Energy efficiency: towards a strategy for the rational use of energy

1) OBJECTIVE

To promote energy savings.

2) ACT

Communication from the Commission of 29 April 1998: Energy Efficiency in the European Community - Towards a Strategy for the Rational Use of Energy [COM (1998) 246 final - Not published in the Official Journal].

3) SUMMARY

This Communication reflects the political commitment to energy efficiency. It focuses on what is realistically and economically feasible in the short and medium term.

The Commission's objectives are:

• to underline the economic potential for energy efficiency and barriers to investment in this field;
• to consider the policies followed so far;
• to highlight relevant Community, national and regional action;
• to stimulate discussion towards a detailed action plan;
• to prepare the ground for common policies and actions in line with the Kyoto commitments.

According to estimates, the economic potential for improving energy efficiency between 1998 and 2010 for all sectors combined is approximately 18% of the total annual energy consumption for 1995.

However, this cost-effective potential is not being fully realised. This is because barriers to investments in energy efficiency remain.

The price factor is important, as energy efficiency will only fully penetrate the market if energy prices accurately reflect energy costs. This can be achieved by:

• internalising external costs through taxation and fees;
• liberalising the electricity and gas sectors, which will improve efficiency in energy production and bring prices down.

There are also numerous institutional and legal obstacles to improving energy efficiency, such as:

• the continued practice of selling energy in the form of kWh instead of as energy services such as heating, lighting and power;
• the practice among builders and landlords of installing appliances with low initial costs but high running costs for energy, costs which are incurred by the home-buyer or tenant.

Lack of information for consumers and manufacturers, technical barriers and financial obstacles also hamper investment in energy efficiency.

The Communication reviews existing energy efficiency measures. They are of various kinds:

• technological programmes such as JOULE-THERMIE;
• the SAVE programme with the drafting and adoption of legislation, e.g. on labelling the energy consumption of refrigerators;
• support for investments via the ERDF and the Cohesion Fund;
• international cooperation, notably through the PHARE, TACIS and SYNERGIE programmes.

In addition to these programmes, the Communication proposes a strategy for the rational use of energy.

In general terms, efforts must be made to promote energy efficiency in other policies, notably in regional, transport, fiscal, research and development and international cooperation policies.

More specifically, the following areas for action are proposed as priorities for the short and medium term:

• energy efficient buildings;
• review of Council Directive 93/76/EEC to limit carbon dioxide emissions;
• energy-efficient household appliances and other end-use equipment;
• wider use of negotiated and long-term agreements on minimum efficiency requirements;
• increased dissemination of information;
• third-party financing, guarantee of results and other creative financing schemes;
• energy efficiency in the electricity and gas sectors and combined heat and power (CHP);
• energy management and public and cooperative technology procurement.

Finally, the Communication stresses the need for a strong commitment from all decision-makers and stakeholders if significant energy savings are to be made. Member States will need to develop their own national strategies alongside the Community strategy.

In the light of the reactions to this Communication by the Community institutions, the Commission will produce an Action Plan for Energy Efficiency.

Last updated: 26.03.2007