Analysing the EU Action Plan

The diagnosis is superb and the medicine right, but the prescription still weak.

The energy efficiency action plan was delivered at last. It was said that the reason for the dealy was that earlier drafts have not been enough forceful. That may be the case and the version now presented certainly is focused and there are many suggestions to support and create new instruments. One interesting thing is that a document presented on the meta-level (Europe) directed to the meso-level (the national governments) also cares about the micro-level (us people) giving advice on what we can do: "What can YOU do to save energy". This gives comforting witness to that the authors have a clear perspective that all the links must work to achieve the results they portray for us, saving 20% with gross value of 100 billion € annually that corresponds to 200-1000 € for an average European household.

The Diagnosis

The point of departure is that cost-effective measures, meaning that lowest life-cycle cost (LCC) alternative should be chosen, amounts to at least 20% of the energy use. At least 20% because the sector-survey shows a range from 25-30%, because the calculation is made on an oil-price of 48$ per barrel and because the learning curve effects are not factored in the calculations. All of these indicates that the calculation is conservative and on the safe side.

The 20% savings do not only deliver cost reductions but lower energy use by 390 Mtoe, which spells less dependency on import and higher security of supply, and emission reductions with 780 Mt CO2, which spells less harm to climate and environment. These multiple dividends also counts better competitiveness for European Industry by lower costs and stimulated development of leading-edge markets for energy efficient technologies. This is estimated to as much as 1 million jobs in Europe!

But to get all this we need to double the rate of energy efficiency improvements (see figure below), we have to aim at Best Available Technology (BAT), suppliers need to produce them and consumers need incentives to buy and use them.

(click image to enlarge)

Figure: Annual Improvements in energy intensity (Action Plan page 7)

The yellow sector corresponds to the achievements we assume will come from ongoing work, the green sector to already decided improvements supported by directives and the blue sector to measures suggested in the new action plan.

The Medicine

1. Labelling and standards should be dynamic, i.e. follow the technical development; very good

2. Separate building performance requirements (kWh/m2) and a strategy for passive houses; brilliant

3. Power generation and distribution should be more efficient by use of e.g. regulatory practices and a framework for decentralised generation; yes indeed!

4. Fuel efficiency of cars by a specific goal for CO2 emission and with labelling; Intention is good

5. Facilitate financing for SMEs and ESCOs; Financing is maybe the easiest part. Motivation, confidence and availability of skilled resources is harder

6. Spurring the new member states, e.g. by financing; OK but how?

7. A coherent use of taxation and integration of efficiency and environment aspects. Using tax credits; Good, countries may be more open to this nowadays and tax credits send strong signals

8. Raising awareness and development of an energy efficiency tool-kit for SMEs; Awareness is generally good, but tool-kits are strongly needed. The tools, however have to be sharp enough.

9. A Covenant of Mayors from important and pioneering cities; An interesting idea, but there are already a few network of pioneers.

10. Foster energy efficiency world-wide; Very useful indeed -Europe should be more clearly marked on the map, but such an initiative must also be operational

All these ten so called priority actions are elaborated in greater detail in the document and seems to form a convincing web of actions on the meta-level addressing relevant meso-level issues. The measures are further addressed in an "Impact Assessment Report for the Action Plan for Energy Efficiency 2006"

The Prescription

But still the prescription on how this medicine should be used is weak. No doubt it is very much up to the member states to make the final blend for their purposes but then they should take into account.

a) How the existing financial incentives should be applied. On this site there is a concept paper to be downloaded and that advocates that there should be a more aggressive and persistent support in practical action to enable users of energy to be more efficient. The mostly have dormant incentives but lack the skill and guidance.

b) How the carbon-emission abatement can be more effectively organised. The ETS has resulted in huge transfers of value from energy-users without corresponding activities or investments in neither energy efficiency nor renewable fuels. Here incentives could be developed and added to the dormant as mentioned above.