1. Why energy efficiency? What challenges and policies for its increased market uptake?
Dr. Gergana Miladinova
Unit C.3 (Energy efficiency)
DG Energy. European Commission
29 November 2011 1

2.  GAP MIND THE GAP! 20% Objective business as usual Status today 1900
* Gross inland consumption minus non-energy uses
Primary energy consumption*, Mtoe
Projections from 2007
Projections from 2009
20% Energy saving objective
1842 Mtoe
1850
1800
1750
Status today
1700
1678 Mtoe
GAP
1650
1600
1550
1474 Mtoe
20%
Objective
1500
1450
1400
2005
2010
2015
2020
Source: IA EEP, SEC(2011) 277 2

3. Why European energy efficiency policy?
Why European energy efficiency policy?
Reduce EU’s energy bill
Create new business opportunities
Boost R&D & markets for EU global leadership
Security of
supply
Competitiveness
Sustainability
Main messages
The benefits from energy efficiency improvements are threefold, as there contribute to improve Europe security of supply, Europe’s competitiveness and Europe’s sustainability.
Background on the energy bill: 20% reduction in primary energy consumption means 20% less import needs (368 Mtoe at an average price of X EUR=200 bn EUR) GERGANA
Reduce EU’s energy dependence
Reduce investments in energy infrastructures
Improve the energy trade balance
Reduce CO2 emissions
Limit environmental degradation

4. Why this focus on buildings?
Buildings are responsible for about:
40% of EU final energy use
36% CO2 emissions
210 M households, conditioned floor area: 15000km2 – residential, 6000km2 - commercial
Construction sector: 9% of EU GDP, 8% of EU-workforce, € 2 trillion annual turnover - hardest hit by the crisis
Benefits:
Considerable savings possibilities
Positive employment impact: up to 2 million jobs created/retained
Lower energy bills + better living conditions
Investments in energy efficiency trigger economic activity
EU 27 total
Energy use
CO2-emmissions
EU- Buildings sector
40%
36%
and €2 trillion annual turnover
Source: IA recast EPBD, SEC(2008) 2864, Annex 5; IA for Ecodesign/Energy Labeling; Ecorys 2010; Eurostat 4

5. SIGNIFICANT COST-COST EFFECTIVE SAVINGS
SIGNIFICANT COST-COST EFFECTIVE SAVINGS
Savings expected to be achieved with already existing measures
Remaining saving potential to be addressed with new measures 2% 5%
16%
11%
29%
Source: IA EED, SEC(2011) 779, based on Fraunhofer ISI et al. 2009, PRIMES 2007 and 2009 and expert estimations

6. 
Many challenges
Energy market prices do not reflect all costs to society plus low price elasticity
Asymmetric information on the benefits and costs. Principal-agent market failure
Missing or incomplete markets and low mobilisation of funds (e.g. low demand, low number of trained professionals, lack of suppliers)
High transaction costs, decentralised/ local projects
Low replacement rates: 92% of building stock today will be there in 2020, and 75% in 2050
Suboptimal renovations – lock-in effect
Lack of a comprehensive policy framework
=► Low energy related renovation rates of buildings and low replacement rates of energy-using products
=► Need of coordinated intervention at all levels and with comprehensive policy mix

7. 
Stepping stones 1: current policies (EPBD, Ecodesign and Energy Labelling)
Minimum energy performance requirements (MEPR):
Member States to set MEPR for all new and existing buildings (undergoing major renovation)
Member States to set MEPR for technical building systems and elements when installed, replaced/upgraded
Member States to ensure that after 2020 all new buildings are nearly zero energy
Ecodesign minimum requirements set in implementing measures to be used by industry when developing products to be placed on the EU market and/or put into service
Information tools:
Energy Performance certificate for buildings or apartments (for newly-built, on sale, newly rented)
Inspection report for HVAC
Energy Label (for energy-using products)

8. EPBD makes energy efficiency visible
EPBD makes energy efficiency visible
Concrete example of the EPBD implementation: energy performance certificates from various Member States

9. 
Example ecodesign/labelling: Interaction between minimum requirements and information
The Ecodesign Directive addresses the supply side while the Energy Labelling Directive addresses the demand side.
It is the combined effect of both measures leads to market transformation.
Source: IEA, P. Waide, International use of policy instruments, Copenhagen, 05 April 2006

10. Stepping stones 2: proposal for a new EE Directive
Stepping stones 2: proposal for a new EE Directive
Public sector to lead the market transformation (renovation target, energy efficiency criteria in public purchase)
Energy efficiency obligation schemes or alternative approaches to be set by MS to ensure measures are realised
Encouragement of energy performance contracting
Accurate and frequent individual metering and billing to inform consumers
Mandatory energy audits for large companies and promotion of audits for households and SMEs
Heat and cooling demand plans
Strong obligations for uptake of cogeneration and promotion of district heating and cooling

11. ILLUSTRATON OF FACTORS ASSESSED (Energy efficiency obligation, IA EED)

12. 
Stepping stones 3: financing and capacity Example: Technical assistance facilities under the IEE
ELENA-EIB
Large scale investments
Direct contracts with EIB
Open call, no deadline
Leverage 20
All IEE MS
>Є50m
MLEI
Small-scale investments
Direct contracts with EACI
IEE call, standard deadline
Leverage 15
IEE MS
> Є6m
ELENA-KfW
Mid-size programmes
Intermediated via PFIs
Open call, no deadline
Leverage 20
All IEE MS
< Є50m
TA for
Project
Development
Services
ELENA-EBRD
Mid-size investments
Direct contracts with EBRD
Open call, no deadline
Leverage 20
IEE/EBRD MS
< Є50m
ELENA-CEB
Mid-size programmes
Direct contracts with CEB
or Intermediated via PFIs
Open call, no deadline
Leverage 20
IEE/CEB MS
< Є50m
07/04/2019

13. Example of a successful technical assistance: ELENA
Example of a successful technical assistance: ELENA
ELENA EIB projects as of 31/10/2011: 12 signed, 3 approved
Huge leverage:
ELENA contribution: EUR 27,341,336
Expected investment: up to EUR 1.9bn
Significant savings: 1009,13 GWh during ELENA funding period
Direct and indirect jobs estimated at 32,500 person-years

14. ELENA EIB projects as of 31/10/2011 – 12 signed,+3 approved
ELENA contribution: EUR 27,341,336 – Expected investment: up to EUR 1.9bn

15.  Conclusion The 20% EE target is achievable, modelling shows:
Primary energy reduction of 19.7% and 20.9%
Slightly positive impact on the GDP and employment
Insignificant positive impact on household income, some small distributional effects possible in very limited cases
Significant remaining potential and social and economic benefits, especially in buildings, as well as challenges
Current and forthcoming legislation would facilitate the uptake
Still, financing and capacity remains a curtail driver for faster progress
Main challenge and opportunity is to develop coordinated package of measures
Systematic approach required + bundling of small projects + avoidance of lock-in effect

16. Thank you. For further information: http://ec. europa 16 16