Source: EURLEX
Language: en
Format: md

**EN**

# **EN EN**

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}

# **EN EN**

Europe can reduce its primary energy use by 20% in 2020 simply by applying cost-effective [1]
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 CO 2 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.** **W** **HAT 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.** **E** **XISTING 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

1 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.
2 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 potential [3] . 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.** **M** **AIN 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 Paper [4] 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 2020 [5] _._

3 Originally the NEEAPs were due in mid-2007 but many were delayed and were submitted by mid-2008
4 COM(2005) 265: P rimary 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.
5 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 growth_ [6] .

**5.** **A** **NALYTICAL 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.** **C** **ONCLUSIONS** **:** **P** **REFERRED 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

6 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, the introduction of certain energy efficiency
conditionalities for public funding support is considered beneficial (Option A4b).

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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