Communication from the Commission - Energy efficiency in the European Community - Towards a strategy for the rational use of energy
Date: 1998-04-29
Institutions: European Commission
Subjects: electrical energy, energy policy, energy saving, environmental protection, pollution control measures

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 29.04.1998 
COM(1998) 246  final 

COMMUNICATION FROM THE COMMISSION 

Energy Efficiency  in the European 
Community «Towards a Strategy for the 
Rational use of Energy 

1. The need for renewed efforts to promote Energy Efficiency 

There is an urgent need to reinvigorate commitment both at Community and Member 
State level to promote energy efficiency  more actively, especially, but not only, in the 
light  of the Kyoto agreement to reduce C02 emissions. Improved  energy  efficiency 
will lead to a more sustainable energy policy and enhanced security of supply, as well 
as to many other benefits. It is important to underline, however, that it will play a key 
role in helping the Community to meet its challenging Kyoto target economically. 

The underlying assumption behind this Communication is that, whilst energy intensity 
has decreased slowly but surely over recent years, it is essential to take the necessary 
steps to  ensure  that  energy  efficiency  is  substantially  improved,  and  reflected  in a 
significantly  reduced  level  of  energy  intensity.  The  role  of  Member  States  and  of 
regional and local authorities will be crucial in this context as much of the action on 
energy efficiency  takes place at national level. 

The Commission's objectives in presenting this Communication at this point in time, 
can be summarised as follows: 

-To underline the economic potential for energy efficiency which exists. 
-To present both the successes and failures of the policies followed  so far, and draw 
the necessary conclusions. 
-To highlight the need for more action at Member State and regional level in parallel 
with action at Community level. 
-To  refocus  attention  on  promoting  energy  efficiency  and  stimulate  discussion 
towards a more detailed Action Plan. 
-To prepare the ground in this specific field for common and coordinated policies and 
actions which will need to be undertaken in the light of the Kyoto Agreement. 

Saving energy has been a stated policy objective of the Community and its Member 
States since the first oil crisis in  1973, when energy  security  became of paramount 
concern  and  saving  energy  was  an  important  element  of  the  strategy  to  reduce oil 
imports, particularly in a context of high energy prices. However, as these pressures 
disappeared, so has much of the effort to improve energy efficiency. 

A more long-term view of energy demand reduction led in time to the realisation that 
it was possible to "delink" economic growth and energy consumption, allowing GDP 
to increase without commensurate increases in energy consumption. Market barriers 
and falling prices, however, have limited the scope and extent to which delinking has 
occurred, especially  regarding the final or end-use of energy. It is worth noting the 
development  of  energy  intensity  in  the  Union  between  1974 and  19951,  shown  in 
Diagram A. 

In spite of the existence of Community and Member State energy end-use  efficiency 
programmes  designed  to  remove  them,  many  of  the barriers  to  the rational  use of 

1 Energy in Europe "1997 -Annual Energy Review", European Commission , September  1997, p. 66. 
And Eurostat(Gross Inland Consumption/GDP.) 

1 

••Sy-iMMl. M 

I  M — —— 

energy from the  1970s persist today. Analysis of the current situation indicates that 
strengthened efforts, including better common and co-ordinated policies and measures 
at  Community  and  Member  State  level,  are  needed  to  increase  energy  efficiency, 
notably in the use of electricity, the generation of which accounts for some 30% of the 
Community's C02 emissions. 

330 

Energy Intensity 

1974  1976  1978  1980  1982  1984 1986  1988  1990  1992 1994 

Year 

Diagram  A.  Development  of  Primary  Energy  Intensity  1974 

1995 

(toe/1990 MECU) 

In this document the Commission: 
(i) outlines the potential for energy efficiency  improvements from now until the year 
2010; 
(ii) analyses the nature and types of barriers to the exploitation of this potential; 
(iii) reviews programmes and measures and their relevance to barriers and potentials; 
(iv) examines the economic rationale for  programmes  to remove barriers to energy 
efficiency, and 
(v) proposes elements for a strategy and priorities to exploit available potential which 
reflects Community and Member State roles and capabilities . 

This Communication  is only the first step towards a strategy  for the rational use of 
energy. It indicates a policy commitment  towards energy efficiency  and focuses on 
what  is  realistically  and  economically  feasible  in  the  short  and  medium  term. 
Following  input  from  the  other  institutions,  Member  States  and  other  interested 
parties, a more specific Action Plan for Energy Efficiency  will be developed and more 
concrete actions and ways to implement them will be proposed. 

The manner  in which  energy  efficiency,  together  with other  sectoral  measures will 
contribute  to  the  Kyoto  commitments  will  be  further  developed  in  a  forthcoming 
Commission  Communication  on  a  comprehensive  post-Kyoto  strategy  for  C02 
emission reduction. 

2. Realising the Available Energy Efficiency Potential 
Community  and  Member  State  activity  improving  energy  efficiency  and  energy 
intensity can be justified  economically if significant  potential individual and societal 

benefits remain unrealised by the operation of market forces. This is today the case, 
since  due  to  market  failure  resulting  from  market  barriers,  many  cost-effective 
investments in energy efficient technology and methods are not undertaken. 

If no action is taken to promote energy efficiency  only the market potential for energy 
saving can be expected to be achieved in practice, which is what can be realised by 
individuals and firms in the face  of imperfect  knowledge and other market barriers 
and  without  market  intervention.  However,  what  is  very  important  to  achieve, 
especially in the light of the Kyoto commitment is the full economic potential. Further 
action, beyond what is suggested in this Communication, can lead to the realisation of 
the societal potential and the technical potential.  This  Communication  specifically 
focuses on action necessary to promote the economic potential for improving energy 
efficiency,  as  a first and  necessary  no-regrets  step  for  reaping  economic  benefits, 
ensuring continued security of energy supply and meeting Community targets for the 
reduction of C02 emissions. 

Estimates are that the available economic potential between  1998 and the year 2010, 
for all sectors combined, is approximately  18 % of final annual energy consumption 
1995, as shown in Table l2. 

Table 1. Available Economic Potential in the European Union 1998 -2010 
Sector 

Final Energy Consumption, 
1995 (Mtoe) 

Available Potential to 2010. 
Per cent of 1995 Consumption 

Industry 
Transport 
Domestic and Tertiary 
Total 

1 

268 
270 
358 
896 

17% 
14% 
22% 
18% 

3.Why  the  Potential  Is  Not  Being  Realised:  Imperfections,  Barriers  and 
Shortcomings 

Despite  the  environmental,  economic  and  energy  policy  advantages  that  energy 
efficiency  offers, we are not realising sufficiently  the cost-effective  potential. Neither 
the Community  nor the Member  States efforts  undertaken  have  so far  managed to 
overcome  the  existing  barriers  to  investments  in  energy  efficiency.  An  effective 
strategy for the future must successfully tackle the main obstacles outlined below. 

Energy  efficiency  will  only  fully  penetrate  the  market  if  energy  prices  accurately 
reflect  energy  costs. Internalisation  of  externalities  through  taxation  and  fees  is an 
effective  way  to  increase  investments  in  energy  efficiency  as  outlined  in  the 
Community's  Fifth  Environmental  Action  Plan,  "Towards  Sustainability".  It  is 
important to realise that at the same time as efforts are being made to increase energy 

2 MURE model estimation, based on current energy prices. European Commission March  1998. The 
calculation for the transport sector is based entirely on fuel efficiency  improvements. If other effects, 
including modal shifts, are included, the potential for the transport sector is estimated to be around 
25% by the year 2010. 

efficiency,  the  energy  sector  is undergoing  significant  changes, due  in  part  to EU 
initiatives. These changes will affect the perception and role of energy efficiency. The 
completion  of  the  internal  market  for  energy,  for  example, with  liberalisation  and 
restructuring of both the electricity and gas sectors, will most certainly have an impact 
on  energy  efficiency.  On  the  one  hand,  competitive  pressure  will  improve  the 
efficiency  in energy production. Market forces  will be released, economies of scale 
will be discovered and developed, tariff  structures will change and new stakeholders 
will emerge to assume new roles. On the other hand, the liberalisation of the energy 
markets  will  inevitably  mean  lower  energy  prices.  However,  at  the  same  time, 
increased competition as a result of the internal energy market is likely to lead to a 
tariff  structure  for  the  electricity  industry  which  will  better  reflect  true  production 
costs without hidden cross-subsidies. It is clear that in a period of generally  falling 
energy prices, specific  measures to promote energy efficiency  are more critical than 
ever. 

After price signals, lack of or incomplete information  is usually the first barrier to 
energy  efficiency  which  one  encounters.  It  is  also  the  most  ubiquitous.  Imperfect 
knowledge of the product and lack of foresight  on price development  on the part of 
consumers,  manufacturers  and  other  stakeholders  hampers  the  introduction  of 
efficiency  measures. Consumers receive  inadequate or incomplete information from 
the service sector on running costs. Purchases are then often  based on lowest initial 
cost or other criteria. 

Information  on system applications of energy technology is also often unavailable or 
inaccessible. As a result, equipment is often over-sized or incorrectly installed. There 
is  also  often  a lack  of technical  skills  and training  in the  energy  maintenance  and 
service  sector. Because of expectations  of relatively  low and  stable end-use energy 
prices, information  on efficiency  has also become less important in the planning and 
purchase of automobiles, appliances and other equipment. 

Poor feedback of information to energy consumers also acts as a disincentive. This is 
particularly true for consumers who see no immediate or appreciable change in energy 
costs  after  haven  chosen  energy-efficient  alternatives.  At  a  different  level,  lack  of 
harmonised  and comparable  evaluation  methods for  analysing  the results of energy 
efficiency  initiatives can also be a barrier. 

There  are  numerous  institutional  and  legal  barriers  to  greater  energy  efficiency. 
One  example  is  found  in  the  energy  supply  industry,  where  the  institutionalised 
energy  planning  mind  set  has  proven  difficult  to  change.  This  tends  to  associate 
greater  credibility  with  highly  centralised  power  production  than  with  more 
decentralised  demand-side  measures  to  meet  increases  in  demand.  Yet,  least-cost 
analyses  have  shown  that  investments  in  demand-side  energy  efficiency  are  often 
more cost-effective than production-side investments. 

One of the most  difficult 
institutional  barriers to overcome today  is the continued 
practice of selling energy in the form  of kWh instead of as energy  services such as 
heating  and  cooling,  lighting  and  power.  Services  are  invariably  what  the  energy 
consumer actually wants, not energy for its own sake. This is one of the arguments in 

favour  of  the  development  of  energy  service  companies  and the use of integrated 
resource planning. 

Other  institutional  barriers  include  things  such  as the practice  among builders and 
landlords  in  some  Member  States to  choose and  install  appliances  with  low initial 
costs but high running costs for energy, costs which are usually incurred by the home-
buyer or tenant. The landlord-tenant problem of "split-incentives,, is a classic example 
of this type of institutional barriers. 

Lack of political commitment can also be said to constitute an institutional barrier. As 
energy  efficiency  occurs  in  small  increments, there  is never  a  grandiose  ceremony 
associated  with  it  as is the  case  when a new power  station  or highway  is opened. 
Politically motivated incentive structures in the form of taxes and subsidies are also 
often based on short-term or fiscal goals. 

There  are  also  many  different  types  of  technical  barriers  to  energy  efficiency. 
Countless energy-efficient  technologies have been held back from the market due to 
inadequate  support  in  the  form  of  technicians,  consultants,  trained  repairmen  etc.. 
leading to lack of confidence  on the part of the consumer, either regarding product 
reliability or maintenance of the equipment. 

Barriers  also  arise  because  many  manufacturers  of  equipment  and  appliances  and 
builders  are  not  specifically  in  the  "efficiency"  business  and  thus  have  different 
priorities  in  designing  and  selling  their  refrigerators,  pumps,  buildings  etc.  Low 
energy prices have contributed to this. 

Reaching sufficient  production volume for economies of scale to make the cost of a 
new product competitive is another common technical barrier. 

The  lack  of  standardised  components,  spare  parts  and  fixtures  for  energy-efficient 
solutions  is  a  barrier  which  the  lighting,  building  and  other  industries  have 
experienced.  Community' standardisation  measures  and  programmes  are  helping  to 
alleviate this problem, with the single market in mind. 

Financial barriers such as lack of up-front capital are major barriers to cost-effective 
investment  in  energy  efficiency.  Self-financing  capacities  and  loan  facilities  have 
traditionally  been far  better  for  energy producers than for  energy consumers. Banks 
e.g., do not include reduced energy costs resulting  from  extra investment in energy 
efficiency  in the calculations upon which they base the size of their loans. 

The above list of barriers is not exhaustive. Its purpose is rather to illustrate the main 
categories of barriers to energy efficiency  in order to address the question of how to 
remove them. 

4. Existing Measures for Energy Efficiency 

Future  measures  have  to  build  on  existing  initiatives,  overcoming  weakness  and 
pursuing  successful  experiences.  It  is  important  to  underline  that  initiatives,  with 

varying degrees of effectiveness,  have been undertaken at Community  level since the 
late  1970's. However, by the late  1980s* the Commission concluded that the  different 
energy efficiency  instruments passed by Council in the  1970s and early  1980s had not 
fulfilled  expectations.  More  effort  was  then  required  from  the  Member  States.  In 
1986,  the  Council  adopted  a  Resolution  concerning  new  Community  energy 
objectives, which inter alia, called for a 20% improvement in energy intensity of final 
demand  by  the  year  19953. A  1987  Communication  entitled  "Towards  a  continuing 
policy  for  energy  efficiency  in  the  European  Community"  (COM(87)233  final) 
proposed  14 energy  efficiency  measures to  Member  States to help achieve the  1995 
target.  In  the  1990  SAVE  proposal  which  followed,  it  was  recognised  that  this 
Communication  had  had  no  appreciable  effect,  and  it  was  necessary  for  the 
Commission to act at Community level. 

The Commission's proposal  of  13 November  1990 (COM(90)365final)  for  a Council 
Decision concerning the promotion of energy efficiency  in the Community  stated that 
"Community action in this field is revived  in the light of changes in economic trends 
for  energy  and the need  for  greater environmental  protection.  In the energy  policies 
pursued  by,most  Member  States,  energy  efficiency  generally  has  become  a  lesser 
priority." The  1990 proposal  stated further  that the  "majority  of Member  States have 
reduced  or  even  completely  abolished  their  programmes  which  directly  support 
energy efficiency-linked  investments." This conclusion led, among other things, to the 
approval in 1991 of the multi-annual SAVE Programme for energy  efficiency. 

In  spite  of  SAVE,  for  the  Community  as  a  whole,  the  overall  rate  of  decrease  in 
energy  intensity  was not  significant.  By  1995, the improvement  was only  12 %,  far 
short  of  the  target  of  20  %.  Even  more  alarming  was  the  fact  that  the  pace  of 
improvement  had  slowed  down  to  only  -0.6  %  per  year  between  1990  and  1995, 
compared to -2.0 % per year between  1985 and 19904. 

An  important  factor  underlying  the  slow  penetration  of  energy  efficiency  measures 
continues  to  be  the  relatively  low  priority  attributed  to  energy  saving  by  Member 
States, despite the Community efforts  in this direction as described below. 

There has been recognition at Community level, that technological programmes can 
play an important role m providing the basis for  energy efficient  technologies. In the 
JOULE-THERMIE  programme  launched  in  1995  as  a  specific  programme  of  the 
Fourth  Framework  Programme  for  RTD,  280  MECU  were  devoted  to  energy 
efficiency,  representing  27%  of  the  total  budget  and  contributing  to  substantial 
achievements,  especially  in  the  reduction  of  energy  intensity  in  buildings,  transport 
and  the  process  industries.  A  recent  evaluation  of  THERMIE  indicates  that  this 
Community  programme  is  very  well  known  amongst  stakeholders  on  Community 

3 Council Resolution of  16 September 1986 concerning New Community Energy Policy Objectives for 
1995 and Convergence of the Policies of theMember States. OJC 241 of 25 September 1986. 
4  Eurostat  1997.  Energy  intensity  for  final  energy  consumption  is  only  an  indicator  for  energy 
efficiency,  because it also includes economic restructuring, changes in fuel mix, etc. 

energy  markets  and  that  it  has  impacted  on  market  shares  for  energy-efficiency 
technology.5 

However,  the  principal  focus  of  the  Community's  action  has  been  the  SAVE 
Programme. After evaluation of the results of SAVE I, the SAVE II programme was 
adopted in December  1996 with an indicative budget of 45 MECU for five years. Its 
aim is "improving energy intensity of final consumption by a further  one percentage 
point per annum over that which would have been otherwise attained. Compared with 
the original SAVE Programme, SAVE II was enlarged by the addition of the regional 
and urban energy efficiency programme and an electricity end-use programme.6 and in 
March  1998, the Commission adopted its decision opening up the SAVE programme 
to Bulgaria, Lithuania, Poland, Romania, Slovakia and the Czech Republic. 

One of the major  elements of the Commission's non-technological  efforts  relates to 
the development  and adoption of legislation having a Community-wide scope. The 
legislative  programme  largely  relates  to  traded  goods  and,  as  such,  is  essential  in 
completing  the internal  market. Evaluations of the effects  in Member  States of the 
Community  labelling  programme  indicate  that  the  programme  has  had  a  positive 
impact both on the share of energy-efficient  models in EU manufactures' assortment 
of products and the market share of sales of efficient  models. An extrapolation of the 
present trend of improvement in the energy intensity of cold appliances as a result of 
labelling, for example, indicates a reduced average intensity of 15% for the entire EU 
cold appliance market by the year 2010. That this improvement is in large measure a 
result of labelling is supported by the fact that there was no significant rate of change 
before labelling was introduced. 

An important element of SAVE has been its focus on helping to build the necessary 
capacity  and  infrastructure  for  energy  efficiency  and  to  improve  policy  analysis. 
SAVE provides support for pilot actions and information  dissemination  activities in 
the  areas  of  appliances, buildings,  CHP, DSM, education  & training,  industry  and 
transport. Over 350 pilot actions and studies have been carried out for this purpose, 
and  the  asessment  of  their  effectiveness  has  indicated  the  areas  of  priority  action 
where there is Community added-value. Programme evaluations show clearly that the 
SAVE programme  has  played  a  significant  role  in  capacity-building  in  the energy 
sector  but  we  have  still  not  reached  the  stage  where  this  has  produced  sufficient 
results in practice. A separate component of the SAVE Programme which supports the 
creation  of  energy  agencies  at  regional,  local  and  island  level  has  proved  to  be 
significant.  To  date  140  such  SAVE  agencies  have  been  set  up  throughout  the 
Community, and their impact is starting to be felt at a local level. One of their roles, 
which needs to be strengthened is the exchange of experience and best practices. 

A further  important element of Community action has been support for investments 
in less developed regions. The European Regional Development Fund (ERDF) and the 
Cohesion Fund have the possibility to contribute to increased energy efficiency.  This 

s Horizontal Evaluation of DGXVII Energy Programmes, Report to the Commission, December  1996. 
6 Council Decision 96/737/EC of  16.12.97 concerning a multiannual programme for the promotion of 
energy efficiency  in the Community - SAVE II. 

is  possible  in  both  Objective  1  and  Objective  2  areas,  where  national  as  well  as 
regional  energy  programmes  usually  include  specific  measures  to  improve  energy 
efficiency.  However, a greater interest needs to be shown by Member States in these 
possibilities. 

Evaluations  of  the  programmes  indicate  that  the  programmes  dealing  with  energy 
efficiency  have  had  an  impact  on  reducing  energy  intensity  but  have  not  been  in 
themselves  sufficient  to  bring  about  changes  on  a  scale  necessary.  THERMIE  is 
judged to have contributed  significantly  to meeting the Community goal of increased 
industrial  competitiveness,  especially  among  SMEs. The  SAVE Programme  has had 
measurable  effect  on  capacity-building  for  energy  efficiency  and  in  CHP  through 
replication  of  focused  pilot  projects.  Through  its  legislative  programme,  SAVE  has 
been judged  to  have  made  an  important  contribution  to  the  improvement  of  energy 
efficiency.  Estimates of the C02  abatement effects  of different  actions in SAVE and 
THERMIE support the claim that the programmes are producing tangible results.7. 

The  main  conclusions  drawn  point  to  the  need  to  better  focus  and  coordinate 
Community  and  Member  State  measures,  to  improve  and  strengthen  existing 
measures, to facilitate exchanges of experience and best practice, and to select priority 
areas  of action,  in order to bring  about the  increased  rate  of  improvement  in  energy 
intensity which individual and societal benefits and costs fully  justify. 

It should also be noted that efforts  to improve energy efficiency  outside the Union are 
important  in the context  of international  cooperation, especially  in the  light  of  the 
global reduction of C02 emissions. The PHARE and TACIS programmes, intended to 
support  reform  and  restructuring  in the  CEEC  and  CIS  countries,  respectively  have 
promoted  energy  efficiency.  INCO-Copernicus, an element of the Fourth  Framework 
Programme  intended  for  non-member  countries,  promotes  both  the  efficient  use  of 
energy  in  buildings,  industry  and  transport,  as  well  as  the  clean  and  efficient 
production  of  energy  from  fossil  fuels,  through  joint  research  and  demonstration 
projects.  INCO-DC  has  provided  support  to  JOULE-THERMIE's  accompanying 
measures in developing  countries, aiming at promoting the use of clean and  efficient 
energy in these countries. SYNERGY also supports energy efficiency  projects in non-
member  countries.  However,  the  economic  energy  efficiency  potential  in  countries 
outside the Union is also far from being realised, and needs to be further  encouraged. 

5. Towards a Strategy for the Rational Use of Energy 

The  fact  the  Union  is  not  realising  the  full  cost-effective  potential  for  energy 
efficiency  improvements, raises the question of why this is not happening. There are 
two  important  points  to  consider.  First,  it  is  clear  that  the  market  is  still  not 
functioning  properly  because  there  are  market  failures  and  barriers  which  hinder 
expected  investments  and  actions.  Secondly,  the  policies  and  programmes  that  the 
Community  and its Member States have put in place have fallen  short either because 
they  were  not  sufficient,  not  fully  effective  or  not  adequately  co-ordinated,  or  a 
combination of these. If we are to achieve, as a minimum, the economic potential  for 

- Horizontal Evaluation of DGXVII Energy Programmes, Report to the Commission, December 1996. 

energy efficiency,  a renewed  Community-wide  commitment  at Community, national, 
regional and local level is essential in order to implement the appropriate policies and 
measures as part of a wider strategy. 

We  need  to  build  on  the  foundations  for  a  comprehensive  Community  energy 
efficiency  strategy which are already in place. A number of Community initiatives are 
already running, one of which is the SAVE Programme and the activities arising from 
it. Member States have programmes in place, as shown in Annex 2 which have had a 
greater  or  lesser  degree  of  success.  Numerous  evaluations  of  energy  efficiency 
programmes have been carried out in Member States, which show clear  cost-effective 
increases  in the  market  shares  for  energy-efficient  lighting,  appliances,  heat-pumps 
and  other  energy-consuming  equipment,  often  after  only  a  few  years  of  programme 
activity.  Extrapolated  over  the  life  of  the  investments  undertaken  as  a  result  of  the 
programme,  these  activities  impact  on  the  energy  intensity  of  individual  end-use 
sectors by factors  of up to 65%. The proposals made in this Communication  build on 
documented successful  experiences, and aim to ensure that they are more widely taken 
up. 

A number of coordinated measures need to be taken. Progress will need to be closely 
monitored.  One  of  the  shortcomings  of  the  current  energy  efficiency  programmes  is 
the  insufficient  monitoring  and  evaluation  of  results.  Monitoring  will  become  even 
more  important  in  the future  as it will be necessary  to track  the progress  in meeting 
the Kyoto commitments. The Commission will continue to strengthen its activities in 
this area. 

An  energy  efficiency  strategy  cannot  be  successfully  implemented  without  the  co 
operation  and  support  of  a  wide  variety  of  actors  throughout  the  Community. 
Increased co-operation with Member States must be sought as well as with the energy 
service  industry,  manufacturers,  distributors,  installers,  industry  associations,  branch 
organisations, utilities, consumer organisations and NGOs. 

Member  States  must  be  encouraged  to  promote  awareness  on  energy  efficiency. 
Particular importance should be given to increasing  consumer awareness of the many 
cost-effective  energy  efficiency  opportunities  and  new  emerging  technologies. 
OPETs,  SAVE  Agencies,  consumer  networks  and  other  Community-supported 
dissemination  networks  can  be  more  effectively  used  to  increase  co-operation  in 
pursuit of such common objectives. 

Better  coordination  of  actions  is  very  important,  facilitated  by  the  existence  of  a 
special  forum  where  energy  efficiency  policies  are  discussed.  If  a  group  on 
convergence of national energy policies is established by Council as already proposed 
by the Commission, then a sub-group on energy efficiency  with a special emphasis on 
improved  co-ordination  of  national  and  Comnrmity  measures  will  be  foreseen. 
Alternatively  an appropriate forum  may need to be established to promote a re-newed 
impetus  and  commitment  io  energy  efficiency,  permit  experience  to  be  shared  and 
follow and review progress at EU and Member Sta  ? 'eve!. 

There is clearly a need to identify and raise the profile of improving energy efficiency, 
giving it a more positive thrust both at Community and Member States level. It must 
be  placed  on  an  equal  basis  with  energy  supply  options.  While  energy  and 
environmental  policy  objectives  cannot be achieved  by  demand-side  options alone, 
neither  can  they  be  achieved  solely  by  supply-side  options.  Energy  efficiency 
programmes must be put in place and implemented effectively, but at Community and 
Member  State  level.  Below  is  a  first  outline  of  what  can  be  cost-effectively 
undertaken: 

5.1 Promoting Energy Efficiency in Other Policies 
Greater focus  needs to be placed on promoting energy efficiency  via other policies. 
The  regional  and  urban  dimensions  of energy  efficiency  must  be  developed  more 
fully.  Integrated regional  and urban partnerships  involving a wide variety  of actors 
from  different  sectors need to be promoted as part of the activities undertaken under 
SAVE.  The  European  Regional  Development  Fund  and  the  Cohesion  Fund  must 
continue to  contribute to increased  energy  efficiency  by  including  specific  policies 
and  measures,  but  Member  States  must  also  ensure  that  they  submit  appropriate 
proposals. 

Transport is another priority area for energy efficiency.  Without appropriate policy 
action, emissions from transport will increase by about 40% between  1990 and 2010. 
The European Union has adopted a strategy on C02 and cars, which aims to reduce by 
30% the average C02  emissions  of new cars to  120g/km in 2005/2010 against the 
8, the Commission 
1990 baseline. In the recent Communication on Transport and C02
made  an  assessment  of  how to  reduce  energy  use and  hence  C02  emissions from 
transport. The measures proposed concern four principal elements: further  action on 
vehicle fuel economy; progress with fair and efficient  pricing in transport; completion 
of the internal market in rail transport; as well as measures for better integrating the 
various modes of transport. It can be expected that those measures represent a cost-
effective  policy approach capable of halving the growth in C02  emissions by 2010. 
Beyond 2010, the large-scale introduction of new technologies (e.g. hybrid cars, fuel 
cells  and  alternative  fuels)  will  reduce  the  use  of  fossil  fuels  and  cut  emissions 
significantly.Energy efficiency needs to become an integral part of transport policy. 

Internalisation  of  externalities  through  taxation  and  fees,  where  appropriate, 
continues  to be considered  as a means to allow energy  prices  to  reflect  true costs. 
Market liberalisation  benefits  in the form  of lower prices should partially  accrue to 
environmental improvement when appropriate. The Commission tabled a tax proposal 
to the Council in 1997 concerning taxation of energy products, which would establish 
a broader minimum tax base. The Council is currently examining this proposal, which 
includes provisions for possible tax-exemptions for energy efficiency  investments. It 
is  important  for  progress  to  be  made  on  this proposal.  In  parallel,  Member  States 
should  be encouraged  to examine  what  special  tax  incentives  they  can  provide  for 
energy-saving. 

8 COM(98)204 final of 31.3.98 

10 

Science  Research  and  Technology  Policy  also  has  a  role  to  play  in  the  energy 
efficiency  strategy. The Fifth  RTD Framework Programme forsees  two specific key 
actions  for  "cleaner  energy  systems, including  renewable  energies" and  "economic 
and efficient  energy for a compétitive Europe". Actions to be carried out by the JRC 
are also foreseen, for example, on new materials for high efficiency  power generation 
system  on  prospective  studies  on  upcoming  technologies.The  Community  and 
Member  States must pursue intensified  research and development  efforts  on energy 
efficiency. 

International Commitment  and  Cooperation  for  energy efficiency  is also critical. 
The European Union is fully  committed to participate  in the implementation  of the 
Energy  Charter  Protocol  on Energy  Efficiency  and Related Environmental Aspects. 
Increased co-operation with other international organisations such as the International 
Energy  Agency must be sought.  Strengthened  co-operation with international  banks 
will allow more leverage for Community programmes and projects. Ensuring that the 
accession  countries  of  Central  and  Eastern  Europe  and  Cyprus  are  adequately 
prepared  in the field of energy  efficiency  prior to membership, as identified  in the 
Accesion Partnerships with each of the countries concerned, is also a high priority. 

5.2 Specific Priorities For Action 
On the basis of an assessment of the economic potential for greater energy  efficiency 
and  an évaluation of the  effectiveness  of  actions  already  undertaken, the  following 
areas for  action are proposed  as priorities for  the short to medium-term. This is not 
intended to be an exhaustive list of actions, but rather indicate the main directions to 
follow, coordinating action at Community and Member State level. 

(!) Energy-Efficient  Buildings 
Buildings  account  for  40%  of  the  EU's  energy  requirements.  The  building  sector 
offers  one of the largest single potentials for energy efficiency  and should thus be a 
major  focus  for  action. In  addition to  installed  components  and  equipment, energy 
conscious  design  and  use  of  buildings  and  new  concepts  in  building  renovation, 
refurbishment  and life cycle analysis and costs are important. 

Initiatives  which  can  be  undertaken  under  the  SAVE Programme  include  e.g., the 
development of simple tools to help installers to design appropriate systems, training 
and certification  in their use of these tools.  This must be combined with information 
schemes providing  the final customer  with clear and reliable  information  about the 
performance of the energy systems they may be considering. Further measures in this 
field  will include the review of Council Directive 93/76/EEC (below) which needs to 
be strengthened to improve energy efficiency  in buildings.9 It is important for Member 
States  also  to  review their  national  standards  for  energy  efficiency  in buildings, to 
identify where improvements might be made. 

9 The development of harmonised European standards under the Construction Products Directive 
(89/106/EEC) for products such as thermal insulation, windows, heat emitters, etc. can lead to the 
adoption of standards and indications in the form of information  on inter alia product energy economy 
and heat retention properties. 

11 

(ii) Review of Council Directive 93/76/EEC to Limit Carbon Dioxide Emissions 
Council  Directive  93/76/EEC  has  the  potential  to  improve  substantially  energy 
efficiency  and  reduce  carbon  dioxide  emissions  by  helping  overcome  a  number  of 
barriers. Results to date indicate, however, that many Member  States have not  given 
the  Directive  sufficient  priority.  This  is  attributed  in  part  to  the  subsidiarity  in  the 
Directive. The Directive requires Member States to develop actions in six programme 
areas,  (such  as  individual  metering  and  billing  of  energy  use,  and  energy  audits  in 
industry)  but  allows  considerable  flexibility  regarding  which  instruments  to  choose 
and how. Member States are also required to monitor and report on the impact of the 
measures. 

Strengthening  specific  articles  in  the  Directive  will  enhance  its  impact.  Making  it 
more focused  and precise  is also necessary. Therefore,  a directive amending  Council 
Directive  93/76EEC  will  be  proposed  by  the  Commission.  The  main  areas  of  the 
present  Directive  which  need  to  be  strengthened  include  energy  certification  of 
buildings to include existing buildings and not only new buildings, further  standards 
for the installation of insulation and proposals for inspections and energy audits. 

(iii) Energy-efficient Household Appliances and Other End-use Equipment 
The  technical  barriers  to  energy  efficiency  need  to  be  overcome.  For  domestic 
appliances,  labelling  has  been  established  for  a  number  of  years  and  should  be 
extended  to  cover  all  the  major  appliances.  For  rninimum  efficiency  requirements, 
progress  has  been  slower  due  to  the  long  decision  process  and  lack  of  cooperation 
from  manufacturers.  The  "refrigerator  directive"  (96/57/EC),  was  a  first  example, 
followed  by  negotiated  agreements  for  washing  machines  and  televisions,  as 
mentioned  below.  In  the  near  future  energy-efficiency  standards  for  electric  water 
heaters and room air conditioners will be negotiated. 

In  the  commercial  and  industrial  sectors  there  is  no  labelling  scheme,  and  therefore 
negotiated  minimum  efficiency  requirements  are  necessary.  Proposals  to  introduce 
minimum efficiency  requirements  should  be developed,  for  example,  for  ballasts  for 
fluorescent  lighting,  electric  motors,  pumps,  compressors,  fans  and  commercial 
refrigeration  equipment.  For office  equipment a voluntary quality mark to indicate the 
most efficient  equipment for  large purchasers (public authorities and large commercial 
enterprises  such  as  banks,  insurance  companies,  etc)  is  under  discussion,  based  on 
world-wide harmonised technical specifications  and the logo, Energy Star. 

Incentive  schemes 
in  favour  of  the.  most  efficient  appliances,  together  with 
disincentives  for  inefficient  appliances,  should  be  promoted  as  a  means  of  ensuring 
rapid market penetration of energy-efficient  equipment. 

in  industry  through  minimum  efficiency 

(iv) Wider Use of Negotiated and Long-Term Agreements 
There  is a  large  savings potential  which can be realised  by  the removal  of  technical 
requirements  or  equivalent 
barriers 
negotiated 
for 
manufactured  goods.  Therefore  these  instruments  should  be  strengthened  and 
expanded  to  other  appliances  and  equipment,  especially  in  the  commercial  and 
industrial  sectors.  Adequate  funding  under  the  SAVE  Programme  to  allow  detailed 

establishing  minimum 

requirement 

agreements 

efficiency 

12 

technical/economic  analysis  and  mandates 
(CEN/CENELEC) is necessary to implement this strategy. 

to 

the  standardisation  bodies 

Several Member States have insisted on the use of more flexible instruments such as 
negotiated  agreements  between  manufacturers  to  reach  the  same  objective  as 
mandatory minimum efficiency  requirements. Negotiated agreements are considered 
a valid alternative to the introduction of legislation if they include commitments by 
a large segment of the manufacturers  in a branch (at least 80%), stipulate quantified 
commitments to improvements in the appliances and equipment they produce and if 
they include an effective  monitoring and self-regulating  scheme and non-compliance 
procedures.  Currently  two  agreements  have  been  negotiated  by  the  Commission 
with appliance manufacturers,  for  the reduction of energy consumption of stand-by 
losses  of  TVs  and  VCRs  and  for  washing  machines.  A  wider  use  of  negotiated 
agreements  should  be  sought,  with  targets  corresponding  to  or  exceeding  any 
objectives set for energy intensity. These agreements concern tradeable goods such as 
appliances  and  equipment,  but  the  inclusion  of  energy  services  should  also  be 
considered.  Should  negotiated  agreements  fail  to  deliver  the  expected  results, 
mandatory standards must be implemented. 

The  Commission  has  adopted  a  Communication  on  Environmental  Agreements 
(COM  (96)  561),  which  aims  "to promote  and  facilitate  the  use  of  effective  and 
acceptable Environmental Agreements" as part of the effort  to broaden the range of 
co-operation with industry. Long-Term Agreements (LTAs) with industry branches, 
are a specific  type of  Environmental  Agreement,  characterised  by the fact  that the 
industrial  trade  association  in  question  and  its  members  commit  themselves  to a 
quantified  target for  energy efficiency  in their manufacturing  processes. Wider use 
of this instrument should be made. 

(v) Increased Dissemination of Information 
Information  dissemination must remain a high priority under the SAVE Programme 
and  in  Member  States  programmes,  in  order  to  remove  the  information  barriers 
mentioned above. A renewed Community information campaign is planned, focusing 
the attention of consumers and other stakeholders on the fact that energy efficiency  is 
more  essential  than  ever  and  on  how  it  achieves  benefits.  This  campaign  would 
require  the  active  participation  of  all  the  energy  stakeholders  including  consumer 
organisations. 

The  current  successful  programme  of  energy  efficiency  labelling  of  household 
appliances needs to be expanded to include other energy-using equipment, including 
building  components.  Information  on  this  must  be  made  more  readily  available. 
Consumer  organisation  participation  in the  dissemination  of  consumer  information 
should be increased. 

There is a need to increase the use of  information  technology  and other  innovative 
methods 
to  reach  new  audiences  with  labelling  and  other  information  on  energy 
efficiency  and  energy-efficient  technology.  For  Commission  projects,  a  greater 
emphasis will be placed  on dissemination  of results through  e.g.,  new and existing 

13 

Çommunity-wide networks. It is also recommended that training and certification on 
the use and maintenance of energy-efficient  technology be expanded. 

A new system of awards for energy efficiency,  to be developed in cooperation with 
relevant organisations under the SAVE Programme, is being considered. This could 
be offered  yearly for the institutions, organisations, authorities or persons in Member 
States  making  the  most  important  contribution  to  energy  efficiency.  The  system 
should  be  under  the  auspices  of  the  Commission,  with  strong  Member  State 
participation. 

It  is  also  important  to  strengthen  information  dissemination  on  best  practices  in 
Energy Efficiency.  Under the SAVE Programme, a European Energy Efficiency  Best 
Practice Programme,in cooperation with Member States will be proposed. 

(vi)Third-party Financing, Guarantee of Results and Other Creative Financing 
Schemes 
Financial barriers require special attention. Third-party financing has been promoted 
for several years by the Commission in both the SAVE and THERMIE programmes 
as a means of removing  such barriers.  Model contracts have been prepared  for all 
Member States and several projects have been carried out.  Council SAVE Directive 
93/76 requires Member States to develop actions related to third-party financing in the 
public  sector.  While this  has been  reasonably  successful,  the  full  potential  of  this 
instrument has not yet been achieved. The instrument needs to be strengthened by use 
in  larger  public  sector  undertakings  and  expanded  to  cover  private  sector  needs. 
Therefore, new ways must be sought to promote the instrument  and to increase the 
interest  of  commercial  banks  in  assuming  the  role  of  guarantor  for  energy  service 
companies  (ESCOs)  considering  third-party  contracting.  In  addition  to  increased 
commercial bank participation, new contract forms may need to be developed, such as 
the guarantee of results procedure which has been successfully used by the ALTENER 
programme. Energy efficiency  investment project clearing houses will also need to be 
tested as a means of providing commercial banks with independent evaluations of the 
viability  of proposed  investments. Studies and pilot actions in these specified  areas 
need to be carried out. 

(vii) Energy Efficiency in the Electricity and Gas sectors and CHP . 
It is important to overcome the institutional  and legal barriers identified.  Integrated 
resource planning or rational planning techniques are an important tool, especially in 
the  context  of  liberalisation  of  the  electricity  and  gas  markets.  The  institutional 
barriers in these sectors may or may not be removed by increased  competition. The 
Commission  remains  of the  view,  especially  in  the  light  of  Kyoto, that  IRP  is an 
important component of the EU's energy efficiency  strategy to increase the focus on 
the  electricity  and  gas  industry's  role  in  providing  energy  services.  There  is  a 
modified  Draft  Directive  on  Rational  Planning  Techniques  which,  while  strongly 
supported  by  the  European  Parliament  has  yet  to  obtain  sufficient  support  in  the 
Council for adoption. The Commission continues to consider this Directive important, 
especially  in  view  of  the  development  of  energy  services  arising  from  market 
liberalisation, and will consider the best way to proceed. 

14 

The  use  of  combined  heat  and  power  in  industry,  the  domestic  and  tertiary  and  the 
power  sectors  is  critical  for  energy  efficiency  and  must  continue  to  be  promoted  by 
the Community  and the Member  States. The recent  Communication  on  Cogeneration 
(COM(97)514  final)  outlines  the  barriers  and  strategy  for  the  European  Union,  and 
was  endorsed  by  Member  States  in  December  1997  in  the  form  of  a  Council 
Resolution. It should be noted that the forthcoming  proposal for a revision of Council 
Directive  88/609/EEC  on  polluting  emissions  from  large  combustion  plants  will 
require  that  new  plants  apply  CHP  where  feasible,  make  provisions  for  the  use  of.* 
biomass and promote efficient  production with fossil  fuels. 

More  generally,  there  is  a  need  to  expand  the  promotion  of  energy  efficiency 
undertaken  by  both  electricity  and  gas  utilities.  A  voluntary  partnership  will  be 
developed whereby utilities support EU initiatives such as the labelling and appliance 
efficiency  programmes  through  negotiated  agreements.  The  Commission  will 
continue  to  promote  DSM  through  pilot  projects  and  dissemination  activities  under 
the  SAVE  Programme.  Commitments  will  be  sought  from  utilities  to  market  energy 
services and energy efficiency  as part of their corporate goal. 

(viii) Energy Management and Technology  Procurement. 
In order to promote energy efficiency  in the public sector, the Commission  intends to 
present  a Proposal  for  a Directive  on Energy  Management,  in which  Member  States 
and  EÙ  Institutions  agree  to  follow  established  guidelines  for  purchasing  cost-
effective  energy-efficient  technology  whenever  constructing,  repairing  or  furnishing 
buildings  owned  or  leased  by  them.  This  should  include  all  EU  and  Member  State 
nationally-owned energy-using equipment, including automobiles. The intention is for 
public  bodies  to  take  the  lead  by  setting  examples  regarding  energy  efficiency. 
Corporate  commitment  based  on  best  practices  programmes  will  be  a  logical 
extension of this. This work will be co-ordinated  with the Community  environmental 
management  and  audit  scheme  (EMAS).  It  will  also  include  life-cycle  cost  analysis 
(LCC).  Compatibility  with 
in 
implementing  the programme  will  be assured.  The potential  in the  building  sector  is 
judged  to  be  large  and  the  institutional  barriers  to  realizing  this  potential  are  well 
known. An energy  management  programme  for public buildings and  property  of this 
type is deemed to be an effective  way to remove these barriers. The Commission will 
also continue to examine and improve its own energy management practices. 

the  Commission's  public  procurement 

rules 

Cooperative  technology  procurement  is  an  instrument  to  specify  and  aggregate  the 
demand  for  energy  efficiency  in  technology.  It  has  been  shown  to  work  well  in 
removing  several different  types of technical  barriers. Technology  procurement  aims 
at  encouraging  new  products  to  meet  a demand  (in  this  case  for  energy  efficiency) 
that existing products on the market  are unable to fulfil.  Technology  procurement  is 
used  to  match producers'  and  consumers'  perspectives  in order  to make  the  market 
function  more  efficiently  with  regard 
to  energy  efficiency.  A  group  of 
knowledgeable  and  influential  purchasers,  defined  as  a  "buyers'  group",  formulate 
product  specifications  with  the  help  of  technical  experts,  and  initiate  competition 
among  producers  to  meet  these  demands.  Technology  procurement  has  been  used 
successfully  by  several  Member  States.  The  feasibility  of  an  EU-levcl  procurement 
has  been  studied  by  the  SAVE programme  and  the  concept  applied  in  a  THERMIE 

15 

project.  A new pilot  project  is now being  considered  and  ways  will  be  sought  to 
broaden and increase this instrument's areas of application. 

6. Next steps 
A  strong  commitment  and clear  signals from all  decision-makers  and  stakeholders 
regarding the importance and priority of energy efficiency  is needed if any significant 
energy  saving  is to be made, particularly  in the  light  of  the  Union's  commitment, 
undertaken in Kyoto, to reduce C02 emissions. 

Apart  from  a  Community  Strategy, Member  States  will  need  to develop their own 
national strategies. In this context, consideration  will need to be given to setting an 
objective to reduce energy intensity at Community and national levels, as well as in 
different sectoral activities. 

It  has been  estimated  that  if  a  basic package  of  measures  such  as  those  proposed 
above,  is  implemented  in  an  effective  and  co-ordinated  fashion,  it  would  have  a 
measurable impact on reducing energy intensity in the Community over and above the 
trend  of  recent  years  (-0.6%  /p.a.).  If  an  additional  annual  reduction  of  energy 
intensity of  1% were to be achieved with the win-win measures proposed  (which is 
realistic), this must be regarded as an achievement against the background of expected 
continuing low energy prices. 

The  focus  of  our  strategy  over the  next  years  has to  be  the  full  realisation  of  the 
significant economic potential for the improvement in energy efficiency  which exists 
in the EU, estimated to be, by 2010, as much as 18% of 1995 energy consumption. 

This Communication is a first step in such a strategy. In the light of further discussion 
and input on the basis of the ideas presented in this Communication, the Commission 
intends to produce an Action Plan for Energy Efficiency. 

16 

Annex 1. 

Changes in Energy Intensity (Total Final Consumption/GDP)(toe/MECU  1990) 

1985 

1990 

1995 

Austria 
Belgium 
Denmark 
Finland 
France 
Germany 
Greece 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
Spain 
Sweden 
United Kingdom 
ww<i«f«jij.•«> 

161.5 
202.1 
143.0 
196.8 
143.5 
177.4 
230.6 
201.1 
128.4 
409.9 
192.8 
217.1 
145.8 
166.9 
177.2 
a<ao 
Source:  1997 — Annual Energy Review, European Commission, September 1997. 

159.6 
210.1 
133.8 
216.9 
142.7 
154.8 
231.4 
161.9 
128.4 
318.2 
196.5 
234.3 
154.5 
181.4 
173.1 
; 
.18I9^S&-

181.2 
223.5 
152.8 
205.8 
160.0 
204.3 
253.4 
216.7 
129.7 
443.3 
222.1 
229.3 
152.7 
192.9 
194.7 

15|f»iU/13S1S1 

Annual 
% 
Change 
90/85 
-2.3 
-2.0 
-1.3 
-0.9 
-2.2 
-2.8 
-1.9 
-1.5 
-0.2 
-1.6 
-2.8 
-1.1 
-0.9 
-2.9 
-1.9 
v&<H\  ,: 

Annual 
% 
Change 
95/90 
-0.2 
0.8 
-1.3 
2.0 
-0.1 
-2.7 
0.1 
-4.2 
0.0 
-4.9 
0.4 
1.5 
1.2 
1.7 
-0.5 
K $ 4 'V 

17 

Annex 2. Outline of Member State Programmes and Measures  for Energy 
Efficiency 

Austria 
There  is  an  Agreement  between  the  Federal  Government  and the  Federal  Provinces 
(Article  15a  of  the  Federal  Constitution  on  Energy  Conservation)  which  came  into 
force  on  15 June  1995. The article provides for the possibility of a common approach 
to energy policy throughout the country. The agreement covers: heat conservation  in 
buildings, energy-saving hot water preparation, subsidies, individual heat cost billing, 
labelling  of household  appliances, certification  of boilers and energy  conservation  in 
the  industrial  sector.  An  agreement  with  the  Association  of  Austrian  Energy 
Consumers provides for  energy  consultancy to companies with energy  use of at least 
20 TJ per year.  Austria has adopted  targets  for  2000, in relation  to  1991 in order  to 
decrease  energy  for  heating  and  water  by  20%,  decrease  specific  industry  use  of 
energy by 20% and decrease energy consumption of transport by 10%. 

m 

• 

Belgium 
Energy  efficiency  is  the  responsibility  of  the  regional  governments.  In  1993,  the 
region  of  Wallonia  adopted  a  decree  to  promote  energy  efficiency  in  all  sectors  by 
creating  a  coherent  legal  framework.  The  region  adopted  the  thermal  efficiency 
standard  used  in  the  Flemish  region  in  1997.  Since  1992,  the  Flemish  region  has 
adopted  a  series  of  actions  related  to  energy  efficiency  including  thermal  efficiency 
standards, energy agreements and consultancy services.  The regions have a variety of 
subsidy and information programmes. 

Denmark 
Energy 21,  the most recent action plan for energy, was published  in  1996.  The main 
purpose is to contribute to sustainable development. A high priority of Energy 21 is to 
promote more efficient  use of energy.  The objective of Energy 21 is to achieve a 20 
per  cent  improvement  in  energy  intensity  between  1994  and  2005.  There  is  also  a 
longer-term  objective  to  improve  energy  intensity  by  55% between  1994  and  2030. 
There is a heavy reliance on carbon taxes in combination with a full  range of  policy 
measures.  Denmark  is  a  pioneer  in  the  use  of  energy  labelling  for  buildings  and 
recently  revised the programme to  improve effectiveness.  It gives a high priority  to 
encouraging  cogeneration  and  in  1996  it  established  the  Electricity  Saving  Trust  to 
support electricity conservation initiatives. 

Finland 
The most recent energy policy was sent to Parliament in June  1997.  It calls for  further 
improvement  of  energy  efficiency.  The  goal  is  to  bring  the  growth  of  total  energy 
consumption  to  a  halt  in  the  next  10 to  15 years  which  means  more  specifically  to 
increase  energy  efficiency  by  10-20%  by  2010.  A  Government  Decision  on  the 
Implementation  of  Energy  Conservation  from  December  1995  states  that  energy 
conservation has been a key of Finnish energy policy for the past two decades and will 
continue to be in the future.  Finland  is giving high priority to voluntary  agreements 
with industry and municipalities.  Finland also relies on the use of carbon taxes to help 

18 

encourage energy efficiency  and has an extensive information programme and major 
technology development programmes. 

France 
Energy efficiency  has been a major element of French energy policy since the  1970s 
and France  has  traditionally  had  one  of  the  most  comprehensive  approaches  in the 
European Union.  In recent years, there have been government cutbacks which have 
affected the overall thrust of the programme. However, there are indications that there 
will  be  a  significant  budget  increase  starting  in  1999.  Since  1993,  ADEME,  the 
executive agency  for energy  efficiency,  and the national utility, EDF, have had joint 
demand-side  management programmes.  ADEME also has one of the most  effective 
regional  networks  in  the  EU  and  has  had  an  effective  consumer  information 
programme for all end-use sectors. 

Germany 
Energy  efficiency  policies  are  largely  designed  to  support  the  climate  change  and 
related  environmental  strategies  as  well  as  meet  EU  obligations.  Germany  has 
traditionally had a strong energy efficiency  effort, both at the federal and state levels. 
The policies  include  regulations  and voluntary  agreements,  combined  with a strong 
emphasis  on  relying  on the  market  mechanism.  Germany  was  one of  the first EU 
countries  to  require  consumption-based  billing  of  costs  of  central  heating  and  hot 
water.  There is also an important energy advisory service undertaken by the consumer 
association AgV which provides service in 330 cities.  The government has voluntary 
agreements  with  19  industry  associations.  Many  Lander  promote  demand-side 
management. 

Greece 
In  recent  years,  Greece  has  improved  its  energy  efficiency  programme,  linking  it 
closely to environmental objectives. Energy efficiency  is being promoted through the 
Global  Action  Plan  and  the  energy  conservation  sub-programme  of  the  National 
Environmental  and  Energy  Programme.  The  Global  Action  Plan,  entitled  Energy 
2001,  is  the  national  action  plan  for  energy  conservation  in  the  built  environment. 
There are a number of subsidy programmes and energy  audits which are undertaken 
by  CRES.  There  are  also  voluntary  agreements  with  energy  -intensive  industries. 
Support is being provided to encourage the development of energy service companies 
(ESCOs). 

Ireland 
Energy efficiency  is one of the three pillars of Irish energy policy.  It is an important 
element in the government's climate change strategy and strategy towards sustainable 
development.  Ireland has developed an energy rating system for buildings and created 
the National Irish Centre for Energy Rating to deliver the programme.  There are two 
major  audit  programmes  for  industry  and  a  programme  to 
fund  measures 
recommended  by  the  audit.  The  Irish  utility,  ESB,  has  an  important  demand-side 
management programme. 

19 

Italy 
The 1988 National Energy Programme (PEN) gives high priority to energy  efficiency. 
Most  of  the  policy  instruments  being  used  result  from  Law  No.  10/91,  entitled 
"Regulations  for the implementation of the National  Energy Plan with regard to the 
rational  use  of  energy,  energy  savings  and  the  development  of  renewable  energy 
sources."  It is a framework  law to introduce regulations aimed at improving energy 
efficiency  in all end-use sectors.  Many of the regulations are still  not completely in 
place.  One,  however,  requires  energy  managers  in  companies  and  organisations 
consuming more than 10,000 toe (industry) or 1,000 toe (other).  A number of subsidy 
programmes ended in 1995 due to lack of funding. 

Luxembourg 
Parliament adopted the general  Energy Efficiency  Law of August  5,  1993.  The law 
gives  authority  to  several  energy  efficiency  measures  to  be  implemented,  including 
new thermal efficiency  standards that came into effect in 1996.  A Grand Ducal ^decree 
requires  the  promotion  of  energy  efficiency  in  municipalities.  There  are  various 
subsidies  for  industry  as  well  as  mandatory  energy  audits 
in  industrial  enterprises 
consuming more than 3 GWh per year. 

The Netherlands 
Energy  policy  gives  high  priority  to  both  energy  efficiency  improvements  and 
developing a sustainable energy economy. The Third White Paper on Energy Policy, 
published in 1996, set a target of an energy efficiency improvement equivalent to one-
third  of  energy  consumption  within  the  next  25  years  (33% improvement  between 
1995-2020,  equivalent  to  1.7% per year).  Energy  efficiency  policies  focus  on three 
end-use  groups:  manufacturing  industry,  homes  and  buildings,  and  traffic  and 
transport.  The  Netherlands  has  been  one  of  the  pioneers  in  the  use  of  voluntary 
agreements  in  all  sectors  and  provides  a  variety  of  subsidies  to  support  the 
agreements. 
There  are  also  several  environmental  taxes  to  encourage  energy 
efficiency.  The  1995 Action Plan for Sustainable  Construction calls for revisions in 
the  thermal  efficiency  standards  in  1998  and  2000.  The  government  has  actively 
supported  cogeneration.  The  utilities  implement  the  Environmental  Action  Plan 
(MAP)  which  covers  a  range  of  subsidies  and  information  programmes  related  to 
energy  efficiency. 

Portugal 
The Energy  Programme,  created in  1994 and partly funded  by the  EU,  is primarily 
designed to provide financial incentives for energy efficiency.  The objectives are to 
increase the use of indigenous energy sources and to improve energy efficiency.  The 
Energy  Programme  for  Buildings  came  into effect  in  1995.  Enterprises  consuming 
more than  1,000  toe  per year are required to establish  energy  management  systems 
and their energy use patterns must be examined every five years.  The five-year plans 
must be approved by the  government.  The Strategic  Programme  for the  Expansion 
and Modernisation of Portuguese  Industry provides incentives  and voluntary  actions 
to help industry both modernise and meet environmental goals.  SIURE, the Regional 
Incentive  System for the Rational  Use  of Energy, encourages  investments  in energy 
efficiency through audits, investment support, demonstration and information. 

20 

Spain 
The  most  recent  energy  policy  is  laid  out  in the  National  Energy  Plan  1991-2000 
(PEN), approved by Parliament in April  1992. The PEN gives high priority to energy 
efficiency.  The goal of the energy efficiency  plan is to reduce projected final energy 
demand  by  7.6  per  cent  in  the  year  2000  compared  to  1991  by  decreasing  7% in 
industry,  9.6% in  transport  and  5% in the  residential  sector.  There  are a variety  of 
subsidy  programmes.  IDAE,  the  Institute  for  Energy  Diversification  and  Savings, 
provides third-party financing for hospitals and industry.  The government launched a 
DSM  programme  in  1995.  IDAE  negotiated  the  first  voluntary  agreements  with 
industry in 1996. 

Sweden 
Sweden has traditionally had an ambitious energy efficiency  strategy.  The  1997 Bill 
on  Sustainable  Energy  Supply  gives  a  strong  emphasis  to  energy  efficiency  using 
technology procurement. The goals for Sweden's  1997 energy policy are to secure the. 
long-term  and  short-term  supplies  of  electricity  and  other  energy  in  internationally 
competitive terms. Until the  1997 Bill on Sustainable Energy Supply, the most recent 
official  Swedish energy  policy  dated from 1991.  Sweden also relies on a variety  of 
environmental taxes, including a tax  on carbon dioxide emissions.  Sweden provides 
support  for  municipal  energy  management  and  requires  municipalities  to  prepare 
energy plans. 

United Kingdom 
The  energy  policy  in the United  Kingdom  is based on ensuring  secure,  diverse and 
sustainable  supplies  of  energy  in the forms that people  and businesses  want,  and at 
competitive  prices.  It  is  the  government's  view  that  this  can be  achieved  through 
competitive  energy  markets  working  within  a  stable  legal  framework.  Energy 
efficiency  has been a major element  of energy  policy  since the  1970s.  The Energy 
Saving  Trust  was  established  to  encourage  investments  in  energy  efficiency.  The 
1995 Home Energy Conservation Act requires all local housing authorities to identify 
measures  that  will  improve  energy  efficiency  in  public  and  private  housing.  The 
United  Kingdom  is  one  of  the  leaders  in  developing  a  Best  Practice  Programme, 
which provides technical information for professionals in all sectors.  The government 
also has an ambitious programme to improve the energy use of its own operations. 

21 

ISSN 0254-1475 

COM(98) 246  final 

DOCUMENTS 

EN 

12  06  01  10 

Catalogue number  : CB-CO-98-286-EN-C 

ISBN 92-78-35495-3 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg