Commission staff working document accompanying the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the Sustainable Consumption and Production and Sustainable Industrial Policy - Action Plan - Impact assessment {COM(2008) 397 final} {SEC(2008) 2111}
Date: 2008-06-25
Institutions: European Commission
Subjects: consumption, energy policy, environmental protection, environmental standard, impact study, industrial policy, sustainable development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.7.2008 
SEC(2008) 2110 

COMMISSION STAFF WORKING DOCUMENT 

accompanying the  

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the Sustainable Consumption and Production and Sustainable Industrial Policy 
Action Plan 

IMPACT ASSESSMENT 

{COM(2008) 397 final} 
{SEC(2008) 2111} 

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This  impact  assessment  report  accompanies  the  Proposal  for  a  Communication  on  a 
Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan. This 
Action  Plan  is  the  overarching  element  of  a  package  of  measures  that  will  also  include 
concrete legislative proposals. This impact assessment focuses on a proposal for an extended 
Integrated  Package,  which  could  improve  the  environmental  performance  of  the  European 
Union  through  the  promotion  of  production  and  consumption  of  environmentally  better 
performing products. 

The IA identifies several market failures that EU policy currently already addresses or where 
there could be a need for some form of public intervention: 

•  Environmental  externalities  resulting  from  prices  not  reflecting  the  negative 

environmental impacts of the production or consumption of products, 

•  Information  asymmetries  due  to  high  transaction  costs  for  consumers  to  obtain 
relevant  information  on  product  characteristics  that  influence  environmental 
performance, 

•  Bounded  rationality  meaning  that  even  well  informed  consumers  do  not  always 
act  rationally  in  the  sense  of  taking  a  long  term  view  when  making  purchasing 
decision, 

•  Principal  agent  problems  as  a  result  of  a  misalignment  of  incentives  between 

economic actors , 

•  And negative effects of these market failures on innovation. 

In  addition  there  are  what  can  be  described  as  regulatory  failures  as,  for  example,  some 
Member  States'  actions  in  the  area  of  procurement  or  fiscal  incentives  can  fragment  the 
internal market for products. 

Although  there  are  already  policies  in  place  on  greenhouse  gas  emissions,  air  and  water 
quality,  waste,  product  policy,  energy  efficiency,  etc.  that  address  these  market  failures, 
several problems remain. The analysis shows that some environmental externalities could be 
avoided  without  incurring  additional  costs.  More  important  however  is  evidence  that 
information asymmetries are not being addressed sufficiently by existing tools and that even 
when  they  are,  there  is  evidence  that  without  updating  the  information  provided  by  labels 
(such as the energy efficiency label) they lose their informational value, and thus usefulness, 
over  time.  Moreover,  there  is  evidence  to  suggest  that  even  if  consumers  have  all  the 
necessary information to make purchasing decision based on what is in their best private and 
social interest, they fail to do so because of short-sighted behaviour. Principal agent problems 
persist in the area of housing and existing policies related to energy performance of buildings 
cannot reduce them substantially in the near future. Due to the existence of remaining market 
failures, incentives to innovate are less than socially optimal.  

Furthermore,  a  multitude  of  diverging  national  criteria  exists  with  respect  to  Green  Public 
Procurement  rules  and  fiscal  incentives.  This  leads  to  fragmentation  of  the  internal  market 
that  should  be  avoided.  Finally,  the  policies  in  place  are  not  sufficiently  aligned  and  linked 
with each other to realise synergies but send conflicting signals and have gaps that lead to a 
fragmented regulatory framework rather than a consistent one. 

The general objective of the action plan is to render the EU’s product policy more effective, 
thus contributing to the goals of the Lisbon Strategy and those of the Reviewed Sustainable 
Development Strategy.  

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to  raise  dynamically 

More  specifically: 
the  market  share  of  products  with  more 
environmentally  performing  features;  to  provide  consumers  with  relevant  information  on 
product performance; to help overcome problems caused by a misalignment of incentives and 
to reduce the potential for suboptimal outcomes as a result of myopic consumer behaviour; to 
avoid fragmentation of incentives and stimuli (e.g. fiscal incentives and public procurement); 
to  remove  barriers  to  trade  to  ensure  that  Environmental  Industries  can  benefit  from  the 
advantages  of  the  Internal  Market;  and  to  maximize  the  environmental  contribution  of  the 
EU's  standards  internationally  whilst  ensuring  that  the  possible  short  run  incidence  on  the 
competitive position of EU industry is addressed, where necessary. 

Three  options  were  considered  to  address  these  objectives:  no  further  action  or  the  baseline 
scenario (no change of existing policies) and two alternative packages of measures.  

The  no  further  action  option  would  imply  that  the  identified  market  and  regulatory  failures 
would not be addressed.  

The  first  alternative  package  is  mostly  focused  on  enhancing  the  role  of  the  voluntary  eco-
label scheme and linking it with other policies. This option would promote a combination of 
instruments that would reinforce voluntary actions (Eco-label, Open Method of Coordination 
for  the  use  of  incentives),  promote  Environmental  Management  and  Audit  Scheme,  Green 
Public Procurement  and  identify  internal market barriers for eco-industries (competitiveness 
screening).  The  different  market  and  regulatory  failures  would  essentially  be  addressed 
through  the  provision  of  information  and  the  development  of  voluntary  incentives.  The  co-
ordination of existing policies would be done within the existing framework.  

The  second  alternative  package  consists  of  a  set  of  measures  that  are  centred  around  an 
extended Integrated Package. This option would integrate a set of instruments to extend the 
scope  of  mandatory  actions  (Eco-design  Directive  for  Energy  Using  products,  Energy 
level  of  product  performance  for  public 
Labelling  Directive, 
procurement)  and  link  them  with  voluntary  actions  (Eco-label,  Green  Public  Procurement, 
Environmental  Management  and  Audit  Scheme).  The  use  of  incentives  by  Member  States 
would  be  further  harmonised  and  internal  market  barriers  for  eco-industries  would  be 
identified  (competitiveness  screening).  The  difference  to  option  2  is  that  this  option  places 
greater emphasis on mandatory requirements.  

including  mandatory 

The  analysis  of  the  impacts  of  each  option  presents  a  qualitative  assessment  of  the  positive 
and  negative  impacts.  It  gives  an  indication  on  the  extent  to  which  each  of  the  options  can 
resolve the remaining market and regulatory failures established in the problem definition as 
well as indications of potential drawbacks or costs. A quantitative estimation of the effects on 
product prices, resource use, life-cycle costs and CO2 emissions are provided for a number of 
product  categories  for  which  data  is  available.  The  analysis  is  indicative  only  since  a 
comprehensive quantitative assessment would require large amounts of detailed data, which is 
not  currently  available,  and  complex  modelling  that  would  go  beyond  the  scope  of 
proportionality for this impact assessment.  

Given  that  the  Action  Plan  does  not  represent  a  concrete  legislative  proposal  and  that  the 
detailed  impacts  of  any  measures  that  may  subsequently  be  adopted  will  be  analysed  in 
separate impact assessments, the level of analysis is deemed proportionate. Individual impact 
assessments  will  be  carried  for  each  of  the  envisaged  measures  and  more  detailed  analysis 
will be provided for these. 

The  conclusion  for  this  impact  assessment  is  that  the  second  package  of  measures  is 
preferable, which rests on an extended Integrated Package based on the Ecodesign Directive 
and a more harmonised use of criteria for Public Procurement and fiscal incentives across the 

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European  Union.  This  option  would  enable  substantial  improvements  in  resource  efficiency 
and reduce environmental externalities. 

The  action  plan  will  be  regularly  monitored  in  order  to  adapt  the  actions  and  optimise  the 
impacts in a cost-effective manner. 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

Procedural Issues and Consultation of Interested Parties ............................................ 7 

Organisation and timing............................................................................................... 7 

Consultation and expertise ........................................................................................... 7 

1.2.1 

Studies .......................................................................................................................... 7 

1.2.2.  Stakeholder Consultations............................................................................................ 8 

1.3 

2. 

2.1. 

2.2 

2.3. 

2.4. 

Opinion of the Impact Assessment Board.................................................................... 9 

Problems and underlying drivers ................................................................................. 9 

Background and context............................................................................................... 9 

The problem ............................................................................................................... 11 

Negative Externalities ................................................................................................ 11 

Other market failures.................................................................................................. 12 

2.4.1. 

Information asymmetries ........................................................................................... 12 

2.4.2.  Bounded rationality.................................................................................................... 12 

2.4.3.  Principal agent problems............................................................................................ 13 

2.5. 

2.6. 

3. 

3.1. 

3.2. 

3.3 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

Impacts of the above market failures on Innovation.................................................. 13 

Internal market fragmentation due to uncoordinated public intervention.................. 14 

Current situation and existing policy responses to challenges................................... 14 

Internalising greenhouse gas emissions ..................................................................... 14 

Air quality, industrial emissions and waste legislation.............................................. 15 

Product policy ............................................................................................................ 16 

Energy Efficiency....................................................................................................... 17 

Other policies ............................................................................................................. 17 

Remaining Problems, taking account of existing policies ......................................... 17 

Externalities................................................................................................................ 18 

Information asymmetries ........................................................................................... 18 

Bounded rationality and principal agent problems .................................................... 19 

Impacts of the above market failures on Innovation.................................................. 19 

Regulatory failures ..................................................................................................... 20 

4.5.1. 

Internal market fragmentations due to uncoordinated public intervention ................ 20 

4.5.2.  Fragmentation of existing policy measures................................................................ 21 

5. 

5.1. 

5.2. 

6. 

EU's right to act.......................................................................................................... 21 

Treaty establishing the European Community........................................................... 21 

Policy background...................................................................................................... 22 

Objectives................................................................................................................... 22 

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7. 

Options ....................................................................................................................... 24 

Option 1: No policy change (baseline)..................................................................................... 24 

Option 2: Strengthen the role of Eco-label (mostly voluntary measures)................................ 24 

Option 3: Strengthen the role of Product Policy (mandatory measures).................................. 25 

8. 

9. 

10. 

11. 

Analysis of Impacts.................................................................................................... 27 

Comparison of options ............................................................................................... 37 

Cost-effectiveness ...................................................................................................... 39 

Monitoring and evaluation ......................................................................................... 40 

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1. 

PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

1.1. 

Organisation and timing  

This  Impact  Assessment  accompanies  the  Communication  on  Sustainable  Consumption  and 
Production  and  Sustainable  Industrial  Policy  Action  Plan  (SCP/SIP).  This  document  is 
prepared as a basis for comments and does not pre-judge the final form of any decision to be 
taken by the Commission. 

An  internal  DG  Environment  Taskforce  and  two  Inter-Service  Groups  (one  on  Sustainable 
Consumption  and  Production,  the  other  one  on  Sustainable  Industrial  Policy)  were 
established,  involving  relevant  Commission  services.  The  aim  of  the  Communication  is  to 
present the global objective and coherence in both fields of action.  

Specific  actions  to  be  presented  together  with  the  Action  Plan  will  be  accompanied  with 
separate Impact Assessments as needed.  

1.2. 

Consultation and expertise 

This  impact  assessment  is  based  on  the  results  of  dedicated  stakeholder  consultations  and 
consultations on specific actions to be proposed; as well as on a broad range of studies and 
consultations  carried  out  with  respect  to  related  policies  (Annex  I).  This  includes  the 
Integrated  Product  Policy  (IPP),  the  Thematic  Strategy  on  the  sustainable  use  of  natural 
resources, the Thematic Strategy on the prevention and recycling of waste, the Environmental 
Technology  Action  Plan  and  others.  It  also takes stock of  the work undertaken by the High 
Level Group “Competitiveness, Energy and Environment”. A more comprehensive overview 
of existing EU policies related to the Action Plans can be found in the Annex III. 

1.2.1 

Studies 

The results of a number of studies have been considered. Some of the most important are: the 
EIPRO project1, the SUSPROC initiative2, the IMPRO project3, several waste and recycling 
related  studies  (e.g.  on  End  of  Waste  criteria);  Tools  for  Environmentally  Extended  Input-
Output  Analysis  (EE-IO)  for  Europe4,  Environmental  Product  Declarations  and  work  of  the 
Life  Cycle  Assessment  platform5,  the  European  Environmental  Agency's  (EEA)  work  on 
Household  Consumption  and  the  State  of  the  Environment6,  and  the  Environmental  Input-
Output  Analyses  based  on  NAMEA  data7,  ASCEE  and  SCORE  projects8  funded  by  the 
Directorate General for Research, Directorate General Transports and Energy studies on the 
Energy using Products (EuP) Directive9, work of the Directorate General EUROSTAT Task 
Force  on  developing  indicators10,  a  DG  Enterprise  (ENTR)  study  on  fostering  EU  internal 
market for Competitive Technologies for a low carbon economy11. 

1 
2 
3 
4 
5 
6 
7 
8 

9 
10 
11 

http://ec.europa.eu/environment/ipp/identifying.htm 
http://www.jrc.es/activities/sustainable_development/susproc.cfm 
http://ec.europa.eu/environment/ipp/identifying.htm 
http://ec.europa.eu/environment/ipp/identifying.htm 
http://ec.europa.eu/environment/ipp/lca.htm 
http://reports.eea.europa.eu/eea_report_2005_11/en 
http://www.jrc.es/publications/pub.cfm?prs=1366 
http://ec.europa.eu/research/environment/pdf/global_change_ecosystem.pdf 
http://www.score-network.org/score/score_module/index.php 
http://ec.europa.eu/energy/demand/legislation/eco_design_en.htm 
Implementing measure of the Resource Thematic Strategy COM(2005) 670 
http://ec.europa.eu/enterprise/environment/sip_en.htm 

p.403 

and 

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In addition relevant studies and other expert inputs in particular when related to the climate 
policy  dimension  of  Sustainable  Consumption  and  Production  and  Sustainable  Industrial 
Policy  have  been  continuously  analyzed  and  their  results  considered  when  developing  this 
Impact Assessment. 

External environmental reports have provided further important input. Examples include the 
Organisation  for  Economic  Co-operation  and  Development  (OECD)  Environmental 
Outlook12,  UK  Department  for  Environment,  Food  and  Rural  Affairs  (DEFRA)  Sustainable 
Consumption  and  Production  research  studies13,  European  Roundtable  on  Sustainable 
Consumption  and  Production14,  The  European  Environment  -  State  and  Outlook  200515, 
Worldwatch  Institute16,  Europe's  Environment  –  4th  Assessment  by  the  EEA17  and  the  UK 
Stern report18. 

More detail in particular about studies and research launched by the services responsible for 
drafting the Action Plan is given in Annex I. 

1.2.2. 

Stakeholder Consultations 

DG Environment (ENV) and DG ENTR launched a joint internet stakeholder consultation on 
Sustainable Consumption and Production (SCP) and on Sustainable Industrial Policy (SIP)19. 
The  consultation  was  based  on  a  background  document20  drafted  by  DGs  ENV  and  ENTR 
(Annex  II).  DG  ENTR  also  launched  a  dedicated  consultation of companies  participating at 
the “European Business Test Panel”21. 
Two  stakeholder  meetings  were  organised  in  September  and  October  200722.  Stakeholders 
from  Member  States,  industry,  Non-Governmental  Organisations,  private  companies,  trade 
associations,  and  management  consultancies  participated.  In  parallel,  DG  ENV  targeted 
selected stakeholders to obtain feedback on specific aspects of the Plan. 

Three workshops with selected experts were held: Japanese Top Runner (to better understand 
its  transferability  to  the  European  market);  Retailers  (to  explore  the  potential  for  greening 
supply  chains  and  sustainable  consumer  behaviour);  and  Green  Private  Procurement 
(exploring opportunities in the private sector). 

DG ENV also established an EU Member States' Experts Group on Sustainable Consumption 
and  Production,  which  will  meet  twice  a  year.  The  biannual  "Integrated  Product  Policy 
Regular  Meetings"  with  Member  States  and  key  stakeholders23  were  also  used  to  discuss 
elements  of  a  Sustainable  Consumption  and  Production  Action  Plan.  The  latter  were  also 
discussed at the Environment Policy Review Group (EPRG) which brings together high level 
Member State environment representatives. 

12 
13 
14 
15 
16 
17 
18 

19 
20 
21 
22 
23 

http://www.oecd.org/LongAbstract/0,3425,fr_2649_37465_38126171_119693_1_1_37465,00.html 
http://www.defra.gov.uk/environment/business/scp/research/ 
http://www.erscp2007.net/cms/ 
http://reports.eea.europa.eu/state_of_environment_report_2005_1/en 
http://www.worldwatch.org/ 
http://www.eea.europa.eu/pan-european/fourth-assessment 
http://www.hm-
treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm 
http://ec.europa.eu/environment/eussd/escp_en.htm 
http://ec.europa.eu/enterprise/environment/sip.pdf 
http://ec.europa.eu/yourvoice/ebtp/ 
http://ec.europa.eu/environment/eussd/escp_en.htm 
http://ec.europa.eu/environment/ipp/meetings.htm 

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DG  ENTR  took  advantage  of  the  recommendations  of  the  High  Level  Group  on 
“Competitiveness,  Energy  and  Environment”  when  identifying  the  different  activities  to 
include in the Action Plan. 

1.3 

Opinion of the Impact Assessment Board 

This  impact  assessment  report  was  drafted  following  the  remarks  in  the  request  for 
resubmission of the Impact Assessment Board (4 December 2007) and the Final Opinion of 
the Board on the final draft issued on 8 April 2008. The following improvements have been 
made: 

The problem definition has been substantially reworked to explain the nature of the existing 
market  and  regulatory  failures,  how  the  policies  in  place  aim  to  address  them  and  what 
problems are still unsolved. The need for action at EU level has been illustrated more clearly 
by  pointing  out  the  risk  of  a  fragmentation  of  the  internal  market  resulting  from  diverging 
criteria at national level with respect to the provision of fiscal incentives and for purposes of 
Green Public Procurement. 

The objectives have been revised to strengthen the link between the remaining problems and 
the policy options. 

The  options  have  been  redesigned  to  reflect  two  different  policy  choices  (in  addition  to  the 
baseline  option):  a  largely  voluntary  approach  based  on  the  existing  eco-label  or  one  that 
relies  mostly  on  cost-effective  mandatory  measures  by  extending  the  existing  eco-design 
framework  (including  several  flanking  measures).  The  presentation  of  the  options  has  been 
revised to emphasize even more the voluntary versus mandatory  character  of each  scenario, 
and to make the synergies between the activities included in each option more visible. More 
attention  has  been  given  to  specify  the  added  value  of  presenting  a  package  of  measures 
instead of a set of individual actions. With respect to the potential for simplification it should 
be noted that this has not been an objective of the initiative. The justification for maintaining 
complementing  labelling  schemes  has  nevertheless  been  further  developed.  Subsequent 
impact  assessments  will  establish  references  to  this  impact  assessment  to  ensure  coherency 
and maximize synergies between the actions.  

It  has  to  be  emphasized  that  the  present  document  assesses  only  whether  strengthened 
voluntary or mandatory existing instruments are likely to successfully achieve the objectives 
of the Action Plan. It does not prejudge the future analysis of the measures nor the legal form 
of  individual  actions.  The  report  clearly  points  out  that  future  impact  assessments  of  the 
specific actions will have to be undertaken to show their necessity and pertinence. References 
to  alternative  legal  instruments  have  been  removed  from  the  text.  The  Monitoring  and 
evaluation section has been expanded to be more precise on the scope of indicators. 

A glossary has been added in Annex VI explaining the essential abbreviations and technical 
terminology. 

2. 

PROBLEMS AND UNDERLYING DRIVERS 

2.1. 

Background and context 

Continuing  economic  growth  of  the  world  economy  will  lift  millions  out  of  poverty  in  the 
coming decades, but coupled with an increasing world population from 6 billion in 2000 to 
8.3  billion  in  2030  there  will  also  be  pressures  on  resources  and  on  the  environment. 
Consumption and production can lead to negative environmental consequences. For example, 
the  use  of  fossil  fuels  in  production  has  been  the  biggest  contributor  to  increases  in  total 

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greenhouse gas emissions and the concentration of CO2 in the atmosphere (Graph 1) which 
cause  global  climate  change  and  temperatures  to  rise  (graph  2).  And  fossil  emissions  are 
expected to continue to grow if no action is taken (see Graph 1, line POLES WETO baseline 
2001).  

Graph 1: Historic development of carbon emissions and the POLES projection. 

Source : JRC (http://energy.jrc.ec.europa.eu/) 

Graph 2: Historic temperature development 

Source:  Impact  assessment  accompanying  the  Communication  "Limiting  Global  Climate 

Change to 2 degrees Celsius The way ahead for 2020 and beyond", p. 14. 

To  combat  climate  change  the  EU  has  set  ambitious  targets  for  reducing  greenhouse  gas 

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(GHG)  emissions  by  20  %24  by  2020.  At  the  same  time,  the  EU  is  heavily  dependent  on 
imported  energy  and  natural  resources.  On  current  projections,  e.g.  assuming  no  further 
action, energy consumption in the EU is likely to increase by 9% from 2005 to 202025. And 
compared to 200026 the use of natural resources in the EU-15 is expected to grow by around 
19% in EU 15 and 60% in the EU 10 by 2020. 

The challenges related to climate change and to the use of and access to natural resources are 
directly  linked  to  how  we  produce  and  the  efficiency  of  the  products  we  consume27. 
Projections  show  a  doubling  of  total  household  consumption  in  terms  of  expenditure  in  the 
EU-25  by  203028.  This  leads  to  significant  contributions  to  greenhouse  gasses,  pollution, 
material use, and natural resource depletion. For example, even though air quality in Europe 
has been steadily improving, air pollution contributes to 750,000 years of life lost each year in 
Europe29.  More  progress  to  diminish  risks  related  to  the  use  of  hazardous  materials  and 
substances  is  still  needed.  Public  intervention  is  needed  to  decrease  these  negative 
environmental externalities while fostering economic growth. 

2.2 

The problem 

Rationales  for  public  intervention  are  generally  found  in  market  and  regulatory  failure 
arguments. Energy generation and industrial processes, transportation activities and household 
energy consumption generate GHG emissions, pollution, waste and other negative effects on 
the environment whose costs are not always reflected in market prices or, when they are, do 
not trigger the desired demand response.  

2.3. 

Negative Externalities 

Consumers when making their consumption choices do not necessarily act in the interest of 
society  as  a  whole.  This  can  happen  if  prices  of  goods  do  not  reflect  the  total  cost  of 
environmental pollution to society and rational consumers maximise private utility rather than 
social welfare. Free-riding becomes a dominant strategy and the result is a collective action 
problem: while everybody agrees that it would be better to avoid the negative environmental 
and thus health impacts, no-one has a sufficiently strong incentive to act accordingly. 

Negative externalities arise not only during the production and consumption of a product but 
also  when  it  is  disposed.  Greenhouse  gas  and  pollutants  emissions,  for  example,  lead  to 
climate  change,  acid  rain  that  degrades  forests  and  air  and  water  pollution  which  lead  to 
negative  health  effects.  Toxic  substances  can  be  released  when  waste  is  burned  and  require 
expensive abatement technology to prevent environmental harm. By and large, there is often 
no  incentive  for  consumers  to  purchase  products  that  generate  less  hazardous  waste  as  the 
disposal costs are not charged to the consumer individually but to taxpayers.  

24 
25 
26 
27 

28 
29 

30% in the case of an international agreement 
COM (2008) 30 final Annex  
Europe's Environment Fourth Assessment (EEA, 2007) 
EIPRO  study  Joint  Research  Centre  and  NAMEA  EEA.  These  studies  show  that  in  the  EU,  the 
consumption  areas  of  eating  and  drinking,  housing,  and  travelling  bear  between  70%  to  80%  of  all 
environmental  impacts,  and where  "housing"  includes:  heating, water, and domestic  appliances  –  and 
these account for 24% of all environmental impacts. 
EEA, 2005 
Health Aspects of Air Pollution (WHO, 2004) 

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2.4. 

Other market failures 

2.4.1. 

Information asymmetries 

Consumers - in a wider sense - do not always make decisions based on what is in their own 
long term interest or benefit. For example, consumers often fail to buy the products that are 
cheapest  over  their  entire  life  span  but  rather  make  their  decisions  based  on  the  purchasing 
price  of  a  product.  This  kind  of  seemingly  ill-informed  behaviour  is  partly  due  to  a  lack  of 
information. A majority of companies (80.3%) that responded to the European Business Test 
Panel30 survey indicated that the lack of consumer awareness was the main reason as to why 
demand  for  better  performing  products  is  not  higher,  while  62%  of  respondents  of  the 
SCP/SIP public internet consultation31 also raised lack of information as an important issue. 

If  producers  do  not  provide  the  necessary  information  on  the  life-time  performance  of  their 
products and if it is costly and time consuming for consumers to acquire that information, this 
so-called  information  asymmetry  may  lead  to  more  resource  efficient  products  not  being 
bought. The consequence is unnecessary energy consumption leading to avoidable emissions 
of greenhouse gases and pollutants  

Similar information issues exist in the housing market. Finding out about a building's “energy 
value”  is  difficult  as  there  is  only  r  very  limited  information  available  in  terms  of,  for 
example, potential renovation costs, not least “due to a lack of standardised information about 
the energy consumption of the building (such as a certified label32)". So that "as a result there 
is  no  specific  demand  for  energy  efficient  buildings  which  could  induce  owners  to  improve 
the Energy Efficiency of their buildings” (Jakob 2007, for the case of Switzerland). 

But information asymmetries also pertain to public procurement decisions: A questionnaire by 
the  OECD  on  green  public  procurement  revealed  that  17  of  the  19  responding  States  saw  a 
lack of information about the long term financial benefits as a main barrier to the uptake of 
green public procurement33. 

In  summary,  demand  for  energy  efficiency  currently  is  very  limited  with  the  result  that  the 
formation of a distinguished (higher value) market segment often does not occur. 

2.4.2.  Bounded rationality 

However, even when the relevant information is easily available (and consumers have access 
to credit if that is needed to finance purchasing a more expensive product) they may still not 
decide  rationally  but  act  in  a  myopic  (i.e.  short-sighted)  way  and  buy  the  low  price  –  high 
lifetime cost product. Empirical studies and laboratory experiments show that individuals do 
not  always  make  optimal  decisions  despite  having  all  the  necessary  information.  The  cause 
for this lies in the limited cognitive capabilities to process the relevant information needed for 
drawing  the  correct  (rational)  conclusions.  In  the  economic  literature  this  phenomenon  is 
sometimes referred to as bounded rationality. 

As pointed out by the High Level Group on Competitiveness, Energy and the Environment, 
bounded  rationality  “in  the  large  non-energy  intensive  sectors  and  the  public  sector…"  is 

30 

31 
32 

33 

European  Business  Test  Panel  Sustainable  Industrial  Policy  –  Sustainable  Consumption  Policy 
(17.09.2007 – 17.10.2007) Aggregate results 
SCP/SIP public internet consultation (27 July – 23 September 2007) 
Building certification and labelling is part of the European Directive of Building Performance (EPBD) 
and is also being discussed in Switzerland, cf. Baumgartner et al. (2004) and Rieder et al. (2006). 
OECD  (2007)  Improving  the  environmental  performance  of  public  procurement:  report  on 
Implementation of the Council Recommendation. 

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mainly  due  "to  a  lack  of  awareness  and  poor  motivation,  complexity  of  contracts  and  the 
difficulty of measuring savings”34. 

The Stern report also mentions that “some economists have suggested that people use simple 
decision rules when faced with complexity, uncertainty or risk.35 For example, many people 
are unable to calculate the long-run value of energy savings, which will depend in any case of 
the frequency of use of the devise, or have difficulties determining appropriate responses to 
risks and uncertainties around future energy costs or the potential impacts of climate change. 
As a result, individuals and firms commonly make decisions which simply meet their short-
term  needs,  rather  than  undertaking  complex  analysis  to  determine  the  best  possible 
decision3637”. 

The  result  is  that  despite  the  availability  of  the  relevant  information  and  the  potential  for 
internalisation  of  negative  externalities,  consumers  may  still  not  behave  in  a  privately  and 
socially optimal way. 

2.4.3.  Principal agent problems 

Aside from information asymmetries, a misalignment of incentives between economic agents 
may induce  inefficient long term behaviour. A  typical example is the owner renter problem 
(Jakob 2006; Econcept 2002; UNDP/WEC/UNDESA 2000). The owner (the agent) rents out 
the house or the apartment and mostly provides some appliances with the rented property such 
as water heaters, boilers, and refrigerators. Yet, it is the tenant (the principal) who has to pay 
the  energy  bill.  Although  tenants  would  benefit  from  more  energy  efficient  appliances  or 
better insulation, landlords have no incentive to invest in more energy efficient products and 
instead maximise their utility by buying the product with the lowest price. 

Another  example  is  television  set-top  boxes.  A  set-top  box  is  an  electronic  device  that 
receives a video signal and converts it for display on a television. The service provider (the 
agent)  provides  the  consumer  (the  principal)  with  a  box  as  part  of  the  subscription.  The 
service provider selects the set-top box and the consumer pays the electricity bill. The service 
provider seeks to minimise the cost of these boxes and does not care about energy efficiency. 
Studies demonstrate that currently a simple set top box uses 800 kwh over its life cycle and 
has a life cycle cost of €83. However, there are already se t top boxes with a life cycle cost of 
€56 on the market using only 134 kWh 38. 

2.5. 

Impacts of the above market failures on Innovation 

The  production  of  environmentally  friendly  goods  tends  to  be  more  complex  so  that 
production  is  typically  high  up  the  learning  curve  (leading  edge  technology).  Due  to  their 
higher  production  costs  these  products  often  have  higher  upfront  costs  (a  higher  purchase 
price)  than  those  made  by  using  conventional  technology  and  may  in  their  initial  stages  of 
being  introduced  on  the  market  have  higher  life-time  costs.  However,  because  of  learning 
effects  and  economies  of  scale  future  production  costs  could  be  lower  thus  bringing  down 

34 
35 

36 

37 
38 

http://ec.europa.eu/enterprise/environment/hlg/hlg_en.htm 
Kahneman  &  Tversky  (1979,  1986,  1992)  developed  the  idea  of  ‘prospect  theory’  in  which  people 
determine the value of an outcome based on a reference point. 
See  Simon,  H.A.  (1959)  for  concept  of  ‘satisficing’.  See  also  transcript  of  2005  Bowman  Lecture: 
Energy  Demand  -  Rethinking  from  Basics,  Professor  David  Fisk  submitted  to  Stern  Review  Call  for 
Evidence http://www.hm-treasury.gov.uk/media/F7E/46/climatechange-fisk_1.pdf  
See p 380 of Stern (2007) Stern Review: The Economics of Climate Change. 
Technical  study  for  the  implementing  measures  on  simple  set  top  boxes  (study  5  and  study  7) 
http://www.ecostb.com/ 

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life-cycle cost to a level below that of conventional (older) products. But getting to this lower 
level  of  production  costs  can  be  problematic  as  producers  may  be  unwilling  to  incur 
temporary  losses  in  order  to  sponsor  the  new  technology  until  sufficient  learning  has  taken 
place and critical mass is reached, while on the consumption side, perhaps due to the market 
failures  outlined  above,  demand  is  limited.  This  prevents  a  move  down  the  learning  curve. 
The outcome is that the initial phase during which the product is more costly is not overcome 
and  these  new  products  do  not  become  competitive  in  the  longer  run  and  that  overall 
investment  in  new  leading  edge  technologies  is  suboptimal.  It  is  worth  noting  that  these 
specific problems come on top of the usual market failures identified for innovation, such as 
imperfect appropriation of benefits of innovation due to knowledge spillovers. 

Another reason for too low innovation speed has been pointed out by the High Level Group 
on Competitiveness, Energy and the Environment: "Long term policy predictability is seen as 
essential  for  (…)  industries  as  well  as  for  energy  suppliers,  since  investment  cycles  are 
long39",  particularly  in  the  building  sector.  Predictability  can  be  improved  by  sending  out 
clear  policy  signals  assuring  the  market  that  innovation  will  be  rewarded  in  the  future, 
particularly if uncertainty prevents the emergence of new technologies. 

2.6. 

Internal market fragmentation due to uncoordinated public intervention 

Many member states provide financial incentives, such as grants for substitution of electricity 
for heating (Sweden), ecological tax reform (Germany), refunds for Category A++ appliances 
(Belgium)  that  intend  to  induce  consumers  to  buy  more  environmentally  friendly  products. 
However,  the  criteria  that  these  products  have  to  meet  can  differ  substantially  from  one 
country  to  another.  The  result  is  a  fragmentation  of  the  internal  market  for  the  products 
concerned,  since  no  harmonised  approach  exists  that  would  send  consistent  signals  to 
producers  and  consumers  and  allow  a  level  playing  field  for  environmentally  friendly 
products  across  the  EU.  Similarly,  some  Member  States  link  their  procurement  policies  to 
national  labelling  schemes  which  can  equally  cause  a  fragmentation  of  the  internal  market. 
While the cause of this problem is not a market failure, it may be described as a regulatory 
failure.  

3. 

CURRENT SITUATION AND EXISTING POLICY RESPONSES TO CHALLENGES 

A  number  of  policies  are  already  in  place  to  address  negative  environmental  impacts  of 
production  and  consumption.  This  section  presents  the  major  ones  and  illustrates  how  they 
deal  with  the  market  failures  described  above.  A  more  detailed  analysis  can  be  found  in 
Annex III. The policies listed below are not exhaustive. There are other policies on some of 
the market failures identified in the previous section, but those policies are not relevant as far 
as the scope of the present initiative is concerned.  

3.1. 

Internalising greenhouse gas emissions 

The  European  Union  is  committed  to  a  20%  reduction  of  greenhouse  gases  [or  30  %  if  an 
international  agreement  is  reached],  a  20%  share  of  renewable  energy  and  a  10%  biofuels 
target by 202040: 

•  The Emission Trading Scheme (ETS) will be expanded to cover: all greenhouse gases as 
compared  to  only  CO2  emissions.  All  major  industrial  emitters  will  be  included  in  the 

39 
40 

http://ec.europa.eu/enterprise/environment/hlg/hlg_en.htm 
Presidency conclusions (2007) 7224/1/07 

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ETS,  covering  40%  of  the  greenhouse  gas  emissions  in  the  EU.  The  establishment  of 
unified EU wide rules that replace the national allocation plans.  

•  For sectors not covered by ETS a target of 10% reduction from the 2005 levels is set to be 

reached by action at MS level and at Community level. 

•  The  setting  of  modulated  targets  for  renewable  energy  at  Member  States  level,  fostering 
the internal market for renewable energies, updating the regulatory framework and creating 
a comprehensive system to promote sustainable biofuels production for which a target of 
10% is set 

•  A 10% biofuels target is set. 

These  measures  are  expected  to  lead  to  higher  production  costs  for  products  that  are  very 
energy intensive in their production. It is likely that these additional production costs will be 
passed on to consumers. In particular energy prices are expected to rise by 10 Euro/MWh for 
a CO2 price of 20€/tn CO2 equivalent 41. This will give a price signal to consume less energy 
and  make  investment  in  environmental  technologies  leading  to  lower  greenhouse  gas 
emissions  more  cost  effective.  However,  this price  signal  might  not  be  sufficient  to  address 
bounded rationality and principal-agent problem. 

3.2. 

Air quality, industrial emissions and waste legislation 

Apart  from  the  internalisation  of  greenhouse  gas  emissions  there  is  command  &  control 
legislation in place to regulate the environmental pollution of the production and waste stage 
and specific legislation related to air quality.  

•  The directive on industrial emissions aims at minimising pollution from various industrial 
sources  throughout  the  European  Union  taking  into  account  the  whole  environmental 
performance  of  the  plant,  covering  e.g.  emissions  to  air,  water  and  land,  generation  of 
waste,  use  of  raw  materials,  energy  efficiency,  noise,  prevention  of  accidents,  and 
restoration of the site upon closure. About 52.000 installations are covered. Environmental 
pollution during the production stage is controlled by this. 

•  The  environmental  pollution  during  the  waste  stage  is  covered  by  general  legislation  on 
waste management, e.g. the Waste Framework Directive, the Hazardous Waste Directive, 
the  Waste  Shipment  Regulation  and  the  Landfill  and  Incineration  Directives  and  by 
legislation to regulate the management of specific waste streams (waste oils, PCBs/PCTs 
and batteries). Recycling and recovery targets have been set for some key waste flows, i.e. 
packaging,  end-of-life  vehicles  (ELVs)  and  waste  electrical  and  electronic  equipment 
(WEEE).  Heavily  polluting  landfills  and  incinerators  are  being  cleaned  up.  Hazardous 
substances are being removed from vehicles and electrical and electronic equipment. The 
levels of dioxins and other emissions from incineration are being reduced. 

•  The  future  directive  on  Ambient  Air  Quality  and  Cleaner  Air  for  Europe,  which 
implements the thematic strategy on air pollution, sets targets for Member States to reduce 
environmental  pollution  stemming  from  particulate  matter,  ammonia,  nitrogen  oxides, 
sulphur  dioxide,  volatile  organic  compounds  and  ground  level  ozone.  The  Thematic 
Strategy  on  Air  Pollution  will  drive  down  air  pollution  significantly  with  reductions 
between 27% and 82% of the five main polluting substances. 

41 

McKinsey 

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3.3 

Product policy 

The  Community  has  a  number  of  building  blocks  in  place  that  affect  the  environmental 
characteristics of products that can be put on the internal market and influences to some extent 
consumer choice through the provision of information: 

•  The  Eco-Design  of  Energy-using  Products  Directive  defines  conditions  and  criteria  for 
setting,  through  subsequent  implementing  measures,  minimum  requirements  regarding 
environmentally relevant product characteristics of energy using products. 

•  Voluntary  Green  Public  Procurement  aims  at  making  public  procurement  more 
environmentally friendly. It does so by aiming at average levels of GPP similar to those in 
the best performing Member States [voluntary targets for Member States] and by providing 
information  to  public  procurers  on  green  public  procurement  and  environmental  friendly 
products. 

•  The  Eco-label  is  a  voluntary  scheme  that  identifies  products  or  services  with  the  highest 
overall environmental performance based on life cycle considerations (production, use and 
disposal). Similar labels are also awarded in some Member States (such as the Swan label 
in Sweden, Blauer Engel label in Germany) 

•  The  Energy  Labelling  Directive  (ELD)  imposes  a  mandatory  label  for  energy  using 
household appliances that account for a significant proportion of electricity consumption in 
households.  The  label  provides  information  on  the  consumption  of  energy  and  of  other 
essential resources during the use phase.  

•  The Energy Star label is a voluntary U.S. label covering energy using and energy saving 
products/materials42. Only those products that can offset higher initial purchase prices by 
energy savings during their expected life span are awarded the label. The label is also used 
in the EU for Personal Computer systems and imaging equipment and it is mandatory for 
public procurement.  

Green  public  procurement  and  the  mandatory  procurement  under  Energy  Star  contribute  to 
solving  the  information  asymmetries  for  public  procurers.  The  labelling  schemes  solve  the 
information asymmetries for the covered products by showing the 'hidden' costs of use over 
the expected life span. For example, the EELD has contributed to 34 Terrawatthours (TWh) in 
primary  energy  savings  from  1995  until  2006.  Half  of  the  savings  would  be  due  to  the 
labelling43.  Once  the  implementing  measures  of  the  eco-design  directive  are  introduced 

42 

43 

The  current  list  of  products  covered  include:  Appliances  (Battery  Chargers,  Clothes  Washers, 
Dehumidifiers, Dishwashers, Refrigerators & Freezers, Room AC, Room Air Cleaners, Water Coolers ) 
Heating  &  Cooling  (Air-source  Heat  Pumps,  Boilers,  Central  AC,  Ceiling  Fans,  Dehumidifiers, 
Furnaces,  Geothermal  Heat  Pumps,  Home  Sealing  (Insulation),  Light  Commercial,  Programmable 
Thermostats, Room AC, Ventilating Fans) Home Envelope (Home Sealing (Insulation and Air Sealing), 
Roof Products, Windows, Doors, & Skylights), Home Electronics (Battery Charging Systems, Cordless 
Phones,  Combination  Units,  Digital-to-Analog  Converter  Boxes  (DTAs),  DVD  Products,  External 
Power  Adapters,  Home  Audio,  Televisions,  VCRs),  Office  Equipment  (Computers,  Copiers  and  Fax 
Machines,  Digital  Duplicators,  Notebook  Computers/Tablet  PCs,  Mailing  Machines,  External  Power 
Adapters, Monitors, Printers, Scanners, and All-in-Ones), Lighting (Compact Fluorescent Light Bulbs 
(CFLs), Residential Light Fixtures, Ceiling Fans, Exit Signs), Commercial Food Service (Commercial 
Dishwashers, Commercial Fryers, Commercial Hot Food Holding Cabinets, Commercial Ice Machines, 
Commercial  Solid  Door  Refrigerators  &  Freezers,  Commercial  Steam  Cookers),  Other  Commercial 
Products  (Battery  Charging  Systems,  Exit  Signs,  External  Power  Adapters,  Roof  Products,  Vending 
Machines, Water Coolers) 
SEC(2006)1174 

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information asymmetries and bounded rationality should no longer pose problems for energy 
using products, since the consumer will buy those products that have the lowest life cycle cost 
whether  he  is  informed  or  not.  Principal-agent  problems  will  be  solved  for  energy  using 
products since agents do not have the possibility to buy products which are not in the interest 
of  the  principal.  Furthermore,  the  minimum  requirements  will  limit  negative  externalities 
caused  by  energy  using  products  to  the  extent  that  they  are  covered  by  the  standards.  It  is 
expected to avoid 200 mio tonne of CO2 per year by 2020, compared to today’s emissions. 

3.4. 

Energy Efficiency 

The action plan on energy efficiency aims to improve energy efficiency: 

•  The Energy Performance of buildings directive (EPBD) promotes the improvement of the 
energy  performance  of  buildings.  Member  States  are  requested  to  identify  minimum 
requirements  regarding  the  energy  performance  of  new  buildings  and  the  refurbishing  of 
existing  buildings  bigger  than  1000  m².  The  EPBD  can  solve  negative  externalities 
resulting from poor energy performance, information asymmetries and bounded rationality 
problems with respect to new buildings. 

•  The  eco-design  directive,  the  energy  star  label  and  the  EELD  described  above  are 

important pillars of the action plan. 

The  action  plan  is  set  to  realise  a  20%  saving  potential  in  EU  annual  primary  energy 
consumption. The Action Plan recognises that the achievement of this objective will require a 
significant further strengthening of product policy.  

3.5. 

Other policies 

•  ETAP  is  a  European  strategy  for  eco-innovation  and  environmental  technologies.  It  is 
composed  of  actions  around  three  main  themes:  Getting  from  Research  to  Markets; 
Improving  Market  Conditions;  Acting  globally.  Actions  include  increased  and  more 
focused  research,  demonstration  and  dissemination  activities  within  the  7th  Framework 
Programme  for  Research,  support  to  the  activities  of  the  Technology  Platforms  and  the 
setting up of a verification scheme. 

•  The  Eco-management  and  audit  scheme  (EMAS)  certifies  through  an  independent 
verification  mechanism  that  a  firm  complies  with  environmental  legislation  and  has  an 
environmental management system. Compliance with EMAS, even if costly, facilitates the 
identification of green producers. 

•  Member  States  promote  the  uptake  of  energy  and  environmental  efficient  products  by  a 

variety of fiscal incentive schemes.  

•  The  Enterprise  Europe  Network  and  other  dissemination  channels  encourage  SMEs  to 

adopt environmentally friendly and energy efficient solutions.  

4. 

REMAINING PROBLEMS, TAKING ACCOUNT OF EXISTING POLICIES 

The  current  initiatives  go  some  way  towards  addressing  the  market  failures  outlined  in 
Section  2  and  hence  align  better  our  consumption  and  production  with  the  socially  optimal 
outcome. However, further issues remain and they need to be dealt with. This section sets out 
what they are, who is affected and explains their causes and drivers.  

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Externalities 

4.1. 
A  study44  undertaken  for  the  Joint  Research  Centre  estimates  that  due  to  negative 
externalities, the social cost of per capita consumption at EU level is between EUR 219 and 
EUR  946  per  year.  The  biggest  contributors  are  direct  greenhouse  gases  (169€), 
eutrophication (12€), phothochemical oxidation ( 11€) disaminities caused by landfilling (10€) 
and human health effects caused by dust (9€).  Greenhouse gas emissions are thus by far the 
most important externality.  

In its current form the EUP directive addresses energy using products. According to the study 
mentioned above, per capita externalities of these products account for only 38 to 43% of total 
externalities.  The  potential  to  deal  with  externalities  generated  by  the  use  of  other  products 
not covered by the EUP Directive, both in terms of greenhouse gases and other environmental 
impacts, is somewhat limited.  

EMAS  could  help  avoid  externalities  through  better  consideration  of  the  environmental 
impacts  when  identifying  production  processes.  However,  the  uptake  of  EMAS  remains 
limited and costly. For example, the results of a consultation undertaken for a recent study45 
indicate  that  almost  half  of  the  respondents  believed  that  the  monetary  costs  of  EMAS 
outweighed the benefits, even if more than two third of the respondents considered EMAS as 
a success when comparing the financial as well as non-financial benefits and costs. In 2007 
3,935  organisations  were  registered  in  Europe.  These  organisations  have  6,000  registered 
EMAS sites employing 1.34 Million people – 0.6% of total employment in EU-27. The same 
study points out that 62% of all respondents think that EMAS remains regarded and used as 
"best  practice"  for  environmental  management  among  industrial  sectors  or  other  types  of 
organisations.  EMAS  thus  provides  a  signalling  function  and  can  reduce  information 
asymmetries to some extent but due to its voluntary nature and limited participation, it does 
not  appear  to  have  the  potential  to  overcome  most  problems  related  to  information 
asymmetries, particularly as it relates to the production process and not to the characteristics 
of the actual products. 

4.2. 

Information asymmetries 

In  spite  of  the  labelling  schemes  in  place,  information  asymmetries  remain,  meaning  that 
consumers  are  lacking  important  information  or  are  given  information  whose  value  has 
declined.  

The current Energy Efficiency Label only solves information asymmetries with respect to one 
aspect, namely the amount of electricity that a product uses over its expected life-span. Other 
environmental aspects are not covered, such as the amount of energy required and pollution 
caused to produce the device or negative impacts related to its disposal. In addition, only very 
few  product  categories  are  covered  by  the  label.  The  limitation  of  the  scope  of  the  EELD 
labels  to  household  appliances  does  not  address  the  information  asymmetries  faced  by 
professional  buyers  of  energy  using  products.  This  is  particularly  true  for  SMEs  that 
sometimes lack the time or expertise to judge the energy performance of, for example, motor 
systems. Similarly, the scope of the energy star label in the EU is limited to office equipment 
and there presently is no link with the EuP directive.  

44 

45 

Labouze et al (2003) Externali environmental effects related to the life cycle of products and services. 
Bio-intellince Service – O2 FRANCE 
EVER study: "Perceptions of EMAS Registration – A summary report". p.3 

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The EELD are also updated at too low a pace. As a result the market penetration of Category 
A  for  most  of  the  labelled  products  is  very  high  -  between  47  and  81%  depending  on  the 
appliance - (Annex IV, Table 2), even if it varies among Member States (79% of appliances in 
EU15 belonging to categories A and A+, 67% of mostly category A in 8 new Member States 
and  Candidates  Countries  (JRC,  200746)  (Annex  IV  Figure  1).  This  means  that  the  current 
information content of the label has been devalued since the majority of products are in the 
same category.  

There is also a lack of information of other environmental impacts. Only the eco-label, based 
on life-cycle analysis, could in theory solve this information asymmetry but it is a voluntary 
scheme and there are only 25 products groups that use this label, with so far only around 400 
companies  producing  Eco-label  products.  Total  sales  of  Eco-labelled  products  amount  to 
around  €800  million  per  year.  This  represents  less  than  1%  of  the  potential  EU  market 47. 
Given  that  99%  of  the  products  on  the  market  are  not  covered  by  eco-label,  information 
asymmetries are currently barely addressed by the Eco-label scheme.  
Moreover  in  a  recent  Eurobarometer  Survey48,  only  11  %  of  the  respondents  correctly  said 
that it is a label for ecological products and services. In comparison, 80 % of Germans know 
the  Blue  Angel  and  67  %  of  people  in  the  Nordic  countries  understand  the  Swan.49  The 
Eurobarometer also found that apart from being widely unknown the logo is also confusing to 
consumers.  

4.3. 

Bounded rationality and principal agent problems 

As explained above, reducing information asymmetries alone might not be sufficient.  

Principal  agent  and  bounded  rationality  problems  for  products  beyond  energy  using  ones 
remain unsolved as they are not subject to minimum standards as energy using products are. 
Take  insulation  and  the  landlord  /  tenant  case:  incentives  for  installing  the  optimal  level  of 
insulation,  once  renovation  has  been  decided,  can  be  distorted  if  the  costs  of  installing 
insulation  are  not  borne  by  the  one  who  reaps  the  benefits.  The  typical  case  is  that  of  the 
landlord  and  the  tenant  already  mentioned  above.  A  case  study  for  the  residential  house 
market in the Netherlands demonstrates that less insulation is installed in rented houses. For 
example, 48% of private rentals are equipped with insulated glazing, while 70% of privately 
owned dwellings have this  insulation feature (Annex IV, Table 3). Since  47%  of  all houses 
are rented the incentive problem is of a substantial nature.  

Currently the Energy Performance of Buildings Directive does not solve this problem either. 
Indeed,  the  energy  efficiency  of  buildings  directive  does  not  cover  refurbishments  below 
1,000 square meters, which thus excludes most residential housing. This is precisely the area 
where, due to the significant presence of households, principal agent problems are of serious 
concern. 

4.4. 

Impacts of the above market failures on Innovation 

The internalisation of CO2 costs that is for instance due to the ETS and other measures (see 
above) will aid innovation to the extent that it reduces the initial phase during which the new 
technology may not be competitive. In Graph 3 below this is represented by a move from A to 
B  as  a  result  of  the  upward  shift  of  the  green  line.  Thus  it  may  not  fully  solve  the  issue  of 

46 
47 
48 
49 

http://sunbird.jrc.it/energyefficiency/pdf/EnEff%20Report%202006.pdf 
Proposal for on a revised Community Ecolabel award scheme, forthcoming. 
http://ec.europa.eu/environment/ecolabel/pdf/studies/eurobarometer_survey.pdf 
Source: http://www.svanen.nu 

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19 

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certain  innovations  having  relatively  high  prices  in  the  early  stages  of  the  learning  curve. 
During these early stages it is unlikely that there will be sufficient demand as prices are too 
high,  thus  deterring  consumers  from  making  purchases,  and  companies  may  not  be  able  to 
generate  the  revenue  to  stay  afloat.  However,  it  is  in  the  public  interest  to  move  along  the 
learning curve to generate the CO2 savings of lower energy and resource use that otherwise 
would  be  foregone.  Randon  and  Naimzada  (2006)  indicate  that  the  rate  of  decreasing  costs 
has  a  strong  influence  on  reaching  a  steady  state50,  which  supports  public  intervention  to 
accelerate  the  rate.  The  existence  of  the  other  market  failures  described  above  however 
impedes innovation. 

Graph 3: Interaction between carbon pricing and deployment support 

Source: Stern Report (2007) p. 359  

Innovation  will  only  occur  if  there  is  sufficient  demand  for  innovative  products.  In  the 
absence of the market failures mentioned above (information asymmetry, bounded rationality, 
principal  agent  problems),  environmental  externalities  would  be  better  internalised  by 
consumers and there would be a higher demand for products that use less resources (energy, 
water, etc). This demand would provide incentives for firms to invest into new technologies to 
improve product characteristics. However, the presence of the market failures leads to lower 
demand than is socially optimal and thus to too low levels of innovation. 

4.5. 

Regulatory failures 

4.5.1. 

Internal market fragmentations due to uncoordinated public intervention 

Green Public Procurement 

Green  Public  Procurement  has  not  been  uniformly  successful  (Annex  IV  Graph  2).  The 
degree  of  uptake  shown  by  the  study  “Take  5”51  is  in  some  cases  quite  substantial  (around 
50% of procurement) while in other cases it is quite low (Annex IV Graph 2). Some Member 
States link Public Procurement to national labels, which can create market barriers for foreign 
producers. 

Fiscal incentives 

The differences in national fiscal incentive schemes with respect to eligibility criteria persist. 
The following table illustrates for the example of roof insulation and energy saving windows 

50 

51 

Randon  E.,  Naimzada  A.  (2006)  Dynamics  of  the  non  linear  learning  curve  with  spillovers  in  a 
differentiated oligopoly: effects on industry structure. J Evol Econ (2006) 17: 95–106 
http://www.ec.europa.eu/environment/gpp/pdf/take_5.pdf 

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20 

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how fiscal incentives in countries with similar climate conditions are based on quite different 
performance criteria. For example, a producer that supplies windows with a U value52 of 2.0 
will  benefit  from  increased  demand  due  to  fiscal  incentives  only  in  Belgium  but  not  for 
example in Luxembourg or Germany (Annex IV Tables 4 and 5). This limits the economies of 
scale that the producer could realise if fiscal incentives were harmonised to foster the highest 
performance across Member States for similar climate conditions.  

4.5.2.  Fragmentation of existing policy measures 

An  additional  problem  is  that  the  policies  described  under  point  2  are  currently  not 
sufficiently aligned and linked with each other. Current labelling systems, such as the energy 
efficiency label, the national “green” labels and the eco-label that coexist but are not part of 
an overall scheme that would foresee a particular role to play for each label. This creates gaps 
- some products do not carry any label despite causing significant environmental externalities 
- which prevents solving information asymmetries in a satisfactory way. 

Furthermore, policies that aim at fostering environmental performance are not linked to each 
other  and  thus  do  not  inform  and  reinforce  each  other.  Green  Public  Procurement  measures 
for example do not include a uniform provision that only products carrying a particular label 
should be purchased. Rather, a multitude of national or regional approaches exists that due to 
diverging requirements can send conflicting signals to producers and can cause fragmentation 
of the internal market. The same applies to diverging fiscal incentive schemes. 

Thus producers are faced with a complex regulatory environment with a multitude of national 
requirements  that  hinder  an  efficient  product  design  on  an  EU-wide  level.  This  leads  to 
foregoing economies of scale that could be realised if an internal market with uniform criteria 
existed. 

5. 

EU'S RIGHT TO ACT 

5.1. 

Treaty establishing the European Community  

Article  94  &  95  of  the  EC  Treaty  state  that  the  Council  shall  adopt  the  measures  for  the 
approximation  of  the  provisions  laid  down  by  law,  regulation  or  administrative  action  in 
Member  States  which  have  as  their  object  the  establishment  and  functioning  of  the  internal 
market. This applies to all aspects of production, products and consumption in the EU.  

Article 174 of the EC Treaty states that Community policy on the environment shall include: 

•  Preserving, protecting and improving the quality of the environment. 

•  Protecting human health 

•  Prudent and rational use of natural resources 

•  Promoting  measures  at 
environmental problems. 

international 

level 

to  deal  with  regional  or  worldwide 

Patterns of production and consumption are manifest at global, European, national and local 
level and are integral to each of the considerations above. 

52 

The U-value describes how well a building material conducts heat. It measures the rate of heat transfer 
through a material of known thickness over a given area under standard conditions. 

EN 

21 

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5.2. 

Policy background 

Specific impetus to act was recognised by the European Council in June 2006 when it adopted 
the  renewed  EU  Sustainable  Development  Strategy  (SDS).  This  identifies  unsustainable 
consumption and production patterns as one of the key challenges for the EU and called upon 
the Commission to develop an Action Plan on Sustainable Consumption and Production, to: 

•  identify and overcome barriers for Sustainable Consumption and Production, 

•  ensure better coherence between the different related policy areas; 

•  rise awareness among citizens and change unsustainable consumption habits. 

Actions on Sustainable Industrial Policy and on Sustainable Consumption and Production lie 
at the heart of furthering the Lisbon Growth and Jobs Agenda. 
In the Mid-term review of the industrial policy53 thrust is provided for a new initiative on a 
sustainable industrial policy, envisaged to help industry contributing to solve the challenges 
while also benefiting from the emergence of new markets in environmental technologies. The 
main thrust is to turn potential challenges into opportunities for EU industry, in order to lead 
the transition towards a low carbon and resource efficient economy. 

More  globally,  the  need  for  action  was  clearly  voiced  at  the  World  Summit  on  Sustainable 
Development in 2002. The Johannesburg Plan of Implementation (JPI) signed at this Summit 
urged  all  countries  to  promote  sustainable  consumption  and  production  patterns,  with  the 
developed countries taking the lead. This calls for countries to promote the development of a 
10-year framework of programmes on Sustainable Consumption and Production (10YFP). At 
global  level,  the  EU  is  committed  to  international  efforts  to  develop  the  10YFP,  the 
"Marrakech process"54. 

Subsidiarity and EU added value  

Action  at  the  Member  States  level  is  unlikely  to  address  environmental  performance  either 
efficiently or effectively. The impacts of climate change and air and water pollution are of a 
global  or  at  least  a  cross  border  nature.  Member  States  may  fail  to  take  into  account  the 
effects  of  domestically  generated  pollution  which  impacts  outside  its  national  borders  and 
carry out insufficient abatement. 

Individual  Member  States  action  risks  leading  to  fragmentation  of  the  internal  market, 
particularly  if  that  means  implementing  different  standards  and  labelling  or  verification 
schemes. Where necessary, homogenous labelling or standards schemes avoid internal market 
fragmentation,  facilitate  the  realisation  of  economies  of  scale  and  increase  consumer 
understanding and acceptance.  

6. 

OBJECTIVES 

The general objective of the action plan is to contribute to the goals of the Lisbon Strategy 
and to help achieve the policy aims of the Sustainable Development strategy of the European 
Union by rendering product policy in the EU more effective. More concretely, the goal is to 
allow  industry  to  transform  environmental  challenges  into  economic  opportunities  by 
fostering  sustainable  production  and  consumption  on  the  basis  of  a  strong  framework  for 

53 
54 

COM(2007)374 
http://www.un.org/esa/sustdev/sdissues/consumption/Marrakech/conprod10Y.htm 

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22 

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product policy. This requires an integration of different building blocks and a strengthening, 
where necessary, of the different tools to ensure that: 

–  For  products  with  significant  environmental  externalities,  notably  with  regard  to  energy 
use,  thresholds  are  set  as  a  minimum  requirement  for  putting  products  on  the  internal 
market that lead to a more socially desirable outcome; 

–  For  products  with  significant  environmental  externalities  placed  on  the  Internal  Market 
consumers  are  provided  with  relevant  information  on  the  differentiation  in  this 
performance; e.g. through an appropriate labelling scheme; 

–  Fragmentation of incentives and stimuli (e.g. fiscal incentives and public procurement) for 
consuming products with more environmentally performing features in the Internal Market 
is avoided; 

–  Barriers  to  trade  across  the  Internal  Market  are  identified  and  eliminated  to  ensure  that 

Environmental Industries can benefit from the advantages of the Internal Market; 

–  Innovation with regard to environmentally performing products is facilitated by removing 
market  and  regulatory  failures  and  by  providing  early  information  on  top  performing 
products; 

–  Ensuring  a  regular  updating  of  the  key  parameters  defining  the  framework  for  product 
policy to ensure that, as innovation picks up, the framework remains relevant to products 
actually sold on the Internal Market; 

–  Maximising  the  environmental  contribution  of  the  EU's  standards  internationally  whilst 
ensuring that the possible short run incidence on the competitive position of EU industry is 
addressed, where necessary. 

This is to be done on the basis of a coherent set of measures centred around a strengthened 
Integrated Package which builds on existing tools, strengthening them where appropriate and 
providing for better linkages. Indeed, the operational objectives are to focus on existing tools, 
such as EuP, EELD, Eco-label and others. They are: 

(1) 

(2) 

(3) 

To  investigate  ways  of  making  better  use  of  eco-labelling  to  help  overcome 
information asymmetries  

To  assess  possible  developments  of  the  EUP  directive  so  that  it  can  better  deal  with 
bounded  rationality  and  principle  agent  problems  as  well  as  reduce  internal  market 
fragmentation 

To  examine  if  and  how  GPP  and  EELD  can  help  find  solutions  to  innovation 
difficulties  and  help  contribute  to  addressing  internal  market/market  fragmentation 
issues 

(4) 

To see where further measures are needed and to help develop them. 

The Action Plan therefore does not aim at environmental legislation for industrial processes or 
at air quality legislation. It also does not target the use of economic instruments to internalise 
externalities  per  se.  It  is  important  to  note  however  that  should  such  a  pricing  policy  be 
developed  it  would  be  complementary  and  consistent  with  the  above  defined  objectives  for 
product  policy  since  the  thresholds  for  putting  products  on  the  markets  are  set  such  that  a 
more socially desirable outcome will be achieved. A pricing policy would obviously further 
strengthen incentives for innovation. 

EN 

23 

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These  objectives  of  the  initiative  follow  directly  from  the  market  and  regulatory  failures 
outlined above and the problems they lead to in terms of negative environmental impacts. The 
possible  actions  that  will  follow  from  the  proposals  resulting  from  this  action  plan  will  be 
subject  to  further,  detailed  impact  analysis  where  considerations  such  as  costs  and  benefits, 
efficiency and effectiveness in achieving the objectives will form the fundamental basis upon 
which  they  will  be  judged.  At  that  stage,  more  specific  objectives  that  each  of  the  concrete 
actions are then to achieve will be spelt out.  

7. 

OPTIONS 

These further impact assessments will of course also include a baseline (or no policy change 
option)  as  a  real  alternative  against  which  the  new  measures  will  be  analysed.  Moreover, 
detailed  analysis  pertaining  to,  for  example,  the  impact  on  administrative  burdens  will  be 
carried out when the individual measures are assessed. Thus the role of the current action plan 
is  to  identify  ways  and  measures  for  further  analysis  so  that  the  objectives  of  the  previous 
section can be attained. In accordance with the present set of Commission IA guidelines, the 
options  and  the  analysis  of  their  impact  in  what  follows  hereunder  is  proportionate  in  the 
sense  that  there  is  sufficient  detail  to  show  how  the  options  can  achieve  the  objectives  and 
why, based on the preliminary analysis presented hereunder, they deserve (or do not deserve) 
further, more detailed analysis. 

Three mutually exclusive options that seek to contribute to solving the market and regulatory 
failures identified in the problem definition and improve environmental performance will be 
analysed.  The  baseline  option  consists  of  continuing  current  policy  (a  set  of  voluntary  and 
mandatory  actions).  The  second  option  places  much  more  emphasis  on  voluntary  action 
whereas the third option makes use of mandatory measures based on existing legislation with 
some limited support in the form of voluntary action. 

Option 1: No policy change (baseline) 

This option consists of the policies currently in place as described in the problem definition 
(see current situation). To summarize, product policy as it stands would introduce via the eco-
design  directive  mandatory  standards  for  a  limited  set  of  energy-using  products,  while  the 
energy efficiency label and eco-label would continue to provide information to consumers and 
procurers on the energy use of appliances and life-cycle performance of a limited number of 
products respectively. The energy star label would facilitate the procurement of more efficient 
computers.  The  energy  efficiency  action  plan  would  foster  improvement  in  energy  use,  in 
particular  through  the  implementation  of  the  Energy  Performance  Buildings  Directive.  The 
Environmental  Technologies  Action  Plan  and  EMAS  would  promote  improvements  in 
environmental  performance,  notably  of  production  processes.  Greenhouse  gas  emissions 
reduction would be addressed through the Climate package. Air pollution would be tackled by 
the directives on industrial emissions on ambient air quality and Cleaner air for Europe. Waste 
related environmental impacts would be covered by waste directives. No new measures would 
be introduced. 

Option 2: Strengthen the role of Eco-label (mostly voluntary measures) 

This option would promote a combination of instruments to reinforce voluntary actions (Eco-
label,  Open  Method  of  Coordination),  promote  Green  Public  Procurement  and  identify 
internal  market  barriers  for  eco-industries  (competitiveness  screening).  The  different  market 
and  regulatory  failures  would  essentially  be  addressed  through  the  provision  of  information 
and  the  development  of  incentives.  New  regulatory  action  setting  mandatory  requirements 

EN 

24 

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would not be developed and the co-ordination of existing policies would be dealt with within 
the existing framework.  

The actions would consist of: 

The  main  building  block  would  be  the  Eco-label  regulation,  substantially  revised.  The 
revision  would  consist  of  simplifying  the  mechanisms  for  granting  it  while  maintaining  its 
voluntary character. The new Eco-label regulation would promote a reduction of the number 
and  stringency  of  criteria  to  be  applied  for  the  identification  of  eco-labelled  products,  by 
concentrating  only  on  the  most  important  environmental  impacts  from  a  life-cycle 
perspective.  A  simplified  process  and  the  use  of  more  limited  criteria,  regularly  updated, 
would  allow  more  product  groups  to  apply  for  the  eco-label,  thus  reducing  information 
asymmetries  on  environmental  impacts  of  products  not  addressed  by  EUP.  The  Eco-label 
would  become  a  voluntary  “label  of  common  environmental  standard”  throughout  the 
European Union. The Energy Efficiency Label could be repealed if the extended number of 
products covered by Eco-label became sufficiently large.  

Implementing  measures  for  EUP  would  be  developed  that  include  not  only  minimum 
requirements but also indicate the expected date of revision of these requirements to introduce 
a  dynamic  adjustment  mechanism  into  the  process  to  take  account  of  developments  and  to 
provide  predictability  for  the  sectors  concerned.  Energy  performance  would  continue  to  be 
used  as  the  main  criterion  to  set  minimum  requirements  for  energy  using  products,  while  it 
would be one of the criteria of Eco-label for these products. 

Measures  to  reinforce  Green  Public  Procurement  would  include  utilising  Eco-label  as  an 
indicative  criterion  of  procurement  for  some  specific  products  such  as  portable  computers, 
appliances, etc.  

The  Commission  would  promote  the  use  of  the  open  method  of  coordination  by  those 
Member States that would like to harmonise the use of economic incentives to promote eco-
labelled  products  and  more  generally  identify  benchmarks,  share  best  practices  and  develop 
guidelines for green public procurement.  

A strong effort would be put in promoting the use of EMAS by companies to improve their 
environmental performance. 

A  study  would  be  launched  to  carry  out  a  competitiveness  screening  of  barriers  to  the 
expansion of eco-industries to identify internal market problems for this sector. On the basis 
of  the  results,  the  Open  Method  of  Coordination  could  be  mobilised  to  set  up  a  common 
approach  by  Member  States  to  eliminate  these  barriers.  Finally,  existing  instruments  (EuP, 
labelling,  GPP  etc)  would  be  better  coordinated  by  developing  concrete  measures  by  the 
Commission and the use of the Open Method of Co-ordination. 

In  summary,  this  option  foresees  no  new  mandatory  measures.  The  emphasis  is  on  the 
voluntary provision of information coupled with a more dynamic approach to already planned 
mandatory measures such as EUP. 

Option 3: Strengthen the role of Product Policy (mandatory measures) 

This  option  would  integrate  a  set  of  instruments  to  extend  the  scope  of  mandatory  actions 
(EUP,  EELD)  and  link  them  with  voluntary  actions  (Eco-label,  EMAS,  GPP).  The  use  of 
incentives  by  Member  States  would  be  further  harmonised.  The  main  element  would  be  an 
Integrated  Package  that  provides  information  to  consumers  about  life-cycle  costs  and 
establishes  a  harmonized  level  of  ambition  for  the  use  of  incentives  to  promote 
environmentally  better  performing  products.  The  difference  to  option  2  is  that  this  option 

EN 

25 

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consists  of  a  greater  emphasis  on  mandatory  requirements,  whilst  also  including  voluntary 
components.  

The main building block of the Integrated Package would be the Eco-Design Directive. The 
scope of the directive would be extended beyond energy using products. The implementation 
would  comprise,  besides  mandatory  minimum  requirements,  the  identification  of  indicative 
advanced  performance  benchmarks.  Requirements  and  benchmarks  would  evolve 
dynamically. The impact assessments of the implementing measures for each product would 
identify key environmental criteria to be fulfilled.  

Another important building block of the Integrated Package would be an enhanced labelling 
framework. The Eco-design Directive would be accompanied by a revised Energy Labelling 
Directive  (ELD)  which  would  be  further  developed  to  cover  energy-using  products  (except 
vehicles55) and energy related products (such as windows). The ELD will focus on the energy 
consumption/conservation  in  the  use  phase  while  taking  into  account  other  environmental 
impacts where appropriate. This scheme would be mandatory and would reflect the evolving 
boundaries  of  the  advance  performance  benchmarks.  The  implementing  measures  of  the 
Labelling  Directive  will  define,  where  appropriate,  the  precise  modalities  of  the  label. 
Labelling  will  be  used  for 
the  one  hand,  use  phase  energy 
consumption/savings  and,  on  the  other  hand,  other  significant  and  relevant  environmental 
parameters of the product, . 

indicating, 

,  on 

Distinct  form  these  mandatory  labelling  schemes,  the  voluntary  Eco-label  would  be 
complementary  by  indicating  environmental  excellence,  providing  the  benchmark  levels  for 
top  performance.  In  order  to  achieve  this,  the  Eco-label  regulation  would  be  revised  to 
simplify  the  procedures  of  obtaining  the  label  and  reducing  fees,  as  well  as  improve  its 
coverage  of  other  product  groups  and  boost  marketing.  Eco-label  criteria  would  be  used  to 
inform the process of identification of advance performance benchmarks for the Eco-design 
Directive. 

The final building  block  of the  Integrated Package would relate to economic incentives and 
Public Procurement. The labelling system would fix mandatory level of product performance 
for public procurement. Besides, and to avoid fragmentation of the Internal Market, the use of 
economic  incentives  by  Member  States  would  also  be  linked  to  this  level  of  product 
performance. Member States could continue to use economic incentives of their choice, such 
as tax credits, reduced tax rates, lower interest rates for specific loans, cash subsidies, etc. but 
would have to base them on this level of product performance. 

The accompanying measures would include actions to address environmental performance in 
production  processes  and  reinforce  existing  legislation.  A  strengthened  and  inter-linked 
EMAS scheme would aim to increase functionality and up-take of the EMAS scheme through 
the  revision  of  the  existing  Regulation  (EC)  No  761/2001  to  enhance  the  possibilities  for 
companies, particularly SMEs, to apply EMAS and to establish best practise benchmarks for 
operating  and  managing  enterprises.  An  Environmental  technologies  verification  scheme 
would be set up to act as framework to provide technology developers with the possibility of 
having  a  reliable  third-party  verification  of  the  environmental  performance  of  their  new 
technologies, thus increasing their credibility vis-à-vis customers and facilitating their up-take 
by  the  market.  Moreover,  actions  would  aim  at  developing  content  for  training  and 
dissemination  of  tailor  made  information  on  subject  of  energy  saving  and  environmental 

55 

Already addressed by other Community legislative initiatives. 

EN 

26 

   EN 

 
                                                 
compliance  in  SMEs.  Other  voluntary  measures  and  targets  to  promote  uptake  of  Greening 
Public procurement would be set up. 

As  in  option  2,  a  study  would  be  launched  to  identify  competitiveness  issues  for  eco-
industries such as internal market barriers. However, in case of proven barriers, action would 
be  taken  to  remove  them  within  the  framework  of  the  Commission’s  industrial  policy, 
accompanied  with  a  thorough  impact  assessment  of  the  possible  options  and  their 
consequences. Table 1 summarises the actions within each option and the market failure they 
address. 

Table 1: identified market failures and proposed actions to address them in each option.  

Market failure 

Option 1 

Option 2 

Option 3 

Information 
asymmetries 

Ecolabel/EELD/E
nergyStar 

Enhanced Ecolabel 

Promotion of EMAS 

Revised EELD, Eco-label, 
enhanced EMAS, Environmental 
Technologies Verification 
Scheme 

Bounded 
rationality 

Principal Agent 
problems 

EUP 

EUP 

Dynamic 
Implementing 
measures EUP 

Dynamic 
Implementing 
measures EUP 

Extended EUP 

Extended EUP 

Innovation 

CIP/FP7/EnergyS
tar/Enterprise 
Europe Network 

Voluntary GPP at 
Ecolabel level 

Mandatory product performance 
for public procurement. GPP 

GPP at Ecolabel level 
(Open Method of 
Coordination), EUP, 
Screening of single 
markets barriers 

Mandatory product performance 
for public procurement. GPP. 
Harmonised requirements for 
national incentive schemes; 
enhanced EuP; screening of 
single market barriers 

Fragmentation 
of Internal 
Market 

EuP 

8. 

ANALYSIS OF IMPACTS 

Option 1 (baseline): 

As mentioned above, under the 'no policy change' scenario, several policies already partially 
address  the  identified  market  failures.  The  following  table  summarizes  the  positive  and 
negative impacts in the future, compared to the status quo.  

Table 2: Current policies and their impacts  

Market 
failure 

Actions 

Positive impacts  

Limitations and negative 
impact 

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Information 
asymmetries 

Ecolabel/EELD/
EnergyStar 

Bounded 
rationality 

EUP 

impact  on 
Positive 
energy  efficiency  for 
products covered 

Can  be  solved 
for 
energy  using  products 
implementing 
by 
measures 

Principal 
Agent 
problems 

EUP 

for 
Can  be  solved 
energy  using  products 
by 
implementing 
measures 

Innovation 

CIP/FP7/ 

EnergyStar 

Enterprise 
Europe Network 

Fragmentation 
Internal 
of 
Market 

EuP 

leading 

learning 
Improved 
to 
curves 
lower  costs  for  new 
technologies.  SMEs 
networking 
for 
innovation. 

Can  partly  be  solved 
using 
energy 
for 
products 
by 
implementing 
measures 

Limited 
performance criteria (EELD) 

coverage.  Outdated 

Not  solved  for  energy  related 
products.  

(but 
Higher  purchase  prices 
offset  by  savings  over  lifespan 
of product) 

Firms  not  being  able  to  meet 
minimum  requirements  have  to 
exit the market 

Not  solved  for  energy  related 
products.  

Higher  purchase  prices 
(but 
offset  by  savings  over  lifespan 
of product).  

Firms  not  being  able  to  meet 
minimum  requirements  have  to 
exit the market 

The  persistence  of  market 
failures  for  non-energy  using 
innovation. 
products  hinders 
Insufficient 
for 
SMEs not tailor-made.  

information 

Where national criteria for GPP 
incentives  are  not 
or  fiscal 
granted  based  on  uniform 
criteria 
of 
fragmentation of internal market 

high 

risk 

Option 2: Strengthen the role of Eco-label (mostly voluntary measures) 

Overall, the impacts of this option would depend on the degree of participation of companies 
in the voluntary schemes. Their participation would be promoted by a simplified access to the 
eco-label scheme and increased demand for more environmentally friendly products in those 
Member  States  adopting  the  eco-label  as  criteria  for  public  procurement.  A  more  proactive 
promotion  of  EMAS  would  also  advocate  its  voluntary  uptake  and  improve  environmental 
performance.  Additional  demand  would  be  stimulated  by  fiscal  incentives  in  those  Member 
States that decide to coordinate their actions and ambitions. However, the remaining presence 
of low performing, low priced products on the markets would slow down the move towards 
improved environmental performance. 

Positive impacts: 

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28 

   EN 

 
The information asymmetries identified above would be dealt with by extending the scope of 
the  still  voluntary  basis.  Less  stringent  criteria  for  Eco-label  as  well  as  lower  cost  of 
compliance would induce a large number of eco-labelled products on the market thus enabling 
the consumer to take better informed decisions. The success of this in terms of leading to a 
more efficient outcome depends on the number of products with the eco-label and the number 
of  consumers  making  use  of  the  information.  .  Environmental  performance  of  companies 
would be clearly identified for those companies adopting EMAS. 

Public procurement would benefit from the additional information so that procurement criteria 
could be linked to the eco-label. Moreover, making eco-label a voluntary criterion for public 
procurement  and  coupling  it  with  more  ambitious  indicative  targets  should  increase  the 
demand  for  these  products  and  reward  those  who  use  the  eco-label.  The  reference  to  a 
harmonised  label  across  the  EU  could  prevent  fragmentation  of  the  internal  market  through 
Green Public Procurement. 

Member States could use the open method of coordination to prevent a fragmented approach 
to  giving  incentives.  Using  the  eco-label  as  a  criterion  for  granting  fiscal  incentives  would 
further stimulate demand, facilitate the use of economies of scale, and reward those producers 
who participate in the eco-label scheme.  

Bounded rationality and principal agent problems would be dealt with through the adoption of 
implementing  measures  for  energy  using  products  within  the  framework  of  the  current  EuP 
Directive complemented by self-regulatory approaches. 

Barriers to innovation would be partly offset by using dynamic criteria for ecolabel products 
and the use of dynamic minimum requirements in the implementing measures under the EuP 
Directive. Increased demand for these products and GPP would provide additional stimuli to 
innovation. 

Internal  market  barriers  for  eco-industries  would  be  identified  by  the  screening  exercise. 
These would be addressed as far as possible within the framework of the industrial policy.  

Voluntary  compliance  with  eco-label  criteria  would  in  addition  drive  up  the  environmental 
performance  of  companies  from  outside  the  European  Union  willing  to  put  Eco-labelled 
products on the European market. 

No  additional  short-term  financial  burden  would  be  imposed  on  Low  income  households 
because they would be able to continue purchasing less performing products. 

The  different  measures  contained  in  this  option  are  complementary  in  that  each  of  them 
improves  demand  for  eco-labelled  products  by  addressing  the  above  mentioned  market 
failures and by decreasing market fragmentation. Higher demand should allow the realisation 
of economies of scale in production that otherwise would not be feasible. 

Negative impacts 

Information  asymmetries  would  be  solved  only  for  products  covered  by  Eco-label.  A 
substantially simplified procedure would make it more attractive to participate in the scheme, 
however the problem remains that participation is voluntary. Unless a significant fraction of 
consumers  buys  eco-label  products,  the  incentive  for  producers  to  participate  would  remain 
somewhat limited. 

High  cost  of  compliance  with  EMAS  would  remain,  even  if  the  scheme  would  be  better 
known by companies. 

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The  magnitude  of  the  impacts  on  bounded  rationality  and  principal  agent  failures  would  be 
restricted  to  those  covered  by  the  EUP  Directive.  In  comparison  to  the  baseline  option,  the 
only  difference  would  be  that  the  implementing  measures  and  the  minimum  requirements 
would  be  updated  more  regularly.  However,  many  products  with  significant  environmental 
impacts would remain outside the scope of the Directive and many badly performing products 
would  remain  on  the  market  and  be  bought  due  to,  for  example,  bounded  rationality  and 
principal agent problems 

The effects on innovation would be constrained by the voluntary nature of GPP and depend 
on how much use public authorities make of the criteria. It is doubtful whether this would lead 
to sufficient demand for triggering major investments in innovation. 

A fragmentation of incentives would only be addressed by Member States participating in the 
Open Method of Coordination. Due to the voluntary nature of this approach it is likely that the 
fragmentation  of  the  internal  market  would  persist,  although  probably  at  reduced  levels 
compared to the baseline. 

Products with superior performance are likely to have higher purchasing costs. Low income 
households  would  not  be  able  to  benefit  from  the  long  term  life-cycle  gains  if  they  are  not 
able to finance the initial investment. 

The  impacts  on  administrative  burden  cannot  be  assessed  at  this  stage  but  the  impact 
assessment  reports  that  need  to  be  prepared  for  any  legislative  proposals  that  might  follow 
would address this. 

Table 3 summarizes the envisaged actions and their impacts.  

Table 3: Actions and their impacts under option 2. 

Market 
failure 

Actions 

Positive impacts  

Information 
asymmetries 

Enhanced 
Ecolabel 

Bounded 
rationality 

Dynamic 
Implementing 
measures for 
EUP 

Extended coverage but 
impact remains limited 
(voluntary labelling), 
reduced cost of compliance 
for participating firms 

Can be solved for energy 
using products, regularly 
updated efficiency 
improvements to maintain 
incentives to innovate 

Principal 
Agent 
problems 

Dynamic 
Implementing 
measures for 
EUP 

Can be solved for energy 
using products, regularly 
updated efficiency 
improvements to maintain 
incentives to innovate 

Limitations and negative 
impact 

Could lead to higher prices 
but limited impacts on low 
income households 

Limited scope, higher 
purchase prices (but offset by 
savings over lifespan of 
product), firms not being able 
to meet minimum 
requirements have to exit the 
market 

Limited scope, higher 
purchase prices (but offset by 
savings over lifespan of 
product), firms not being able 
to meet minimum 
requirements have to exit the 
market 

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30 

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Innovation 

Fragmentation 
of Internal 
Market 

Voluntary GPP 
at Ecolabel 
level, Dynamic 
Implementing 
measures for 
EUP 

GPP at Ecolabel 
level (Open 
Method of 
Coordination), 
EUP, Screening 
of single 
markets barriers 

Higher uptake induces 
economies of scale, 
incentives to innovate via 
dynamic criteria for 
ecolabel 

Budget impacts for 
governments purchasing 
leading edge technology 

Help avoiding 
fragmentation of internal 
market 

Limited to Member States' 
participation with high 
impact on Member States 
budget 

Option 3: Strengthen the role of Product Policy (mandatory measures) 

Overall, this option would induce the strongest impact on environmental conditions given the 
mandatory  character  of  the  measures  and  synergies  flowing  from  the  combination  of  the 
actions in the Integrated package. Although some initial costs of this option such as purchase 
prices might be higher, it is expected that in the long term product prices would go down due 
to  learning  effects  and  economies  of  scale  and  that  life  cycle  costs  in  particular  would  be 
lower l. 

Positive impacts 

The revised Energy label and the Eco-label would provide information on the environmental 
impacts for a broad range of products. The dynamic elements envisaged for those labels also 
guarantee  that  the  information  that  is  provided  is  relevant.  An  improved  EMAS  and  the 
environmental technologies verification scheme would recognise more environmental friendly 
production  processes  by  awarding  a  certificate.  All  these  measures  would  substantially 
contribute to solving information asymmetries. 

The  enlarged  scope  for  Eco-design  would  decrease  bounded  rationality  and  principal  agent 
problems  through  the  implementation  of  mandatory  minimum  requirements  for  an  extended 
number  of  products,  beyond  energy-using  ones,  such  as  insulation  material  that  have 
significant  environmental  impacts.  This  can  not  be  said  of  pricing  policies  such  as  ETS,  as 
explained above. Mandatory minimum requirements would remove from the market products 
inefficient  from  a  life-cycle  perspective  whenever  their  impact  would  lead  to  a  desirable 
social outcome. The dynamic nature of the system would ensure that regular improvements in 
the  environmental  characteristics  of  products  take  place  in  the  future.  Both  would  help 
improve environmental quality and decreasing energy consumption. The extent of the impacts 
would  depend  on  the  products  for  which  implementing  measures  would  be  adopted  and  the 
precise  nature  of  the  product  characteristics.  Due  to  the  focus  on  least  life-cycle  cost,  for 
minimum requirements the improvements would also be cost effective.  

Predictability  for  companies  and  incentives  to  innovate  would  be  improved  by  harmonised 
environmental  performance  criteria  for  Public  Procurement  and  economic  incentives  across 
the  EU.  Higher  mandatory  level  of  performance  for  public  procurement  would  further 
accelerate innovation and reward front-runner companies.  In  addition,  the  mandatory  use  of 
the  same  EU-level  of  performance  in  these  two  areas  will  eliminate  a  fragmentation  of  the 

EN 

31 

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internal  market.  In  the  longer  term,  this  would  allow  attaining  economies  of  scale,  boost 
innovation and lower product prices for consumers. 

SMEs  would  have  access  to  more  adequate,  tailor-made  solutions  to  improve  their 
environmental performance and foster innovation. 

The  formal  linkage  between  Eco-design  and  the  labelling  scheme,  whose  criteria  would  be 
informed  by  Eco-label,  provides  a  harmonized  and  coherent  framework  to  continually 
improve the performance of products on the market while at the same time assuring that this 
is done in a cost-effective way.  

Internal  market  barriers  for  eco-industries  would  be  identified  by  the  screening  exercise. 
These would be addressed as far as possible within the framework of the industrial policy. No 
difference exists in comparison to option 1 in that regard. 

Compliance  with  minimum  requirements  would  be  required  from  non-EU  producers  who 
want to market their products in the EU. This could lead to improved products being offered 
on other markets as well. If consumers elsewhere understand the life-cycle cost savings that 
can  be  realised  by  products  complying  with  EU  minimum  requirements  this  might  create 
additional demand for improved products. At the same time, the competitiveness of European 
producers on non-EU markets should not be impaired since EuP product standards only apply 
to  products  being  marketed  in  Europe.  Thus  exports  to  third  countries  of  products  not 
fulfilling  minimum  requirements  are  still  possible.  Clearly,  however,  manufacturers  with 
small sales volumes and all single production lines would be more affected.  

The  common  focus  of  the  enlarged  EUP  and  the  labelling  scheme,  dealt  with  by  the  same 
comitology  procedure  with  common  members,  would  speed  up  the  process  of  adopting 
implementing measures and the identification of requirements for the labelling system. 

The  different  elements  of  this  option  are  designed  to  complement  and  reinforce  each  other. 
The  main  synergy  consists  of  a  strong  increase  in  demand  for  environmentally  friendly 
products  that  satisfy  harmonised  criteria  across  the  entire  EU.  This  will  encourage  firms  to 
engage in innovation and will allow them to realise economies of scale in production, which 
in the medium term should lead to lower prices for more environmentally friendly products. 

Negative impacts 

In  the  short  term  the  prices  of  products  having  to  fulfil  minimum  requirements  would  most 
likely increase, but in the long run this would be offset by life cycle savings. In particular low 
income households could be affected, either by having to buy more expensive products or by 
having  to  pay  higher  rent  (if  landlords  need  to  provide  more  performing  equipment).  The 
precise impacts would be carefully analysed in the impact assessments that would accompany 
each implementing measure. 

Companies  that  would  like  to  adopt  EMAS  and  utilise  the  Environmental  Technologies 
Verification Scheme would also face additional costs to obtain the certificate. In comparison 
with  the  baseline  scenario,  a  larger  number  of  firms  not  being  able  to  meet  the  minimum 
requirements  set  by  the  implementing  measures  of  the  extended  Ecodesign  Directive  would 
have to exit the market. For each implementing measure,  these effects  would  be scrutinised 
carefully in the accompanying impact assessment for the measure. 

Mandatory Public Procurement of environmentally performing products would impose some 
upfront budgetary burdens on public authorities. However, the level of performance would be 
fixed so as to ensure equal or lower life-cycle costs when compared with current procurement 
practices.  

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32 

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Foreign companies whose products do not fulfil minimum requirements have to incur cost to 
change their product design or stop supplying the European market. 

The  impacts  on  administrative  burden  cannot  be  assessed  at  this  stage  but  the  impact 
assessment  reports  that  need  to  be  prepared  for  any  legislative  proposals  that  might  follow 
would  address  this.  Producers  concerned  by  the  extension  of  the  scope  of  the  Ecodesign 
Directive may incur some additional administrative burden, which will have to be considered 
in the impact assessment of the implementing measures. 

Table 4 summarizes for this option the actions and their impacts.  

Table 4: Actions and their impacts under option 3 

Market 
failure 

Information 
asymmetries 

Actions 

Positive impacts  

Revised Energy label, 
Eco-label, enhanced 
EMAS, Environmental 
Technologies 
Verification Scheme 

Solved also for products 
beyond energy-using ones 
with the highest 
environmental impacts. Lower 
environmental impacts of 
production processes 

Bounded 
rationality 

Extended Ecodesign 

Solved also for products 
beyond energy – using ones, 
regularly updated efficiency 
improvements to maintain 
incentives to innovate 

Extended Ecodesign 

Principal 
Agent 
problems 

Solved also for products 
beyond energy-using ones 
with the highest 
environmental impacts, 
regularly updated efficiency 
improvements to maintain 
incentives to innovate 

Innovation 

Mandatory level of 
product performance 
for PP, voluntary 
measures on GPP 

Accelerated market uptake of 
more performing products. 
Induced economies of scale. 
Front-runners rewarded. More 
adequate solutions for SMEs 
available 

Limitations and 
negative impact 

Higher costs for 
companies affected. 

Higher purchase 
prices (but offset by 
savings over 
lifespan of product) 
for consumers and 
procurers. Firms not 
being able to meet 
minimum 
requirements have to 
exit the market 

Higher purchase 
prices (but offset by 
savings over 
lifespan of product) 
for consumers and 
procurers. Firms not 
being able to meet 
minimum 
requirements have to 
exit the market 

Additional 
budgetary burden  

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33 

   EN 

 
Fragmentation 
of Internal 
Market 

Mandatory level of 
product performance 
for PP, Harmonised 
requirements for 
national incentive 
schemes; extended 
Ecodesign; screening 
of single market 
barriers 

Accelerated market uptake of 
more performing products. 
Uniform product requirements 
for incentives. Induce 
economies of scale. Front-
runners rewarded. 

Additional 
budgetary burden 

Based on the qualitative reasoning presented so far, it is clear that all three options would help 
reduce  the  problems  to  do  with  the  market  and  regulatory  failures  outlined  in  the  problem 
definition of this document. However, the analysis of the baseline that is also contained in that 
section showed that a number of issues would remain unaddressed. Although the discussion 
above points to the baseline option being the one that produces the least amount of initial new 
costs,  at  least  when  excluding  environmental  costs  that  result  from  no  further  action,  this 
option would only very partially achieve the objectives set out in section 6. To name but two 
objectives,  information  to  consumers  would  remain  very  limited  and  the  fragmentation  of 
public incentives, and thus trade barriers, are unlikely to be resolved.  

In  spite  of  the  more  voluntary  nature  of  the  measures  foreseen  in  option  2  and  the  possible 
extension  of  mandatory  measures  in  option  3,  it  would  be  wrong  to  assume  that  option  2 
would  be  less  costly.  Indeed,  the  analysis  below  shows  that  the  introduction  of  new 
mandatory measures, for example in the context of dealing with the principle agent problem 
explained  above,  could  be  less  costly.  When  taking  into  account  the  likely  benefits,  the 
argument tilts even further in favour of option 3 as its mandatory measures mean that in order 
for option 2 to achieve the same benefits one would have to assume a high degree of take up 
of its voluntary measures. And such an assumption is likely to be much too optimistic since 
uptake  rates  are  typically  very  low.  For  example,  regarding  labelling  schemes  such  as  eco-
label, existing schemes in some member states tell us that uptake rates are at best 20%.  

Clearly,  a  precise  quantification  of  the  costs  and  benefits  of  the  different  options  is  not 
possible  at  this  stage,  inter  alia,  since  they  all  depends  crucially  on  the  supply  and  demand 
characteristics of the product categories to which the framework would be applied. They will 
be determined through subsequent Impact Assessments. 

However,  the  likely  effects  can  be  illustrated  on  a  case  by  case  basis.  The  following 
paragraphs  provide  some  illustrative  calculations  based  on  information  that  is  readily 
available  of  the  expected  costs  and  benefits  of  using  more  energy  efficient  products.  The 
methodology for these calculations is presented in Annex V. The calculations are not intended 
to provide a full cost benefit analysis of all the measures foreseen in the three options since 
they  only  focus  on  water  heaters  (energy  using  product)  and  windows  (energy  related 
product). They do however add further arguments to the sections above so that a decision can 
be  made  as  to  the  direction  in  which  further  analysis  should  go  –  e.g.  whether  it  will  be 
targeted  on  a  set  of  measures  that  are  essentially  voluntary  or  towards  a  more  mandatory 
approach.  

In  the  case  of  energy  using  products,  the  first  scenario  reflects  the  current  situation  where 
implementing measures have not yet been adopted. Option 2 would mean that water heaters 
could apply for the eco-label and that those that correspond with the best performing product 
on  the  market  would  receive  the  label.  Option  3  would  entail,  as  already  expected,  the 

EN 

34 

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inclusion of water heaters in EUP. When looking at the life-cycle costs option 3 turns out to 
be  significantly  cheaper  than  option  2.  Interestingly  though,  option  3  would  mean 
substantially higher purchase costs for the consumer (but also greater benefits in terms of less 
energy use and CO2 emissions) (Annex V, table 4).  

The case of energy related products, e.g. windows, is even more interesting as, contrary to the 
above analysed case, according to current arrangements these products would not come within 
the  scope  of  the  EUP.  Thus  option  1  represents  the  baseline  with  low  purchase  prices  but 
relatively high energy use and CO2 emissions. Similar to the case of water heaters, very low 
emissivity windows would receive the eco-label. That would lead to a more than doubling of 
the purchase price for consumers for this product. Option 3 envisages rolling out Ecodesign to 
also  include  windows  with  higher  insulation  performance  (for  the  purpose  of  the  example, 
double  glazing  windows  are  considered  even  if  in  some  cases  single  glazing  could  also 
apply)56 , which would result in an increase in the purchase price of ca. 50%, but lower life-
cycle costs (Annex V, table 8).  

At  the  aggregate  level  (Tables  5  and  6),  the  importance  of  the  impacts  of  option  2  would 
depend on the degree of market penetration of the different products. For this analysis, one a 
market  penetration  of  20%  of  eco-labelled  products57  is  assumed,  based  on  the  penetration 
rates of national labelling schemes which so far have achieved at best rates of up to 20%. In 
the  case  of  option  3,  mandatory  minimum  requirements  for  products  translate  into  full 
penetration. 

For  both  examples  (energy  using  and  energy  related)  aggregate  initial  purchase  costs  for 
consumers and procurers of option 3 would be clearly higher than those induced by option 2. 
This is explained by the fact that under option 2 only a limited share of all purchased products 
has the highest environmental performance, which makes them more expensive.  

Over time, however, option 3 would pay off in terms of life-cycle costs, energy savings and 
CO2  emissions  avoided.  Whereas  most  other  environmental  policies  are  implemented  at 
positive  cost,  the  measures  envisaged  in  this  report  imply  cost  reductions  in  the  long  term, 
positive  environmental  impacts  and  lower  energy  consumption,  as  shown  in  the  following 
tables. 

Table 5: Aggregated impacts of the options for the case of water heaters (covered by EUP) 

Purchase costs  

Energy impacts  

CO2 impacts  

Life cycle cost  

Option 2 (20%) 

Option 3 

48.29% 

-7.49% 

-7.49% 

-3.19% 

99.19% 

-29.13% 

-29.13% 

-16.94% 

56 

57 

It is clear that this is a simplification for the purpose of the argument. In many regions in Europe double 
windows might not be required. 
These percentages seem justified by the fact that this scheme would remain voluntary but would lead to 
a higher penetration than at the moment due to the simplification of the granting procedures and criteria 
on the one hand and some additional demand from public procurement on the other hand, 

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35 

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Sources: own estimations on the basis of results from Technical studies for the implementing 

measures of the EuP and data from Prodcom 

Table 6: Aggregated impacts of the option for the case of windows (not covered by EUP) 

Option 2 (20%) 

Option 3 

Total purchase price  

Total energy consumption in lifespan  

Total CO2 emissions in life span  

Total Life-cycle costs  

30.00% 

-6.50% 

-6.18% 

-1.34% 

50.00% 

-22.86% 

-20.91% 

-10.70% 

Sources: own estimations with data from Prodcom, French prices for windows from Lapeyre 

website, and degree of performance by Price Waterhouse Cooper 

Under Option 2, access to better performing products would be substantially more difficult for 
low income households due to higher purchase costs. It should be reminded that this category 
of household spend the highest proportion of their income (30.6%) on housing, water, energy 
gas,  and  other  fuels  and  the  lowest  portion  (5.7%)  of  their  income  on  appliances  and 
renovation (Annex IV, Graph 3). However, as less performing (low price) products would still 
be  present  in  the  markets,  therefore  it  is  unlikely  that  these  households  would  change  their 
consumption  behaviour.  This  would  prevent  them  from  energy  savings  in  the  long-term. 
Option  3  would  have  bigger  benefits  but  may  create  some  adjustment  difficulties  for  low 
income  households.  Under  budgetary  constraints,  the  decision  to  renew  appliances,  or 
renovate buildings might be postponed, implying also that these households would not be able 
to take advantage of more efficient products. The use of incentives by Member States could 
help  in  overcoming  these  possible  drawbacks  for  low  income  households.  However  in  the 
long run Option 3 would guarantee that also these households benefit from lower energy bills.  

Public procurement can help in creating a sufficient level of demand to accelerate innovation. 
Assuming  that  5  %58  of  the  market  for  small  size  water  heaters  (860000  units  per  year)  are 
bought  by  public  authorities59,  even  if  under  option  2,  100%  of  public  purchases  would  be 
eco-label products (as assumed in table below), it can still be shown that option 3 would lead 
to  lower  purchase  costs  and  lower  life-cycle  costs  while  still  achieving  a  substantial 
improvement of energy use (Table 7).  

Table 7: Impacts of mandatory public procurement for water heaters 

Option 2  

Option 3 

total purchase 

241.46% 

99.19% 

Total emissions 

-37.47% 

-29.13% 

Total energy use 

-37.47% 

-29.13% 

58 

59 

This is a conservative estimation. Pricewater House Cooper (2007) estimates a 7% of market share by 
public procurement of water heaters. 
No data is available on the procurement for this item. 

EN 

36 

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Total life-cycle 

-15.97% 

-16.94% 

In terms of use of incentives to promote the most efficient products, the mandatory level of 
ambition identified in the implementing measures of the Ecodesign Directive or through the 
Ecodesign label would be more proactive and reduce the fragmentation of the Internal Market 
than a voluntary approach through the Open Method of Coordination, whose impact would be 
limited to the participating Member States.  

It is expected that incentives would induce economies of scale in time due to faster learning 
curves.  Lower  prices  combined  with  the  dynamic  approach  for  requirement  of  an  enlarged 
number of products setting in option 3, in which indicative advance performance benchmarks 
would become minimum requirements in a given period of time, are expected to induce very 
significant  effects.  The  case  of  water  heaters  shows  a  strong  decrease  of  energy  use,  CO2 
emissions  and  life  cycle  costs  would  be  reduced  under  the  hypothesis  of  a  3%  yearly  price 
decrease  of  the  best  performing  product.  However,  this  would  impose  some  burden  on 
Member States budgets. 

Table 8: Impacts of improving minimum requirements for the case of water heaters. 

Aggregate results  % compared to BAU

Total energy consumption in lifespan (GWh) 

11,083 

-87.49% 

Total CO2 emissions in life span (Mt CO2) 

7,758,450 

-87.49% 

Total Life-cycle cost ( million €) 

1,495 

-83.19% 

Sources: own estimations from the same sources indicated above 

For all the products considered, option 2 shows higher purchase prices and higher life-cycle 
cost. 

9. 

COMPARISON OF OPTIONS 

The table below summarises the results of the previous analysis. 

Table 9: Comparison of the options 

Impact 

Option 1 (baseline) 

Option 2 

Option 3 

Economic 

No  immediate  impact 
but  in  the  long  run 
efficiency 
gains 
would  be  foregone 
for  energy 
(except 
using 
products). 
Fragmentation  of  the 
internal market would 
remain. 

limit 

same 

energy 

using 
For 
products 
as 
Option  1.  For  other 
high 
products 
purchase  prices  likely 
to 
voluntary 
uptake.  Fragmentation 
internal  market 
of 
continue 
could 
on  MS 
depending 
to 
willingness 
Financial 
cooperate. 

run 

the  short  run  price 
In 
increases 
less 
since 
performing  products  have 
to  exit  the  market.  In  the 
long 
significant 
savings  on  energy  more 
this. 
offset 
than 
Fragmentation 
the 
internal  market  would  be 
reduced. 
High 
procurement  pressure  for 
Member  States  budget  in 

of 

EN 

37 

   EN 

 
 
Environmental  Limited 

only 
to  minimum 
for 
using 

improvements 
due 
requirements 
energy 
products. 

No  major  impacts, 
prices of energy using 
products  might  rise 
but  offset  over  time 
by life cycle savings. 

Social 

burden  for  those  MS 
voluntarily 
adopting 
ambitious  Green  public 
procurement 
and 
granting  incentives  for 
best 
performing 
products. 

the short term but offset in 
the  long  run  by  energy 
budget 
savings.  High 
pressure 
for  Member 
States  granting  incentives 
for 
performing 
products. 

best 

same 

energy 

using 
For 
products 
as 
Option  1.  For  other 
some 
products 
improvements 
but 
limited  by  voluntary 
nature. 

Substantial 
improvements  due 
to 
mandatory  minimum 
requirements. 

No  major  impacts,  For 
energy  using  products 
same  as  Option  1,  for 
other  products  the  high 
purchase  prices 
limit 
access  by  low  income 
households. 

For energy using products 
same  as  Option  1,  for 
other  products  increases 
in  purchase  prices 
that 
could  affect  low  income 
households,  but  more 
than  offset  in  the  long 
run by energy savings. 

The  qualitative  analysis  has  shown  that  option  3  has  the  largest  positive  overall  impacts.  It 
may  create  some  adjustment  difficulties  in  the  short  term,  particularly  on  the  budgets  of 
Member  States  and  for  low  income  households.  However,  in  the  long  run  option  3  leads  to 
substantial  economic,  environmental  and  social  benefits.  Therefore  option  3  should  be  the 
preferred option, which is supported by the illustrative quantitative comparisons as well. 

Table  10  summarizes  the  set  of  actions  in  each  option  and  whether  they  would  be 
accompanied by an impact assessment. 

Table 10 Summary of the Actions and Impact Assessments included in each option (In bold 
those Impact Assessment already developed) 

Option 2 

Option 3 

Instrument 

Action 

Eco-label 

Comprehensive 
revision 

IA 

Yes 

EUP 

no change to 
Directive 

Yes, for each 
implementing 
measure 

Action 

Revision to 
simplify 

Amend 

IA 

Yes 

Yes, for the Directive 
and for each 
implementing 
measure 

EN 

38 

   EN 

 
 
EELD 

Eventually 
repeal 

Yes 

Complementary 
labelling scheme 

/ 

/ 

Extend scope and 
include 
mandatory 
procurement 
levels as well as 
harmonize the 
use of incentives 

New instrument 
or through the 
extension of 
scope of existing 
ones 

Incentives 

Open Method 
of 
Coordination 

No 

Included in the 
revised label 

Green Public 
Procurement 

Communication 
setting voluntary 
measures for 
products not 
covered by the 
labels 

Competitiveness 
Screening 

Study 

EMAS 

Proactive 
promotion 

No 

No 

Study 

Revision to 
simplify 

Yes 

Yes 

Yes 

No 

Yes 

Environmental 
Technology 
Verification 
Scheme 

Post-2008 
measures 

Regulation 

Yes 

To be determined

If necessary 

10. 

COST-EFFECTIVENESS 

The  examples  presented  indicate  that  option  3  is  the  most  cost-effective  from  the 
environmental and life-cycle perspective.  

The  cost  effectiveness  of  the  different  actions  will  be  re-evaluated  when  data  becomes 
available through the Impact Assessments of the individual actions.  

EN 

39 

   EN 

 
 
 
 
 
 
 
 
11. 

MONITORING AND EVALUATION 

Monitoring and evaluation will be an important part of the EU sustainable consumption and 
production  policy  and  the  sustainable  industrial  policy.  Progress  on  the  objectives  will  be 
monitored  both  to  check  the  implementation  of  the  measures  and  the  contribution  to  the 
objectives of the Climate package, the renewed Lisbon agenda for Growth and Jobs and more 
generally the Renewed Sustainable Development Strategy.  

To  this  end,  it  is  foreseen  to  review  the  policy  on  a  regular  basis  (2-4  years)  and  to  submit 
regular  implementation/progress  reports  to  the  European  Parliament  and  the  Council. 
EUROSTAT already gathers data and estimates indicators related to Sustainable Production 
and Consumption within the framework of the sustainable development indicators. Indicators 
of  particular  importance  for  this  Action  Plan  are  greenhouse  gas  emissions  and  projections, 
electricity  consumption  by  households,  environmental  management  systems,  as  well  as  the 
number  of  Eco-labels.  They  could  be  complemented  with  indicators  on  the  market  share  of 
the  different  categories  of  products  covered  by  Eco-design  and  labelling  directives  and 
indicators on Eco-industries, such as value added, employment, SMEs and innovation rates. 

EN 

40 

   EN 

 
Annex I 

to the 

Impact Assessment on the SCP and SIP Action Plans 

Summary of stakeholder consultations 

EN 

41 

   EN 

 
 
 
 
Table of Content 

1. 

1.1. 

Section 1: Stakeholder Consultations......................................................................... 44 

Highlights from the SCP/SIP public internet consultation, 27 July to 23 September 
2007............................................................................................................................ 44 

1.2. 

SCP selected stakeholders consultation, August/September 2007 ............................ 47 

1.2.1.  General Issues: ........................................................................................................... 47 

1.2.2.  Better products ........................................................................................................... 47 

1.2.3.  Leaner production ...................................................................................................... 48 

1.2.4.  Smarter consumption ................................................................................................. 48 

1.3. 

1.4. 

1.5. 

1.6. 

1.7. 

1.8. 

SCP Stakeholder Meeting, 2 October 2007 ............................................................... 49 

SIP Stakeholder Meeting, 17 September 2007 .......................................................... 49 

Recommendations of the High Level Group (HLG) on Competitiveness, Energy and 
the Environment ......................................................................................................... 50 

SCP Conference organized by the Slovenian Presidency: "Time for Action-Towards 
Sustainable Consumption and Production in Europe", Ljubljana, 27-28 September 
2007............................................................................................................................ 50 

Environment Policy Review Group meeting (EPRG), 19 September 2007 .............. 51 

Integrated Product Policy (IPP) Regular Meetings.................................................... 51 

1.8.1.  Last meeting, 2 October 2007 .................................................................................... 52 

1.8.2.  Penultimate meeting, 15 November 2006.................................................................. 52 

1.9. 

European Consumer Consultative Group, 19 September 2007 ................................. 52 

1.10.  Roundtable on Sustainable Consumption, 20 September 2007 ................................. 53 

1.11.  Concluding remarks ................................................................................................... 53 

2. 

2.1. 

Section 2: Overview of expertise input...................................................................... 53 

Commission research on the environmentally most damaging products and their 
potential for improvement (EIPRO and IMRPO projects) ........................................ 54 

2.1.1.  The EIPRO project..................................................................................................... 54 

2.1.2.  The "Environmental IMprovement of PROducts" (IMPRO) project ........................ 56 

2.2. 

2.3. 

2.4. 

2.5. 

Commission research on the environmental impact of raw materials and 
commodities, the "Environmentally weighted Material Consumption" (EMC) Study
.................................................................................................................................... 57 

Commission Pilot Projects under Integrated Product Policy ..................................... 57 

List of main studies .................................................................................................... 58 

SCP experts' workshops, June and July 2007 ............................................................ 60 

2.5.1.  Workshop on the Japanese Top Runner scheme........................................................ 61 

2.5.2.  Workshop on greening retailers' supply chains.......................................................... 61 

EN 

42 

   EN 

 
2.5.3.  Workshop on Green Private Procurement.................................................................. 61 

2.6. 

2.7. 

2.8. 

Environmental Product Information Working Group, November 2006 .................... 62 

Key recommendations from the EPDs workshop (January 2007) ............................. 62 

Marrakech process, 3rd International SCP experts meeting, Stockholm, June 2007 63 

EN 

43 

   EN 

 
1. 

SECTION 1: STAKEHOLDER CONSULTATIONS  

This section presents the main consultations carried out by the Commission in preparation of 
the SCP and the SIP Action Plans. It highlights key messages received from stakeholders and 
puts  them  into  perspective  with  regard  to  the  SIP/SCP  background  document  published  by 
DG  ENV  and  DG  ENTR  on  27  July  2007.  This  document  is  available  in  Annex  II  to  this 
impact assessment. 

In addition, separate stakeholder consultations and Impact Assessments have been carried out 
for  a  number  of  specific  actions that  are  intended  to  be  presented  with  or  are  related  to  the 
Action  Plans.  These 
the  EMAS  and  Eco-label  regulations,  a 
communication  on  Green  Public  Procurement,  a  Communication  on  a  SME  compliance 
scheme  and  a  Communication  on  Market  Based  Instruments.  Summaries  of  the  Impact 
Assessments and related documents prepared for these initiatives are available in Annex III. 

include  reviews  of 

Besides, the Action Plans take into consideration the recommendations of the high level group 
on Competitiveness, Energy and the Environment. 

In addition, substantial input from stakeholders has been collected by DG ENV over the past 
years  in  the  course  of  numerous  conferences,  workshops  and  other  events,  related  to  the 
ongoing development and implementation of EU Waste Policy, the Thematic Strategy on the 
sustainable use of natural resources, the Thematic Strategy on the prevention and recycling of 
waste,  and  the  Integrated  Product  Policy  (IPP).  Stakeholder  contributions  to  these  activities 
have  been  reported  elsewhere  and  are  not  repeated  here  in  detail.  They  are  however  an 
integral part of the Commission services' considerations in developing the SCP Action Plan. 

1.1. 

Highlights  from  the  SCP/SIP  public  internet  consultation,  27  July  to  23 
September 2007 

A web-based public consultation was carried out from 27 July to 23 September 2007. It was 
based on a common background document of DG ENV and DG ENTR.  

Responses  were  given  via  a  multiple-choice  questionnaire.  In  total  658  responses  were 
received,  of  which  479  were  exploitable.  Responses  came  from  industry  associations  and 
NGOs, trade and consumer associations, private companies, public bodies, academic bodies, 
private companies, SMEs, and individuals. Important results include: 

•  Stakeholders strongly support the need for Action Plans and the key challenges identified 

in the Commission background document. 

•  A  large  majority  see  environmental  concerns  as  either  equally  ("tackle  environmental 
problems  cost-efficiently";  70%)  or  more  important  ("solve  environmental  problems 
regardless  of  costs";  19%)  than  cost  issues  ("be  cost-efficient  even  if  positive 
environmental impact is not maximized"; 7%) 

•  Mandatory policy instruments are clearly favoured over voluntary instruments. 

•  Consumption is seen as the most important challenge. 

•  A  lack  of  market  pull  (several  questions)  is the main barrier to a wider up-take of better 

products. 

•  Overwhelming  support  for  (mandatory)  green  public  procurement,  green  private 

procurement to stimulate smarter consumption and initiatives through retailers.  

EN 

44 

   EN 

 
•  Market  based  instruments,  public  procurement  and  a  dynamic  system  to  qualify 

performance are the most important instruments to promote better products 

In more detail: 

a) 

b) 

c) 

d) 

e) 

f) 

g) 

h) 

i) 

j) 

k) 

l) 

97.5% of respondents agreed that there is a need for action in the fields of sustainable 
industrial policy and of sustainable consumption and production. 

81% agree with the five key challenges identified in the background document. 

There  is  a  large  consensus  that  'consumption'  is  the  most  important  challenge  to 
tackle, followed by 'production', 'innovation' and 'products' in decreasing order; 

A large majority see environmental concerns as either equally ("tackle environmental 
problems cost-efficiently"; 70%) or more important ("solve environmental problems 
regardless  of  costs";  19%)  than  cost  issues  ("be  cost-efficient  even  if  positive 
environmental impact is not maximized"; 7%) (See also under point i).  

Most barriers to "innovation" point to uncertainty for investments respectively a lack 
of  trust  in  long-term  'market  pull'.  They  include:  lack  of  long-term  policy  and 
insufficient  stringency  of  legal  instruments,  lack  of  consumers'  awareness  and 
knowledge,  and  lack  of  Green  Public  Procurement.  This  leads  to  high  risk  of 
investments by industry. Production costs and higher prices rank significantly lower 
in  terms  of  barriers.  Lack  of  financing  available,  potential  pay-off,  lack  of  partners 
and 'red tape' do not appear to be important barriers.  

Barriers  for  the  adoption  of  energy  and  resource-efficient  production  systems  are 
lack  of 
international 
competitiveness (20.8%).  

followed  by  disadvantages 

incentives 

(36.8%), 

to 

Barriers to wider use of better products are lack of incentives to consumers and their 
lack  of  awareness  of  long-term  pay-off  as  well  as  a  perceived  insufficient 
environmental  ambition  of  the  "better"  products  available.  The  quality  of  product 
labels, or a lack of trust in labels are not important barriers.  

65%  of  all  respondents  and  75%  of  the  general  public  are  in  favor  of  mandatory 
instruments. Only 25% of all respondents favour voluntary instruments. 

For  the  choice  of  products  on  which  one  should  act,  environmental  concerns 
including  improved  resource  and  energy  efficiency  are  of  highest  priority  while 
"potential EU market leadership" is of very low concern (see also under d). 

Enhanced  eco-design,  labeling  and  strict  performance  standards  are  of  high 
importance for better products. 

The options 'eco-design for more products via an 'extended EuP' and 'additional eco-
design policy' have equal support, but the EuP option has more explicit opponents. 

Top priorities for improved product policy should be: more use of taxation and more 
green public procurement (in both cases questions were specifically asked for energy 
and resource efficiency), dynamic minimum requirements together with benchmarks 
for  best  performers  (not  dynamic  evolution  of  minimum  requirements  alone),  a 
broader range of products covered and strengthened labeling. 

m) 

Most important instrument to develop sustainable consumption is differentiated tax, 
followed  by  actions  to  address  misleading  advertising  and  public  procurement. 
Consumer educating and training and awareness ranked lower. 

EN 

45 

   EN 

 
n) 

o) 

p) 

Over 70% agreement on questions regarding the need for EU level initiatives to help 
retailers to green the supply chain and improve the reliability of their environmental 
claims and stimulating green procurement by private purchasers. 

Overwhelming  support  for  public  procurement  to  concentrate  on  green  products, 
even  if  they  are  more  expensive  (80.6%)  with  60%  considering  that  green 
procurement should be mandatory. 

Overwhelming  support  to  promote  Global  Sectoral  Agreements  and  for  negotiating 
international minimum requirements. 

Core messages from position papers  

During  the  consultation,  some  respondents  also  submitted  position  papers.  The  sixty-six 
written contributions uniformly expressed support in sustainability and overall welcomed the 
European Commission's proposed actions. The consultation attracted a wide range of diverse 
position  papers  by  stakeholders,  sometimes  resulting  in  unavoidable  contradictions.  Main 
comments  received  by  Member  States  include  the  need  to  clarify  the  coherence  and  clear 
links  between  the  two  Action  Plans,  and  explore  the  potential  of  developing  a  joint  SC/SIP 
Plan.  In  addition,  some  respondents  sought  further  clarification  on  the  development  of 
indicators, methodologies, timelines etc.  

Many position papers by Member States support the need for clear and more ambitious targets 
for resource efficiency. The majority of industries were not fully supportive of the proposed 
targets on the grounds these are already ambitious as many improvements have already been 
made  over  the  last  decades,  they  were  already  developing  their  own  indicators.  Companies 
also express the fear that the measurement methodologies are not yet well enough developed 
nor the indicators well enough defined.  Further clarification of the methodology to quantify 
impacts should be developed before proposing any new regulations. There is broad support to 
streamlining  existing  regulations  as  well  as  to  learning  from  former  failures.  For  labelling 
schemes this would also be helpful to prevent consumers’ confusions.  

One  of  the  most  important  aspects  is  to  ensure  global  competitiveness.  Further  analysis  is 
needed on how import and export markets will be affected by any policy. Regulatory costs for 
companies, notably from regionally differentiating regulations, have to be considered before 
implementation. There is agreement that legislation should keep the administrative burdens as 
small as possible. 

SIP-SCP consultation through the European Business Test Panel (EBTP) 

The  EBTP  addresses  companies  throughout  the  European  Union  who  have  signed  up  to 
participate in surveys related to business concerns. The Questionnaire on SCP-SIP was very 
similar to the one for the open consultation. It was translated in all the official languages of 
the  EU  and  was  available  for  over  5  weeks  until  middle  of  October,  2007.  There  were  354 
responses, 309 of those were completed.60  

Of the companies that filled out the questionnaire the majority saw the need for further action 
towards a more sustainable industrial policy. 61% fully agreed with that statement and 29% 
somewhat agreed. About the same accounts for the need of more sustainable consumption and 
production patterns: the percentages are respectively 55% and 31%.  

60 

The  companies  that  did  not  complete  the  questionnaire  probably  do  not  feel  affected  directly  by  the 
policy field. 

EN 

46 

   EN 

 
                                                 
According  to  the  companies  in  the  European  Business  Test  panel,  the  key  challenges  to 
promote a more sustainable industrial policy were rated as follows: 

(1) 

(2) 

(3) 

(4) 

(5) 

Leveraging innovation  

Designing new products that are produced in a sustainable way  

Leaner and cleaner ways of current production methods  

Increasing sustainable consumption by consumers  

Creating global markets for sustainable products  

The  main  focus  to  promote  SIP-SCP  were  all  rated  the  same.  EBTP  members  are  of  the 
opinion  that  'cost  efficient  solutions',  'environmental  issues  as  main  priority'  and  'socially 
viable solutions' should all be treated with the same importance. 

1.2. 

SCP selected stakeholders consultation, August/September 2007  

Supplementing  the  general  stakeholder  consultation,  industry  and  consumers  associations, 
NGOs,  think  tanks,  academia  in  addition  to  Member  States  (via  Permanent  Representations 
and Waste Directors Group61) were requested for their specific comments through a targeted 
mailing  action.  48  organizations  (industry  and  consumers  associations,  NGOs,  think  tanks, 
academia) in addition to Member States' (via Permanent Representations and Waste Directors 
Group)  were  contacted.  As  responses  are  still  being  received  the  following  is  a  preliminary 
summary of responses received until now: 

1.2.1.  General Issues 

•  Overall  supportive  responses  on  the  proposed  SCP  approach  and  measures  (e.g.  on 

coherence, strengthening existing tools, focus on products). 

•  Ambition levels need to be high and new additional actions need to be added as necessary.  

•  Sustainable development needs to be addressed as a whole. 

•  Taking strong action on consumption is core to SCP. 

•  Make best use of different Market-Based Instruments. 

•  Provision of and access to robust consumer information is essential. 

1.2.2.  Better products 

Eco-design 

Overall support for strengthening existing eco-design requirements. Support for extending the 
scope of EuP Directive to non energy-using products; also support for Dynamic Performance 
Requirements. But: before making changes learn first from lessons and experience of the EuP 
Directive;  let  it  mature  before  moving  to  evaluating  it;  however  move  on  with  actions  in 
priority areas (food and drink, housing, private transport). It is important to look not only at 
eco-design but also at the continuous environmental improvement at all life-cycle stages. 

Environmental Product Declarations (EPDS), sustainability labels and data collection 

Support  for  strengthening  the  role,  wider  application  and  coherence  between  the  different 
schemes.  However,  it  is  important  to  build  on  existing  experiences;  there  is  no  need  for 

61 

The Waste Directors Group is a non-statutory group of high level officials from Member States and the 
Commission, set up by DG ENV 

EN 

47 

   EN 

 
                                                 
developing new EPDs or new labels; some support for extending the FLEGT scheme to other 
products (e.g. soy bean and palm oil).  

Dynamic performance requirements through standardisation 

Some support but caution that standardization is a lengthy process.  

1.2.3.  Leaner production 

Targets: resource & material efficiency, eco-innovation 

A range of different options were given: Support, but difficult to achieve; need to distinguish 
targets  from  instruments  to  reach  the  goal;  a  3%  overall  target  rather  difficult,  but  separate 
objectives  should  be  set  for  resource  efficiency  of  different  areas/sectors;  also  consider 
competitiveness issues; be ambitious in setting targets 

Reinforce eco-innovation & eco-technologies  

Overwhelming support, including the technology verification scheme. 

Boost EMAS 

Overall  support  for  a  strong  EMAS,  when  reviewed,  especially  with  regard  to  improving 
resource efficiency. 

Sustainability labelling of imported products 

Support improving existing labels to strengthen their coherence, but not creating new ones so 
as not to confuse the public. 

SMEs support and advice 

Support for existing initiatives to work efficiently. Any new actions need to carefully consider 
impacts on SMEs and at what level they should best be taken.  

1.2.4. 

Smarter consumption 

Environmental performance agreements with retailers 

Overall  support  of  the  principle  and  need  for  action.  But  it  should  be  carefully  considered 
where  more  value  can  be  added,  i.e.  at  EU  or  Member  State  level.  There  is  no  support  for 
developing  an  EU  logo  of  “environmental  commitment'  for  retailers.  Ensure  SMEs  are  not 
discriminated  against.  Consider  developing  guidelines  to  help  evaluating  environmental 
performance of products. Use more CSR.  

Market-Based Instruments 

A patchy picture was painted. There is some support for reducing/differentiating VAT rates. 
Role  of  MBIs  to  boost  new  markets  doubtful.  Better  consider  sharing  information  on  best 
practices and leave taxation matters to Member States.  

EU Eco-label overhaul 

There was full support for a strong revised EU Ecolabel. 

Misleading advertising/false environmental claims 

There was support for taking action to ensure consumers are not misled.  

Green public and private procurement 

Strong  support  for  strengthening  public  procurement  and  for  taking  actions  to  encourage 
private procurement.  

EN 

48 

   EN 

 
Education/awareness raising campaigns 

Support; overwhelmingly most respondents. But it would need to be carefully considered at 
what  level  most  value  is  added  (EU  and/or  national);  also  need  to  consider  economic 
instruments; and to link with actions in other consumer related areas (health and safety). 

1.3. 

SCP Stakeholder Meeting, 2 October 2007 

Following the closing date of the general stakeholder consultation, a meeting was organized 
to inform stakeholders of preliminary results and obtain their reactions. 

At  the  meeting,  there  was  consensus  that  action  needs  to  be  taken  to  tackle  the  challenges 
posed  by  current  unsustainable  consumption  patterns.  The  added  value  of  the  SCP  Action 
Plan will be in building on and strengthening existing instruments, whilst going a step further 
to meet the SCP challenges and objectives. However, SCP would have to be addressed within 
the  context  of  the  economy,  development  and  society  and  not  solely  tackled  from  an 
environmental  perspective.  Any  future  actions  should  not  be  taken  on  the  premise  that  one 
size fits all, but should consider the specificities of individual sectors or product groups, and 
should  be  balancing  gains  and  losses.  To  do  so,  the  different  roles  the  SCP  and  SIP  Action 
Plans can play will need to be clearly defined so that they complement each other effectively. 
From  the  areas  to  be  tackled  within  SCP,  consumption  represents  the  biggest  challenge  as 
information  only  is  not  sufficient  to  change  consumer  behaviours;  different  initiatives  will 
need to be taken in parallel. To effectively address it, cooperation is needed, in particular with 
those who are closer to the consumer. In addition, measures will need to be taken at the most 
appropriate levels. The continuous improvement of products is also key in SCP, and needs to 
be supported by robust scientific evidence and research looking at their whole life-cycle. 

Overall, opinions voiced at the meeting were very much in line with written contributions of 
both the general and the targeted consultations. 

1.4. 

SIP Stakeholder Meeting, 17 September 2007 

Around 50 representatives  of  industrial sectors participated at the meeting. In general, there 
was  a  strong  degree  of  support  for  the  directions  proposed  in  the  Background  document,  in 
particular  its  systemic  perspective,  even  if  the  participants  indicated  that  the  number  of 
measures should be limited in the final action plan. The thrust to improve competitiveness and 
decouple  growth  from  environmental  degradation  was  welcome.  Also  several  participants 
indicated  that  there  is  a  need  to  concentrate  the  activities  on  a  limited  number  of 
environmental impacts in order to deliver concrete environmental improvement. 

More specific comments include 

•  Continuing support to SMEs for innovation is important.  

•  Many  outstanding  products  and  technologies  already  exist  and  the  process  of 

improving the energy efficiency could take place in the short-term.  

•  A  regulatory  approach  combined  with  voluntary  commitments  was  highly 

appreciated.  

•  Implementing  measures  are  essential  for  achieving  a  quick  success  in  terms  of 

environmental impacts. 

•  The promotion of products fulfilling “Advanced performing benchmarks” through 

tax incentives was welcomed.  

EN 

49 

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•  Support  to  Life  Cycle  Assessment,  scientifically  determined,  is  essential  for  the 
identification and comparison of the impacts of products and for the selection of 
those more relevant for action. It was recognized though that there is no sufficient 
data to carry out LCA for some environmental impacts. The Value chain approach 
should also be considered.  

•  It is very difficult to identify/define “green” standards. Eco-design produces better 

results. 

•  Front-runners  have  experienced  frustration  when  dealing  with  eco-label.  It  is 

important to identify concrete ways to reward them. 

•  More information might not be sufficient to modify consumers’ behaviour. More 
attention should be paid to this issue. But consumers should be free to decide.  

•  Affordability  of  products  (“reasonable  price”)  should  be  also  taken  into 
consideration.  Enough  available  income  is  also  essential  to  purchase  “better” 
products.  

•  Provide  retailers  and  stakeholders  with  information  on  essential  environmental 
impacts  to  drive  Business  to  Business  activities  and  Business  to  Public 
procurement. A Website would be welcome. 

•  Support was provided for pushing public procurement towards a limited number 

of products which respond to advance performance benchmarks.  

•  Public authorities should show the way towards energy efficiency through its own 

actions. 

1.5. 

Recommendations of the High Level Group (HLG) on Competitiveness, Energy 
and the Environment  

To develop the potential for improving energy efficiency, the HLG has proposed establishing 
a  list  of  priorities.  It  would  like  to  see  closer  analysis  of  the  payback  time  for  investments, 
further  development  of  district  heating  and  wider  use  of  eco-designs  with  their  minimum 
energy efficiency requirements.  

1.6. 

SCP  Conference  organized  by  the  Slovenian  Presidency:  "Time  for  Action-
Towards Sustainable Consumption and Production in Europe", Ljubljana, 27-
28 September 2007 

This  Conference,  organised  by  the  European  Environment  Agency,  the  Ministry  of  the 
Environment  and  Spatial  Planning  of  the  Republic  of  Slovenia  and  the  UNEP/Wuppertal 
Institute Collaborating Centre on Sustainable Consumption and Production, brought together 
100 experts from governments in Europe, researchers, NGOs and business. 

Three  top-priority  recommendations  for  the  forthcoming  EU  Action  Plan  on  Sustainable 
Consumption and Production were: 

•  include clear sustainability targets; 

•  make concrete steps to internalise environmental costs into prices; 

•  develop legislation on green public procurement.  

Discussions focused on the three consumption areas which have been identified by separate 
studies  of  the  European  Commission  and  the  European  Environment  Agency  to  have  the 
highest environmental impacts over their lifecycle: housing, food and drink, and mobility. 

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It  was  recommended  that  at  the  national level, priority action should  be  taken  to  internalise 
environmental  costs  through  an  environmental  fiscal  reform,  to  identify  'beacons'  of 
sustainable  living  and  to  develop  a  long  term  vision  of  sustainable  consumption  and 
production. 

Finally,  participants  recommended  that  the  United  Nations'  process  to  develop  a  10-year 
framework  of  programmes  on  sustainable  consumption  and  production,  the  so-called 
Marrakech  process,  should  encourage  national  governments  to  integrate  sustainable 
consumption  and  production  objectives  into  ministries  beyond  environment.  Further  the 
Marrakech  process  should  develop  communications  strategies  and  campaigns  with  national 
organisations  to  reach  out  to  consumers  for  actions  and  involve  financial  institutions  in  its 
process. 

1.7. 

Environment Policy Review Group meeting (EPRG62), 19 September 2007 

EPRG  Members  expressed  overall  support  for  the  elements  for  an  Action  Plan  under 
consideration by the Commission. Ambitious targets for resource efficiency, linked to sectors, 
were seen as important, although difficult to establish and to agree upon. The product focus, 
specifically targeted at priority products (focus should be on cars, food, drinks, housing), was 
supported,  as  was  the  need  for  ambitious,  dynamic  standards,  without  there  being  defined 
views as to the instrument/ process for reaching those. Some supported the setting of binding 
eco-design  principles.  Public  procurement:  was  stressed  to  be  a  leaver,  and  further  concrete 
steps at EU level were needed, the same for eco-label. Some pronounced support for reducing 
VAT  to  drive  the  change  to  better  performing  products.  The  consumption  side  needs  to  be 
further emphasised, also as concerns the rebound  effect, and benchmarks should also be set 
for  consumption  patterns.  Initiating  changes  to  'different  lifestyles'  clearly  links  with 
education, and also advertising deserves to be considered. Retailers are seen as very important 
actors;  need  further  assessment  of  what  is  the  best  level  to  address  them,  and  how  EU 
initiatives  could  look  like.  Some  considered  that  choice-editing  by  retailers  needed  to  be 
considered. Overall, dialogue with actors, possibly sector-specific was seen as crucial. It was 
also  mentioned  that  there  was  a  need  to  be  more  inclusive  as  regards  the  focus  of  SCP 
policies- not only environment, but also including, for instance, fair trade and social aspects. 

1.8. 

Integrated Product Policy (IPP) Regular Meetings 

Integrated Product  Policy (IPP) Regular Meetings consist of Member States' representatives 
and  key  stakeholders  assisting  the  Commission  in  developing  and  implementing  the 
Communication on IPP and monitoring progress in the Member States. They also provide a 
forum  for  the  Commission  to  inform  Member  States  and  stakeholders  of  its  IPP  related 
activities,  and  for  Member  States  and  stakeholders  to  report  and  inform  back  to  the 
Commission.  Meetings  were  held  once  to  twice  annually  since  adoption  of  the  IPP 
Communication  in  200363.  Several  working  groups  established  under  the  umbrella  of  this 
group have treated issues of immediate relevance to SCP, such as on Environmental Product 
Declarations (EPDs) and indicators to assess product policy impacts.  

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The EPRG is a regular meeting of Directors General for the Environment from Member States, chaired 
by the Commission, to discuss environmental issues at an early stage before formal policy proposals are 
made to the EU legislators.  
COM(2003)302 

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1.8.1.  Last meeting, 2 October 2007 

The meeting was dedicated to share views and discuss in-depth the Commission's proposals 
on the Sustainable Consumption and Production (SCP) Action Plan. The participants clearly 
recognised  the  need  for  action  on  changing  unsustainable  consumption  and  production 
patterns in the EU. There was overall support for the proposed approach, with  emphasis on 
coherence and consistency between the various policy instruments in order to have a robust 
product policy. To do so, the different roles of SCP and SIP would merit from further clarity 
as well as clear roles of all actors, a clear vision with objectives, timeframes, monitoring, and 
concrete actions. The need to deal not only with environment, but also with all three pillars of 
sustainable development was also mentioned. Consumption was recognized as a difficult area 
needing further development; the Commission's proposed approach to consumption seemed to 
be  more  about  greening  supply  chains,  and  not  about  changing  consumption  patterns. 
Strengthening eco-design was supported, but by first building on lessons learnt from the EuP 
Directive, given that it is not mature enough to enable broadening its application. The use of 
economic  instruments  to  get  the  prices  right  was  seen  as  important  as  were  Dynamic 
Performance  Requirements  to  have  a  long-term  perspective.  With  regard  to  carbon 
footprinting and labelling, these are initiatives led by certain retailers, without having been put 
into place yet, measured or piloted. Actions to be taken at EU level include making legislation 
more  coherent,  sharing  best  practice  on  consumer  behaviours,  developing  standards  and 
targets,  establishing  a  European  Top  Runner  scheme,  and  a  strong  Eco-label.  At  Member 
States level include work with retailers and consumer education in schools. 

1.8.2.  Penultimate meeting, 15 November 2006 

A  meeting  dedicated  to  preparatory  discussion  and  exchange  of  first  ideas  on  a  future  SCP 
Action Plan. Overall, the Member States and stakeholders from the regular meeting supported 
extending  EU  eco-design  legislation  and  developing  product  performance  targets,  based  on 
the  Japanese  top-runner  approach,  also  including  chemicals  and  WEEE  products.  They 
confirmed that legal performance standards should exclude "bad" products from the market, 
and focus on "priority product" areas from the EIPRO study (food and drink; housing; private 
transport) and on suppliers of products with high impacts. The Group also supported market-
based instruments, financial drivers, subsidies and differentiation, and more emphasis on the 
consumer  side,  in  particular  through  Green  Public  and  Private  Procurement  and  agreements 
with retailers to change products on the shelves. They also confirmed the development of the 
ecological  footprint  concept,  integration  of  different  data  systems,  and  facilitation  of  green 
investments. 

1.9. 

European Consumer Consultative Group64, 19 September 2007 

In  its  Decision  (2003/709/EC)  of  9  October  2003,  the  Commission  created  the  European 
Consumer Consultative Group (ECCG). This body replaced the Consumer Committee as the 
Commission's  main  forum  for  engaging  with  consumer  organisations.  In  the  meeting  the 
SCP/SIP background document (see Annex II) was discussed. Reference was made to good 
examples  already  existing  in  Member  States;  the  Commission  should  set  an  example  in 
making its own policy more sustainable, in particular the Common Agricultural Policy. It was 
pointed out that the social dimension was not addressed in the consultation document. High 
awareness  of  consumers  about  environmental  problems  does  not  translate  into  behaviour 
when buying products. Measures were needed to address the whole production chain, which 

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should  be  more  transparent  and  producer  responsibility  needs  to  be  reinforced  (e.g. 
reparability of products poor/insufficient). 

1.10.  Roundtable on Sustainable Consumption, 20 September 2007 

The debate, organised by the Cabinets of DG ENV and DG SANCO and The Centre Think 
Tank, focused on the importance of information and the necessity of incentives for consumers 
and of "getting the prices right" (not only focus on carbon). Indicators to measure progress in 
sustainable consumption. There was a strong plea for including social and economic aspects, 
not only environment. The forthcoming CAP check will be crucial to see if the Commission is 
willing to apply sustainability criteria to its own policy. Examples to push SC were presented, 
such  as  VAT  differentiation,  Code  for  GPP,  Tax  reduction  for  environmental  investments, 
sustainable wood labels for retailers, mandatory energy label for housing. 

1.11.  Concluding remarks 

Summarizing the contributions from stakeholders it can be stated that there is large agreement 
on the need for action towards more sustainable consumption and production patterns. There 
is  also  large  support  for  the  approach  outlined  in  the  SIP/SCP  background  document  and  a 
high degree of consensus on several key issues. They include in a non-exhaustive list: 

•  to act on production and consumption issues 

•  to  employ  a  mix  of  approaches,  including  consumer  information,  eco-design  of 

products, and eco-efficient production 

•  to  use  a  tailored  mix  of  policy  instruments  for  each  specific  problem,  including 
market based instrument, fiscal means, product legislation and voluntary schemes 

•  to focus initiatives on products with the strongest environmental impacts, notably 

food and drink, housing and transport 

It  appears  fair  to  state  that  neither  the  present  consultation  nor  previous  consultations  on 
related policy initiatives have cast severe doubt on the value of the approach proposed or on 
the level of expectation/support among stakeholders from all parts of society. 

2. 

SECTION 2: OVERVIEW OF EXPERTISE INPUT  

This  section  gives  an  overview  of  main  sources  of  input  of  expertise  to  the  present  SCP 
Action Plan, notably as concerns studies and workshops launched by the Commission services 
responsible for drafting the SCP Action Plan (ENV G4). 

The large number of highly relevant reports and other literature of key relevance for the SCP 
Action Plan published by other institutions and individuals almost daily are far too numerous 
to be listed here. They nevertheless form the core of information used in assessing production 
and  consumption  trends,  the  ensuing  state  of  the  environment  and  proposals  for  possible 
solutions or actions. Reports by the European Environment Agency, the OECD and UNEP are 
just  a  small  selection  of  this  wealth  of  information  to  which  many  research  institutes, 
government organizations and other organizations/initiatives have to be added. 

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2.1. 

Commission  research  on  the  environmentally  most  damaging  products  and 
their potential for improvement (EIPRO65 and IMRPO66 projects) 

In the context of Integrated Product Policy (IPP) the Commission has carried out over the last 
four  years  substantial  work  to  identify  which  products  are  environmentally  most  damaging 
and should therefore receive most attention of policy initiatives. This work, carried out under 
the "Environmental Impact of PROducts" (EIPRO) project was concluded in 2005. It is being 
followed up by a series of still ongoing projects that identify main options for improving the 
products identified by EIPRO, the IMPRO studies. 

2.1.1.  The EIPRO project 

Key findings of the project are: 

•  Food  and  drink  products,  private  transport  and  housing  have  the  biggest  environmental 
impacts  across  the  impact  categories  investigated  (global  warming,  acidification, 
photochemical ozone formation, and eutrophication).  

•  Food and drink is responsible for 20-30% of the different environmental impacts of total 
consumption,  and  in  the  case  of  eutrophication  for  even  more  than  50%.  Meat  and  meat 
products have the greatest environmental impact,  contributing  4-12 % to global warming 
of  all  products.  The  second  product  grouping  is  dairy  products,  followed  by  plant-based 
food  products,  soft  and  alcoholic  drinks,  with  lower  levels  of  environmental  impacts  for 
most impact categories considered. 

•  Housing  constitutes  20-35%  of  the  total  for  most  impact  categories,  with  household 
heating being one of the most important contributors for each impact category. Energy use 
for  heating,  hot  water  and  electrical  appliances  contribute  most  to  global  warming, 
acidification,  and  photochemical  oxidation.  Residential  structures  also  have  high  impacts 
(3–4% of all  products), followed  by  other energy-consuming products. Wooden products 
may also have high impacts on biodiversity or natural resources. 

•  Transport  contributes  15%  to  global  warming  potential  and  acidification  of  all  products, 
but  less  to  eutrophication  and  more  to  photochemical  oxidation.  Cars  and  private  cars 
account for about four fifths of the transport related impacts of consumption.  

A more detailed overview of the EIPRO project is set out below: 

In  June  2003  the  European  Commission  adopted  a  Communication  on  Integrated  Product 
Policy  (IPP),  in  which  it  committed  to  identify  the  products  with  the  greatest  potential  for 
improvement.  However,  when  the  Communication  was  published,  there  existed  no 
analytically-based  consensus  on  which  products  and  services  have  the  greatest  impact,  and 
hence no consensus on those which have the greatest potential for improvement. 

On request of DG Environment, the JRC-IPTS therefore launched the EIPRO study, with the 
objective  to  identify  those  products  that  have  the  greatest  environmental  impact  throughout 
their  life  cycle,  from  cradle  to  grave.  The  project  was  carried  out  with  the  help  of  ESTO 
(TNO-CML  Centre  for  Chain  Analysis,  the  Flemish  Institute  for  Technological  Research 
(VITO) and the Danish Technical University (DTU)). 

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http://ec.europa.eu/environment/ipp/identifying.htm  
Environmental Improvement of Products: Passenger cars project (IMPRO-car), Meat and dairy products 
(IMPRO-food), Environmental Improvement Potentials of Residential Buildings 

(IMPRO-building)  

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The methodology and the results of the different tasks were discussed at special workshops, 
followed  by  meetings  with  stakeholders.  The  draft  final  report  was  published  on  the 
Commission’s website in May 2005 with an invitation for comments. The final results of the 
study were presented to the Member States and other stakeholders in November 2005. 

The  methodological  approach  for  this  study  was  to  take  the  results  of  existing  studies  and 
combine them with new research. This way, full advantage could be taken of existing research 
and knowledge of impacts, and the understanding could be developed further in key areas to 
close knowledge gaps. As part of the new research, an environmentally extended input-output 
model was developed – the CEDA EU-25 Products and Environment model – that allowed a 
systematic and detailed analysis (distinguishing several hundreds of products). 

The  review  of  existing  studies  showed  that  substantial  and  useful  research  had  been 
undertaken  already,  and  despite  different  methodological  approaches  and  limitations,  this 
research could provide quite robust results for aggregated groupings of products at the level of 
the  main  functional  areas  of  consumption  (corresponding  to  the  highest  level  of  the  UN 
Classification  of  Individual  Consumption  According  to  Purpose  –  about  a  dozen  product 
groupings)  and,  to  some  extent,  also  at  aggregation  levels  that  distinguish  up  to  about  50 
consumption  domains  or  product  groupings.  However,  the  studies  provided  far  less  useful 
information  for  more  disaggregated  product  groupings,  and  their  geographical  scopes  were 
not at all identical. The review also showed that existing knowledge did not give a full picture 
of consumption in the EU-25. 

To  improve  the  situation,  a  model  was  built  that  allowed  a  systematic  analysis  of  the 
environmental  impacts  of  products  for  the  EU-25  in  sufficient  detail  to  distinguish  several 
hundreds of product groupings. The CEDA EU-25 Products and Environment model covers 
the  environmental  impacts  of  all  products  consumed  in  the  EU-25  (produced  in  EU-25  and 
imported), including the life cycle stages of extraction,  transport, production, use and waste 
management. 

Although the principle of an environmental IO analysis is simple, getting the data right was 
challenging.  Also,  an  IO  analysis  is  based  on  the  records  of  financial  transactions  between 
productive sectors and to final consumers, which do not generally cover the use and disposal 
phases of products. For a cradle-to-grave analysis, specific solutions needed to be adopted to 
cover the use, waste management and recycling stages. 

The model adapts the latest model developed with United States sectoral data (CEDA 3.0) to 
Europe. The resulting CEDA EU-25 Products and Environment model covers all resource use 
and emissions in the production, use and disposal phases of all products consumed in the EU-
25. The analysis used the following eight environmental impact categories: 

•  abiotic depletion 

•  acidification 

•  ecotoxicity 

•  global warming 

•  eutrophication 

•  human toxicity 

•  ozone layer depletion 

•  photochemical oxidation 

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The results were calculated as a percentage of the EU-25 total for each impact category. 

The study identified products in the following three areas as having the greatest impact: 

•  food and drink 

•  private transport 

•  housing 

Together they are responsible for 70-80% of the environmental impact of consumption, and 
account for some 60% of consumption expenditure. 

Food and drink cause 20-30% of the various environmental impacts of private consumption, 
and this increases to more than 50% for eutrophication. This includes the full food production 
and  distribution  chain  ‘from  farm  to  fork’.  Within  this  consumption  area,  meat  and  meat 
products are the most important, followed by dairy products. Food and drink were covered by 
only  some  of  the  studies  so  the  results  for  that  area  should  be  treated  with  more  caution. 
However, the general conclusions can be taken with a reasonably high level of confidence. 

The  contribution  of  passenger  transport  to  the  total  environmental  impacts  of  private 
consumption ranges from 15 to 35%, depending on the impact category. The greatest impact 
is from cars, despite major improvements in the environmental performance in recent years, 
especially  on  air  emissions.  The  impact  of  private  air  travel  is  increasing  but  for 
methodological and data reasons, it has not been possible to adequately quantify its impact on 
the environment. 

The products under the heading of housing include buildings, furniture, domestic appliances, 
and energy for purposes such as room and water heating. Together they make up 20 to 35% of 
the  impacts  of  all  products  for  most  impact  categories.  Energy  use  is  the  single  most 
important  factor,  mainly  for  room  and  water  heating,  followed  by  structural  work  (new 
construction,  maintenance, repair, and demolition). The next  important  products  are energy-
using domestic appliances, e.g. refrigerators and washing machines. 

All other areas of private consumption together (i.e. excluding food and drink, transport and 
housing)  account  for  no  more  than  20-30%  of  most  environmental  impacts.  There  are 
uncertainties  about  the  percentage  contributions  of  the  remaining  products,  but  most  of  the 
evidence  suggests  that  clothing  ranks  highest,  accounting  for  between  2  and  10%  of  total 
environmental impact. 

2.1.2.  The "Environmental IMprovement of PROducts" (IMPRO) project 

Building  on  the  results  of  the  EIPRO  work,  the  IMPRO  project  identifies  possible  ways  in 
which the life-cycle environmental impacts can be reduced for some of the products that are 
among those with the greatest environmental impacts. From the interim reports (final reports 
are expected for the end of 2007), improvement options are: 

•  Cars: options for improvement are weight reduction, hybrid cars, using bio-ethanol, power 

train improvements, driving behaviour, smaller car 

•  Meat  and  dairy:  Agriculture:  Nitrogen  management,  cereal  intensification;  Feed: 
requirement on feed contents; Meal planning and home delivery; Prolonged durability 

•  Housing: (not yet available) 

It  is  expected  that  the  IMPRO  results,  when  available  in  their  final  form,  can  give  valuable 
input to eco-design initiatives that will be launched under the forthcoming SCP Action Plan. 

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2.2. 

Commission  research  on  the  environmental  impact  of  raw  materials  and 
commodities,  the  "Environmentally  weighted  Material  Consumption"  (EMC) 
Study67 

This  study  approached  the  problem  of  greatest  environmental  impacts  of  materials  that  are 
used  in  the  EU  15  economy.  As  materials  are  the  basis  of  manufacturing  products  the 
reduction of environmental impacts of materials production and use would contribute directly 
to more sustainable production and eco-design of products.  

The study assessed the environmental impacts of materials across a number of environmental 
impact categories, such as Greenhouse Gas Emissions, resource depletion, eco-toxicity etc. It 
then  established  a  specific  impact  per  kilogram  of  each  material.  Multiplying  this  specific 
impact by the overall amount of the material used in the economy (based on Direct Material 
Consumption  statistics)  it  concluded  which  materials  cause  the  greatest  environmental 
impacts  overall.  It  concluded  that  the  following  materials  have  by  far  the  greatest 
environmental impacts: 

•  animal products 

•  crops 

•  plastics 

•  oil, households 

•  brown coal for electricity in households 

There is a remarkable coherence with the results of the product-based EIPRO analysis. The 
EMC approach is presently further investigated as part of a basket  of environmental impact 
indicators  of  resource  use68.  Together  with  the  EIPRO/IMPRO  results  the  EMC  results  can 
inform future actions on eco-design and raw material choices under the SCP Action Plan. 

2.3. 

Commission Pilot Projects under Integrated Product Policy 

The  Commission,  together  with  Nokia  Corporation  and  Groupe  Carrefour  organized  two 
voluntary pilot  projects  to  investigate  how  multi-stakeholder  groups  can work together with 
industry  towards  the  improvement  of  environmental  impacts  from  consumer  products.  The 
projects had a duration of one to two years and led to concrete action on the side of business. 

•  In the case of tropical wood garden furniture it was recognized that the origin of 
the  wood  and  the  distribution  by  road  transport  of  the  furniture  cause  major 
impacts.  Sourcing  of  the  wood  was  subsequently  changed  and  more  economic 
packaging methods for the products were investigated. 

•  In the case of mobile telephones a number of technology/eco-design options were 
identified  for  improvement.  They  are  presently  being  assessed  wit  regard  to  the 
feasibility of implementing them. 

67 

68 

Policy review on decoupling: development of indicators to assess decoupling of economic development 
and environmental pressure in the EU-25 and AC-3 countries CML report 166. Van der Voet, E., L. van 
Oers, S. Moll, H. Schütz, S. Bringezu, S. de Bruyn, M. Sevenster and G. Warringa. 2005. Leiden, The 
Netherlands: Institute of Environmental Sciences (CML), Leiden University, on behalf of the European 
Commission. 
Potential  of  the  Ecological  Footprint  for  monitoring  environmental  impact  from  natural  resource  use: 
Analyse  the  potential  of  the  Ecological  Footprint  and  related  assessment  tools  for  use  in  the  EU's 
Thematic Strategy on the Sustainable Use of Natural Resources. Ecologic, 2007. Ongoing. 

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Both  projects  showed  also  that  involving  consumers  is  crucial  but  in  many  cases  faces 
particular difficulties. 

2.4. 

List of main studies 

A  number  of  further  studies  are  accessible  through  the  Commission  websites  on  Integrated 
Product  Policy69,  the  Thematic  Strategy  on  the  sustainable  use  of  natural  resources70,  the 
Thematic Strategy on the prevention and recycling of waste71 and on EU Waste Legislation72. 

Studies contributing in particular to SCP Policies in the context of IPP: 

•  Support for the Impact Assessment on expected environmental benefits and costs 
savings  of  a  European  legislative  framework  for  the  eco-design  of  products 
(ongoing). 

•  Environmental  Impact  of  PROducts  (EIPRO)  -  Analysis  of  the  life-cycle 
environmental impacts related to the final consumption of the EU-25. This study 
supports the development of an EU Integrated Product Policy by clarifying which 
products  that  are  consumed  in  the  EU  have  the  greatest  environmental  impacts 
from a life-cycle perspective.73  

•  Environmental  IMprovement  of  PROducts  (IMPRO)  is  a  study  identifying 
possible  ways  in  which  the  life-cycle  environmental  impacts  can  be  reduced  for 
some  of  the  products  that  are  among  those  with  the  greatest  environmental 
impacts, in particular for cars, meat and dairy products and buildings.74 

•  DG TREN's studies on the Energy using Products (EuP-Directive)75 

•  Household consumption and the environment, EEA Report No 11/2005. With an 
aim  to  provide  input  for  European  policy-making,  this  report  analyses  the 
environmental effects of household consumption in Europe. 76 

•  SCORE  network  supported  by  the  EU`s  6th  Framework  Programme.  The 
Network project acts as one of the EU`s central support structures for the UN`s 10 
Year  Framework  of  Programs  for  Sustainable  Consumption  and  Production 
(SCP). 77  

•  ASCEE  (Assessing 

instruments  for  sustainable 
consumption  practises  and  greening  of  the  market)  supported  by  the  EU`s  6th 
Framework Programme 78 

the  potential  of  various 

•  Environmentally  Extended  Input-Output  Tables  and  Models  for  Europe  (EEIO). 
This  study  explores  how  methodologies  based  on  analysis  of  environmentally 

69 
70 
71 
72 
73 
74 
75 
76 
77 
78 

http://ec.europa.eu/environment/ipp/ 
http://ec.europa.eu/environment/natres/index.htm 
http://ec.europa.eu/environment/waste/strategy.htm 
http://ec.europa.eu/environment/waste/index.htm 
http://ec.europa.eu/environment/ipp/pdf/eipro_report.pdf 
http://ec.europa.eu/environment/ipp/identifying.htm 
http://ec.europa.eu/energy/demand/legislation/eco_design_en.htm 
http://reports.eea.europa.eu/eea_report_2005_11/en 
http://www.score-network.org/score/score_module/index.php 
http://ec.europa.eu/research/environment/pdf/global_change_ecosystem.pdf p.403 

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extended  input-output  tables  can  be  further  developed  and  applied  in  policy 
making. 79 

•  Sustainable  Production  and  Consumption  (SUSPROC).  The  objective  of  the 
action  is  to  support  the  implementation  and  further  development  of  the  EU 
Strategy for Sustainable Development, the EU Environmental Action Plan as well 
as the integration of environmental concerns in other European policy areas. 80 

•  European Platform on Life Cycle Assessment (LCA). The objective of the project 
is to promote life cycle thinking in business and in policy making in the European 
Union by focusing on underlying data and methodological needs. 81 

•  Making  life  cycle  information  and  interpretative  tools  available.  This  study  is 
looking at the level of awareness regarding life cycle thinking in small European 
firms,  retailers  and  consumer  organisations,  and  their  needs  for  further 
information and support was finalised. 82 

•  Development of Indicators for an Integrated Product Policy. 83 
•  Evaluation of Environmental Product Declaration Schemes. 84 

•  Study on  external  environmental effects  related to the life cycle of products and 

services. 85 

Studies  contributing  in  particular  to  SCP  Policies  in  the  context  of  the  sustainable  use  of 
natural resource: 

•  Potential  of  the  Ecological  Footprint  for  monitoring  environmental  impact  from 
natural resource use: Analyse the potential of the Ecological Footprint and related 
assessment tools for use in the EU's Thematic Strategy on the Sustainable Use of 
Natural Resources. (Ongoing) 

•  Strengthening  the  Knowledge  Base  for  the  implementation  of  the  Thematic 
Strategy on the Sustainable Use of Natural Resources. Forthcoming, on behalf of 
the European Commission. (Ongoing) 

•  Work  led  by  Eurostat,  with  JRC  and  EEA,  on  indicators  to  measure  progress, 

identify priorities and set targets (Ongoing). 

•  Resource  Use  in  European  Countries  (Zero  Study).  This  study  provides  the 
baseline  data  on  material  flows  for  the  further  development  of  the  "Resources 
Strategy". 86 

•  Public  Private  Interface.  This  study  seeks  to  find  concrete  proposals  for  target 

setting and instrumentation based on the experience of Member States. 87 

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83 
84 
85 
86 
87 

http://www.jrc.es/publications/pub.cfm?prs=1366 
http://www.jrc.es/activities/sustainable_development/susproc.cfm 
http://ec.europa.eu/environment/ipp/lca.htm 
http://ec.europa.eu/environment/ipp/pdf/study_final_clean_report.pdf 
http://ec.europa.eu/environment/ipp/pdf/eu_incdicators_ipp_final_rep.pdf 
http://ec.europa.eu/environment/ipp/pdf/epdstudy.pdf 
http://ec.europa.eu/environment/ipp/pdf/ext_effects_finalreport.pdf 
http://ec.europa.eu/environment/natres/pdf/zero_study_final.pdf 
http://ec.europa.eu/environment/natres/titles1_2.htm 

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•  Dynamic  View  on  Resources.  This  study  aims  to  assess  the  feasibility  of 

decoupling resource use from economic growth. 88 

•  Policy review on decoupling and development of resource productivity indicators. 

89 

Studies contributing in particular to SCP Policies in the context of waste policies90 : 

•  Coherence  of  Waste  Legislation  –  Assessment  of  Lessons  learnt  from  the  EU 

"Recycling Directives" (planned) 

•  Study  addressing  the  buildings  (considered as  one  of  the  consumption  area  with 
highest  environmental  impact),  in  particular  Construction  and  Demolition  Waste 
Management Practices and their Economic Impacts91 

•  Studies concerning End of Life Vehicles, to improve their eco-design and waste 

management 

•  Studies regarding mining, as one important production stage  

•  A number of studies addressing packaging and packaging waste  

•  A number of studies concerning Persistent Organic Pollutants (POPs), with links 

to some products, production and consumption processes 

•  A number of studies on PVC, their use in product, waste management, etc. 

•  Support  in  the  drafting  of  an  ExIA  on  the  Thematic  Strategy  on  the  Prevention 

and Recycling of Waste (TSPRW)92 

•  The study 'Waste Prevention and Minimisation' examines some of the best waste 

minimisation practices on both industrial and municipal waste flows. 93 

•  The  study  'Waste  Management  Options  and  Climate  Change'  assess  the  climate 
change impacts of options for municipal solid waste management in the EU. 94 

Study contributing to identifying barriers to and impacts of technology adoption 

•  Study  on  fostering  EU  internal  market  for  competitive  technologies  for  a  low 

carbon economy 

2.5. 

SCP experts' workshops, June and July 2007 

In preparation of possible specific actions three workshops were organized with experts from 
industry, NGOs and other organizations. The purpose was to understand better the potential 
strengths  and  weaknesses  of  the  possible  actions  and  the  particular  advice  or  concerns  of 
different stakeholder groups. A summary of the three workshops is given below: 

88 
89 
90 
91 
92 
93 
94 

http://ec.europa.eu/environment/natres/pdf/dynamic_view_final_report.pdf 
http://ec.europa.eu/environment/natres/pdf/fin_rep_natres.pdf 
http://ec.europa.eu/environment/waste/studies/index.htm 
http://ec.europa.eu/environment/waste/studies/cdw/cdw_report.htm 
http://ec.europa.eu/environment/waste/pdf/epec_report_05.pdf 
http://ec.europa.eu/environment/waste/studies/prevention_minimisation.htm 
http://ec.europa.eu/environment/waste/studies/climate_change.htm 

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2.5.1.  Workshop on the Japanese Top Runner scheme  

•  In Japan, Green Public Procurement is obligatory and public authorities have to purchase 

TR products; this helps the demand. 

•  Extension  of  Top  Runner 

from  energy  other  environmental  aspects  such  as 
material/resources  and  hazardous  substances  could  be  done  step  by  step,  in  a  dynamic 
process, no major obstacles identified for establishing a similar concept in EU. 

•  Administrative burdens for business would be low as the data, criteria, and format needed 

would be already available.  

•  Impacts of the Top Runner to consumers would be higher product prices. These would be 

acceptable at business to business level and they can go down gradually. 

2.5.2.  Workshop on greening retailers' supply chains 

•  It is paramount to focus on both consumption and production.  

•  Choice editing is already happening to some extent already, but if it were not implemented 
by all competitors, retailers would be reluctant to pursue such a concept. A level playing 
field should be established to guarantee equal treatment. 

•  A robust revision of the Eco-label would boost more and better products, quicker process, 

simpler criteria, and would allow national labels to get the Eco-label logo. 

•  The  Commission  should make available user-friendly science-based information on Life-

Cycle Approach of products. 

•  Affordability  of  products  is  concern  for  all;  consumers  look  at  price  first.  Economic 

incentives for greener products and for innovation are important to change behaviour. 

•  A  common  framework  is  needed,  with  a  light  touch  from  the  legislator  and  strong 
communication  (strong  communication  strategy,  similar  to  climate  change).  A  common 
knowledge base would also make it easier for industry to green supply chains. 

•  SMEs need to be engaged through the right incentives for them, e.g. web portal. 

•  Create  for  SCP  a  similar  mechanism  to  the  UK  Corporate  Leaders  Group  on  Climate 

Change but by avoiding duplication and building on it. 

2.5.3.  Workshop on Green Private Procurement 

•  A  common  legal  framework  (level  playing  field)  on  what  we  want  to  achieve  with 
objectives  and  rules  is  needed.  A  framework  which  encourages  green  leadership  in 
industry;  ensures  harmonised  methods,  data  and  simple  tools  for  life  cycle  analysis  and 
footprint calculations of products; and sends a clear message to business and industry that 
"legal  compliance  only  would  not  be  enough"  if  they  want  to  remain  competitive  in  the 
long run. 

•  To change unsustainable behaviours, it is important to know the key objective (e.g. moving 

towards a low carbon economy); need for prioritisation (not to do all in once).  

•  A main objective should be ensuring minimum environmental impacts of products; this can 

be done through the Life-Cycle Approach.  

•  Frontrunners in industry are already practicing some green purchasing; the more suppliers 

for a product/service exist, the easier it is for industry to impose green requirements. 

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•  Purchasing  is  largely  driven  by  price  and  functionality.  Eco-Label  criteria  should  play  a 

central role in providing technical specifications for products. 

•  Carbon  footprints  would  need  a  standardised  approach  and  should  be  established  per 

product group. 

The  results  of  these  workshops,  together  with  further  work,  will  inform  the  development  of 
possible future actions under the SCP Action Plan. 

2.6. 

Environmental Product Information Working Group, November 2006 

The  European  Commission’s  Regular  Meeting  on  Integrated  Product  Policy  decided  in  its 
second  meeting  in  September  2004  to  set  up  a  working  group  on  Environmental  Product 
Information. This working group examines the issue of life cycle information throughout the 
product chain. Its objectives are to identify the needs, examine the tools, identify the gaps and 
opportunities, and propose how the situation should be improved. In its Final report Making 
Product  Information  Work  for  the  Environment,  the  Group  recommended  that  the 
Commission should draw up a "package" consisting of three kinds of actions: 

•  A clear statement of vision and framework thinking to set the course for future policy, with 
clear  signals  to  market  players.  This  could  cover  a  vision  for  the  role  of  product 
information  in  helping  to  deliver  the EU’s  IPP,  SCP  and  sustainable  development 
objectives;  the  roles  which  governments,  businesses,  stakeholder  groups  and  household 
consumers are expected to play in delivering these aims; in the case of the governmental 
role, setting an emphasis on framework-setting to enable, push, reward or correct the way 
that market players deliver the results in the market, rather than governments trying to do 
the delivery themselves. 

•  A plan for supporting  administrative and  practical  measures to strengthen  the knowledge 
base,  the  accessibility  of  relevant  and  useful  information,  the  harmonisation  of 
frameworks, and the practical measures to achieve synergies with other EU policies. This 
should cover continued strengthening of the public knowledge base on product impacts and 
the  product  life-cycle  knowledge  base  available  to  the  market;  keeping  the  adequacy  of 
knowledge-based tools under review – and helping to fill the gaps; keeping the efficiency 
of  the  whole  information  ‘system’  under  review  –  stimulating  forms  of  standardisation, 
harmonisation and simplification to make the task as economical as possible for business; 
and  building  up  the  administrative  connections  with  other  ‘systems’  used  to  deliver  EU 
policies – a key example being the green public procurement (GPP) agenda. 

•  A proposal for supporting a legal and regulatory framework that will enable the market to 
deliver,  ensuring  a  fair  and  competitive  market,  stimulating  standardisation  and 
comparability in key areas, and building up the awareness and use of product information. 
This should include ensuring a good quality of product information placed on the market, 
to  support  market  confidence  and  fair  competition;  establishing  an  enabling  power  for 
requiring  information  on  the  key  impacts  of  certain  key  products  to  be  declared  in  a 
standardised  form;  and  setting  a  duty  at  national  level  to  promote  the  awareness  of  all 
forms of good-quality product information. 

2.7. 

Key recommendations from the EPDs workshop (January 2007) 

One  of  the  working  groups  set  up  under  the  Integrated  Product  Policy  Regular  Meeting 
assessed the way forward for a business-to-business communication tool on the environmental 
characteristics  of  intermediate  products,  materials,  components  etc.  Such  "Environmental 
Product Declarations (EPDs) have been suggested and developed by a number of actors but 

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there is yet no harmonized or generally agreed scheme available. There is an opportunity for 
the Commission to play a co-ordinating role towards a generally accepted scheme. 

At the workshop, it was concluded that: 

•  EPDs  can  be  very  useful  for  developing  and  implementing  policies  on  environmental 

management such as eco-design and green purchasing. 

•  The Commission should establish a common EU harmonisation EPD system with the EU 

Member States in an advisory role  

•  The  Commission  should  develop  an  EU  EPD  Platform  based  on  common  environmental 

product information. 

A full report of this working group is available on the IPP website95. 

2.8.  Marrakech  process,  3rd  International  SCP  experts  meeting,  Stockholm,  June 

2007 

Outcomes from workshops and discussions at the meeting include: 

•  Existing policy tools, i.e. EU regulations, should be more coherent. 

•  Develop a better understanding and ensure access to markets for sustainable products, and 
mechanisms  to  overcome  market  barriers,  also  by:  developing  policies  that  set  the  right 
conditions for products to be labelled as “sustainable”; and creating a level playing field. A 
regulatory framework with clear parameters and a market-driven approach that encourages 
competitive  innovation  beyond  minimum  standards,  i.e.  introducing  environmental 
taxation  on  unsustainable  products,  communicating  lifecycle  costs  and  benefits  of 
sustainable products to consumers. 

•  Regulation  is  needed  to  promote  innovation,  and  incentives,  awards  and  certification 

systems all will yield competitiveness benefits. 

•  Market  forces  to  drive  demand  for  sustainable  products  should  be  identified  and  a 
distinction between “best in class” products versus the market conditions should be made 
to drive innovation and changes in markets. 

•  Phase  out  unsustainable  products  and  discouraging  demand  for  and  use  of  unsustainable 
products through building on existing approaches and processes for example in chemicals. 

•  Environmental labels and clear product information to be available to consumers  

•  A lifecycle approach focusing on products having the biggest environmental impact such 

as food, housing, transport (EIPRO study). 

•  Business  to  provide  to  consumers  information  on  the  life-cycle  costs  of  products  (e.g. 
product labelling, transparency for investors from the financial sector, and corporate social 
responsibility in the supply chain). 

•  Make  strong  links  between  trade  and  investment  policies;  governments  to  work  with  the 

financial sector to promote socially responsible investment by industry.  

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http://ec.europa.eu/environment/ipp/pdf/20070115_resume.pdf 

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Annex II 

to the 

Impact Assessment on the SCP and SIP Action Plan 

(Background Document by DGs ENV and ENTR on Sustainable Industry Policy and 
Sustainable Consumption and Production Action Plans; This document was the basis 
for the public consultation from 27 July to 23 September 2007) 

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Background document to the consultation 

On the action plans on 

Sustainable consumption and production 

And 

Sustainable industrial policy 

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Table of contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

4. 

INTRODUCTION...................................................................................................... 68 

KEY CHALLENGES ................................................................................................ 69 

Leveraging Innovation: stimulating the development and commercialisation of low 
carbon, energy and resource efficient technologies, products and services............... 69 

Better Products: creating a dynamic internal market for better performing products 69 

Leaner and Cleaner Production: increasing the efficiency of EU production ........... 69 

Smarter Consumption: changing behaviours ............................................................. 70 

Global markets: exploiting first mover advantages and levelling the playing field for 
industry worldwide..................................................................................................... 70 

ENVISAGED APPROACH TO FACE THE KEY CHALLENGES........................ 70 

Focusing on key environmental issues....................................................................... 70 

A product-based approach.......................................................................................... 71 

Building on existing policy instruments .................................................................... 71 

A contribution to policy coherence ............................................................................ 71 

MAIN ACTIONS UNDER CONSIDERATION....................................................... 72 

4.1. 

Leveraging Innovation ............................................................................................... 72 

4.1.1.  Lead Market Initiative................................................................................................ 72 

4.1.2.  Networking of innovation stakeholders and closer cooperation between research and 
industry....................................................................................................................... 72 

4.2. 

Better Products: creating a strong EU market for sustainable products..................... 73 

4.2.1.  Dynamic Performance Requirements ........................................................................ 73 

4.2.2.  Environmental product declarations, sustainability labels and data collection.......... 74 

4.2.3.  Enhanced use of eco-design instruments at EU level ................................................ 74 

4.2.4.  Standardisation........................................................................................................... 74 

4.3. 

Leaner and Cleaner Production: increasing the efficiency of EU production ........... 75 

4.3.1.  Resource and material efficiency targets ................................................................... 75 

4.3.2.  Reinforcement of eco-innovation and environmental technologies........................... 75 

4.3.3.  Setting targets for eco-innovation and the uptake on environmental technologies ... 75 

4.3.4.  Review of the legislation on eco-management and audit schemes/pollution from big 

industrial installation.................................................................................................. 76 

4.3.5.  Small and medium size enterprises (SMEs)............................................................... 76 

4.4. 

Smarter Consumption: Changing behaviour.............................................................. 76 

4.4.1.  Environmental Performance Agreements with retailers ............................................ 76 

4.4.2.  Enhanced use of market-based instruments ............................................................... 77 

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4.4.3.  Differentiation of value-added tax rates..................................................................... 77 

4.4.4.  Revision of the EU Eco-label Regulation .................................................................. 77 

4.4.5.  Misleading advertising/false environmental claims................................................... 77 

4.4.6.  Green Procurement..................................................................................................... 78 

4.4.7.  Consumer information/ education and /training campaigns ...................................... 78 

4.5. 

Global markets: exploiting first mover advantages and levelling the playing field 
worldwide for sustainable technologies and products ............................................... 78 

4.5.1.  Adapt EU policies to fostering energy and resource efficiency................................. 78 

4.5.2.  Global Sectoral Approaches....................................................................................... 79 

4.5.3.  Strengthened international cooperation on sustainable consumption and production79 

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1. 

INTRODUCTION 

Achieving sustainable consumption and production is a key challenge for the future. Current 
patterns  of  consumption  and  production  are  causing  major  environmental  degradation,  in 
addition future energy supply and raw materials availability is not guaranteed. The carrying 
capacity  of  the  planet  on  which  our  well-being  is  based  is  in  jeopardy,  with  unsustainably 
high  rates  of  energy  and  raw  material  use,  soil  and  habitat  degradation.  Although 
advancement  of  technology  has  increased  the  efficiency  of  products,  in  many  cases  this  is 
offset by an even higher consumption level. 

This  problem  has  a  global  dimension.  Already  many  products  produced  in  the  EU  have 
components  made  from  resources  which  are  extracted,  processed  and  transported  from 
elsewhere  and  their  use  and  disposal  is  felt  globally.  Furthermore,  by  2050,  the  world  may 
have more than 3 billion more people all of whom have a legitimate claim to a comparable 
quality  of  life  to  that  enjoyed  in  the  EU.  To  meet  this  challenge,  there  is  a  need  for 
advancement  in  technological  development  and  in  innovation.  We  also  need  to  change  our 
consumption patterns. In the near future, climate change and security of energy supply need to 
be tackled by rapidly moving towards a low carbon economy at global level. 

The EU can foster its contribution to tackle these issues through an ambitious industrial and 
sustainable consumption and production policy. On one hand, a sustainable industrial policy 
can aim at turning the environmental challenges into economic opportunities for society. On 
the other hand, as the EU is one of the biggest consumers at global level and as products are 
traded globally, European policies standards to foster sustainable consumption and production 
will  tend  to  become  global  benchmarks.  By  developing  robust  sustainable  consumption  and 
production  policies,  the  EU  can  therefore  contribute  in  a  concrete  way  to  sustainability 
worldwide. 

The EU Heads of State and government committed to tackle these challenges in the European 
Council  on  8  and  9  March  2007.  They  set  ambitious  targets  for  greenhouse  gas  reduction, 
energy  efficiency  and  an  increased  share  of  renewable  energy.  The  mid-term  review  of  the 
Industrial  policy  called  for  actions  in  the  field  of  a  sustainable  industrial  policy  and 
sustainable  production  and  consumption.  The  renewed  Sustainable  Development  Strategy 
identified  the  promotion  of  sustainable  consumption  and  production  as  one  of  the  key 
challenges.  The  Council,  in  June  2007,  confirmed  that  environmental  technologies  and 
ecoinnovations  are  one  of  the  strongest  pillars  of  the  EU's  economy.  The  EU's  economic 
competitiveness will, to a large extent be based on its energy and resource efficiency and its 
capability  to  develop  appropriate  technological  solutions.  Key  to  future  jobs,  growth  and 
wealth as well as to environmental protection will be efficient eco-innovations and resource 
and material efficiency. 

The  Commission  will  contribute  to  this  political  momentum  by  presenting  Action  Plans  on 
Sustainable Industrial Policy and on Sustainable Consumption and Production.  

Since  the  envisaged  Action  Plans  cover  products,  production  and  consumption,  stakeholder 
engagement is crucial. The purpose of this Background document is to explain to stakeholders 
and to the public the rationale behind the different possible actions and ask for feed-back on 
them.  Interested  parties  are  invited  to  participate  to  the  on-line  consultation  using  the 
following  link  http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=SurveySIPSCP.  The 
consultation closes on September 23, 2007. 

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2. 

KEY CHALLENGES 

Future policy will aim to achieve economic growth, whilst respecting environmental carrying 
capacity,  find  ways  to  minimise  environmental  damage  and  make  a  sustainable  use  of  the 
earth's resources. Therefore, a shift in incentives is needed for both producers and consumers, 
so that firms and individuals acting in their own interest take society towards sustainability. In 
this way the EU’s goals of both continuous prosperity and environmental sustainability can be 
achieved in synergy. 

Policy intends to focus on the following five key challenges: 

2.1. 

Leveraging  Innovation:  stimulating  the  development  and  commercialisation  of 
low carbon, energy and resource efficient technologies, products and services 

It  is  clear  that  technology  will  need  to  play  a  central  role  in  addressing  sustainability 
challenges  through  being  successfully  translated  into  innovative  products  and  services  and 
could  also  provide  significant  competitive  strengths.  This  requires  an  integrated  policy 
approach that combines a number of tools, such as legal framework conditions, investment in 
research  and  development,  intellectual  property  rights  (IPR),  technology  transfer  and 
networking between actors in industry, research, finance, etc. 

Therefore, it will be necessary to reflect on how to better use the Communities’ instruments, 
notably  the  Competitiveness  and  Innovation  Programme,  the  Framework  Programme  for 
Research  and  structural  funds,  to  provide  a  more  targeted  stimulus  to  finance  technology 
development, innovation and encourage the uptake of environmentally friendlier products and 
services. 

2.2. 

Better  Products:  creating  a  dynamic  internal  market  for  better  performing 
products 

More  than  80%  of  all  product-related  environmental  impacts  are  determined  by  product 
design.  The  Commission  intends  to  develop  a  strong  product  policy  and  remove  remaining 
obstacles in the internal market. Promoting "eco-design" for the most significant products will 
be the cornerstone of this approach96. 

Dynamic  incentives  for  producers  are  needed  to  improve  the  environmental  performance  of 
all  types  of  products.  For  example  by  fostering  lead  markets  and  creating  incentives  for 
frontrunners.  This  may  require  appropriate  financing  instruments  and  the  development  of 
market-based  instruments  that  encourage  the  uptake  of  environmentally  friendlier  products 
and  services.  Environmental  management  schemes  and  energy  services  for  firms  and 
households will also be promoted, supported by a simple, user-friendly framework. 

It  is  paramount  that  policies  which  influence  the  performance  of  products  are  coherent  and 
reinforce  each  other,  for 
improvement  of  products’  environmental 
performance. The key challenges of climate change, energy and resource efficiency or carbon 
profile of products should play an important role in assessing the environmental performance 
of products. 

the  continuous 

2.3. 

Leaner and Cleaner Production: increasing the efficiency of EU production 

Leaner or more efficient production processes reduce resources intensity, which contributes to 
cost competitiveness of companies. The future policy will need to assist producers to improve 
resource  efficiency,  promote  the  uptake  and  development  of  new  eco-efficient  technologies 
along the whole supply chain and close the "resource loop" from manufacture to the use phase 

96 

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and final disposal, through the utilisation of recycled, reused and remanufactured goods and 
materials and through waste prevention. Also, Information and communication technologies 
are enablers to improve energy efficiency in various sectors. 

2.4. 

Smarter Consumption: changing behaviours 

Households  in  Europe  are  major  contributors  to  environmental  problems  such  as  climate 
change,  air  pollution,  water  pollution,  land  use  and  waste  generation97
  –  and  household 
expenditures are projected to double across the EU-25 by 2030. Although the environmental 
performance  of  many  individual  products  is  improving,  increases  in  total  consumption  and 
production  often  outstrip  the  progress  made.  Consumers  therefore  play  a  crucial  role  in 
moving  towards  more  sustainable  consumption  patterns  by  the  choices  and  decisions  they 
make.  Accordingly,  an  ambitious  mix  of  policy  measures  can  enable  consumers  to  make 
better choices in consuming, owning, and using more sustainable products and services. 

2.5. 

Global  markets:  exploiting  first  mover  advantages  and  levelling  the  playing 
field for industry worldwide 

Faster uptake of environmental technologies and standards for more sustainable technologies, 
products  and  services  in  the  EU  can  pave  the  way  for  the  development  of  international 
standards which better integrate environmental aspects, taking a life-cycle approach. This can 
give  European  companies  “first-mover”  advantages  in  global  competition.  International 
sectoral  approaches  for  energy  intensive  industries  offer  a  significant  potential  to  set  global 
benchmarks for energy and material efficiency and foster technologies that are meeting these 
benchmarks. Such sectoral approaches, which must comply with competition rules and meet 
leading  European 
environmental  objectives,  should  help  create  export  markets  for 
technologies,  services  and  products.  They  can  be  complemented  through  international  or 
bilateral  agreements  on  the  diffusion  and  use  of  environmental  technologies,  by  facilitating 
the use of the Kyoto flexible instruments and through trade and development policy. 

3. 

ENVISAGED APPROACH TO FACE THE KEY CHALLENGES 

The  above  key  challenges  cut  across  a  wide  range  of  policy  areas  and  therefore  have 
economic, social and environmental aspects.  

Ambitious but well-focused future policies which clearly prioritise key areas are needed. The 
Plans should help shift unsustainable consumption and production patterns and use industrial 
policy as an efficient tool to create market conditions conducive to low carbon and sustainable 
technologies,  products  and  services.  In  particular,  the  scope  could  concentrate  on  the 
following four elements: 

3.1. 

Focusing on key environmental issues 

Global  climate  change  and  the  sustainable  use of  natural  resources  are  presently  among  the 
greatest environmental concerns. To be most effective, the Commission therefore intends to 
focus on: 

•  Climate change and a low-carbon economy; 

•  Sustainable and efficient use of natural resources, energy and materials; and 

97 

Organisation for Economic Co-operation and Development (OECD), 2002a 

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•  The  SCP  Action  Plan  could  also  address  the  further  phasing  out  hazardous 

substances and endangered materials98

 from production processes and products. 

The two Action Plans will fully take into account competitiveness, energy, environmental and 
social aspects. 

3.2. 

A product-based approach 

Recent  Commission  research  confirms  that  a  large  portion  of  environmental  impacts  in  the 
EU  are  caused  by  consumer  products  throughout  their  life-cycle,  from  extraction  to 
production,  transportation,  consumption  and  final  disposal.  A  strong  product-focus  is 
therefore  needed,  aiming  at  those  product  types  where  the  potential  for  improving  resource 
and energy efficiency is greatest, where the EU industry could lead the markets worldwide or 
whose  consumption  causes  most  environmental  damage.  Such  a  product-based  approach 
would  be  efficient  as  it  allows  addressing  competitiveness  issues  and  key  environmental 
impacts  of  selected  products  where  it  is  most  appropriate  in  their  life-cycles.  Thus,  it  can 
create  a  dynamic  process  of  continuous  improvement  in  the  environmental  performance  of 
products. 

3.3. 

Building on existing policy instruments 

The approach would build on several existing EU policies related to products and resources, 
such  as  the  Industrial  Policy  (as  reviewed  in  July  2007),  Integrated  Product  Policy99,  the 
ecodesign of Energy-Using Products100, the Sustainable Use of Natural Resources strategy101, 
the Energy Policy for Europe102, Cohesion policy and other product legislation and labelling 
schemes.  

While  all  these  wide  ranging  policy  instruments  already  exist  in  different  policy  areas  to 
address  unsustainable  consumption  and  production  the  aim  is  to  focus  on  a  selected  set  of 
existing  policy  instruments  and  choose  those  which  are  most  appropriate  to  reinforce  each 
other and ensure coherence. In particular, these instruments should: 

–  reinforce the EU’s competitiveness; 

–  have a clear sustainability focus; and 

–  be the most suited to address the key challenges. 

A selected number of new instruments might be considered for achieving the objectives and 
reinforcing the impact of existing policy instruments. 

3.4. 

A contribution to policy coherence 

The  approach  will  complement  policies  that  already  tackle  unsustainable  consumption  or 
production.  It  will  focus  on  strengthening  existing  and  developing  new  policy  instruments, 
identifying gaps, ensuring policy coherence and avoiding overlaps. It will create a framework 
for  better  knowledge  and  information  on  products,  so  as  to  identify  policy  priorities  and 
suitable actions. 

98 
99 
100 
101 
102 

For example overharvested tropical timber. 
http://eur-lex.europa.eu/LexUriServ/site/en/com/2003/com2003_0302en01.pdf 
http://ec.europa.eu/enterprise/eco_design/index_en.htm 
http://ec.europa.eu/environment/natres/pdf/com_natres_en.pdf 
http://ec.europa.eu/energy/energy_policy/documents_en.htm 

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4. 

MAIN ACTIONS UNDER CONSIDERATION 

This section provides an overview of the policies and instruments being considered: 

4.1. 

Leveraging Innovation 

The improvement of the conditions for innovation is a priority in the Lisbon agenda. 

The  new  European  Institute  for  Technology,  and  instruments  like  the  Competitiveness  and 
innovation  programme  (with  funding  of  430  million  available  for  eco-innovation)  could 
provide  further  financial  input  to  leverage  innovation.  These  instruments  should  be  further 
focussed  onto  those  few  areas  where  the  EU,  compared  to  its  competitors  could  make  a 
difference by providing technologies and the type of products needed by carbon-constrained 
economies (low energy housing, efficient boilers and motors for industry, renewable energy, 
renewable raw materials, low emissions cars, etc). 

Investment  in  research  through  funding  programmes  like  the  Framework  programme  for 
research,  (FP7),  the  structural  funds  and  policy  initiatives  like  the  Strategic  Energy 
Technology plan (SET) and the Environmental Technologies Action Plan (ETAP) should be 
used also in support of sustainable industrial development. 

Joint  Technology  Initiatives  (combining  EU  and  industry  funds)  and  Article  169  measures 
(for pooling national research funds) such as the Euro Stars initiative, which seeks to support 
research  is  small  and  medium  sized  companies,  were  identified  as  important  tools  for 
mobilising private and public funds. 

4.1.1.  Lead Market Initiative 

The “lead markets concept” is about spurring the growth of markets for innovative products 
and services by creating conducive market conditions. The lead market concept has to align 
with  potential  European  industrial  strengths  where  the  EU  may  be  positioned  to  lead 
worldwide markets and increase industrial competitiveness. 
The  Commission  has  announced103  that  it  will  table  in  December  2007  a  Lead  Market 
Initiative. The initiative will tailor policy instruments to a small number of defined areas with 
a lead market potential. 

The measures could be designed to accelerate deployment, leading to market acceptability of 
the technology and rapid economies of scale. The selected areas will contribute to broad EU 
policy  objectives,  such  as  environment  protection,  health  or  climate  change  and  resource 
efficiency. 

4.1.2.  Networking of innovation stakeholders and closer cooperation between research and 

industry 

Supporting networking among innovation actors, including public private partnerships, is part 
of the innovation policy tools. Cooperation among clusters is particularly addressed by the EU 
helping enterprises share knowledge and access knowledge intensive services. 

Only  the  successful  translation  of  new  technologies  and  research  results  into  innovative 
products  and  services  can  render  the  desired  return  on  the  research  investments,  be  they  of 

103 

‘Putting knowledge into practice: A broad-based innovation strategy for the EU’ adopted on 13.09.2006 
(COM(2006)502) 

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economic, societal or environmental nature. To spur this, the conditions for more and closer 
cooperation between research, higher education and business are crucial.104

4.2. 

Better Products: creating a strong EU market for sustainable products 

Measures  for  improving  the  environmental  performance  of  products  should  include  an 
ambitious and more dynamic framework for benchmarking and establishing requirements for 
products. It is important that policies enable all producers, including small and medium sized 
enterprises, to benefit. They should also make it easier for consumers to identify the products 
with the best environmental performance in the marketplace and increase the demand for such 
products.  In  this  process,  other  aspects  such  as  safety  performance  of  products  will  be 
considered as appropriate with regard to their contribution to sustainability. 

To this end, the following actions could be considered: 

4.2.1.  Dynamic Performance Requirements 

Product  policy  could  be  better  used  as  a  competitiveness  and  sustainability  tool.  Products 
entering  the  Internal  Market  could  be  subject  to  demanding  but  realistic  requirements.  This 
may require a more strategic approach. 

Advanced performance benchmarks (describing  the best performing products in the market) 
could  be  coupled  with  minimum  requirements  already  foreseen  in  Community  legislation 
(notably in the Eco-design of energy using products Directive) and market incentives so as to 
reward  frontrunners  and  drive  performance  upwards.  This  approach  would  be  dynamic  and 
predictable, driving performance upwards. 

An  essential  incentive  could  be  to  enhance  product  labelling,  by  giving  information  to 
consumers on the performance of the product, so as to facilitate a shift of demand towards the 
most  sustainable  products.  Categorization  of  environmental  performance  and  labelling 
requirements  can  be  established  for  each  product  group  in  the  different  implementing 
measures being developed within the "Eco-design of energy using products" Directive105. A 
similar approach could be considered for non-energy using products. 

Incentives could be of economic nature, such as taxation policy, or subsidies for consumers 
buying  better  performing  products  from  a  sustainability  point  of  view.  Public  procurement, 
which is an instrument that could be geared towards purchasing the most performing products 
and  innovative  services,  could  accelerate  market  development  for  the  highest  performing 
products.  For  this  to  happen,  common  priorities  and  approaches  for  taxation  and  public 
procurement  might  be  developed  and  agreed  between  Member  States,  through  increased 
cooperation  within  the  existing  networks.  Moreover,  dialogue  between  users,  industry  and 
procurers should be encouraged to increase the awareness of procurers, notably local on the 
existence of the most innovative products106. 

EU  standards  should  also  be  taken  to  the  international  level.  This  should  build  on  the 
advantages Europe has in terms of its regulatory influence. There are several examples of EU 

104 

See  the  Communication  from  the  Commission  on  ‘Delivering  on  the  Modernisation  Agenda  for 
Universities: 

Education, Research, Innovation’ (COM(2006)0208) ass well as the Communication from the Commission on 
‘Improving knowledge transfer between research institutions and industry across Europe: embracing open 
innovation’ (COM(2007)182). 
105 
2005/32/EC 
106 
see  COMMISSION  STAFF  WORKING  DOCUMENT  Procurement:  “Guide  on  dealing  with 
innovative solutions in public procurement.”; SEC (2007) 280 

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environmental  regulation  put  in  place  in  other  parts  of  the  world.  This  can  give  European 
companies a first mover advantage in global competition. 

The  reinforcement  of  market  surveillance  should  also  be  considered  as  a  way  to  ensure  not 
only  a  level  playing  field  within  the  EU,  but  also  between  imported  and  domestically 
manufactured products. 

4.2.2.  Environmental product declarations, sustainability labels and data collection 

Further developing instruments with the view of informing both producers and consumers on 
the environmental performance of products could be considered. 

It  is  envisaged  to  integrate  and  expand  the  existing  European  Platform  for  Life-Cycle 
Assessment into a Data Centre for the environmental performance of products, technologies 
and services. This Data Centre would pool the relevant knowledge on the best performance 
products on the market and the environmental impacts of products in general. 

More  standardized  European  Environment  Product  Declarations  would  have  multiple 
benefits.  In  addition  to  having  direct  consumer  benefits,  manufacturers  could  sell  their 
products more easily to other producers on the EU market and the purchases would not have 
to  track  the  environmental  performance  of  product  on  a  case  by  case  basis.  A  more  robust 
European  system  of  product  declarations  could  also  prevent  false  claims  and  control 
efficiently self-certified declarations. 

European  product  labelling  rules  could  be  streamlined  and  reinforced  with  the  objective  to 
improve  the  synergies  and  coherence  between  labelling  schemes.  This  analysis  will  look  at 
the existing labelling schemes such as energy labelling and eco-labels as well as possible new 
labelling such as carbon labelling and sustainability labelling for key raw materials (e.g. fish). 
The outcome of the ongoing revision of the Energy Labelling Directive 92/75/EEC could be 
considered  in  this  context.  The  objective  should  be  to  inform  consumers  of  the  best 
performing  products,  thereby  rewarding  producers  of  the  best  performing  products  in  the 
marketplace. 

It  will  also  be  examined  whether  additional  actions  are  needed  to  limit  further  false 
environmental claims. 

Tackling the international impacts of unsustainable production could include options such as 
extending  the  application  of  the  Forest  Law  Enforcement,  Governance  and  Trade  (FLEGT) 
model  to  other  products,  or  conceiving  similar  approaches.  This  could  improve  the 
environmental sustainability of the commodities production and trading process and enhance 
access to technology in developing economies, especially for the poorest countries. 

4.2.3.  Enhanced use of eco-design instruments at EU level 

A  range  of  EU  legislation  on  the  environmental  performance  of  products  and  eco-design 
requirements is already in place. The future policy could consider the need for an enhanced 
use of the EU's eco-design policy instruments, including broadening their scope, in order to 
ensure  coherence  and  reinforce  synergies  with  existing  legislation,  which  would  reduce  the 
administrative burden for industry. The Action Plans could therefore contain an assessment of 
the need for and content of a new policy for the eco-design of non energy using products. 

4.2.4. 

Standardisation 

The  future  policy  could  assess  possibilities  for  developing  new  standards  on  resource 
efficiency  and  will  ask  standardisation  bodies  to  address  the  environmental  dimension  of 
European  standards,  to  make  best  use  of  tools  for  standardisation  and  to  report  on  progress 
('greening of standards'). It would be necessary to mobilise funding for this. 

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4.3. 

Leaner and Cleaner Production: increasing the efficiency of EU production 

Actions  to  support  leaner  production  at  EU  level  should  promote  more  efficient  and 
environmentally  sound  production  and  cleaner  and  greener  technologies.  They  should  also 
aim  at  improving  the  provision  of  information  about  the  environmental  impacts  of  the 
components  or  materials  used  in  production  and  at  providing  incentives  to  promote  more 
efficient  production.  All  manufacturers  should  comply  with  the  production  requirements, 
irrespective of their location. 

The following actions could be considered: 

4.3.1.  Resource and material efficiency targets 

Progress towards more sustainable consumption and production needs to be measured against 
the  right  indicators.  The  Commission  has  been  and  will  be  working  on  developing  these 
indicators. 

Resource productivity (€/kg) of the EU-15 econo my has developed favourably over the past 
decades. In the period 1980-2000 it increased by 52%, which is 2.2% per year. On the basis of 
this  trend,  and  assuming  even  a  modest  further  increase  in  resource  productivity,  it  is 
reasonable to expect a rate of 3% resource productivity improvements annually for the period 
2000-2030.  Assuming  an  average  economic growth of 3% per  year as well, resource  use in 
absolute quantities will be more or less stable. It could be considered to set an overall target of 
around 3% annual resource productivity gains for the EU to underpin this development. 

4.3.2.  Reinforcement of eco-innovation and environmental technologies 

The future policy could help maximise the impact of the Commission's support to promoting 
environmental  technologies  and  eco-innovation.  This  could  be  done  through  the  EU 
Environmental Technologies Action Plan (ETAP) and with the support of funding of the EU 
Competitiveness  and  Innovation  Programme  by  doing  more  to  increase  demand  in 
particularly  promising  areas  such  as  construction,  food  and  drink,  transport,  recycling,  and 
waste water.107

Further  initiatives  could  include  a  technology  verification  scheme,  providing  reliable 
information  on  the  environmental  performance  of  new  technologies,  which  will  further 
market confidence in environmental technologies. 

Consideration should be given to further develop ETAP to give guidance on decision making 
regarding the financing of market introduction of eco-technology. 

There  is  also  room  to  examine  in  more  detail  how  environmental  regulation  could  promote 
even more the uptake and the development eco-innovation and eco-technologies, for instance 
by  developing  synergies  between  reviews  of  relevant  environmental  regulation  and  ETAP 
objectives; specific measures will be proposed in this regard. 

4.3.3. 

Setting targets for eco-innovation and the uptake on environmental technologies 

The  work  underway  on  developing  indicators  for  eco-innovation  can  provide  the  basis  for 
setting measurable targets for eco-innovation and the uptake of environmental technologies in 
the  EU.  Indicators  could  be  based  on  a  number  of  aspects  such  as:  uptake  levels,  public 
procurement  levels,  investments  and  financing,  patent  submissions,  selected  company 

107 

EN 

For 
http://ec.europa.eu/environment/etap/pdfs/comm_pdf_com_2007_0162_f_en_acte.pdf 

information 

background 

ETAP 

more 

Report 

see 

the 

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performance,  etc.  The  setting  of  targets  could further  enhance,  in  the  longer  term,  the  EU’s 
share of eco-friendly products and technologies in the global market. 

4.3.4.  Review of the legislation on eco-management and audit schemes/pollution from big 

industrial installation 

The Eco-Management and Audit Scheme (EMAS) Regulation is a powerful tool for managing 
and reducing the environmental impacts of industrial plants and institutions. This instrument 
is  currently  under  review  and  could  be  further  reinforced  to  increase  and  strengthen  their 
focus on the energy and resource efficiency and on the reduction of the use of hazardous and 
endangered material and their discharges. 

It will also be crucial that the Directive on Integrated Pollution Prevention and Control (IPPC) 
ensures the uptake of Best Available Techniques (BAT) in a more homogeneous way.  

Furthermore,  for  innovative  techniques,  beyond  BAT,  incentives  both  financially  and 
regulatory,  should  be  provided.  Market-based  instruments  could  also  play  a  role  in  this 
context. 

4.3.5. 

Small and medium size enterprises (SMEs) 

Specific actions should target the particular situation of small and medium sized enterprises, 
which are often not sufficiently aware of new energy efficient and environmentally friendly 
solutions  or  do  not  always  have  the  financial  resources  required  for  acquiring  new 
technologies.  At  the  same  time  SMEs  are  an  important  source  of  eco-innovation  and  new 
energy and resource saving technologies and need support in bringing their innovations to the 
market. 

In  the  context  of  the  future  policy,  it  could  be  envisaged  to  enhance  existing  policy 
instruments  to  provide  market  incentives  for  SMEs  to  improve  environmental  performance 
and  energy  efficiency.  The  Commission  already  provides  specific  financial  support  for 
research  and  innovation  in  SMEs  (FP7,  CIP,  structural  funds),  in  particular  the  Euro-info 
Centres and Innovation Relay Centres. It could also be envisaged to fund a new programme 
providing  free  advice  to  SMEs  to  help  them  to  sustain  their  competitiveness,  become  more 
resource and energy efficient and generate less environmental impacts. This could be done by 
making  available  to  SMEs  a  free  helpline,  organising  on-site  visits  by  expert  advisors,  and 
building  on  successful  models  in  Member  States.  A  specific  environmental  compliance 
assistance programme for SMEs is also envisaged. 

4.4. 

Smarter Consumption: Changing behaviour 

EU  actions  for  promoting  smarter  and  more  sustainable  consumption  could  introduce  and 
reinforce measures to internalise environmental cost into product prices, to improve consumer 
access to information on the environmental performance of products, and to stimulate markets 
for best performing products and the sustainable use of products. The following actions could 
be envisaged: 

4.4.1.  Environmental Performance Agreements with retailers 

The policies and practices of large retailers in the EU could become an important element in 
moving towards more sustainable consumption. Sales of greener products very much depend 
on  their  availability  and  promotion  at  retail  outlets.  Large  retailers  can  also  influence  the 
environmental performance of their supply chains, passing on incentives for green production 
and product design. 

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Therefore, in addition to existing initiatives108
 it could be explored with large retailers how to 
promote  and  purchase  better  products  and  how  to  green  supply  chains  with  a  view  to 
establishing EU-wide guidelines to assess the environmental performance of products. 

In  order  to  facilitate  these  developments,  an  EU  logo  of  “environmental  commitment”  for 
retailers could  be created. It would reward companies or/and retailers for demonstrating the 
use  of  energy  and  material  efficient  products  or  services  or  selling  a  given  share  of  highly 
performing  products.  Therefore,  the  logo  would  become  an  additional  incentive  for  the 
production and use of environmentally better products, including for SMEs. 

4.4.2.  Enhanced use of market-based instruments 

As price is one of the main determinants of purchasing choices, market-based instruments can 
help get prices right and internalise environmental costs. EU proposals to link purchase taxes 
on cars to their climate impact are a step in this direction. Market-based instruments could be 
used  to  address  the  consumption  of  natural  resources  and  the  production  of  waste.  It  is 
considered to facilitate further discussion and implementation by coordination of experiences 
in Member States in a Forum on Market-based Instruments.  

At the moment, 47,7% of EU government tax revenue comes from labour and only 7,5% from 
taxes on resource use and pollution.109
 Therefore, future policy could set out the potential for 
further  fiscal  reform,  particularly  of  consumption  taxes  based  on  the  recent  Green  Paper  on 
the Use of Market-Based Instruments in Environment Policy.  

4.4.3.  Differentiation of value-added tax rates 

The  Commission  will  examine  the  opportunity  and  efficiency  of  differentiating  VAT  rates 
according to the environmental performance of products. 

4.4.4.  Revision of the EU Eco-label Regulation 

Eco-label could further contribute to shift demand to better performing products The revision 
of the EU Eco-label Regulation will extend the scheme to cover all important product groups, 
increase uptake by producers, and link it to other policy instruments. The key elements of the 
revision  are:  a  mechanism  for  selecting  priority  product  groups,  more  efficient  process  for 
developing Eco-label criteria, a flexible decision-making process involving stakeholders and 
simplification  of  the  operation  of  the  scheme.  It  will  be  analysed  how  the  Eco-label 
Regulation  links  with  other  EU  eco-design  policies  and  how  synergies  could  be  further 
reinforced. 

4.4.5.  Misleading advertising/false environmental claims 

The  provision  of  clear,  understandable  and  correct  information  on  the  environmental 
performance of products should stimulate public and private purchases of greener products. In 
this  context,  there  is  a  need  to  further  protect  consumers  against  misleading  advertising 
practices.  The  Directive  2005/29/EC  on  Unfair  Commercial  Practices110,  applicable  as  of 
December 2007 aims to protect consumers against a broad range of misleading practices and 
claims.  It  could  be  explored  how  the  application  of  this  legislation  can  be  supported  by 
supporting  environmental  product  data  in  order  to  determine  the  existence  of  unfair 
commercial practices.  

108 
109 
110 

Such as the Energy Labelling Directive 92/75/EEC, eco-label, or other voluntary initiatives 
Of which only approximately 0.3% come from pollution taxes. 
OJ L 149, 11/06/2005, replacing with respect to business-consumer relations an earlier Directive from 
1984 on 

misleading advertising. 

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4.4.6.  Green Procurement 

In  2007,  the  Commission  will  propose  further  guidance  to  strengthen  Green  Public 
Procurement  (GPP)  in  the  EU.  Public  procurement  could  be  used  to  accelerate  the  market 
uptake of the most performing products. The future policy could explore whether it would be 
more effective to focus on the most impacting products belonging to lead markets or whether 
it  is  better  to  raise  the  proportion  of  “green”  products  overall  in  public  purchases.  Another 
issue  is  whether  such  priorities  should  be  compulsory  for  public  procurement  or  remain 
indicative. 

Additionally, initiatives to stimulate large private sector purchasers to green their procurement 
could also be considered. 

4.4.7.  Consumer information/ education and /training campaigns 

In  order  to  develop  smarter  consumption,  raising  awareness,  education  and  training  of 
consumers  is  important  for  them  to  be  able  to  make  sustainable  consumer  choices.  In 
cooperation  with  consumer  organisations  and  Member  States,  future  policy  could  explore 
further appropriate ways, for example through information campaigns, or through education 
and training initiatives, to promote sustainable lifestyle choices and to ensure consumers are 
adequately  informed  about  the  products  with  the  best  environmental  performance.  In  this 
context,  it  could  be  explored,  for  instance,  to  further  develop  'on  line  consumer  education 
tools' focusing on sustainable consumption. 

4.5. 

Global  markets:  exploiting  first  mover  advantages  and  levelling  the  playing 
field worldwide for sustainable technologies and products 

4.5.1.  Adapt EU policies to fostering energy and resource efficiency 

There is little doubt that over time the world will have to evolve towards a low carbon and 
resource-efficient  economy.  The  momentum  created  by  adopting  climate  change  policies 
within  the  EU  and  the  renewed  Sustainable  Development  Strategy  should  be  used  to  drive 
efforts to achieving similar commitments internationally. This is a prerequisite for succeeding 
in both, containing climate change, a sustainable use of natural resources and preserving the 
EU  industrial  competitiveness.  It  requires  coherence  across  policy  areas  and  in  particular  a 
more pro-active use of the EUs trade and development policies.  

Several  studies  are  showing  that  eco-technology  is  a  fast-growing  market.  European 
companies have so far succeeded in taking advantage of these opportunities. 

In  the  future,  low  carbon  and  resource-efficient  technologies,  products  and  services  will 
dominate the markets. Internally, a faster development and uptake of ambitious standards in 
the EU can pave the way to the adoption of international standards, notably if the standards 
are developed with international participation and can in turn help open foreign markets for 
the benefit of leading European companies as well as the global environment.  

Trade policy can also contribute to this process, by working towards the elimination of trade 
tariffs  for  low  carbon  and  resource-efficient  products  and  through  the  creation  of  a  global 
trading  scheme  for  carbon.  An  increased  industrial  dialogue  with  major  emitting  countries 
could  also  facilitate  this  task.  The  enforcement  of  the  compliance  of  imports  with  claimed 
environmental requirements and labels need also be improved. 

EU development policy can proactively promote the uptake of low carbon, resource efficient 
technologies,  processes  and  products,  in  particular  by  fostering  investment  in  clean  energy 
and  resource  technologies.  This  process  will  need  to  be  accompanied  with  decisions  on  the 

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issue  of  intellectual  property  rights  in  technology  diffusion  to  safeguard  the  protection  of 
rights belonging to EU companies. 

4.5.2.  Global Sectoral Approaches 

The impetus in adopting climate change and resource efficient policies within the EU should 
be matched by an equal deployment of efforts to achieve similar commitments internationally, 
which is a prerequisite for succeeding in both containing climate change, a sustainable use of 
natural resources and preserving our industrial competitiveness. 

Different industrial sectors have started working on global sectoral approaches, with a view to 
agreeing on and committing to specific targets (energy efficiency of the process of production 
or CO2 content of the product). Sectoral approaches could constitute an effective tool both to 
reduce  the  environmental  impact  of  industry  and  to  create  a  level  playing  field  for  industry 
sectors  internationally,  thus  addressing  the  current  competitive  disadvantage  for  EU  energy 
intensive industries exposed to international competition. At the same time, this provides an 
effective way to engage developing countries in action that will help mitigate climate change 
but without placing a constraint on growth.  

Public  authorities  have  to  play  a  role  in  creating  an  appropriate  institutional  and  legal 
framework to underpin these approaches, in particular by providing a credible monitoring and 
enforcement system and ensuring that targets defined by industry are sufficiently ambitious. 
The  compatibility  of  global  sectoral  approaches  and  the  EU  Emissions  Trading  Scheme 
should be ensured. 

The European Union could negotiate bilateral industrial agreements between governments to 
provide  industry  sectors  with  such  framework.  The  launching  of  a  pilot  project  in  2008, 
working  with  advanced  sectors  exposed  to  international  competition  and  the  main  relevant 
international partners, is being considered. 

4.5.3. 

Strengthened international cooperation on sustainable consumption and production 

International  cooperation  on  sustainable  consumption  and  production,  particularly  on  work 
and initiatives led by the United Nations under the Marrakech process, and international co-
operation on the sustainable use of natural resources could be further strengthened. 

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Annex III 

to the 

Impact Assessment on the SCP and SIP Action Plan 

Description of current polices 

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A number of policies are already in place aiming to address negative environmental impacts 
resulting  from  production  and  consumption.  This  section  presents  the  major  ones  and 
illustrates how they intend to address the market failures described above. It should be noted 
that the policies listed below are not an exhaustive list and that there are other policies that 
can  be  related  to  the  market  failures  described  above.  These  other  policies  are  however  not 
relevant as far as the scope of the present initiative is concerned.  

Integrated Product Policy 

IPP advocates life-cycle thinking, in order to take appropriate action at the problem stages in 
the life-cycle. The objective is to avoid shunting the environmental impact from one phase of 
the life-cycle to another.  

It  promotes  the  application  of  Life-Cycle  thinking  through  actions  such  as  Environmental 
Management  Systems  (like  the  Eco-Management  and  Audit  Scheme  –  EMAS)  and  Product 
design  obligations  (such  as  those  requested  by  the  Eco-design  of  Energy  Using  Products  – 
EUP).  On  the  public  consumer  side,  the  IPP  Communication  underlines  the  importance  of 
Green Public Procurement, Greener Corporate Purchasing and Environmental labelling (like 
eco-label or the energy efficiency label).  

Eco-Management and Audit Scheme (EMAS) 

EMAS  certifies  through  an  independent  verification  mechanism  that  a  firm  complies  with 
environmental legislation and has an environmental management system. It is a voluntary EU 
instrument which acknowledges organisations that improve their environmental performance 
on  a  continuous  basis.  EMAS  registered  organisations  are  recognised  by  the  EMAS  logo, 
which  guarantees  the  reliability  of  the  information  provided.  EMAS  helps  to  minimise 
information costs for purchasers who value environmentally sound production techniques by 
providing them with the possibility to rely on the logo when making a purchasing decision.  

Energy-using Products Directive (EuP)  

Directive  2005/32/EC  on  the  eco-design  of  Energy-using  Products  (EuP)  covers  products 
such  as  electrical  and  electronic  devices  or  heating  equipment.  The  Directive  does  not 
introduce  directly  binding  requirements  for  specific  products,  but  defines  conditions  and 
criteria  for  setting,  through  subsequent  implementing  measures,  minimum  requirements 
regarding environmentally relevant product characteristics (such as energy consumption) and 
allows them to be improved quickly and efficiently. The minimum requirements are set such 
that the combined purchase and use costs are minimised. A key element is that the Directive 
provides coherent EU-wide  rules  for eco-design and  ensures that disparities  among  national 
regulations do not become obstacles to intra-EU and external trade. 

Taking into account the exclusion of the transport sector, the directive potentially covers 68% 
of total energy use in Europe. Currently implementing measures are under preparation for 20 
products  in  heating  and  water  heating  equipment,  electric  motor  systems,  lighting  in  the 
domestic and tertiary sectors, domestic appliances, office equipment in both the domestic and 
tertiary  sectors,  consumer  electronics  and  HVAC  (heating  ventilating  air  conditioning) 
systems.  

Once  the  implementing  measures  of  EuP  are  introduced  information  asymmetries  and 
bounded  rationality  should  no  longer  pose  problems  for  energy  using  products,  since  the 
consumer will buy those products that have the lowest life cycle cost whether he is informed 
or not. Principal-agent problems will be solved for energy using products since agents do not 
have the possibility to buy products which are not in the interest of the principal. Furthermore, 

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the minimum requirements will limit negative externalities caused by energy using products 
to the extent that they are covered by the standards.  

The  minimum  requirements  of  the  EuP  directive  will  limit  the  emissions  of  significant 
environmentally  harmful  impacts.  It  is  expected  to  save  200  mio  tonne  of  CO2  per  year  by 
2020 which is approximately 5% of current total emissions. 

Green Public Procurement 

In  terms  of  GPP,  the  Integrated  Product  Policy  initiated  several  actions  to  stimulate  it:  1. 
Determination  of  the  extent  of  greener  public  procurement  in  the  EU;  2.  Encouragement  of 
Member  States  to  develop  by  the  end  of  2006  publicly  available  action  plans  for  greening 
their public procurement (National Action Plans); 3. Elaboration of information measures for 
public  authorities-  a  practical  handbook  for  public  authorities  (Handbook  on  Green  Public 
Procurement), a Product Group Database , a GPP website.  

The  Presidency  Conclusions  of  the  European  Council  (7775/1/06  REV  1,  March  2006) 
indicated  that  Member  States  decided  to  review  specific  actions  to  bring  about  more 
sustainable  consumption  and  production  patterns  at  EU  and  global  level.  EU  governments 
said  this  could  be  achieved  by  pursuing  a  variety  of  actions  –  from  fostering  green  public 
procurement  to  promoting  environmental  criteria  and  performance  targets.  Moreover,  the 
Renewed EU Sustainable Development Strategy (SDS) (10117/06 June 2006) indicated that 
the  EU  Member  States  decided  to  aim  at  achieving  by  2010  an  EU  average  level  of  Green 
Public  Procurement  (GPP)  equal  to  that  currently  achieved  by  the  best  performing  Member 
States.  Green  public  procurement  policies  contribute  to  limiting  negative  environmental 
impacts. The EU GPP in addition aims at protecting a distortion of the internal market.  

EU Energy Star Programme 

The  recently  adopted  Council  Decision  on  Energy  Star  for  office  equipment  [Council 
Decision 2006/1005/EC] requires that EU institutions and central Member State government 
authorities  use  energy  efficiency  criteria  no  less  demanding  than  those  defined  in  the 
ENERGY  STAR  programme  when  purchasing  office  equipment.  The  energy  star  label  is  a 
voluntary  U.S.  label  covering  energy  using  appliances  (such  as  personal  computers  and 
printers)  as  well  as  insulation  materials111  that  promotes  energy  efficiency.  Only  those 
products that can offset higher initial purchase prices by energy savings during their expected 
life  span  are  awarded  the  label.  The  label  thus  has  the  potential  to  solve  the  information 
asymmetry regarding these products. The energy star label will be used in the EU for office 
equipment  within  the  framework  of  the  EU  ENERGY  STAR  programme  following  an 

111 

The  current  list  of  products  covered  include:  Appliances  (Battery  Chargers,  Clothes  Washers, 
Dehumidifiers, Dishwashers, Refrigerators & Freezers, Room AC, Room Air Cleaners, Water Coolers ) 
Heating  &  Cooling  (Air-source  Heat  Pumps,  Boilers,  Central  AC,  Ceiling  Fans,  Dehumidifiers, 
Furnaces,  Geothermal  Heat  Pumps,  Home  Sealing  (Insulation),  Light  Commercial,  Programmable 
Thermostats, Room AC, Ventilating Fans) Home Envelope (Home Sealing (Insulation and Air Sealing), 
Roof Products, Windows, Doors, & Skylights), Home Electronics (Battery Charging Systems, Cordless 
Phones,  Combination  Units,  Digital-to-Analog  Converter  Boxes  (DTAs),  DVD  Products,  External 
Power  Adapters,  Home  Audio,  Televisions,  VCRs),  Office  Equipment  (Computers,  Copiers  and  Fax 
Machines,  Digital  Duplicators,  Notebook  Computers/Tablet  PCs,  Mailing  Machines,  External  Power 
Adapters, Monitors, Printers, Scanners, and All-in-Ones), Lighting (Compact Fluorescent Light Bulbs 
(CFLs), Residential Light Fixtures, Ceiling Fans, Exit Signs), Commercial Food Service (Commercial 
Dishwashers, Commercial Fryers, Commercial Hot Food Holding Cabinets, Commercial Ice Machines, 
Commercial  Solid  Door  Refrigerators  &  Freezers,  Commercial  Steam  Cookers),  Other  Commercial 
Products  (Battery  Charging  Systems,  Exit  Signs,  External  Power  Adapters,  Roof  Products,  Vending 
Machines, Water Coolers) 

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Agreement  between  the  Government  of  the  US  and  the  European  Community  (EU)  to  co-
ordinate energy labelling of office equipment. It can contribute towards solving a principal-
agent problem in private enterprises and public administrations by mandating procures to buy 
office equipment with the ENERGY STAR label.  

EU Eco-Label 

The  Eco-label  identifies  overall  environmental  preference  of  a  product  or  service  within  a 
specific  product/service  category  based  on  life  cycle  considerations  (production,  use  and 
disposal). It is a voluntary scheme designed to encourage businesses to market products and 
services  that  are  more  environment  friendly  and  for  European  consumers  -  including  public 
and  private  purchasers  -  to  easily  identify  them.  Currently,  products  from  twelve  product 
categories are covered112. 

For those products that have the eco-label it contributes to solving information asymmetries 
with respect to lifecycle costs of a product. 

Energy labelling directive (ELD) 

The  Energy  Labelling  Directive  (ELD)  introduced  mandatory  labelling  for  energy  using 
household  devices  that  account  for  a  significant  proportion  of  electricity  consumption  in 
households. The label has to provide information on the consumption of energy and of other 
essential resources by using the device. 

It applies to the following types of household appliances, even where these are sold for non-
household uses: refrigerators, freezers and their combinations, washing machines, driers and 
their  combinations,  dishwashers,  ovens,  water  heaters  and  hot-water  storage  appliances, 
lighting sources and air-conditioning appliances.  

The labelling solves the information asymmetries for these products by showing the 'hidden' 
costs of use over the expected life span. With the current system, according to the producers 
34 Terrawatthours (TWh) or 7 million tons of oil equivalent (Mtoe) in primary energy savings 
for appliances have been achieved from 1995 until 2006. It is assumed that more than half is 
due to labelling, the remaining part is due to structural technical improvements113. In the case 
of washing machines, Figure XXX shows the efficiency gains observed in the last decade. 

112 

113

APPLIANCES  (washing  machines,  dishwashers,  refrigerators,  vacuum  cleaners,  TVs  AND 
ELECTRICAL  EQUIPMENT  (television  sets,  light  bulbs),  HOUSEHOLD  FURNISHINGS  (bed 
mattresses,  textiles),  COMPUTERS  (personal  computers,  portable  computers),  CLOTHING  (textiles 
for  clothes  and  accessories),  FOOTWEAR  (shoes  and  boots),  PAPER  PRODUCTS  (copying  and 
graphic  paper,  tissue  paper  products),  DO-IT-YOURSELF  (hard  floor  coverings,  indoor  paints  and 
varnishes),  LUBRICANTS  (hydraulic  oils  and  greases),  GARDENING  (potting  compost,  soil 
improvers),  CLEANING  UP  (all-purpose  cleaners,  detergents  for  dishwashers,  hand  dishwashing, 
tourist 
detergents, 
accommodation service). 
SEC(2006)1174 

laundry  detergents),  HOLIDAY  ACCOMODATION 

(campsite 

service, 

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A  study  carried  out  in  2004  analysed  the  degree  of  public  awareness  about  the  energy 
efficiency label. It showed that in Slovenia, 43 % of the surveyed public recognised the label 
for  appliances,  in  Finland,  the  appliance  labels  is  known  by  60  %,  in  Castilla  y  Leon,  the 
number of end consumers recognising energy labels 36 % and in Upper Austria, the energy 
label for buildings in known by 49 %. 

Thus, a significant fraction of the population is aware of the existence of the label and it can 
be concluded that for the products covered information asymmetry is not a serious concern. 

The  effectiveness  of  the  EELD  for  the  products  covered  is  also  acknowledged  in  the  Stern 
Report:  “The  introduction  of  an  EU  labelling  scheme  on  refrigerators  is  estimated  to  have 
delivered one-third of the 29% improvement in the energy efficiency of refrigeration products 
between  1992  and  late  1999.114
The  figure  below  shows  a  clear  and  strong  evolution  of  the 
market toward higher-efficiency products since the introduction of the EU label (contrasting 
favourably  with 
its 
announcement).” 

the  predominantly  flat  efficiency 

immediately  prior 

trends 

to 

114 

Bertoldi (2000). 

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Source: Stern report  

Environmental Technology Action Plan (ETAP) 

ETAP  is  a  European  strategy  for  eco-innovation  and  environmental  technologies.  It  is 
composed of actions around three main themes: Getting from Research to Markets; Improving 
Market Conditions; Acting globally. In terms of the first theme, actions include increased and 
more focused research, demonstration and dissemination activities within the 7th Framework 
Programme for Research, support to the activities of the Technology Platforms and the setting 
up of a verification scheme. To improve market conditions, the Commission envisages to set 
environmental performance targets for industries, mobilise funding for innovation through the 
use  of  the  Competitiveness  and  Innovation  Programme,  use  market  based  instruments  to 
promote  adoption,  “green”  public  procurement  and  foster  awareness  raising  and  training 
campaigns.  Supporting  the  adoption  of  eco-technologies  in  developing  countries  and 
promoting  foreign  investment  are  activities  envisaged  to  address  “Acting  globally”.  ETAP 
contributes towards increasing innovation for environmental technologies. 

Action Plan on Energy Efficiency 

The action plan proposes an energy efficiency strategy for the EU. It aims to realise a 20% 
saving potential in EU annual primary energy consumption (equivalent to about 390 millions 
tons  of  oil  equivalent  by  2020).  The  plan  underlines  the  importance  of  minimum  energy 
performance standards for a wide range of appliances and equipment (from household goods 
such  as  fridges  and  air  conditioners  to  industrial  pumps  and  fans),  and  for  buildings  and 
energy  services.  The  Action  Plan  also  lists  a  range  of  cost-effective  measures,  such  as  a 
coherent  use  of  taxation,  and  the  potential  use  of  tax  credits  as  incentives  for  enterprises  to 
promote  the  increased  production  of  certified  energy-efficient  appliances  and  equipment  at 
lower prices for consumers.  

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The  implementation  of  the  Energy  Efficiency  Action  Plan  adopted  in  October  2006  will 
continue  in  2008.  Notable  actions  already  adopted  in  2007  were  the  amended  Energy  Star 
Regulation115, introducing for the first time an obligation to use energy efficiency criteria at 
least  as  demanding  as  the  Energy  Star  efficiency  levels  in  public  procurement  of  office 
equipment;  and  a  Green  Paper  on  urban  mobility116,  including  a  proposal  on  financing  for 
market introduction of efficient vehicles. The 3rd internal energy market package reinforces 
the  requirements  placed  on  energy  regulators  concerning  energy  efficiency.  The  Strategic 
Energy  Technology  Plan  aims  at  accelerating  the  development  of  promising  energy 
technologies  and  creating  the  conditions  to  bring  such  technologies  to  market.  On  19 
December  2007,  the  Commission  adopted  a  proposal  for  a  Regulation  on  emission 
performance standards for new passenger cars117.  

Energy performance of buildings directive (EPBD) 

The  Directive  promotes  the  improvement  of  the  energy  performance  of  buildings.  This 
Directive lays down requirements as regards: (a) the general framework for a methodology of 
calculation of the integrated energy performance of buildings; (b) the application of minimum 
requirements  on  the  energy  performance  of  new  buildings;  (c)  the  application  of  minimum 
requirements on the energy performance of buildings bigger than 1000 square meter that are 
subject  to  major  renovation  (defined  as  implying  a  renovation  cost  higher  to  25%  of  the 
buildings’ value). 

Member  States  are  requested  to  identify  minimum  requirements  regarding  the  energy 
performance  of  buildings  in  accordance  with  a  common  methodology.  Thirty  one  standards 
have  been  issued  by  the  CEN  under  the  EBPD.  They  deal  notably  with  the  common 
methodology to calculate the energy performance of buildings but it is still up to MS to define 
parameters.  It  means  that,  even  with  a  common  methodology,  the  calculation  of  the  energy 
performance of a building does not lead to the same result in all MS.  

The EPBD solves negative externalities resulting from poor energy performance, information 
asymmetries and bounded rationality problems with respect to new buildings (and large ones 
undergoing renovation) by requiring that the minimum standards are fulfilled. 

Climate policy  

As  presented  above,  Greenhouse  gas  emissions  contribute  to  climate  change.  To  satisfy  the 
EU commitments in terms of emissions reduction (minus 8% when compared with the 1990 
emission’s  level)  within  the  framework  of  the  Kyoto  protocol,  the  Commission  decided  to 
utilise  a  Market  based  instrument:  the  Emission  Trading  Scheme  (ETS),  addressing  mainly 
CO2 emissions. It covers sources for 40% of the Greenhouse gas emissions in the EU, namely 
over  11.500  energy-intensive  installations  across  the  EU  (such  as  combustion  plants,  oil 
refineries, coke ovens, iron and steel plants and factories making cement, glass, lime, brick, 
ceramics, pulp and paper).  

For  the  post-Kyoto  period,  the  European  Union  adopted  the  ambitious  target  of  a  20% 
reduction [or 30 % if an international agreement is attained] by 2020118. To reach this target, 
among the tools proposed in the Communication “20 20 by 2020” (COM(2008) 30 Final), the 
following ones will help internalising the externalities into prices:  

115 
116 
117 
118 

Regulation No 2422/2001 on a Community energy efficiency labelling programme for office equipment 
COM (2007) 551 
COM (2007) 856 
Presidency conclusions (2007) 7224/1/07 

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(1)  the  updating  of  the  Emission  Trading  Scheme,  by  extending  the  scope  to  include  other 
Green House Gases (GHG) and all major industrial emitters; a harmonized ETS covering the 
whole  Union,  replacing  National  Allocation  Plans  by  auctioning  or  free  allocation  through 
single EU wide rules; and the use of Clean Development Mechanisms to fulfil the targets;  

(2) the emission reduction effort will also tackle sectors not covered by ETS, with a target of 
10% reduction from the 2005 levels;  

(3) the setting of modulated targets for renewable energy at Member States level, fostering the 
internal  market  for  renewable  energies,  updating  the  regulatory  framework  and  creating  a 
comprehensive system to promote sustainable biofuels production. 

In 2007, the Spring Council also proposed a mandatory EU target of 20% renewable energy 
by  2020  including  a  10  %  biofuels  target.  It  also  stressed  the  need  to  increase  energy 
efficiency  in  the  EU  so  as  to  achieve  the  objective  of  saving  20%  of  the  EU’s  energy 
consumption. 

It is expected that electricity generators will adapt their dispatch behaviour in order to reflect 
CO2 costs. According to an electricity wholesale market model for the European power sector 
developed by McKinsey, under fully competitive assumptions the resulting average increase 
of electricity prices across Europe would be in the order of 10 Euro/MWh for a 20 Euro/t CO2 
price, assuming a full pass through of the value of allowances to power prices. The 20 Euro 
CO2  price  is  consistent  with  the  spot  and  futures  (2008,  2012)  values  observed  in  EEX. 
Electricity prices in EU 27 (Table 2) have significantly risen since the first semester of 2005, 
in particular for industries consuming more than 2000 MWh/year (0.0672 €/kWh in 2005 to 
0.0822 €/kWh in 2007). 

The  ETS  is  expected  to  lead  to  higher  production  costs  for  products  that  are  very  energy 
intensive  in  their  production  because  producers  either  have  to  abate  emissions  or  acquire 
emission  permits.  It  is  likely  that  these  additional  production  costs  will  be  passed  on  to 
consumers which will lead to an internalisation of some of the negative externalities caused 
by consumption. 

In term this will make investment in environmental technologies leading to lower emissions 
more cost effective. Besides, the possibility of using Carbon Capture and Storage technology 
in new power plants and creating conditions to foster public-private partnerships in particular 
through Member States actions will be envisaged.  

Air pollution 

The Community is acting at many levels to reduce air pollution: via EC legislation, work at 
the wider  international  level in order to reduce cross-border pollution, working with sectors 
responsible for air pollution and with national and regional authorities and NGOs, and finally 
by promoting research in the area. In September 2005, the Commission adopted the Thematic 
Strategy on Air Pollution (TSAP), projecting significant reductions of the major air pollutants.  

EU-25 emissions in 2020 relative to 2000,  
after the reductions projected by the Thematic Strategy on Air Pollution: 

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100%

80%

60%

40%

20%

0%

100%

100%

100%

100%

100%

73%

40%

41%

49%

18%

SO2

NOx

PM 2.5

V OC

NH3

2000

2020

Source: SEC (2005) 1133 

The  Thematic  Strategy  has  set  the  path  and  ambition  to  improve  air  quality  by  reducing 
environmental externalities with concrete measures. A major step for local air quality is the 
Directive on Ambient Air Quality and Cleaner Air for Europe proposed by the Commission as 
COM(2005)447.  It  develops  a  long-term,  strategic  and  integrated  policy  advice  to  protect 
against significant negative effects of air pollution on human health and the environment by 
setting  clear  standards  for  local  air  quality.  Concerning  transboundary  air  pollution,  2020 
emission ceilings for each Member State are under preparation by the Commission services.  

Emission from industrial installations 

Concerning  emissions  from  industrial  installations,  the  Directive  on  industrial  emissions, 
proposed as COM(2007)843 in December 2007, is the major implementing instrument of the 
Thematic  Strategy  on  Air  Pollution.  It  includes  a  re-cast  of  the  Directive  on  Industrial 
Pollution  Prevention  and  Control  (IPPC).  The  Directive  aims  at  minimising  pollution  from 
various  industrial  sources  throughout  the  European  Union.  Operators  of  IPPC  installations 
covered by Annex I are required to obtain an authorisation (environmental permit) from the 
authorities  in  the  EU.  About  52.000  installations  are  covered.  Several  principles  drive  the 
implementation of the directive, namely:  

(1) 

an  integrated  approach,  taking  into  account  the  whole  environmental 
performance  of  the  plant,  covering  e.g.  emissions  to  air,  water  and  land, 
generation of waste, use of raw materials, energy efficiency, noise, prevention 
of accidents, and restoration of the site upon closure,  

(2)  best available techniques (BAT) as the basis for issuing the permit conditions 

including emission limit values (ELVs),  

(3) 

the  consideration  of  local  conditions  in  the  issuance  of  permits,  specifically 
taking  into  account  the  technical  characteristics  of  the  installation  concerned, 
its geographical location and the local environmental conditions, and  

(4)  public participation.  

It is estimated that the calculated health and environmental benefits from enhanced take up of 
BAT, as proposed with the Directive on industrial emissions, would greatly exceed the costs 
for installations to comply with the Directive. The benefits depend on the current performance 
of BAT-based permitting for a region or sector; for example, for Large Combustion Plants the 

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EU-wide net benefits are estimated to be € 7 - 28 billion per year, including the reduction of 
premature  deaths  by  13,000  and  125,000  life  years  gained  (excluding  any  additional 
environmental benefits such as reduced eutrophication and acidification) through preventing 
negative externalities. No significant long-term impacts on competitiveness, social impacts or 
detrimental  long-term  effects  on  economic  growth  have  been  identified  given  possible 
flexibility  in  well-founded  and  documented  cases.  Instead,  the  analysis  shows  that  a  more 
unified  application  of  BAT  would  help  reduce  distortions  of  competition  in  the  industry 
sectors covered by the Directive. 

The  Directive  on  industrial  emission  is  the  tool  to  internalise  environmental  externalities 
during  the  production  stage  by  setting  effective  requirements  based  on  best  available 
techniques, complemented by strict minimum ambition levels.  

WASTE  

The  Community  legislation  on  waste  includes  horizontal  legislation  on  waste  management, 
e.g.  the  Waste  Framework  Directive,  the  Hazardous  Waste  Directive,  as  well  as  the  Waste 
Shipment Regulation. 

These  are  complemented  by  more  detailed  legislation  concerning  waste  treatment  and 
disposal  operations,  such  as  the  Landfill  and  Incineration  Directives,  and  legislation  to 
regulate  the  management  of  specific  waste  streams  (waste  oils,  PCBs/PCTs  and  batteries). 
Recycling and recovery targets have been set for some key waste flows, i.e. packaging, end-
of-life vehicles (ELVs) and waste electrical and electronic equipment (WEEE). 

Waste  legislation  underpinned  substantial  progress  in  waste  management  over  the  last  30 
years. Heavily polluting landfills and incinerators are being cleaned up. New techniques have 
been  developed  for  the  treatment  of  hazardous  waste.  Hazardous  substances  are  being 
removed  from  vehicles  and  electrical  and  electronic  equipment.  The  levels  of  dioxins  and 
other emissions from incineration are being reduced.  

At  present  in  the  EU  municipal  waste  is  disposed  of  through  landfill  (49%),  incineration 
(18%), recycling and composting (33%). The waste management and recycling sector has a 
high growth rate and has an estimated turnover of over €100 billion for EU-25. The recycling 
industry is providing increasing amounts of resources to manufacturing industry: at least 50% 
of the paper and steel, 43% of the glass and 40% of the non-ferrous metal produced in the EU 
are currently derived from recycled materials. 

However, despite these successes, waste remains a problem. Waste volumes continue to grow. 

Legislation  is,  in  some  cases,  poorly  implemented  and  there  are  significant  differences 
between national approaches. The potential for waste prevention and recycling is not yet fully 
tapped. The emerging knowledge about the environmental impact of resource use is not yet 
fully reflected in waste policy. There is evidence that the complexity of EU and Member State 
legislation tends to discourage recycling and recovery activities.  

The  waste  legislation  internalises  environmental  externalities  occurring  during  the  final  life 
cycle stages. 

National fiscal incentives in the EU 25:  

Fiscal  incentives  vary  among  Member  States  while  residential  energy  use  in  different  EU-
countries has many characteristics in common, such as the need to heat the dwelling in winter, 
the need for hot water, the use of a number of standard appliances and the saving measures 
available in the countries. 

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The following graphs illustrate the substantial increase in national policy measures relating to 
improving energy efficiency in Households in EU 15 and EU10.  

Development of active policy measures by type in EU-15 

Source:  Ademe  –  Intelligent  Energy  Europe  (2007)  Evaluation  of  Energy  Efficiency  in  the 
EU-15: Indicators and Measures) 

Development of active policy measures by type in EU-10 

Source:  Ademe  –  Intelligent  Energy  Europe  (2007)  Evaluation  and  Monitoring  of  Energy 
Efficiency in the New EU Member Countries and the EU-25 

In  the  new  Members  States  measures  are  mainly  of  a  legislative  character,  while  in  the  old 
Members States financial incentives and taxes are used as well. 

However, the increase in diverging national fiscal measures also leads to increased distortions 
of the internal market where criteria for eligibility are not the same between countries. 

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ANNEX IV  

to the 

Impact Assessment on the SCP and SIP Action Plan 

Accompanying tables and figures 

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Table 1: degree of coverage of other environmental impacts by EUP 

Significant environmental parameter 

EuP impact as % of total impact  

abiotic depletion 

Acidification 

Global warming 

Ecotoxicity 

Eutrophication 

human toxicity 

ozone layer depletion 

photochemical oxidation 

<20 

<20 

<20 

<10 

<5 

<10 

<10 

<10 

Source: JRC, ESTO, IPTS (2007) Environmental Impact of Products (EIPRO) Analysis of the 
life cycle environmental impacts related to the final consumption of the EU-25 

Table 2: Energy rating of household appliance - percentage of sales – EU 15, 2004-05 

Figure 1: Market share of washing machines according to label 

Source: JRC (2007) 

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Table 3: Difference in energy efficiency by building segment in the Netherlands 

Graph 2: percentage of GPP by some Member States in analysed tenders (‘No criteria’ 
means that no green specifications were found; ‘grey’ means that attempts for 
green specifications were found, but these would not lead to a green purchase; 
‘light  green’  means  1-3  clear  specifications;  ‘solid  green’  means  more  than  3 
specifications were found.)  

Table 4: minimum requirements and incentives for insulation in some Member States 

The case of Roof insulation 

Minimum R 
value 

Amount 

Cap 

Belgium 
(Fed) 

Brussels 

Wallonia 

France 

2.5 

tax reduction: 40% of the price 

2.60 € 

4 

3 

3 

20€/ m² 

4-8€/m² 

50% of the 
price 

10.00 € 

Tax credit: 25 or 40% of the price 

- 

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Luxembourg 

4.34 

13-15€/m² 

Germany 

4.5 

100% interest rate paid by the 
Bund 

- 

- 

Table  5:  minimum  requirements  and  incentives  for  insulation  in  some  Member  States 

The case of Windows 

Maximum U 
value 

Belgium (Fed) 

Brussels 

Wallonia 

France 

Luxembourg 

Germany 

Austria 
city) 

(Vienna 

2 

2 

2 

1.5 - 2 

1-1.35 

1.3 

1.9 

Amount 

Cap 

tax reduction: 40% of the price 

2.60 € 

25€/m² 

40€/m² 

50% of the 
price 

10.00 € 

Tax credit: 25 or 40% of the 
price 

12-30€/m² 

100% interest rate paid by the 
Bund 

2-3% of the annual loan cost 

- 

- 

- 

- 

Graph 3: Share of total expenditures by household income category (1999 – EU 15)  

Share of total expenditures by income category of household 
(1999 - EU15)

%

35

30

25

20

15

10

5

0

Housing, water, electricity, gas
and other fuels

Furnishings, household
equipment and routine
maintenance of the house

First
quintile

Second
quintile

Third
quintile

Fourth
quintile

Fifth
quintile

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Source Eurostat 

Figure  2:  evolution  of  prices  and  energy  efficiency  over  time  of  several  type  of 

appliances. 

Source: Weiss, Junginger and Patel (2008) unpublished 

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Annex V 

to the 

Impact Assessment on the SCP and SIP Action Plan 

Economic Analysis 

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The Case of water heaters 
The Preparatory study119 for water heaters carried out within the framework of the Eco-design 
directive analyses in detail each type of appliance present in the market.  

The  study  identifies  three  main  categories  of  water  heaters  in  the  market:  those  linked  to 
boilers and the direct water heaters, the later of two kinds, electric and gas-fired. (Table) 

Table 1: market shares for the different type of boilers 

Total sales 

linked to boilers 

direct water heaters 

Millions

17.2 

6.8 

10.4 

electric 

8.3 

gas -fired 

2.1 

Source: VHK(2007). Task 5 p 27 

The analysis concentrates on the direct water heaters of small size, which corresponds to the 
average residential water heater for a single person or very small family. The characteristics 
of this segment of the sector is presented in table  

Table 2: market share, energy consumption and emission 

in 2005 

Small WH 

market share (*1000) 

Total Energy consumption (PJ) 

Electricity consumption (PJ) 

Emissions (Mt CO2) 

Source: VHK(2007). Task 6 p.8 

4105 

520 

471 

24 

Total 

17143 

6169 

3725 

298 

For this type of water heater, 5 categories of appliances where identified in the study, mainly 
of  two  types:  those  using  gas  and  electricity  and  those  using  only  electricity.  Current 
equipments show little efficiency and high life-cycle costs120.  

Table 3: performance and prices for small Water heaters 

119 
120 

VHK (2007) Preparatory study on ecodesign of water heaters. (http://www.ecohotwater.org ) 
The study estimated a product life of 17 years and used a discount rateo f 2%. 

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Sources: same as above. 

The ESWH 30 type, which delivers 16l of water at 40º during 3 to 5 minutes, is assimilated to 
the current situation before the implementation of the EUP. EIWJ 18H (electric instantaneous 
water heater with hydraulic control) is assimilated to the EUP given that it presents the lowest 
life-cycle.  EIWH  18E  (electric  instantaneous  water  heater  with  electronic  control  that 
improves efficiency) is assimilated to Eco-label. This assumption is a simplification, because 
other environmental impacts should be taken into consideration for awarding the eco-label.  

Table summarizes the finding by appliance in the case of electrical WH are considered.  

Table 4: prices and performance of the different water heaters used in the different options 

Option 1 

Option 2 

Option 3 

Purchase price (euro) 

123 

Energy use during lifespan (kwh) 

21590 

CO2 inpacts (t CO2e) 

15 

life cycle cost without externalities 

2167 

Source: own estimations based on VHK (2007) 

420 

13500 

9 

1821 

245 

15300 

11 

1800 

Only electrical water heaters are considered because the proportion of electricity consumption 
over  total  energy  consumption  (table  above)  indicates  that  they  are  the  predominant  type  in 
this  category.  The  rest  of  the  analysis  considers  the  whole  market  segment  as  electrical 
appliances. 

For the estimation of the aggregated impacts, the following assumptions were undertaken: 

1. 

2. 

3. 

4. 

all small WH use only electricity 

for  option  2,  a  20%  market  penetration  of  highest  efficient  WH,  reflecting  the 
voluntary approach, the higher prices and the higher full life cycle cost. 

for option 3, full market penetration of the least life cycle cost type. 

a retail energy price of 14 Euro cents per KWh. 

The results are presented below. 

Table 5: results of the simulations for the different options 

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Option 1 

Option 2 (20%) 

Option 3 

Number of WH 

4,105,000 

3284000 standard; 
821000 High efficient 

4,105,000 

Total purchase price (€) 

504,915,000 

748,752,000 

1,005,725,000

Total energy consumption in lifespan 
(KwH) 

Total CO2 emissions in life span (Mt 
CO2) 

88,626,950,000

81,985,060,000 

62,806,500,000

62,038,865 

57,389,542 

43,964,550 

Total Lifecycle cost € 

8,895,535,000

8,611,469,000 

7,389,000,000

 Source: own estimations based on VHK (2007) 

In comparative terms with the BAU before implementing EUP, the results are: 

Table 6: Comparison to the business as usual of the options 

Option 2 (10%)  Option 2 (20%) 

Option 3 

Purchase costs (euro) 

24.15% 

48.29% 

Energy impacts (kwh) 

CO2 inpacts (t CO2e) 

Life cycle cost without 
externalities 

-3.75% 

-3.75% 

-7.49% 

-7.49% 

99.19% 

-29.13% 

-29.13% 

-1.60% 

-3.19% 

-16.94% 

Source: own estimations based on VHK (2007) 

For the analysis of the impacts of procurement, no data could be found in terms of the market 
share of procurement for this category of WH. 

Only for illustrative purposes, the following assumptions were undertaken: 

The share of public procurement compared to the market is 5%.  

There  is  currently  no  intermediate  product  for  WH.  Therefore  the  analysis  only  compare 
mandatory procurement for minimum requirements (after the implementation of EUP) and for 
the highest performing products. 

Table 7: Impact of mandatory public procurement 

total purchase 

Option 2 

241.46% 

Total emissions 

-37.47% 

Total energy use 

-37.47% 

Option 3 

99.19% 

-29.13% 

-29.13% 

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Total lifecycle 

-15.97% 

-16.94% 

Source: own estimations based on VHK (2007) 

The  impacts  of  the  option  of  imposing  performance  criteria  higher  that  the  minimum 
requirements  would  be  in  the  in-between  of  the  results  presented  above,  depending  on  the 
characteristics of the appliance. 

It is expected that incentives would induce economies of scale in time due to faster learning 
curves. Lower prices combined with the dynamic approach for requirement setting in option 
3,  in  which  indicative  advanced  performance  benchmarks  become  minimum  requirements, 
could lead to significant beneficial effects.  

Figure 2 in Annex IV presents price and energy efficiency for several appliances for a given 
period  of  time.  It  shows  that  as  efficiency  grows,  prices  have  systematically  decreased.  For 
the case of water heaters, we assumed a conservative 3% price decrease yearly due to learning 
curves.  This  implies  that  in  five  years  time,  the  price  for  the  most  performing  water  heater 
total initial costs would be quite important, 
would evolve from 420€ down to 372€. Even if 
the improvement in energy use, emissions and life cycle costs would be very significant. 

Table 8: Impacts of the dynamic approach on Water Heaters 

Aggregate results  % compared to BAU 

Total purchase price (€) 

1,527,060,000 

202.44% 

Total energy consumption in lifespan (KwH) 

11,083,500,000 

-87.49% 

Total CO2 emissions in life span (Mt CO2) 

7,758,450 

-87.49% 

Total Lifecycle cost € 

1,495,041,000 

-83.19% 

The case of windows 

Most  of  the  data  for  this  estimation  can  be  found  in  the  “Study  on  fostering  EU  internal 
market for competitive technologies for a low carbon economy” carried out for DG Enterprise 
by Price Waterhouse Cooper in 2007. 

This study identified the following products with different insulation performance. 

Table 9: performance of the different type of windows 

Typology of windows 

Units 

Single 
glazing 

Double 
glazing 

Low 
emissivity

U-value 

W/(m2*K) 

4.7 

Power consumed for heating per m2  kWh/(m2*year)

270 

Lifetime 

Purchase cost 

Installation costs 

30 

100 

23 

Years 

Euro/m2 

Euro/m2 

100 

EN 

2.7 

216 

30 

150 

23 

1.6 

189 

30 

250 

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annual CO2 emissions 

kgCO2/(m2*yr)

Initial costs 

Discounted heating costs 

Total lifecycle costs 

Euro/m2 

Euro/m2 

Euro/m2 

208 

123 

680 

803 

166 

173 

544 

717 

146 

273 

476 

749 

* U-Value is the measure of the rate of heat loss through a material 

Source: own estimations from PWC (2007), except for the purchase prices, which correspond 
to retailers prices in Poland and France 

Single glazing makes reference to the standard window, with a relative high heat loss. Double 
glazing improves the avoidance of heat transmission, therefore reducing the energy required 
for heating. The literature indicates reduction in energy consumption of up to 35% (Eurima), 
however it was preferred to simulate the reduction by 20%. The Low emissivity windows are 
double  glazing  windows  treated  with  a  special  coating  or  using  alternative  gas  between  the 
two  layers,  improving  even  more  the  performance.  The  literature  indicates  energy  savings 
between 30 and 50% (www.nmhydro.ca) and even up to 65% (EURIMA), for the simulation 
only  30%  savings  were  analysed.  The  rate  of  replacement  for  all  type  of  windows  in 
refurbishing is estimated to be around 4% annually, given the lifetime of 30 years. 

For the analysis of the impacts associated with each type of windows, the life cycle takes into 
consideration  the  purchasing  and  installation  costs  and  the  discounted  heating  expenses 
throughout the lifetime of the window, using a 4% discount rate. The CO2 emissions reflect 
those associated with electricity generation using a factor of 0.7 tn CO2/kWh. 

For the analysis the following assumptions were undertaken: 

•  In the case of option 1, all replacement is undertaken with single glazing windows 

•  In the case of option 2, only 0, 8% of the standards windows are replaced by low 
emissivity  is  considered.  (20%  of  the  4%  refurbishing  rate  annually),  the 
remaining 3.2% respectively are replaced by single glazing windows. 

•  In the case of option 3, to simplify the analysis, all replacement is undertaken with 
double glazed windows. This overestimates the potential for this type of windows, 
because in certain climatic conditions they might not be required.  

Table 10: Aggregate results of the simulations  

Option 1 

Option 2 

Option 3 

Total purchase price (€) 

5,214,160,000 

6,778,408,000 

7,821,240,000 

Total  energy  consumption  in 
lifespan (KwH) 

Total  CO2  emissions  in  life 
span (Mt CO2) 

422,346,960,000 

397,006,142,400 337,877,568,000

325,363,584,000 

305,966,908,800 259,665,168,000

Total Lifecycle costs € 

41,869,704,800 

41,306,575,520  37,385,527,200 

Source: own estimation based on PWC (2007) 

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Comparing  the  results  with  the  Business  as  usual  situation,  the  simulations  show  the 
advantages of option 3, even if the initial purchase costs are higher. 

Table 11: Comparions of the options with the Business as usual 

Option 2 (20%) 

Option 3 

Total purchase price (€) 

30.00% 

50.00% 

Total energy consumption in lifespan (KwH) 

-6.50% 

Total CO2 emissions in life span (Mt CO2) 

-6.18% 

-22.86% 

-20.91% 

Total Lifecycle costs € 

-1.34% 

-10.70% 

 Source: own estimation based on PWC (2007) 

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ANNEX VI  

to the 

Impact Assessment on the SCP and SIP Action Plan 

GLOSSARY  

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Advanced performance benchmarks 

High level of performance on energy consumption and other essential environmental impacts 
achieved by a given product category present in the market. 

Best performing product 

A good and/or service that provides the maximum performance on energy consumption and 
other essential environmental impacts across its life-cycle. 

Eco-design 

Eco-design means the integration of environmental aspects into product design with the aim 
of improving the overall environmental performance of the product throughout its whole life 
cycle. 

Eco-design Framework 

A  framework  containing  environmental  life-cycle  oriented  principles  for  the  design  of 
products  in  support  of  existing  and  future  product  policies  in  order  to  ensure  coherence 
amongst them. Such a framework could define common principles, criteria and methodologies 
related to the environmental performance of products.  

Eco-Management and Audit Scheme (EMAS) 

EU voluntary instrument which acknowledges organisations that improve their environmental 
performance  on  a  continuous  basis.  EMAS  registered  organisations  are  recognised  by  the 
EMAS logo, which guarantees the reliability of the information provided.  

Emission Trading Scheme (ETS) 

The EU Emission Trading Scheme is a cornerstone in the fight against climate change. It is 
the  first  international  trading  system  for  CO2  emissions  in  the  world.  It  covers  over  11.500 
energy-intensive  installations  across  the  EU,  which  represent  close  to  half  of  Europe’s 
emissions of CO2. The aim of the EU ETS is to help EU Member States achieve compliance 
with  their  commitments  under  the  Kyoto  Protocol.  Emissions  trading  does  not  imply  new 
environmental  targets,  but  allows  for  cheaper  compliance  with  existing  targets  under  the 
Kyoto Protocol. Letting participating companies buy or sell emission allowances means that 
the targets can be achieved at least cost. 

Energy Labelling Directive (ELD) 

The  Energy  Labelling  Directive  seeks  to  increase  consumer’s  awareness  on  the  real  energy 
use  of  household  appliances  through  a  liable  and  clear  labelling  in  their  sales  points.  It 
currently  covers  household  appliances  such  as  washing  machines,  dishwasher,  oven,  air-
conditioning systems, etc. 

Energy-using Product (EuP) 

A product which, once placed on the market and/or put into service, is dependent on energy 
input (electricity, fossil fuels, or renewable energy sources) to work as intended, or a product 
for  the  generation,  transfer  and  measurement  of  such  energy,  including  parts  dependent  on 
energy  input  and  intended  to  be  incorporated  into  an  EuP  covered  by  the  EuP  Directive 
(2005/32/EC) which are placed on the market and/or put into service as individual parts for 
end-users and of which the environmental performance can be assessed independently.  

Energy-using Products Directive (EuP)  

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Directive  2005/32/EC  on  the  eco-design  of  Energy-using  Products  (EuP).  Products  such  as 
electrical  and  electronic  devices  or  heating  equipment  are  covered  by  the  Directive  that 
provides  coherent  EU-wide  rules  for  eco-design  and  ensure  that  disparities  among  national 
regulations  do  not  become  obstacles  to  intra-EU  and  external  trade.  The  Directive  does  not 
introduce  directly  binding  requirements  for  specific  products,  but  defines  conditions  and 
criteria  for  setting,  through  subsequent  implementing  measures,  minimum  requirements 
regarding environmentally relevant product characteristics (such as energy consumption) and 
allows them to be improved quickly and efficiently.  

Energy performance in buildings Directive 

The  Directive  2002/91/EC  seeks  to  improve  the  energy  performance  of  new  building  and 
renovations  above  1000  m2.  The  four  key  points  of  the  Directive  are:1.  A  common 
methodology  for  calculating  the  integrated  energy  performance  of  buildings;  2.  Minimum 
standards on the energy performance of new buildings and existing buildings that are subject 
to major renovation; 3. Systems for the energy certification of new and existing buildings and, 
for  public  buildings,  prominent  display  of  this  certification  and  other  relevant  information. 
Certificates must be less than five years old; and 4. Regular inspection of boilers and central 
air-conditioning systems in buildings and in addition an assessment of heating installations in 
which the boilers are more than 15 years old.  

Environment Policy Review Group meeting (EPRG) 

A regular meeting of Directors General for the Environment from Member States, chaired by 
the  Commission,  to  discuss  environmental  issues  at  an  early  stage  before  formal  policy 
proposals are made to the EU legislators.  

Environmental external costs, negative externalities 

Costs  (usually  falling  on  society),  e.g.  related  to  pollution  or  resource  use,  which  are  not 
included in the market price of the goods and services, thus leading to an inefficient allocation 
of resources, e.g. their overuse. 

Environmental impact 

Impact on the environment and those human health effects that occur via emissions and the 
consequent  impact  on  the  natural  environment  and  on  humans  via  the  uptake  of  harmful 
substances. 

Environmental Technology Action Plan (ETAP) 

In  2004,  based  on  the  aims  of  the  EU  Lisbon  Agenda,  the  European  Commission  launched 
ETAP with the view of stimulating the development and use of environmental technologies in 
Europe. ETAP is a life-cycle based European strategy for eco-innovation and environmental 
technologies. It is composed of actions around three main themes: Getting from Research to 
Markets;  Improving  Market  Conditions;  Acting  globally.  A  key  aspect  is  the  setting  of 
quantified  and  timed  performance  targets  for  products,  that  base  upon  the  technical  and 
economic feasibility of their implementation in relationship to the potential improvement for 
the environment.  

Environmental Technology Verification (ETV)  

to  offer  credible  verification  of 

Systems  designed 
the  performance  and  potential 
environmental impacts of new technologies. They are generally voluntary systems, based on 
qualified third parties and recognised procedures, ensuring the reliability of their assessment 
of technologies. They are flexible to meet the different requirements and market situations of 
the technologies addressed.  

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European Consumer Consultative Group (ECCG)  

Created  in  2003  (Commission  Decision  2003/709/EC),  this  body  replaces  the  Consumer 
Committee  as  the  Commission's  main  forum  for  engaging  with  consumer  organisations.  It 
constitutes a forum for general discussions on problems relating to consumer interests; gives 
an opinion on Community matters affecting the protection of consumer interests; advises and 
guides the Commission when it outlines policies and activities having an effect on consumers; 
informs the Commission of developments in consumer policy in the Member States; acts as a 
source  of  information  and  soundboard  on  Community  action  for  the  other  national 
organisations. The ECCG meets four times a year. It consists of one representative of national 
consumer organisations per country; one member from each European consumer organisation 
(BEUC  and  ANEC);  two  associate  members  (EUROCOOP  and  COFACE);  and  two  EEA 
observers (Iceland and Norway).  

EU Eco-Label 

A  label  which  identifies  overall  environmental  preference  of  a  product  or  service  within  a 
specific product/service category based on life cycle considerations. It is a voluntary scheme 
designed  to  encourage  businesses  to  market  products  and  services  that  are  kinder  to  the 
environment and for European consumers - including public and private purchasers - to easily 
identify  them.  The  European  Eco-label  is  part  of  a  broader  strategy  aimed  at  promoting 
sustainable consumption and production.  

EU Sustainable Development Strategy (SDS) 

The European Council of June 2006 adopted a renewed EU SDS for an enlarged EU, building 
on the Gothenburg strategy of 2001. It sets overall objectives, targets and concrete actions for 
seven  key  priority  challenges  for  the  coming  period  until  2010:  Climate  change  and  clean 
energy; Sustainable transport; Sustainable Consumption and Production; Public health threats; 
Better  management  of  natural  resources;  Social  inclusion,  demography  and  migration;  and 
Fighting  global  poverty.  The  EU  SDS  recognises  the  need  to  gradually  change  our  current 
unsustainable  consumption  and  production  patterns  and  move  towards  a  better  integrated 
approach  to  policy-making.  To  improve  synergies  and  reduce  trade-offs  a  more  integrated 
approach  to  policy  making  is  proposed,  based  on  better  regulation  and  on  the  guiding 
principles for sustainable development (adopted by the European Council of June 2005). The 
external  dimension  of  sustainable  development  (e.g.  global  resource  use,  international 
development concerns) is factored into EU internal policymaking and there is a commitment 
to  integrate  sustainable  development  considerations  in  all  EU's  external  policies.  It  also 
proposes  mechanisms  for  improving  the  coordination  with  other  levels  of  governments  and 
calls upon business, NGOs and citizens to become more involved in working for sustainable 
development. Education, research and public finance are stressed as important instruments in 
facilitating the transition to a more sustainable production and consumption patterns.  

Green Public Procurement (GPP) 

A  process  whereby  public  authorities  seek  to  procure  goods,  services  and  works  with  a 
reduced environmental impact throughout their life cycle when compared to goods, services 
and  works  with  the  same  primary  function  that  would  otherwise  be  procured.  Contracting 
authorities  and  entities  take  environmental  issues  into  account  when  tendering  for  goods  or 
services.  The  goal  is  to  reduce  the  impact  of  the  procurement  on  human  health  and  the 
environment.  

High Level Group on Competitiveness, Energy and the Environment 

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In  February  2006,  the  Commission  set-up  a  High-Level  Group  specifically  to  examine  the 
relationship between competitiveness, energy and the environment. The Group offered advice 
to  policy-makers  and  ensure  an  integrated  approach  to  the  development  of  legislation  and 
regulation. 

Integrated Pollution Prevention and Control (IPPC) 

Directive 96/61/EC to prevent or, where that is not possible, reduce pollution from a range of 
industrial and other installations by means of integrating permitting based on the application 
of best available techniques (BAT).  

Integrated Product Policy (IPP) 

An  approach  that  begins  by  asking  how  the  overall  environmental  performance  of  products 
(both  goods  and  services)  can  be  improved  most  cost-effectively.  It  is  founded  on  the 
consideration of the impacts of products throughout their life-cycle, from the natural resources 
they  come  from,  through  their  use  and  management,  recycling  to  the  disposal  of  any 
remaining waste.  

Life-cycle 

Consecutive and interlinked stages of a product system, from raw material extraction, through 
production of materials, intermediates, and parts to products, through product use or service 
operation to recycling and/or final disposal.  

Life-cycle assessment (LCA)  

A  process  of  compilation  and  evaluation  of  the  inputs,  outputs  and  the  potential 
environmental  impacts  of  a  product  system  throughout  its  life  cycle.  LCA  is  internationally 
standardized in the ISO 14040 ff, since 1997. It is widely used in industry and a number of 
public  bodies  in  support  of  strategic  and  concrete  decisions  in  product  development  and 
design, and in policy development and implementation.  

Mid-term review of Industrial Policy 

In  the  mid-term  review  of  industrial  policy,  the  European  Commission  identifies  that 
globalization  and  technological  change  are  likely  to  intensify  in  the  coming  years. 
Furthermore industry needs to adapt to the challenges posed by climate change and to grasp 
the opportunities of new low- energy and resource saving processes and products. Based on 
the  assessment  of  the  current  situation,  and  building  on  the  achievements  since  2005,  the 
Commission envisages strengthening some of the ongoing initiatives and launching some 
new  initiatives  in  response  to  recent  challenges.  The  Sustainable  Industrial  Policy  Action 
Plan is one of the new initiatives called for. 

Product design 

Under the Eco-design Directive for Energy-using Products (EuP), it is a set of processes that 
transform legal, technical, safety, functional, market or other requirements to be met by a EuP 
into  its  technical  specification.  In  general,  the  design  of  a  product  largely  determines  its 
overall  life  cycle  environmental  performance.  The  product  design  hence  offers  the  largest 
leverage for improved consumption and production.  

Product performance requirements 

Under the Energy-using Products (EuP) Directive, Eco-design requirement is any requirement 
in  relation  to  an  EuP,  or  the  design  of  an  EuP,  intended  to  improve  its  environmental 
performance,  or  any  requirement  for  the  supply  of  information  with  regard  to  the 
environmental  aspects  of  an  EuP;  Generic  eco-design  requirement  is  any  eco-design 

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requirement based on the ecological profile as a whole of an EuP without set limit values for 
particular  environmental  aspects;  Specific  eco-design  requirement  is  a  quantified  and 
measurable  eco-design  requirement  relating  to  a  particular  environmental  aspect  of  an  EuP, 
such  as  energy  consumption  during  use,  calculated  for  a  given  unit  of  output  performance. 
(i.e. the product's functional unit).  

SMEs 

Small and Medium Entreprises 

Subsidiarity  

The  principle  of  subsidiarity  is  defined  in  Article  5  of  the  Treaty  establishing  the  European 
Community.  It  is  intended  to  ensure  that  decisions  are  taken  as  closely  as  possible  to  the 
citizen and that constant checks are made as to whether action at Community level is justified 
in the light of the possibilities available at national, regional or local level. Specifically, it is 
the principle whereby the Union does not take action (except in the areas which fall within its 
exclusive  competence)  unless  it  is  more  effective  than  action  taken  at  national,  regional  or 
local level. It is closely bound up with the principles of proportionality and necessity, which 
require that any action by the Union should not go beyond what is necessary to achieve the 
objectives of the Treaty. 

Sustainable Consumption and Production (SCP) 

Addressing social and economic development within the carrying capacity of ecosystems and 
decoupling  economic  growth  from  environmental  degradation.  In  practice,  SCP  is  about 
changing  the  ways  we  design,  produce,  distribute,  use  and  dispose  of  goods  and  services, 
minimising the overall environmental impact taking a life cycle perspective.  

Thematic Strategy on the prevention and recycling of waste 

This  long-term  strategy  (December  2005)  aims  to  help  Europe  become  an  environmentally 
and economically efficient recycling and recovery society that seeks to avoid waste and uses 
waste  as  a  resource.  It  draws  on  the  knowledge  that  the  Thematic  Strategy  on  resources 
generates.  

Thematic Strategy on the sustainable use of natural resources 

The  objective  of  this  EU  Strategy  (December  2005)  is  to  reduce  the  overall  environmental 
impacts associated with resource use in a growing economy.  

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