COMMISSION STAFF WORKING DOCUMENT   SUMMARY OF THE IMPACT ASSESSMENT Accompanying document to the   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS   European Energy Efficiency Plan 2011     {COM(2011) 109 final} {SEC(2011) 277 final}
Date: 2011-03-08
Institutions: European Commission
Subjects: consumer, energy consumption, energy policy, energy saving, energy transport, financial aid, innovation

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EUROPEAN COMMISSION 

Brussels, 8.3.2011 
SEC(2011) 280 final 

COMMISSION STAFF WORKING DOCUMENT 

SUMMARY OF THE IMPACT ASSESSMENT 

Accompanying document to the 

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

European Energy Efficiency Plan 2011 

{COM(2011) 109 final} 
{SEC(2011) 277 final} 

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Europe can reduce its primary energy use by 20% in 2020 simply by applying cost-effective1 
energy  savings  measures.  This  would  make  the  EU's  economy  more  competitive  and  create 
jobs  and  new  business  opportunities.  EU  citizens  would  pay  less  on  their  energy  bills, 
reducing  the  number  of  fuel-poor  households.  Energy  efficiency  also  means  better  use  of 
energy resources and reduced import dependency. Less energy use also means less CO2 and 
other harmful emissions, less impact on the ecosystem, and better quality of life for people. 
Energy efficiency and savings benefit the EU economy as a whole, Member States, businesses 
and private individuals. 

1. 

WHAT IS THE PROBLEM? 

At the Spring Council 2007, the EU Heads of States and of Governments stressed 'the need to 
increase energy efficiency in the EU so as to achieve the objective of saving 20% of the EU's 
energy consumption compared to projections for 2020'2.  

However,  the  EU  is  not  on  track  to  fully  realize  these  cost-effective  energy  savings.  The 
PRIMES 2009 energy efficiency scenario shows a break in the trend towards ever increasing 
energy demand but the reduction in consumption relative to previous projections will still be 
only about 9% in 2020. Therefore, if the EU does not double its efforts on energy efficiency, 
it will not reach its 20% target and will not realize all the associated benefits for the economy, 
society and environment.  

The causes of insufficient progress are market failures (such as insufficient price signals, split 
incentives, asymmetric information, missing or incomplete markets and high initial costs) and 
regulatory failures (such as lack of comprehensive policy frameworks, poor enforcement and 
low level of ambition). The rebound effect is another challenge that, however, is difficult to 
address at EU level as it relates to behaviour and the free choice of individuals. 

2. 

EXISTING POLICIES ARE INSUFFICIENT 

To  tackle  the  above  limitations  and  reap  the  benefits  of  energy  efficiency  a  number  of 
policies have been adopted at EU and national level.  

The  Energy  Efficiency  Action  Plan  (EEAP)  of  2006  provided  a  comprehensive  policy 
framework, listing 85 measures, at the EU level that has led to the adoption of more than 20 
legal measures and numerous soft-law initiatives. Assessment of the EEAP has shown that the 
majority  of  the  measures  have  been  completed  or  are  in  progress  of  implementation.  The 
EEAP  has  fulfilled  its  objective  of  being  an  important  driver  for  the  adoption  of  ambitious 
policies at EU, national and local level. However, the EEAP was not designed to achieve the 
full energy savings potential and because of this its updating is needed. 

A number of policies were also adopted by Member States but these will not be sufficient to 
close the gap. The first National Energy Efficiency Action Plans (NEEAPs), submitted as an 

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For  example,  Fraunhofer  ISI  et  al.  2009:  Study  on  Energy  Savings  Potentials  in  EU  Member  States, 
Candidate  Countries  and  EEA  Countries;  Action  Plan  for  Energy  Efficiency:  Impact  Assessment 
SEC(2006) 1174; Lechtenböhmer and Thomas, Wuppertal Institute. 2005: The mid-term potential for 
demand-side energy efficiency in the EU. 
7224/1/07 REV 1. 

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obligation under the Energy Services Directive, give a good account of many of the policies 
that  Member  States  have  set  to  realise  their  energy  efficiency  and  savings  potential3.  The 
Commission's  evaluation  of  the  NEEAPs  revealed  the  progress  attained  in  each  Member 
State.  It  concluded  that  even  though  many  NEEAPs  already  contain  coherent  and 
comprehensive strategies for the achievement of intermediate and overall targets, some show 
piecemeal thinking with a scattering of fragmented energy efficiency measures.  

3. 

EU HAS AN IMPORTANT ROLE 

The EU's right to act as regards energy efficiency and savings is instituted in the Treaty on the 
Functioning of the European Union, Article 194(1). Although much responsibility rests with 
Member States, the EU's right to act has been established because of the importance of 
energy  efficiency  and  savings  for  realizing  the  EU's  climate  change,  security  of  energy 
supply,  competitiveness  and  environmental  protection  objectives.  Tackling 
these 
objectives  requires  coordinated  action  and  coherent  energy  efficiency  and  savings  policy. 
Therefore, the EU has a role in: 

–  Setting minimum requirements in areas where there is a risk of internal market distortions 

if Member States take individual measures.  

–  Establishing  a  common  framework  which  creates  the  basis  for  coherent  and  mutually 
reinforcing mechanisms while leaving in being the responsibility of Member States to set, 
in a transparent and comparable way, the concrete levels that are to be met.  

–  Creating a platform for exchanging best practices and stimulating capacity building.  

–  Using  EU  instruments  to  promote  energy  efficiency,  e.g.  through  financing,  and  to 

mainstream it into the other policy areas.  

–  Promoting  the  EU  internationally  as  a  forerunner  in  the  area  –  an  activity  that  is  also 

beneficial for EU businesses.  

4. 

MAIN POLICY OBJECTIVES  

The general EU policy objective, as set by EU leaders, is to increase energy efficiency in the 
EU so as to achieve the objective of saving 20% of the EU's energy consumption compared to 
projections  for  2020,  as  estimated  by  the  Commission  in  its  Green  Paper4  on  Energy 
Efficiency. This objective is consistent with the EU's overall energy policy. Increased energy 
efficiency is an essential element of the new European Energy Strategy 20205. 

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Originally the NEEAPs were due in mid-2007 but many were delayed and were submitted by mid-2008 
COM(2005)  265:  Primary  energy  savings  amounting  to  370  Mtoe  in  2020  compared  to  a  baseline 
scenario projecting the level of primary energy consumption. The baseline was updated in 2007 to take 
account of two new Member States.  
COM(2010) 639. 

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More generally, energy efficiency contributes to broader initiatives to achieve climate change 
policy  objectives  and  to  stimulate  economic  recovery  and  smart,  sustainable  and  inclusive 
growth, as outlined in Europe 2020: A strategy for smart, sustainable and inclusive growth6.  

5. 

ANALYTICAL APPROACH  

The aim of this IA was to analyze the achievements and challenges of existing policies and 
the trends in  energy  consumption  and  assess whether there are possibilities for additional 
action at EU level.  

The analysis was proportionate to the foreseen level of detail of the policy document itself. As 
the  concrete  measures  will  be  developed  in  the  future  and  will  be  accompanied  by  impact 
assessments  when  needed,  the  evaluation  was  done  mainly  in  qualitative  terms.  However, 
quantitative examples of similar policies or general calculations of the possible impacts were 
presented where possible.  

The analysis discussed, first, which is the best way to approach energy efficiency at EU level 
and,  second,  what  types  of  EU  policy  instruments  are  needed  to  support  Member  States  in 
realizing the savings potential.  

Three  main  policy  alternatives  were  analyzed:  (i)  setting  only  targets  and  leaving  it  to 
Member States to develop the policy mix needed; (ii) no targets, but developing detailed EU 
policy  instruments,  inviting  Member  States  to  implement  and/or  supplement  them;  (iii)  a 
comprehensive policy framework at Member State level (including objectives/targets), while 
the EU develops policy instruments to support Member States. 

Afterwards  for  each  sector  (i.e.  the  residential  and  tertiary,  transport,  industry  and  energy 
sectors)  various  types  of  policy  instruments  were  analyzed  (i.e.  voluntary,  regulatory, 
financing, awareness and training) in order to identify whether their application at EU level 
would be needed for the specific policy objectives for the sectors to be met. The selection of 
the best options was based on the progress achieved by the existing policies and on evaluation 
of the remaining barriers, the EU value added, possible impact, effectiveness, efficiency and 
coherence.  

6. 

CONCLUSIONS: PREFERRED NEW POLICY FRAMEWORK 

Preferred general policy approach 

It is essential that a coherent policy mix is developed at Member State level with clear, simple 
and  measurable  objectives.  Well  coordinated  measures  at  EU  level  could  provide  Member 
States with the needed framework on which to further develop their efforts. The Commission 
could  propose  individual  measures  for  each  sector  that  would  provide  for  a  common 
framework and also support Member States in developing their own tools.  

This approach would lead towards the realization of the cost-effective potential and address 
major  barriers  such  as  policy  fragmentation,  lack  of  political  commitment  and  policy 

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COM(2010) 2020. 

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predictability.  It  would  ensure  that  the  possible  synergies  between  the  various  policies  are 
explored.  

The  Commission  could  in  addition  study  the  best  approach  to  objective  setting  and  the 
interaction  of  such  objectives  with  other  policy  instruments  (especially  climate  targets).  It 
could propose the establishment of NEEAPs as a key document. A strengthened and extended 
(to  all  supply  and  demand  sectors)  National  Energy  Efficiency  Action  Plan  could  give  high 
political visibility to energy efficiency and drive the process. Furthermore, in order to increase 
the engagement of local authorities it is suggested that the successful model of the Covenant 
of  Mayors  supported  by  the  Commission  is  continued  to  keep  it  growing  and  realising  its 
potential. 

Preferred way forward for the residential and services sectors 

The analysis concluded that to address the challenge of insufficiently high renovation rates of 
buildings further strengthening of the current policy framework on buildings (Option A3a) is 
not  necessary  as  the  recent  modification  of  the  legislative  framework  (especially  of  the 
Energy Performance of Buildings Directive) is already ambitious and the focus should be on 
its implementation. This is not the case for product requirements. To increase the uptake of 
energy  efficient  products,  the  scope  of  Ecodesign  and  Energy  Labelling  could  be  further 
extended  to  cover  more  product  groups,  especially  in  the  tertiary  sector,  and  also  some 
construction  materials  (e.g.  windows)  (Option  A3b).  This  would  further  support  the 
establishment of markets for energy efficient products and materials. 

Measures on financing would be essential to tackle the serious limitations on the availability 
of liquidity for high upfront costs and also to some extent the landlord-tenant problem. The 
limited  financial  resources  at  EU  level  could  be  particularly  targeted  at  providing  technical 
assistance  to  Member  States  and  local  authorities  but  also  provide  risk-sharing  and  project 
guarantee  support  (Option  A4a).  With  the  economic  crisis  it  cannot  be  expected  that 
significant additional public funds would be dedicated to energy efficiency and it is therefore 
essential that these instruments aim at better engagement  of third party financing. Measures 
that could further support the engagement of private investors are energy savings obligation 
on energy utilities (Option D3d) and support for the development of energy service companies 
(ESCOs)  Option  D5).  Furthermore, 
introduction  of  certain  energy  efficiency 
conditionalities for public funding support is considered beneficial (Option A4b). 

the 

The  persistent  lack  of  a  qualified  building  workforce  due  to  the  undeveloped  character  of 
markets is recognised as one of the main non-technological and non-financial barriers to the 
deployment of optimal energy renovations or installation of appliances in buildings. It could 
be tackled at EU level by supporting Member States with tools (e.g. development of national 
qualification  roadmaps,  education  and  training  curricula,  accreditation  and  certification 
schemes) and creation of platforms on the exchange of best practices. 

Additionally  measures  on  awareness  raising  (A5)  and  increased  voluntary  engagement  of 
private  entities  (Option  A2)  would  be  beneficial  and  could  be  implemented,  if  there  are 
sufficient resources as the EU has a limited role and such measures would remain mainly in 
the domain of Member States or local authorities.  

Preferred way forward for the transport sector 

The projected growth in the transport sector's energy consumption up to 2020 is the highest of 
any  sector.  To  realize  the  remaining  potential  support  is  needed  for  the  transformation  of 

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transport  towards  more  efficient  vehicles,  modes  and  usages.  However,  because  the 
forthcoming Transport White Paper will give further impetus to the increased decarbonisation 
and resource efficiency of the sector, no options were analyzed in the IA.  

Preferred way forward for the industry sector 

Even though industry has experienced the highest energy efficiency improvements, still some 
potential  remains.  EU  policies  have  already  partially  addressed  some  of  the  possible 
environmental impact of the sector. Therefore, the objective as regards the industry sector is 
to  support  the  use  of  this  untapped  potential  while  remaining  coherent  with  existing  policy 
instruments  (e.g.  Emissions  Trading  Scheme  (ETS)  and  the  new  Industrial  Emissions 
Directive).  The  barriers  in  the  sector  are  mainly  a  lack  of  strong  price  signals,  lack  of 
awareness  and  training  (especially  for  SMEs),  and  also  a  lack  of  long-term  policy  planning 
which increases the perception of risk and deters companies from realizing investments. 

The analysis of the possible approaches concluded that further legal instruments that would be 
in  line  with  the  above-mentioned  objective  and  existing  policy  could  be  developed  (Option 
C3).  To  this  end,  more  implementing  measures  under  the  Ecodesign  Directive  could  be 
proposed  that  would  cover  commonly  used  products  in  industrial  processes  (such  as  large 
pumps  or  furnaces).  Custom-made  equipment  and  systems  could  be  addressed  with  generic 
energy-efficiency  requirements  to  be  operationalised  though  standards.  In  addition,  certain 
energy  management  requirements  (e.g.  energy  audits)  could  be  established  for  large  energy 
consumers.  For  SMEs,  information  toolkits  and  assistance  to  manage  their  energy 
consumption could be provided (Option C5).  

Important  mobilization  of  projects  in  the  industry  sector  could  come  from  energy  savings 
obligations,  if  imposed  on  energy  companies  (Option  D3d)  and  the  promotion  of  ESCOs 
(Option D5).  

Measures  on  awareness  raising  (Option  C4)  and  increased  voluntary  engagement  of  private 
entities (Option C2) would be also beneficial and could be implemented if there are sufficient 
resources. Still, the EU has limited role and such measures remain mainly in the domain of 
Member States or local authorities.  

Preferred way forward for the energy sector 

At present, the average efficiency of the generation capacity is considerably lower than best 
available technologies. The main reason for this is the lack of sufficiently strong price signals 
in relation to investment decisions for the construction of new capacities and the retirement of 
old ones. The ETS in its third phase will have a certain impact on this problem for the units it 
covers.  Therefore,  it  not  appropriate  to  propose  further  regulatory  instruments  without 
knowing  its  concrete  effects  (Option  D3a).  However,  with  the  growing  number  of  small 
generation  installations,  the  need  for  further  regulatory  instruments  to  ensure  their  high 
efficiency could be studied.  

The  full  potential  for  residual  heat  use  or  energy  recovery  is  also  not  used.  The  analysis 
showed  that  further  regulatory  measures  for  the  promotion  of  cogeneration  and  district 
heating and cooling units could be developed following further analysis and possible revision 
of the main policy framework in the area (i.e. the Co-generation Directive) (Option D3b). 

National  Regulatory  Authorities  (NRAs)  could  play  an  important  role  in  steering  energy 
efficiency  improvements  of  the  grid,  promoting  smart  grids  and  promoting  intelligent 

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metering  systems  that  ensure  peak  shaping  possibilities  and  optimization  of  energy  demand 
and supply. This could be done by conferring more powers on them (Option D3c).  

Energy  companies  dispose  of  important  information  about  the  energy  consumption  of  their 
clients  but  have  no  stimuli  to  use  it  for  reducing  their  clients'  energy  consumption  as  this 
would mean fewer revenues for them. This could be overcome by the introduction of energy 
savings  obligation  schemes  which  would  ensure  that  for  a  small  short-term  increase  of  the 
energy  bill  the  most  cost-effective  long-term  measures  will  be  realized  (Option  D3d).  The 
best methods of doing this need to be studied in further detail. In order not to have negative 
interactions  with  the  ETS  the  certificates  that  prove  energy  reductions  should  not  be  traded 
within the ETS. 

Usually  the  managers  of  energy  companies  are  well  aware  of  the  possibilities  for  energy 
savings  at  their  companies.  However,  the  specific  subsector  that  would  require  additional 
support in terms of information, guidelines and exchange of best practices is that of ESCOs 
(Option D5). Voluntary agreements could also lead to energy savings and could be considered 
(Option D2). 

Will the measures be sufficient to reach the 20% objective? 

The preferred options provide for a wide range of supporting instruments that would intensify 
the  uptake  of  the  energy  savings  potential  and  the  related  benefits,  and  the  maturing  of  the 
energy efficiency markets. Quantification was not possible for all options but from those that 
could be quantified it can be concluded that there is good chance that the remaining savings 
gap will be closed. However, the concrete results will depend on the level of ambition of the 
regulatory  and  non-regulatory  initiatives  and  the  pace  at  which  they  are  implemented. 
Therefore, mid-term evaluation and possible updating of the Plan would be essential to ensure 
that there are continuous efforts on energy efficiency. 

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