The Green Paper on Energy Efficiency

Doing more with less as part of the Lisbon Strategy

Directorate general for Energy and Transport 1

Background: The Green Paper on Energy security of supply (2000)

 Gulliver in chains  Energy dependency in EU-25 is 50% and will reach 70% by 2030  Recognise the need to deal with the Demand side of Energy Policy  A wide debate with stakeholders with more than 300 meetings in 30 countries Directorate general for Energy and Transport 2

What has been done since?

 Energy Performance of Buildings Directive  Cogeneration Directive  Eco-design Directive  Proposal of a Directive on energy services and end-use efficiency  A new programme “Intelligent Energy – Europe”  Other measures including renewable energies Directorate general for Energy and Transport 3

Why publishing a green paper on energy efficiency? (1) The Priority dossier of the Commissioner

 An ever increasing energy consumption   1 to 2% a year increase of energy consumption Energy consumption could still increase by about 10% by 2020  Broad discussion on how to curb rising energy use in EU and arrive at a reduction of 20% by 2020 Directorate general for Energy and Transport 4

Why publishing a green paper on energy efficiency? (2)

 Improve energy efficiency in EU to:  Use energy more rationally – stop wasting it  Stop wasting money on energy we don’t need to use (Lisbon - growth)  Mitigate climate change (Kyoto)  Limit avoidable pollution  Encourage research and development in promising sectors (Lisbon – jobs)  Increase our energy security position Directorate general for Energy and Transport 5

The energy efficiency potential (1)

 An ambitious goal of 20% by 2020 compared with today consumption  based on several scientific studies  cost-effective  Half of this potential can be realised with adopted legislations  Technical potential of around 40% reduction 500 250 0 mtoe 2000 Total energy consumption by fuel and energy intensity Energy intensity 1990=100 100 renewables 1750 1500 1250 75 nuclear natural gas 1000 750 50 oil solids 0 25 energy intensity 1990 2000 2010 2020 Directorate general for Energy and Transport 6

The energy efficiency potential (2)

 EXAMPLES of possible savings Electricity production and cogeneration Extension of buildings Directive Eco-design Transport 70 Mtoe 30 Mtoe 30 Mtoe 45 Mtoe 1600 1400 1200 1000 800 600 400

Energy intensity (toe/M€95)-2003

200 0 DK IE AT IT DE FR SE NL LU UK EU ES BE PT EL CY MT FI SI HU PL LV SK CZ LT EE Directorate general for Energy and Transport 7

What are the benefits?

 Savings representing 60 billions €  200 to 1000 €/year for an average household  Around a million jobs could be created  Reduce waste of scarce resources  Strengthen the security of supply  Strengthen our competitive position  Gives new push to RTD Directorate general for Energy and Transport 8

What are the benefits for environment?

 Quickest and most effective way to meet Kyoto Climate Change objective  By saving 20% of energy consumption, it would be possible to secure 50% of the necessary reductions of CO 2 emissions  Reduction of local pollution  Stopping wasting resources Directorate general for Energy and Transport 9

Where energy can be saved?

Estimated gross energy consumption (1 725 Mtoe) by sector in 2005 (EU-25)

Tertiary 12% Transformation losses, etc 35% Transport 24% Non-energy use 7% Industry 22%

Directorate general for Energy and Transport 10

200 150 100 250

What has been done?

Where are we going?

Long-term development of GDP, energy demand and energy intensity (baseline) for EU-25

50 0 1971 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 GDP Energy demand Energy intensity

Directorate general for Energy and Transport 11

The Negajoules concept

Development of primary energy demand and of ‘negajoules’ (EU-25) 2500 2000 1500 1000 500 Coal 0 1971 1974 Oil Gas 1977 1980 Nuclear 1983 1986 Other electricity 1989 1992 Biomass 1995 1998 2001 Negajoules

Directorate general for Energy and Transport 12

Obstacles - Why is the potential not realised?

In theory market will achieve the best result, but…   Financial obstacles Insufficient regulatory action   No transparent and cost-reflective prices  Lack of market for energy efficiency Lack of information and education Directorate general for Energy and Transport 13

Obstacles – The financial obstacles

 Lack of information on costs and profitability   Split-incentive Risk aversion  Address with: better and more (targeted) information   Global loans and right intermediaries Role of Energy Service Companies (ESCO’s) Directorate general for Energy and Transport 14

Obstacles - The regulatory obstacles

 Reluctance to commit to targets  Sub-optimal use of tax and state aid  • • • Address with: Better information towards decision • makers To create the political will and awareness Better use of tax and state aid Rationalisation of subsidies Directorate general for Energy and Transport 15

Action is needed now!

 Need to acknowledge that public authorities are necessary to address inadequacies of the market  Most obstacles can be removed by policy intervention  Influence change of behaviour by showing example Directorate general for Energy and Transport 16

Options to achieve the potential

Directorate general for Energy and Transport 17

At what level energy efficiency should be addressed

  European initiatives on all levels:  European  national   regional and local industry   consumers (citizens) International: Gleneagles conclusions (7/7/05) Leading to Action Plan with concrete steps Directorate general for Energy and Transport 18

What can be done at European level? (1)

 Broad policy options   Streamlining EE in all policy Research and Development • • EU is in the lead Need to strengthen its efforts  Benchmarking National Action Plans • Good example in all Member states but not replicated elsewhere • • Commission can act as a catalyst Exchange of best practices: gathering information and pass it on Directorate general for Energy and Transport 19

What can be done at European level? (2)

•

Financing options

 Better use of taxation  Better targeted state aid  Public procurement  European co-financing  Coordination of policies with the EIB, EBRD, World Bank Directorate general for Energy and Transport 20

What can be done at European level? (3)

•

Specific option



Extension of the Buildings Directive



Domestic appliances (Minimum efficiency and labelling)



Increasing fuel efficiency of vehicles



Foster market transparency



Information and protection of consumers

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What can be done at National level? (1)

 White certificates : a market instrument for energy efficiency  Electricity industry   Regulation of electricity networks Regulation of supply activities – metering Directorate general for Energy and Transport 22

What can be done at National level? (2) Improving electricity generation

 Replacing power plants with 25% efficiency while best technology is 60%   Use of best technology Promotion of distributed generation    Promotion of cogeneration CHP in District heating Improve efficiency coal fired plants over 50% asap Directorate general for Energy and Transport 23

What can be done at regional and local level?

 Many measures can be taken at regional and local levels  Action will only produce all its potential gains if operations are reflected locally  Creation of regional and local energy agencies (networks)  Programme Intelligent Energy – Europe  Specific financing instruments: clearinghouse facilities  Information and communication Directorate general for Energy and Transport 24

What can be done by Industry?

 Promote best practices and exchange of information on results of various voluntary agreements  constructive contributions and commitment to efficiency goals, e.g. supporting voluntary agreements/code of conduct initiatives  Most regulation is directed at industry!

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What can be done at consumers/citizens level?

 Information  Protection Directorate general for Energy and Transport 26

What can Europe do at International level?

 World energy use rising steeply  Uneven division of access to energy  Security of energy supply  Integrating efficiency in international relations:  Neighbourhood policy   Development policy International financing institutions  EU is better placed than Member State to initiate action at that level Directorate general for Energy and Transport 27

Corner stones: Transports

 Optimise traffic management (including air)  Develop a market for clean vehicles  Infrastructure charging  Improvement in tyres  Promote public transport  Aviation Directorate general for Energy and Transport 28

The debate

  Broad discussion till 31/03/05  With all stakeholders including citizens  All options are open, all contributions welcome On basis of results of consultation -- Action Plan in 2006 Directorate general for Energy and Transport 29