en.pdf. 
95 GeSI and the climate Group. SMART 2020. Cited at: 
http://www.gesi.org/LinkClick.aspx?fileticket=tbp5WRTHUoY%3D&tabid . 
96 EPRI 2008. Electric Power Research Institute (E PRI). The green grid: Energy savings and carbon 
emissions reductions enabled by a smart grid. Pa lo Alto, California, United States: EPRI, accessed 
November 2009. 
http://www.smartgridnews.com/artman/uploads/1 /SGNR_2009_EPRI_Green_Grid_June_2008.pdf. 
 
EN 57   EN scheme or as a mandatory requirement for each Me mber State to set such scheme with certain 
minimal EU level harmonization. Some studies97 suggest that the sec ond approach could be 
more productive as nationally determined sche me could possibly better match the specific 
national circumstances. To ensure coherence w ith the EU internal energy markets certain 
elements would need to be harmonized. These fo r instance are: targeted consumption sectors 
and companies, common rules for counting the savings and their veri fication, rules for 
trading, if any. In addition, consistency of su ch a scheme with the EU emissions trading 
schemes is essential (e.g. it shall not be possible to meet the ETS obligations using tradable white certificates produced as  a result of the schemes).
 
At present, such schemes already exist in five  Member States, i.e. the UK, France, Italy, 
Denmark and the Flanders region of Belgium.  Reductions of 2.3% to  5.6% of final energy 
consumption have been realized by the energy companies concerned (typically suppliers or 
distributors) over the durati on of the various schemes98. Energy obligation schemes also exist 
in a number of USA States. Encouraged by the success stories, several Member States are 
planning the introduction of ener gy savings obligations  or to run pilots (these include 
Bulgaria, Germany, the Netherlands, Portugal, Poland, and Romania). 
Impact:  The existing schemes proved that energy savi ng obligations are an effective tool for 
realizing energy efficiency measures. When energy consumption starts to saturate the interest 
of energy companies will increasingly focus on service market. The EU framework could 
pave the way. Savings potential at EU level esti mated with a conservative savings target of 
4% of final energy consumption, based on an av erage savings targets of the current national 
schemes, would yield up to 46 Mtoe of end-en ergy savings if all end- use is counted, or 24–34 
Mtoe, if only the residential, the services and the non-energy intensive industrial sectors are 
included. A more ambitious, but still realistic, target of 6% of primary energy savings, based 
on a wider roster of eligible se ctors, would yield more ambitious  savings in the range of 109 
Mtoe in 2020. 
Evidence suggests that creating incentives to  encourage energy efficiency action by energy 
companies is very cost-effective triggering inve stments in energy efficiency in the range of 
about €1 bn in the bigger member states such as France, Italy and UK 99,100. The cost of 
compliance of the realised progr ams can be put in the range of 1 - 3 Eurocent per kWh for 
companies, while the cost for households is esti mated to be only €2.5 per fuel bill per year for 
households. 
The existing schemes create almost no extra costs for the government as they are in general 
completely financed by either energy prices or grid charges, or if certification and trading 
exist by a financial charge per certificate given101. The cost for the UK government is a 
£330,000 per year (or less than 0.3% of the budge t of the authority administering the 
scheme102), in France – approx. €700,000 per year. Ho wever, in Italy, where trading of 
                                                 
97 For example: JRC. 2009. Energy Savi ngs and Tradable White Certificates 
98 Ecorys, Ecofys and BioIntelligence. 2010. Study to Support the Impact Assessment for the EU Energy 
Saving Action Plan 
99 IEA. 2009. Progress with implementing energy efficiency policies in the G8, citing Waide & Buchner, 
2008 
100 Lees, 2007 
101 Harmelink M., Blok K. Chang M., Graus W. and S. Joosen. 2005. Mogelijkheden voor versnelling van 
energiebesparing in Nederland, Ecofys rapport in opdracht van Ministerie van Economische zaken 
102 Based on administrative cost for EEC-1 and tota l expenditure on energy efficiency for EEC-2. 
 
EN 58   EN savings certificate is an essential part of the sy stem, the costs are slightly higher, i.e. in the 
range of €1 mln per year103. Overall, total administrative costs of around 0.002 Eurocent per 
kWh can be assumed which has a negligible imp act on power prices (Harmelink et al., 2005).  
Such scheme(s) would also open up new opportuniti es for businesses in an emerging markets, 
creating a range of high-skilled jobs, and secu ring accelerated access take-up of innovations. 
It would incentivize the development of a market for energy efficiency services.  
Some of the possible drawbacks of such sc heme(s) could include negative redistribution 
impact, double counting, additionally. The EU has an important role in  drawing the minimum 
design requirements that would tackle these de ficiencies. Requirement to implement a given 
proportion of the energy efficiency improvement  measures for 'energy poor' households (e.g. 
50% in the UK) would ensure that there is a positive direct redistribution impact for low 
income households. Effective verification and monitoring mechanisms would guarantee that 
additional savings to busine ss as usual are achieved an d no double counting occurs. The 
proper selection of participa ting sectors would avoid possibl e overlaps with existing 
instruments, such as ETS104, the green certificates or i ndustrial permitting procedures.  
Option D4: Financial instruments 
Possible approaches:  At present the EU ETS ensures that  energy generation companies with a 
net heat excess of 20 MW could profit from rea lizing energy savings and that the least cost 
possibilities are used. Investment and/or opera ting state aid is possible for energy savings, 
renewable energy sources and for cogeneration under strict conditions. Also, in many cases, 
these companies could leverage funding on commercial basis. Additional EU support for companies above 20 MW would contradict the ex isting policies and woul d divert funds from 
the sectors that face much bigger challenges in  finding the initial investments (e.g. buildings, 
urban mobility). However, support for small di stributed generation and sustainable urban 
generation projects could be pr ovided. The modalities of this support were already discussed 
under Option A4a (Technical assist ance and risk sharing faciliti es, page 36) and, to avoid 
repetition, would not be discus sed again. As a resu lt, the option is excluded from further 
analysis. 
Option D5: Awareness and training (in particular focusing on the promotion of energy 
services companies) 
The practice shows that most of the energy companies are well aware and trained of the 
possibilities for energy efficiency improvements.  Therefore, financing at EU level of such 
projects does not seem good investment of taxp ayers' money. The situ ation is completely 
different for the final consumers who in many ca ses are not well aware a bout the possibilities 
but this aspect has been tackle d under Sections 6.1 (R esidential and services  sectors) and 6.3 
(Industry sector). It could also be strongl y promoted by the energy companies if energy 
obligation (Option E3d) is imposed on them. 
Specific subsector that would require additional support in terms of information, guidelines, 
exchange of best practices is the one of the energy services companies (ESCOs). ESCOs 
                                                
 
103 JRC. 2009. Energy Saving Oblig ations And White Certificates 
104 The possible negative effects on carbon and green cer tificate markets of such a scheme if coupled with 
trading of savings certificates (w hite certificates) were analyzed in details in NERA Economic 
Consulting. 2005. Interactions of the EU ET S with Green And White  Certificate Schemes 
 
EN 59   EN deliver energy efficiency improvement measures in  a user's facility a nd accept some degree of 
financial risk by tidying part or all of thei r payment on the achievement of savings. These 
companies could serve as an important interloc utor between the energy utilities (even some 
utilities are developing ESCOs subs idiaries) and the end-users.  
Possible approaches:  Despite the potential for energy se rvices the market development of 
such services is still poor. Considering the sign ificant heterogeneity of market situation within 
EU-27, the EU value added is in supporting capacity building and defini ng clear EU energy 
efficiency services concept and approaches. 
The EU could define clearer common definitions  and possible harmonized approaches such as 
pan-European standard model processes fo r e.g. the selection, the procurement, the 
development or the verification and measuremen t of energy savings. This would ensure the 
delivery of higher quality serv ices in Europe and it would avoid confusion and ease the 
transfer of best practices acr oss Europe. The EU could also support the creation of specific 
national (or regional) business suppo rt structures in the field of energy efficiency services. In 
addition the EU could promote the setting up of  local project support en tities (e.g. “one stop 
shop”)  that could offer a wide range of services in  order to assist project owners implement 
energy savings in their buildings.  
Impact:  Energy efficiency services have a great role to play in helping the market tap into the 
large reservoir of energy savi ngs potential. So far, the pub lic sector is where energy 
performance contracts have been the most used. For example, the city of Berlin in partnership 
with Berlin Energy Agency has used energy performance contracting since 1996. As a result 
so far over 1300 public buildings have been upgrad ed, delivering carbon reductions of nearly 
68 kt/a and cost savings of about €10,5 millions or 26% of the baseline energy cost of the 
buildings involved105. Furthermore, the IEE project “C learSupport” has shown that the 
concept of Project Support Facili ties is relevant for bridging the gap that exists between 
building owners and financing sources. The project  established facilities to assist municipal 
and residential building owners in 5 new MS, with more than 200 renovation projects being 
identified. 
The European market potential for ESCOs has i ndeed been estimated to be at least €5-10 bn 
per annum and €25 bn in the long-term. The annual amount of energy savings that could be achieved through energy efficiency  services is estimated to re present 10 to 30% of the overall 
energy savings potential in Europe
106. As regards the distribution of the costs and benefits 
over time for the different parties of the contract , at the initial stage until the investment is 
paid back the owner of the renovated building will only profit from better comfort levels but 
not from reduced energy bills. The ESCO will ha ve to make the initial investment but will 
have a stable profit over a number of years.  
                                                 
105 C40, Best practices - Buildings - Berlin, and Good  Practice Examples: Berlin, European Energy Service 
Initiative (EESI) project co-finan ced under the IEE programme, www.energy-service-initiative.net  and 
http://www.c40cities.org/bestpracti ces/buildings/berlin_efficiency.jsp  
106 IEE supported project ChangeBest 
 
EN 60   EN Comparing the options for the energy sector 
The following table summarizes the outcomes of the analysis for each policy option.  
Evaluation criteria
 
 
Policy options 
Subsidiarity/ 
proportionality 
Effectiveness 
Efficiency 
Coherence 
OVERALL 
Option D1: No additional EU action (BAU) R = = C = 
Option D2: Voluntary commitments 
 R + ++ C + 
Option D3a: Generation efficiency 
 R   NC - 
Option D3b: Higher energy recovery from generation 
(cogeneration, district heating and cooling) R ++ ++ C ++ 
Option D3c: Increased role of energy regulators  
 R ++ ++ C ++ 
Option D3d: Energy companies' ro le in energy savings of their 
clients R +++ +++ C +++ 
Option D4: Financial instruments 
 - - - - - 
Option D5: Awareness and training (in particular focusing on 
the promotion of energy services companies) R + ++ C ++ 
All options are in line w ith the principles of subsidiarity and proportionality . Further 
regulatory requirements  (Options D3a, D3b, D3c, D3d) ar e justified on the grounds that it 
would create level playing field for all compan ies operating in the EU. Legal measures to 
address the potential for  energy recovery from generation  (option D3b),  increased role of 
energy regulators (Option D3c)  of energy companies as regards realizing savings at their 
clients (Option D3d) will set the gene ral framework but will also provide enough flexibility to 
Member States to take into account the local conditions. Promoting voluntary commitments, 
financial instruments, and awareness and training (Options D2 and D5)  also respect the 
two principles because they aim at supporting MS and various stakeholders in achieving the 
policy objectives. 
As regards coherency , all options but D3a, are fully in line and complementary to the  
existing policies. Any further legal measures addressing generation efficiency  (Option D3a) 
are clearly not coherent  with the ETS and the new IED as regards capacities covered by two 
Directives. However, with the growing number  of small generation capacities, further 
regulatory instruments to ensu re their high efficiency c ould be studied. As regards 
effectiveness  most of the options, with the notable  exception of D1 (BAU), would pave the 
way towards reaching the objecti ves for the sector. The highest savings can be expected from 
the increased role of energy co mpanies in delivering energy sa vings at demand side (Option 
D3d), i.e. high effectiveness (+++) because of  the significant remaining possibilities for 
improvement. Still, the effectiveness woul d depend on the stringency of the obligation 
schemes. Based on the calculated impacts, the effectiveness of options on higher energy 
recovery from generation and incre ased role of energy regulators  (Options D3b and D3c) 
is evaluated as medium (++) . The options on voluntary commitments and awareness and 
training  (Option D2 and D5) would be beneficial  but due to their voluntary nature and 
uncertainty of the results their effectiveness is measured as low (+) . 
 
EN 61   EN The efficiency of the option on increased role of energy companies in delivering energy 
savings at demand side  (Option D3d) is the highest (+++)  because small increase in the 
energy bills would lead to the utilization of significant cost-effective potential. The 
administrative burden is considered at insignifi cant. Measures that require significant bulky 
upfront investments in energy generation capacities or networks  (Option D3b and D3c) are 
very capital intensive and even though the investments are cost-e ffective their efficiency is 
evaluated as medium (++) . The options on voluntary agreements and training and awareness 
(D2 and D5) are rated as moderately efficient (++) because the EU costs for their 
implementation are relatively low, the investments will be paid back and social and environmental impact could be positive. 
 
EN 62   EN 7. CONCLUSION : OUTLINE OF THE PREFERRED NEW POLICY FRAMEWORK  
The analysis discussed, first, which is the best way to approach energy efficiency at EU level 
and, second, what types of EU policy instrument s are needed to support  Member States in 
realizing the savings potential.  
Three main policy alternatives were analyzed : (i) setting only targ ets and leaving it to 
Member States to develop the policy mix needed ; (ii) no targets, but developing detailed EU 
policy instruments, inviting Member States to implement and/or supplement them; (iii) comprehensive policy framework at Member States ' level (including objectives/targets), while 
EU develops policy instruments to support Member States. 
Afterwards for each energy consumption sector w ith significant potential (i.e. residential and 
tertiary, transport, industry, ener gy sectors) various types of po licy instruments were analyzed 
(i.e. voluntary, regulatory, financ ing, awareness and training) in order to identify whether 
their application at EU level w ould be needed so that the specific policy objectives for the 
sectors are met. 
Preferred general policy approach 
It is essential that a coherent policy mix is developed at Member  State level with clear, simple 
and measurable objectives. Well coordinated m easures at EU level could provide Member 
States with the needed framework on which to further develop their e fforts. The Commission 
could propose individual measures for each  sector that would provide for a common 
framework and also support Member Stat es in developing th eir own tools.  
This approach would lead towards the realization of the cost-effective potential and address 
major barriers such as policy fragmentation,  lack of political commitment and policy 
predictability. It would ensure  that the possible synergies be tween the various policies are 
explored.  
The Commission could in additi on study the best approach to  objective setting and the 
interaction of such objectives with other policy instruments (e specially climate targets). It 
could propose the establishmen t of NEEAPs as a key documen t. A strengthened and extended 
(to all supply and demand sector s) National Energy Efficiency Action Plan could give high 
political visibility to energy efficiency and drive the process. Furthermore, in order to increase 
the engagement of local authorit ies it is suggested that the su ccessful model of the Covenant 
of Mayors supported by the Commission is con tinued to keep it growing and realising its 
potential. 
Preferred way forward for the re sidential and services sectors 
The analysis concluded that to address the challe nge of insufficiently high renovation rates of 
buildings further strengthening of the current policy framework on buildi ngs (Option A3a) is 
not necessary as the recent modification (especia lly of the EPBD) is already ambitious and the 
focus should be on its implementation. This is not the case for products requirement. To 
increase the uptake of energy efficient products , the scope of Ecodesign and Energy Labelling 
could be further extended to cove r more product groups, especially  in the tertia ry sector, and 
also some construction materials (e.g. windows)  (Option A3b). This wo uld further support the 
establishment of markets for energy efficient products and materials. 
Measures on financing would be essential to tackle the serious limitations on the availability 
of liquidity for high upfront costs and also to some extent the landlord-tenant problem. The 
limited financial resources at EU level could be particularly targeted at providing technical 
 
EN 63   EN assistance to Member States and local authori ties but also provide ri sk-sharing and project 
guarantee support (Option A4a). With the economic crisis it cannot be expected that 
significant additional public funds would be dedicat ed to energy efficiency  and it is therefore 
essential that these instrument s aim at better engagement of third party financing. Measures 
that could further support the engagement of private investors are energy savings obligation 
on energy utilities (Option D3d) and support for the development of energy service companies 
(ESCOs) Option D5). Furthermore, the in troduction of certain energy efficiency 
conditionalities for public funding support is  considered benefi cial (Option A4b). 
The persistent lack of a qualified building workforce due to the unde veloped character of 
markets is recognised as one of the main non- technological and non-finan cial barriers to the 
deployment of optimal energy renovations or inst allation of appliances in buildings. It could 
be tackled at EU level by supporting Member St ates with tools (e.g. development of national 
qualification roadmaps, education and traini ng curricula, accreditation and certification 
schemes) and creation of platforms on the exchange of best practices. 
Additionally, measures on awaren ess raising (A5) and increased  voluntary engagement of 
private entities (Option A2) would be benefi cial and could be implemented, if there are 
sufficient resources as the EU has a limited role  and such measures w ould remain mainly in 
the domain of Member States or local authoritie s. From the other sect ors, Option D3d and D5 
as mentioned above, will have positive impact on energy savings in the re sidential an d tertiary 
sectors. 
Preferred way forward for the transport sector 
The projected growth in the transport sector un til 2020 is the highest of any sectors. In order 
to realize the remaining potential  support is needed for the transformation of transport towards 
more efficient vehicles, modes and usages. The growth in the sector is mainly driven by increase use and need of transport modes, the l ack of full internalization of the environmental 
costs into the energy prices an d low awareness. The high upfront  costs are also a significant 
barrier which leads to the difficulty of the real ization of the projects , especially on urban 
mobility.   
The analysis of the already adopted EU po licy documents revealed that a number of 
legislative and soft-law initiatives could be proposed, but a number of them are yet to be 
implemented. It could be expected that thes e future policies would have positive impact 
towards the sustainability of th e sector. In addition, the fort hcoming Transport White Paper 
(TWP) will give further impetus to the increas ed decarbonisation and resource efficiency of 
the sector. Therefore, no detail ed options were analyzed for the sector but some of the 
measures proposed in the TWP that are relevant  for EU energy efficiency and savings policy 
will feature also in the Energy Efficiency Plan with special focus on sustainable urban mobility and consumer behaviour.  
Preferred way forward for the industry sector 
Even though the industry has experienced th e most significant energy efficiency 
improvements, still some potential remains. Th e EU policies have alr eady partially addressed 
some of the possible environmental impact of the sector. Therefore, the objective as regards the industry sector is to suppor t the use of this untapped pote ntial while remaining coherent 
with existing policy instruments (such as  the ETS and the new Industrial Emissions 
Directive). The barriers in th e sector are mainly a lack of  strong price signals, lack of 
awareness and training (especially for SMEs), and also lack of long-term policy planning 
which increases the perception of risk and de ters companies from realizing investments. 
 
EN 64   EN The analysis of the possible approaches c oncluded that it is possible to propose some 
additional legal framework that would be in  line with the above-mentioned objective and 
existing policy (Option C3). To this end,  more implementing measures under Ecodesign 
Directive could be proposed that would cover commonly used products in industrial process 
(such as large pumps or furnaces). Custom-made equipment (such as machine tools) and systems could be addressed with generic ener gy-efficiency requirements, which would then 
be operationalised by the European Standardis ation Organisations. In addition, certain energy 
management requirements (e.g. for energy audits or  plans) could be established for all energy 
consumers above a certain threshold, notably la rge companies. For SMEs information toolkits 
and assistance to manage their energy cons umption could be provided (Option C5).  
Important mobilization of projects in the indu stry sector could come from energy savings 
obligations, if imposed on energy companies (Option D3d) and the promotion of ESCOs 
(Option D5).  
Measures on awareness raising (Option C4) a nd increased voluntary engagement of private 
entities (Option C2) would be also beneficial a nd could be implemented if there are sufficient 
resources. Still, EU has limited role and such  measures remain mainly in the domain of 
Member States or local authorities.  
Preferred way forward for the energy sector 
At present, the average efficiency of the gene ration capacity is considerably lower than best 
available technologies. The main reason for this is  the lack of sufficien tly strong price signals 
in relation to investment decisions for the cons truction of new capacities and the retirement of 
old ones. The ETS in its third phase will have a certain impact on this problem for the units it 
covers. Therefore, it not appropriate to pr opose further regulatory instruments without 
knowing its concrete effects (Option D3a). Ho wever, with the growing number of small 
generation installations, the need for further regulatory instruments to ensure their high 
efficiency could be studied.  
The full potential for residual heat use or ener gy recovery is also not  used. The analysis 
showed that further regulatory measures fo r the promotion of cogeneration and district 
heating and cooling units could be developed following further analysis and possible revision 
of the main policy framework in the area (i.e . the Co-generation Directive) (Option D3b). 
National Regulatory Authorities (NRAs) could play an importa nt role in steering energy 
efficiency improvements of the grid, promoting smart grids and promoting intelligent metering systems that ensure peak shaping pos sibilities and optimization of energy demand 
and supply. This could be done by conferri ng more powers on them (Option D3c).  
Energy companies dispose of important inform ation about the energy consumption of their 
clients but have no stimuli to us e it for reducing their clients' energy consumption as this 
would mean fewer revenues for them. This c ould be overcome by the introduction of energy 
savings obligation schemes which would ensure that for a small short-term increase of the 
energy bill the most cost-effec tive long-term measures will be  realized (Option D3d). The 
best methods of doing this need to be studied in  further detail. In orde r not to have negative 
interactions with the ETS the certificates that prove energy re ductions should not be traded 
within the ETS. 
Usually the managers of energy companies are well aware of the possibilities for energy 
savings at their companies. However, the spec ific subsector that w ould require additional 
support in terms of information, guidelines and ex change of best practices is that of ESCOs 
 
EN 65   EN (Option D5). Voluntary agreements could also le ad to energy savings and could be considered 
(Option D2). 
Will the measures be sufficient to reach the 20% objective? 
The preferred options provide for a wide range of supporting instruments that would intensify 
the uptake of the energy savings potential and the related benefits, and the maturing of the 
energy efficiency markets. Quantification was not possible for all options but from those that could be quantified it can be concluded that there is good chance that the remaining savings 
gap will be closed. However, the concrete results will depend on the level of ambition of the regulatory and non-regulatory initiatives and the pace at which they are implemented. 
Therefore, mid-term evaluation and possible updati ng of the Plan would be essential to ensure 
that there are continuous e fforts on energy efficiency. 
8. M
ONITORING AND EVALUATION  
The Commission will monitor the progress inter alia via the mandatory and possibly 
strengthened National Energy Efficiency Action Plans and the policy objections and 
indicators that would be developed as a result of the new Energy Efficiency Plan. In addition, it will continue monitoring Member States progress and assisting them in implementing 
existing and new EU regulatory measures, and take  any necessary measures at its disposal in 
cases of infringements.  
The Commission will launch specific  studies to evaluate in more details the modalities for the 
implementation of the various t ypes of policy instruments propos ed (e.g. the role of NEEAPs, 
the nature and levels of the policy objectiv es, the modalities for better supporting energy 
recovery, the approaches towards energy sa vings obligations on energy companies, the 
concrete public procurement obligations, and the requirements on companies for energy management). Ex-ante financial analysis woul d be carried out, where required, to study the 
concrete needs for financing.  
The lack of detailed data on en ergy consumption in all end-use sectors is a major challenge. 
Eurostat has started efforts, following inter alia  the requirements of the 2008 Energy statistics 
regulation, to get in refined data for household consumption but with the present speed it will take further years before detailed consumption st atistics for all sectors will be in place. There 
are no good data also of how much CO
2 emission are emitted by the end-use sectors because 
the current statistical reporting procedure assigns  the emissions from electricity and heating to 
the energy sector. Furthermore, additional studies to examine th e job creation effect of energy 
efficiency measures and the composition of the EU's building stock could be carried out in order to facilitate the decision making process.