Green Paper on Energy Efficiency or Doing More With Less
Date: 2005-06-22
Institutions: European Commission
Subjects: consumer information, energy policy, energy saving, energy supply, environmental protection, security of supply

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.6.2005 
COM(2005) 265 final 

GREEN PAPER 

on Energy Efficiency 
or 
Doing More With Less 

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TABLE OF CONTENTS 

Introduction ................................................................................................................................ 4 

A. 

1. 

1.1. 

1.2. 

2. 

3. 

4. 

B. 

1. 

Identifying the obstacles ............................................................................................ 12 

The need to adopt specific measures to improve energy efficiency .......................... 13 

Financial obstacles in the way of proper market reaction.......................................... 13 

The need for energy services...................................................................................... 14 

The need for action by public authorities................................................................... 14 

The external costs and the transparency of prices...................................................... 15 

Information and education: two under-used tools...................................................... 15 

A European Initiative ................................................................................................. 16 

Action at Community level ........................................................................................ 17 

1.1. 

Integrating energy in other Community policies ....................................................... 17 

1.1.1.  Research and Technological Development................................................................ 17 

1.1.2.  Promoting best practices and technology................................................................... 17 

1.1.3.  Establishing and promoting best practice at all levels through national Action Plans

.................................................................................................................................... 18 

1.1.4.  Better use of taxation ................................................................................................. 18 

1.1.5.  Better targeted State aid ............................................................................................. 20 

1.1.6.  Opening up public purchasing ................................................................................... 20 

1.1.7.  Finding European financing....................................................................................... 20 

1.2. 

Specific energy policy measures................................................................................ 21 

1.2.1.  Buildings .................................................................................................................... 21 

1.2.2.  Domestic appliances................................................................................................... 22 

1.2.3.  Limiting the fuel consumption of vehicles................................................................. 23 

1.2.4. 

Informing and protecting the consumer ..................................................................... 24 

2. 

2.1. 

2.2. 

2.3. 

National level ............................................................................................................. 25 

Regulation of network activities ................................................................................ 25 

Regulation of supply activities................................................................................... 26 

Electricity generation ................................................................................................. 26 

2.4.  White certificates, a market-based instrument ........................................................... 28 

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3. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

5. 

Industry ...................................................................................................................... 28 

Transport .................................................................................................................... 29 

Organising air traffic management............................................................................. 29 

Optimising traffic management.................................................................................. 30 

Developing a market for clean vehicles ..................................................................... 30 

Charging of infrastructure to induce changes in behaviour ....................................... 31 

Tyres........................................................................................................................... 31 

Aviation...................................................................................................................... 32 

Regional and local level ............................................................................................. 32 

5.1. 

Specific financing instruments................................................................................... 32 

6. 

6.1. 

6.2. 

6.3. 

6.4. 

A strategy open to the world ...................................................................................... 33 

Integrating energy efficiency in international cooperation ........................................ 34 

Integrating energy efficiency in the neighbourhood policy and EU-Russia co-
operation..................................................................................................................... 35 

Integrating energy efficiency into development policy ............................................. 35 

Reinforcing the role of international financing institutions ....................................... 35 

CONCLUSION ........................................................................................................................ 37 

ANNEX 1................................................................................................................................. 39 

ANNEX 2................................................................................................................................. 47 

ANNEX 3................................................................................................................................. 48 

ANNEX 4................................................................................................................................. 49 

ANNEX 5................................................................................................................................. 50 

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INTRODUCTION 

Even without high and volatile oil prices, which have led to a downgrading of the prospects of 
economic  growth  in  Europe,  there  would  be  very  good  reasons  for  the  European  Union  to 
make  a  strong  push  towards  a  re-invigorated  programme  promoting  energy  efficiency  at  all 
levels of European society1: 

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Competitiveness and the Lisbon agenda. According to numerous studies2 the EU 
could save at least 20% of its present energy consumption in a cost-effective manner, 
equivalent  to  €60  billion  per  year,  or  the  present  combined  energy  consumption  of 
Germany and Finland. Although considerable investment is needed to harness these 
potential  savings,  in  terms  of  new  energy  efficient  equipment  and  energy  services, 
Europe  is  a  world-leader  in  this  area  and  energy  services  are  largely  local  in 
character. This means the creation of many new high-quality jobs in Europe. Indeed, 
on  the  basis  of  several  studies3  it  could  be  estimated  that  such  an  initiative  could 
potentially  create  directly  and  indirectly  as  many  as  a  million  new  jobs  in  Europe. 
Furthermore, as the measures targeted in this initiative are only cost-effective energy 
efficiency  measures  –  ones  that  result  in  a  net  saving  even  once  the  necessary 
investment is taken into account – a successful energy efficiency scheme means that 
some  of  the  €60  billion  not  spent  on  energy  translates  as  a  net  saving,  resulting  in 
increased  competitiveness  and  better  living  conditions  for  EU  citizens.  The  same 
studies mentioned above conclude that an average EU household could save between 
€200  and  €1 000  per  year  in  a  cost-effective  manner,  depending  on  its  energy 
consumption.  

An  effective  energy  efficiency  policy  could  therefore  make  a  major  contribution  to 
EU  competitiveness  and  employment,  which  are  central  objectives  of  the  Lisbon 
agenda.  By  addressing  energy  demand  this  policy  is  part  of  the  EU  policies  on 
energy supply including its efforts to promote renewable energies and is as such part 
of the set of priorities first outlined in the 2000 Green Paper “Towards a European 
Strategy for the security of energy supply”. In addition, energy efficiency equipment, 

See also Annex 1. 
The  Mid-term  Potential  for  Demand-side  Energy  Efficiency  in  the  EU,  Lechtenböhmer  and  Thomas, 
Wuppertal Institutie, 2005: “Our recent policies and measures (P&M) scenario for the EU-25 sketches a 
so-called “ambitious strategy” in order to achieve substantial reductions of GHG-emissions until 2020. 
This  strategy  uses  about  80  %  of  the  currently  available  economic  savings  potentials.  It  is  assumed 
though  that  decision  makers  are  better  informed  by  active  policies  and  measures  and  change  their 
attitudes towards the best available technologies in case of energy efficiency. The results shown in the 
table make it clear that energy efficiency of the EU 25 economy will increase in this P&M scenario by 
29 %.” Explanatory memorandum to the proposed Directive on energy end-use efficiency and energy 
services  -  COM(2003)  739.  MURE  Database  Simulation  2000,  SOS  Italy;  Economic  Evaluation  of 
Sectoral  Emissions  Reduction  Objectives  for  climate  change,  Blok  and  Joosen,  ECOFYS,  Utrecht, 
2000;  Energy  Efficiency  Indicators,  ODYSSEE,  ADEME,  Paris,  2004;  Powering  Profits:  How 
Companies turn energy efficiency into shareholder value, Green Business Letter, April 2005; Improving 
energy efficiency by 5% and more per year, K. Blok, to be published in Journal of Industrial Ecology; 
The  Potential  for  more  efficient  electricity  use  in  Italy,  F.  Krause;  The  Energy  Efficiency  Challenge, 
WWF, 2005; World Energy Assessment 2000 and 2004 update, UNDP Website; European Council for 
an energy efficient economy, Proceedings 2005 Summer study: Energy savings, What works and who 
delivers?, www.eceee.org 
Rat 
publikationen/broschueren/Broschuere_Kohleempfehlung.pdf, Ecofys. 

für  Nachhaltige  Entwicklung,  2003,  http://www.nachhaltigkeitsrat.de/service/download/ 

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services  and technology are  becoming increasingly important worldwide. If Europe 
maintains  its  prominent  position  in  this  area,  resulting  in  the  development  and 
introduction of new energy efficiency technologies in Europe first, this represents an 
important trade opportunity.  

Environmental  protection  and  the  EU’s  Kyoto  obligations.  Energy  saving  is 
without  doubt  the  quickest,  most  effective  and  most  cost-effective  manner  for 
reducing greenhouse gas emissions, as well as improving air quality, in particular in 
densely populated areas. It will therefore help Member States in meeting their Kyoto 
commitments. Secondly, it will constitute a major contribution to the longer term EU 
efforts in combating climate change through further emissions reductions, as part of a 
future  post  2012  regime  within  the  United  Nations  Framework  Convention  on 
Climate  Change.  Many  developing  countries  fully  recognise  the  essential  role  of 
energy efficiency in addressing these multiple challenges. Europe therefore needs to 
set  the  example  in  this  respect,  leading  to  the  development  of  new  policies, 
cooperation  and  technologies  that  can  assist  the  developing  world  to  address  this 
challenge. 

Security  of  supply.  By  2030,  on  the  basis  of  present  trends,  the  EU  will  be  90% 
dependent on imports for its requirements of oil and 80% dependent regarding gas. It 
is impossible to predict the price of oil and gas in 2020, particularly if demand from 
the developing world continues to increase as rapidly as today. As indicated on the 
2nd May 2005 in the context of the IEA Ministerial meeting, energy efficiency is one 
of the key methods to deal with this challenge. Making a real effort to at first cap EU 
energy  demand  at  present  levels  and  subsequently  reduce  it,  would  represent  an 
important contribution in developing a coherent and balanced policy to promote the 
security of energy supplies for the European Union. 

This Green Paper therefore seeks to identify the bottlenecks presently preventing these cost-
effective  efficiencies  from  being  captured  –  lack  of  appropriate  incentives,  lack  of 
information, lack of available financing mechanisms for example.  

The  Green  Paper  then  seeks  to  identify  options  how  these  bottlenecks  can  be  overcome, 
suggesting a number of key actions that might be taken. Examples include: 

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establishing  Annual  Energy  Efficiency  Action  Plans  at  national  level.  Such  plans 
might  identify  measures  to  be  taken  at  national,  regional  and  local  level  and 
subsequently monitor their success both in terms of improving energy efficiency and 
their cost-effectiveness. The plans could be complemented by a “benchmarking” and 
“peer review” process at European level, so that Member States can easily learn from 
the successes and mistakes of others and to ensure the rapid spread of best practice 
throughout the EU; 

giving the citizens better information, for example through better targeted publicity 
campaigns and improved product labelling; 

improving  taxation,  to  ensure  that  the  polluter  really  pays,  without  however 
increasing overall tax levels; 

better  targeting  state  aid  where  public  support  is  justified,  proportionate  and 
necessary to provide an incentive to the efficient use of energy; 

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using public procurement to “kick-start” new energy efficient technologies, such as 
more energy efficient cars and IT equipment; 

using new or improved financing instruments, both at Community and national level, 
to give incentives, but not aid, to both companies and householders to introduce cost-
effective improvements; 

going  further  regarding  buildings,  where  an  existing  Community  Directive  applies, 
and  possibly  extending  it  to  smaller  premises  in  a  manner  that  ensures  cost-
effectiveness and minimum additional bureaucracy; 

using  the  CARS  21  Commission  initiative  to  speed  up  the  development  of  a  new 
generation of more fuel-efficient vehicles. 

This Green Paper seeks to act as a catalyst, leading to a renewed energy efficiency initiative at 
all levels of European society – EU, National, regional and local. In addition, this Green Paper 
seeks to make a significant contribution, by way of example and leadership, to kick-start an 
international  effort  to  contribute  to  addressing  climate  change  through  energy  efficiency. 
China presently uses more than five times as much energy as the EU to produce one unit of 
GDP, the USA approximately uses 50% more than the EU4. With exploding energy demand 
in particular  in China and  India,  energy efficiency must be one of the key policies to try to 
reconcile  on  the  one  hand  the  increased  energy  needs  of  the  developing  world  to  power 
growth and improve living conditions for their citizens and, on the other hand, combat global 
warming. This Green Paper, and the momentum created in following it up, should put the EU 
at the forefront of efforts to make energy efficiency a global priority. Finally, high oil prices 
hit the poorest the hardest, particularly in ACP countries. Attention should be given during the 
follow-up to the Green Paper as to how technology which is developed in Europe can be used 
or adapted to meet the needs of these countries and how best it can be deployed. 

The concrete examples cited above to meet this challenge, which are examined in more detail 
below, are not proposals; they are ideas for discussion. Nor are they exhaustive. Following the 
publication of this Green Paper, the Commission shall, until the end of this year, undertake an 
intensive public consultation.  

To stimulate debate and effective input, the Commission puts forward the 25 non-exhaustive 
questions figuring below.  

The  Commission  has  decided  to  set  up  the  “European  Sustainable  Energy  Forum”.  This 
Forum, based on the models of the “Florence” and “Madrid” Forums, which were used very 
successfully to develop consensus on how to proceed with energy market liberalisation, will 
bring  together  the  Commission,  Member  States,  the  European  Parliament,  national  energy 
Regulators  and  representatives  of  european  industry  and  NGO’s.  It  will  meet  twice  a  year. 
The first meeting, scheduled for October, will discuss in depth this Green Paper. 

However,  in  addition  to  consulting  the  Council,  the  European  Parliament  and  industry  and 
NGO’s  on  the  document,  the  Commission  considers  it  vital  to  have  a  wide-ranging  public 
consultation.  All  interested  are  welcome  to  put  forward  comments  and  suggestions  in  the 
following manners: 

4 

This comparison would change if we take into account the difference in purchase power of citizens. See 
Annex 1 for more details. 

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by 
http://europa.eu.int/comm/energy/efficiency/index_en.htm; 

internet, 

Commission’s 

through 

the 

web-site 

at 

by contacting Mr. Luc Werring of the Directorate-General for Energy and Transport 
of the European Commission (luc.werring@cec.eu.int); 

the  Commission  will  involve  each  of  its  Offices  situated  in  EU  cities.  Information 
and 
on: 
will 
http://europa.eu.int/comm/represent_en.htm; 

advertised 

possible 

events 

be 

the Commission has a network of Energy Agencies, in many European cities. These 
Agencies will be tasked with widely spreading information on the Green Paper and 
seeking comments. 

Where  the  person  submitting  comments  agrees,  all  submissions  will  be  placed  on  the 
Commission’s internet site for consultation.  

It  is  important  that  this  Green  Paper  rapidly  leads  to  concrete  action.  Thus,  following  the 
consultation process the Commission believes that a concrete Action Plan should be drawn up 
in  2006,  outlining  the  specific  action  to  be  taken  at  EU  and  national  level,  accompanied  by 
necessary cost-benefit analyses.  

- Questions for debate 

General remarks 

The following questions seek to further analyse the options identified in this paper, in terms of 
their cost-effectiveness and their contribution to energy saving, to environmental protection, 
to job creation and to the reduction of imports of oil and gas.  

In replying to these questions, the Commission would be grateful if as much detail as possible 
is  provided  on  these  specific  issues,  as  well  as  the  question  at  which  level  the  proposed 
measure  could  be  best  addressed:  at  international,  EU,  national,  regional  or  local  level? 
Furthermore  would  the  measure  in  question  be  best  addressed  through  recommendations, 
voluntary  measures,  binding  objectives  or  measures  in  legislative  proposals?  Finally,  how 
could  the  measures  under  consideration  be  implemented  in  practice?  What  would  be  the 
timescale, the costs, and where a monitoring or similar  function would be necessary, which 
body would be best placed to do this? 

This  will  enable  the  Commission,  in  2006,  to  reach  solid,  practical  and  implementable 
proposals in its Action Plan that will make a real difference. 

In addition, one of the main objectives of the Green Paper and the consultation which follows 
it is to stimulate additional ideas that are not yet identified. Suggestions and examples, where 
possible giving the details mentioned above in terms, for example, of cost of implementation, 
benefits  in  terms  of  energy  savings  and  ease  of  implementation  would  be  welcomed  by  the 
Commission. 

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Questions regarding the options identified in the Green Paper 

1. 

2. 

3. 

4. 

5. 

6. 

How  could  the  Community  and  the  Commission  in  particular,  better  stimulate 
European  investment  in  energy  efficiency  technologies?  How  could  funds  spent 
supporting research in this area be better targeted? (Section 1.1) 

The emission trading mechanism is a key tool in developing a market-based response 
to  meeting  the  goals  of  Kyoto  and  climate  change.  Could  this  policy  be  better 
harnessed to promote energy efficiency? If so, how? (Section 1.1) 

In  the  context  of  the  Lisbon  strategy  aiming  to  revitalise  the  European  economy, 
what link should be made between economic competitiveness and a greater emphasis 
on  energy  efficiency?  In  this  context,  would  it  be  useful  to  require  each  Member 
State to set annual energy efficiency plans, and subsequently to benchmark the plans 
at  community  level  to  ensure  a  continued  spread  of  best  practice?  Could  such  an 
approach be used internationally? If so, how? (Section 1.1.3) 

Fiscal policy is an important way to encourage changes in behaviour and the use of 
new  products  that  use  less  energy.  Should  such  measures  play  a  greater  role  in 
European  energy  efficiency  policy?  If  so,  which  sort  of  measures  would  be  best 
suited to achieve this goal? How could they be implemented in a manner that does 
not result in an overall increase in the tax burden? How to really make the polluter 
pay? (Section 1.1.4) 

Would  it  be  possible  to  develop  state  aid  rules  that  are  more  favourable  to  the 
environment, 
in  particular  by  encouraging  eco-innovation  and  productivity 
improvements? What form could these rules take? (Section 1.1.5) 

Public  authorities  are  often  looked  to  for  an  example.  Should  legislation  place 
specific  obligations  on  public  authorities,  for  example  to  apply  in  public  buildings 
the measures that have been recommended at Community or national level. Could or 
should  public  authorities  take  account  of  energy  efficiency  in  public  procurement? 
Would  this  help  build  viable  markets  for  certain  products  and  new  technologies? 
How  could  this  be  implemented  in  practice  in  a  way  that  would  promote  the 
development of new technologies and provide incentives to industry to research new 
energy  efficient  products  and  processes?  How  could  this  be  done  in  a  manner  that 
would  save  money  for  Public  authorities?  As  regards  vehicles,  please  see  question 
20. (Section 1.1.6) 

7. 

Energy  efficiency  funds  have  in  the  past  been  used  effectively.  How  can  the 
experience be repeated and improved? Which measures can be adopted usefully at: 

– 

– 

– 

– 

international level 

EU level 

national level 

regional and local level?  

(Section 1.1.7. See also question 22) 

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8. 

9. 

10. 

Energy  efficiency  in  buildings  is  an  area  where  important  savings  can  be  made. 
Which practical measures could be taken at EU, national, regional or local level to 
ensure  that  the  existing  Community  Buildings  Directive  is  a  success  in  practice? 
Should the Community go further than the existing Directive, for example extending 
it to smaller premises? If so, how could the appropriate balance be achieved between 
the  need  to  generate  energy  efficiency  gains  and  the  objective  of  limiting  new 
administrative burdens to the minimum possible? (Section 1.2.1) 

Giving  incentives  to  improve  the  energy  efficiency  of  rented  accommodation  is  a 
difficult task because the owner of the building does not normally pay the energy bill 
and  thus  has  no  economic  interest  in  investing  in  energy  efficiency  improvements 
such  as  insulation  or  double  glazing.  How  could  this  challenge  be  best  addressed? 
(Section 1.2.1) 

How can the impact of legislation on the performance of energy-consuming products 
for household use be reinforced? What are the best ways to encourage the production 
and consumption of these products? Could, for instance, present rules on labelling be 
improved? How could the EU kick-start research into and the subsequent production 
of  the  next  generation  of  energy  efficient  products?  What  other  measures  could  be 
taken at : 

– 

– 

– 

– 

international level 

EU level 

national level 

regional and local level? 

(Section 1.2.2) 

11. 

A major challenge is to ensure that the vehicle industry produces ever more energy 
efficient  vehicles.  How  can  this  best  be  done?  What  measures  should  be  taken  to 
continue to improve energy efficiency in vehicles and at which level? To what extent 
should  such  measures  be  voluntary  in  nature  and  to  what  extent  mandatory?  
(Section 1.2.3) 

12. 

Public  information  campaigns  on  energy  efficiency  have  shown  success  in  certain 
Member States. What more could and should be done in this area at: 

– 

– 

– 

– 

international level 

EU level 

national level 

regional and local level?  

(Section 1.2.4) 

13. 

What  can  be  done  to  improve  the  efficiency  of  electricity  transmission  and 
distribution?  How  to  implement  such  initiatives  in  practice?  What  can  be  done  to 

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14. 

15. 

16. 

17. 

18. 

19. 

20. 

21. 

improve the efficiency of fuel use in electricity production? How to further promote 
distributed generation and co-generation? (Sections 2.1-2.3) 

Encouraging electricity and gas providers to offer an energy service (i.e. agreeing to 
heat  a  house  to  an  agreed  temperature  and  to  provide  lighting  services)  rather  than 
simply  providing  energy  is  a  good  way  to  promote  energy  efficiency.  Under  such 
arrangements  the  energy  provider  has  an  economic  interest  that  the  property  is 
energy efficient and that necessary investments are made. Otherwise, electricity and 
gas  companies  have  an  economic  interest  that  such  investments  are  not  made, 
because  they  sell  more  energy.  How  could  such  practices  be  promoted?  Is  a 
voluntary code or agreement necessary or adequate? 

In a number of Member States, white (energy efficiency) certificates have been or are 
being introduced. Should these be introduced at Community level? Is this necessary 
given the carbon trading mechanism? If they should be introduced, how could this be 
done  with  the  least  possible  bureaucracy?  How  could  they  be  linked  with  carbon 
trading mechanism? (Section 2.4) 

Encouraging  industry  to  take  advantage  of  new  technologies  and  equipment  that 
generate cost-effective energy efficiencies represents one of the major challenges in 
this area. In addition to the carbon trading mechanism, what more could and should 
be  done?  How  effective  have  been  the  steps  taken  so  far  through  voluntary 
commitments,  non-binding  measures  adopted  by 
information 
campaigns? (Section 3) 

industry,  or 

A new balance between modes of transport – a major theme of the strategy set out in 
the White Paper that the Commission adopted in 2001 on a European transport policy 
for  2010  –  is  still  a  top  priority.  What  more  could  be  done  to  increase  the  market 
share of rail, maritime and inland waterway transport? (Section 4.2) 

In  order  to  improve  energy  efficiency  it  is  necessary  to  complete  certain 
infrastructure  projects  from  the  trans-European  transport  network.  How  should  the 
investments  needed  for  infrastructure  projects  be  developed,  using  what  sources  of 
financing? (Section 4.2) 

Among  the  measures  that  could  be  adopted  in  the  transport  sector,  which  have  the 
greatest  potential?  Should  priority  be  given  to  technological  innovations  (tyres, 
engines…),  particularly  through  standards  defined  jointly  with  the  industry,  or  to 
regulatory measures such as a limit on fuel consumption of cars? (Sections 4.3-4.5) 

Should  public  authorities  (state,  administrations,  regional  and  local  authorities)  be 
obliged in their public procurement to buy a percentage of energy efficient vehicles 
for  their  fleets?  If  so,  how  could  this  be  organised  in  a  manner  that  is  technology 
neutral  (i.e.  it  does  not  result  in  distorting  the  market  towards  one  particular 
technology)? (Section 4.3) 

Infrastructure charging, notably paying to use roads, has started to be introduced in 
Europe. A first proposal was made in 2003 to strengthen the charging of professional 
road  transport.  Local  congestion  charges  have  now  been  introduced  in  some  cities. 
What should be the next steps in infrastructure charging? How far should “external 

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costs”  such  as  pollution,  congestion  and  accidents  be  directly  charged  to  those 
causing them in this manner? (Section 4.4) 

In  certain  Member  Sates,  local  or  regional  energy  efficiency  project  financing 
schemes,  managed  by  energy  efficiency  companies,  have  proven  very  successful. 
Should this be extended. If so, how? (Section 5.1) 

Should energy efficiency issues be more integrated in the Union’s relationships with 
third  countries,  especially  its  neighbours?  If  so,  how?  How  can  energy  efficiency 
become a key part of the integration of regional markets? Is it necessary to encourage 
the international financial institutions to pay more attention to demand management 
issues in their technical and financial assistance to third countries? If so, what could 
be the most effective mechanisms or investments? (Section 6) 

How could advances in energy efficiency technology and processes in Europe be put 
to effective use in developing countries? (Section 6.3) 

Should the Union negotiate tariff or non tariff advantages within the WTO for energy 
efficient products and encourage other members of WTO to do the same? (Section 6) 

22. 

23. 

24. 

25. 

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A. 

IDENTIFYING THE OBSTACLES 

The oil embargos at the beginning of the seventies led countries of the EU to re-think their 
energy  consumption  to  become  less  dependent  on  oil.  Progress  to  this  end  in  all  Member 
States  broke  the  hitherto  inseparable  link  between  growth  in  GDP  and  in  energy  demand 
already half-way through the seventies. Energy intensity has come down by 40% in Germany 
and Denmark, and in France it is 30% less than what it was in the seventies. This decoupling 
of GDP and energy demand is illustrated in the figure below. 

Fuel  efficiency  of  cars  dramatically  increased5.  Awareness  of  the  importance  of  rational 
energy use in buildings has given rise to better insulation. France, for instance embarked an 
ambitious energy-savings programme, with the slogan "We don't have oil, but we have ideas," 
accelerating the shift in electricity production from oil-fired power plants to nuclear reactors, 
and increasing taxes on diesel. 

Development of the primary energy demand  and of “negajoules” - EUR 25
 ( "negajoules" : energy sav ings calulated on the basis of 1971 energy 
intensity) 

3000

2500

2000

e
o
t
M

1500

1000

500

0

Negajoules

Biomass

Other electricity

Nuclear

Gas

Oil

Coal

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Source: Enerdata 

The oil shocks were a short-term boost to quick energy efficiency measures, but the absence 
of  in-depth  structural  measures  meant  that  demand  could  not  be  stabilised.  In  more  recent 
years  the  new  energy  price  rise  on  world  markets  and  especially  oil  prices,  has  stimulated 
renewed interest in demand management.  

Effective  action  to  bring  down  energy  consumption  substantially  is  impossible  without  first 
identifying the factors underlying waste in order to come to grips with them in future. 

5 

In contrast to the United States, where oil consumption initially fell but then ended up rising by a total 
of 16 % from 1973 to 2003, in France, despite some increase in recent years, oil use is still 10 % lower 
today than it was three decades ago and its energy intensity is 30% lower than in 1973. 

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1. 

The need to adopt specific measures to improve energy efficiency 

In  theory,  market  forces  would  in  time  produce  the  most  efficient  outcome  without 
interference. However, given the technical characteristics of the energy markets, there appears 
to  be  a  need  to  promote  and  accompany  such  market  induced  change  by  improving  energy 
efficiency  more  rapidly  and  thus  reducing  the  demand  for  energy.  Market  forces  will  also 
continue to be essential when matching demand with supply.  

The most important barrier to increased energy efficiency is a lack of information (on costs 
and availability of new technology; lack of information on costs of own energy consumption; 
lack of training of technicians on proper maintenance and the fact that these aspects are not 
properly  taken  into  account  by  market  participants).  This  can  be  a  particular  problem  when 
making investments which are often long term. Investment decisions can also be influenced 
by  the  split-incentive  problem  (eg  between  the  landlord  (who  installs  the  boiler)  and  the 
tenant (who pays the heating bill); or where a corporate investment budget is not coordinated 
with the energy budget. There can also be misleading prices (due to exclusion of externalities, 
lack of transparency). Technical barriers such as the lack of standardisation of energy-using 
equipment  and  components  can  also  make  it  more  difficult  for  new  energy  efficient 
technologies  to  have  a  rapid  impact  on  the  market.  In  the  past,  regulatory  failures  in  the 
monopoly  sectors  created  in  some  cases  inadvertent  consumption-incentives  in  energy  tariff 
structures. The improvement in the regulatory regime in the EU and the introduction of more 
transparent market forces through liberalisation should address this concern, but the effects of 
previous investment decisions will be with us for many years. 

1.1. 

Financial obstacles in the way of proper market reaction 

The  lack  of  information  and  training  on  the  latest  technologies  and  their  economic  and 
financial  impact  on  the  rate  of  return  from  investment,  combined  in  some  cases  with  an 
aversion  to  the  risk  associated  with  early  adoption  of  new  technologies  and  techniques,  can 
encourage  investors  such  as  banks  to  continue  to  support  out-dated  technology  even  when 
they  are  not  the  most  efficient  or  offering  the  best  return.  The  promoters  of  energy-saving 
technologies obviously need to make their case when seeking support from potential investors 
such as banks or venture capital funds. Energy Service Companies (ESCO`s) will also have a 
role to play here. Industry, investors, and consumers in general should also be encouraged to 
include  the  energy-saving  alternative  in  their  financial  planning.  Players  should  be  made 
aware  of  the  very  positive  cost-benefit  ratio,  and  sometimes,  very  short  pay-back  periods  – 
even  less  than  a  year  in  certain  cases  –  for  investments  in  energy  efficiency.  Simple  tools 
could be developped for risk-assessment of projects such as life-cycle analysis handbooks and 
computer programmes and investment grade energy audits. 

There  is  moreover  a  lack  of  access  to  adequate  financial  instruments  supporting  measures 
which  bolster  energy  efficiency,  such  measures  being  predominantly  small  in  scale. 
Experience shows that the traditional intermediaries, in particular banks, are often reluctant to 
support energy efficiency projects. One avenue to explore is the idea of ‘global’ loans6, where 
the funds are subsequently redistributed via an intermediary or a “clearing house” with more 
technical and economic expertise in the field of energy efficiency. Another opportunity is the 

6 

The European Investment Bank e.g., enters partnerships with intermediaries (usually national or local 
banks)  to  provide  global  loans,  which  are  then  loaned  out  through  these  intermediaries  to  finance 
smaller projects. 

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financing  models  based  on  shared  savings  currently  used  in  some  Member  States,  such  as 
third-party financing and performance contracting. 

1.2. 

The need for energy services 

The  opening-up  of  markets  has  had  a  positive  effect  on  energy  efficiency.  Competitive 
pressure  has  driven  electricity  companies  to  produce  in  the  most  efficient  way,  particularly 
through technology investments, (e.g.such as combined-cycle gas turbines). 

The opening-up of markets has had an impact on electricity prices. Hence, for large industrial 
users, electricity prices fell in real terms by an average of 10-15% between 1995 and 2005. 
However, more remains to be done to ensure real and effective competition in all areas of the 
EU. To this end the Commission at the end of the year will adopt a full report on the state of 
the market, and has also recently launched a sectorial competition enquiry. 

In  themselves,  falling  prices  for  energy  do  not  encourage  either  careful  consumption  or 
investments  in  energy  efficiency.  There  are  a  number  of  companies  that  supply  efficiency 
solutions  and  that  are  getting  paid  by  the  energy  savings  (“ESCO”).  These  companies  still 
need  policy  support  in  the  form  of  help  for  the  dissemination  of  their  activities,  quality 
standards,  and  access  to  finance,  as  they  are  still  in  their  infancy  stage.  The  further 
development  of  the  ESCO  industry  could  greatly  contribute  to  the  implementation  of  many 
additional cost-effective projects, and can play an important role in bridging the gap between 
different actors on the energy and technology supply side and among energy consumers. 

The Commission is well aware of the dilemma of increased consumption resulting from lower 
prices  caused  by  the  greater  efficiency  secured  by  introduction  of  market  forces.  For  this 
reason, in December 2003, it proposed a Directive on energy end-use efficiency and services  

2. 

The need for action by public authorities 

Public authorities, national or European, have a role to play in compensating for inadequacies 
of the market. However, this is not always within their capacity. Several reasons explain this 
shortcoming. 

Member States have recognised that more has to be done to ensure greater energy efficiency. 
They hesitate to commit themselves to the mandatory annual reduction in energy consumption 
by 1% in the proposed Directive on energy services.  

Furthermore,  state  aid  and  tax  measures  are  two  tools  which  are  often  misused.  State  aid  is 
granted not only in favour of energy efficiency but also for electricity generation using fuels 
which do not give the highest energy yield. There is also the effect of a plethora of disparate 
small  subsidies  which  have  only  a  very  limited  overall  impact.  The  same  is  true  for  tax 
instruments. Levels of tax should in principle be eased on specific products with low energy 
consumption, and raised on those with high demand. 

Finally there is the need for continued, careful scrutiny of further mergers of companies in the 
energy  and  transport  sectors,  which  can  lead  to  increased  scope  for  the  abuse  of  market 
power, and not necessarily to greater energy efficiency. 

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3. 

The external costs and the transparency of prices 

The current pricing system for energy products does not point consumers towards patterns of 
consumption which offer a more economical and rational use of energy.  

Moreover,  it  does  not  take  account  of  the  relative  energy  value  of  products,  nor  of  the 
environmental impact of their use. The current pricing system does not guarantee that external 
costs are included. Clearly this is not an incentive to consume less, or to produce energy from 
more  environmentally  friendly  sources.  This  problem  is  particularly  acute  in  the  transport 
sector. In the White Paper on Transport ‘European transport policy for 2010: time to decide’, 
published in September 20017, the Commission took the view that as long as the prices fail to 
reflect the entire social costs of transport, demand will continue to be artificially excessive. If 
appropriate  infrastructure  charging  policies  were  applied,  these  inefficiencies  would  largely 
disappear.  

The current pricing structure and low prices could even lead to higher consumption. There is a 
lack of effort to allow for consumers to understand the price of their consumption. A real-time 
metering system (so-called “smart meters”) could bring down consumption at times when the 
electricity price is high. 

4. 

Information and education: two under-used tools 

While it is regarded as normal to launch public information campaigns to encourage people to 
drink  less  alcohol;  less  attention  has  hitherto  been  given  to  publicity  campaigns  on  energy 
efficiency.  

Publicity  campaigns  providing  clear  information  on  how  to  make  cost-effective  energy 
savings,  as  well  as  providing  stimulus  for  consumers  to  act,  can  be  effective  in  changing 
perceptions and encouraging action. Action at three levels in this respect can be identified:  

•  information  to  citizens  on  issues  such  as  how  to  reduce  energy  consumption  in  homes, 
through, for example, efficient lighting and heating and sensible purchasing decisions, 

•  information to industrial customers, and  

•  information to energy efficiency experts and service providers to ensure that a network of 

such well-trained experts exists and functions well in all Member States. 

It should not be difficult to convince consumers of the fact that by relatively simple measures, 
the  average  European  household  can  save  a  significant  amount  in  its  spending,  which  is 
especially important for households spending a large share of their budget on energy. 

Education and training can play a major role in strengthening a culture of energy efficiency. 
Examples  could  be  certain  aspects  of  civic  education  in  some  Member  States  or  specific 
training  courses  to  be  set  up  on  how  to  improve  energy  efficiency  in  enterprises.  The 
European programmes in the field of education and training could contribute to spread good 
practices  among  Member  States  as  well  as  encourage  cooperation  projects  on  these  topics 
along the whole spectrum of life-long learning. 

7 

http://europa.eu.int/comm/energy_transport/wp_en.html 

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Furthermore, national regulatory authorities have been created in all Member States with the 
opening-up of the energy markets to competition. Their role is to guarantee fair competition, 
but  Community  legislation  equally  provides  that  they  shall  oversee  sustainable  trends  in 
energy consumption. This role of regulators should be strengthened in future. 

The annual improvement in energy efficiency in the 1990’s was 1.4% per year, but this 
rate  has  declined  since  and  is  now  stationary  at  0.5%,  showing  current  efforts  are 
proving insufficient. 

B. 

A EUROPEAN INITIATIVE 

Setting  out  an  energy  policy  for  the  EU  is  a  complex  task.  On  the  one  hand,  pending  entry 
into force of the Treaty establishing a Constitution for Europe, the responsibility of the Union 
in this area is not clearly defined. For this reason, energy measures in Community policy have 
had to be adopted using other legal bases in the existing Treaties. On the other hand, energy is 
an  area  with  a  large  number  of  players:  governments,  national  regulators,  large  enterprises, 
local authorities, etc. Therefore, to mobilise all players and transform energy efficiency policy 
over the long-term, a strong political message is essential. 

Forceful  action  in  the  field  of  energy  efficiency  indeed  requires  a  general  structuring 
framework. It is the national, regional and local authorities, as well as industry, which will be 
responsible  for  implementing  this  framework,  in line  with  the  subsidiarity  principle.  Only  a 
combination  of  measures  at  the  various  levels  (EU,  Member  States,  regions,  local  level, 
industry) will allow the whole potential to be exploited. 

The  EU  will  continue  to  develop  market  instruments  as  much  as  possible,  particularly 
voluntary  agreements  with  industry  and  information  campaigns  to  increase  consumer 
awareness. But whereas these instruments can prove highly effective, they cannot always be a 
substitute  for  adopting  regulatory  measures  designed  to  correct  market  inadequacies  and  to 
provide proper signals for consumers when necessary .  

According to available studies8 the EU could save 20% of its current energy use in a cost 
effective  manner.  These  studies  indicate  that  around  half  of  this  could  result  from  the 
full application of existing measures, notably Community directives already in force or 
tabled. This Green Paper seeks to launch a process to harness the potential in practice 
and to identify and subsequently implement as many cost-effective measures as possible, 
to achieve as much as 20%. To do this, the Union must rapidly work towards a concrete 
Action  Plan,  which  will  be  formulated  after  a  widespread  consultation  of  interested 
parties  following  this  Green  Paper,  and,  where  necessary,  after  cost-benefit  analyses. 

8 

Explanatory memorandum to the proposed Directive on energy end-use efficiency and energy services - 
COM(2003)  739.  MURE  Database  Simulation  2000,  SOS  Italy;  Economic  Evaluation  of  Sectoral 
Emissions Reduction Objectives for climate change, Blok and Joosen, ECOFYS, Utrecht, 2000; Energy 
Efficiency  Indicators,  ODYSSEE,  ADEME,  Paris,  2004;  The  Mid-term  Potential  for  Demand-side 
Energy  Efficiency  in  the  EU,  Lechtenböhmer  and  Thomas,  Wuppertal  Institutie,  2005:  Powering 
Profits:  How  Companies  turn  energy  efficiency  into  shareholder  value,  Green  Business  Letter,  April 
2005;  Improving  energy  efficiency  by  5%  and  more  per  year,  K.  Blok,  to  be  published  in  Journal  of 
Industrial  Ecology;  The  Potential  for  more  efficient  electricity  use  in  Italy,  F.  Krause;  The  Energy 
Efficiency  Challenge,  WWF,  2005;  European  Council  for  an  energy  efficient  economy,  Proceedings 
2005 Summer study: Energy savings, What works and who delivers?, www.eceee.org 

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Such  an  Action  Plan  should  mobilise  all  players:  national  governments,  regions, 
municipalities,  industries,  and  individuals  -  and  cover  all  the  energy  producing  and 
consuming  sectors.  In  such  an  Action  Plan  all  types  of  cost-effective  actions  must  be 
considered, including taxation, public subsidies, economic incentives, partnerships with 
industry, etc. 

1. 

Action at Community level 

1.1. 

Integrating energy in other Community policies 

Beyond those measures which can be proposed for improving sectoral energy efficiency, the 
EU and its Member States have “horizontal” powers which are currently under-utilised. The 
EU must therefore put energy efficiency at the centre of its concerns, with the tools that have 
proven their value in other policy areas. 

1.1.1.  Research and Technological Development 

In this respect, it is important to mention the importance of research. Several promising end-
use technologies still require R&D support. Community and industry investments in R&D for 
more  energy  efficient  emerging  technologies  will  allow  the  EU  to  keep  the  technological 
leadership in this field and further improve energy efficiency beyond the 2020 horizon.  

In  particular,  a  number  of  concerns  highlighted  in  this  document  (an  increased  share  of 
renewable  energy,  the  efficiency  of  fossil  fuel  based  power  production,  more  efficient 
electricity  networks,  vehicle  efficiency,…)  can  only  be  alleviated  through  efficient  research 
and  demonstration  activities  in  connection  with  other  regulatory  and  economy  based 
measures. 

On 6 April 2005, the Commission adopted a proposal for the 7th Framework Programme for 
Research and Development. For energy, it is proposed to concentrate on a limited number of 
key priorities which reflect the policy priorities of the new Commission, among which among 
which  are  renewables  for  power  generation  and  fuel  production,  clean  coal  technologies, 
smart energy networks and energy efficiency9 within the main “cooperation programme”. The 
‘clean safe car’ is a good example, for which on the energy side, demonstration projects for 
alternative motor fuels (bio fuels) are planned.  

Considerable  research  efforts  are  also  being  focused  on  power  management  for  computer 
systems and energy “scavenging” techniques where electronic devices draw their power from 
ambient sources such as the motion of the user, body heat or sunlight.  

1.1.2.  Promoting best practices and technology 

The Commission has also proposed extending the programme “Intelligent Energy-Europe” for 
the period 2007-2013, and with a (greatly increased) budget of € 780 million. The programme 
will  support  a  broad  range  of  promotional  activities  and  address  non-technological  barriers 
(legal, financial, institutional, cultural, social) in the fields of energy efficiency and renewable 
energy sources. 

9 

This  includes  topics  such  as  fuel  cells,  distributed  generation  and  smart  energy  networks,  better 
efficiency of fossil power plants and co-firing and bio-fuels in transportation. 

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1.1.3.  Establishing and promoting best practice at all levels through national Action Plans 

The integrated guidelines for growth and employment, which as from 2005 bring together the 
main  guidelines  for  the  economic  and  employment  policies  of  the  Member  States,  will 
provide  the  EU  and  its  Member  States  with  a  stable  and  coherent  framework  for 
implementing  the  priority  actions  identified  by  the  European  Council  under  the  Lisbon 
Strategy.  They  will  be  the  basis  for  national  programmes  which  Member  States  will  be 
required to implement.  

These  guidelines,  adopted  by  the  Commission  on  12  April  2005  for  the  period  2005-2008, 
point  out  that  recent  and  forecasted  trends  for  oil  prices  make  action  in  favour  of  energy 
efficiency  a  priority.  Delaying  our  efforts  to  face  these  challenges  could  increase  the 
economic cost of the measures taken. To this end, the Member States should give priority to 
promotion of energy efficiency “in line with current European obligations”.  

Member  States  should  as  appropriate  give  due  consideration  to  the  objective  of  improving 
energy efficiency in the context of their National Action Plans for growth and employment.  

In this context, one of the key measures that will be considered during the consultation period 
following the adoption of this Green Paper is the possibility of agreeing that, for example on 
an annual basis, each Member State could adopt an Energy Efficiency Action Plan, citing the 
specific measures that it has decided to undertake, either as a result of Community legislation 
or on its own initiative, to achieve a given target for energy efficiency in the year to come. 
Such a Plan might be adopted on an annual basis, reviewing the success of the measures taken 
during the previous year, both in terms of energy savings and cost-effectiveness, and setting 
out new measures and, possibly a new target, for the subsequent period. These Plans could be 
accompanied by a Peer Review process at Community level through a High Level Group on 
Energy  Efficiency,  as  well  as  the  Sustainable  Energy  Forum,  followed  by  an  annual 
benchmarking  by  the  Commission.  This  review  and  benchmarking  process  would  compare 
best practices with a view to their becoming widespread across the Community. 

1.1.4.  Better use of taxation 

More  than  is  the  case  today,  the  EU  could  promote  tax  measures  that  either  encourage  or 
discourage certain forms of behaviour. At the moment, community tax policy still remains too 
often a simple tool at the service of budgets, without much coherence with the aims of other 
policies, and full of exceptions demanded by Member States for all manner of considerations. 
Nevertheless,  it  must  be  recognised  that  serious  efforts  have  been  made  at  the  community 
level,  as  instanced  by  the  adoption  of  Directive  2003/96/EC  on  energy  taxation,  which  sets 
out  a  favourable  context  for  cogeneration  (CHP),  development  of  renewables,  rail  and  river 
transport, etc. Substantial proposals are on the Council's table, especially regarding diesel fuel 
for business use. In-depth reform is also in progress as regards passenger vehicles. 

The taxation of energy products, in the form of duties, falls under EU competence. This tool 
could  be  used  to  move  towards  harmonising  tax  regimes,  for  example  for  supporting 
development of vehicles that use cleaner fuels and that are more energy-efficient. 

At Community level, the coherence of the whole area of vehicle taxation must be reviewed. A 
new  framework  should  be  considered  allowing  mechanisms  to  be  introduced  to  be  able  to 
differentiate taxes - e.g. road and registration taxes - according to energy consumption, which 
will  also  allow  the  CO2  emission  level  to  be  taken  into  account.  It  would  encourage  low 

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consumption vehicles and penalise 'gas guzzlers'. Such a policy, which can de designed so as 
not to have any budgetary impact on Member States, would make vehicle taxation 'greener' by 
encouraging purchase of low consumption vehicles. It would also help new markets to emerge 
for industry by speeding up the rate of vehicle replacement. 

In  2002  the  Commission  presented  a  Communication  on  vehicle  taxation10  containing  a 
number  of  recommendations  and  future  actions.  On  this  basis  the  Commission  considers  a 
proposal centring on two major objectives: 

•  improved functioning of the internal market in this area; 

•  restructuring  of  the  tax  base  to  include  elements  directly  related  to  CO2  emissions, 
particularly  for  highly-powered  cars.  This  would  imply  parallel  changes  in  both 
registration taxes and those levied when a car is first put on the road. 

Further opportunities need to be analysed with a view to strengthening the positive impact of 
taxation  of  policies  in  favour  of  greater  energy  efficiency.  In  that  context  the  debate  could 
focus on ideas such as : 

•  concentrating efforts as regards excise taxes on a few essential political areas (for instance, 
harmonise rates where substantial problems involving distortion of competition arise, use 
differentiated tax measures in order to promote renewables); 

•  bringing excise rates on energy products and electricity consumed in production activities 
closer together, but at the higher end of the scale, and introduce automatic indexing of all 
excise rates in order to avoid erosion by inflation; 

•  the tax treatment of transport, both as regards excises and VAT ; 

•  the conditions for application of border trade adjustments; 

•  the  tax  treatment  of  inputs  for  heat  production,  in  particular  for  large  housing 

developments; 

•  rationalising tax exemptions and exceptions. 

If it proves impossible to make progress due to the requirement for unanimous decision in the 
field  of  indirect  taxation,  enhanced  co-operation  in  the  field  of  energy  efficiency  could  be 
envisaged  as  a  last  recourse.  Enhanced  co-operation,  introduced  by  the  Amsterdam  Treaty, 
permits  a  group  of  Member  States  to  deepen  co-operation  between  them  while  leaving  the 
door  open  for  other  Member  States  who  may  wish  to  join  in  later.  Among  the  various 
conditions  imposed  by  the  Treaty,  enhanced  co-operation  must  not  constitute  an  obstacle  to 
trade between Member States nor distort competition. In this respect, it would not appear that 
such  a  group  of  Member  States  deciding  together  on  measures  designed  to  improve  energy 
efficiency could do either of these things.  

10 

COM(2002) 431. 

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1.1.5.  Better targeted State aid 

State aid in favour of energy efficiency  is  approved  by  the  Commission  in  accordance  with 
the Community guidelines on state aid for environmental protection. The current ones expire 
at  the  end  of  2007.  The  revision  of  these  guidelines,  for  which  preparatory  work  must 
begin during 2005, will be the opportunity to put more stress on measures designed to 
encourage  eco-innovation  and  productivity  gains  resulting  from  increased  energy 
efficiency. 

This  revision  could  also  be  the  occasion  to  provide  an  exemption  to  notifying  aid  below  a 
certain level, which would give a wider margin for manoeuvre to Member States to finance 
energy efficiency measures. 

1.1.6.  Opening up public purchasing 

Many  technologies  exist  for  improving  energy  efficiency.  The  problem  is  that,  for  some  of 
new energy efficient technologies, the market is not significant enough to allowing offsetting 
a greater development and production cost through increased numbers of sales.  

Public procurement could constitute an incentive for achieving this objective. It accounts for 
some  16%  of  the  Union’s  GDP11.  The  number  of  vehicles  purchased  by  public  bodies  has 
been estimated at 100 000 cars, 100 000 vans, 30 000 lorries  and  15 000 buses each year in 
the EU-15 alone. If the public authorities (states, administrations, local authorities) could 
collectively acquire less-polluting and more energy-efficient vehicles, this would clearly 
encourage motor manufacturers by helping to build up market credibility of these types 
of vehicles. This topic is part of the discussions currently underway in the CARS 21 group. 
For  example,  if  the  urban  local  authorities,  where  pollution  has  exceeded  a  certain  level, 
reserved 25% of their purchases for cleaner and more efficient vehicles, this would represent 
nearly 60 000 vehicles each year. 

Cars  are  just  one  example  among  many  which  could  be  mentioned.  In  general,  the 
Commission  is  seeking  to  promote  ‘green’  public  procurement  and  to  stimulate  European 
public purchasers (at federal or regional/local levels) to include environmental criteria in their 
contracting12. Purchasing by all public authorities should be concerned, by national authorities 
but also European institutions, because the latter should point the way by example and open 
up new markets for products which use less energy. 

1.1.7.  Finding European financing  

Financing is one of the major problems to be resolved, bearing in mind that some industries 
claim  that  they  currently  expect  a  return  on  investment  in  about  two  years.  Member  States 
have already put in place different support mechanisms at national level, notably investment 
aid  as  well  as  fiscal  reductions  or  exonerations.  In  order  to  increase  the  efficiency  of  these 
schemes  and  to  gain  the  confidence  of  investors,  it  is  important  to  consider  establishing  a 
more  favourable  framework  for  investments  in  this  sector.  This  framework  could  be  further 
strengthened  if  it  was  harmonised  at  Community  level,  implying  notably  the  European 
Investment Bank (especially under the heading of ‘risk facilities).  

11 
12 

http://europa.eu.int/comm/internal_market/publicprocurement/studies_en.htm 
http://europa.eu.int/comm/environment/GPP 

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For the EU cohesion policy in the forthcoming programming period 2007-13, the Commission 
has suggested that the increased energy efficiency and the promotion of clean urban transport 
should constitute explicit targets for the activity of the European Regional Development Fund 
in both the convergence regions and in the regions that are running programmes for regional 
competitiveness.  

Furthermore,  the  Commission  has  suggested  to  open  up  the  Cohesion  Fund  in  the  current 
programming  period  which  originally  had  to  be  used  only  for  transport  and  environmental 
projects,  also  to  other  areas  of  importance  to  sustainable  development  and  environmental 
benefits, among which are energy efficiency and clean urban transport and public transport. 
Such projects however need to be fully integrated into the regional development concepts and 
the  Commission  intends  to  provide  further  guidance  on  this  aspect  by  Community  strategic 
guidelines for the cohesion policy 2007-13 which will link cohesion policy more effectively 
to the Lisbon process. The importance and potential of the synergies between cohesion policy 
and  energy  efficiency  is  further  underlined  by  the  fact  that  a  large  part  of  the  financial 
resources  of  the  cohesion  policy  will  be  devoted  to  regions  in  the  ten  new  Member  States 
where the potential for increasing energy efficiency is high. 

1.2. 

Specific energy policy measures 

1.2.1.  Buildings 

The implementation of the Directive on the Energy Performance of Buildings (2002/91/EC), 
as  from  2006,  will  permit  a  gain  estimated  at  some  40  Mtoe  (Megatons  of  oil  equivalent) 
between now and 202013. The Commission must therefore monitor the rigorous application of 
the Directive.  

It will be the task for the Commission to provide Member States with the necessary tools for 
developing  the  framework  for  an  integrated  calculation  methodology  of  the  energy 
performance  of  buildings.  Around  30  European  (CEN)  standards  have  been  developed. 
Member  States  have  indicated  that  they  will,  on  a  voluntary  basis,  apply  these  standards. 
Should  voluntary  compliance  with  these  standards  not  be  forthcoming,  or  equivalence  not 
proven,  then  mandatory  standards  should  be  considered  in  a  future  amended  version  of  the 
Buildings Directive.  

Article 7 of this Directive requires the energy performance certification of buildings of more 
than  50  m²  when  they  are  constructed,  sold  or  rented  out.  The  certificates  must  be 
accompanied  by  recommendations  for  the  cost-effective  improvement  of  the  building’s 
energy  performance.  The  Member  States  are  responsible  for  facilitating  the  financing 
necessary for following up on these recommendations.  

An  option  is  to  propose  an  extension  of  the  Directive  in  order  to  improve  the  energy 
performance of buildings when they are being renovated. The current Directive only applies 
to buildings under renovation of more than 1 000 m2. A study14 arrived at the conclusion that 
the  technical  potential  of  this  Directive  could  be  enormous  if  its  rules  were  applied  to  all 
renovations.  In  economic  terms,  the  biggest  opportunity  is  in  coupling  measures  for  energy 
efficiency  improvement  with  retrofitting,  this  must  not  only  be  cost-effective,  but  also 
workable, and it remains to be discussed how this can be achieved in practice.  

13 
14 

See the explanatory memorandum of the directive. 
Ecofys, DM 70067, “Cost effective retrofit in buildings”, 2005. 

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The  Ecofys  study,  as  mentioned  in  footnote  14,  estimates  that  the  net  job  effects  of  the 
existing  and  a  possible  new  Directive  on  Buildings  are  important.  With  cost-effective  gains 
conservatively estimated at more than 70 Mtoe, this sector alone could create at least 250 000 
full  time  jobs.  The  gains  in  employment  are  for  highly  qualified  personnel  and  for  the 
building  profession  in  general.  The  employment  is  mostly  created  at  local  level,  in  places 
where the changes to buildings have to be made. 

Around a third of the energy used by a building goes into lighting. Potential savings can run 
to  50%  or  even  more,  as  shown  by  several  projects  carried  out  under  the  framework  of  the 
‘European GreenLight Programme’. To realize this potential and to meet increasing demand, 
Europe could show the way by promoting the use and further development of more modern 
and intelligent lighting15.  

An  energy-saving  electric  bulb  uses  five  times  less  current  than  a  standard  one. 
Replacing bulbs can easily save €100 annually for an average household.  

1.2.2.  Domestic appliances 

Since  1992,  a  framework  Directive  allows  Member  States  to  oblige  the  provision  of 
information to consumers on the energy efficiency of a whole range of electrical appliances 
via  labelling.  During  the  last  four  years,  the  Commission  has  striven  for  an  increase  in  the 
number  of  covered  appliances.  The  Commission  has  to  continue  in  this  direction  while 
involving industry in the definition of these consumer information activities. 

This  is  an  area  where  major  improvements  could  be  made  with  a  combination  of  measures 
taken to inform the consumer on minimum efficiency levels and by voluntary agreements16. 
However, a new approach has been proposed by the newly adopted Directive on Eco-design, 
setting requirements for eco-design applicable to consumer electrical appliances. The Council 
and the European Parliament have recently reached an agreement on this objective. One of the 
aims  of  the  Directive  is  to  apply  the  requirements  for  energy  efficiency  while,  at  the  same 
time, avoiding negative consequences of other aspects of the environment or other stages in 
the life cycle of the appliances.  

To the extent that energy consumption has a significant impact on the environment, which is 
often  the  case  for  household  appliances,  it  should  now  be  possible  to  establish  energy 
efficiency  requirements  for  a  large  range  of  appliances  and  applications.  For  example,  the 
stand-by control for lighting, heating, cooling and electric motors17. Special measures need to 
address  the  concerns  over  the  the  stand-by  function.  In  fact,  this  type  of  energy  waste  is 
increasing all the time, because more and more appliances offer this feature. Whilst this was 
an  early  form  of  energy  management  for  some  appliances,  it  can  also  result  in  significant 
energy  loss.  Electricity  used  in  stand-by  mode  can  reach  between  5%  and  10%  of  total 

15 

16 
17 

Further savings could be achieved by the introduction of solid state LED (light emitting diodes)-based 
lighting for which estimates of reductions in Europe by 2015 are of the order of 40GW of peak demand 
or 2 billion barrels of oil per year (ref: cited in Photonics for the 21st Century, VDI, 2005). 
See Annex 2. 
The Directive has the potential to generate efficiency gains of at least 20 Mtoe, at the same time making 
European industry more competitive on a global scale. 

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electricity  consumption  in  the  residential  sector18.  The  technical  development  has  now 
produced more efficient sleep modes that the ones currently used, and there is a strong need to 
encourage the rapid implementation of this technology.  

The United States and Japan have already taken initiatives to reach a maximum consumption 
figure of 1 Watt for several types of appliance. In Europe, and still in the context of the 'eco-
design' Directive, it is foreseen to:  

–  encourage and promote voluntary agreements;  

–  introduce, if necessary, implementing measures to reduce standby losses for certain groups 

of appliances19; 

–  stimulate the development at the international level of technologies and measures aiming to 

limit electricity loss in stand-by mode. 

1.2.3.  Limiting the fuel consumption of vehicles 

The  consumption  in  2005  of  private  cars  and  motorcycles  in  the  EU  is  around  170  Mtoe 
which is near to 10 % of our gross consumption. 

Average consumption has improved over the last decade, but this improvement has been off-
set by the increase in the number of cars and car use, and there are now tendencies to heavier 
high performance cars that could lead to a further deterioration of the energy situation. 

In order to limit this consumption the Union has implemented until now voluntary agreements 
with the car industry and labelling of cars on energy efficiency. 

In the framework of CARS 21 recommendations should be developed on how best to proceed. 
In deciding how and whether to proceed regarding this option, it needs to be defined how best 
the  qualification  as  “clean”  and  “efficient”  might  be  set,  taking  into  account  the  need  to 
promote the objective in a technology neutral and cost-effective manner, so that any initiative 
allows industry to develop the appropriate technology to meet the objective in question. Some 
of the measures to be discussed are as follows: 

- 

18 

19 

With  the  automotive  industry  Voluntary  Agreement,  the  EU's  aim  is  to  reach  an 
average CO2 emission figure of 120 g/km for all new passenger cars marketed in the 
EU. This objective, adopted by the European Parliament and by the Council, is to be 
achieved  by  agreements  committing  European,  Japanese,  and  Korean  car 
manufacturers  to  reduce  CO2  emissions  to  140  gm/km  by  2008/09,  to  take  steps 
aiming  at  the  market  to  influence  consumer  choice  towards  lower  fuel-consuming 
cars,  and  finally  to  improve  the  quality  of  consumer  information  on  fuel 
consumption. 

Sources: IEA “Things that go blip in the night”, IEA 2005 “Saving electricity in a hurry”, Fraunhofer 
institute “Study on options on a stand by label for Federal Ministery of Economics and Labour February 
2005”. 
As for "codes of conduct" for power supplies and digital adaptors for televisions. 

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This  means  that  the  fleet  of  new  passenger  cars  put  on  the  market  in  2008/09  will 
consume  on  average  about  5.8  l  petrol/100  km  or  5.25  l  diesel/100  km.  This 
translates into a reduction of fuel consumption of around 25% compared to 1998.  

However, the trend for bigger size, weight and power poses a risk that the target will 
not  be  met.  Reflection  is  necessary  on  how  to  move  from  140  g/km  in  2008/09  to 
120 g/km  in  2012.  In  this  context  the  Commission  is  aware  of  the  great  challenge 
associated  with  the  achievement  of  the  120  g/km  target.  Reaching  the  120  g/km 
target will not be possible without costs but it offers further benefits for consumers 
and society as a whole. For example, consumers will benefit from fuel savings and 
this benefit will increase with higher fuel prices.  

- 

Car  labelling:  The  European  car  labelling  system  obliges  Member  States  to  ensure 
that  information  on  fuel  consumption  and  CO2  emissions  of  new  private  cars  is 
available  to  consumers.  This  enables  consumers  to  make  an  informed  choice.  The 
obligation  entails  the  placing  of  a  sticker  with  this  information  either  on  or  nearby 
every new car being offered for sale. On the basis of reports on the implementation 
of  the  Directive,  the  Commission  is  currently  studying  measures  that  could  be 
proposed to improve its effectiveness.  

It  should  be  pointed  out  that  for  energy  consuming  products  other  than  cars,  apart  from 
voluntary  agreements  and  labelling  provisions,  minimum  efficiency  requirements  are  also 
imposed, but only where this is justified by the market conditions. 

Experience with the European white-goods industry, which is the world leader as a result of 
best  technology  developed  in  accordance  with  minimum  standards  and  a  serious  labelling 
programme, proves that in the longer term our car industry also could actually benefit, rather 
than suffer, from efficiency requirements in their home market.  

1.2.4. 

Informing and protecting the consumer 

This  Green  Paper  has  identified  the  shortcomings  in  information  and  training  of  consumers 
and  the  general  public.  Many  of  the  actions  to  remedy  this  situation  have  to  be  taken  at 
national, regional and local level. The EU supports these initiatives, for example through the 
ManagEnergy  Programme.  ManagEnergy  supports  players  at  local  and  regional  level  who 
work in the field of renewable energy sources and energy demand. 

A broad public awareness campaign on sustainable energy across the EU, EEA countries and 
EU candidate countries has recently been launched: Sustainable Energy Europe 2005–2008. It 
is designed to bring about a genuine change in behaviour by the main players concerned, so 
that  they  commit  themselves  to  move  towards  efficient,  clean  and  sustainable  energy 
production  and  consumption  schemes  based  on  renewable  energy  sources  and  energy 
efficiency, including in transport. The new campaign is financed under the Intelligent Energy 
– Europe Programme, with a budget of € 3.6 million.  

The Campaign addresses all main sustainable energy sectors that contribute to the Community 
Strategy  on  Sustainable  Development  and  aims  at  fostering  implementation  of  Community 

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legislation  on  sustainable  energy,  as  well  as  national  and  local  measures,  by  supporting 
industry, energy agencies, associations and consumers’ activities20.  

Informing  the  public  is  the  first  goal,  informing  and  training  those  working  in  the  energy 
sector  the  second.  When  designing  buildings,  architects  need  to  have  enough  knowledge 
about  the  latest  technologies  to  make  energy-savings  possible.  The  same  goes  for  heating 
system installers who have to advise their clients. These actions could be initiated at European 
level,  but  obviously  have  to  be  taken  up  and  carried  out  by  national,  regional  and  local 
authorities. 

In  addition,  under  the  second  electricity  Directive,  the  Member  States  must  ensure  that 
consumers benefit from so-called universal service, in other words that they have the right to 
be supplied on their territory with electricity of a given quality, and at reasonable, transparent, 
and  easily  comparable  prices.  Consumers  must  also  be  able  to  change  supplier  under  non-
discriminatory  conditions.  Furthermore,  the  same  directive  requires  electricity  companies  to 
inform their actual and potential clients regarding the energy mix in their generation portfolio.  

2. 

National level 

The  national  level  is  in  many  ways  more  appropriate  for  putting  measures  to  encourage 
energy  efficiency  into  effect.  National  authorities’  actions  will  reinforce  Community  efforts 
which would not be as effective on their own in the long term. National authorities should be 
encouraged  to  use  the  large  range  of  measures  available  to  them,  through  regulators,  better 
control  of  the  electricity  supply  chain,  introduction  of  certification  mechanism  and 
optimisation of road transport. It should be remembered that there are excellent good practice 
examples to be found in every Member State which deserve to be made widespread. 

2.1. 

Regulation of network activities 

The transport of electricity involves losses of up to 10% of the electricity produced ( up to 2% 
by transmission, 8% in distribution). In many cases, cost-effective measures can be taken to 
significantly  reduce  these  figures.  However,  transmission  or  distribution  system  operators 
may  not  always  have  the  incentive  to  undertake  the  necessary  investments  to  make  the 
savings.  As  the  efficiencies  result  in  reduced losses,  this  will  normally  mean  a  reduction  in 
transmission  fees,  and  in  a  system  of  regulated  third  party  access,  a  loss  of  money  for  the 
company making the investment. Therefore, unless a system of incentive-based regulation is 
provided for in this respect – i.e. transmission and distribution system operators being able to 
retain an appropriate proportion of the net efficiency gains resulting from the improvement - 
the necessary investments are unlikely to be made.  

The  transport  network  operators  could  include  their  practices  for  loss  management 
(information transparency measures and compensating energy purchasing conditions) in their 
commitment  programme  drawn  up  in  pursuance  of  Directive  2003/54/EC.  The  European 
Regulators’  Group  for  gas  and  electricity  might  be  invited  to  propose  guidelines  on  good 

20 

The  Campaign  will  support  promotional  activities  by  the  main  stakeholders,  such  as  national 
governments,  regions,  municipalities,  energy  agencies,  energy  production  but  also  energy  service 
companies,  utilities,  industrial  manufacturers,  building  developers,  agricultural  and  forest  industry, 
consumers’,  industry,  and  farming  associations,  financial  institutions,  domestic  and  foreign  trade 
associations, NGOs  and  development  cooperation  institutions. Other  initiatives  of  this  type  should be 
launched in future. 

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regulatory  practice  for  transmission  and  distribution  tariff  regulation  and  energy  efficiency. 
These  guidelines  might  start  from  the  principle  that  transmission  and  distribution  system 
operators  should  be  placed  under  a  positive  obligation  to  carry  out  all  investments  that  are 
cost-beneficial (i.e. will result in a net reduction of tariffs), and be permitted to retain a fair 
proportion of the resulting net benefits. Moreover the Group of Network Regulators and the 
other  players  concerned  could  look  into  the  possibility  of  an  energy  efficiency  certificate 
system. 

2.2. 

Regulation of supply activities 

In December 2003, the Commission proposed a Directive on energy efficiency in end-use and 
energy  services.  This  Directive  will  oblige  distributors  and  suppliers  of  energy  to  offer 
consumers not only electricity, gas or oil products, but to diversify by also offering consumers 
the opportunity to opt for energy services. These would comprise an integrated package, such 
as  thermal  and  lighting  comfort,  and  warm  water  production  in  building,  transport,  and  so 
forth.  Price  competition  between  energy  service  suppliers  will  lead  to  a  reduction  in  the 
quantity of energy consumed by these services, since the cost of the energy would normally 
be a large part (sometimes the most important one) of the total cost of the service. Offering 
this  kind  of  integrated  service  allows  market  forces  to  play  an  important  role  in  improving 
energy efficiency at the point of supply of the energy services. 

The  current  pricing  structure  for  energy  products  could  be  re-examined,  as  it  does  not 
encourage  consumers  towards  more  rational  use.  Promotion  of  lower  consumption  at  peak 
times and in times of shortage could also be an issue for consideration. This would imply that 
regulators  at  national  level  promote  metering  to  enable  users  to  be  informed  of  their 
consumption in real time.  

2.3. 

Electricity generation 

With energy “waste” levels in the process of electricity generation running at 66 %, this sector 
possesses great potential. Using standard technology, only between 25 and 60 % of the fuel 
used is converted into electrical power. Combined-cycle gas turbines (‘CCGT’) are among the 
most efficient plant now available as compared with the old thermal solid fuel ones, some of 
which were commissioned in the 1950’s. 

Liberalisation and stringent emission standards have brought significant benefits in terms of 
fuel  efficiency  to  European  electricity  generation.  Many  old  inefficient  and  surplus  plants 
have  been  taken  off  the  market  and  in  most  cases  it  is  the  more  fuel-efficient  CCGT 
technology (efficiency ranging between 50 and 60%) which is preferred as replacement.  

With predicted growth of 1.5% per year, Eurelectric – the European association representing 
the  electricity  industry  –  projects  that  around  520  GW  of  new  generation  capacity  must  be 
installed  up  to  2030  in  EU-15.  This  means  huge  investment  costs  running  into  billions  of 
Euros. 

Therefore, the EU is presented with a unique opportunity to radically improve fuel efficiency 
across  its  electricity  generation  capacity.  The  EU  emissions  trading  system  is  an  effective 
means  to  incite  electricity  producers  reduce  emissions  and  improve  efficiency  in  the  most 
cost-effective way. The Commission is planning a review of the system in mid 2006. Through 
the establishment of the National Allocation Plan and the creation of an overall scarcity in the 

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market, Member States can continue to use the EU ETS as an instrument to incentivise more 
efficient power production. 

Some major issues will require careful consideration in the context of developing the Energy 
Efficiency Action Plan for 2006: 

- 

- 

to  ensure  that  only  the  most  fuel-efficient  (CCGT)  technology  for  electricity 
production  is  being  used  in  Europe.  The  most  efficient  technology  currently 
available  has  a  yield  close  to  60%,  and  is  mostly  manufactured  by  European 
companies.  However,  competitors  from  other  parts  of  the  world  now  also  offer 
CCGT technology, with lower up-front investment costs, but with significantly lower 
fuel efficiency of around 40%. It needs to be considered what action might be taken 
to ensure that our generation in the EU is highly energy efficient. 

promotion  of  distributed  generation.  The  biggest  waste  in  the  electricity  supply 
chain  (generation  –  transmission,  distribution  –  supply)  is  the  unused  heat  which 
escapes in the form of steam, mostly by heating the water needed for cooling in the 
generation  process.  The  supply  chain  is  still  largely  characterised  by  central 
generation  of  electricity  in  large  power  plants,  followed  by  costly  transport  of  the 
electricity  to  final  consumers  via  cables.  This  transport  generates  further  losses, 
mainly  in  distribution.  Thus  centralised  generation  has  advantages  in  the  shape  of 
economies of scale, but also wastes energy. 

The  current  investment  needs  in  electricity  generation  could  be  used  to  Europe’s 
advantage if it was to use the opportunity to facilitate a shift in electricity generation 
away  from  the  big  power  stations  to  cleaner  and  more  efficient  distributed  and  on-
site generation. Distributed generation is normally much closer to useful outlets also 
for  the  heat  which  is  lost  in  conventional  generation,  so  increasing  heat  recovery 
opportunities,  which  dramatically  improves  fuel  efficiency.  This  change  will  be  a 
gradual process which can be facilitated at national level by using the right incentives 
for industry.  

The  second  electricity  Directive,  2003/54/EC,  already  contains  an  incentive  for 
Member States and national regulatory authorities to promote distributed generation 
by taking account of its benefits for the transmission and distribution networks in the 
form  of  long-term  avoided  investment  costs.  Furthermore,  Member  States  are 
obliged  to  ensure  that  authorisation  procedures  for  this  type  of  generation  take 
account  of  its  small-scale  nature  and  therefore  potentially  limited  impact. 
Streamlining  and  reduction  of  the  regulatory  load  of  authorisation  procedures  for 
distributed generation is therefore required: national authorities, regulators and local 
and regional authorities need to make this happen. The Commission will see to it that 
the measures provided for by the Directive are enforced. In any event, to conform to 
the  community  rules  on  freedom  of  establishment  and  of  provision  of  services, 
authorisation procedures for energy production must be based on objective and non-
discriminatory criteria, made known in advance to the undertakings concerned, so as 
to ensure that the discretionary power of the national authorities shall not be used in 
an  arbitrary  fashion.  The  nature  and  scope  of  public  service  obligations  to  be 
imposed by a system of administrative authorisations must be made clear in advance 
to such undertakings. In cases where the number of available permits for a particular 
activity  is  subject  to  a  limit,  the  validity  of  the  permit  must  not  exceed  the  time 
necessary  to  write  off  the  investment  and  to  allow  for  equitable  payback  on  the 

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- 

- 

capital.  Furthermore,  any  person  affected  by  a  restrictive  measure  based  on  such  a 
derogation must have the opportunity to enter an appeal. 

Co-generation  also  offers  a  substantial  potential  gain  in  efficiency.  To  date,  only 
around 13% of the electricity consumed in the EU is generated using this technology. 
The  Member  States  have  to  implement  the  Directive  promoting  the  use  of  high-
efficiency co-generation by February 2006. They should ensure that the best possible 
use is made of this technology. In addition, they could stimulate further progress in 
developing  co-generation  technologies  not  only  in  respect  of  energy  efficiency  and 
fuel flexibility but also with the aim of reducing construction costs. Member States 
could  equally  further  explore  and  develop  co-generation  technologies  which  can 
increase the use of renewable sources.  

Most  Member  States  of  the  EU-25  have  district  heating  systems,  and  especially  in 
the  new  ones  in  Central  Europe  with  transition  economies,  this  is  a  very  common 
means of providing heat, especially to households. District heating, if managed well, 
can be environmentally friendly. It is estimated that even just those district heating 
and  co-generation  facilities,  including  industrial  applications,  already  existing,  may 
save 3-4 % in primary energy use as compared with separate production. 

However  the  main  problem  to  be  solved  is  how  to  finance  the  upgrading  of  old 
systems. To this end, the financial institutions such as the European Investment Bank 
need  to  be  further  mobilised  to  enable  financing  for  energy  efficiency  measures  in 
district heating. Finally, it needs to be determined how to support the Improvement 
in  the  energy  yield  of  coal-fired  plants  beyond  50%  as  soon  as  possible. 
Community-supported research is likely to play an important role. 

2.4. 

White certificates, a market-based instrument 

Policies  based  on  incentives  have  the  disadvantage  that  they  not  always  galvanise  market 
forces towards the most cost-effective solution. White certificate systems have been partially 
implemented in Italy and the UK, are under preparation in France, and are being considered in 
the  Netherlands.  These  are  systems  where  suppliers  or  distributors  are  obliged  to  undertake 
energy efficiency measures for final users. Certificates corroborate the amount saved, giving 
both energy value and lifetime. Such certificates can, in principle, be exchanged and traded. If 
the  contracted  parties  cannot  then  submit  their  allocated  share  of  certificates,  they  can  be 
required to pay fines that may exceed the estimated market value. 

Modelling work carried out under the “White and Green” SAVE project has concluded that 
by  introduction  of  this  system  in  the  tertiary  and  services  sector,  savings  of  15%  can  be 
obtained at zero cost, and that when ‘externalities’ such as the environment consequences are 
taken  into  account  this  saving  potential  would  go  up  to  35%.  The  Commission  is  currently 
preparing  for  the  possible  creation  of  an  EU-wide  scheme  for  white  certificates,  in  order  to 
allow real trade in energy efficiency between Member States. A measurement system for this 
purpose is expected to be developed under the current Commission proposal for a Directive 
on Energy end-use and energy services. 

3. 

Industry 

Industry  has  already  moved  in  direction  of  energy  efficiency.  Furthermore,  driven  by 
economic  incentives  it  is  to  be  expected  that  industry  will  make  additional  significant 

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improvements  in  its  processes  and  the  machines  it  uses  (electric  motors,  compressors,  etc.) 
European and national legislation impacts on the energy consumption of industry, and in that 
connection  industry  itself  must  take  the  necessary  measures  to  fulfil  the  cap  on  greenhouse 
gas emissions imposed by the National Allocation Plans as foreseen in the Emissions Trading 
Directive.  It  is  in  this  respect  that  energy  efficiency  is  a  necessary  tool.  In  addition,  the 
Commission  is  currently  preparing  a  general  BREF21  on  energy  efficiency  in  the  context  of 
the  IPPC  Directive22  that  will  provide  information  which  can  be  used  for  developing  best 
practice  for  energy  systems  that  are  used  in  a  large  number  of  industrial  processes  (motor 
systems, pump systems, approaches to energy efficiency etc.). 

A  large  number  of  voluntary  agreements  in  industrial  sectors  have  already  been  taken  (for 
instance  in  the  paper  industry,  the  horticultural  sector  and  the  chemical  industry).  Such 
voluntary  agreements  by  industry  reinforce  energy  efficiency  measures.  Among  these 
examples, one can quote: 

•  UK:  The  “Energy  Efficiency  Commitment”  (2002-2005)  obliges  electricity  and  gas 
suppliers  to  achieve  targets  for  installing  energy  efficiency  measures  in  households.  This 
programme has proven to be extremely cost-effective in reducing energy consumption and 
has been extended from 2005 to 2008. 

•  The  Netherlands:  thanks  to  the  tradition  of  voluntary  agreements  with  industry,  the 
Netherlands  has  become  one  of  the  best  performing  economies  in  the  world  in  terms  of 
energy efficiency. In July 1999 the Dutch government signed a Benchmarking Agreement 
on Energy Efficiency with industry23. In return for a commitment by industry to reach the 
absolute top in energy efficiency by 2012, the government agreed to refrain from imposing 
additional  national  energy  efficiency  measures.  The  first  review  of  measures  taken  and 
planned by these companies indicated that they will save 82 000 TJ in 2012 (2 Mtoe), thus 
avoiding emissions of around 5.7 million tonnes of CO2. 

In  addition,  two  voluntary  environmental  programmes,  the  Community  eco-label  award 
scheme24  and  the  Community  eco-management  and  audit  scheme  (EMAS)25  could  also 
contribute to enhanced energy efficiency. The eco-label can be awarded to consumer products 
under  the  condition  that  they  comply  with  a  set  of  environmental  performance  criteria, 
considering  the  whole  life  cycle  of  the  product.  Energy  efficiency  requirements  are  part  of 
these  criteria,  in  particular  concerning  product  groups  such  as  tourist  accommodation  and 
campsites. 

Under  EMAS,  organisations  must  engage  in  the  continuous  improvement  of  their 
environmental performance. Here too, energy efficiency is part of this improvement and has 
to  be  addressed  in  the  environmental  review  and  the  environmental  statements  to  be 
performed under the scheme. 

21 
22 
23 
24 
25 

BAT (Best available technology) Reference Documents. 
Directive 96/61/EC concerning integrated pollution prevention and control. 
Companies representing around 90% of industrial energy demand have signed up to the agreement. 
Regulation (EC) No 1980/2000. 
Regulation (EC) No 761/2001. 

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4. 

Transport 

4.1. 

Organising air traffic management 

An  ambitious  plan  to  re-organise  European  airspace  was  launched  under  the  ‘Single  Sky’ 
initiative. In particular, it provides for the development of a single Europe-wide system for air 
traffic control. This project, which will give rise to a large industrial initiative to be known as 
‘SESAME’,  will  lead  to  substantial  savings  (around  6  to  12%)  of  kerosene  aviation  fuel, 
simply by reducing air congestion around Europe’s airports. 

4.2. 

Optimising traffic management 

Intelligent transport systems such as navigation systems, congestion charging and cooperative 
driver assistance are being developed which can increase the safety and energy efficiency and 
driving  behaviour.  Notably,  the  exploitation  of  the  satellite  navigation  system  following  the 
programme “GALILEO” by 2008 will open the door to a new generation of applications and 
services  in  various  fields.  Transport  will  be  the  user  par  excellence  of  this  radio  navigation 
system by satellite. The satellite navigation system will offer reliable and precise positioning 
systems  for  cars  and  will  enable  information  systems  to  be  developed  for  road  users  and 
assistance to drivers. In aviation it will assist at different stages of the flight. In the maritime 
field it will be used on the high seas as well as for coastal navigation. The development of the 
satellite navigation system will thus also help development of sustainable transport, thanks to 
traffic flow optimisation in road transport, aviation, maritime and rail transport. By pushing 
back the limits of infrastructure saturation, it will diminish the exorbitant costs of congestion 
and  will  help  to  reduce  energy  consumption  and  underpin  better  protection  of  the 
environment.  

The promotion of intermodality is another measure that will contribute to substantial energy-
savings.  Alternatives  to  road  transport  have  already  been  encouraged  by  a  number  of 
measures, notably the creation of a Community programme - MARCO POLO – dedicated to 
stimulation  of  alternative  solutions:  rail,  inland  and  maritime  navigation  for  short  distances. 
The Commission proposed a budget of € 740 million for this programme in July 2004 under 
the financial perspectives for 2007-2013. Numerous industrial projects have already benefited 
from  its  programme:  the  ‘Kombiverkehr’  project  which  served  to  introduce  a  multimodal 
train-ferry  service  between  Italy  and  Sweden,  ‘Lokomotiv’,  which  has  linked  Germany  and 
Italy  by  intermodal  rail  services  run  by  private  rail  companies,  ‘Oy  Langh  Ship’,  which 
introduced  an  intermodal  service  combining  maritime,  rail  and  river  transport  between 
Finland and Central Europe, etc.  

4.3. 

Developing a market for clean vehicles 

Community  research  programmes  have  invested  large  budgets  in  development  of  electric 
vehicles,  in  testing  those  running  on  alternative  fuels  such  as  natural  gas,  as  well  as  in 
advancing  longer-term  prospects  for  technologies  such  as  fuel  cells  and  hydrogen.  The  7th 
Framework Programme for Research & Development will continue such support. 

Possible options that are being discussed, amongst others, in the context of CARS 21 are 

•  de-taxing clean vehicles; 

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•  as mentioned above, placing an obligation on public administrations to spend a part of their 

vehicle purchasing budget on clean vehicles; 

•  cities to introduce restricted access to central areas for polluting and high fuel-consuming 

vehicles, either by tolls or actual prohibition; 

•  specific certification and technical standards for clean vehicles. 

Such  measures  could  prove  to  be  more  efficient  than  direct  aid  to  industry  and  contribute 
furthermore to technological development in European industry. This is no small benefit in a 
globalising economy. 

4.4. 

Charging of infrastructure to induce changes in behaviour 

Half  of  all  road  transport  fuel  is  burnt  in  built-up  areas,  despite  the  fact  that  half  of  all 
journeys in such areas are less than five kilometres in length.  

The  Union  has  already  embarked  on  a  road-pricing  policy  for  heavy  goods  vehicles  on  the 
Trans-European  Road  Network.  Future  satellite  location  techniques,  based  on  the  satellite 
navigation  system  following  the  programme  “GALILEO”,  will  make  it  easier  to  put  road 
charging systems in place without causing long queues at entry points to the charging zones. 

The Community Directive on air quality obliges the most polluted large conurbations to draw 
up plans for combating air pollution. In most cases this has meant either radical restriction on 
polluting transport in city centres, or else charges which are sufficiently differentiated to take 
account  of  the  emission  and  consumption  levels  of  individual  vehicles.  In  the  consultation 
period following the adoption of this Green Paper, the question of the need and effectiveness 
of such schemes needs to be considered. 

The experience of London since introducing ‘congestion charging’ in 2003 has been that fuel 
consumption has gone down by 20% and CO2 emissions by 19% in the charging zone. For its 
part,  the  city  of  Madrid  has  installed  a  system  for  rapid  transit  for  buses  and  cars  with  a 
minimum  of  two  passengers  on  a  section  of  20  km  of  the  A6  highway  into  the  city.  The 
Commission  is  making  an  effort  by  means  of  its  Intelligent  Energy  Programme  to  promote 
these best practices on a larger scale.  

However, it should be noted that the exchange of best practices is rather limited. One could 
question if and how such good examples of best  practices can be generalised and expanded 
throughout the EU.  

4.5. 

Tyres 

Friction  between  tyres  and  the  road  accounts  for  up  to  20%  of  a  vehicle’s  consumption. 
Properly  performing  tyres  can  reduce  the  latter  by  5%  and  sales  of  such  tyres  should  be 
encouraged not only on new cars but also for subsequent replacements 

Better pressure checks also lead to lower consumption. Estimates suggest that between 45% 
and  70%  of  vehicles  are  driven  with  at  least  one  tyre  below  the  prescribed  pressure,  which 
causes  4%  over-consumption,  not  to  mention  the  increased  risk  of  accidents.  So  why  not 
consider developing systems to encourage service stations better to inform and assist drivers 
as  regards  tyre  checks?  Another  option  would  be  to  consider  a  voluntary  agreement  with 
industry to install tyre pressure sensors on the dashboard of cars. 

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Additionally  to  the  substantial  gains  to  be  made  by  using  the  right  tyres  at  the  right 
pressure, an average driver can easily save 100€ on the annual fuel bill by driving in a 
more ecological way26.  

4.6. 

Aviation 

The Commission plans shortly to present a Communication on climate change and aviation. 
The Communication will focus in particular at the use of economic instruments (such as fuel 
taxation, emissions charges or emissions trading) which would promote energy efficiency and 
greenhouse gas reductions in the sector. 

5. 

Regional and local level 

Many measures can be taken at regional and local level, close to the citizen. Action on energy 
efficiency  will  only  produce  all  its  potential  gains  if  operations  to  be  undertaken  at 
Community  and  national  levels  are  reflected  locally.  The  EU  has  already  taken  numerous 
initiatives in this area. An example is the CIVITAS programme, launched in 2000, which has 
helped 36 European cities with urban mobility projects. Support programmes have also been 
put in place to encourage public and private investment in rational energy use (pilot actions, 
creation  of  local  agency  networks,  etc.).  Indeed  the  Union  has  recently  adopted  a  new 
programme called ‘Intelligent Energy – Europe’ which brings all these actions under one roof 
thus strengthening the synergies between them. 

Furthermore,  the  specific  activities  for  energy  efficiency  that  are  integrated  into  the 
operational  development  programmes  for  the  EU  cohesion  policy,  notably  in  those  regions 
lagging  behind  in  development,  make  the  regions  disposing  of  a  strong  instruments  which 
could be used for a wide range of different projects. Support for increased energy efficiency 
of public buildings, investments in clean urban transport, support to SME’s in improving their 
energy  efficiency  as  well  as  related  research  and  development  are  options  to  be  mentioned. 
When this potential for energy efficiency is mobilised, one has however to respect the specific 
provisions of cohesion policy programming, partnership and management. 

As  already  mentioned,  it  should  also  be  discussed  how  to  find  solutions  for  the  growing 
problems caused by city centre congestion. City transport is above all a matter for local and 
national authorities, the EU should contribute to find solutions in the face of the deterioration 
in  the  quality  of  life  which  this  problem  causes,  and  which  goes  hand-in-hand  with  a  truly 
enormous waste of energy. Local authorities have an important role to play by providing and 
promoting sustainable construction in their cities, in particular in relation to energy efficient 
buildings.  Then  again,  there  is  the  eternal  problem  of  financing.  Regulatory  measures  are 
certainly  needed,  but  we  must  also  be  able  to  back  them  up  with  investments.  Currently 
available financing products as developed by banks are not always suitable for the small scale 
of many energy efficiency projects, whereas the aggregate benefit such smaller projects can 
provide as a whole is substantial. 

5.1. 

Specific financing instruments 

There is a huge ‘win-win’ potential for investments in small-scale sustainable energy projects 
throughout Europe. They will often be highly feasible, especially when including the aspects 

26 

IEA “Saving oil in a hurry”, 2005. 

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of  energy  security  and  environmental  benefits.  But  financing  of  such  projects,  especially  in 
the  less  developed  regions  of  Europe,  needs  ‘facilitation’  to  happen.  Financial  instruments 
could  be  devised  along  the  lines  of  the  clearinghouse  facilities  used  in  other  sectors.  These 
would include project preparation facilities and risk management funds.  

But given the small scale and dispersed nature of the projects to be funded, it would seem that 
action is in any event best initiated at local or regional level. 

It may be appropriate that local and regional authorities should take the lead in setting up an 
EU  working  group  with  stakeholders,  involving  financing  institutions  like  the  European 
Investment  Bank  and  other  commercial  banks,  regional  funds,  and  Member  States’ 
representatives.  They  could  develop  proposals  as  soon  as  possible  on  how  to  rearrange 
existing  financing  mechanisms,  including  focused  organisation  of  clearinghouse-type 
instruments, to review the investment potential in small-scale sustainable energy projects, and 
consider  ways  to  overcome  barriers  to  investment,  including  the  role  of  energy  companies, 
recovery of energy bill savings, pricing, etc. 

Funds  to  support  the  projects  for  the  improvement  of  energy  efficiency  have  been  very 
successful in many Member States, and it should be considered how best practices in this area 
can be repeated and improved.  

6. 

A strategy open to the world 

The  energy  efficiency  performance  of  countries  varies  widely.  The  EU  and  Japan  are  for 
instance  three  to  four  times  more  energy-efficient  in  terms  of  energy  intensity  than  the 
countries of the former Soviet Union or the Middle East. 

Energy efficiency already forms part of the international cooperation activities of the EU with 
its  partners,  including  industrial  partners  (such  as  the  United  States),  countries  in  transition 
(such  as  Russia),  and  developing  countries  (such  as  China  and  India).  Furthermore,  energy 
efficiency projects, albeit limited in size, are part of the lending portfolio of international and 
European financing institutions. However, huge scope remains for much closer and vigorous 
cooperation on energy efficiency with the majority of countries. 

The principal reasons for strengthening energy efficiency cooperation with third countries are 
closely  linked  to  the  geopolitical  and  strategic  interests  of  the  EU  and  the  business 
opportunities  arising  from  the  EU’s  leading  role  in  this  area.  In  particular  Europe  could  be 
actively  engaged  in  establishing  and  adopting  standards  on  energy  efficiency  that  can  be 
internationally compatible. A further reason is the contribution energy efficiency can make to 
economic and social development. 

The recent increase in oil prices highlighted the impact of increased energy demand resulting 
from rapid growth in energy consumption in a number of countries, including China. Given 
the  scarcity  of  energy  resources  and  the  limited  spare  production  capacity,  especially  for 
hydrocarbons, it is obvious that energy-importing countries increasingly become competitors 
for the same energy resources, for example in Russia, the Middle East and the Caspian region.  

Therefore  energy  efficiency  is  an  issue  in  the  interest  of  all  energy  importing  countries, 
including the Union, and should be integrated into their global strategy for security of energy 
supply. 

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From a climate perspective, the recent Communication on climate change has highlighted the 
importance  of  broad  participation  as  an  essential  element  of  a  mid-  and  long-term  strategy. 
Co-operation  with  developed,  and  in  particular,  developing  countries  could  be  a  useful  tool 
for engaging countries in climate action, while providing local benefits for insurance in terms 
of air quality and energy security, which are key concerns for a large number of developing 
countries. As the energy sector has to provide the lion’s share of the reduction targets, global 
climate change mitigation depends greatly on increased use of energy efficiency, renewable 
energy  and  other  cleaner  energy  technologies  in  all  countries.  Due  to  the  fact  that  the  EU, 
since  the  first  energy  crisis  in  the  early  70's,  has  put  in  place  coherent  policies  and 
programmes  for  energy  efficiency  promotion,  the  EU’s  energy  efficiency  manufacturing 
industry is now well placed to make the most of new opportunities and to gain new markets in 
third countries. European industry is at the forefront in technology, and occupies the strategic 
high  ground  in  the  global  competition  on  energy  efficiency  technology  in  most  sectors, 
including  turbines,  combined  heat  and  power  and  district  heating  technologies,  household 
appliances  and  building  materials.  Renewed  efforts  for  an  international  drive  on  energy 
efficiency could play a key role in consolidating the European industry’s role as world leader 
in this field and could contribute to boosting Europe’s competitive edge in the energy sector.  

The  export  potential  for  energy  efficient  products  and  services  has  not  been  systematically 
assessed, but it is estimated that the business opportunities deriving from stronger efforts on 
energy efficiency are not less significant than those related to renewable energy. The Chinese 
market,  for  example,  is  expected  to  develop  rapidly  in  accordance  with  the  Long  and 
Medium-Term Energy Conservation Plan drawn up by the National Development and Reform 
Commission, according to which residential and public buildings are supposed to halve their 
energy  consumption  during  the  11th  Five-Year  Plan  (2006-10)  as  compared  with  current 
levels. In this context it should be mentioned that the EU construction industry has the world 
leadership in low energy consumption buildings and by further updating the requirements in 
the EU, the export of this know how will give new opportunities to our industry.  

6.1. 

Integrating energy efficiency in international cooperation 

The first part of increased international cooperation on this issue will consist of working with 
the EU’s industrial partners, particularly the OECD countries within the International Energy 
Agency (IEA), to establish energy efficiency plans. As developing countries are now able to 
join  the  Implementing  Agreement  of  IEA,  they  could  be  encouraged  to  participate  in  these 
fora. 

This  international  forum  could  for  instance  be  the  starting  point  for  launching  the  idea  of 
taking better account of external effects of the aviation sector on the environment.  

European trade policy can assist in the cause of energy efficiency, for instance by negotiating 
favourable tariff treatment for goods on the basis of their energy efficiency performance. This 
has  been  proposed  in  WTO  context  by  the  European  Commission  in  February  200527.  This 
policy furthers the Doha Development Programme. At Doha ministers agreed to negotiations 
on the reduction, or even elimination, of tariff and non-tariff barriers to environmental goods 
and services to further sustainable development. 

27 

WTO submission TN/TE/W/47 of 17 February 2005. 

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Finally,  the  EU  should  renew  its  efforts  to  arrive  at  a  common  understanding  with 
industrialised third countries, in particular the US, to the effect that serious efforts to improve 
global  energy  efficiency  are  indispensable;  the  recommendations  contained  in  the  recent 
consensus  report  from  the  US  National  Commission  on  Energy  Policy28,  which  forcefully 
addresses demand-side policies, may be a positive starting point for such a renewed EU-US 
dialogue on energy efficiency.  

6.2. 

Integrating  energy  efficiency  in  the  neighbourhood  policy  and  EU-Russia  co-
operation 

Energy efficiency is also, as its second feature, part of the EU's Neighbourhood policy. 
The  Commission  will  ensure  that  it  continues  to  feature  in  the  action  plans  for  this 
policy. 

Furthermore,  the  Commission  is  currently  negotiating  a  treaty  establishing  an  Energy 
Community  with  the  countries  of  South-East  Europe.  It  has  equally  initiated  cooperation 
actions  in  the  Caspian  and  Mediterranean  regions.  The  potential  in  these  countries  is 
significant  but,  as  yet,  largely  unexploited.  They  are  conscious  of  the  fact  that  their  steep 
increase  in  energy  consumption  not  only  causes  environmental  and  public  health  problems, 
but will equally serve as a brake to economic development, sooner rather than later. 

A  third  feature  must  be  to  promote  energy  efficiency  in  the  process  of  energy  co-
operation  with  Russia  which  has  emerged  since  the  year  2000.  Russia  is  becoming 
increasingly conscious of the need to improve its energy efficiency. 

6.3. 

Integrating energy efficiency into development policy 

European development policy is the fourth feature of increased international cooperation. The 
EU  Energy  Initiative  launched  at  the  WSSD  in  Johannesburg  in  2002  sets  the  political 
framework  for  EU  cooperation  with  developing  countries  on  energy  issues,  where  energy 
efficiency, is of course an important component. The need to ensure coherence of EU policies 
with  development  objectives  was  underlined  in  the  recent  Communication  on  Policy 
Coherence  for  Development,  in  which  energy  was  one  of  the  eleven  policies  specifically 
highlighted.  With  their  comparatively  weak  economies,  developing  countries  are  extremely 
vulnerable  to  increases  in  energy  prices.  In  countries  of  Sub  Saharan  Africa,  increased  oil 
prices can have a significantly stronger negative impact than on OECD countries. At the same 
time,  developing  countries  often  face  high  losses  in  power  production,  transmission  and 
distribution  as  well  as  in  transportation  and  different  end-uses  of  energy.  In  addition,  up  to 
95% of the population depends on the use of traditional biomass for cooking and heating that 
is  used  with  low  energy  efficiency  and  creates  health  problems.  In  the  island  states  of  the 
Pacific and Caribbean, the high price of imported oil is exacerbated by the small markets and 
long transportation distances. The potential for increased energy efficiency for economic and 
social development in developing countries is significant and should be given more attention 
in the cooperation with these countries.  

European development policy can and should help take these issues into account. Actions can 
support  capacity  building,  awareness  raising,  policy  development,  as  well  as  deployment  of 
efficient applications and end use technologies.  

28 

“Ending the Energy Stalemate: A Bipartisan Strategy to Meet America’s Energy Challenges” . 

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Finally,  European  environment  policy  should  help  develop  the  capacity  to  value  efficient 
projects  implemented  in  these  countries  through  climate  change  mechanisms  such  as  the 
CDM.  

6.4. 

Reinforcing the role of international financing institutions 

Lastly,  as  a  fifth  feature,  the  EU  and  the  Member  States  must  incite  the  IFI’s 
(International  Financing  Institutions)  to  give  more  attention  to  energy  efficiency 
measures in their future financial and technical assistance operations to third countries. 
Ways and means need to be explored on how international financial institutions can integrate 
energy efficiency considerations in all major investment projects. The upcoming evaluation of 
the  energy  policy  of  the  EBRD  will  be  a  good  opportunity  to  raise  this  point.  The  fact  that 
promotion of energy efficiency often passes through support for micro-projects should not be 
an  argument  for  these  institutions  not  to  engage  themselves  fully.  Global  lending  facilities 
should be developed, and there is a need for more lending through intermediaries, for example 
national agencies. 

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CONCLUSION 

This  Green  paper  aims  at  identifying  options  and  at  opening  a  wide-ranging  discussion  on 
how to realise the cost-effective savings and to start the process towards rapidly establishing a 
concrete  Action  Plan,  involving  action  at  Community,  national,  regional,  local  and 
international  levels  and  at  the  level  of  industry  and  of  individual  consumers,  to  harness  the 
identified potential energy efficiency savings.  

Implementation  of  this  framework  will  involve  all  actors.  Firstly  the  national,  regional  and 
local  public  authorities,  to  be  supported  by  local  energy  agencies,  which  will  take  care  of 
dissemination of best practices, right through to the general public. Industry is another partner 
which  should  be  brought  on  board  to  drive  forward  this  policy.  Energy  efficiency  also 
constitutes  opportunities  for  industry  to  develop  new  technologies  for  export.  Discussions 
should  also  be  opened  with  financial  institutions  in  order  to  increase  their  investments  in 
energy  efficiency  in  the  future.  Without  investments  many  measures  will  not  take  place.  In 
particular financing tools have to be devised which are more suitable for smaller projects.  

An  Energy  Efficiency  initiative  has  wider  implications  than  for  energy  policy  alone.  It 
constitutes  a  major  contribution  to  reduction  of  our  energy  dependency  on  third 
countries, in a setting of high and volatile oil prices. This initiative will also contribute to 
the attainment of the Lisbon Strategy goals, aiming to re-launch the European economy, 
and to the fight against climate change.  

The  key  to  promoting  energy  efficiency  is  to  give  Member  States,  regions,  citizens,  and 
industry  the  incentives  and  tools  necessary  to  go  forward  to  the  necessary  action  and 
investments  to  achieve  energy  savings  with  a  positive  cost-benefit  ratio.  This  can  be  done 
without any lowering of comfort levels or of the standard of living. It simply means to avoid 
wasting energy when simple steps can be taken to reduce consumption. According to studies 
carried  out  by  the  Commission29,  the  following  table  gives  a  general  indication  of  the 
potential  cost-effective  savings  in  the  different  sectors  that  could  be  harnessed.  Whilst  only 
indicative, they represent a picture of the opportunities that this Green Paper seeks to exploit.  

Potential savings in Mtoe 

2020 

2020+ 

Rigorous implementation of 
adopted measures  

Implementation of additional 
measures  

Buildings: Heating/cooling 

Electric appliances 

Industry  

Transport 

CHP 

Other energy transformation, etc  

Total energy savings 

 41 

15 

16 

45 

40 

33 

190 

70 

35 

30 

90 

60 

75  

360 

This Green Paper therefore is a starting point from which to launch the debate and to prompt 
new  ideas,  whether  these  come  from  industry,  public  authorities,  consumer  groups  or 

29 

See i.a. European Energy and Transport “Scenario on Key drivers”, Ecofys studies etc. 

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consumers  themselves.  This  consultation  process  has  already  begun.  To  prepare  this  Green 
Paper, a High Level Group composed of representatives of all Member States was put in place 
and  met  in  April  2005.  It  has  already  confirmed  that  progress  can  only  be  made  if  the  EU 
takes  a  pro-active  approach,  and  concrete  targets  adopted.  Additionally,  the  Commission  is 
creating a Sustainable Energy Forum, which will include representatives not only of Member 
States but also of all those interest groups which must be considered as partners in order to 
make sure that the energy efficiency drive shall succeed.  

The  initiatives  to  be  launched  by  the  EU  must  be  made  known  and  implemented  at  the 
national,  regional  and  local  levels.  Obviously,  consumers  themselves  will  also  have  to  be 
mobilised in order to develop and spread habits which will incorporate more energy efficiency 
in everyday life. 

Of course ideas are required in order to achieve the whole potential for energy savings,  but 
also a good method for putting them into practice across the EU. If following the debate on 
the  Green  Paper,  it  is  decided  to  set  overall  binding  targets  and  ensure  a  minimum  of 
harmonisation, the so-called ‘Community method’ must be used. Under this the Commission, 
armed  with  its  right  of  initiative  confirmed  by  the  Treaty,  makes  proposals  which  are 
discussed  and  adopted  by  the  European  Parliament  and  the  Council  of  Ministers.  The 
Community  method  has  been  the  keystone  for  the  success  of  the  EU.  Furthermore,  energy 
efficiency is included in the integrated guidelines under the Lisbon process. It is therefore part 
of  the  new  economic  governance  structure.  As  was  done  in  the  2000  Green  Paper  on  the 
security of energy supply, the Commission now puts down a number of questions in order to 
set out a structure for public debate, and facilitate putting the results to good use. 

In December 2005, the Commission will lay a first analysis of the results of the public debate 
to be launched on this Green paper on energy efficiency before the Council of Ministers. The 
report  will  be  accompanied  by  an  action  plan  containing  the  practical  action  which  will  be 
proposed as from 2006. 

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ANNEX 1 

Energy efficiency: the need for action 

The  25  Member  States  of  the  EU  currently  consume  around  1 725  Mtoe  (Megatons  of  oil 
equivalent) of energy per year. This has a high price tag it: in the region of € 500 billion, or 
more than € 1000 per person per year. Of these € 500 billion, about one half falls on the 
trade  bill  of  the  EU  (around  €  240  billion).  Energy  is  expensive.  It  is  also  beginning  to  be 
scarce.  According  to  many  experts,  known  oil  reserves  are  only  enough  to  cover  today’s 
needs for about 40 years. 

However,  in  Europe  a  large  proportion  of  this  energy  continues  to  be  wasted,  whether  by 
inefficient  equipment  or  through  lack  of  awareness  of  energy  users.  This  represents  a  cost 
with  no  benefit,  whether  the  waste  occurs  at  the  point  of  production  or  use.  This  enormous 
loss of capital could be put to other uses, including developing new energy-efficient practices, 
technologies and investments. 

Energy  consumption  is  also  a  major  contributor  to  climate  change,  which  is  the  cause  of 
increasing concern over recent years. Energy is the source of 4/5 (78%) of total greenhouse 
gas emissions in the EU. Of these, the transport sector contributes around one third. 

The  cost-effective  saving  of  energy  means,  for  the  EU,  lower  dependence  on  imports  from 
third countries, greater respect for the environment and reduced costs for the EU economy at a 
time  of  trailing  competitiveness.  Reducing  energy  needs  is  hence  a  policy  objective  which 
would contribute to the objectives of the Lisbon Agenda by boosting the European economy 
and  creating  new  jobs.  Energy  efficiency  policy  also  brings  significant  savings  on 
household  energy  bills  and  thus  has  a  direct  impact  on  the  every-day  lives  of  all 
European citizens.  

The role of public authorities, particularly the EU, is to make individuals and their political 
representatives aware of the urgency of improving energy efficiency. It is imperative for the 
environment, for the economy and for our health. 

Improving energy efficiency is a broad term. In this Green Paper it covers firstly, a better use 
of energy through improvements in energy efficiency, and, secondly, energy saving through 
changes in behaviour. 

•  Energy  efficiency  essentially  depends  on  the  technologies  used.  Improving  energy 
efficiency  hence  means  using  the  best  technologies  to  consume  less,  whether  at the final 
consumption  or  energy  production  stage.  This  means,  for  example,  replacing  an  old 
household  boiler  with  a  new  one  which  consumes  one-third  less;  or  putting  in  place 
systems  which  avoid  the  energy  consumption  of  standby  mode  on  numerous  household 
appliances  (TV,  electric  oven,  etc.);  or  using  light  bulbs  which,  for  the  same  brightness, 
use less energy thanks to new technologies. 

•  Energy saving in the overall sense also derives from a change in consumer behaviour. This 
means,  for  example,  a  policy  of  making  public  transport  more  attractive  and  thereby 
encouraging car users to take the bus or train instead; or educating people on how to reduce 
heat losses from their house, notably through correct use of the thermostats. 

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This Green Paper intends to open a discussion on how the EU promotes an overall policy in 
order to encourage the more widespread use of new technology to improve energy efficiency 
and to stimulate a change in European consumer behaviour.  

Research is particularly vital in further improvements of the energy efficiency potential which 
will continue to grow as economies develop further. Research and development in the area of 
energy efficiency as carried out under the Framework programmes and under the Intelligent 
Energy for European programme thus complement policy n this field  and  work towards the 
same goals: less fossil fuel use, better jobs created in the European Union and higher added 
value for the European economy. 

1. 

Fossil fuels dominate in Europe’s energy consumption  

From the early 1970s until 2002, energy consumption in EU-25 rose by almost 40% – or 1% 
per year – while GDP doubled, growing at an average rate of 2.4% per year. Energy intensity, 
the ratio of GDP to energy consumption, therefore decreased by a third. However, since 2000, 
the  improvement  in  energy  intensity  has  been  less  substantial,  reaching  only  1%  over  two 
years (see annex 3). 

Total energy consumption by fuel and energy intens ity

Energy intensity 1990=100

10 0

75

50

25

0

renewables

nuclear

natural gas

oil

solids

ene rg y
intensity

mtoe
2000

1750

1500

1250

1000

750

500

250

0

1990

2 000

201 0

2020

This  Community  average  does  not  reflect  the  considerable  differences  between  Member 
States  caused  by  the  differing  economic  structures  (e.g.  more  or  less  energy  intensive 
industry), the national currency exchange rate compared to the Euro and the level of energy 
efficiency that, by and large, is obviously much better in the EU-15. 

The  following  diagram  demonstrates  the  great  potential  for  improvements  in  most  new 
Member States. 

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Energy Intensity (toe/M€95)-2003

1600

1400

1200

1000

800

600

400

200

0

DK IE

AT

IT DE FR SE NL

LU UK EU ES BE PT EL CY MT FI

SI HU PL

LV SK CZ LT EE

In  the  following  diagram,  this  comparison  is  corrected  for  the  differences  in  the  purchasing 
power of incomes in the Member States. 

Primary energy intensity adjusted at current purchasing power parities (2002) : EU-25=100

250

200

150

100

50

0
0
1
=
5
2
U
E

0

Malta

Italy

Ireland

Denmark

Austria

Portugal

United Kingdom
Greece

Netherlands
Spain
Germany

Cyprus

France
Luxembourg

Slovenia

Hungary

Poland

Sweden

Source: Enerdata 

Latvia

Finland

Lithuania

Slovak Republic
Czech Republic
Belgium
Estonia

If the current trend continues, gross energy demand could increase by 10% by 2020. Growth 
in electricity demand could also reach 1.5% per year. Today’s consumption in the EU could 
reach 1 900 Mtoe within 15 years (2020), compared with 1 725 Mtoe in 200530. 

30 

This predictions are made under the assumption of an average growth of GDP as foreseen to be 2.4% 
per year. 

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Gross energy consumption EU25  (1725 mtoe) in 2005 – see
annex 1

by sector

house-
holds
17%

tertiary
10%

transport
20%

industry
18%

transfor-
mation 
losses, 
etc
29%

non-
energy 
use
6%

Meanwhile energy demand continues to increase in the EU, while its hydrocarbon production 
slows down. Thus, oil production reached a maximum in 1999 with 170 Mtoe; and it should 
decrease to 85 Mtoe by 203031. The contribution of renewable energies remains relatively low 
- 6% in 2000 and between 8%  and  10% of the  total consumption in  2010  and the  expected 
decrease in production of nuclear electricity predicts a fall of around 240 Mtoe. This means 
that domestic primary production could fall to 660 Mtoe in 2030, whereas it still represents 
900 Mtoe in 2005. 

2. 

The benefits of increased energy efficiency for the European economy  

The absence of convincing action to thwart the trends towards increased energy consumption 
also  has  a  negative  effect  on  the  efforts  of  the  EU  in  the  context  of  the  Lisbon  Strategy, 
which aims to make the economy of the Union the most competitive in the world.  

Higher oil prices impact negatively on GDP growth. A lesser dependency on oil would thus 
benefit  the  economy  immediately.  But  even  without  higher  oil  prices,  there  are  sound 
economic reasons to make a strong push towards more efficient use of energy in Europe. In 
this context a discussion should be launched on how EU business and citizens could make a 
financial  gain  in  the  short,  medium  and  long  term  by,  for  example,  installing  new  energy 
efficiency  equipment  or  refurbishing  buildings.  Further  more,  as  energy  efficiency  requires 
services and technology in an area where Europe is a world leader, an effective energy policy 
means that instead of paying for imported hydrocarbons new, quality jobs are created in the 
EU. 

31 

EU-25 baseline scenario. European Energy and Transport scenario on key drivers. 

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According to estimations made by the German Council for Sustainable Development32, more 
than 2000 full-time jobs could be created for  each million tonnes of oil equivalent that 
will be saved as result of measures and/or investments specially taken to improve energy 
efficiency as compared to investing in energy production. This is shown to be the case in 
calculations  done  in  several  other  studies  on  the  subject.  It  should  be  noted  here  that  this 
figure does not include jobs created as a result of increased exports of European technologies, 
but does include job losses due to the lower demand of energy (see annex 5). 

The economic potential of energy efficiency depends both on technological developments and 
on  current  and  forecast  energy  prices.  Consumers  will  benefit  from  energy  efficiency 
measures  when  the  cost-benefit  ratio  is  positive.  The  general  economy  could  also  benefit 
thanks to transfers of the resources saved to other economic activities. Research is also at the 
centre  of  progress  in  energy  efficiency,  and  is  one  of  the  two  main  goals  of  the  Lisbon 
strategy  to  revitalise  the  European  economy,  together  with  job  creation,  to  which  it  is  also 
directly linked. 

Furthermore,  the  European  Union  is  one  of  the  world  economic  zones  best  placed  to  help 
developing  economies  also  reduce  their  own  energy  intensity  and  render  their  economic 
growth more sustainable33, thanks to its exports of state-of-the-art technology.  

3. 

Energy use – a cause of environmental damage 

Growth  in  consumption  has  a  direct  impact  on  the  deterioration  of  the  environment  and  on 
climate change. Air quality is a major environmental concern for the EU. The Commission is 
currently  elaborating  the  EU  Clean  Air  Programme  (CAFE),  where  the  harmful  effects  of 
ozone  and  especially  particulates  are  revealed  for  human  health,  the  ecosystems  and 
agricultural  crops34.  This  situation  will  be  improved  by  2020  in  the  first  place  by  the 
implementation of current emission standards, but increased energy efficiency could equally 
improve air quality dramatically by avoiding burning of fossil fuels. Effects of reduced energy 
consumption have been estimated in environmental models35 to be in the order of thousands 
of avoided premature deaths and billions €.  

Burning fossil fuels causes greenhouse gas emissions. CO2 emissions, rather than evening out, 
could  if  prevailing  trends  persist  actually  exceed  1990  levels  by  14%  by  2030  under  a 
“business  as  usual  scenario”.  At  the  current  rate  of  increase  of  energy  consumption,  the 
tensions between our pattern of energy demand – 80% based on fossil fuels – and the struggle 
to advance a sustainable environment could be felt most strongly from 2012 onwards. 

In  its  recent  Communication  on  climate  change36,  the  Commission  concluded  that  50%  of 
future  reductions  of  greenhouse  gas  emissions  would  be  achieved  by  improved  energy 
efficiency.  

32 

33 
34 

35 
36 

für  Nachhaltige  Entwicklung,  2003,  http://www.nachhaltigkeitsrat.de/service/download/ 

Rat 
publikationen/broschueren/Broschuere_Kohleempfehlung.pdf 
UNDP, World Energy Assessment 2000, and update of 2004, http://www.undp.org/energy 
For example in 2000, 3 million life years have been lost in the EU due to particulate concentrations in 
the air we breathe. This is equivalent to about 288 000 premature deaths. 
Study made for the CAFE 
COM(2005)  35.  The  Communication  stresses  the  importance  of  energy  efficiency  for  reaching 
greenhouse gas emission levels which are compatible with maintaining the climate. It is estimated that 

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All  Member  States  are  committed  to  developing  forms  of  energy,  which  do  not  emit 
greenhouse  gases:  “green”  electricity,  bio  fuels,  etc.  They  have  already  developed  plans  for 
energy  savings  in  certain  sectors.  However,  Europe  has  still  not  demonstrated  its  ability  to 
reduce current trends or its capacity to reverse the spiralling growth in energy consumption.  

4. 

The international response 

Energy  concerns  were  for  a  long  time  merely  a  matter  of  satisfying  demand  by  supply-side 
policies. It was only in the year 2000 that the European Commission’s Green Paper on energy 
supply security put forward a clear strategy based on demand management. The Green Paper 
on security of supply proposed a clear strategy anchored in demand. The Green Paper came to 
the conclusion that the EU had just too little room for manoeuvre on energy supply and that it 
was in the area of energy demand that it could act. So the Commission has started a first series 
of  regulatory  acts  in  the  field  of  energy  efficiency,  notably  the  Directive  on  the  Energy 
Performance of Buildings and the Cogeneration Directive. 

The  same  can  be  said  regarding  the  international  intergovernmental  organisations  like  the 
International  Energy  Agency  (IEA)  which  have  very  recently  started  to  consider  energy 
efficiency  as  a  priority,  pushed  by  record  oil  prices.  Bilaterally  there  has  not  been  a  proper 
energy  dialogue  either  between  producing  and  consuming  countries.  Such  a  structured  and 
lasting  dialogue  would  have  enabled  the  introduction  of  a  minimum  of  transparency  in  the 
market and would have contributed to stable prices. The partnership with Russia launched in 
2000 and the up-coming re-launch of the dialogue with OPEC will allow for this gap in the 
energy policy of the Union gradually to be overcome. 

This new awareness is also reinforced by the international economical of the strong economic 
growth in certain countries – China, Brazil, and India – which has led to energy consumption 
racing ahead. However it must be stated that these countries are conscious of the fact that they 
have  to  reduce  their  energy  intensity,  if  only  because  these  growth  rates  in  energy 
consumption can put their economies at risk. 

Moreover, there is also a lack of a structured dialogue between consumer countries, whereas 
this could lead to a demand-based strategy at world level, and would help them to become less 
dependent  on  fossil  fuels,  thus  reducing  the  negative  impact  of  their  consumption  on  the 
environment. 

The following graph shows the big differences in energy intensity between the large zones of 
consumption in 200337: 

37 

50% of the necessary reduction - i.e. to achieve a level of such gases in the air of 550 ppm - could come 
from greater energy efficiency. 
Although other less energy efficient regions are at the moment more competitive than the EU, this is not 
a reason why the EU should not increase its energy efficiency and thus its own competitiveness. 

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Energy Intensity 2003 (toe/M€1995)

2000

1800

1600

1400

1200

1000

800

600

400

200

0

Japan

EU-25

USA

China

Russia

In  the  following  diagram,  this  comparison  is  corrected  for  the  differences  in  the  purchasing 
power of the incomes of these economic areas. 

Energy Intensity 2003 (toe/M€1995GDP)
(GDP adjusted for purchasing pow er parity)

900

800

700

600

500

400

300

200

100

0

Japan

EU-25

USA

China

Russia

5. 

Opening the debate on an ambitious goal for the EU 

source Enerdata 

Without  pro-active  measures  to  avoid  a  further  drift  of  energy  consumption  all  these 
preoccupations  linked  to  the  security  of  supply,  European  competitiveness,  climate  change 
and  atmospheric  pollution  will  only  get  worse.  The  EU  cannot  allow  such  negative 
predictions to come true.  

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This Green Paper on energy efficiency envisages to launch the debate on how the EU could 
achieve  a  reduction  of  the  energy  consumption  of  the  EU  by  20  %  compared  to  the 
projections for 2020 on a cost effective basis. 

With  today’s  most  advanced  technology,  it  is  certainly  possible  to  save  around  20%  of  the 
energy consumption of the Member States of the EU Total consumption is currently around 
1 725  Mtoe.  Estimations  indicate  that,  if  current  trends  continue,  consumption  will  reach 
1 900 Mtoe in 2020. The objective is thus to arrive, thanks to energy savings of 20% at the 
consumption level of 1990, i.e.1 520 Mtoe.  

This would mean that rigorous implementation of all measures taken after 2001, for instance 
the  Directives  on  the  energy  performance  of  buildings  and  on  combined  heat  and  power 
generation,  combined  with  new  measures,  could  lead  to  annual  savings  of  an  average  1,5% 
per year, which in turn would allow EU-25 to return to its 1990 consumption38.  

38 

This  is  calculated  on  the  basis  of  existing  EU  predictions  on  GDP  development,  indicating  a  yearly 
growth of 2,4%, see “European Energy and Transport, scenario on key drivers”, Commission, 2004. 

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Electricity consumption savings and trends in the residential sector EU-15 (sources: Wai 
2004, Kem 2004)39 

ANNEX 2 

Electricity Savings 
Achieved in the 
Period 1992-2003 

Consumption in 
2003 

[TWh/year] 

[TWh/year] 

Consumption in 
2010 
(with current 
policies)  

[TWh/year] 

Consumption in 
2010 
Available 
potential to 2010 
(with additional 
polices) 
[TWh/year] 

Washing Machines 

10-11 

Refrigerators and 
Freezers 

12-13 

Electric ovens 

- 

Standby 

Lighting 

Dryers 

DESWH40 

1-2 

1-5 

- 

- 

Air-conditioners 

Dishwashers 

0.5 

Total 

24.5-31.5 

26 

103 

17 

44 

85 

13.8 

67 

5.8 

16.2 

377.8 

23 

96 

17 

66 

94 

15 

66 

8.4 

16.5 

401.9 

14 

80 

15.5 

46 

79 

12 

64 

6.9 

15.7 

333.1 

39 
40 

Status report 2004 Joint Research Center IES. 
Domestic Electric Storage Water Heaters (DESWH), the saving potential indicated is only related to the 
reduction  of  the  thermal  stand-by  losses  due  to  thicker  insulation.  Additional  saving  will  come  from 
control strategy (thermostat and timer). Larger electricity saving will be achieved by introducing solar 
thermal panel. 

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ANNEX 3 

EU-25: long-term development of GDP, energy demand and 
energy intensity (baseline) : 2000 = 100

200

175

150

125

100

75

50

1971 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Average decrease of energy intensity is 1,6% p. year 

GDP

energy
demand

energy
intensity

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ANNEX 4 

Final energy demand 

2002 

Buildings 
(residential and 
tertiary  

Industry 

Transport 

All final demand 
sectors 

% of 
final 
demand 

Mtoe  % of final 
demand 

Mtoe 

% of 
final 
demand 

Mtoe  % of final 
demand 

Mtoe 

12.2 

96.8 

1.1 

8.9 

38.7 

46.9 

155.6 

14.4 

105.4 

121.3 

11.2 

91.2 

Solid fuels 

Oil 

Gas 

Electricity 
(incl.14% 
from RES) 

Derived heat 

Renewables 

22.8 

29.0 

2.1 

2.7 

7.5 

16.2 

3.6 

4.3 

9.7 

8.4 

0.7 

1.5 

0.0 

0.0 

50.9 

4.7 

331.5 

30.6 

475.2 

43.9 

0.4 

6.0 

0.0 

1.0 

0.0 

0.6 

0.0 

0.1 

261.5 

24.2 

218.5 

20.2 

30.3 

46.2 

2.8 

4.3 

Total 

437.8 

40.4 

306.0 

28.3 

338.9 

31.3 

1 082.6 

100.0 

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ANNEX 5 

The Employment effects of Energy Efficiency Improvements 

Investments  in  cost-effective  energy  efficiency  improvement  will  almost  always  have  a 
positive impact on employment41. In all cases the number of jobs created is greater than those 
created  from  comparable  alternative  investments,  including  investments  for  the  extraction, 
transformation and distribution of energy42. 

The  strong  employment  impact  deriving  from  energy  efficiency  investments  is  due  to  the 
combined result of two separate effects. One effect is the so-called “re-deployment effect” of 
energy  savings  investment.  This  effect  is  due  to  the  indirect  effects  of  re-investing  the 
financial savings generated by energy efficiency measures. It accounts for fully two-thirds of 
the total impact on employment43. The other effect is the direct effect of such investments and 
comes  from  the  labour  required  to  implement  the  original  energy-efficiency  investment.  A 
good  example  of  this  is  investments  such  as  retrofitting  of  existing  buildings.  Many  such 
investments  have  the  added  advantage  of  being  labour-intensive,  of  having  impacts  that  are 
felt  locally  and  regionally  and  of  having  a  relatively  low  import  content.  This  demand  for 
labour  often  includes  unskilled  labour  as  well  as  semi-skilled  and  highly  trained  craftsmen, 
making it a versatile instrument for reaching regional policy objectives. 

Many other direct investments in energy efficiency, such as energy-efficient process lines in 
industry,  the  installation  of  energy-efficient  boilers,  improved  building  maintenance  service 
will  generate  as  much  or  more  employment  per  invested  euro  than  comparable  alternatives 
such as road, bridge and energy transmission infrastructural investments. 

Numerous studies have been carried out to compare the relative employment-creating effects 
of energy efficiency investment with alternative investments. One such study identified 12-16 
job-years  of  direct  employment  created  for  every  USD  1  million  invested  in  energy 
efficiency, compared with only 4.1 job-years for an investment in a coal-fired power plant and 
only  4.5  job-years  for  a  nuclear  power  plant.  That  is  to  say,  energy  end-use  efficiency 
investments  create  three  to  four  times  the  number  of  jobs  created  by  comparable  energy 
supply investments44. 

It has also been commonly thought that power plant construction has a very large impact on 
the  local  economy.  This  impression  arises  from  viewing  the  impact  in  a  local  area  where 
construction expenditures and employment are highly concentrated. For the region as a whole, 
however,  the  impact  is  not  nearly  as  large  as  that  of  a  comparable  energy  efficiency 
improvement  programme.  In  addition,  because  of  the  large  share  of  capital  investment 
required  for  energy  production  facilities,  the  total  cost  of  producing  a  kWh  of  electricity  is 
about twice the cost of saving a kWh. 

Some  jobs  are  actually  lost  due  to  increased  environmental  regulation  and  market 
deregulation in the energy sector. The opening of the electricity and gas markets, for example, 
has  led  to  job  losses  in  the  short  term,  mainly  because  increased  competition  has  forced 

41 

42 
43 
44 

“National and Local Employment Impacts of Energy Efficiency Investment Programmes,” 2000. SAVE 
Study, ACE, UK.  
Employment Effects of Electric Energy Conservation,” 2002. Charles River Associates. 
Ibid. 
Ibid. 

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rationalisation of energy production/generation, transmission and distribution facilities. These 
net job losses do not take account of the redeployment effects of lower electricity prices for 
big industrial users. It is clear, however, that if increased investments in energy efficiency are 
co-ordinated with environmental legislation and market liberalisation, net employment gains 
can still be achieved45.  

There  are  many  estimates  on  the  possible  number  of  jobs  that  can  be  created  in  the  EU 
through  increased  energy  efficiency.  These  estimates  vary  greatly,  according  to  the  size, 
length and types of investments that are made. A rough calculation based on the value of the 
energy saved from an energy efficiency increase of 1% per year for a 10-year period, shows 
that  this  could  lead  to  over  2 000 000  man-years  of  employment  if  these  investments  are 
undertaken, for example, under proper conditions in the buildings retrofitting sector46. These 
estimates are corroborated by other studies.47 The large savings potential and the fact that the 
buildings  sector  is  responsible  for  40%  of  EU  final  energy  consumption,  make  energy 
efficiency  investments  in  this  sector  particularly  interesting.  The  increased  possibility  to 
finance some of these investments from the Structural Funds and the possibility for Member 
States to apply reduced VAT and other taxes and charges can add to this interest48.  

It should also be mentioned in this context that new requirements in  Member States for the 
certification of the energy performance of buildings are expected to impact very positively on 
employment  in  the  buildings  sector.  At  the  same  time,  this  requirement  will  provide 
information and advice on future cost-effective energy-efficiency investments, many of which 
should  be  undertaken.  The  requirement  for  the  inspection  of  heating  and  air-conditioning 
systems is also expected to increase employment. Although EU-level estimates of the direct 
employment effects of these requirements are not yet available, indications are that Member 
States  together  will  need  around  30 000  new  experts  for  certification  and  inspection  when 
national legislation has fully entered. 

. 

45 
46 
47 

48 

European Parliament study of 2004. 
SAVE Study. 
UNDP, World Energy Assessment, p. 185. Rat für Nachhaltige Entwicklung: ‘Perspectives for coal in a 
sustainable energy industry’, October 2003. 
It is estimated that lowering income taxes and employer charges while raising them compensatorily on 
energy could create half a million new jobs in Denmark. 

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