Communication from the Commission - Energy efficiency: delivering the 20% target
Date: 2008-11-13
Institutions: European Commission
Subjects: competitiveness, energy consumption, energy policy, energy supply, research and development, sustainable development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
COM(2008) 772 final 

COMMUNICATION FROM THE COMMISSION 

Energy efficiency: delivering the 20% target 

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COMMUNICATION FROM THE COMMISSION 

Energy efficiency: delivering the 20% target 

EXECUTIVE SUMMARY 

European  leaders  committed  themselves  to  reduce  primary  energy  consumption  by 
20% compared to projections for 2020. Energy efficiency is the most cost-effective 
way  of  reducing  energy  consumption  while  maintaining  an  equivalent  level  of 
economic  activity.  Improving  energy  efficiency  also  addresses  the  key  energy 
challenges of climate change, energy security and competitiveness. 

Community  legislation  on  energy  efficiency  has  been  designed  to  considerably 
improve  energy  efficiency  in  key  energy-consuming  sectors.  However,  current 
energy efficiency legislation alone will not deliver sufficient energy savings to meet 
the 20% saving objective. Main obstacles to energy efficiency improvements are the 
poor implementation of existing legislation, the lack of consumer awareness and the 
absence of adequate structures to trigger essential investments in and market uptake 
of  energy  efficient  buildings,  products  and  services.  The  assessment  of  national 
energy efficiency action plans shows that there is a gap between the Member States 
political commitment to energy efficiency and their actions. Member States need to 
implement  more  swiftly  and  effectively  energy  efficiency  legislation.  New 
instruments must be developed to further enhance energy efficiency. 

The  Commission  proposes  to  reinforce  the  key  energy  efficiency  legislation  on 
buildings  and  energy-using  products.  The  provisions  of  the  Energy  Performance  of 
Buildings Directive will be strengthened to apply to more buildings, and to enhance 
the role of energy performance certificates and inspection reports for heating and air-
conditioning systems. The Energy Labelling Directive will be revised to be applied 
to  additional  energy-using  and  energy-related  products,  and  not  to  household 
appliances  alone.  A  Directive  containing  a  new  labelling  scheme  for  tyres  is 
proposed  to  promote  the  market  take-up  of  fuel  efficient  tyres.  For  further 
improvements  of  energy  efficiency  in  energy  supply,  the  Commission  proposes 
detailed guidelines to facilitate the uptake of electricity generation from high energy 
efficiency  cogeneration 
is 
presented. To address the lack of necessary investments, new financing initiatives for 
energy efficiency, such as an EU Sustainable Energy Financing Initiative, are already 
considered  as  they  would  also  contribute  to  shield  the  EU  economy  against 
deteriorated financial conditions. 

installations.  A  Communication  on  cogeneration 

The European Council has underlined the importance of the European framework for 
energy  efficiency  policies  and  measures,  i.e.  the  2006  European  Action  Plan  for 
Energy  Efficiency,  by  urging  the  Commission  and  Member  States  to  speed  up  its 
implementation and consider its possible revision. To this end, the Commission will 
evaluate  this  Action  Plan  in  2009  with  a  view  to  prepare  a  revised  Plan.  It  could 
reinforce  incentives  to  leverage  energy  efficiency  improvements  and  will  take  into 
account  the  crucial  role  cities  could  play  in  reducing  energy  consumption,  e.g.  by 
further  promoting  local  networks  like  the  Covenant  of  Mayors.  Internationally,  the 

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Community  will  continue  to  promote  energy  efficiency  through  institutionalized 
dialogues and partnerships. 

1. 

THE RISK OF FALLING SHORT 

Energy saving is the EU's most immediate and cost-effective way of addressing the 
key energy challenges of sustainability, security of supply and competitiveness as set 
out  in  the  strategic  objectives  of  the  'Energy  Policy  for  Europe'.1  EU  leaders  have 
stressed  the  need  to  increase  energy  efficiency  as  part  of  the  '20-20-20'  goals  for 
2020: saving 20% of the EU's primary energy consumption2, a binding target of 20% 
reduction  of  greenhouse  gas  emissions  and  20%  renewable  energies  by  2020.  Both 
greenhouse  gas  emission  reduction  and  the  renewable  targets  trigger  energy 
efficiency improvements and, conversely, ambitious action on energy efficiency will 
greatly  help  achieve  the  EU's  climate  objective,  notably  under  the  effort  sharing 
decision3. 

If  the  saving  objective  of  20%  is  met,  the  EU  would  not  only  use  about  400  Mtoe 
less  primary  energy  but  it  would  also  avoid  the  construction  of  about  1000  coal 
power  units  or  half  a  million  wind  turbines.4  CO2  emissions  reduction  would  be 
about 860 Mt.5 

'Negawatthours', or avoided energy consumption through savings, have become the 
single  most  important  energy  resource.  For  example,  the  annual  final  energy  use 
would have increased by 115 Mtoe or 11% over the 1997-2006 period had there been 
no energy efficiency improvements.6 This is one third of all crude oil imports into the 
EU-27 in 2006. Energy saving is a crucial asset to ensure EU's security of supply. 

Indeed,  on  current  implementation  trends  by  Member  States,  it  is  clear  that  our 
saving  objective  by  2020  is  in  serious  danger  of  not  being  met.  Annex  1  gives  a 
quantitative  evaluation  of  the  expected  impact  of  some  specific  energy  efficiency 
legislation  and  measures  when  fully  implemented.  The  Member  States  are 
implementing the legislation and it is too early to assess the full impacts. But the first 
hand  information  on  the  evolvement  and  the  implementation  as  well  as  other 
indicators  (see  section  2)  suggest  that  the  energy  saving  potential  is  not  being 
realised fast enough. These measures should achieve energy savings of about 13% by 
2020  if  properly  implemented  by  Member  States.  Even  if  this  represents  a  major 
achievement, this falls far short of what is needed.  

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COM(2007) 1 final. 
Council of the European Union, Presidency Conclusions 8/9 March 2007 (7224/1/07). 
COM(2008) 17. 
Based on the assumption that each power plant unit is 600 MW, operating 7000 hours/year; for wind: 
average turbine size of 4 MW in 2020, operating 2300 h/year. 
An  implicit  emission  factor  for  2020,  derived  as  the  ratio  of  primary  energy  consumption  to  CO2 
emission, has been  used.  The  implicit  emission  factor  is based  on  the  Primes  baseline  (2007  update), 
available  at:  http://ec.europa.eu/dgs/energy_transport/figures/trends_2030_update_2007/index_en.htm, 
and is dependent on the fuel mix in 2020. 
Odyssee project, 115 Mtoe final energy is about 180 Mtoe primary energy. 

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Recent  studies  indicate  that  the  opportunities  for  energy  savings  still  remain 
significant, as shown in Figure 17. 

Figure 1. Estimated energy consumption reduction potential in 2020 

Mtoe

600

450

300

150

0

Final energy in 2020

energy savings 
potential 

30%

20%

19%

Industry

Transport Households,

services

Many barriers to achieving energy efficiency exist. Annex 2 gives an overview of the 
main  drivers  and  barriers  in  relation  to  bringing  about  energy  efficiency 
improvements.  Cross-sectoral  barriers  include  incomplete  implementation  of  EU 
energy  efficiency  legislation,  insufficient access  to  financing  and  low  awareness  of 
the  benefits  of  energy  saving.  In  transport,  insufficient  infrastructure  facilitating 
energy  efficiency  and  limited  commitment  from  the  sector  need  improvement.  For 
the industry, low awareness of the potential benefits and high up-front costs present 
clear obstacles. The current state of the financial markets does not help to improve 
access to financing in the short term. 

2. 

WHAT HAS BEEN DONE SO FAR 

2.1 

The importance of energy efficiency 

Energy efficiency is highly relevant for EU citizens. More people feel the effect of 
higher  energy  bills,  as  do  businesses.  Reducing  energy  consumption  is  the  best 
sustainable long-term response. Energy saving benefits per year can easily amount to 
over € 1000 per household: € 600 thereof due to  lower energy bills and the remainder 
due  to  cost-savings  elsewhere.8  However,  up-front  costs  remain  a  challenge.  Since 
most renovations  have a long lifetime, the  added cost  of making such  a renovation 
energy efficient will itself pay back much faster than the lifetime of the renovation 
itself.  A  recent  example  from  France  shows  that  insulating  the  roof  of  an  average 
house will save so much heating oil that the measure is paid back in 3 years. More 
substantial  renovations  (e.g.  insulation  of  walls,  better  windows),  have  longer  pay 
back times. 

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Study  on  Energy  Savings  Potentials  in  EU  Member  States,  Candidate  Countries  and  EEA  Countries. 
Fraunhofer ISI et al; preliminary results. 
Based  on  the  mean  consumption  expenditure  per  household  in  2005  (i.e.  1192  purchasing  power 
standard (pps) for electricity, gas and other fuels, and 1121 pps for transport) with a 20% increase factor 
by 2020. 

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Energy  efficiency  is  beneficial  to  the  EU  economy  as  a  whole  and  even  more  for 
local  development.9  The  direct  benefits  of  energy  savings  if  the  20%  energy 
reduction  objective  is  met  in  2020  are  expected  to  be  €220  billion  per  year. 10  The 
indirect economic benefits are much higher. Energy efficient products and materials, 
and  energy  services  constitute  a  profitable  market,  also  for  export.  It  is  an 
opportunity  for  European  business  to  lead  innovation  and  creates  new  jobs,  often 
with  local  small  and  medium-sized  companies  (SMEs)  as  investments  in  energy 
efficiency are mostly related to small-scale renovation projects. 

2.2 

EU tools for achieving energy efficiency 

Energy  efficiency  is  both  the  result  of  policy  developments  and  the  application  of 
concrete  measures.  Technology  development  creates  the  basis  and  environmental 
legislation  has  contributed  much,  especially  the  Emission  Trading  Scheme  and 
transport emissions policies. Taxation and other fiscal measures such as State aid and 
recent industry policy tools also provide strong incentives for markets to realise cost-
effective  energy  savings.  It  is  important  to  continue  relying  on  these  efficient 
instruments, especially in the current difficult economic situation. 

There are five pillars to the EU's specific energy efficiency policy: 

(1) the general policy framework and the actions taken under the European Energy 
Efficiency Action Plan;  

(2) the National Energy Efficiency  Action  Plans  based on the  framework  Directive 
on Energy Services11;  

(3) the legal framework for the most important consumption sector - buildings - and 
energy consuming products;  

(4) flanking policy instruments such as targeted financing, provision of information 
and networks like the Covenant of Mayors and Sustainable Energy Europe; and  

(5) international collaboration on energy efficiency.  

With  the  Green  Paper  on  energy  efficiency,  the  Commission  initiated  a  debate  on 
efficient  ways  of  using  energy.12  The  potential  to  save  20%  of  primary  energy 
consumption  by  2020  in  a  cost-effective  way  was  recognised.  To  achieve  this,  a 
comprehensive  Energy  Efficiency  Action  Plan  was  developed  and  adopted  in 
2006.13 It identifies six key areas14 with the highest potential for energy saving and it 
proposes 85 actions and measures to be taken at EU and national level. Among them, 

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Conclusions of the European Council 22 and 23 March 2005, 7619/05, CONCL 1. 
COM(2006) 545 final. Calculated savings are 390 Mtoe; at USD 96/barrel net of taxes this equals €220 
billion. 
Directive 2006/32/EC (OJ L 114, p. 6). 
COM(2005)265 final; 22.6.2005. 
COM(2006)545 final. 
(1)  Energy  performance  requirements  for  products,  buildings  and  services,  (2)  energy  transformation, 
(3) transport, (4) financing and pricing, (5) energy behaviour, and (6) international partnerships. 

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ten priority actions have been identified and all of these have advanced well.15 The 
implementation of the Action Plan is ongoing and should be completed by 2012. One 
third  of  the  actions  have  been  completed  but  the  remainder  still  need  active 
commitment both at EU and national level (see also section 4.1 below). 

Smart  metering,  labelling  and  informative  billing  based  on  actual  consumption  are 
key  to  help  individual  consumers  save  energy.  The  Energy  Services  Directive16 
requires  Member  States  to  ensure  that  competitively-priced  meters  reflect  actual 
energy consumption. Energy efficiency is also one of the key aspects in the work of 
the  Citizens'  Energy  Forum17,  a  regulatory  forum,  recently  launched  by  the 
Commission. 

2.3 

Development at EU level 

The last decades have seen rapid economic growth which increased our energy needs 
(see Figure 2 below). While national wealth has more than doubled since the first oil 
crisis  of  the  1970s,  the  energy  to  support  this  growth  increased  only  by  30%. 
Unfortunately, the rate of energy efficiency gains18 started to slow down in the 1990s 
and have reduced further in the current decade. Since the 1980s the dependency on 
energy imports is on the rise again. The EU depends on imports for over half of its 
energy needs.  

Figure 2. Development of some main indicators for Europe (1973 = 100%)19 

GDP at purchasing pow er parities (ppp)

Total primary energy supply (TPES)

Self-sufficiency (energy production/TPES)

Energy intensity at ppp

250%

200%

150%

100%

50%

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

Within  the  EU,  energy  efficiency  policies  and  measures  implemented  since  1997 
together  with  'normal'  technological  progress  combined,  have  contributed  to 

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Examples  of  priority  actions:  Appliance  and  equipment  labelling,  and  the  setting of minimum  energy 
performance standards, adoption of building performance requirements and very low energy buildings, 
making power generation and distribution more efficient, achieving fuel efficiency of cars, facilitating 
appropriate financing of energy efficiency investments, coherent use of taxation and energy efficiency 
in built-up areas. 
Directive 2006/32/EC, Article 13. 
The first meeting of the Citizens' Energy Forum took place in London on 27-28 October 2008.  
Energy  efficiency  gains  are  measured  in  energy  intensity  i.e.  energy  used  per  unit  produced.  More 
energy  efficiency  will  reduce  energy  consumption  per  performance,  service  or  good,  but  it  does  not 
necessarily equal energy saving as we tend to heat and cool more houses, drive more kilometres and use 
more electrical devices. 
Due to data limitation the figure includes all EU-27 except the three Baltic States and Slovenia. Unless 
otherwise stated, Eurostat data is used. 

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improving  final  energy  efficiency  on  average  by  1.3%  per  year  between  1997  and 
200620. Without these gains, final energy consumption would have been 11% higher 
in  2006.  Industry  is  the  sector  which  achieved  the  largest  energy  efficiency 
improvement.  It  is  24%  more  energy  efficient  than  in  1997.  Energy  efficiency  in 
transport and households has improved only by 9%, i.e. 1.1% per year. See figure 3 
below. 

Figure 3. Energy efficiency trends for final consumers for EU 27 (ODEX index, 1997 = 100%) 

Transport index
Households index
Total index
Industry index

100%

95%

90%

85%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

There  is  a  lot  of  room  for  improvement  of  energy  generation  and  transmission 
efficiency. Reduced final energy consumption means even greater up-stream savings: 
if  a  final  consumer  uses  1kWh  of  electricity  less,  2.5  kWh  of  primary  energy  are 
saved. This also means that any saving of final energy has a much higher monetary 
value than the same amount of saved primary energy. 

2.4 

Development at national level 

Community  legislation  on  energy  efficiency  is  the  backbone  for  the  national 
portfolios, as it provides the framework by defining legal obligations in a number of 
Directives and leaves the implementation to Member States. This implementation is 
not  progressing  well  enough:  transposition  has  been  slow  and  enforcement  at 
national  level  uneven.  Member  States  are  beginning  to  put  in  place  financing 
schemes but they are often fragmented. There are also other obstacles such as lack of 
information, administrative barriers and insufficient qualified workers. 

The Energy Services Directive21 gives a general framework for many saving actions 
including  an  indicative  energy  saving  target.22  The  Directive  applies  to  energy 
distributors,  distribution  system  operators,  retail  energy  sales  companies,  and  to  all 
energy users except those covered by the Emission Trading Scheme.  

Due to the wide scope of the Directive and the diversity in the Member States of the 
development  of  energy  infrastructures,  Member  States  have  implemented  and 
applied the Directive in very different ways. The Commission is currently assessing 
the national implementing measures.  

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Basis: ODEX. It is an alternative index to overall energy intensity used by the ODYSSEE project. It is 
obtained  by  aggregating  the  unit  consumption  changes  at  detailed  levels,  by  sub-sector  or  end-use, 
observed  over  a  given  period.  This  ODYSSE  index  does  not  include  many  factors  such  as  structural 
changes  and  other  changes,  not  related  to  energy  efficiency  (e.g.  the  rebound  effect).  See  also: 
www.odyssee-indicators.org. 
See note 11 supra. 
Article 4. 

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The  Directive  requires  each  Member  State  to  submit  a  National  Energy  Efficiency 
Action Plan. These action plans present the national strategy on how to achieve the 
Directive's  energy  savings  objective.  Annex  3  gives  a  concise  assessment  of  the 
national action plans. Some of them contain coherent and comprehensive strategies 
towards the target. Unfortunately, most plans reveal a clear gap between the Member 
States' political commitment to energy efficiency and the actions they propose. The 
European Council has requested that the National Energy Efficiency Action Plans be 
at  the  core  of  efforts  towards  achieving  the  EU's  energy  saving  objective23. 
Ultimately,  the  national  plans  should  be  the  all-encompassing  reporting  tool  for 
Member States on their energy efficiency policies. 

2.5 

Development at regional and local level 

Regional  and  local  authorities  have  a  crucial  role  to  play  in  carrying  out  energy 
efficiency  policies.  Cities,  towns  and  regions  are  usually  responsible  for  planning 
permission,  fiscal  incentives  and  the  proper  application  of  zoning  and  building 
regulations.  They  are  also  increasingly  drivers  of  energy  efficiency  through  their 
public procurement policies. 

With this in mind, in 2007 the Commission launched the Covenant of Mayors. Under 
this scheme, cities, towns and regions commit to go beyond the 20% greenhouse gas 
emission  reduction  in  2020,  and  to  this  end  they  will  produce  a  sustainable  energy 
action  plan.  This  is  an  opportunity  for  an  all-encompassing  local  view,  integrating 
energy efficiency, renewable energy, urban transport and public procurement into a 
plan that will not only bring economic but also environmental and social benefits.  

3. 

NEXT STEPS 

The  Commission  proposes  an  Energy  Efficiency  Package  consisting  of  the 
following elements: a proposal for a recast of the Energy Performance of Buildings 
Directive; a proposal for a revision of the Energy Labelling Directive; a proposal for 
a  new  Directive  containing  a  labelling  scheme  for  tyres;  a  Commission  decision 
establishing  guidelines  clarifying  the  calculation  of  the  amount  of  electricity  from 
cogeneration; a communication on cogeneration. 

The Package is presented in sections 3.1 to 3.3 below. 

3.1 

Energy efficiency in buildings - a new way of capturing the potential 

Energy use in residential and commercial buildings is responsible for about 40% of 
EU's total final energy consumption and 36% of the EU's total CO2 emissions. The 
cost-effective  energy  saving  potential  by  2020  is  significant:  30%  less  energy  use 
within  the  sector  is  feasible.  This  equals  a  reduction  of  11%  use  of  the  EU's  final 
energy. However, energy use in this sector continues to increase. 

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Council of the European Union, Presidency Conclusions 19/20 June 2008 (11018/08). 

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Figure 4. Estimated gross energy consumption 
by sector in 2006 (EU-27) 

Figure 5. Development of the final energy 
consumption by sector (EU-27) 

No n-Energy 
use 6%

Industry 18%

Mtoe

1500

Households and services

Transport

Industry

Energy trans-
fo rmatio n 
29%

1000

39%

40%

41%

Ho useho lds 
and 
Services 
24%

500

26%

31%

32%

Other 2%

Transpo rt 
20%

0

34%

29%

28%

1990

2000

2006

The  Buildings  Directive24  provides  a  framework  for  concrete  measures  and 
requirements  at  Member  States  level  and  its  revision  means  simplification, 
clarification  and  stronger  provisions.  Member  States  will  remain  responsible  for 
establishing  concrete  requirements.  The  Commission  proposes  that  the  1000  m2 
threshold for existing buildings when they undergo major renovation25 is eliminated: 
energy  performance  requirements  will  therefore  apply  to  more  buildings.  Energy 
performance  certificates  should  become  more  reliable,  heating  and  air-conditioning 
systems  regularly  inspected  and  the  Member  Sates  will  draft  national  plans  on  low 
energy buildings. The proposed modifications give Member States the opportunity to 
reap more than half of the remaining cost-effective potential in this dispersed sector 
(60-80 Mtoe or 5-6%/year of total primary energy demand in 2020). 

In  2009,  the  Commission  will  launch  a  major  'Build-up'  initiative  to  increase  the 
awareness  of  all  parties  in  the  building  chain  of  the  saving  potential,  incorporating 
the  current  Buildings  Platform  and  complementing  the  Lead  Market  Initiative  on 
Sustainable  Construction.  These  seek  to  spur  the  market  uptake  of  innovative, 
sustainable  and  energy  efficient  construction  solutions.  The  Commission  will  also 
work with social partners to promote investment in the sector.  

The  Commission  also  owns  large  buildings  and  is  working  on  the  certification  of 
their energy performance so as to be in line with the requirements of the Directive. 

3.2 

Energy efficiency of products 

As  part  of  the  Action  Plan  on  Sustainable  Industrial  Policy  and  Sustainable 
Consumption and Production, the Commission has presented a proposal to extend the 

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Directive 2002/91/EC (OJ L 1, p. 65). 
The definition of major renovation is kept: either the investment should be more than 25% of the value 
of the entire building (excluding the land), or more than 25 % of the building envelope should undergo 
structural  renovation.  Thus  the  renovation  of  an  apartment  in  a  large  multi-family  building  would,  in 
most cases, not be covered by the requirements. 

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scope  of  the  Ecodesign  Directive26.  It  is  now  followed  by  a  proposal  to  revise  the 
Energy Labelling Directive27. Both instruments will cover commercial and industrial 
energy-using products and energy-related products such as windows and motors used 
in buildings. A revised Labelling Directive will, when relevant, identify the labelling 
classes  below  which  products  will  not  be  procured  by  or  receive  incentives  from 
public authorities.  

A proposal for a labelling scheme for tyres is also part of this policy package. The 
objective is to promote the market take-up of fuel efficient tyres, also known as low 
rolling resistance tyres. 

By  spring  2009,  the  Commission  is  expected  to  adopt  ecodesign  measures  for  i.a. 
light bulbs (leading to the phasing out of wasteful incandescent light bulbs), electric 
equipment  in  stand-by  mode,  street  and  office-lighting  equipment,  external  power 
supplies  and  set-top  boxes  for  televisions.  Boilers  and  water  heaters,  televisions, 
motors and several white goods will also be addressed in 2009. By way of example 
of  the  potential  benefits,  replacing  a  medium  sized  'M'  class  gas  domestic  boiler 
(power input 22kW) which is representative of the current average sold with a high-
efficiency  model,  leads  to  the  annual  saving  on  fuel  costs  of  about  250-300€.  The 
payback period is around 5-6 years.28 

3.3 

Cogeneration 

Cogeneration is a highly efficient technique to generate electricity and heat. Because 
of the need of parallel heat load, cogeneration is mainly used in district heating and 
industry.  The  Cogeneration  Directive29  promotes  high  efficiency  cogeneration.  To 
ensure  its  full  implementation  detailed  guidelines  have  been  adopted.  They  clarify 
the  procedures  and  definitions  for  a  harmonised  methodology  to  determine  the 
quantity of electricity generated from cogeneration30. They allow Member States to 
better implement the Directive. 

The  Communication  from  the  Commission  presents  further  possibilities  to  enhance 
cogeneration. 

3.4 

Financing 

To support investments to improve energy efficiency, financing schemes31 exist and 
the  first  results  are  positive:  more  urban  development  and  renewal  projects  take 
energy  efficiency  into  account.  In  Germany  for  example,  in  the  period  1990-2006 
efficiency measures in some 2.5 million homes were financed. Investments there in 
2006  alone  will  achieve  a  long-term  reduction  of  more  than  1  million  tonnes  per 
annum  in  CO2  emissions  and  provided  220,000  jobs  for  that  year,  mainly  in  the 

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COM(2008) 399 final. 
Directive 92/75/EEC (OJ L 297, p. 16).  
Preparatory Study on Eco-design of CH-Boilers - VHK, Delft 30.9.2007; www.ecoboiler.org. 
Directive 2004/8/EC (OJ L 52, p. 50). 
See Annex II of the Directive 2004/8/EC. 
The European Investment Bank and the European Bank for Reconstruction and Development provide 
financial instruments targeted at various beneficiaries. At EU level, the Cohesion Policy Funds, the 7th 
Research  Framework  Programme  and  other  sources  exist  such  as  the  Global  Energy  Efficiency  and 
Renewable Energy Fund. 

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construction  industry.  Other  similar  initiatives  are  taking  place  in  several  other 
Member States. 

The potential is clearly there, but it is not yet generally recognised and initiatives are 
scattered. Designing effective energy efficiency measures targeted at households and 
SMEs  requires  a  well  coordinated  financing  framework  coming  from  private, 
national  and  EU  sources  in  line  with  Community  legislation.  The  latter  sources 
include  the  Structural  Funds.  Community  funds,  like  Intelligent  Energy,  and  loans 
can then ensure their replication across the EU. The standards can subsequently serve 
as a model to be followed at national level.  

The  Commission  is  also  working  with  the  EIB  and  EBRD  to  set  up  an  EU 
Sustainable Energy Financing Initiative to mobilise large-scale funding from capital 
markets  for  investments  in  energy  efficiency,  renewable  energies,  the  clean  use  of 
fossil  fuels  and  combined  heat  and  power  from  renewables  in  Europe's  cities.  The 
difficult situation in financial markets reinforces the need to look into the benefits of 
a  publicly  supported  instrument.  A  joint  effort  is  required  to  explore  new  and 
innovative  financing  schemes  to  enable  welfare  enhancing  investments  in  energy 
efficiency, characterised by levels of risks not covered by the markets. 

A  holistic  overview  of  financial  support,  not  just  for  energy  efficiency,  but  for  all 
policies  that  contribute  to  combating  climate  change  and  ensuring  energy  supplies, 
will  be  part  of  the  re-launched  Lisbon  strategy  later  this  year.  In  times  of  scarce 
public resources, there is a need to ensure that public funds are spent where they can 
contribute in the most cost effective way to European goals. 

With the unprecedented crisis in international financial markets, the financial system 
is  in  the  grip  of  a  prolonged  process  of  deleveraging.  The  question  of  how  to  fund 
innovative technologies to enhance energy efficiency will need to be addressed. The 
Commission  will  explore  with  the  Member  States  measures  to  boost  energy 
efficiency and green technology, for examples in buildings and in clean cars, which 
would provide opportunities for the economy, including for SMEs, while at the same 
time helping the EU to meet its climate change aim. Increasing demand for energy 
efficient  goods  and  services  through  reduced  taxation  and  other  targeted  fiscal 
measures is another option which will be further investigated.32

Cohesion  Policy  programmes  have  allocated  over  EUR  4.2bn  to  the  promotion  of 
energy efficiency in the period 2007-13. Cohesion Policy Funds support a vast range 
of  activities  in  this  area,  including  energy  efficiency  improvements  in  industry, 
commerce, transport and public buildings, cogeneration and local energy production, 
innovation  for  sustainable  energy,  and  training  for  monitoring  and  evaluation  of 
energy  performance.  In  addition,  in  the  new  Member  States,  Cohesion  Policy 
supports  investment  in  energy  efficiency  in  residential  housing  under  certain 
conditions. As some of these actions may be funded by other Cohesion Policy budget 
headings such as R&D and urban as well as rural regeneration, the actual allocation 
in  support  of  Europe's  Energy  Policy  is  expected  to  be  much  higher.  Furthermore, 
financial instruments, including debt finance and equity funds provided by the EIB 

32 

COM(2008) 706 final, 29.10.2008: From financial crisis to recovery: A European framework for action. 

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Group (e.g. through structural programme loans) and EBRD, could allow managing 
authorities to obtain additional funding in support of Operational Programmes.  

The Commission will also investigate the possibilities of linking public support with 
energy  efficiency  results  in  a  wider  context,  as  already  suggested  in  the  proposed 
Energy  Labelling  Directive  for  energy  related  products.  One  option  could  be  a 
revised Energy Services Directive. 

The  Commission  will  present  a  Communication  on  the  financing  of  low-carbon 
technologies  in  spring  2009.  The  Commission  is  also  preparing  a  review  of  the 
energy  products  taxation  Directive33  which  will  provide  an  adapted  framework  to 
address energy efficiency and CO2 emissions outside the Emission Trading Scheme.  

4. 

FURTHER ACTIONS 

4.1 

Evaluation of the European Energy Efficiency Action Plan (EEAP) 

As foreseen in EEAP in 2006, the Commission will evaluate it in 2009 and prepare a 
revised  Action  Plan,  as  requested  by  the  European  Council.  The  starting  points 
should  be  the  saving  potentials  and  the  cost-effectiveness  of  the  policy  tools.  The 
EU's  legislation  on  energy  efficiency  should  be  analysed.  Energy  efficiency  must 
become fully integrated into the broader energy policy, in particular the EU Energy 
and  Climate  Package  with  its  dynamic  CO2  and  renewable  energy  policies.  The 
Action  Plan  will  remain  complementary  to  the  Emission  Trading  Scheme.  The 
objectives will have to be more demanding in the longer term e.g. 2030 and 2050. A 
pre-condition  is  that  a  commonly  agreed  verification  or  measurement  system  on 
energy saving exists34, and that proper impact assessments are carried out.  

The Plan will focus on energy supply, transmission and energy consumption sectors. 
The emphasis on the building sector will remain: as more people are living in cities, 
the  latter  present  a  natural  opportunity  for  increased  efficiency.  The  Covenant  of 
Mayors  and  similar  city  networks  are  crucial  to  realize  the  ambitions.  Cities  also 
provide possibilities to enhance more efficient urban transport and the use of electric 
cars. With 23% of total CO2 emissions coming from road transport35, the reduction of 
vehicles  energy  intensity  and  emissions  is  a  major  challenge.  Information  and 
communication  technologies  (ICTs)  also  merit  special  attention  as  ICT-based 
solutions  can  enable  amongst  others  the  continuous  monitoring,  control  and 
automation of energy use, and make energy use and even cost information visible to 
consumers in real (or near real) time. Early next year, the Commission will present a 
Communication  and  a  Recommendation  identifying  specific  actions  to  overcome 
barriers and  exploit  the  full  potential  of  ICTs  in  enabling  a  more  efficient  use  of 
energy.  

33 
34 

35 

Directive 2003/96/EC (OJ L 283, p. 51). 
We  should be able  to  measure  energy  efficiency  gains.  There  is no  common  methodology on how  to 
measure  energy  efficiencies  but  several  indicators  are  used,  as  presented  in  this  communication.  The 
Energy  Services  Directive  provides  for  the  further  development  of  a  harmonised  measurement 
methodology, and Member States and the Commission are jointly working on common guidelines for 
such methodology.  
European  Environment  Agency,  Annual  European  Community  Greenhouse  Gas  Inventory  1990-2005 
and Inventory Report 2007, p. 88. 

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4.2 

International relations 

The  Community  is  exchanging  views  and  best  practices  on  energy  efficiency  with 
third countries. Bilaterally, in dialogues with Brazil, China, India, Russia, the USA 
and in the context of enlargement countries and the European Neighbourhood Policy, 
energy efficiency features high on the agenda. Regionally, the issue is addressed e.g.. 
through the Euromed energy cooperation, the Baku process with partners in Eastern 
Europe,  the  Caucasus  and  Central  Asia,  and  in  the  framework  of  the  Africa-EU 
Energy Partnership. Multilaterally, the establishment of the International Partnership 
for  Energy  Efficiency  Cooperation  was  endorsed  last  June  by  the  G8  and  the 
Community36.  The  Heiligendamm  Dialogue  Process  is  a  similar  framework 
established by the G8. The Community is a signatory to the Energy Charter Protocol 
on Energy Efficiency and Related Environmental Aspects.  

5. 

CONCLUSIONS 

Energy and its use affect us all. Energy efficiency combats climate change, improves 
energy security, contributes to the attainment of the Lisbon goals, and reduces costs 
for all EU citizens. 

Realising  energy  efficiency  gains  and  at  least  reaching  the  20%  energy  saving 
objective must continue to be a priority and the Community's common goal. Policy 
implementation  efforts  should  be  intensified  -  in  particular  through  the  National 
Action Plans - and the initiatives of this package must be steered swiftly through the 
legislative  process.  The  proposed  measures  together  with  financing  incentives, 
energy taxation and raising awareness will bring about permanent, concrete results. 

36 

China, India and South Korea have also endorsed the IPEEC. 

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 Annex 1 

Expected annual primary energy saving potential by 2020 for EU27 for some specific 
Energy Efficiency measures (full implementation) 

Measures 

1 

energy services Dir 2006/32/EC 

Yearly primary 
energy savings 
by 2020 
compared to 
'business as 
usual' scenario  

in Mtoe 

Max 193 

Reference document37 

Yearly primary 
energy savings 
by 2020 
compared to 
'business as 
usual' scenario  

in % 

Max 9.8% 

COM(2008)11(as of 2016) 

2 

eco-design Dir 2005/32/EC 
(appliances) and labelling framework 
Dir 92/75/EC 

energy star agreement with USA 

3 

4 

5 

buildings Dir 2002/91/EC 

cogeneration Dir 2004/8/EC 

fuel efficiency in road vehicles - 
CO2&cars –public procurement 

6 

urban transport - integrated approach 

TOTAL NET (taking into account the 
interplay of measures and the 
witnessed implementation speed)  

96 

2 

130 

23 

36 

20 

256 

4.9% 

0.1% 

6.6% 

1.2% 

1.9% 

1.1% 

13% 

EuP preparatory studies 
http://ec.europa.eu/energ
y/demand/legislation/eco
_design_en.htm#consulta
tion_forum 

SEC(2006)1174 

COM(2002)415 

COM(2007)856 & 
SEC(2007)1723 
COM(2007)817 

Policy assessment of the 
CIVITAS initiative 

OBJECTIVE EU27 in 2020 

394 

20% 

Note: PRIMES model 'business as usual' baseline projections (update 2007) in 2020: EU27 TOTAL primary energy 
consumption = 1968 Mtoe.  

37 

The reference documents contain projected effects of the proposed policies therein at the time of their 
adoption, expressed either in final or primary energy demand percentages. The ratio between final and 
primary energy saving is approximately 2:3.  

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Energy saving potentials by final energy consuming sector and key drivers, actors and 
barriers for energy efficiency improvements 

Annex 2 

Share in 
final energy
cons. (2006)

Saving 
potential 
by 202038 

Key drivers for energy 
efficiency 

Key barriers 

Key actors 

•  Energy policies 
•  Market forces/ energy 

• 

100% 

21% 

41% 

30% 

31% 

20% 

prices 

•  Financing and taxation
•  Awareness 
•  Technological 
development 

•  EU and 

national/regional legal 
requirements 
•  Technological 
developments 
•  Financial and fiscal 

incentives  
•  Energy services 
Companies 
Information 
instruments (e.g. 
labelling, certificates, 
metering, campaigns) 

• 

•  Behaviour trends 
•  EU and 

national/regional legal 
requirements 

•  Consumer awareness  
• 
Information campaigns
•  Labelling 
•  High energy prices 

•  High energy and 
carbon prices 
•  Voluntary and 

28% 

19% 

• 

mandatory agreements
Improved energy 
efficiency of 
production processes 

Incomplete 
implementation of 
energy efficiency 
legislation 

•  Everybody 

•  Lack of awareness  
•  Market failures 

•  High up-front costs 
•  Owner-tenant dilemma 
•  Lack of awareness on 

the benefits 

•  Overestimation of the 
investment needs 
•  No access to attractive 
financing options 
•  Energy efficiency not 
recognized as business 
opportunity 

•  Property owners 
and tenants 
•  Construction 
business 
•  Financial 

institutions 
•  Consumer 

associations 
•  National/local 
authorities 
•  EU institutions 

•  Lack of information 
•  Limited commitment 

• 

from transport industry 
Insufficient 
infrastructure (e.g. 
poor urban planning, 
limited public 
transport) 

•  Behaviour patterns 
•  High up-front costs 
•  Limited commitment 
•  Low awareness of the 

benefits 

•  Overestimation of the 
investment needs 
•  Lack of financing 
•  Low share of energy in 

production costs 

•  Transport 
companies 
•  Associations 
•  Citizens 
•  National/local 
authorities 
•  European 

institutions 

•  Companies 
• 
Industry 
associations 
•  National/local 
authorities 
•  European 

institutions 

s
g
n
d

i

l
i

u
b

r
o
t
c
e
S

s
r
o
t
c
e
s

l
l

A

l
a
i
c
r
e
m
m
o
c
d
n
a
s
d
l
o
h
e
s
u
o
H

t
r
o
p
s
n
a
r
T

y
r
t
s
u
d
n
I

38 

Source: see note 7 supra. 

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Annex 3  

Assessment of the National Energy Efficiency Action Plans 

This  Annex  gives  a  concise  summary  of  the  assessment  of  the  National  Energy 
Efficiency Action Plans (NEEAPs) submitted by all Member States under Directive 
2006/32/EC.39  

Background 

In accordance with Article 14 (2) of the Directive, Member States were required to 
submit their first NEEAPs to the Commission not later than 30 June 2007. 

For  the  purpose  of  the  first  NEEAP,  each  Member  State  should  have  adopted  an 
overall national indicative savings target of 9% or higher40, to be achieved in 2016, 
and  an  intermediate  national  indicative  savings  target  for  2010.  NEEAPs  are 
intended to set out the national strategies of Member States towards the overall and 
intermediate  national  indicative  targets.  Member  States  should  show,  in  particular, 
how they intend to comply with the Directive's provisions on the exemplary role of 
the public sector and the provision of information and advice on energy efficiency to 
end users.  

The  first  NEEAPs  should  stimulate  the  translation  of  energy  saving  objectives  into 
concrete  and  coherent  measures  and  actions  at  the  level  of  each  Member  State  and 
set implementation milestones. The plans should trigger an exchange of experience 
between  the  Member  States  and  create  a  dialogue  between  the  Commission  and 
Member  States.  Subsequent  implementation,  monitoring  and  evaluation  of  the 
strategies and the measures identified, complemented by benchmarking and a ‘peer 
review’  process  at  European  level,  should  help  Member  States  learn  from  the 
successes and mistakes of others and should facilitate the diffusion of best practices 
throughout the EU. 

Assessment of the NEEAPs  

The  first  NEEAPs  propose  a  wide  diversity  of  policy  packages  and  measures 
targeting  different  end-use  sectors.  Many  NEEAPs  demonstrate  coherent  and 
comprehensive  strategies  towards  the  intermediate  and  overall  targets,  backed  by 
institutional  and  financial  provisions.  A  number  of  NEEAPs  clearly  identify  their 
priority end-use sectors or policy tools. 

In contrast, some NEEAPs show piecemeal thinking with a scattering of fragmented 
energy efficiency measures. The absence, or sporadic indication of savings estimates 
in  the  majority  of  NEEAPs,  along  with  the  mostly  limited  degree  of  detail  about 
assumptions made in estimating savings from different measures, have impeded the 
quantitative  assessment  of  the  NEEAPs  and  how  realistic  they  are.  In  addition,  for 

39 

40 

More detailed results of the assessment of NEEAPs will be presented in a separate Commission Staff 
Working Document planned to be produced by the end of 2008. 
Percentage of saved final energy consumption of non ETS sectors to be measured in 2016 in relation to 
the  average  final  energy  consumption  during  five-year  period  previous  to  the  implementation  of  the 
Directive for which official data are available (Directive 2006/32/EC (OJ L 114, p. 64), Annex 1). 

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several Member States there is a considerable gap between the political commitment 
to  energy  efficiency  and  the  measures  adopted  or  planned,  as  reported  in  the 
NEEAPs, and the resources attributed to preparing it. 

Almost  all  Member  States  have  introduced  9%  national  indicative  energy  savings 
target for 2016 calculated in line with Annex I of the Directive. Some Member States 
have committed to targets that exceed 9%: Italy 9.6%, Cyprus 10%, Lithuania 11%, 
and Romania 13.5%. This is very positive. Other Member States have indicated that 
they  expect  savings  from  measures  to  go  beyond  9%  without  committing  to  the 
higher target (Luxembourg 10.4%, Ireland 12.5% and the United Kingdom 18%). A 
number  of  Member  States  indicate  that  the  NEEAPs  form  part  of  their  strategy  to 
reach  the  20%  reduction  in  energy  demand  by  2020,  among  them  Austria,  Ireland 
and Sweden. A few Member States fail to comply with some provisions related to the 
setting of national indicative savings targets. Non-conformity is related in particular 
to the calculation methodology set out in Annex I and to the 2008-2016 timeframe. 

Ongoing measures that qualify as "early action"41 dominate the majority of NEEAPs 
and some Member States indicate stricter interpretation of such early actions. Some 
Member States explicitly indicate the share of savings from early action. In contrast, 
the  NEEAPs  of  some  Member  States  such  as  Estonia,  Latvia  and  Poland  rely 
extensively on new measures, though it is difficult to assess whether certain Member 
States  will  be  able  to  deliver  in  accordance  with  their  strategies  given  the  brief 
descriptions of measures and the absence of saving estimates.  

Measures  in  the  buildings  sector,  especially  residential  buildings,  have  been  at  the 
heart  of  most  NEEAPs.  Numerous  measures  target  refurbishment  of  existing 
buildings.  Some  Member  States  declare  ambitious  strengthening  of  building  codes 
and support passive or low-energy house buildings. With varying degrees of detail, 
almost  all  NEEAPs  also  include  measures  in  the  tertiary,  transport  and  industrial 
sectors  However,  as  regards  agriculture,  the  only  NEEAPs  to  include  measures 
specific  to  this  sector  are  from  Latvia,  the  Netherlands,  Spain  and  Sweden.  Some 
NEEAPs  have  included  measures  that  fall  outside  the  scope  of  the  Directive.  Most 
commonly  these  include  fuel  switch  and  power  generation,  including  large 
Combined  Heat  and  Power  installations,  biomass  district  heating,  network  loss 
reduction, biofuels, measures in international transport, and measures that have some 
impact on the Emission Trading Scheme.  

In  addition,  many  of  the  NEEAPs  include  a  number  of  promising  horizontal 
measures.  The  majority  of  the  NEEAPs  propose  a  range  of  measures  to  fulfil  the 
provisions regarding the exemplary role to be played by the public sector, but some 
Plans  contain  little  or  no  information  in  this  regard.  However,  few  NEEAPs 
demonstrate  good  strategies  for  communicating  the  exemplary  role  of  the  public 
sector.  Public  procurement  is  a  key  element  in  capturing  the  power  of  the  public 
purse for energy efficiency and the majority of NEEAPs contain public procurement 
measures.  However,  it  is  not  always  clear  if  these  measures  contain  concrete 

41 

Energy improvement measures initiated by the Member State not earlier than 1995 (in certain limited 
cases  not  earlier  than  1991)  that  have  a  long-lasting  effect,  which  will  still  lead  to  energy  savings  in 
2016 (Directive 2006/32/EC, Annex 1). 

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requirements,  as  called  for  in  Annex  VI  of  the  Directive,  and  exactly  how  these 
would be met. 

Most Member States have introduced a variety of information measures. These range 
from measures aimed at altering general public behaviour, such as public awareness 
raising campaigns, public training and education, advice on energy use and general 
information sources like web tools and publications, to measures that target business 
entities.  The  latter  comprise  sector-focussed  information  campaigns,  trainings  for 
professionals,  energy  audits  and  energy  efficiency  publications  for  professional 
stakeholders.  

A  number  of  NEEAPs  provide  good  examples  of  best  practices  and  innovative 
measures  with  a  strong  set  of  diverse  information  measures  that  target  the  general 
public and businesses. 

Conclusions 

The analysis of the NEEAPs has shown that many Member States already recognised 
that  with  an  integrated  approach  these  national  plans  can  become  the  key  tool  not 
only for the effective implementation of Directive 2006/32/EC, but also for the real 
push  to  achieving  energy  savings  which  go  beyond  obligations  arising  from  the 
current EU legislation on end-use energy efficiency. The Commission recognises the 
great  potential  that  NEEAPs  could  play  to  help  with  getting  better  focus  and 
streamlining of Member States' policy, legal and support actions to help their citizens 
and  all  local  market  actors  save  energy  in  a  cost-effective  way,  thus  reducing 
emissions  of  greenhouse  gases,  increasing  the  competitiveness  of  European 
businesses and improving energy security of the EU. Given the growing importance 
of  energy  saving  to  energy  security  and  sustainable  development  of  the  EU,  the 
Commission would welcome Member States taking the initiative to further improve 
their  current  NEEAPs  (eg.  add/improve  measures  for  important  areas/sectors  not 
sufficiently covered in their current plans, provide further details of planned actions, 
etc). 

Lessons for the future  

The current NEEAPs could play a more important role. National plans will only be 
effective  when  they  stand  for  real  action:  it  should  set  a  quantitative,  measurable 
target  with  a  time  schedule  and  concrete  steps  on  who  is  doing  what  and  the 
budgetary  and  human  resources  available.  National  plans  should  require  the 
competent national authorities to work together. Administrative structures should be 
in place  with a clear division of responsibilities. Member States should also ensure 
that  sufficient  resources  are  made  available  for  the  promotion  of  energy  efficiency 
services, information provision and monitoring. 

Also  ideally,  the  EU's  Efficiency  Action  Plan  could  be  linked  more  closely  to  the 
national  efficiency  plans  and  the  latter  could  take  into  account  longer  term  time 
horizons  (e.g.  2030,  2050)  and  more  ambitious  targets  that  are  agreed  to  by  the 
Member  States  at  EU  level.  Integration  with  other  reporting  obligations,  especially 
those related to climate protection - e.g. alignment of reporting periods, streamlined 
methodologies  on  calculation  of  energy  savings  and  reduction  of  CO2  emissions  - 
would reduce the reporting burden already carried by the Member States.  

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