Proposal for a Directive of the European Parliament and of the Council on energy end-use efficiency and energy services.

General targets for saving energy

Member States must adopt and reach an annual target for saving energy. The target is to save an annual quantity of energy equal to 1% of the quantity of energy supplied and/or sold to the end customers. Member States are to appoint one or more new or existing independent public sector authorities or agencies whose job it will be to ensure overall monitoring of the process set up to achieve these targets.

In which areas could energy efficiency be strengthened?

If current consumption trends continue, energy consumption in Europe will rise by 10% in the next fifteen years. The Commission intends to reverse this trend by combating the main forms of energy waste.

The first sector with a high energy saving potential is transport, representing a third of the EU's total consumption. The dominance of road transport and its high level petrol dependence are accompanied by congestion and pollution problems which add to energy waste. Another area affected by the improvement of energy efficiency is energy production itself. Depending on the technology used, 40 to 60% of energy necessary for electricity production is lost in the production process.

Finally, important progress can be made in the buildings sector, either in houses or offices. Heating and lighting buildings counts for nearly 40% of energy used in the EU and could be managed more efficiently.

Applying existing measures and thinking of new ones

The Commission emphasises energy saving actions already launched at European level. Out of the 20% of possible savings that could be made by 2020, 10% could result from the full application of existing legislation, particularly in the transport, heat production and buildings sectors. Effectively implementing the multiannual energy programme is equally important before launching new initiatives. Instruments for improving energy efficiency in the EU exist and so must be used.

The other 10% of energy savings require new laws and new behaviour to be adopted by all players concerned, i.e. across all public authorities, industries and individuals. The Commission therefore proposes practical energy saving measures in different sectors to meet the objective of 20% by 2020.

Avenues opened by the Green Paper

In the transport sector, tax schemes favouring clean and economical vehicles must be put in place to ensure that the polluter really pays. Similarly, manufacturers supporting energy efficiency must be rewarded and consumers must be made accountable for issues such as tyre pressure, use of public transport and car pools. The Commission also wishes to finance research and the development of alternative fuels. Finally, it calls for better road and air traffic management on a continental scale to limit congestion and pollution, particularly by using the applications of the GALILEO programme.

In the buildings sector, the Commission intends to encourage industry and consumers to use their energy better through more economical technology and behaviour. Replacing light bulbs, boilers and refrigerators with better performing appliances should be encouraged. However, the stand-by function in electrical appliances seems to be a significant source of electricity waste.

In the industrial sector, the Commission invites businesses to invest in more efficient technology to produce more with less energy. Public authorities must be ready to take action if market mechanisms are not sufficient to give an incentive for energy saving. In the long term, investing in efficient technology allows businesses to reduce their production costs and to be more competitive. Europe can also reinforce its place in the energy efficient technology market and lead the debate on energy saving on a global level.

Renewable energy : White Paper (96) laying down a Community strategy and action plan

OBJECTIVE :

To attain, by 2010, a minimum penetration of 12% of renewable energy sources in the European Union.

Renewable energy sources may help to reduce dependence on imports and increase security of supply. Positive effects are also foreseeable in terms of C02 emissions and job creation. Renewable energy sources at present account for 6% of the Union 's overall gross internal energy consumption. The Union 's aim is to double this figure by 2010. The Union 's overall objective requires a major input from the Member States, which must promote wider use of renewable energy sources as far as their potential allows. The setting of goals in each Member State could encourage efforts to:

  • make greater use of the potential available;
  • help further cut CO2 levels;
  • reduce energy dependence;
  • develop the national industry;
  • create jobs.

Substantial investment, estimated at ECU 95 billion for the period from 1997 to 2010, will be needed to achieve this overall goal. Greater use of renewable energy sources is expected to provide substantial economic benefits, in particular major export opportunities in view of the European Union's capacity to supply equipment and technical and financial services.

Estimates also point to:

  • the creation of 500 to 900 000 jobs;
  • an annual saving of fuel costs of ECU 3 billion from 2010;
  • the reduction of fuel imports by 17.4%;
  • the reduction of CO2 emissions by 402 million tonnes a year by 2010.

Main features of the action plan

The action plan aims at providing fair market opportunities for renewable energies without excessive financial burdens. For this purpose, a list of priority measures has been drawn up, including:

  • non-discriminatory access to the electricity market;
  • fiscal and financial measures;
  • new initiatives regarding bio-energy for transport, heat and electricity and, in particular, specific measures to increase the market share of bio-fuels, promote the use of biogas and develop markets for solid biomass;
  • the promotion of the use of renewable energy sources (such as solar energy) in the construction industry, both in retrofitting and for new buildings.

At the moment, little importance is attached to renewable energy sources in Community policies, programmes and the budget. The action plan aims to heighten the awareness of those responsible for the various programmes and to give greater prominence to renewable energy sources in the Union 's various policies, such as environment – employment - competition and State aid - technological research and development, in particular under the JOULE-THERMIE programme - regional policy - Common Agricultural Policy and rural development - external relations, in particular through PHARE, TACIS and MEDA programmes, …

To achieve the objective set in the White Paper, cooperation between the Member States must be increased. This has already been the subject of a proposal for a decision on the cooperation arrangements.

Support measures are also provided for, in particular under the ALTENER programme, to achieve targeted action, to inform consumers, to develop European standards, to improve the position of renewable energy sources on the capital market of the institutional and commercial banks and to create networks (of regions, islands, universities, etc.) in the field of renewable energy sources.

Campaign to get renewable sources off the ground

The aim of this campaign is to boost high-profile projects in various renewable energy sectors. Several key actions are to be promoted during the campaign:

  • the installation of one million photovoltaic systems, with 500 000 for roofs and facades for the EU domestic market (total investment cost: ECU 1.5 billion) and 500 000 for export, in particular to kick-start decentralised electrification in developing countries;
  • 10 000 MW of large wind farms;
  • 10 000 MWth of biomass installations;
  • integration of renewable energies in 100 small communities, regions, conurbations, islands, etc. as a pilot scheme.

The implementation of the strategy and action plan set out in White Paper will be closely followed, under the ALTENER programme, to measure the progress made in the penetration of renewable energy sources.

General comments

Overall, RES made little progress between 1997 and 2000 but have experienced spectacular growth in certain sectors and certain specific countries. In 1995 the proportion of RES in the EU's overall gross internal consumption was 5.4%. That figure increased to 5.9% in 1998 (interim figures). However an increase in 5.4% in the use of renewable energy sources to generate electricity, hydroelectric- and wind-power here making a major contribution, was noted between 1997 and 1998.

Although a huge amount of effort is still required at both Community and national levels in order to achieve the aims of the White Paper, the Commission feels that the principal aim is ambitious but nevertheless realistic. It should be noted that constant growth in the Community's gross internal energy consumption is a further hurdle on the way to achieving that aim. Moreover, following publication of the White Paper the signing of the Kyoto Protocol highlights even more the importance of RES. It is also pointed out that it is difficult to assess the progress made since the impact of new laws at all levels will only make itself felt two or three years after these enter into force. The communication thus represents the initial conclusions.

Progress in each sector

Biomass (including biogas, solid biofuels, etc.)

Given that it may make a major contribution to the security of supplies, biomass has become a major factor in energy, environmental and agricultural policies. Although progress has been made, this has not been enough given the potential of biomass and the available technologies. It is necessary to disseminate knowledge and information more widely within the European Union and to launch promotion campaigns stressing the energy, environmental and economic aspects of this technology.

Wind - power
Wind-power has made impressive progress. It has been growing at an annual rate of 55%. The European industry dominates the market - representing 60% of the international market. The key aim of this sector has already been achieved three years ahead of schedule. This positive development is above all the outcome of highly dynamic policies in Denmark , Germany and Spain .

Photovoltaic solar power (PV)

This sector has grown at an annual rate of 29% in Europe . Its potential is enormous and it is a highly popular source of power, but difficulties remain. It is essential that the public services and the municipalities become involved in order to solve these technical and administrative problems.

Geothermal energy

In 1999 almost one million homes were heated by geothermal energy and new stations have been completed.

Thermal solar energy (solar heating)

The solar heating of water offers major potential in the building industry, which represents 40% of the EU's energy consumption and which is increasing rapidly. A slight increase of 14% has been noted in the surface area installed between 1997 and 1998. However, the market is still underexploited. Active promotion, distribution networks and commercial innovations are required.

Hydroelectricity
The technology has been fully developed. The major hydroelectric schemes are in general competitive and do not need particular assistance. The building of small hydroelectric power stations should be developed further.

New measures

Several regulations have been adopted since the White Paper was published and a working party was set up at Community level in order to ensure closer cooperation between the Commission and the Member States .
The action taken at Community level concerns, among other things, the use of renewable energy sources in order to generate electricity, taxation, energy efficiency and output and the inclusion of other Community policies in areas such as the environment and agriculture. The policy extends to non-member countries such as the developing countries and the applicant countries. The kick-start campaign will take place in 2000-2003. The main thrust of the campaign is "100 communities aiming to be supplied 100% by RES" in 2003.
Community support for RES via all of the programmes and various subsidies is estimated at EUR 987.5 million for 1999-2003. Private-sector funding will provide most of the money needed for the campaign and the aims of the White Paper. A system of partnerships with public and private operators has been set up in order to achieve these aims.

Recommendations
The Commission feels that the efforts made in the future will necessarily have to relate to devising specific strategies and aims for sub-sectors in the Member States, the promotion of biomass, action involving the building industry, the exchange of good practices in order to homogenise activities directed nationally, and the removal of legal and administrative barriers accompanied by innovative commercial instruments at Community level, and more particularly taxation.

Renewable energy: the share of renewable energy in the EU

The Commission Green Paper entitled "Towards a European strategy for the security of energy supply" highlighted the EU's high energy dependence. The EU now depends on imports to meet 50% of its energy needs. This will increase to 70% in 2030 with an increasing reliance on oil and gas. This situation presents many economic, political and environmental risks. In this context, and even if conventional fossil fuels and nuclear power remain key sources of energy, the EU must play its part by promoting renewable energy.

This Communication assesses the development of renewable energy (RE) in the EU. It serves 3 purposes:

  • to implement the provisions of Directive 2001/77/EC under which the Commission is required to make a formal report evaluating the progress made by EU15 towards achieving national targets for 2010 for renewable energy sources;
  • to assess the prospects for achieving the target of 12% of overall energy consumption being produced from renewable energy in EU15 in 2010;
  • to put forward proposals for concrete actions at national and Community level to ensure the EU's renewable energy targets are achieved in 2010.

In order to promote progress since 2000 the EU has in a legislative framework, set 2 indicative targets for RE :

  • to increase the share of electricity generated by renewable energy to 22% in 2010 for EU15 (compared with 14% in 2000);
  • to increase the share of biofuels in diesel and petrol used for transport to 5.75% in 2010 (compared with 0.6% in 2002).

The 10 new Member States of the EU are obliged to implement the provisions of Directive 2001/77/EC on the production of electricity from RE sources. To this end, indicative national targets for the share of electricity from RE in each new Member State are set out in the Accession Treaty. These targets mean that the collective target for EU25 is 21%. Relative to this Directive, all the Member States have adopted national targets on the share of electricity produced from renewable energy sources. With the measures that have been put in place, the Commission estimates that the share of RE sources in EU15 is on course to reach 10% in 2010. However, it is currently difficult to predict whether the policies carried out and the measures adopted in the EU will enable these targets to be reached by 2010. If the current trend continues, the rate of consumption of electricity produced from renewable energy in 2010 can still be extrapolated to between 18 and 19%. According to the report, the situation varies considerably from one Member State to another. In general, countries can be divided into 3 groups having made different amounts of progress as regards RE :

•  Germany , Denmark , Spain and Finland have implemented an energy policy which should enable them to reach their national targets;

•  Austria, Belgium, France, Ireland, the Netherlands, the UK and Sweden have begun adopting policies and measures which would also allow them to achieve their national targets;

•  Greece and Portugal must improve their policies since these will not enable them to reach their targets.

Information is not available for Italy and Luxembourg . The situation in the new Member States will undergo an initial evaluation in 2006. In terms of different sources of renewable energy used for electricity production, it seems that the EU should concentrate on developing wind, solar and biomass technologies.

•  Wind energy : the European wind industry has 90% of the world equipment market. Germany , Spain and Denmark alone account for 84% of European production capacity.

•  Biomass : the development of biomass technologies is hampered by the lack of policy coordination and insufficient funding. Only Denmark , Finland and the UK are experiencing significant growth rates for this energy source. However, in most of the new Member States there is a sound potential for the use of biomass to generate both electricity and heat.

•  Photovoltaics electricity (solar) : photovoltaic output is still limited but this energy form could in the long term be developed to a greater extent in EU under the condition that a reliable political framework is created allowing companies in the photovoltaic sector to make their investments profitable.

Supporting programmes and Member State actions

Over the last two years, Member States have implemented new policies in the field of renewable energy. Legal frameworks are more structured and financial conditions have become clearer. In this respect, the Community has only limited means for funding renewable energies. The following actions were undertaken:

  • Intelligent Energy - Europe Programme (2003-2006) : The "Intelligent Energy" programme is intended to improve energy efficiency (SAVE actions), to promote new and renewable energy sources (Altener actions), to support initiatives tackling the energy aspects of transport (STEER) and to promote renewable energy and energy efficiency in developing countries (Coopener);
  • Sixth Research and Technical Development Framework Programme (2002-2006) : The programme focuses on sustainable development and the knowledge-based economy. It concentrates on five research priorities: cost-effective supply of renewable energies, large-scale integration of renewable energy, eco-buildings, polygeneration and alternative motor fuels.

Energy efficiency is as important as renewable energy in increasing security of energy supply and reducing greenhouse gas emissions. Renewable energy policy began by setting an overall target (the 12% target).

In order to achieve this target, the Member States of the EU are required to promote biofuels and the use of RE in heating systems. The fate of biofuels remains heavily influenced by tax exemptions. To date, 7 Member States have either completely or partially exempted biofuels from taxes under European legislation: Germany , Austria , Spain , France , Italy , UK and Sweden . Biofuels are relatively expensive, although the additional costs which they incur are justified by benefits across several policy fields. More effort must be put into using RE for heating highly dominated by traditional biomass use (fuel wood), heat produced by solar energy and the biogas sector. Supporting policies also to use wood much more profitable and to promote other forms of biomass.

New initiatives for increased investment in RE

According to a 2003 report, between EUR 10 to15 billion will need to be invested each year in order for 12% of energy in the EU to be produced from renewable sources in 2010. Over time, the development of each energy source has benefited from substantial public funding and risk support from Member States. Member States have different means at their disposal to support RE sources, such as electricity feed-in tariffs, green certificates, market-based mechanisms, tax exemptions …

Supplementary action could be explored on the following fronts:

  • the establishment of a new financial instrument which could be tailored to accommodate the diversity and specificity of the renewables and energy efficiency sectors. This instrument should support the first market applications of technologies of European relevance and could be the main component of the successor to the current "Intelligent Energy-Europe" programme;
  • the "Intelligent Energy-Europe" programme
  • strengthening public support for research and technological development in RETs.

The other measures planned are:

  • a Community plan for biomass to secure adequate supplies of biomass through European, national and regional/local action in the fields of energy, agriculture, waste, forestry, industry, rural development and the environment;
  • developing RE in heating
  • offshore wind policy : the Commission will review the obstacles and objections that may block the development of offshore wind energy as well as the environmental requirements which need to be met. It will also support research and development to improve turbine technology and the stability of the grid in order to increase the penetration of wind energy to over 20%;
  • electricity from solar energy : the EU needs continued, targeted RTD funding to develop increasingly pollution-free production technologies, such as solar thermal electricity for which some promising pilot projects which have just been launched in southern Europe;
  • placing biofuels on the market

 

Community framework for the taxation of energy products and electricity

The EU establishes generalised arrangements for the taxation of energy products and electricity. The Community system of minimum rates, which for a long time was confined to mineral oils, is extended to coal, natural gas and electricity. This system sets the minimum rates of taxation applicable to energy products when used as motor or heating fuels and to electricity. Its aim is thus to improve the operation of the internal market by reducing distortions of competition between mineral oils and other energy products. In line with the Community's objectives and the Kyoto Protocol, it encourages more efficient use of energy so as to reduce dependence on imported energy products and limit greenhouse gas emissions. Also in the interests of protecting the environment, it authorises Member States to grant tax advantages to businesses that take specific measures to reduce their emissions.

Exemptions and reductions

The following are exempt from taxation :

•  energy products/electricity used to produce electricity and electricity used to maintain ability to produce electricity. Member States may, for environmental policy reasons, subject these products to taxation;

•  energy products supplied for use as fuel for the purposes of navigation within Community waters, including fishing, other than private pleasure craft, and electricity produced on board a craft.

Member States may apply total or partial exemptions or reductions in the level of taxation to, inter alia :

•  energy products used under fiscal control in the field of pilot projects for technological development of more environmentally-friendly products or in relation to fuels from renewable sources;

•  biofuels;

•  forms of energy which are of solar, wind, tidal or geothermal origin, or from biomass * or waste;

•  energy products and electricity used for the carriage of goods and passengers by rail, metro, tram and trolley bus;

•  natural gas and LPG used as propellants.

The Directive takes account of the competitiveness of businesses by providing for measures to alleviate the tax burden on energy intensive businesses * and/or businesses that undertake to achieve environmental protection objectives or to improvements in energy efficiency. It also provides that Member States may refund, fully or in part, taxes paid by businesses that have invested in the rationalisation of their energy use. This refund may be as much as 100% in the case of energy intensive businesses, and up to 50% for other businesses.

Green certificates

 

A Green Certificate (or "RE Certificates") represents the delivery of one megawatt-hour of renewable power to the total energy infrastructure. Certificates represent the environmental benefits created when electricity is generated from renewable resources instead of fossil fuels, like coal and natural gas, that release air pollution.

By purchasing Certificates, an enterprise is supporting clean energy development and offsetting the emissions from the production of your company's electricity. As purchases of Green Certificates increase, so does the demand for additional new, clean RE facilities. Green Certificates are an effective way to "improve" electricity consumed. They help:

  • Reduce greenhouse gas emissions.
  • Meet RE targets.
  • Improve community relations.
  • Strengthen positive brand and company perceptions for customers and employees.

Green Certificates

  • Provide a low-cost way to offset pollution due to electricity usage.
  • Provide organizations a true "green energy" marketing claim.
  • Can be used to cover all facilities in one contract.
  • Are easy to implement relative to other sustainability efforts.
  • Can be purchased without switching utilities.
  • Has no impact on energy reliability.