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Brussels, 13 December 2005

The Energy End-use Efficiency and Energy Services Directive

A general energy end-use savings target of 1% per year for 9 years, covering the period from 2008 until 2017 is imposed. The overall target of 9% is to be met by the 9th year and will include an intermediate target covering the third year of application of the Directive.

This saving is calculated as 1% of the average amount of energy consumed during the previous five years. These savings can be realised from the following sectors: households; agriculture; commercial and public sectors; transport[1] and industry[2], with a few exemptions. All types of energy will be taken into account, from electricity and natural gas[3] to district heating and cooling, heating fuel, transport fuels, coal and lignite, and biomass.

A public sector obligation

Member State public sectors shall fulfil an exemplary role and fulfil a number of obligations to contribute to reaching the overall savings target. The public sector will need to ensure the availability and publication of public procurement guidelines that take into account energy efficiency. The public sector will also need to apply at least two requirements relating to the mandatory use of public procurement guidelines to purchase energy-efficient equipment, vehicles, buildings and other end uses. Alternatively, they may choose to use energy audits and apply the resulting recommendations or apply financial instruments such as energy performance contracting. Public sector savings would also contribute to the general savings target of 1%.

A supply-side obligation concerning the offer of energy services and other energy efficiency measures to customers

Energy distributors and retail energy sales companies will have to ensure that their customers are offered competitively priced energy efficiency improvement measures or services when they are supplied with energy. These measures may, however, be implemented by any competent market actor such as energy service companies, installers and energy advisors.

A harmonised method for calculating improvements in energy efficiency will be developed by the Commission and a committee composed of Member State experts. The method of calculation will allow credit for measures taken earlier, so-called “early actions” if they meet certain criteria, including impact measurability and verification. Existing energy taxes and information campaigns may be taken into account, provided their impacts are still measurable and verifiable and are not double counted. The measurement system will include benchmarks, energy efficiency indicators and bottom-up measurements.

It will be up to each Member State to decide which sectors should be addressed and how much each sector should contribute in reaching the national target, although all eligible customers should be offered some form of energy service, energy efficiency programme or measures. Savings will then be calculated as the sum of the measured or estimated reductions in final energy consumption attributable to energy services, energy efficiency programmes and other eligible measures[4].

Member States will report regularly on their progress in meeting targets, using national Energy Efficiency Action Plans. These plans will be assessed by the Commission and reported on. The Commission will actively support Member States in preparing for their Action Plans and in monitoring and reporting progress toward meeting their targets. If insufficient progress is being made, additional measures will be proposed by the Commission. Examples of eligible energy services and energy efficiency improvement measures are set forth in the Directive.

To help them achieve their target and meet their obligations and to make sure that progress is correctly monitored, Member States are required to:

  • have, where necessary, a system for the qualification, accreditation and certification of providers of energy services and energy improvement measures;
  • amend or remove legislation that unnecessarily restricts the use of financial instruments for energy savings such as third party financing and energy performance contracting;
  • remove incentives that unnecessarily increase the volume of transmitted energy or sales embedded in tariff regulation schemes;
  • ensure the availability of independent and high quality energy audit schemes, including those for smaller domestic and commercial customers;
  • ensure that meters and systems measure accurately and frequently customers` actual energy consumption; and that billing is informative, sufficiently frequent and based on actual energy consumption;
  • use energy efficiency funds as an option to subsidise the delivery of energy efficiency measures and energy services, especially to reach the higher transaction cost segments of the end-use efficiency market.

The measures adopted today are targeting the main types of obstacles identified as hampering the further progress of energy efficiency in the Union :

  • The lack of standardised information and measurements: until now in the EU there has been no harmonised and credible framework for energy efficiency and energy services that included definitions, consumer information requirements, certification of providers, and dedicated contractual, financial and legal instruments and tools.
  • An energy services market has also been limited in its further development by several specific barriers, including institutional obstacles, the fragmentation of the energy efficiency investment market, a lack of credible and sanctioned contract forms, a lack of visibility for savings and savings potentials, split incentives for investment, a limited access to capital, the lack of knowledge on cost-effectiveness, on life-cycle costs, and on the returns and risks of energy services.

This Directive will also serve as an “umbrella” to complement and improve the implementation of existing EU energy efficiency legislation, including the Energy Performance of Buildings Directive, the Combined Heat & Power Directive and the Directives on the energy labelling of appliances.

[1] Air and maritime transport means are excluded for measurement reasons

[2] With the exception of energy intensive industry and the energy transformation sector, as these are already covered by the Emission Trading Directive (2003/87/EC).

[3] As well as liquefied gas (LNG) and liquefied petroleum gas (LPG).

[4] Electricity, because of its high energy quality, will be valued at 2.5 times other energy forms. This also reflects the EU average transformation efficiency (40%). This means saving a kWh of electricity is worth more than saving the equivalent amount of gas, etc. at the final point of consumption.

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