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Energy

IEA Efficiency
Update

AUSTRALIA Updated June 2003

BACKGROUND

Energy On 15 August 2002, the Australian government announced its agenda for the
and the development of a forward strategy on climate change, and elaborated the key
Environment elements on which that strategy will be based. The major aspects of this
announcement included:

ƒ The government’s commitment to develop and invest in domestic programmes


to meet the Kyoto target of limiting greenhouse emissions to 108% of 1990
levels over the period 2008 to 2012.
ƒ A climate change agenda focusing on the short term (next few years) and the
longer-term (20 to 30 years).
ƒ The development of the strategy to be supported and informed by dialogues
with state and territory governments, industry and community groups and
underpinned by four key elements:
− striving for a more comprehensive global response to climate change;
− maintaining a strong and internationally competitive economy with a lower
greenhouse signature;
− pursuing a policy balance between flexibility and certainty that allows key
decisions on investment and technology development, and also
emphasises cost-effectiveness; and
− policies and programmes that assist adaptation to the consequences of the
climate change that is already unavoidable.

The Ministerial Council on Energy (MCE), which comprises energy ministers from
all Australian States and Territories and the Commonwealth, was formed in June
2001. MCE’s objectives are:

ƒ To provide national oversight and co-ordination of policy development to


address the opportunities and challenges facing Australia's energy sector into
the future.
ƒ To provide national leadership so that consideration of broader convergence
issues and environmental impacts are effectively integrated into energy sector
decision-making.

As a further commitment to progressing energy efficiency, MCE established the


Energy Efficiency and Greenhouse Working Group, which consists of all Australian
jurisdictions. The group’s charter is to provide strategic advice on policy direction
and programme delivery to significantly enhance energy end-use efficiency. A key
task for the group is the development of a comprehensive National Framework for
Energy Efficiency.

National As a commitment to progressing energy efficiency in Australia, all jurisdictions are


Framework on currently developing a co-operative National Framework for Energy Efficiency.
Energy Efficiency
While all Australian jurisdictions have made a considerable contribution to the
facilitation of improved energy efficiency, there is still significant potential for further
co-ordination and enhancement. In particular, a more co-ordinated national
approach to energy efficiency will avoid unnecessary duplication; identify existing
and potential gaps; and maximise the impact and effectiveness of resources
dedicated to energy efficiency across jurisdictions.

The objective of the Framework is to achieve a sustained, measurable


improvement in Australia’s energy efficiency. The Framework will focus on
approaches to achieve net economic benefits and improve the efficiency and
competitiveness of the Australian economy; stimulate investment in sustainable
industries; and help reduce Australia’s environmental impacts.

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The Framework will be strategic in focus and developed co-operatively with all
jurisdictions and key stakeholders. Delivery and implementation will be targeted at
the most appropriate level and will take into consideration the individual
circumstance of particular regions and jurisdictions.

The development of the Framework will include:

ƒ Analysis of energy end-use in Australia.


ƒ Assessment of current government energy efficiency programmes.
ƒ Assessment of what energy efficiency improvements are technically viable
within realistic timeframes.
ƒ Barriers to realising energy efficiency potential.
ƒ Financial modelling to evaluate the commercial viability of energy efficiency
investment.
ƒ Economic modelling to determine the economic viability and impact of different
energy efficiency scenarios and recommendations for programmes, initiatives
and policy.

Completion of the Framework is expected towards the end of 2003.

Institutional Australia is a federation of six states and two territories. The Commonwealth
Framework government has limited constitutional powers in relation to many aspects of the
energy economy. Local governments have responsibility for implementing planning
policies and regulations which have an impact on energy use and efficiency at local
level. This covers areas such as urban design, road planning, etc., planning
regulations which effect energy efficiency in houses and businesses, and in waste
management and utilities. These can have large-scale implications for energy use
and consequent environmental impacts at the local, national and global levels. A
number of programmes administered through the Commonwealth's AGO
(Australian greenhouse Office) aimed at improving energy efficiency, are managed
through local governments.

RESIDENTIAL/
COMMERCIAL

Energy As part of the National Greenhouse Strategy, governments have introduced


Efficiency minimum energy performance standards (MEPS) for refrigerators, freezers, three-
Standards phase motors and air-conditioners and electric storage water heaters. These
standards have been developed in consultation with the manufacturing industry
and agreed by the Ministerial Council on Energy.

The development of minimum energy performance standards for other products


during 2002–2004 has been announced in published plans. New MEPS are being
considered for electric lamps, distribution transformers, air-conditioners, electric
motors and commercial refrigeration.

The National Appliance & Equipment Energy Efficiency Committee (NAEEEC)


regularly commissions studies to project the energy saving and greenhouse
abatement expected to be saved as a result of regulatory decisions made under
the National Appliance & Equipment Energy Efficiency Programme (NAEEEP). The
latest report entitled “When you can measure it, you know something about it”
(projected impacts 2000-2020) covers only those programmes that are generally
implemented on a mandatory basis: energy labelling and MEPS. It reviews the
likely impacts of labelling and MEPS for a wide range of household, commercial
and industrial appliances and equipment. The combined projected greenhouse gas
impact of all programmes covered in this study is 134 million tonnes carbon dioxide
equivalent (Mt CO 2-e) below business-as-usual over the period 2003-2018. The
average impact during the Kyoto Protocol Commitment period 2008 to 2012 is
estimated to be about 8.2 Mt CO2-e per annum reduction below business-as-usual.
The projected impact is 13.3 Mt CO2-e per annum by 2015 and 14.9 Mt CO2-e per

2
annum by 2020. The programme is expected to save purchasers over A$4 billion1
by 2018. More information can be found at:
www.greenhouse.gov.au/energyefficiency/appliances/meps/

Building Codes

Mandatory In March 1999, following wide consultation, the federal government and the
Energy Efficiency building industry reached agreement on a comprehensive strategy aimed at making
Standards for Australian buildings more energy-efficient. This two-pronged strategy
Buildings encompasses, on the one hand, Commonwealth government and building industry
support for voluntary best practices in building design, construction and operation,
and the elimination of worst energy performance practices on the other hand by
incorporating a single standard for minimum performance requirements into the
Building Code of Australia (BCA).

Work has begun on developments to define an acceptable minimum level of energy


efficiency for new buildings throughout Australia to eliminate worst practice within
the industry. Energy efficiency provisions for housing were to be incorporated into
the BCA on 1 January 2003, with provisions for commercial and public buildings
introduced in 2004.

A comprehensive industry education and training programme is being developed to


prepare the building industry for introduction of mandatory minimum performance
requirements.

The AGO estimated in 1999 that in the absence of any such measures, the energy
consumption of residential buildings could grow by 40% between 1990 and 2010,
leading to a 17% increase in greenhouse gas emissions. The energy use in non-
residential buildings could even increase by 91%, leading to a 94% growth in CO2
equivalent emissions, or 62.8 million tonnes of CO2 equivalent from commercial
buildings alone in 2010.

Energy Under the National Greenhouse Strategy, governments developed, in consultation


Labelling with industry, a national scheme for mandatory energy labelling for major domestic
appliances. Six appliance types have been labelled since 1992 (refrigerators
freezers, clothes washers and dryers, dishwashers and air-conditioners). A
revision of energy labels for all major domestic appliances was completed in 2001.

Australia is the first nation to effectively rebase its labelling scheme. The Australian
label has been used as an example of label best practice by CLASP, a UN funded
NGO which promotes label schemes to developing countries and it has been used
by the Indian government as the model for that nation’s scheme.

The Australian Gas Association (AGA), together with the Gas Appliance
Manufacturers Association of Australia, developed voluntary energy labelling and
minimum performance programmes for the two main gas-using appliances (gas
water heating systems and space heaters) in Australia. The AGA is recognised as
a standard-setting body for gas issues and the energy programmes have been
designed to comply with these standards. While participation in the labelling
programme is notionally voluntary, all appliances comply as all suppliers are
members of these associations.

Australia’s Standby power is the energy used by an appliance while it is plugged in but not
Standby actually carrying out its central function. In Australia, standby power consumption
Power Strategy generally accounts for over 10% of Australia’s household electricity usage, costing
2002-2012 more than A$500 million and generating more than 5 million tonnes of carbon
dioxide per annum. This is equivalent to the greenhouse impact of more than
1 million cars.

1
On average, in 2002 A$1 = US$0.543.

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In August 2000, all Australian governments agreed to pursue efficiencies in
standby power consumption and the “1 Watt” target for appliances under the
banner of the IEA standby power initiative. In its publication ”Things that Go Blip in
the Night”, the IEA advocates that members develop long-term plans to reduce
standby over time, a recommendation that Australian jurisdictions have embraced.

In a process throughout 2002, government agencies consulted with stakeholders


about ideas to reduce standby: the Strategy is a result of that dialogue.

The Strategy is being developed through a process which potentially has two
stages. This staged approach will provide the opportunity firstly to identify the
products that need attention and, secondly, provide industry with the opportunity to
develop voluntary measures to address standby for the product, and then move to
more interventionist measures (mandatory actions) if and when necessary.

Stage 1 -- Profiles: identification of major product groups and initial actions (as
short as one year and as long as five years):

ƒ All key products will have a product profile prepared which outlines its current
status with respect to standby power. Australian governments will announce the
standby target for each product in the product profile. Generally, this target will
be the Energy Star level promoted by the US Environmental Protection Agency
or some other previously identified internationally accepted level. The standby
target will be included in the relevant Australian Standard to ensure all
stockholders have a reasonable opportunity to become aware of the target level
and compliances dates. NAEEEC will continue benchmarking surveys each
year and gather other market intelligence to monitor standby levels. The data
will be used to measure improvement for each product and build on the existing
data sources and analysis. This monitoring function will be assisted by industry
agreements where suppliers agree to supply government agencies with standby
levels for relevant products. A formal review of progress will be undertaken once
milestones have been reached. A review will generally result in either “a positive
result”, meaning that reasonable progress has been made to date and that
voluntary measures in place can continue as proposed, or a “negative result”
meaning that insufficient progress has been made (or is unlikely to be made)
and that specific mandatory measures under Stage 2 will be necessary.
ƒ Initially 40 product types have identified savings of 36 Mt over 15 years.

Stage 2 -- Mandatory Action Plans: escalating Government Action (one to five


year process)

ƒ Stage 2 seeks to impose mandatory measure. Government would move to


regulatory intervention ONLY:

1. Where progress by voluntary measures is shown to be inadequate (i.e. a


negative review at the end of Stage 1); or
2. The potential for excessive standby is well documented from overseas
experience and that regulation appears to be warranted as a pre-emptive
measure or voluntary measures are unlikely to be effective; and
3. The Ministerial Council of Energy accepts that regulation is necessary to
achieve the standby target.

Any regulatory action would be subject to the usual processes of economic


analyses (cost-benefit analysis and public consultation) and would only proceed if it
is in the public interest and complies with governmental regulatory requirements.

Mandatory measures can be withdrawn if it shown that the relevant industry is


responding to standby targets set for Stage 2 or making significant progress toward
those targets.

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House Governments have agreed to implement a consistent Nation-wide House Energy
Energy Rating Scheme (NatHERS). The scheme provides householders with a means of
Rating assessing energy efficiency of houses and thereby assists in making more
informed choices about housing purchases and renovation. The national scheme
and several state-based rating schemes will be co-ordinated to ensure consistency.
A graded five-star rating system is used, with the most energy-efficient dwellings
receiving the highest number of stars. Implementation of the scheme rests with the
state and territory governments who can decide whether or not to make the
scheme mandatory. The Australian Capital Territory has a requirement that all new
houses achieve at least a four-star rating. Victoria has recently announced that all
new residential buildings will soon have to have a five star energy rating.

Mandatory energy efficiency measures for houses were introduced in the Building
Code of Australia on 1 January 2003. However, the measures were not adopted in
all States and Territories at that time, as some administrations need time to resolve
administrative issues, including reconciling building control and planning
requirements. These changes will make homes more energy-efficient and save
greenhouse gas emissions.

Windows In 2001 the window and glazing industry, supported by the Commonwealth
Energy government, launched a system of energy performance labelling for window
Rating products called the Window Energy Rating Scheme (WERS). The scheme, which
Scheme delivers both an energy performance label for consumers and backup technical
support for industry members, was designed to inform consumers and influence
purchase decisions.

WERS is used by product manufacturers in their promotional campaigns to


establish differentiation in the market and encourage the increased use of high
performance glazing.

Education, In 2002, the Commonwealth government, several state governments, and the
Training building and design industries jointly developed and published Australia’s most
and Public comprehensive guide to environmentally sustainable housing titled Your Home.
Awareness
The Your Home suite of materials includes a Consumer Guide to raise awareness
and a Technical Manual for building professionals and interested owner builders.
The Your Home Technical Manual has become the principal reference guide for
building industry education and training programmes.

Your Home materials are also used in tertiary education for architecture,
environment design, and building courses.

State and territory governments have focused on their own communities and areas
of responsibility to raise public awareness both on energy efficiency and
environment protection. Activities undertaken include the production of booklets,
journals, books, web sites, demonstration projects and training programmes; some
local governments are active in producing publications aimed at increasing public
awareness of energy efficiency and environmental issues.

PUBLIC SECTOR The Commonwealth government has made a commitment to lead by example in
ensuring that its own procurement practices and operations maximise energy
efficiency. State and territory governments are implementing similar programmes.

Government The Australian government is committed to reducing the intensity of energy use in
Energy Commonwealth operations, with a consequent reduction in economic costs and
Efficiency greenhouse gas emissions. Annual whole-of-government energy reports are
Actions tabled in Parliament and made available to the public. The reports show total
energy used by Commonwealth departments and agencies, the intensity of energy
use and associated greenhouse gas emissions.

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The fourth annual report, Energy Use in Commonwealth Operations 2000-01,
showed a 10% reduction in total energy consumption and a 10% reduction in
associated greenhouse gas emissions largely as a result of reduced energy
intensities of government operations.

Under the policy for improving energy efficiency in government operations


introduced in 1997, budget dependent agencies are required to submit energy
consumption data annually to the Department of Industry, Tourism and Resources
(ITR). Energy intensities, such as MJ/person, MJ/square metre and MJ/kilometre,
are calculated and used to track changes in energy performance over time to allow
simple comparisons to be made between similar facilities. All agencies covered by
the policy are required to meet energy efficiency targets by 2002/3.

Other measures include mandatory minimum energy intensity levels for new and
refurbished buildings, and office equipment and appliances, the requirement that
new building leases increase the incentive for building owners to improve building
energy efficiency, regular energy audits of building space with implementation of
cost-effective recommendations, and the application of minimum energy
performance standards for new houses, with an energy review of existing stock.
New fuel efficiency levels for the government vehicle fleet will be announced in
early 2001.

Government bodies not specifically covered by the policy are encouraged to adopt
the policy measures. The success to date of the central government approach has
encouraged states and territories to adopt similar measures in energy reporting,
and a national government energy data reporting system has been developed by
ITR, in co-operation with the other government jurisdictions.

Local Cities for Climate Protection™- Australia assists local governments and their
Governments communities reduce greenhouse gas emissions. The programme is funded through
a commitment of A$13 million over five years, made by the Prime Minister in his
statement, Safeguarding the Future, in November 1997. CCP™ is an international
trade-marked programme of the International Council for Local Environmental
Initiatives (ICLEI) delivered in collaboration with the AGO, under which councils
commit to progress through five milestones with the aim of reducing greenhouse
gas emissions. Councils that join the programme are provided with assistance,
information and incentive programmes to design approaches to reduce greenhouse
gas emissions and understand the potential impacts of climate change. With
programmes running in a number of countries, Australia has taken the lead.
CCP™ Australia now has over 160 local governments representing over 63% of
the Australian population – the most of any country. This also represents nearly
30% of local government members worldwide.

INDUSTRY

Greenhouse The Greenhouse Challenge, announced in 1995, is a joint voluntary initiative


Challenge between the Commonwealth government and industry to abate greenhouse gas
Programme emissions. The Greenhouse Challenge programme was extended through the
1997 Safeguarding the Future statement. Included in the A$180 million package
was an additional A$27.1 million over five years for the Greenhouse Challenge
programme.

The Greenhouse Challenge programme consists of three phases:

ƒ The commitment (a contract between the Commonwealth government and an


industrial company).
ƒ The co-operative agreement.
ƒ Performance reporting.

The co-operative agreement includes an inventory of emissions, an action plan with


specific actions to minimise emissions, performance indicators to measure

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progress, and a forecast of expected abatement of emissions over a set time
period. The programme also provides information to members, including technical
advice on how to identify, monitor and mitigate emissions in each sector, a
workbook to assist participants in developing their co-operative agreement, and
workshops and seminars on technical issues and greenhouse actions.

Participating organisations amount to 418 members with 250 signed agreements.


Another 288 organisations had indicated through Letters of Intent their desire to
join the programme. The Greenhouse Challenge achieved emissions abatement of
23.5 million tonnes of CO2 equivalent in the year 2000.

The Challenge has almost total emissions coverage in a number of energy-


intensive sectors, including electricity generation and distribution, and oil and gas
extraction. The Challenge also has good coverage of a number of manufacturing
sub-sectors such as machinery and metals manufacturing, iron and steel and
aluminium and cement. In 2000, it was estimated that 45% of Australia's industrial
greenhouse gas emissions were covered by the Greenhouse Challenge
programme.

An independent evaluation of the programme undertaken in 1999 recommended


that the Greenhouse Challenge be continued as a collaborative initiative, with
particular focus on expanding into less well represented sectors and focusing on
major emission sources. Specific opportunities for improvement were identified in
recruitment strategies, technical support and reporting.

The report demonstrated that the Challenge has been effective in achieving
greenhouse gas emission abatement and in building the capacity of both
government and industry to identify, monitor, manage and report greenhouse gas
emissions. The Greenhouse Challenge has demonstrated that it is a flexible
programme that can remain effective in a changing environment.

Australia Post is the country's largest retail network, with more than 4 000 outlets.
Through its Greenhouse Challenge membership, Australia Post introduced a large
number of energy efficiency measures. In the first year, the organisation expected
a 1.8% reduction in its greenhouse emissions, and a forecast target of 3% by 2005.
But the results exceeded forecasts. Australia Post achieved a 14.9% reduction in
its first reporting, saving about 50 000 tonnes of CO2 equivalent and an estimated
A$3 million a year.

The Greenhouse Challenge programme was expanded in 1997 to include


hundreds of smaller companies through another programme called Greenhouse
Allies. Under this programme, large Greenhouse Challenge members mentor
smaller firms through a group process to help them reduce their emissions.

Energy Efficiency The Energy Efficiency Best Practice (EEBP) Programme launched by the
Best Practice Commonwealth government in mid-1998 assists targeted industries to reduce their
Programme greenhouse gas emissions while also reducing costs and increasing productivity
through improving energy efficiency. A$10.3 million has been allocated by the
government over a five-year period 1998-2003 to support the programme.

EEBP’s major focus is on innovation and training, applying strategies that have the
potential to identify efficiency improvements of up to 50% in key energy-using
processes:

ƒ Through innovation, EEBP brings together expertise from technology, industry


and research to provide a lateral, systems-based approach to specific
processes and provides the participating company with support to implement
the opportunities identified.
ƒ Through training, EEBP provides practical skills to all levels of a company,
enabling them to develop the internal capacity sufficient to effectively manage
and improve the energy efficiency of their operations.

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The programme is currently undertaking both sectoral and cross-sectoral work in a
number of areas identified as having opportunities for cost-effective improvements
in energy efficiency. Sectors engaged in the innovation and training aspects of the
programme include bread baking, supermarkets, resource processing, beverage
and containers manufacturing, wine making and dairy production. Energy efficiency
products include a range of promotional and advisory materials, information
dissemination and bench-marking tools (hotels and aluminium sectors). Cross-
sectoral activities include the development of products relating to motors, energy
performance contracting and vehicle fleet management.

EEBP has succeeded in promoting and implementing a range of strategies with


participating sectors. Achievements over the past months include:

ƒ In the baking sector, EEBP facilitated the development and launch of a


showcase best practice bakery with improvements to building fit-out, equipment
efficiency and practices targeted at reducing energy use and greenhouse gas
emissions by 40%.
ƒ EEBP strategies incorporated in the beverage making sector have resulted in
substantial reductions in process energy usage. For example, a major brewer
has achieved 35% reduction in refrigeration energy consumption and is aiming
to roll out energy management training in all its national operations. A major
soft drink manufacturer in implementing energy savings of up to 20% in a filling
and refrigeration process and a large malt producer has also achieved a 12%
reduction across its company wide energy budget.
ƒ Five of the major wineries covering over 60% of Australian production have
participated in the programme and are implementing actions that are estimated
to save between 9% and 43% in process energy applications.
ƒ A partnership between EEBP and the Australian Fleet Management
Association (AFMA), Greener Motoring, identifies how managers of fleet
vehicles can reduce fuel consumption by at least 15%, through successfully
demonstrated fleet management practices. The Greener Motoring programme
has been targeted at 5 000 organisations representing 65% of the vehicle fleet
sector. To date 307 organisations which collectively manage 400 000 vehicles,
have registered with the Greener Motoring programme. Fifteen of these
organisations have recently been awarded certificate for achieving greater than
10% emissions savings.
ƒ A Best Practice Guide (BPG) to Energy Performance Contracts (EPC) has
been developed and distributed to over 2 000 organisations. State government
programmes are actively promoting the uptake of EPC by state and local
government agencies.
ƒ Energy efficiency has been incorporated into a technology roadmap process for
alumina refining, which identified the technologies, innovation and R&D needed
over the next two decades to respond to the pressures of greenhouse and
waste minimisation.

The programme and its activities are communicated through the programme's
Website, bimonthly newsletter, stakeholder seminars and presentations to
governments, key users and industry stakeholders.

An independent full-term review of the programme has been conducted, finding the
programme to be cost-effective and saving 1.2 Mt CO2 and A$74.6 million in
energy costs by 2010 assuming the planned actions are implemented.

Generator The Voluntary Efficiency Guidelines For Power Generation was launched in the
Efficiency Prime Minister's 1997 Safeguarding the Future statement and subsequently
Standards (GES) incorporated into the National Greenhouse Strategy. The measure was developed
in recognition of the fact that power generation is responsible for more than a third
of national greenhouse gas emissions (excluding change of land use). Design of
the Guidelines, subsequently referred to as the Generator Efficiency Standards
(GES) has been completed and agreed by governments. Based on the model

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developed by the Efficiency Standards Working Group (ESWG), the government
introduced on 1st July 2000 efficiency guidelines for power generators using fossil
fuels. The standards apply to new power plants (approved after 30 June 2000) and
existing power generators above a minimum threshold on a case-by-case basis.
This includes grid-connected power stations, off-grid plant or auto-generators. The
minimum threshold is 30 MW capacity, 50 GWh electrical output, and a capacity
factor of 5% or more in each of the last three years. Approximately 65% of energy
generation capacity in Australia is covered by the GES programme. It is proposed
that the measure be implemented through legally-binding, five-year agreements
between the Commonwealth and power generators.

The contract specifies the approach generators should take in identifying and
undertaking agreed actions that improve plant efficiency and reduce greenhouse
gas intensity. Generators first sign the agreement. Then they calculate the best
practice performance band and current performance of the plant and submit this
information, together with a menu of options, to the government for agreement,
within six months of signing. The menu of options outlines potential improvements
for the plant.

The generators must monitor their performance and report to the AGO (Australian
Greenhouse Office) on a regular basis. The standards are reviewed every five
years. The measure is expected to save about 4 million tonnes of CO2 equivalent a
year during the first commitment period under the Kyoto Protocol.

Energy Some energy utilities have distributed information material on climate change,
Utilities developed energy efficiency promotional campaigns, conducted building energy
Information management seminars and provided consumer advice.

TRANSPORT

Transport In May 2000, the Australian Transport Council (ATC) directed the National
Policy Transport Secretariat (NTS) to work with Commonwealth, state and territory
Framework transport agencies to develop a long term strategy for reducing greenhouse
emissions across the transport sector.

The ATC provides a forum for Commonwealth, state, territory and New Zealand
transport ministers to maximise the contribution of effective transport to Australia’s
productivity, quality of life and equity.

Ministers requested that particular attention be paid to the impact of urban traffic on
greenhouse emissions and to develop an integrated national approach. The
Strategy Lowering Emissions from Urban Traffic – An Integrated National Action
Plan responds to that request. The strategy may be viewed at
www.nts.gov.au/environment .

The transport sector needs to make significant changes in order to implement a


strategic and co-ordinated programme that will result in lowered emissions across
the sector. The ATC, as a group that provides leadership and co-ordination of the
transport system, is well placed to facilitate these changes.

National The government is continuing to work with the automotive industry towards
Average Fuel reaching agreement on a satisfactory national average fuel consumption target for
Consumption passenger vehicles for 2010. The negotiations are being carried out in line with the
Target Prime Minister's call for an improvement of 15% over business-as-usual average
fuel consumption for new passenger vehicles by 2010 that was outlined in the 1997
statement Safeguarding the Future: Australia's Response to Climate Change.

Fuel Consumption Label


A mandatory, model-specific fuel consumption labelling scheme for new passenger
cars commenced in January 2001. The scheme will be expanded to include a wider

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range of vehicles in July 2003. The revised label will also show how much carbon
dioxide is emitted by each vehicle.

Government The government has undertaken to develop options for challenging but realistic fuel
Vehicle efficiency targets from 2003 for government car fleets. A number of states have
Fleets introduced initiatives to improve the efficiency of government fleets. The Victorian
Greenhouse Strategy 2002 sets a target of reducing greenhouse gas emissions
from the government passenger fleet by 10% by 2006. In July 2002, the New South
Wales government placed the world's second largest order for hybrid vehicles with
a decision to buy 200 Toyota Prius sedans. The state's Prius fleet -- second only to
New York City's 300 -- will save NSW taxpayers an estimated A$550 000 in fuel
costs over the next two years. The ACT Government Greenhouse Strategy
released in 1999 stated that the government will aim to reduce the greenhouse gas
emissions from the operation of its vehicle fleet by a further 15% by 2008.

The Energy Efficiency Best Practice Programme is also targeting vehicle fleets
(see separate section on EEBP).

Fuel Consumption Guide.


The government produces an annual Fuel Consumption Guide, providing reliable
comparative data of the fuel consumption of new passenger cars and some classes
of four wheel drives and light commercial vehicles. The Guide, available on the
Internet at www.greenhouse.gov.au/transport/fuelguide , helps consumers choose
the most fuel-efficient vehicle for their needs.

Green Vehicle Guide


In January 2002, the Motor Vehicle Environment Council, in consultation with the
Commonwealth Department of Transport and Regional Services released a
proposal for an Australian "green vehicle guide". The internet-based guide will
provide information to consumers on the environmental performance of motor
vehicles, including noxious and greenhouse emissions. The guide is expected to
become available in 2003.

Integrated The Australian government has released a green paper on fundamental land
Transport transport infrastructure reform, AusLink: Towards the National Land Transport
Planning Plan.

AusLink will result in the development of a more sustainable and higher performing
national transport network. It will also improve transport links across regional
Australia, with funding specially earmarked for regional areas.

The green paper proposes:

ƒ Establishing an integrated National Land Transport Network -- transport


links of strategic national importance, such as rail and road connections
between cities and to major ports and airports.
ƒ Developing a National Land Transport Plan -- a rolling five-year national plan
with participation from the community, industry and all governments. A longer-
term planning horizon of up to 20 years will be used to expand our
understanding of the challenges our country will face.
ƒ Establishing a national advisory body -- of public and private sector experts
to provide transport ministers with strategic analysis and advice on priorities for
national infrastructure investment, reforms to support intermodal integration and
infrastructure pricing.
ƒ Generating the best ideas -- expanding the range of organisations able to
propose projects for Commonwealth funding, including state and territory
governments, local councils, the private sector, user organisations, regional
development bodies and community organisations.
ƒ Funding the best solutions -- widening the range of solutions eligible for
Commonwealth funding, including new technology that can lead to better
management and pricing.

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ƒ Employing a consistent approach to funding -- establishing a single, flexible
funding programme to replace the separate programmes for different transport
modes. It will help to direct funds to the best projects. Regional funding will be
earmarked.
ƒ Encouraging reciprocal responsibility -- encouraging the joint and
complementary development and funding of projects between governments,
and with the private sector, to increase the level of available funding.

The AusLink Green Paper is open for comment until 7 February 2003 and will be
supported by a series of consultation meetings in metropolitan and regional
Australia. The government will release a formal policy statement, or white paper,
next year. AusLink will commence from July 2004.

Further For further information, please contact:


information
Ian Cronshaw
General Manager,
Domestic Energy Policy Branch
Energy and Environment Division
Department of Industry, Tourism and Resources
Canberra
Tel: +61 (2) 6213 7879
Fax: +61 (2) 6213 7902
E-mail: Ian.Cronshaw@industry.gov.au

11
Energy
IEA Efficiency
Update

Updated June 2003


AUSTRIA
BACKGROUND

Energy The Energy Report 1993 of the federal government was agreed upon in the
Report Ministerial Council in May 1993 and adopted by the National Council after due
1993 and consideration on 6 April 1994. It laid down the goals for Austrian energy
1996 policy which remain unchanged. These are:

ƒ Security of supply.
ƒ Cost-efficiency of the energy supply.
ƒ Environmentally benign energy supply.
ƒ Social acceptability of the energy supply system.

In order to achieve these objectives the federal government especially makes


use of the following strategies:

ƒ Promotion of the rational use of energy (improvements in energy


efficiency).
ƒ Promotion of renewable sources of energy.

Energy Austria ratified the United Nations Framework Convention on Climate Change
and the (UNFCCC) on 28 February 1994. The Convention entered into force globally
Environment on 21 March 1994 and for Austria on 29 May 1994. The first National
Communication entitled National Climate Report of the Austrian Federal
Government in compliance with the obligations under Articles 4.2 and 12 of
the Framework Convention on Climate Change, Vienna, was issued in August
1994.

Austria supports the UNFCCC climate change policies. The government had
committed itself in all official reports to a national target of a 20% reduction of
CO2 emissions by 2005, based on 1988 emissions. Meanwhile, the target has
been adapted to the Kyoto Protocol under the UN Framework Convention on
Climate Change, where the European Union as a whole has taken on the
commitment of an 8% reduction of the greenhouse gases CO2, CH4, N2O,
HFCs, PFCs and SF6 until the commitment period from 2008 to 2012. The
percentage reduction is based on the emissions of 1990 (for CO2, CH4, N2O)
and 1990 or 1995 (for HFCs, PFCs, SF6). The EU Member States have
thereafter agreed on individual reduction targets for each Member State.
According to the so-called "Burden sharing-agreement“1 Austria is committed
to reduce greenhouse gas emissions by 13% below 1990 levels by the time of
the first commitment period 2008-2012.

Total Austrian GHG emissions have risen 2.7% from 1990 to 1999, so the
country must now reduce emissions slightly more than 15% from 1999 levels
in order to meet the Kyoto Protocol commitments. The Austrian Parliament
ratified this Protocol in March 2002 and the EU as a whole ratified it in May
2002, making the country's commitment to GHG emissions targets legally
binding.

The Second National Climate Report of the Austrian Federal Government was
published in September 1997 in compliance with the UNFCCC obligations.

Austria's Third National Communication to the UNFCCC was finalised in


November 2001. It described in detail the National Climate Strategy (Strategie
Österreichs zur Erreichung des Kyoto-Zieles -- Klimastrategie 2000 --
2008/2012) (see below).

1
The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

1
Energy related measures are described in several sections of Chapter 4 of the
Third National Communication. They are related to minimum thermal
standards for buildings, thermal insulation of dwellings and support schemes
for energy efficient constructions and the use of renewable energy in new
buildings (see below).

The National The National Environmental Plan (NUP) of the federal government was
Environment adopted in 1995 and provided Austria with a long-term concept and integrates
Plan (NUP) these environmental commitments at all political levels — industrial policy,
energy policy, agricultural policy and technology policy. In this plan, the major
energy related targets were defined as further advances in energy efficiency
and a continuing shift to renewable energy sources.

Klimastrategie In response to climate change challenges, Austria has recently developed the
2000-2008/2012 "Strategie Österreichs zur Erreichung des Kyoto-Zieles- Klimastrategie 2000-
2008/2012"; this report builds on the ideas and structures outlined in Austria’s
Third National Climate Report submitted to the UNFCCC by the federal
government in November 2001. It is based on the study “Kyoto-Optionen-
Analyse” by the "Österreichische Kommunalkredit“; this study built upon work
of the Austrian Council on Climate Change (ACCC) (especially the "Kyoto
Technology Package“, which had been proposed as a follow-up to the
"Austrian Toronto Technology Programme“) as well as related studies from
the business and industry sector and took into account the views of different
stakeholders on costs and effects. This is a comprehensive strategy which
lays out a series of measures intended to curb the country’s GHG by 13%
below 1990 levels by 2008-2012, as stipulated in the EU burden-sharing. The
Klimastrategie was released in early 2002 and co-ordinated by the Federal
Ministry of Agriculture, Forestry, Environment and Water Management which
has responsibility for overall energy policy with respect to climate change.
The plan was developed as part of a consultative process among the relevant
ministries at the federal level as well as with representatives of all nine Länder
and calls for a variety of measures at the federal, Länder, and municipal level.
Responsibility for the implementation of the Klimastrategie is shared amongst
various federal and Länder government institutions.

Austrian policies and measures designed to achieve the GHG emissions


reductions required by the Kyoto Protocol which are mainly related to energy
efficiency are broken down into seven different categories. These are clearly
laid out in the Klimastrategie (Climate Strategy) and the country’s third
communication to the UNFCCC. The categories of measures are listed below
along with the country’s expectation of how much emissions reduction each
set of policies will achieve. The sum of annual emissions reduction from the
combined measures listed below would be 13.85 Mt of CO2-equivalent, an
amount approximately 1.65 Mt more than Austria’s required reduction from
2000 levels in order to meet Kyoto.

Space Heating and Small Consumption

This category involves the following activity types:

ƒ Thermal improvement of existing building stock.


ƒ Enhanced technical standards for new buildings.
ƒ Increasing share of renewable energy sources and district heating.
ƒ Increasing boiler efficiency.
ƒ Switching to fuels with lower (fossil) carbon content.
ƒ Demand-side measures to reduce electricity demand.

2
Measures in this category are expected to reduce CO2 emissions by 4 million
2
tons per annum once fully implemented.

Energy Supply

This category deals with all measures related to energy supply with activities
falling under one of the following headings:

ƒ The role of renewable energy sources and efficient district heating


systems.
ƒ Electricity production and various means of supporting non-polluting
electricity generating systems that are not currently commercially
competitive in a liberalised market.
ƒ Heat production in the form of maximising benefits of indigenous biomass
resources.
ƒ Cross-cutting measures which would include energy-related taxes and
earmarking for climate change related measures, and intra-national GHG
emissions trading schemes.

Measures in this category are expected to reduce CO2–equivalent emissions


by 2.1 million tons per annum once fully implemented.

Transport

This category includes measures to curb emissions from all modes of Austrian
transport. Activities include:

ƒ Financial instruments for motor vehicles (i.e. fuel consumption based


registration taxes and road tolls).
ƒ Regional and urban rail transport investments.
ƒ Improvement of fuel quality and promotion of bio-diesel.
ƒ “Car free” tourism projects (e.g. building public transportation at heavily-
frequented tourism locations).
ƒ Technology innovation.
ƒ Traffic management, reducing speed limits, and improvement of spatial
planning.

Measures in this category are expected to reduce emissions by 3.7 million


tons of CO2 equivalent per annum once fully implemented.

Industry

Austria has experienced a degree of uncoupling of its production output and


its energy demand over the last 20 years. Overall GHG emissions from
industry accounted for 22 Mt in 1980 were flat throughout much of the early
1990s and have shown a slight increase since 1997. Policies and measures
for the manufacturing industry, therefore, aim at supporting a continuation of
efforts undertaken by companies. Such policies encourage the use of
renewable energies, greater energy efficiency, and the implementation of an
emission trading regime. They are expected to produce GHG emission
reductions of 1.25 million tons of CO2 equivalent per annum once fully
implemented.

For more information on the Climate Strategy, see: http://www.accc.at/pdf/klima-


english.pdf

2
The emissions reduction effects from demand-side measures have been included in the Energy Supply
category in order to avoid double counting.

3
In the 2002 in-depth review of the energy policies of Austria, the IEA stated:

The Government of Austria should:

• Conduct regular monitoring of the implementation and actual emission


reductions of the proposed Klimastrategie measures under close co-
ordination between relevant ministries and between the public and private
sectors.
• Revisit the cost-effectiveness of various Klimastrategie policies as cost
experience is gained through their implementation

Austrian Strategy The government has recently announced plans to accelerate the reduction in
For Sustainable its national energy intensity. In April 2002, the government published the
Development Austrian Strategy for Sustainable Development (Die Österreichische Strategie
zur Nachhaltigen Entwicklung) which establishes goals for the further
reduction of the country’s energy intensity (defined as national TPES per unit
of GDP). The country is aiming for an average improvement of energy
intensity of 1% per year beyond the normal improvements in this area that can
be expected without any explicit policy initiatives. The report defines this
normal energy intensity improvement to be the average EU decrease of
energy intensity in the time period 1990-1997, which it estimates as 0.6%
annually. Therefore the total energy intensity improvement target is 1.6%
annually. Such a target is identical to that put forward by the European
Council for all EU countries in their resolution on energy efficiency issued on
7 December 1998.

For more information on Sustainable Development:


http://www.nachhaltigwirtschaften.at/english/index.html

Policy of the new Federal Government

The new Federal government which was sworn in on 28 February 2003 stated
in its programme a variety of measures for sustainability and environment
protection, for example:

ƒ Increase of energy efficiency (energy consumption per GDP unit) by 1.6%


per annum.
ƒ Investment of an additional € 30 million per annum from 2004 to 2006 to
implement the Climate Strategy.
ƒ Going a further step in the direction of shaping an ecologically oriented tax
system including price signals for the consumption of non-renewable
resources and incentives for environmentally benign and sustainable
behaviour.
ƒ Further expansion of alternative forms of energy, e.g. an increase in the
share of green electricity, more solar energy and more biomass.
ƒ Contracting programmes for energy saving in public buildings.
ƒ Increase of the use of biomass by 75% in 2010.

For more information on the government policy statement:


http://www.austria.gv.at/e/

Institutional Austria is a federal country with nine Länder (provinces). The Länder as well
Framework as the municipalities are active players in the energy market. The Federal
Constitution allocates responsibilities either exclusively to the federal level, or
to both the federal level and the state level. Federal level responsibilities
cover issues that require co-ordination between Länder, such as energy
security, while the Länder responsibilities involve issues endemic to each
state, such as building code efficiency regulations and subsidies for renewable
energy, where diverse local conditions require different types of approaches.
Co-ordination of various initiatives between the federal and provincial

4
governments is a priority in Austrian energy efficiency policy. In this context,
according to Article 15a of the Federal Constitution, an agreement between
federal and provincial governments on the efficient use of energy came into
force in June 1995. This agreement obliged the parties to adopt a specific set
of measures with respect to energy efficiency by 15 June 1998.

The Federal Ministry of Economic Affairs and Labour (Bundesministerium für


Wirtschaft und Arbeit, or BMWA) is the main body responsible for energy
policy on the federal level. Other ministries involved in energy matters
include: (i) the Federal Ministry for Agriculture, Forestry, Environment and
Water Management, (ii) the Federal Ministry for Transport, Innovation and
Technology, and (iii) the Federal Ministry for Finance

The instruments for the financial support of energy efficiency measures (by
households, enterprises and municipalities) encompass a variety of
programmes. Most of them are at the Länder level and in many cases the
improvement of energy efficiency is only one of several programme goals.
Due to this variety and multi-functionality of the programmes, exact data on
financial support granted and investments triggered are not available.

In the 2002 in-depth review of the energy policies of Austria, the IEA stated:

The Government of Austria should:

• Further improve co-ordination among the many bodies and programmes


which address energy efficiency in the country.

Technology, Public funding of research, development and demonstration is another


Research, important pillar of Austria's energy conservation strategy. Compared with
Development and direct subsidies for the implementation of energy conservation technologies,
Demonstration Austria regards the funding of RD&D as highly conformable to the principle of
non-interference with the market-mechanism. Helping technology applications
to become competitive is a relatively ”soft” measure.

Regarding energy-related fields exclusively, Austria is at a medium level


among the EU countries with respect to public spending for research and
technology development. In 2000, the government sponsored approximately
€ 24 million of energy-related R&D funding, or about € 3 per inhabitant. This
R&D budget represents a decrease from the period between 1995 and 1999
when energy-related R&D budgets were consistently above € 25 million.
Experts within the Austrian government attribute this drop in funding to a
decrease in the number of research proposals received rather than to less
overall funding available. Many research institutions were assumed to have
deferred submitting proposals until 2001 when some of the features of the
biomass funding were scheduled to become slightly more attractive. Initial
indications from 2001 bear out this hypothesis with preliminary budget figures
showing that energy-related R&D public funding for 2001 rose 25% to € 29.9
million. This most recent figure continues the long-term trend in increasing
R&D funding in Austria. In 1990, the level of energy-related public R&D
funding was slightly less than € 10 million.

5
In the 2002 in-depth review of the energy policies of Austria, the IEA stated:

The Government of Austria should:

• Further clarify the objectives of the R&D programmes to meet particular


energy and environmental policy objectives and allocate resources
appropriately based on its national goal of expanded R&D expenditures.
• Enhance monitoring of progress in reaching the energy-related R&D goals
Austria has established.
• Review energy R&D priorities in order to maximise the cost-effectiveness
of limited government R&D expenditures needed to realise mid- to long-
term objectives in the energy sector.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Space Heating The strategy to reduce GHG emissions from space heating is based on the
and Electricity following pillars: Thermal improvement of existing building stock, enhanced
Demand technical standards for new buildings, increasing share of renewable energy
sources and district heating, increasing boiler efficiency, switching to fuels with
lower (fossil) carbon content. The most important instruments with regard to
these targets are technical construction regulations, housing support schemes
(both under sole responsibility of the states) and federal funds to support
district heating and entrepreneurial use of renewable energy sources and
efficiency improving measures (trade, industry, agriculture). The federal level
is also responsible for civil law with respect to the residential matters.

Building Since legislation for building codes falls under the responsibility of the Länder,
Codes an agreement between the federal government and the Länder in accordance
with Article 15a of the Federal Constitutional Law was applied to formulate
common goals and to co-ordinate future action.

This agreement on energy efficiency entered into force on 15 June 1995.

According to the objectives stated in the 1993 Energy Report, the following
measures were adopted in the agreement:

• Harmonisation of federal provinces’ regulations for the realisation of the


agreement’s objectives.
• Basic regulations regarding the energy consumption of appliances.
• Specific regulations regarding heating systems and building structures.
• Increased consideration of objectives relating to environmental policies.

Reduction potential by 2010: A decline in heating requirements in new


buildings to 50 kWh per square metre a year and in old buildings to 75 kWh
per square metre a year has been assumed. In the case of new buildings,
energy savings of 3.6 TWh a year (corresponding to 0.5 million tonnes a year
reduction in CO2 emissions) and regarding old renovated buildings, energy
savings of 21.3 TWh a year (corresponding to an annual reduction of 3.2
million tonnes in CO2 emissions) can be expected by 2010.

Minimum thermal standards for buildings

Improving thermal quality of buildings is important for reducing energy


demand for space heating. Experiences show that construction technologies

6
and techniques undergo continuous improvements and can be influenced
positively by strict legal standards.

Therefore thermal standards for buildings are defined in the Technical


Construction Regulations of the states by way of U-values (=k-values) for
different construction components, although most states opened the possibility
for a more flexible approach by defining certain energy demand codes for the
whole building (per square metre). Almost all states have improved U-values
over the past years and in some cases have also gone well beyond minimum
standards within the existing “Agreement on Energy Saving” of 1995 on the
basis of Article 15a of the Federal Constitution Act between the federation and
the nine provinces.

In general, technical construction regulations apply only to newly constructed


buildings (except, for example, change of windows). As long as no obligatory
standards for renovation measures exist, thermal standards of the old building
stock therefore need to be influenced mainly by other instruments, especially
public support schemes for renovation.

Thermal insulation of dwellings

Austrian provinces administer subsidies of more than € 2 billion annually for


housing support programmes. Therefore, a majority of dwellings is
constructed or renovated with public support. Around 75% of financial
resources are actually spent for new construction, the rest for renovation of
existing buildings. With the largest building stock of the nine Austrian
provinces, the city of Vienna is different in this regard. In Austria’s capital,
more than 50% of available financial resources are spent for renovation of
buildings, in most cases for standard improvement measures (bathroom,
central heating systems, windows, consolidation of flats etc.).

In all Austrian provinces individual measures, like windows changes,


installation of thermal solar systems or replacement of old and inefficient
heating systems also benefit from subsidies. Several Länder give special
incentives for biomass heating systems (e.g. wood pellets) and/or phased out
support schemes for renovation or replacement of fossil fuel heating systems.

Heating The Heating Cost Accounting Act (Heizkostenabrechnungsgesetz, Federal


Costs Law Gazette 827/1992) regulates the accounting of heating costs based on
Accounting actual consumption instead of usable floor space. More precise and cheaper
heat measuring instruments (a relatively cheap measure) and rehabilitation in
terms of heating technology of buildings and heat supply installation (a
relatively expensive measure) are being developed to prevent the trend
towards accounting as a percentage of usable floor space and the 15-20%
higher energy consumption observed in this connection. A 15-20% reduction
of heating consumption is expected from this measure.

Electric The agreement on efficient energy use based on Article 15a of the Federal
Appliances Constitution between the Federation and the Länder contains the following
and Others elements:

ƒ Labelling and description of specific energy consumption of household


appliances.
ƒ Legal requirements to provide information for comparison of household
appliances.
ƒ Ceilings regarding maximum consumption of household appliances.

All EU directives regarding labelling of energy consumption of household


appliances have been implemented through national law within the
Elektrotechnikgesetz (ETG).

7
Energy Eight regional and local energy agencies have been created since 1994. They
Agencies are funded by the Federal Ministry for Economic Affairs and Labour, the
Länder and municipalities.

Subsidies for The Bürges Förderungsbank, a specialised bank in charge of the


Insulation administration of ERP funds provides financial support inter alia for energy
efficiency measures. Support granted in 1998 (for insulation of buildings and
other energy efficiency measures) was approximately Sch 1.3 million3, the
resulting investments amounted to about Sch 25 million.

Support In the past, public support programmes for construction of new dwellings have
Schemes had rather counterproductive total impacts on CO2 emissions, as they have
lacked quality standards. Over the past years most Austrian provinces started
to introduce specific incentive schemes for energy efficient construction
(improved insulation, zero energy houses, etc.) and the use of renewable
energy sources, such as heating systems based on biomass and solar
installations.

Generally, subsidies under the housing support schemes of the Länder in the
new construction sector are segmented into different components. All Länder
give basic subsidies for new houses built in conformity with existing technical
construction standards. Most Länder give supplementary subsidies, either on
social grounds or for specific measures to improve the quality of buildings well
beyond legally binding standards. Supplementary supports, differentiated
along energy-related specifications, led to significant decreases in CO2
emissions from new dwellings since 1995. The schemes also had positive
impacts on the construction industry in terms of technically improved building
standards at competitive costs.

Energy efficiency measures, i.e. insulation, other energy saving measures and
connection to district heating, are supported by all nine Länder in the context
of housing improvement in various ways: loans, subsidies, sureties.

In 1998, 41,803 dwellings benefited from such measures resulting in € 431.8


million of total expenditures leveraged by € 112.9 million of government
support. In 1999, 33,736 dwellings benefited from such measures resulting in
€ 228.8 million of total expenditures leveraged by € 81.4 million of government
support. In total for households there are 26 programmes for the support of
various energy efficiency measures and 21 programmes for financial support
in connection with district heating. No comprehensive monitoring is carried
out to show the amount of energy that was ultimately saved through these
programmes.

Building of The Austrian Federal Ministry of Transport, Innovation and Technology


Tomorrow (BMVIT) in co-operation with a network of experts and with the assistance of
the Austrian Industrial Research Promotion Fund has developed the Austrian
Programme on Technologies for Sustainable Development. This five-year
research and technology programme initiates and supports trend-setting
research and development projects and the implementation of exemplary pilot
projects. The sub-programme "Building of Tomorrow" makes use of the two
most important developments in solar and energy efficient building: the
passive house and the low energy solar building method.

"Buildings of Tomorrow" are residential and office buildings and differ from
current construction practice in Austria in that they fulfil the following criteria:

3
On average in 2001, Sch 1 = US$0.065. In 2002, Sch1 = € 0.07267.

8
ƒ Higher energy efficiency throughout the whole life-cycle of the building.
ƒ Greater use of sustainable raw materials and efficient use of materials in
general.
ƒ Greater use of renewable energy sources, especially solar energy.
ƒ Increased consideration of user needs and services.

However, the costs should be comparable with conventional building methods.

The "Building of Tomorrow" sub-programme includes the following elements:

ƒ Technology and component development.


ƒ Development of innovative building concepts for residential and office
buildings.
ƒ Setting up and evaluating demonstration projects.
ƒ Market diffusion of the "Buildings of Tomorrow".

Since 1999 projects have been supported with an amount of some € 7 million
of public funding. This released innovative projects with an overall budget of
some € 120 million. Web site: www.hausderzukunft.at

INDUSTRY

Measures already The Austrian government has not established regulatory constraints on
existing and/or industry which mandate minimum energy efficiency standards in the industrial
being improved sector. This is partly due to the diversity of production processes in the sector
itself and the consequent difficulty in establishing standards which can be
applied to different systems. It is also due to the government’s federal
structure and the corresponding authority held by the Länder government
which makes it difficult to sustain such standards nation-wide. While industry
is subject to environmental laws which can effect energy efficiency, the
government’s greatest influence in this area is through the financial support of
energy auditing and investment in efficient systems. These support systems
are described below.

Information/ In 1980 an audit consultancy service for industrial enterprises was created
Technical and financed by the Federal Ministry for Economic Affairs and Labour in
Assistance collaboration with the Austrian Energy Consumer Association (ÖEKV). The
underlying service contract (between ÖEKV and the ministry) for the year
2001 was the 13th of its kind. Since the programme's inception in 1980, more
than 550 companies were audited and impressive potentials for improving
energy efficiency in industrial companies were identified. As ÓEKV also
proposes concrete measures for improvement it is demonstrated to
companies that the payback periods are in many cases less than two years.
These audits are free of charge for the interested companies.

From 1998 through 2001, this programme has worked with 89 companies.
These audits have identified 171 GWh of annual energy savings potential, an
amount equal to 8.1% of the firms’ total energy use. For the period from 1998
4
to 2000 the audited firms consumed a total of 2 297 GWh, an amount equal
to 1% of the total energy consumed in the industrial sector over that time and
0.3% of the country’s total final consumption. The targeted potential savings
from this programme are equal to 0.8% of the country’s total final energy
consumption. No comprehensive monitoring system has tabulated data on
the actual realisation of these potential projects or the amount of energy that
was ultimately saved.

4
Statistics on total Austrian industrial energy use have not yet been prepared for 2001, so one can only look
through 2000. Nevertheless, there is no reason to believe that the three years of data from 1998 to 2000 are not
representative.

9
Austria disposes of a network of energy auditors covering all Länder. In order
to facilitate access to this useful service, the Energy Efficiency Agency (EVA)
has published a brochure listing all the energy auditors. To ensure minimum
qualification standards, the ARGE Energie-beraterausbildung has developed a
multi-level training programme including the possibility of a university degree
(post-graduate). In addition, in order to improve the communication skills of
auditors, EVA holds seminars entitled Energy Auditing —Train the Trainer.

Demand-Side The Association of Austrian Electricity Utilities carries out different demand-
Management side management activities to improve efficiency in energy supply. The major
(DSM) activities are as follows:

ƒ Consumer information and advice: to increase consumer awareness of the


rational use of energy by giving concrete advice. Examples include
advertising campaigns for the replacement of old electrical appliances by
new more efficient ones, establishment of a Club for the Conservation of
Energy, the promotion of heat pumps, an annual prize for companies that
succeed in improving their energy efficiency.
ƒ Load management to improve the utilisation of production capacity to
reduce peak demand. Price differentiation (different tariffs for different
seasons and times), special tariffs for interruptible electricity supplies and
load management as a service to major consumers are some examples of
these measures.

Partly as a result of the liberalisation of the electricity sector, these utilities


have cut back on these programmes drastically.

Combined District heating (DH) and combined heat and power (CHP) plants are
Heat and widespread throughout Austria, and are often instrumental in meeting the
Power heating and power needs of medium and large cities. District heating
(CHP) schemes produce approximately 12% of the country’s heating and hot water
and 27% of the country’s electricity. The city of Vienna has the most
extensive system which provides 50% of the city’s power and 40% of its heat
and hot water. In 2001, the four CHP plants that serve WienStrom, the
Viennese energy utility, had a combined electric capacity of 1 050 MW. They
operated at a 35% capacity factor over the year and produced 3 255 GWh of
output. In additional to such municipal facilities, industrial plants also make
use of CHP technology.

CHP has long been supported by the regulatory structure in Austria. In order
to survive financially, the majority of Austrian CHP plants require tariffs per
kilowatt-hour of electricity above pure market prices. The Austrian Energy
Liberalisation Act implemented on 1 December 2000 includes the Federal Act
providing new rules on the organisation of the electricity sector, "ELWOG
2000" (Electricity Act 2000). This Act stipulates that the executive laws of the
nine Länder can impose on grid companies the obligation to purchase
electricity from CHP plants, provided that they serve public district heating
supply. It also stipulates that a minimum payment per kWh can be granted to
CHP generated electricity, also provided that they serve public district heating
supply.

As a result, the Austrian Energy Liberalisation Act allows the Länder to pay
CHP plants for their power at rates higher than those of other generation
options. Industry experts estimate that the average cost of CHP-provided
power would be approximately 5 € cents / kWh while system marginal cost
throughout the year would average 3 € cents/kWh. The regulations allow the
utilities to recover these additional costs through tariff supplements imposed
on all electricity grid users. These payments are in a per kilowatt-hour form.
The Länder of Vienna makes the most extensive use of CHP plants. To
support this system, each Viennese customer pays an additional 0.7427 €

10
cents per kWh of electricity consumed, which goes into a fund used to pay for
power coming from CHP facilities. Based on the average retail residential
rates for electricity in Vienna of approximately 15 € cents/kWh, the CHP
surcharge represents a 5% increase in customers’ electricity bills.

While the original Liberalisation Act gave the Länder full discretion in setting
these rates as they chose, legislation making its way through the Austrian
parliament establishes one CHP tariff for the entire country. However, neither
the original law nor the 2002 update make provisions for the continuation of
this system after 2004. No alternative policy for the support of CHP facilities
has gathered sufficient political momentum to be considered as a possible
replacement of the current support scheme.

In July 2002, the new Green Electricity Act was passed by the National
Council and Federal Council (announced in mid-August 2002). Most of its
clauses came into effect on 1 January 2003. The Green Electricity Act
governs the aid for green energy and combined heat and power generation
throughout the country. This means that all end consumers and electricity
dealers in Austria contribute to an equal extent to the financing of the aid
required.

The Green Electricity Act lays down a budget limit on aid based on
calculations of the expenditure required for cost-effective implementation. The
expenditure is financed as two components: firstly the electricity dealers must
reduce their proportion of cost to an internal price of 4.5 cent/kWh (this is
greater than the sales proceeds for the electricity dealers). Secondly, the end
purchasers must pay a supplement to the network tariff (probably around 0.25
to 0.30 cent/kWh). As of 1 January 2003, this supplement replaces the former
federal state supplements which are between 0.05 cent/kWh and 0.8
cent/kWh and would have had to be increased anyway to finance the Green
Electricity Act.

In the 2002 in-depth review of the energy policies of Austria, the IEA stated:

The Government of Austria should:

• Review the support scheme for CHP plants, including its continuation after
2004. Maximise CHP’s cost-effective contribution to meeting
environmental goals through such measures as a gradual lowering of the
support levels in accordance with a benchmarking system which includes
minimum efficiency standards.

Benchmarking In a number of Austria's Länder (Upper Austria, Salzburg, Styria, Tyrol,


Vorarlberg, Vienna) energy efficiency benchmarking projects have already
been initiated. In a first step, industry branches are carefully analysed with a
view to assessing their energy efficiency standards and potential for
improvements. Based on this know-how, companies can compare their own
performance against industry leaders and can derive valuable information on
how to increase their energy efficiency.

Subsidies: Within the framework of the Umweltförderung in accordance with the


“Umwelt- Environmental Support Act (Umweltförderungsgesetz, UFG) which is
förderung” managed by Österreichische Kommunal-kredit (ÖKK) (a specialised bank) on
Programme behalf of the Federal Ministry of Agriculture, Forestry, the Environment and
Water Management, companies can obtain subsidies for thermal improvement
of buildings, for other energy efficiency measures, for connection to district
heating and for CHP. From 1998 through 2000, total subsidies issued through
the ÖKK were € 12.4 million. Total investments in energy efficiency resulting
from these supports amounted to € 55.0 million. No data exist on the energy
efficiency improvements realised from these investments.

11
In 2000, subsidies were:

Thermal improvements in buildings 1.8 million Euro


Other saving measures 0.4 " "
Connection to district heating 0.5 " "
CHP plants 0.3 " "

The investments resulting from this support amounted to € 6.8 million, € 1.4
million, € 1.7 million and € 1.1 million respectively.

In addition to the two schemes, Energy audits and the Environment Support
Act, there are about 30 programmes -- mainly run by the Länder -- for the
support of various energy efficiency measures in the manufacturing industry.

Co-operation The so-called Bund-Bundesländer-Kooperation auf dem Gebiet der Rohstoff-,


on Research, Energie- und Umweltforschung (co-operation of the Federal State and the
Energy Länder in the research on raw materials, energy and environment) was
and the founded in 1978 as an informal platform of co-operation between several
Environment federal ministries and Länder. Potential projects of common interest are
discussed and, if selected, funded and implemented in co-operation with
Austrian research institutions. Examples of recently funded projects are
electricity-powered taxis in the city of Graz and a study on the use of sterling-
motors in electricity generation using biomass.

Research In 1991 the Verbundgesellschaft (the Austrian electricity industry, the Länder
Co-operation electricity companies as well as the municipal and other electricity utilities)
in the Electricity established the Energieforschungsgemeinschaft (EFG) within the framework
Industry of the Verband der Elektrizitätswerke Österreichs, VEÖ (Association of
Austrian Electricity Utilities). EFG’s general aim is to improve the generation,
distribution and use of electricity in terms of cost-effectiveness, efficiency and
environmental compatibility. Its research activities focus on:

ƒ Environment.
ƒ Renewable sources of energy.
ƒ Innovative energy technologies.
ƒ Energy efficiency.
ƒ Social, economic and political framework.

As a member of the European Union, Austria also participated in the energy


programmes of the Fourth and Fifth EU Framework Programme for Research,
Technological Development and Demonstration (RTD). Austrian enterprises
and universities mainly participated in projects of renewable energies and
energy efficiency.

Sub-programme In the framework of the Austrian Programme on Technologies for Sustainable


"Factory of Development, the sub-programme "Factory of tomorrow" addresses trade and
Tomorrow" industry as well as service enterprises that produce and provide products of
tomorrow using materials of tomorrow to meet future needs.

The following aspects have to be taken into consideration:

ƒ Aiming at zero-waste and zero-emission technologies and methods of


production.
ƒ Increased use of renewable raw materials for materials and products.
ƒ Increased use of renewable sources of energy in the production process
and in the enterprise as a whole.
ƒ Development of new partnerships and co-operation as well as in-house
models for further training and participation of employees in order to
achieve these objectives.

12
Since 2001, additional energy-related projects, such as a survey for the
potential for the use of solar-thermal energy in industry, have been carried out
by this sub-programme.

Energy At the beginning of 1993, at the federal state level, a programme on energy-
Technology technology was created within the Innovations- und Technologiefonds, ITF
Programme (Innovation and Technology Fund) for a period of five years. After its
expiration at the end of 1997 the programme was extended to 1998 – in
particularly to synchronise with the Fourth EU framework programme on
RD&D. Follow-up activities were initialised within the ITF programme on
“technology transfer”.

The main emphasis was given to the stage of market introduction of


innovative technologies, processes and products (pilot plants, integration into
grid based systems, monitoring of these phases), taking account of the huge
investments necessary and the problems of co-operation with grid operators.

As a consequence of the restructuring of the federal state technology


programmes, the ITF was replaced by the so-called Kompetenzzentren,
Impulsprogramme, Regierungsinitativen, KIR. Special emphasis is given to
centres of excellence in the field of energetic use of biomass; both the thermal
use of biomass and conversion to electricity are seen as important options.

Measures under
Consideration

Long-term From June 2000 until the autumn of 2001, EVA, the Energy Efficiency Agency,
Agreements together with partners from Italy and Norway worked on a project concerning
the implementation of long-term agreements (LTA) on energy efficiency in
industry (energy intensive industry, except energy industry). Various forms of
LTA were examined with regard to their effects and the elements necessary
for success as well as the possibilities for implementation in Austria. The
purpose was to find out how LTAs have to be designed to enable their
integration into the mix of Austria's energy efficiency policy instruments. For
Austria, a country with no LTA tradition in the energy efficiency field, the
study's results are certainly a valuable input for discussion should LTA be
chosen as an option for energy efficiency measures.

PUBLIC SECTOR In March 2001, the Federal Ministry of Economic Affairs and Labour together
with the Federal Ministry of Agriculture and Forestry, the Environment and
Water Management, started an initiative on third-party financing (TPF) of
energy efficiency measures in (federal) public buildings, following a successful
pilot project in 64 federal schools with a usable floor-space of more than
500 000 square metres. A management group consisting of representatives
of Bundesimmobiliengesellschaft (the company which owns the federal public
buildings and leases them to the user Ministries), user Ministries, the Federal
Ministry of Economic Affairs and Labour and external consultants was set up
and has so far accomplished the following tasks:

ƒ Selection-based on relevant data and analyses-of those buildings which


are in principle suitable for TPF.
ƒ Grouping these buildings.
ƒ Definition of specific projects, of specific objectives, of tendering criteria
and of framework conditions for the future contractors.

The potential annual savings of energy costs after the implementation of the
projects is estimated at € 6.5 million. The potential for reduction of CO2
emissions is estimated to be between 70 000 and 100 000 tonnes.

13
TRANSPORT

Measures already
existing and/or
being improved

Vehicle Vehicles in Austria are subject to two different types of taxes: a fuel
Taxation consumption tax (Normverbrauchsabgabe/NoVA)) and a car registration tax
(Kraftfahrzeugsteuer).

The fuel consumption tax NoVa was introduced in 1992. This tax has to be
paid at the time of purchasing a new car and is based on the fuel consumption
specifications of the car. The Structural Adjustment Act in 1996 led to an
increase in this tax rate of about 1% by changing the way fuel consumption is
measured. At the same time, the maximum tax rate was raised from 14% to
16%. Since the fuel consumption tax increases the tax burden depending on
the vehicle’s relative fuel consumption, this measure offers incentives for the
purchase of energy-efficient vehicles. In recent years a strong trend towards
diesel powered vehicles reduced the average fuel consumption. In 1996
diesel powered vehicles accounted for 50% of all new registrations compared
to 22% before the introduction of the fuel consumption levy. Diesel vehicles
currently hold a share of 40% to 50% of the total passenger vehicle fleet
compared to 5% in the mid-1980s.

The car registration tax has to be paid for each month in which a vehicle is
registered and has a number-plate, the prerequisite to use public roads. The
level of the tax depends on engine specification and it is paid to the insurance
company together with the liability insurance premiums. The tax is then
forwarded by the insurance company to the tax authority.

Road Some provisions of the Road Traffic Regulations have been amended to
Traffic implement a general night-time driving ban for non-low noise trucks and a
Regulations 60 km/h speed limit at night (in force since 1 January 1995) and to implement
enhanced monitoring of adherence to existing speed limits (in force since
1 October 1994).

Annual In order to maintain vehicles in a satisfactory technical state, every car must
Check-up undergo an annual check-up. (EU legislation calls for a maximum of two
years between check-ups.)

Master The 1991 Master Transportation Concept adopted the goal of reducing CO2 by
Transportation 20% by the year 2005 (from 1988 levels) and formulated appropriate
Concept measures to bring about this reduction. These measures are based on the
following principles:

ƒ Avoid unnecessary traffic.


ƒ Shift traffic to more energy-efficient and environmentally compatible means
of transport.
ƒ Undertake technical innovations in motor vehicles to optimise energy.
ƒ Use real costs.

Combined transport is supported under a programme managed by the ERP


fund with an annual budget of about € 2.9 million.

Road To better utilise the available infrastructure of motorways and express ways
Pricing and to improve traffic distribution, a road pricing system has been set up. In
1997 an annual fee for motor vehicles to use motorways and express ways
was introduced. This fee is paid via the purchase of a sticker (vignette) which
has to be stuck onto the windscreen. The price of the vignette until the end of

14
2002 is € 73 (passenger vehicles) and € 727 (HGV up to 12 tonne) per year.
The introduction of a toll depending on mileage for motor vehicles exceeding
3.5 tonne is being discussed.

Transport To promote environmentally acceptable commuting and company-related


Demand mobility, the Austrian Federal Ministry of Agriculture, Forestry, Environment
Management for and Water Management, together with the Austrian Federal Economic
Companies Chamber in co-operation with three large enterprises, carried out a model
project for "Transport Demand Management for Companies" which have
shown encouraging results (e.g. -17% emissions). The following measures,
mainly related to energy efficiency improvement, have been implemented:
information events, information via internet, special travel offer, improved
booking possibilities for business trips by railways, presentation of car-sharing,
purchase of office bicycles, etc.

Public The following measures have been taken to promote municipal, local and
Transport regional public transport:

ƒ Limit individual traffic, especially in downtown areas — limit entry to city


centres by such measures as pedestrian zones.
ƒ Manage parking space.
ƒ Promote the creation and enlargement of municipal, local and regional
public transportation networks. In 1996, the Technical University of Vienna
published the study Creation and Financing of Public Transportation
Networks. Its main conclusions were the need for a network system
covering Austria as a whole; the creation of a planning authority; changes
in the system of concessions.

Bilateral In order to promote the use of buses and trucks with low emissions and low
Agreements consumption, Austria has concluded bilateral agreements with a number of
Central and Eastern European countries (Slovenia, Croatia, Bosnia, Lithuania,
Moldavia and Russia) on a quota system for vehicles which do not meet
certain emission and consumption standards.

RD&D In the framework of the Austrian Programme on Technologies for Sustainable


Programmes Development, developed by the Austrian Federal Ministry of Transport,
Innovation and Technology (BMVIT), there are some energy related activities
for transport. For example, some € 7 million will be spent in the new A3-
Technology Programme (Austrian Advanced Automotive Technology) for new
propulsion systems, energy efficient auxiliary devices and alternative fuels.
The programme "MOVE -- Mobility and Transport Technology" promotes
research and development projects in the field of transport and mobility by
funding demonstration projects capable to trigger innovation in the transport
system. For this programme, about € 2.9 million are budgeted annually.

Energy In 1999, the Tax Reform Commission proposed a number of measures for an
Taxation ecological tax reform including higher taxation on energy. In mid-2000 the
existing tax on electricity was increased from 0.1 Sch per kWh to 0.2 Sch per
kWh.

MONITORING/ For measures which are taken in the context of the EU, it can be assumed
ASSESSMENT that cost-effectiveness is seriously taken into account because – as a rule –
initiatives taken by the Commission and negotiated and adopted by the
Council are thoroughly analysed beforehand.

Decisions on measures at both the federal and Länder levels are based on
thorough preparatory work. At the project level, monitoring is done on a case-
by-case basis, where beneficiaries of subsidies have to report on the use of
the money. In many cases this micro monitoring is not exclusively focused on

15
energy efficiency because programmes often pursue objectives other than just
energy efficiency improvements.

So it can happen that a measure chosen may appear sub-optimal from a mere
energy efficiency perspective and differently from a global point of view.

Ex-post assessment of the results of implemented measures is probably an


area with room for improvement. But the cost of an assessment scheme has
to be in reasonable relation to the results which can be expected of it. Given
the complexity of Austria's landscape of instruments promoting energy
efficiency and given the fact that energy efficiency is often only one of several
goals (as is the case in many financial support schemes) an assessment
structure can be assumed to be extremely resource consuming.

The effects of implemented and planned GHG mitigation measures on


economy and emissions have been assessed in the energy scenario
calculation until 2020 carried out by the Austrian Institute for Economic
Research. The National Climate Strategy contains provisions for the
monitoring of the mitigation effect of measures with co-operation of the
Länder.

In the 2002 in-depth review of the energy policies of Austria, the IEA stated:

The Government of Austria should:

• Institute an effective monitoring scheme for government-sponsored


energy efficiency programmes to measure their efficacy in order to both
improve them and ascertain their cost-effectiveness.

Further For further information, please contact:


Information
Bundesministerium für Wirtschaft und Arbeit, Sektion IV
Schwarzenbergplatz 1
A - 1015 Wien
Tel: +43 (1) 711 00
Fax: +43 (1) 714 35 83
E-mail: post@ivsl.bmwa.gv.at

16
Energy
IEA Efficiency
Update

BELGIUM Updated August 2003

BACKGROUND

Constitutional The fundamental factor affecting the evolution of Belgium’s energy policy in
Framework the last decade has been the Special Law of Institutional Reform of 8 August
1988 which made Belgium a federal state. Under this law, responsibilities for
energy efficiency, including related R&D activities, were fully transferred from
1 January 1989 to the three regional governments of Flanders, Wallonia and
Brussels-Capital. The federal government remains responsible, for example,
for energy tariffs. The energy consultation group CONCERE/ ENOVER
(Concertation état-regions pour l’énergie/Energie-Overleg Staat-Gewesten
inzake Energie) is a co-operative structure created by the central and regional
governments and operational since 1992. One of the main tasks of the
Cellule CONCERE/ENOVER is to gather information and promote its
exchange among the regions and the federal government and internationally.
Policies (regional, national and international) relating to energy efficiency are
discussed in the monthly plenary meetings of the group and in the thematic
working groups.

In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

• Promote improved co-ordination activities between the regions and with


the federal government in all areas of energy efficiency.
• Given the diverse circumstances within the different sectors, ensure that
those who have the best knowledge and the capacity on particular areas
should be chosen as implementing bodies to improve energy efficiencies
in these respective areas.

The following web sites address these areas:

Federal level
Federal Public Service – Economy – Division Energy:
www.energie.mineco.fgov.be
CREG (Commission for Electricity and Gas Regulation): http://www.creg.be
Federal Planning Bureau: http://www.plan.be
Brussels-Capital Region
Brussels Institute for Management of the Environment, IBGEBIM,
http://www.ibgebim.be
Flemish Region
Natural Resources and Energy Department: http://www.energiesparen.be
VREG (Flemish Electricity and Gas Regulatory Commission):
http://www.vreg.be
Sustainable Energy Agency, ODE-Vlaanderen: http://www.ode.be
Energy and Environment Information System: http://www.emis.vito.be
Walloon Region
Administration for Energy: http://energie.wallonie.be and
http://mrw.wallonie.be/dgtre
CWAPE (Walloon Electricity and Gas Regulatory Commission):
http://www.cwape.be
Information site on renewables: http://www.erel.org
Energy desks: http://energie.wallonie.be (click on "particulier")
Renewable Energy Agency: http://www.apere.org

Energy In June 1991 the Council of Ministers adopted a target to reduce CO2
and the emissions by 5% between 1990 and 2000. This target refers to total
Environment anthropogenic CO2 emissions; there is no specific target for the energy sector.

1
To achieve it, the regional governments in June 1994 and the Council of
Ministers on 1 July 1994 approved the Belgian National Programme for
Reducing CO2 Emissions (PNBRE94). This programme selected 14
categories of measures concerned essentially with energy conservation.

Review of the In March 1996, the different working groups that produced the PNBRE94
PNBRE94 carried out a detailed review to assess the results achieved by implementing
programme these 14 categories of measures. The review recommended that to overcome
the difficulties of implementation, it would be necessary, inter alia, to:

• Allocate more financial resources, in particular to the regions, to support


the implementation of the energy efficiency measures.
• Give high priority to the measures in the CO2 programme, particularly for
the rational use of energy.
• Take the political decision at the highest level of government on the
conclusion of voluntary agreements with industrial sectors, notably with
the electricity sector.
• Include the measures into a broader framework, particularly in the context
of European Union Directives.

Following the detailed review of PNBRE94, an Interministerial Conference on


the Environment, grouping the federal and regional ministers, confirmed the
national environment target to reduce CO2 emissions and decided to elaborate
a new programme before the end of 1999.

Belgium ratified the UN Framework Convention on Climate Change (UN


FCCC) in January 1996 and submitted its first national communication at the
beginning of 1997. The Second National Communication according to articles
4 and 12 of the Convention (updating of the first communication) (Deuxième
Communication Nationale conformèment aux articles 4 et 12 de la Convention
[mise à jour de la première communication]) was submitted in August 1997.

After the Kyoto commitment of December 1997, the European Union Council
1
of Ministers agreed on 17 June 1998 on the Burden-Sharing Agreement
towards achieving the 8% European Union commitment to reduce emissions.
In this context, Belgium is committed to reducing its emissions by 7.5% for the
2008-2012 period over the 1990 levels.

Following a decision at the Council of Ministers of 14 June 2001, the Federal


Planning Bureau will draft an annual report. This report will comprise a series
of economic and social indicators to monitor the impact of the National
Climate Plan on the Belgian economy (for example, on the different sectors,
on purchase power, on employment and on sustainable economic
development) and on the competitiveness of Belgian companies.

The first Federal Plan for Sustainable Development, submitted to the general
public and to organisations for consultation, was approved by the federal
government on 20 July 2000. The Plan is available (in French and English) at
http://www.icdo.fgov.be/pub/rapports.stm).

National Climate At the Belgian federal level, the "Plan National Climat 2002-2012" was
Plan 2002-2012 finalised on 6 March 2002.

The Plan available on the web site http://www.energie.mineco.fgov.be/ of the


Federal Public Service – Economy – Energy Division
(http://mineco.fgov.be/redir_new.asp?loc=/energy/home_fr.htm) considers
measures in the field of energy, mobility, fiscality and product standards such
as defined in the Federal Plan for Sustainable Development, especially with

1
The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6

2
respect to the “green” taxation reform. It will create a Climate Commission
consisting of representatives from the federal government and the three
regions, and supported by a permanent secretariat. It will make an annual
assessment of national co-operation and the implementation of the measures
taken in the framework of the National Climate Plan. It will advise on Belgian
positions in the international context of climate change and ensure information
exchange between the parties involved. Co-operation between the federal and
regional bodies will be achieved to implement flexibility mechanisms. It
integrates the measures foreseen in the plans in the Regions, in particular the
“Plan d’Action de la Région wallonne en matière de changements climatiques”
and the corresponding “Plan pour la maîtrise durable de l’énergie” (draft
available at http://daras.wallonie.be/).

The regional plans include energy efficiency measures (e.g. voluntary


agreements) and portfolio standards for renewables and CHP.

In 2003, an international consortium lead by the Fraunhofer Institute finalised


a study on DSM for the federal government (see
http://mineco.fgov.be/energy/home_fr.htm). In the “benchmarking scenario”,
where savings are derived from a comparison with other countries, CO2
reduction would be sufficient to meet Belgium’s Kyoto target by lowering
energy-related CO2 emissions to 100 Mt CO2. The “economic potential
scenario” assumes extensive use of demand reduction potentials, going
beyond the current international best practices, and implementing investments
with zero net costs (so-called “win-win” measures). Under this scenario CO2
emissions would be cut down considerably more, opening the potential for a
possible second commitment period in the Kyoto process, and partly
compensating the impact of nuclear phase-out after 2015. The study makes
concrete proposals for DSM that could be included through co-ordinated
federal and regional policies according to their administrative feasibility and
national or European constraints and priorities.

With respect to the deployment of energy technologies, the plan presents


some new elements. For the energy sector (according to the decision of the
Council of Ministers approved on 7 December 2001), a draft decree foresees
the introduction of a green certificate scheme (GCS) implying a quota for the
suppliers connected to the transport grid (>70kV- 6% in 2010). GCS will be
operational in the regions for the distribution grid (<70 kV, the targets being
3% and 5% respectively in 2004 and 2010 in the Flemish Region, the
corresponding figures being 5% and 12% in the Walloon Region, where the
green electricity also takes into account high quality CHP, the CHP also being
supported in the Flemish Region with a target of an additional 1 200 MW from
1995 to 2005). The indicative plans for the equipment in the gas and electricity
sectors will be integrated.

The Brussels-Capital Region will support energy audits, and energy


certification. The Walloon Region also aims to introduce more transparent
tariff forms to promote energy efficiency and to set up a fund fed by the
penalties paid by suppliers not having reached their GC quotas to support
sustainable energy use. The use of standards and energy voluntary
agreements will also contribute together with a new fiscal exoneration for
energy efficient equipment installed in households.

3
RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Thermal The main insulation standards for new buildings and retrofitting in the
Insulation residential and tertiary sector currently being implemented in the three regions
Standards are as follows:

Wallonia

For new lodgement buildings (residential, but also hospitals, hotels, boarding
2 3
schools, barracks, prisons) either the K55 standard or the Be 450 standard
4
is enforced. In both cases, k max values for various building shells and a
ventilation rate are enforced.

For new non-commercial tertiary buildings (offices, schools) K65 standard, k


max values and a ventilation rate are enforced. In the case of retrofitting of
lodgement and non-commercial tertiary buildings with change of allotment, the
K65 and K70 standards respectively are enforced, together with k max values
and a ventilation rate.

When retrofitting the above type of buildings with no change of allotment, only
k max values for the retrofitted elements are enforced. For rooms with
retrofitted windows, a ventilation rate is enforced.

Flanders

For new residential buildings in the Flemish Region, the K55 standard is
enforced as well as different k max values for various building shells.

For new buildings in the tertiary sector, i.e. hospitals, hotels, boarding schools,
barracks and prisons, the Flemish Region enforces the K55 standard and k
max values.

In retrofitting residential buildings, the Flemish Region implements k max


values. For buildings the use of which is changed the Flemish Region
enforces k max values.

Brussels-Capital

Since 1 January 2000, in the Region Brussels-Capital, the thermal insulation


standards of buildings are similar to those in force in Wallonia. To inform
architects and other actors in the construction field, a seminar was organised
in June 2000 by the Brussels Institute for the Environment.

2
The K ratio concerns the total level of thermal insulation calculated on the basis of a technical standard
established by the Belgian Institute for Standardisation (IBN). It takes into account mainly the insulation of the
various shells but neither solar heat, nor occupant behaviour nor the efficiency of heating. The lower the K factor
the better the total insulation of a dwelling.
3
The Be ratio concerns the calculation of the net needs for energy for heating, which means taking into account
the free inputs of solar heat. The calculation of the Be ratio is published in the "Arrêtés" of the Walloon
Government of 15 February 1996, "Moniteur belge" of 30 April 1996 and 9 May 1996.
4
A “k value” designates a heat loss coefficient of a wall system of a building. It allows the calculation of the
specific heat loss of a wall while the K65 or K55 (note the capital K) is the heat loss value of a whole building.
The current regulation in Belgium refers to a “k maximum value” for every type of wall used in a building.
Consequently, it is easier to use a “k value” for a wall in the case of a renovation project as the regulation would
apply only to the walls that were renovated.

4
Before a building permit can be issued, the calculation of the K ratio is
checked by the regional administration of town planning. The monitoring
process, however, is insufficient, and there are no official inspections to check
compliance with this regulation.

The Flemish government has issued an energy policy document for the period
2000 to 2004 which stated the objective of reducing energy consumption in
the residential sector in 2004 to the 1998 level. It is considering the
introduction of an energy performance standard following the Dutch
experience for new buildings (dwellings and office buildings) and efficient
control and motivation activities to enforce the existing legislation concerning
insulation of buildings. For industry and the service sector, the objective is to
increase energy efficiency by 2004 compared to 1998. This objective calls for
a wide range of measures, such as the creation of benchmarking covenants
with energy-intensive industries, a new Decree creating a global framework for
funding energy efficiency projects and the development of a coherent
communication strategy to promote energy efficiency.

The Walloon Region checks the application of the legislation at the stage of
the building permit but also at the beginning of the construction site.
Nevertheless, the inspections are insufficient and better ways to carry out
controls are being studied.

Interregional collaboration

Interregional collaboration on inspection of the insulation and ventilation


regulations takes place in the framework of the Belgian Building Research
Institute. The goal is to produce a manual for a uniform inspection procedure
throughout the country and standardisation and legislation to elaborate an
Energy Performance Standard (cf. the Netherlands).

In the framework of this collaboration, a website with information on ventilation


and insulation legislation in the three regions has been created. This initiative
was co-funded through the CONCERE/ENOVER group. The website was
inaugurated during a national seminar in December 1999.

Recently, the parties within the CONCERE/ENOVER group decided to co-


operate and co-fund several project in the building area. In the field of energy
certification of buildings a national study on the implementation of a system of
energy certification of dwellings, including a test phase of some 15 to 20
different buildings (individual dwellings and apartment buildings), was
completed. A seminar on the results was held on 4 May 1999. As a follow up
the group co-funded Belgian participation in the Save II project "BELAS" on
the same subject. The project ended in June 2001 and will lead to the
introduction of the system in 2002.

Belgian participation in Annex 35 of the IEA Buildings and Community


Systems Implementing Agreement on hybrid ventilation is also co-funded by
ENOVER/CONCERE.

The most recent decision of the group is on Belgian participation in the SAVE
II project EnPeR on Energy Performance Regulation.

In order to monitor the different projects and to exchange information on


regional policy and action plans a new ENOVER/CONCERE working group
was created in the spring of 2001.

In the Belgian National Programme for Reducing CO2 Emissions, it is planned


to strengthen the thermal insulation of new buildings through the mandatory

5
adoption of the K55 insulation standard in the residential and tertiary sector of
the three regions.

Severe problems are associated with the enforcement of the building


standards. According to a study carried out in Flanders, only 1/8 of the
individual houses and 1/3 of apartment buildings constructed after the
introduction of the standard meet the requirements. To address the problem of
poor achievement, the number of inspections has been increased and
additional measures are under consideration to ensure rigorous enforcement
of the standards. As the Flemish Region has decided to introduce energy
performance regulation in the near future, this problem will be tackled within
this system from the start in order to avoid the errors of the past.

In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

• Establish systematic control activities and a system of penalties to reduce


the number of building code violations.

Heating Following a European SAVE study on the regular inspection and timely
Appliances replacement of central heating installations, all regions are planning actions in
this area. In Flanders a revision of the existing regulation is almost ready.
Following consultation in the framework of CONCERE/ENOVER, the other
two regions are studying a similar initiative.

Energy To comply with EU Directive 92/42 on minimum energy efficiency standards


Efficiency for hot water devices and boilers, the Federal Ministers of Economic Affairs
Standards and the Environment, in co-operation with the regional ministers, have
adapted national legislation: the Royal Decree on energy efficiency standards
on hot water devices and boilers of 18 March 1997 was published in the
Moniteur belge of 20 June 1997.

Energy Belgian legislation is also being amended to comply with EU Directive 92/75
Labelling on energy labelling of household appliances.

For refrigerators, freezers and combinations, energy labelling was


implemented by Ministerial Decree of 20 November 1996 (Moniteur belge
dated 25.01.1997). For washing machines, dryers, combinations and
dishwashers ministerial decrees that introduce energy labelling were approved
on 01.12.1998 (Moniteur belge 13.01.1999); lighting bulbs: ministerial decree
01.12.1999, Moniteur belge 31.12.1999.

Information/
Motivation

Energy In the Walloon Region, 13 energy information kiosks provide practical


Information information and audits to individuals who would like to save energy through
Kiosks improvements in thermal insulation of their dwellings, heating, solar panels for
sanitary hot water, lighting, electric appliances, etc. The kiosks also provide
information on energy savings for heating, thermal insulation of buildings and
lighting in small and medium-sized enterprises. Practical information about
well identified RUE products is being prepared. The kiosks also house the
technical managers of the MEBAR programme (see below, under "fiscal
incentives").

In the Flemish Region, VITO (Vlaamse Instelling voor Technologisch


Onderzoek, Flemish Institute for Technological Research) raises energy
awareness in the industrial sector and among the public through the
Information System on Energy and Environmental (EMIS). This system

6
contains three main pillars: figures and statistics related to energy and
environmental matters; contacts (databases containing information on
organisations in the public and private sectors, and general information); and
processing (a technology database will be established containing
technological and economic information about clean and cost-effective
technologies in processes which can be applied in the industrial sector).

The residential sector is of great importance in the Brussels-Capital Region.


The energy balance of the Region, which was drawn up in 1991, shows that
energy consumption is divided among the sectors as follows: 42% housing,
21% tertiary, 23% transport and 10% SMEs. The rest is consumption by large
industry.

The Brussels Energy Agency, l’Agence Bruxelloise de l’Energie-Brussels


Energie Agentschap (ABEA), was set up in 1996. It is open to the general
public and disseminates informative brochures, undertakes thermal
assessments of dwellings and organises thematic workshops. Practical
questions concerning energy savings and the application of renewables in
dwellings are answered.

Information/ Various brochures providing information and motivation on energy savings


Motivation have been issued by regional governments.
Activities
and Events The Brussels-Capital Region issues various brochures on house insulation,
the use of high-efficiency light bulbs, electricity and gas savings, etc. The
Quinzaine de l’Energie en Région de Bruxelles-Capitale took place in October
2000. This 15-day event on energy had the general pubic and schools as
target audiences.

In Flanders, the Flemish Institute for the Rational Use of Energy (RUE),
VIREG, Vlaamse Instelling voor het Rationeel Energieverbruik, created in
September 1997, is now fully operational. Its goal is to involve actively the
different actors in RUE policy, to co-ordinate Flemish initiatives in the field of
RUE and ensure that available funds are used in the best possible way. More
particularly, the tasks of VIREG are to determine the energy saving potential
within the Region, plan and executive concrete actions in energy efficiency
and monitor these actions.

One of the most important actions of VIREG is the annual organisation of the
“month of RUE” in October. An ambitious calendar of events is developed
each year including seminars on RUE in the different sectors, numerous
conferences, workshops, advertisement in newspapers, magazines and
Flemish television.

Every year, the Walloon Region launches a general multimedia motivation


campaign for the residential sector on energy savings in housing. The Region
organises several training programmes for energy managers in public
buildings, teachers in vocational schools for carpenters and bricklayers to
improve the quality of thermal insulation, and for architects. A handbook for
energy managers has been published. A CD-ROM on lighting efficiency
design is being prepared.

Financial/Fiscal
Incentives

Subsidies for Various financial incentives have been introduced by the regions for the
Retrofitting retrofitting of buildings (excluding R&D). The Walloon Region through the

7
MEBAR programme allocates a maximum subsidy of BEF 55 0005 to low-
income households to improve the energy efficiency of their dwellings.

To promote the rational use of energy, two regions allocate subsidies to


municipalities and other local bodies, hospitals and schools. The Walloon
Region implements two subsidy programmes to promote energy efficiency,
AGEBA for municipal, provincial and regional buildings and ECHOP for
schools and hospitals. These two programmes will be harmonised under a
new scheme, called UREBA.

The Walloon Region allocates a subsidy to municipalities for the replacement


cost of inefficient public lighting (EP-URE programme). The subsidy covers
some 70% or more, depending on the energy efficiency of the replacement.

The Brussels-Capital Region allocates subsidies to municipalities, local public


bodies, schools and hospitals. Subsidies amount to 20% of the investment
costs if they are considered to be of an energy efficient nature. Energy audits
are subsidised up to 50% of the cost to a maximum of BEF 50 000.

Measures under
Consideration

Fiscal At its meeting on 17 October 2000, the federal Council of Ministers decided to
Deduction promote energy efficiency measures in the residential sector through a fiscal
deduction.

An article that foresees a tax deduction for energy efficiency measures in the
residential sector has therefore been inserted in the new law that modifies the
taxation of physical persons. Eligible measures are the replacement of old
boilers, the installation of solar boilers and PV systems, the use of double
glazing and thermostatic vans and the insulation of roofs. In June 2001 it was
decided that the fiscal deduction of energy efficiency measures will enter into
force for the revenues of 2003 (tax declaration 2004) with an annual budget of
1.5 billion BEF (€ 37,184 million). The measures are deductible for a percentage
of the real costs. The deduction rate is 15% for the replacement of old boilers
by new condensation boilers, and for solar energy. The rate is 40% for the
installation of double-glazing, roof insulation, the installation of a central heating
regulator, plus energy audits. The total cumulative amount per dwelling may not
exceed € 500 the first year but might be increased the following years.

In this framework the federal authority and the Regions are working together to
prepare software for evaluating the energy efficiency of a building.

Discouraging To discourage direct electric heating and promote the use of natural gas
Direct Electric heating, the regional energy ministers will launch consumer information
Heating campaigns (leaflets, energy information kiosks, advice from architects,
technical brochures, etc.) on the real costs of using the different heating
systems and on their impact on the environment.

INDUSTRY

Measures already
existing and/or
being improved

Information and In Flanders, the Flemish Institute for Technology Research (VITO) raises
Technical energy awareness among industrial companies in particular through the
Assistance Information System on Energy and Environment (EMIS). The Flemish
5
On average in 2000, BEF 1 = US$ 0.023.

8
Institute for the Rational Use of Energy (RUE), VIREG is in fact a discussion
platform between the Flemish government, the energy production and
distribution companies and the industrial and residential energy users.
Flanders has also established energy efficiency consultancy departments for
small and medium-sized enterprises in each of the five regional development
companies. Industries can benefit from a 15% subsidy for energy audits that
are part of an overall investment project.

The Walloon Region finances an annual inventory of energy balances for


Wallonia, prepared by the "Institut Wallon". It also finances a detailed
"monitoring board" of energy consumption, carried out by ECONOTEC. A
Newsletter, "Le REActif" (Le Responsable Energie Actif), which is targeted at
the tertiary sector, is published, but specific information is designed for the
industrial sector. COGENSUD is a non-profit organisation in charge of the
promotion of combined heat and power (CHP). It collects and provides
information to potential users, with the support of the Walloon Region. Last
but not least, the Walloon Region organises an awareness action aimed at the
SMEs: the RUE Broker:

• In agreement with the SME, the RUE Broker analyses the energy balance
of the enterprise and detects the major problems. He proposes solutions
and provides information about the incentives and accompanying
measures available from the Walloon Region.
• In a few cases, the RUE Broker makes a deeper analysis (Energy Potential
Scan method, which was developed in the Netherlands) and proposes
more elaborate solutions.
• This action is sustained 100% by the Walloon Region, the SME assuming
responsibility for its own human and material participation.

Energy For industry, the Walloon Region intends to promote the CAFE (Comptabilité
Audits Analytique des Fluides et des Energies) or analytical accountancy for fluids
and energies used in industrial processes which is composed of data
collection, analysis, reporting and communication. It also promotes energy
audits by bearing 75% of the cost of expert advice.

In 1999, the Walloon government adopted a decree concerning environmental


permits. The permit applicants will be obliged to perform an energy audit and
energy accountancy. However, the procedure does not include setting
requirements for energy efficiency and the permit cannot be refused because
of low energy performance.

The Brussels-Capital Region subsidises feasibility studies for energy


efficiency investments and energy audits to cover 50% of the cost.

Flanders provides a subsidy of 15% to small and medium-sized industries if


the audit is carried out in connection with an investment project, and a 10%
subsidy for all other industrial energy audits. In addition, the Flemish
government employs five energy consultants who carry out pre-audits and
their services are free for the user.

Voluntary Flanders will introduce voluntary agreements to energy-intensive industries.


Agreement
For large energy-intensive industries (energy consumption <0.5 PJ), the
agreements are based on the principle of benchmarking. In these
benchmarking agreements, participating companies commit themselves to
bring their energy efficiency up to world top level by 2012. Negotiations have
taken place, or are ongoing, with the iron, steel, paper and cardboard sectors
and with the chemical industry. The Flemish Economic Federation (Vlaamse
Economisch Verbond, VEV) took part in these talks. The Flemish region is
building the tools to implement benchmarking agreements for the energy-

9
intensive industry, the other industries being invited to make any energy
saving investments with a pay-back time less than five years.

Periodic energy audits will define the suitable investment programmes.

Wallonia has already taken the first steps to adopt voluntary agreements with
different industrial sectors. The first sectors to sign a letter of intent were the
chemical and paper industries in July 2000. In 2001, three industrial sectors
(cement, limestone, and non-ferrous) signed a letter of intent. These letters of
intent will lead to voluntary agreements to reduce energy consumption by 2010.

In the Brussels-Capital Region, the industrial sector is small: therefore, instead


of voluntary agreements, the region has introduced a voluntary labelling
programme called Eco-dynamic enterprise. To obtain the label, the
entrepreneur signs a charter with the engagement to respect a number of
principles of ecological management. Several of these principles are closely
linked to RUE.

DSM/IRP All regions have introduced policies and measures to promote energy
in the efficiency. The 2002 Flemish decree for the promotion of energy efficiency
Electricity sets the grid manager energy saving targets to be realised at customer level.
Sector Certificate markets to support combined heat and power (CHP) have been
introduced in Flanders and also in Wallonia where they are imbedded into its
green certificates system. Brussels-Capital is in the process of preparing its
own certificate scheme to promote CHP. Flanders is establishing a quota-
based certificate system for the promotion of CHP with a target to install an
additional 1 198 MW by 2005. Flanders and Wallonia have introduced
voluntary agreements for energy-intensive industries. The Flemish
agreements are based on “world top benchmarking” of energy efficiency
whereas the Walloon government subsidises energy auditing and monitoring
in industry, as well as technical certification of products contributing to a better
control of energy consumption. Projects are under way in all regions to
improve energy efficiency in buildings in line with the EU directive on the
Energy Performance in Buildings. The Flemish region is also preparing a law
to establish a legal framework on which specific implementing measures will
be based related to energy efficiency, renewables and the implementation of
flexible mechanisms and emissions trading.

Financial/Fiscal
Incentives

Investment A system of fiscal abatement (depreciation) for investments by industrial,


Abatement in commercial and agricultural businesses has been in operation since 1982. It
the Regions currently offers an abatement at the general rate of 13.5% on taxable profits.
An additional 10% abatement is given for investments aimed at improving
energy use in industrial processes and, in particular, recuperating energy used
in industry. Since 1990, the regional executives monitor the viability of the
investments. The system is being adapted to take account of trends in energy
efficiency policy, particularly environmental concerns.

• Flanders: tax abatement – 13.5% of energy saving investments can be


deducted from taxable income.
• Wallonia: tax abatement – 13.5% of energy saving investments can be
deducted from taxable income.
• Brussels: Article 69 of the Income Tax Code 1992 (CIR92): "deduction for
energy saving investments".

Economic General legislation enacted in 1959 and amended in 1970 created a structure
Development for financial support for economic expansion. This support is now the
Subsidies responsibility of the regions, and has been diversified according to each

10
Region’s needs. The financial support consists of subsidies, reimbursable or
not, which are allocated by the regions before the realisation of the
investment. The level of subsidy varies according to the type of enterprise and
other criteria such as the promotion of RD&D, the introduction of new energy
efficient processes and the development of employment.

In Flanders, subsidies for energy saving investments amount to 20% for SMEs
and 10% for large enterprises.

In Wallonia, financial incentives for socio-economic development allocated to


promote renewable energy sources and energy saving include a wide range of
measures (subsidies, reimbursement of loans guaranteed, tax exemption,
accelerated write-off) and vary according to different criteria (direct or indirect
job creation, importance of the activity, etc.).

The "Arrêté du gouvernement wallon" of 16 September 1993 grants


enterprises which invest in renewable energy sources a subsidy of 15% of the
investment.

The "Arrêté de l'exécutif régional wallon" of 19 December 1984 enables


enterprises to benefit from a subsidy for a wide range of measures: expenses
for expert advice prior to an investment, technical agreement expenses,
studies, promotional activities, etc.

In Brussels-Capital, subsidies of up to 20% of the investment cost may be


allocated to enterprises for investments undertaken on the territory of the
Region and aiming at, for example, energy efficiency and environmental
protection (ordinance of 1 July 1993 concerning the promotion of economic
expansion in the Region Brussels-Capital). Preparatory studies (e.g. energy
audits) receive a premium of 50%.

Technology A Royal Decree of 1983 allocates subsidies for the development,


Subsidies in demonstration and commercialisation of new products and processes for
the Regions energy efficiency. However, this legislation overlaps with some regional
initiatives.

In Flanders, the VLIET programme – Vlaams Impulsprogramma voor


Energietechnologie (Flemish programme for the promotion of energy
6
technology) – is managed by IWT . The multi-annual programme ran from
1993 to 1996 and had a budget of BEF 800 million. At least 10% of this
amount had to be devoted to research projects in support of Flemish energy
policy and VIREG – the Flemish Institute for Rational Use of Energy.

As the VLIET budget was not entirely spent, the VLIETbis programme was
started in 1997. Mid-1997, calls for proposals were launched for both parts of
the programme (namely policy support research and research in the field of
RUE and renewables). Mid-1998 the Flemish government agreed to support
12 policy support research projects and 16 research projects on RUE and
renewables. Budgets amounted to, respectively, BEF 84 and BEF 197 million.

The typical project duration is two years, which means that, currently, final
reports on the projects are being prepared. Under the new government, no
decision on the continuation of the VLIET programme has yet been taken.

Demonstration projects are supported financially by the ANRE division of the


Ministry of the Flemish Region.

6
Vlaams instituut voor bevordering van het wetenschappelijk technologisch onderzoek in de industrie – Flemish
Institute for the promotion of scientific and technology research in industry.

11
The Walloon Region operates various programmes in support of innovative
technologies, including energy technologies. The most important of those
programmes, the “Decree” (which refers to a Decree of 5 July 1990 by the
Walloon regional government granting financial support for R&D) applies to all
fields (i.e. energy, telecommunications, new materials and biotechnology).

The Decree defines basic industrial research as being an original theoretical


or experimental activity to acquire new knowledge for possible application to
an industrial sector or to the activities of a specific company. Applied research
consists of investigation or experimental activities aimed at gaining greater
knowledge so as to facilitate the development of new products, processes or
services, and development consists of developing and improving products,
processes or services for industrial and commercial exploitation including pilot
projects and demonstration projects.

The “Plan d’Action pour préparer la Wallonie au Futur” (“Action plan for
preparing Wallonia for the future”) was presented on 25 January 1996 and
consists of guidelines to be followed by the DGTRE. Thus, this Plan reflects
the new RD&D policy that the Walloon government intends to promote in the
future. Efforts by the regional government will be orientated towards clearly
identified technological niches through a yearly inventory that will be
developed through consultation with all the stakeholders. The different types
of support provided by the Region will be restructured and RD&D regional
policy will be better integrated into European research and development
programmes.

In the same way, the Walloon Region regularly launches "Programmes


Mobilisateurs" or calls for RD&D proposals on well-defined targets (e.g.
cogeneration in the energy field).

In Brussels-Capital, in recent years, budgets formerly spent on energy RD&D


projects have shifted towards studies in support of energy policy.

In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

- Assess the feasibility of promoting energy efficiency by giving subsidies or


by tax abatements.

Combined The promotion of CHP is a regional affair. Nevertheless, as energy pricing


Heat and policy is a matter of federal competence, the federal government has an
Power important role to fulfil.

Federal policy to promote CHP

1. CHP in the federal framework law to liberalise the electricity market

Article 20, §4 foresees the possibility to fix minimum tariffs for the purchase of
electricity generated by quality CHP installations.

At the interministerial conference of 5 May 2000, the ministers responsible for


energy matters agreed the following:

• Suppliers responsible for delivering electricity to captive clients will be


obliged to buy surplus electricity and to deliver additional electricity to
autoproducers (inclusive of back up).
• The purchase of surplus electricity and delivery of additional electricity has
to take place at published and reasonable tariffs.
• The ENOVER/CONCERE group must propose concrete measures to

12
promote CHP by 1 January 2001. In order to develop such a list of
measures, the consultation group will collaborate with the Belgian
organisations responsible for the promotion of CHP (Belgogen and
Cogensud).

Regional policy to promote CHP

1. Promotion of CHP in the regional decrees for a liberalised electricity


market:

Flanders

• All regional decrees foresee rules to promote ‘high quality’ CHP.


• The Flemish decree enables producers with a CHP installation to deliver
electricity directly to the consumers. (In the past they were obliged to sell
their surplus electricity to a distribution company at a fixed low resale tariff.)
Furthermore, the Flemish decree offers CHP producers access to the
liberalised market according to their electricity production. A Decree is
under preparation as to create a certificate system for quality CHP.

Wallonia

The decree on the green certificate system includes the high efficiency CHP
on the basis of the avoided emissions.

Brussels-Capital

The holders of a supply permit, with the exception of the distribution grid
managers, are obliged to buy the surplus electricity produced by auto-
producers by means of good quality CHP installations, installations for green
electricity generation and installation for thermal production from domestic
waste, at the price fixed by federal legislation.

A system of green certificate will be introduced which guarantees the origin


and quality of the green electricity and defines the source of energy from
which the electricity is produced. The certificates are tradable.

The government can oblige the suppliers, with the exception of the distribution
grid manager, to deliver a minimum amount of certificates to the "service". The
"service" defines the fine which is to be paid in case of non-compliance with
the minimum amount of certificates.

2. Other instruments

Flanders

One of the instruments that Flanders will use to reduce emission of GHG is
the increased use of CHP. In an earlier objective, the Flemish government set
a target to install 1 200 MW additional CHP capacity by 2005. The new
government has added to this target an extra 600 MW of high-quality CHP
plants between 1999 and 2004.

The special body BELGOGEN was created in 1997 (50% funded by the
Flemish government and 50% by the private sector) to stimulate market
penetration of CHP.

Wallonia

COGENSUD is a non-profit organisation in charge of the promotion of


cogeneration to potential users. It collects and provides information, with the

13
support of the Walloon Region.

PUBLIC SECTOR

Measures already
existing and/or
being improved

AGEBA In the Walloon Region, in the framework of the programme AGEBA


(requirement for energy management in buildings), before applying for a
subsidy for energy efficiency investments, the calculation of the energy
efficiency register and/or of the energy efficiency value for municipal,
provincial, social or intermunicipal buildings must be produced.

Subsidies for In order to promote the rational use of energy, two regions allocate subsidies
Non-Commercial to municipalities and other local bodies, hospitals and schools. Wallonia
Bodies implements two subsidy programmes to promote energy efficiency, AGEBA
for municipal, provincial and intermunicipal buildings and ECHOP for schools
and hospitals. These two programmes will be harmonised.

Wallonia allocates a subsidy ranging from BEF 12 000 to 14 000 to


municipalities covering about 85% of the replacement cost of inefficient public
lighting (EPEE programme). From 1988 to 1995, a total of 166 000 luminaries
were replaced, resulting in electricity savings of about 25%. To fully implement
the EPEE programme, a total of 350 000 luminaries must be replaced in the
262 Walloon municipalities.

Third-Party To promote energy efficiency investments in the public sectors of the three
Financing regions, the mechanism of third-party financing (TPF), through which the
economic risk of investments in the rational use of energy is undertaken by a
third party (generally an energy service company) instead of the end-user, is
widely used in the framework of regional energy efficiency policies. This is the
case, for instance, in the Walloon Region with the AGEBA programme. In the
Flemish Region it was used in the 1998 relighting programme of a government
building in Antwerp, and in the Brussels-Capital Region which has budgetary
provisions for TPF in public bodies.

In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

- Ensure that there are no obstacles for increased use of third-party


financing for energy efficiency Ensure that there are no obstacles for
increased use of third-party financing for energy efficiency.

TRANSPORT The Belgian National Programme for Reducing CO2 Emissions contains
several energy conservation measures for the transport sector. A new national
plan should be ready by mid-2001.

General A broad survey, held in 1999, on the mobility of persons in Belgium, gave the
Situation following shares of the respective modes in total mobility:

• use of private car: 65.1%;


• walking: 19.9%;
• motor cycling: 8.4%;
• public transport: 3.4% (approximately 8.7% of the Belgian population uses
public transport -- regularly or from time to time);
• other: 3.2%.

14
As in other European countries, freight transported by trucks on roads
increased substantially in the past 10-20 years.

European and intercontinental air traffic arriving at or departing from the


airport of Zaventem (near Brussels) has not only more than doubled in the
past seven to eight years, but is also an important source of road traffic.

As a result, total road traffic increased dramatically in the past 10-15 years (on
some motorways: >100%), causing structural congestion problems, mainly in
the larger cities (Antwerp, Brussels, Ghent) and on most motorways
surrounding or interconnecting those cities

A “business as usual” scenario forecasts a further strong rise of road traffic


during the next ten years. This would result, on already saturated roads, in
longer rush hour periods and in a substantial increase of fuel consumption
(35-40%) and emissions.

The measures and actions described hereafter, aim at a stabilisation (and in


the long term, even a reduction) of energy consumption and emissions by
road traffic.

They can be summarised as follows:

• Measures and actions to stimulate the replacement of old cars, vans or


trucks by more fuel-efficient models and with lower emissions. This implies
the use of new vehicles equipped with improved engines (diesel or Otto-
engine) or alternative propulsion systems, improved or alternative fuels, on
board multimedia road/traffic information systems, etc.
• Measures and actions to stimulate the application of fuel saving and safe
driving styles (which are in principle possible in all existing vehicles).
• To offer real alternatives for road transportation of individuals and freight,
such as public transport systems, freight transport by rail, or inland-
waterways, or combined/multi-mode transport systems.

Vehicle The federal government, in consultation with the regional governments, is


Tax defining a new vehicle taxation system which should stimulate the purchase
Schemes and use of new cars and other vehicles with a relatively low energy
consumption and with emission values in accordance with the Euro 3 or
Euro 4 emission standards.

These new taxation schemes would partly replace the existing vehicle and fuel
taxes. The current major fiscal parameter for vehicles is the so-[called “fiscal
(horse) power” (FP), which is an almost linear function of the engine
displacement value (active cylinder volume).

As a result of this definition, a diesel car gets a higher FP-value than a car
equipped with an Otto-engine giving the same engine power (in kW).

The vehicle registration tax is based on the FP-value or on the maximum


power of the engine. This tax increases sharply above the FP-value = 10.

The annual circulation tax is based on a term which is (an almost quadratic)
function of the FP-value. An additional term (also function of the FP) is applied
to LPG cars and diesel cars.

Heavy duty vehicles (trucks, buses) pay a supplementary circulation tax (the
so called “Eurovignette”).

Taxes on fuels:

15
• Excises: depending on the fuel type: 0 for LPG and CNG, higher for
gasoline than for diesel.
• 21% VAT.

There is a tax (9.25%) on vehicle insurance payments and 21% VAT on all
invoices (purchase, maintenance, etc).

Consumer The transposition of the European Directive 1999/94/EC concerning the


Information on availability of consumer information on fuel consumption and CO2 emissions
Fuel of new passenger cars in a Royal Decree is the responsibility of the Federal
Consumption Administrations of Environment and Economic Affairs. This is also the case for
of cars monitoring the correct implementation of the different measures to inform the
public about fuel consumption and CO2 emissions of every new car model
available on the Belgian market, namely labelling, a general information guide,
printed publicity material, brochures and posters.

The Regions can take the initiative to implement large-scale information


actions, such as the editing and distribution of brochures and creation of an
Internet Web Site.

As a project financed by ANRE (Ministry of the Flemish Community), VITO


developed a database with wide information on all new car models available
on the Belgian market, which is accessible since December 1998 on Internet
www.emis.vito.be/mobiliteit/autoverbruik . Since then, it is regularly updated and
improved. It gives, by model, all official technical data, such as the fuel
consumption.

It also applies the concept of comparative fuel consumption labelling, whereby


every model is compared with other cars of the same “dimensional class”. It
also contains a module with information and advice on fuel saving driving and
car loading techniques. The Walloon Region intends to develop a similar
database for the French speaking part of Belgium.
7
Given the total volume of new cars sold in Belgium and the increased interest
of the public in fuel efficient cars because of rising fuel prices, it is almost
certain that large-scale and intensive information actions, such as those
described above, will have a beneficial effect on the purchase behaviour of
consumers.

The introduction of “green” car taxes will have an important leverage effect on
these information actions.

Fuel Efficient Extensive measurement campaigns carried out by VITO (and financed by
Driving ANRE) on different types of cars and in real traffic conditions, have shown
Styles clearly and objectively the important influence of traffic conditions and driving
styles (from anticipating, defensive driving, to a nervous, “sporty” style) on the
fuel consumption and emissions of the cars tested.

Based on this information and on the experience of European colleagues


(such as TNO, Netherlands, MOTIVA, Finland, EVA, Austria) VITO started in
1999 a series of pilot projects concerning fuel efficient and safe driving. About
130 people participated in these projects, on a voluntary basis, using their own
car or a car/van owned by their employer (a large telecom network operator).

The reported energy savings were somewhat lower than expected (in foreign
experiments, fuel savings of up to 15-20%, compared with “average, normal
driving” were reported). This can be explained by the fact that most
participants were probably experienced and motivated drivers.

7
490 000 in 1999, and 530 000 forecast for 2000.

16
The response to a questionnaire by most participants was positive. Their
remarks will help improve the course material. An effective technical
improvement would be the use of a display (on the dashboard) showing the
fuel consumption in real time (some cars have it already as a standard
feature).

As a participant in a European SAVE II-98-project, VITO organised a


symposium on this subject in January 2000 (during the National Car Show in
Brussels), which was mostly attended by high level professionals
(representing fleet owners, driving schools, federal and regional
administrations and institutions).

VITO and a Belgian driving school (run by the Belgian importer of the
Volkswagen group, whose clients are mainly drivers of company cars) will be
active participants in a new European SAVE II-2000 project (which started in
January 2001), called “Ecodriving Europe”. The aims of this project are: to
gain more experience with ecodriving-training courses and to improve their
effectiveness, to stimulate the organisation on a larger scale of such courses,
and to integrate the testing of these fuel saving driving techniques into the
official examinations for obtaining a driving licence (which up to now,
concentrates on traffic codes and road safety).

Public Some ten years ago, the Belgian National Railway Company (NMBS-SNCB)
Transport greatly increased its investment programme in railway infrastructures for
Systems national and international train lines and in rolling stock (new locomotives,
carriages).

The public company VVM-De Lijn, responsible for regional and local public
transport in Flanders, is also investing heavily in new buses, low-floor tram
cars (in the cities of Antwerp and Ghent), and in the associated infrastructure
(such as the extension of tramlines, bus stations, passenger information
systems). The total investment budget for 2000 was BEF 5.237 million while
the prevision for 2001 is BEF 5.811 million.

De Lijn also started in 1998 an experiment with free public transport (in the
city of Hasselt). From the beginning of last year, this free service was
extended to all Flanders for certain classes of users (seniors ≥65 years, the
personnel of the Ministry of the Flemish Community, who can also get free
train tickets, children ≤12 years). The federal government followed this
example by reducing train fares for certain users.

Since 1996 the Flemish Region concludes so-called “Mobility agreements”


with individual or groups of municipalities. Up to now, some 80% of the
municipalities in Flanders have signed the Framework (“Mother”) agreement,
by which they commit themselves to draw up a “Mobility Plan”. This has to
cover a broad range of mobility and road-safety measures, such as promoting
and giving priority to public transport, limiting (or freezing) the number of car
parking places, and the construction of bicycle-tracks.

These study and implementation projects are financially supported by the


Flemish Region (in the period 1997-1999: BEF 962 million).

Several Walloon pilot communities have signed mobility charters (chartes de


mobilité) which are similar to the agreements in Flanders The Walloon Region
is lowering public transport fares, and will equip the buses with particle filters.
It studies how to promote "mobility services" such as taxis (new version). The
Walloon Region has made the commitment to reopen trans-frontier railway
connections and to promote the railways in general.

17
Transport The Walloon regional authorities do carry out some activities to improve
Planning in energy efficiency and to reduce emissions, focusing on a sustainable
Businesses infrastructure and mobility policy. The "Plan d’environnement pour le
Développement durable en Région Wallonne” (PEDD) (Economic Plan for the
Sustainable Development of the Walloon Region) of 9 March 1995 identifies a
wide range of measures including land-use planning, carpooling, promotion of
public transport, use of alternative and cleaner fuels such as natural gas and
biofuels, traffic management, information and motivation campaigns for
drivers, promotion of railways and inland waterways, the development of
intermodal alternatives for road transport of goods and the development of
international transport for passengers and goods.

In particular, the Walloon Region invests in car sharing and participates in a


European project in this field.

In 1998, the Brussels-Capital government approved an ordinance concerning


the assessment and improvement of air quality. The ordinance contains the
following measures in the field of transport and mobility: each private or public
body with more than 200 employees per site has to introduce transport
planning; for events assembling over 3 000 participants an action plan to
promote the use of public transport and of energy efficient and
environmentally friendly means of transport must be instigated; regional public
bodies and institutes with a car fleet of over 50 vehicles: within five years after
the entry into force of the ordinance 20% of these vehicles have to use
environmentally friendly technologies. For public transport companies under
the authority of Brussels-Capital and with at least 50 vehicles, 5% of the fleet
must be environmentally friendly vehicles within a period of five years.

Other actions within Brussels-Capital are initiatives to limit access to the city
centres, instruments for and study on transport management.

In 1992 the Flemish Region started an action programme to promote


Company Transportation plans. These plans mainly consist of bus services
and carpooling, on the level of the individual company or several neighbouring
enterprises. Mainly large companies situated in urban areas participated in
this programme on a voluntary basis (about 20 companies during the period
1994-99) and received financial support from the Flemish Region.

In Wallonia the introduction of transport planning in industry and


administration is being prepared. Following a campaign led by IBGE, which
started in the spring of 1997, several Brussels administrations are currently
elaborating transport plans.

In the beginning of 1999, a proposal for a law which was intended to make
company transportation plans compulsory for medium-sized businesses (>50
employees) was introduced in the Federal Parliament, but it did not complete
the procedures (the proposal was accepted by the Chamber of
Representatives, but was blocked in the Senate, and because of the elections
in June 1999 it expired; it was also firmly opposed by the Belgian Federation
of Enterprises). The Federal Minister of Mobility announced that a new
proposal for a law would be introduced in the autumn of this year.

Carpooling has been promoted for many years in Flanders. The initiative was
in fact originally taken by a non-profit organisation called “Taxistop”.

Since 1998 the Flemish Region promotes carpooling in a more structured


way, namely through :

• An improved carpooling database (initiated and operated by Taxistop),


intended for individuals (for whom it is a free service) and companies.

18
• The construction of specific parking lots (in April 2000, 40 parking lots, with
a total capacity for 2 400 cars, were open); this number should increase to
47 by the end of the year.

But, as with the voluntary company transportation plans, the carpooling


initiatives in Flanders are considered so far to be a “limited success”.

The Brussels-Capital Region concluded in 1999, for the “Icaro” project, a two-
year-contract with Taxistop (with co-financing from the European Commission)
to operate a carpool-centre (database) in Brussels. This initiative is intended
for individuals and about 300 medium and large-sized enterprises.

Promoting The maritime ports (Antwerp, Ghent, Ostend and Zeebrugge) process vast
Energy amounts of all forms of freight to be transported to, or coming from, their
Efficient hinterlands.
Freight
Transport Antwerp is not only the second largest maritime port in Europe, but also the
Modes most important industrial area in Flanders. Antwerp and Ghent have long
been connected to a vast network of inland waterways, with access to other
industrial areas in Belgium and to the waterway networks in the Netherlands,
Germany, France, the south of Switzerland (Basel), Austria, Central and
Eastern Europe. Antwerp is also a modal point of several pipeline networks
(for petroleum products, natural gas, industrial gases).

The four ports are also well connected to the railway network of the NMBS.

While the total freight traffic volume of the four ports increased at a moderate
rate (in the period 1980-99, it has grown from 118 million tons to 178 million
tons), the growth rate of the container traffic and Ro-Ro-traffic (“Roll on – Roll
off” = cars, trucks, trailers) has been spectacular in the past 15-20 years.

But although these types of freight (and especially containers) are very well
suited to transport by rail or inland-vessels/barges, even over relatively short
distances, between well equipped terminals, in reality a large share of
container-traffic is carried by trucks (even to neighbouring countries, the
Netherlands, Germany, France).

The substantial growth in traffic between the region of Antwerp and its
hinterland, has over the past 10-15 years, created increasing problems of
traffic congestion, mainly on the roads but also on certain sections of the
railway network of the NMBS. The Flemish government and the NMBS
therefore jointly decided to invest massively in new or improved transport
infrastructures:

• New infrastructures for container-traffic: docks, quay-walls, container


terminals with direct access to the railway network.
• The reactivation of the “Iron Rhine” railway line, connecting Antwerp with
the German Ruhr area (to be operational in 2002).
• A new main railway access to the right bank of the port of Antwerp (a 25
billion BEF project, to be operational in 2007/2008).
• The construction of several “missing links” in the motorway network in the
Antwerp area.

The total investment of the Flemish Region in maritime infrastructure for the
four ports and in their maritime access ways, amounted to BEF 85.420 million
during the period 1989-99.

Enforced Unmanned cameras have been installed throughout Belgium to control speed
Speed Limit limits, the majority of them being in Flanders. The speeding fines were
harmonised and increased all over Belgium as of 1 January 1999.

19
Other Employees who cycle to their work place are rewarded BEF 6 per kilometre.
Measures
In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

• Promote effective measures in reaching the energy efficiency targets in all


applicable sectors including industries, public and private sectors and
transport.

MONITORING/ In Flanders, the SENVIVV study was undertaken in the framework of the
ASSESSMENT VLIET programme in the building area. The subject of the study was the
testing of 200 recently built (1990-1997) individual dwellings and apartment
buildings for application of the insulation regulations, the heating system
installed and the glazing. Results are as follows:

When looking at buildings constructed since the introduction of the K55


standard, only one-eighth meet the standard. For apartment buildings, the
result is somewhat better: one out of three meets the requirements.

Given this result, the Flemish government is considering increasing the


number of control visits to buildings under construction and changing the
existing procedure.

At the moment, the building owner has to prove the K value of the building
when beginning the procedure to receive the building permit. The Flemish
government considers that it would be preferable to oblige the owner to prove
the K value of his property in the final stages of construction.

In the 2000 in-depth review of the energy policies of Belgium, the IEA stated:

The Government of Belgium should:

• Establish an effective monitoring system, with collaboration with the


regional governments, in light of meeting national energy policy
objectives, in particular, energy efficiency targets.

Further For further information, please contact:


information
ir. G. Michaux
Federal Public Service
Economy, S.M.E.s, Self-employed and Energy
Energy Policy Division
North Gate III, 16 Bld du Roi Albert II,
1000 BRUXELLES - BELGIUM
Tel: +32 (0)2 206 4261/4545
Fax: +32 (0)2 206 5732
e-mail: gabriel.michaux@mineco.fgov.be
Site : http://www.energie.mineco.fgov.be/

20
(QHUJ\
IEA (IILFLHQF\
8SGDWH


CANADA Updated September 2002

BACKGROUND Responsible and increasingly efficient energy use is given considerable policy
attention in Canada. In 1994-95 the federal government conducted a
comprehensive review of its programmes, including energy efficiency. The
review emphasised the importance of federal programmes that support
improvements in energy efficiency, particularly as they relate to fulfilling
Canada’s climate change goals.

Energy efficiency is a key component of Canada’s National Action Program on


Climate Change (NAPCC) approved in February 1995 by federal and
provincial ministers of energy and environment. In October 2000, Canada’s
National Implementation Strategy (NIS) and the First National Climate Change
Business Plan (FNBP) were released with the agreement of federal, provincial
and territorial Ministers of Energy and the Environment. The NIS is a
framework for a co-ordinated, comprehensive and phased approach across
jurisdictions to address the issue of climate change and to reduce the
uncertainties to the extent possible. The FNBP, which outlines climate
change, related policies and measures will be produced annually and updated
on a three-year basis.

Based on the Energy Efficiency Act of January 1993, the cornerstone of the
federal energy efficiency effort is the Efficiency and Alternative Energy
Program (EAE). It encourages investment in economic efficiency and
alternative energy opportunities by employing a mix of information,
persuasion, financial incentives, R&D and regulatory measures. Energy
efficiency activities are carried out in co-operation with provincial
governments, utilities, industry (suppliers of energy-using equipment) and
non-governmental organisations. Major programme expansions occurred in
1997 and 2000 (see below).

Energy In 1992, Canada signed the United Nations Framework Convention on


and the Climate Change (UN FCCC) and in February 1994 tabled its first national
Environment report to the Conference of the Parties of the UN FCCC entitled Canada’s
National Report on Climate Change: Actions to Meet Commitments under the
UN Framework Convention on Climate Change.

Its responses to climate change were outlined in the NAPCC, which


demonstrated the importance given to energy efficiency to address the climate
change challenge. Canada’s Second National Report on Climate Change:
Actions to Meet Commitments under the United Nations Framework
Convention on Climate Change, dated May 1997 and updated November
1997 updates Canada’s situation and responses to climate change.

In February 2002, Canada’s Third National Report on Climate Change:


Actions to Meet Commitments under the UN Framework Convention on
Climate Change was released. The report discusses Canada’s most recent
responses to climate change.

In the framework of the Kyoto Protocol, Canada is committed to reducing its


greenhouse gas emissions by 6% from 1990 levels by the 2008-2012 period.

National Action The National Action Program on Climate Change (NAPCC) launched in 1995
Program on governed Canada's national effort on climate change. It covered federal,
Climate Change provincial and municipal initiatives already announced, or likely to be
announced, with a focus on energy efficiency, alternative energy, and
reductions of GHG emissions. Some provinces also took action with
stakeholders in their own jurisdictions.
The NAPCC gave particular attention to voluntary undertakings (for example,
by industry) registered with Canada’s Voluntary Challenge & Registry Inc. --
www.vcr-mvr.ca -- established in 1994 and privatised in October 1997. The
organisation registers voluntary commitments to reduce GHG emissions. More
than 790 organisations, including federal and provincial government bodies,
have registered, accounting for over 75% of Canada’s GHG emissions from
business and industrial sources.

Government of On 6 October 2000, the Government of Canada Action Plan 2000 on Climate
Canada Action Change was announced and the major features of the initiative outlined. It
Plan 2000 on includes new and expanded measures to reduce GHG emissions by 65
Climate Change megatonnes per year during the commitment period 2008-2012. Funding for
the Action Plan was set at C$500 million over five years, which is in addition to
the C$ 600 million over five years announced in Budget 2000 to support the
Government of Canada’s climate change-related activities.

The Government of Canada outlined a series of measures in Action Plan 2000


on Climate Change that are projected to reduce Canada’s greenhouse gas
emissions by about 65 megatonnes annually during the Kyoto Protocol’s
2008-2012 commitment period. The projected 65 megatonnes reduction would
cover about one-third of the gap between Canada’s projected emissions in
that year and its Kyoto target. Since 1995, the federal government has spent
or committed a total of C$1.95 billion on climate change related initiatives.

More information can be found in the document Canada’s National


Implementation Strategy on Climate Change at the following website:
http://nccp.ca/NCCP/pdf/media/JMM-fed-en.pdf

The Office of Energy Efficiency (OEE) of Canada’s Federal Department of


Natural Resources took a lead role in the implementation process, including
implementation of all the measures in the buildings sector and most of the
measures in the industry and transport sectors.

In the 2000 in-depth review of the energy policies of Canada, the IEA stated:

The Government of Canada should:

x Consider establishing clear objectives possibly as quantified targets, for


the contribution of end-use policies and programmes to reducing
greenhouse gas emissions.

Institutional Canada is a federation of ten provinces and three territories. Federal and
Framework provincial governments share political authority and jurisdiction. The division
of powers in the Canadian Constitution means that federal, provincial/territorial
and municipal governments share jurisdiction over policy areas relevant to
climate change.

Many provincial and territorial governments and other stakeholders have


announced programmes and action plans to improve energy efficiency and
promote greater use of alternative energy and thus contribute to the response
to the issue of global warming.

In the 2000 in-depth review of the energy policies of Canada, the IEA stated:

The Government of Canada should:

x Develop closer relations between federal and provincial energy efficiency


programmes, and assist provinces wishing to develop energy efficiency
policies and programmes.

2
NRCan The Federal Department of Natural Resources (NRCan) has primary
responsibility for formulating and implementing energy policy in areas of
federal jurisdiction. Its energy efficiency activities are delivered by two groups:
the Office of Energy Efficiency (OEE), formerly the Energy Efficiency Branch,
and the CANMET Energy Technology Branch. The OEE has a mandate to
renew, strengthen and expand Canada’s commitment to energy efficiency in
order to help address the challenges to climate change with specific emphasis
on the Kyoto Protocol.

The CANMET Energy Technology Branch (CETB) works in partnership with


industry and all major stakeholders in the Canadian energy and R&D sectors.
Its mandate is to develop and deploy energy-efficient, alternative energy and
advanced hydrocarbon technologies. Some 77% of its total budget of C$44.5
1
million , goes to energy efficiency and alternative energy R&D. The CETB
staff of 400 conducts R&D in oil sands and heavy oils; R&D in energy
efficiency in buildings, industry, communities, renewable energy and
alternative transportation fuels; and R&D in heat management and
photovoltaic technologies.

Natural Resources Canada (NRCan) has 17 market-related energy efficiency


initiatives that target all types of consumers and emphasise partnerships and
economic investments. Their objective is to overcome the market barriers of
inadequate information and knowledge, institutional deterrents in the energy
market, and financial and economic constraints on energy users. NRCan’s
initiatives use the following policy instruments: leadership, information,
voluntary actions, fiscal incentives and regulations.

Community The Community Energy Systems Program works in partnership with Canadian
Energy communities and businesses to help them meet their energy needs with
Systems greater energy efficiency and increased use of renewable energy. The
Program programme identifies and develops opportunities to use district heating and
cooling, combined heat and power (cogeneration), waste-heat recovery,
thermal storage and local sources of renewable energy, particularly biomass.
The programme provides planning and implementing services for projects in
both urban centres and remote communities, development of software for
system design, and analysis of the improved performance of district cooling
systems. It also promotes and fosters the adoption of integrated energy
systems. The programme’s laboratory, which houses an ice-slurry-based
district cooling system, develops and tests district energy technologies.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and or
being improved

National The Model National Energy Code for new residential and commercial
Energy buildings (MNECRCB) consists of two parts, namely the Model National
Code Energy Code for Houses (MNECH) and the Model National Energy Code for
Buildings (MNECB). The MNECRCB aims to increase energy efficiency by
specifying minimum performance standards for new Canadian houses and
buildings. It provides this customised energy standard by allowing for regional
climate and energy and construction cost variations. Published by the
Canadian Commission on Buildings and Fire Codes in 1997, its development
was supported by NRCan in collaboration with energy utilities, provincial and

1. On average in 2001 C$1 = US$ 0.65. Note – the C$44.5M is the federal budget which is leveraged through
in-house (cost recovery) and contracted-out (partnership) projects. The ability to recover costs and to
leverage external funds are obviously dependent upon the base funding identified. Cost recovery increases
the programme size by about C$7M/a. The contracting-out budget varies, ranging between C$17M/a and
C$18M/a. CETB: Partners contribution ratio target is 40:60.

3
territorial governments, and the National Research Council Canada (NRC).
NRCan provides software, training and implementation materials to support
the adoption and implementation of this model code by relevant
housing/building authorities (i.e. provinces, territories and municipalities). The
department also monitors and analyses the impact of this code. This
programme was very influential during consultations under the National
Climate Change Process in 1999-2000, when the provisions of the MNERCB
provided a strong basis for considering measures to improve the energy
efficiency of the Canadian housing and building stock.

R-2000 Home The voluntary R-2000 Home Program, first introduced by the Government of
Program Canada in January 1982, encourages Canadians to build houses that are
more energy efficient and environmentally responsible.

Certified R-2000 homes meet minimum standards for windows and doors,
insulation, HVAC (heating, ventilation and air conditioning), lighting systems,
air quality, recycled materials and water conservation.

Certified R-2000 new houses are up to 50% more efficient than homes built to
current building codes. R-2000 targets home building companies through
education and training schemes. The R-2000 Standard is available across
Canada and is delivered through agreements with Home Builders
Associations in the provinces of British Columbia, New Brunswick, Nova
Scotia and Newfoundland and Labrador, and by private companies in Ontario
and Alberta. Three provinces/territories (namely, Manitoba, the Yukon, and
Quebec) deliver the programme in their regions. When provinces or utilities
have given grants to home buyers or builders, there has been a much higher
adoption rate of the ambitious R-2000 Standard in new buildings than might
be expected on a purely voluntary basis. The R-2000 Standard has had a
strong influence on building practice in Canada; houses built today are about
30% more efficient than those built in 1980, before implementation of R-2000.

Building Given climate change concerns and the need to adopt sustainable
Energy development concepts, the goal of this programme is to establish an industry
Technology capacity which will allow a 50% improvement in energy performance in
buildings. The programme addresses both technology development and
deployment in both new and retrofit applications. Technology development
will focus on improved cost-effectiveness and life cycle performance, and on
the next generation of products. Market acceptance and adoption will be
addressed through the development of specific technologies (e.g. computer
design tools) and facilitating awareness (e.g. best practices).

Efficiency Canada’s Energy Efficiency Act authorises minimum energy efficiency


Standards standards to phase out less efficient energy-using equipment and household
appliances from the Canadian marketplace. The first regulations under the
Act came into force on 3 February 1995.

To date, regulations have been established for more than 30 products,


including residential energy-using products, electric motors and lighting
products. Regulations apply to products that account for over 75% of
residential energy demand.

Federal regulations on imported products and products traded between


provinces complement provincial regulations for intra-provincial markets, and
generally parallel regulations in the US. Possibilities for additional regulations
are electrical distribution transformers and the strengthening of the
performance levels of currently regulated products such as refrigerators,
freezers and washing machines.

Ontario (1988), British Columbia (1990), Quebec (1992), Nova Scotia (1991)
and New Brunswick (1995) have all implemented minimum energy efficiency

4
standards for specific equipment sold or leased within their respective
jurisdictions.

The Accelerated As one of the measures in the Government of Canada’s Action Plan 2000 on
Standards Climate Change, the Accelerated Standards Action Program (ASAP), will
Action Program improve the energy efficiency of appliances through the development of
& standards for residential, commercial and industrial equipment. It will
Energy Star accelerate the market penetration of high-efficiency products by providing
Promotion marketing and product certification assistance to encourage the purchase of
"best in class" products.

In line with ASAP, the Energy Star Promotion was started in July 2001. The
Energy Star£ symbol – an internationally recognised endorsement label –
allows the consumer to very simply identify the most energy efficient products
available based on a standard set of criteria.

Energy The EnerGuide for Equipment labelling programme supplements the minimum
Labelling performance requirements and seeks to stimulate consumer awareness and
to influence purchasing decisions. It covers household appliances and air
conditioners. This labelling scheme is mandatory for new products and gives a
comparative assessment of energy efficiency and energy consumption for a
range of appliances on the market. It is supported through directories for
consumers, information and education campaigns, and training for retail sales
staff. Marketplace audits revealed that over 80% of the regulated parties
complied with the labelling requirements.

A voluntary Window Labelling Program (rating and labelling) similar to


EnerGuide for Equipment is administered by an association of manufacturers.
It applies to windows and doors.

EnerGuide EnerGuide for Houses, established by the Minister of Natural Resources on


for Houses 1 April 1998, is a labelling and certification programme which seeks to
persuade and assist homeowners to make energy efficiency investments in
their houses, and to consider energy efficiency when purchasing a house.
During the 1999-2000 fiscal year, NRCan expanded the EnerGuide for
Houses programme to reach 80% of the Canadian population. The initiative
builds on the EnerGuide for Equipment labelling programme by using a similar
label to guide home energy improvement and purchasing decisions.
Participating homeowners receive an on-site inspection and energy analysis
of their houses, complete with recommendations for energy efficiency
improvements. After the improvements have been made, the EnerGuide for
Houses rating offers evidence of the investment, which enables prospective
buyers to compare the energy performance of similar houses.

Energy The Energy Innovators Initiative (EII) promotes energy efficiency upgrades
Innovators and building retrofits in the commercial and institutional sector. The initiative
Initiative recruits Canadian organisations to enrol as Energy Innovators and make a
corporate commitment to energy efficiency using an Energy Management
Plan. An Energy Innovator can ask to have its plan, which includes its
commitment to reduce greenhouse gas (GHG) emissions from its operations,
registered with Canada’s Climate Change Voluntary Challenge and Registry
Inc. (VCR Inc.).

The EII helps organisations plan, finance and implement comprehensive


energy efficiency improvements by providing a wide range of products and
services. Through an approach called “savings financing,” public and private
sector organisations can use energy savings to pay for the projects they
implement.

EII offers a pilot retrofit incentive, expanded partnerships and benchmarking.


The pilot retrofit incentive, which is provided in the form of a contribution, is

5
available to Energy Innovators implementing comprehensive energy efficiency
pilot retrofits. NRCan contributes up to 25% of project costs to a maximum of
C$250 000. Participants agree to replicate their pilot project in at least 25% of
similar facilities that they own or occupy.

NRCan works in partnership with key sectoral associations such as the Hotel
Association of Canada and the Association of Canadian Community Colleges.
These partnerships help to recruit Energy Innovators, stimulate energy
management plans and projects and develop sector-specific tools.

Benchmarking and best-practice guides allow organisations to measure their


efficiency against similar organisations and identify where to obtain better
performance.

The EII, as part of Action Plan 2000, will be offering two new incentives for
commercial and institutional members: one for retrofit planning services and
the other for energy-intensive retrofits in organisations with fewer than four
buildings.

Information Programmes designed to improve the availability of information on


opportunities for reducing energy use in existing buildings are common in
Canada. These initiatives include publications, seminars, workshops,
operating and maintenance training programmes and building audits. NRCan
supports public exhibits that focus on energy efficiency initiatives such as the
R-2000 Home Program, EnerGuide, EnerGuide Month (May), national energy
codes, Energy Innovators initiative, etc.

Commercial The Commercial Building Incentive Program (CBIP), established by the


Buildings Minister of Natural Resources in April 1998, provides financial incentives to
Incentive builders and developers to incorporate energy-efficient technologies and
Program practices into the design and construction of new commercial, institutional and
multi-unit residential buildings. CBIP seeks to encourage a permanent change
in the way such buildings are designed. It is intended to offset the extra cost of
designing energy-efficient buildings and thus encourages designers and
developers to consider efficiency options in their designs of commercial and
institutional buildings. To qualify for the incentive, buildings must be at least
25% more efficient than buildings that meet the requirements of the Model
National Energy Code for Buildings (MNECB). CBIP provides a one-time
grant based on the difference in estimated annual energy costs between an
approved CBIP design and an MNECB design. In addition to financial
incentives, CBIP provides design software and guidelines, case studies and
training for architects and engineers.

NRCan, in 1999-2000, provided incentive payments for 34 building designs


(up from 12 in the first year of the programme) at an average payment of
C$30 000. The average design was 30% more efficient than the Model
National Energy Code for Buildings.

Industrial Building The Industrial Building Incentive Program (IBIP) established by the Minister of
Incentive Program Natural Resources in July 2001 extends the precepts of CBIP into the
industrial sector. The programme aims to increase the energy efficiency of
newly constructed buildings used for manufacturing and other industrial
activities. IBIP will offer an incentive to companies building new industrial
facilities to offset additional design costs inherent in the initial attempts at
energy-efficient design, primarily focusing on affecting the market through
information programming.

6
PUBLIC SECTOR

Measures already
in place and/or
being improved

Federal The Federal Buildings Initiative (FBI), co-ordinated by NRCan, is designed to


Buildings facilitate comprehensive energy efficiency upgrades and building retrofits for
Initiative departments, agencies and Crown corporations of the Government of
Canada, through mechanisms such as public-private partnerships with energy
management firms.

The FBI provides a full range of products and services for implementing
comprehensive energy efficiency improvements within an organisation. FBI
account managers work with departments from project inception, through
contract development and award, celebration and recognition, to monitoring
and tracking.

The FBI supports partnerships with energy management firms that provide a
turnkey service which includes engineering, third-party private-sector
financing, comprehensive training packages and performance guarantees.

Project data are collected annually from departments and evaluations, and
programme results are published in the Government of Canada’s annual
report to Canada’s Climate Change Voluntary Challenge and Registry Inc.
(VCR Inc.).

The House The House in Order Initiative is designed to accomplish two main objectives of
in Order the Government of Canada. The first objective is to demonstrate
Initiative environmental leadership to the rest of Canada (i.e. all other levels
government and sectors of the economy). The second is to reduce total GHG
emissions resulting from Government of Canada activities by a factor that is
as stringent as that expected of the country as a whole under the Kyoto
agreement.

The initiative provides a set of tools which departments can use to reduce
emissions in their facilities. Several tools are explored and evaluated for their
potential impact on GHG reduction, as well as for cost-effectiveness and
feasibility of implementation. The tools are meant to assist in reducing
emissions from energy production, distribution and consumption activities,
employee behaviour, procurement activities and fleet management practices.

The House in Order Initiative has set an emissions-reduction target of 31%


below 1990 levels by 2010 for Government of Canada operations.

FleetWise Launched in October 1995, the FleetWise programme — the Federal Fleet
Initiative — is a government leadership initiative that targets federal vehicle
fleets to reduce energy use and promote the use of alternative transportation
fuels. The objectives of the programme are to: improve the operational
efficiency of fleets; reduce greenhouse gas emissions from fleets and
accelerate the use of alternative transportation fuels. The initiative provides
fleet managers with an assessment of fleets at little or no cost and technical
advice on using alternative transportation fuels (ATFs) and acquiring
alternative fuel vehicles. In addition, it campaigns to encourage vehicle
operators to select alternative fuels. Four departments — Treasury Board,
NRCan, Environment Canada, and Public Works and Government Services
Canada — manage planning, implementation and reporting under the
FleetWise initiative. NRCan is responsible for implementing FleetWise.

Leadership The Leadership Challenge will encourage all federal departments and
Challenge agencies to participate in emission reduction efforts. Best practice information

7
will be provided in the areas of employee awareness, staff training, solid
waste management, GHG-responsible procurement practices, and by
supporting public transit and green commuting.

INDUSTRY
Measures already
existing and/or
being improved

Industrial The Canadian Industry Program for Energy Conservation (CIPEC), a sector-
Energy level programme, and the Industrial Energy Innovators Initiative (IEII), a
Efficiency company-level programme, both address barriers to planning, implementing
Commitments and tracking energy efficiency projects in industry. Key elements of both
programmes are: the establishment of energy efficiency improvement targets;
the preparation of energy efficiency action plans; the tracking of energy
efficiency improvements on a per-unit-of-production basis; the reporting of
results; and the development and delivery of products and services which
overcome barriers to continued energy efficiency improvements.

CIPEC relies upon the collective support and action of more than 38 trade
associations representing over 90% of secondary industrial energy demand in
Canada. Overall direction is provided by an executive board made up of CEOs
and vice-presidents of some of the largest energy users in industry. CIPEC
task forces in 23 sectors use events, publications, training sessions and
networking to promote energy efficiency.

Through these two industrial initiatives, Natural Resources Canada (NRCan)


provides support services directly to individual organisations establishing
energy efficiency programmes. These services include assistance in energy
management planning, tracking and regular reporting; workshops dealing with
all aspects of energy management; and various technical, financial and
information services.

By March 2001, NRCan had 295 companies signed up as innovators. In the


2000-2001 fiscal year, NRCan employees participated in community and
employee awareness events at four Innovator facilities in the provinces of
Ontario and Quebec. At these events, which were attended by more than
25 000 people, NRCan provided information on its industrial and consumer
energy efficiency products and services.

New In part through funding provided by the Program on Energy R&D, the
Technologies CANMET Energy Technology Branch works in partnership with the private
for Industrial sector, academia and other levels of government to reduce the overall
Energy intensity of Canada’s industrial and utility sectors and, consequently, GHG
Efficiency and other emissions, while improving productivity and providing Canadian
companies with potential economic opportunities.

The objectives of the programme are to provide S&T to develop advanced


industrial energy efficiency products, processes and systems; to reduce fossil
energy intensity and emissions of selected Canadian resource and related
industries; to advance generic energy related technologies and processes; to
increase the proportion of Canada’s electricity supply from distributed systems
and renewables, and to reduce environmental impacts from centralised,
combustion-based electricity power generations systems.

8
In the 2000 in-depth review of the energy policies of Canada, the IEA stated:

The Government of Canada should:

x Strengthen commitments made under voluntary agreements in industry.


x Consider supplementing and integrating current sectoral programmes with
economic incentives in order to maximise the uptake of efficient practices.

TRANSPORT

Measures already
existing and/or
being improved

Fuel Efficiency The Motor Vehicle Fuel Efficiency Program, in effect since 1978, delivered by
Standards NRCan and Transport Canada, promotes improvements in new vehicle fuel
efficiency by encouraging motor vehicle manufacturers to meet voluntary
annual company average fuel consumption targets for new automobiles sold
in Canada. Average fuel consumption targets are patterned after the US
CAFE standards, although compliance is voluntary in Canada. NRCan works
with the vehicle manufacturers through a voluntary Memorandum of
Understanding (MOU) on fuel efficiency. The programme focuses on
opportunities to improve vehicle fuel technology by providing information to
consumers on the fuel efficiency on new vehicles. The annual Fuel
Consumption Guide, which lists fuel consumption ratings for new vehicles, is
produced through information obtained under this initiative.

The current actual average fuel consumption ratings are 8 litres/100 km for
cars and 11.4 litres/100 km for light trucks.

As part of Action Plan 2000, the Government of Canada is to launch


negotiations with the automobile industry and the United States to achieve
new voluntary fuel efficiency improvement targets for model year 2010 and
phase in a significant improvement – starting as early as 2004.

Energuide Since 1999, vehicle manufacturers have been attaching a fuel consumption
for label to their cars, vans and light duty trucks. The label is standardised across
Vehicles the industry and appears on its own or is combined with the vehicle options
and price label on the side window of each new vehicle.

FleetWise Launched in October 1995, the FleetWise programme — the Federal Fleet
Initiative — is a government leadership initiative that targets federal vehicle
fleets to reduce energy use and promote the use of alternative transportation
fuels. FleetWise is described in more detail under the Public Sector section.

FleetSmart FleetSmart — the Commercial Fleet Initiative — announced in March 1997,


encourages Canadian private fleet operators to reduce operating costs
through energy-efficient practices and the use of alternative fuels. FleetSmart
provides information materials, workshops, technical demonstrations and
training programmes to help fleet operators assess opportunities to increase
energy efficiency in their operations. FleetSmart is delivered in partnership
with associations, private industry and other levels of government. FleetSmart
tool kits have now been distributed to 1 643 registered clients, representing
more than 132 000 vehicles.

Auto$mart Auto$mart encourages and assists motorists to buy, drive and maintain their
vehicles in energy-efficient ways that save fuel and money, and emphasises
how such efforts also reduce vehicle emissions. Its main tool is the Auto$mart
Guide, which offers useful information and tips on purchasing, operating and
maintaining personal vehicles. The programme also provides resource
materials to driver educators for fuel-efficiency training to novice drivers and

9
provides Web-based communications tools that support and encourage the
development of new initiatives of local governments, industry and associations
to promote fuel efficiency. Auto$mart also offers information on opportunities
to use alternative fuels.

Freight The goal of the Freight Efficiencies and Technologies Initiative is to increase
Efficiencies and the freight transportation industry’s participation in voluntary climate change
Technology initiatives by: increasing the operating efficiency and environmental training
Initiative and awareness among freight operators and shippers; and demonstrating and
encouraging the take-up of innovative environmental technologies and best
practices within the freight transportation sector. This is a joint NRCan-
Transport Canada initiative.

Alternative The Transportation Energy Technologies Program works in partnership with


Transportation industry to develop and deploy leading-edge transportation technologies that
Fuels R&D minimise environmental impacts, increase the potential for job and economic
growth and extend the lifespan of Canada’s energy resource base.

Programme areas include: the development of alternative fuels and advanced


propulsion systems (gaseous fuels, alcohols, hydrogen, fuel cells, electric
vehicles and hybrids and related systems); advanced energy storage systems
(lightweight cylinders, adsorption technologies and flywheels); emissions
control technologies (for diesel and alternative fuel engines, lean-burn
catalysts and enhanced combustion chamber design); vehicle transportation
system efficiency (advanced materials and processes, auxiliaries and
regenerative breaking systems); and fuelling infrastructure (fuelling station
hardware, hydrogen systems and battery charging systems).

The programme works in co-operation with stakeholders in the domestic and


international transportation industries, including original equipment
manufacturers, industry associations, fleet managers, transit authorities,
utilities, provincial governments, research organisations, universities, other
federal departments, the US Department of Energy and the International
Energy Agency.

MONITORING/ Data gathering on energy consumption has been significantly improved


ASSESSMENT through the creation of a National Energy Use Database, launched in October
1991. The rationale is that by improving understanding of where and how
energy is used in Canada, resulting analyses will identify opportunities to
improve energy efficiency. As well, the data and analysis help Canada track
the effectiveness of efficiency programmes. This monitoring supports federal
data collection activities in each end-use sector.

The Demand Policy and Analysis Division of the Office of Energy Efficiency
(OEE) produces various policy and analysis reports to give a picture of the
current energy efficiency policies and the results achieved. These include:
Emissions Reductions from Federal Operations-Progress Report to the
Climate Change Voluntary Challenge and Registry; Energy Efficiency Trends
in Canada, 1990 to 1999; A Review of Secondary Energy Use, Energy
Efficiency and Greenhouse Gas Emissions; The State of Energy Efficiency in
Canada, Report 2001; and the Report to Parliament Under the Energy
Efficiency Act-1999-2000. These reports are updated annually.

In July 2001, the OEE published Energy Efficiency Trends in Canada: An


Update (see: http://oee.nrcan.gc.ca/general/trewnds/index_e.htm ), its sixth
annual review of energy efficiency in Canada. This report covers the period
1990 to 1999. The OEE Index shows a decline in value between 1990 and
1997, indicating that the various sectors of the economy have generated
energy efficiency improvements of about 1% per year during this period.

10
An evaluation of the OEE’s performance measures in 2000, conducted by the
Office of the Auditor General (OAG), concluded that NRCan has made
satisfactory progress in addressing the 1997 OAG recommendations on
NRCan’s energy efficiency initiatives. While progress continues, the OAG
follow-up noted improvements in the performance information (both
expectations and achievements) as well as an increased effort to link changes
in energy use to changes in greenhouse gas emissions.

Further For further information, please contact:


information
Kwaku Agyei
Office of Energy Efficiency
Natural Resources Canada
580 Booth Street
Ottawa, Ontario
Canada K1A OE4
Tel. +1 (613) 943 1785
Fax +1 (613) 947 4120
E-mail: KAgyei@NRCan.gc.ca

11
Energy
IEA Efficiency
Update

CZECH Updated December 2002


REPUBLIC
BACKGROUND

Energy The Czech Republic acceded to the UN Framework Convention on Climate Change
and the (UN FCCC) on 7 October 1993 on the basis of the Government of the Czech
Environment Republic Resolution No. 323 of 16 June 1993. On the basis of Resolution No. 530,
passed on 18 October 1995, the Minister of Foreign Affairs on 17 November 1995
requested the UN Secretary General and the FCCC depositor to take the following
measures:

· Delete Czechoslovakia from Annex 1 of the UN FCCC because Czechoslovakia


no longer exists and was never a Party to the Convention.
· Include the Czech Republic in the list of Annex 1 countries.

The Czech Republic presented on 17 October 1994 its First National Communication
to the Secretariat of the UN FCCC. In May 1995, the country received the in-depth
review mission of the Secretariat, which issued a report stressing that this
Communication outlines a set of measures to mitigate the impact of climate change.

On 23 November 1998, the Czech Republic signed the Kyoto Protocol (Czech
Republic Resolution No. 669/1998). During the 2008-2012 commitment period, the
country is committed to reducing total emissions by 8% compared to the 1990 level.
Today, total GHG (greenhouse gases) from fuel combustion are 20% below the
1990 baseline.

The Czech Republic's Second Communication on the process to comply with the
commitments under the UN Framework Convention on Climate Change was issued
by the Ministry of the Environment in May 1997. It outlines various measures ("no
regret measures") that have been applied to solve the country's economic and
environmental problems. These measures are defined in the document entitled The
State Environmental Policy of the Czech Republic approved by Government
Resolution No. 472/1995.

This communication included a projection of total GHG emissions of 192 Mt CO2


equivalent in 2010 compared to 188 Mt in 1990. Emission projections were updated
again in 2000 for three different economic growth scenarios. According to these
projections, under new macro-economic parameters the emission reduction from
1990 by 2008-2012 should be between 12 and 32%. In all cases, a potential reserve
may be available for possible emissions trading.

The Czech Republic's Third National Communication on the UN Framework


Convention on Climate Change was issued by the Ministry of the Environment on
28 December 2001. It analyses current circumstances in the area of climate change
in the country and documents the state of compliance with obligations following from
the UN FCCC and the Kyoto Protocol.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Intensify efforts to develop a comprehensive multi-sectoral climate change


strategy, giving priority to enhancing energy efficiency.

State In May 1999, the government of the Czech Republic approved the document entitled
Environmental The Strategy of Protection of the Climate System of the Earth in the Czech Republic
Policy (Resolution No. 480/1999) which places protection of the climate amongst top-

1
priority environmental issues and sets out the main tasks for the individual sectors,
which should lead to fulfilling the quantitative tasks of the Kyoto Protocol. Key
emphasis is placed in the document on a wide range of measures related to energy
efficiency and on renewable energy.

A new Clean Air Act came into force on 1 January 2002. The main reason for
restructuring the current air protection legislation in the Czech Republic lies in
harmonisation and transposition of the relevant legislation of the European Union in
relation to the preparation for accession of the country to the European Union. The
new Act is comprehensive and includes protection against pollutants, protection of
the ozone layer and of the climate system of the earth in the sense of the UN FCCC
and of the Kyoto Protocol.

The new Clean Air Act will also provide a legislative basis for the National
Programme to Mitigate Changes in the Climate of the Earth, approved by the
government to replace the above-mentioned Strategy of Protection of the Climate
System of the Earth in the Czech Republic. The Act will set up reduction targets for
substances affecting the climate system and deadlines for achieving them.

National The National Energy Policy was approved by government decision No. 50 of
Energy 12 January 2000.
Policy
This basic document indicates the targets in the area of energy management
according to the needs of economic and social development, including
environmental protection. The long-term strategic targets of energy policy include a
gradual reduction of the volumes of energy and raw materials needed by the Czech
economy to meet the level of advanced industrial countries. The new sub-objectives
up to 2020 on the demand side are to remove price subsidies and distortions, to
create competitive markets for electricity and gas, to achieve freedom of choice for
consumers, and to ensure energy efficiency enhancement.

Energy The Energy Management Act (Act on Energy Management of the Czech Republic
Management No. 406/2000) was adopted by the Parliament on 25 November 2000 and
Act implemented on 1 January 2001. Chapter III of this framework law, entitled National
Programme for Economical Energy Management and Use of Renewable and
Secondary Energy Resources, deals, inter alia, with the various types of subsidies
from the state budget for specific programmes. Chapter IV, entitled Measures to
Enhance Economical use of Energy, deals specifically with the ways to promote
energy efficiency, such as minimum energy efficiency requirements, conditions for
house occupiers to fulfil determined thermal and technical properties of buildings,
energy efficiency labelling, energy audits, energy auditors and co-generation of heat
and power (CHP).

State Programme The State Programme to Support Energy Savings and Use of Renewable Sources of
to Support Energy (the State Programme) is a one year programme set up by the Ministry of
Energy Savings Industry and Trade which has been announced each year since 1991. It includes
and Use of energy saving measures in the sphere of production, distribution and consumption of
Renewable energy, wider use of renewable and secondary sources of energy and development
Sources of of CHP, counselling, implementation of new low energy consuming technologies,
Energy education, public education and promotion leading to more economic use of energy.
To carry out the State Programme, the Ministry of Industry and Trade has
established the Czech Energy Agency (see below).

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Make energy efficiency in the various consuming sectors a policy priority.


· Ensure that energy efficiency be given priority among energy policy objectives.

2
National The Czech Republic became an independent country on 1 January 1993, as a result
Circumstances of the division of the former Czechoslovakia into the Czech and Slovak Republics.
Since 1990, the country's economy has been undergoing transition from a centrally
planned to a market economy; the country's economic development has also been
influenced by the division of Czechoslovakia. The first stage of economic
transformation was marked by a deep recession as GDP decreased by about 22%.
The economy revived in 1995 and its growth has been encouraged by industrial
restructuring and revitalised investments.

The environment was seriously damaged during the 40 years prior to 1989: during
this period of controlled and centrally directed economy, there was an attempt to
achieve maximum production with no regard for the environment or natural
resources. The situation was aggravated by an excessively high energy demand
and uneconomical use of raw materials; imperfect or non-existent environmental
legislation, etc. This distorted economy resulted in disproportionately high emissions
of principal pollutants and a considerable waste of energy.

Profound changes in environmental protection and thus in energy economy began


after the political changes of November 1989. The Ministry of the Environment, the
Federal Committee on the Environment and various other environmentally linked
institutions were established. The first objective report on the state of the
environment was published. At that time, the foundations were laid for legal
protection of the environment. Reports on the status of the environment have been
published annually since 1993 showing that the deterioration seen in the 1970s and
1980s has been stopped or stabilised; the quality of the environmental is now
improving. In 1995 and 1996, annual emission inventories for 1991 through 1995
were worked out according to IPCC methodology. These inventories show that in the
period 1990-1995, the aggregated emissions of the three basic GHG gases (carbon
dioxide, methane and nitrous oxide) were reduced by 23.3% from 193.2 million
tonnes of CO2 equivalent to 148.2 million tonnes of CO2 equivalent.

The Czech Republic became a Member of the OECD on 21 December 1995. At the
end of October 1999, the IEA Governing Board invited the Czech Republic to accede
to the 1974 Agreement on an International Energy Program (IEP). On 22 February
2001, the Czech Republic officially become a full member of the IEA.

Czech The Czech Energy Agency (CEA) was founded by the Minister of Industry and Trade
Energy on 1 September 1995, as a publicly funded organisation carrying out the work of the
Agency former Energy Agency which existed in Czechoslovakia and then in the Czech
Republic. The CEA's main mission is to encourage and carry out activities aimed at
energy savings and mitigate negative environmental impacts caused by the
consumption and conversion of all kinds of energy. The CEA is in charge of
implementing the above-mentioned State Programme. In 2000, there were 19 staff
members at the CEA' s headquarters.

CEA implements programmes which:

· Save energy in industry, agriculture and transport.


· Optimise energy supplies of residential areas.
· Implement co-generation in small and medium-sized heat production sources.
· Reduce energy consumption in public and residential buildings, as well as
education and healthcare sectors buildings.
· Increase the use of renewable and alternative energy sources.

Other programmes focus on consultation, advertising, creating educational materials


for experts and for the general public; they also support the formulation and
establishment of energy concepts for towns and regions.

A total budget of Kcs 1 523 million was allocated to the Ministry of Trade and

3
Industry programmes from 1991 to 1995 (before the creation of the CEA). From
1996 to 1999, when the CEA was operational, the state budget totalled Kcs 1 226.5
million. The state budget, which was Kcs 362.6 million in 1997, decreased to
Kcs 341.9 million in 1998 and again to Kcs 315 million in 1999; because of budget
constraints, the budget for 2000 was Kcs 209.0 million and decreased to only 102.2
million in 2001. Government support is provided as financial grants and the
resources provided must be used within the given year on the basis of a selection
process. The realisation of the projects supported must occur within 18 months.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Provide adequate funding to the Czech Energy Agency for its energy efficiency
programmes and co-ordinate it with other initiatives, especially those of the State
Environmental Fund.

SEVEn SEVEn, the Centre for Energy Efficiency, is an independent organisation, which is
not affiliated through ownership or in any other way to any domestic or foreign
company. From its creation until 1998, SEVEn functioned as a foundation but in
1999, owing to a change in Czech law on foundations, it was registered as a public
benefit corporation. SEVEn covers the costs of its activities through its contract
work, proceeds from consulting, and grants (in exceptional cases and to a limited
extent).

SEVEn focuses on overcoming barriers to the use of the cost-effective potential of


practical energy savings in the residential, industrial and commercial sectors. When
advising clients on energy efficiency options, SEVEn combines its technical
expertise with economical analysis, an overall assessment including the projected
environmental impact, proposals for the optimal method of financing and the
preparation of business plans for actual projects.

SEVEn has developed relationships with similar energy efficiency centres in other
countries and participates in many international projects. It co-operates with
domestic and foreign governmental bodies and organisations, financial institutions,
private companies, cities and other municipal governments, schools and hospitals,
various energy suppliers, NGOs and individuals.

State The State Environment Fund of the Czech Republic (SEF), established in 1991, is a
Environment specifically focussed institution for financing the preservation and improvement of
Fund the environment. In 1999, in implementing its programme for air protection, which
was not primarily concerned with decreasing energy consumption, SEF did realise
energy savings. All cases concerned the replacement by gas units of old coal-
burning furnaces or co-generation units which did not comply with the emissions
standards set by Decree No. 117/1997b of the Ministry of the Environment. This not
only led to considerable benefits for environmental protection but also to important
energy savings. In 1999, energy savings were not a condition for implementation of
specific programmes by SEF, but a secondary effect. However, from 2000, the SEF
programmes for air protection contain a requirement for an energy-saving approach,
to make it clear that energy saving is essential in an environmental project.

Energy
Efficiency
Funding

PHARE Financing for energy savings projects is difficult to obtain because of the lack of
Energy commercial financial resources and the lack of interest by private investors in
Saving funding such projects. To obtain this support, the European Commission has
Fund established the Energy Savings Fund backed by the European Union PHARE

4
resources. The Ministry of Industry and Trade has contracted the Czechoslovak
Trade Bank (CSOB) to operate and manage this fund. SEVEn co-operated in 1997
in developing the methodology for the management and administration of the Energy
Savings Fund, the procedures for realising funds and the documents subsequently
used by the CSOB.

PHARE funds (ECU 4.5 million) will be granted after a standard evaluation of a
client's credit rating and a technical and economic evaluation of the project. The
CSOB has funds at its disposal for ten years to extend loans at preferential rates for
small and medium-sized energy saving investments, in accordance with specific
qualification criteria, using its own resources on a 50/50 co-financing basis with
PHARE. These projects include the introduction of monitoring and regulation of
heating systems, double-glazing of windows, reduction of heat losses through walls
and roofs, improvements of lighting, etc.

Global The Global Environment Facility (GEF) provides grants and concessional funds to
Environment developing countries and those with economies in transition for projects and
Facility activities that address some aspects of the global environment. In August 1998, the
World Bank approved a Global Environment Facility grant of $5.8 million for the
Kyjov Waste Heat Utilisation Project to improve the efficiency of the Czech
Republic's energy sector. The project will reduce emissions of greenhouse gases
from the district heating system by increasing the energy efficiency and reliability of
heat and power supply to the Vetropak Moravia Glass factory and heat supply to the
city of Kyjov.

RESIDENTIAL/
COMMERCIAL

Energy The Minister of the Environment launched in 1994 an Environmentally-Friendly


Labelling Product Labelling Programme. Almost 200 products are labelled; they include
thermal insulation made of recycled paper, water-based paints limiting VOC
emissions, and small gas boilers for heating apartments and houses. These
products with limited GHG emissions account for more than 80% of all labelled
products

The Energy Management Act implemented on 1 January 2001 plans the introduction
of energy labels. Energy labelling is in preparation for those appliances for which the
European Union has introduced labels: refrigerators, washing machines, tumble
dryers, combined washer-dryers, dishwashers and lamps.

Thermal Stricter insulation standards for buildings have been in effect since 1994. They are
Insulation not mandatory, except where state money is invested. Most standards are
harmonised with the EU standards, if they exist, within one year of their introduction.
The enforcement and monitoring of building codes is considered insufficient.
Assuming that these standards result in a 30% decrease in energy consumption and
that roughly 15 000 apartments are built and retrofitted yearly, this measure
decreases annual CO2 emissions by about 40 000 tonnes of CO2.

A similar estimate is not available for commercial and administrative buildings,


however it is thought to be in the range of a few tens of thousands tonnes of CO2.

There is at present no retrofitting programme for individually-owned houses.


However, a programme for energy savings in individual house (modernisation of
apartment buildings) is being designed by the MRE which has made use of CEA's
experience. The programme includes both the building insulation and heating
systems and it mainly based on a soft loan scheme. The currently low cost-
effectiveness of thermal insulation measures discourages investments in the
renovation of buildings.

5
In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Strengthen current insulation standards for buildings, as well as labelling and


energy efficiency standards for appliances in line with European Union
legislation and progressively make them compulsory.

Energy A one-off programme subsidising the sale of compact fluorescent lamps was
Efficient financed by CEZ, the electric power company and SEVEn funds. Almost 155 000
Lighting lamps were sold in two waves, costing about Kcs 20 million, which resulted in a CO2
emission decrease by an estimated 9 000 tonnes per year. This programme has not
been repeated.

Measurement The Ministry of Economy Decree No. 186/1991 stated that landlords of houses using
of Energy heat from a central source must measure heat consumption at the building's entry.
consumption Energy/heat consumption (quantity of heat for all consumers in building) was then
divided pro rata, according to individual consumption.

This Decree was replaced by the Trade and Industry Ministry's Decree No. 245/
1995 accompanying Act No. 222/1994 "on the conditions of enterprises and
administrations in the energy sector". The first Decree was mandatory; the second
Decree which was originally only a recommendation has been mandatory since
2001.

According to the Energy Management Act, house owners/occupiers, under the threat
of sanctions, must not exceed the determined standards for consumption of energy
for heating. If house occupiers do overheat, they run the risk of financial sanctions by
the state through a state-controlled institution, the State Energy Inspection.

Energy One condition for receiving financial support from the Czech Energy Agency (CEA)
Audits is that an energy audit be made which documents the energy conservation potential
that could be achieved. The audit methodology for residential, public and industrial
buildings has been drawn up by the CEA. Presently, about 300 energy auditors are
operational. Energy savings achieved on the basis of the audit range between 20
and 40%.

The energy audit and observation of its recommendations are mandatory for all
buildings owned by the state which is one of the largest landowners (offices,
schools, hospitals) and for buildings in which energy supply is financed by the state.

An individual energy audit of a residential house, without any immediate


implementation of proposed measures, can benefit from subsidies up to a maximum
of 80% of the cost. Proposed no-cost measures must be implemented within three
months of the finalisation of the energy audit. According to Sub-programme I of the
Government Programme for Support of Energy savings in 2000, a total of 132
projects for energy audits has been selected, the allocated subsidy amounting to
Kcs 4. 56 million.

Heat The total capacity of heat pumps installed after 1990 is about 35 MW. They are
Pumps mostly used for heating apartments. However a number of projects have been
implemented in industry, mainly in drying plants and in the food and woodworking
industries. Annually, they account for 55 GWh of savings and a 20 000 tonnes
reduction of CO2 emissions.

District District heating is an important part of the energy system in the Czech Republic as
Heating 30% of the 10 million households are connected to a local district heating network,
providing 20% of the sector’s final energy consumption. Heat also accounts for 12%
of energy consumption in the service sector and 14% in the industry sector.

6
Household consumption is subject to large seasonal variations and minor daily
variations while that of industry is more constant. Space heating is the main energy
use of households for which the market share of district heating has been estimated
at 35% (1997 survey).

District heating systems are organised locally and operate in some 50 cities.
Individual heating companies are also power producers. The sector was fully
privatised in 1992-1994 through a voucher privatisation. A few units belonging to the
army, schools, state hospitals and other health care facilities remain under state
ownership. There have been significant foreign acquisitions of companies.
International Power (UK) gained control of EOP 748 MWt (363 MWe), the main
independent power producer (IPP) and holds a majority share in Prazska
Teplarenska, the Prague district heating company. Dalkia (France), a subsidiary of
Vivendi and EDF controls major companies in North Moravia with a capacity
exceeding 3 000 MWt. Cinergy, a US utility, controls over 1 440 MW of CHP power
generation facilities. Horizon/United Energy in the United States has three plants
totalling 1 200 MWt. Most important producers are members of Teplárenské
sdružení, the association based in Pardubice.

New The 1994 Energy Act, which previously regulated the sector, was replaced in
Energy January 2001 by the New Energy Act (No.458/2000). The construction of new
Act heating plants above 30 MWt capacity has to be approved by the Ministry of Industry
and Trade and units below this limit by regional authorities. Criteria for approval in
both cases include the use of domestic and local energy sources, energy efficiency
and conditions of solvability of the investing company.

According to current legislation, there is no compulsory buy-back tariff between heat


generators and heat distributors; prices are fixed by contract. As electricity sales
make up an important part of the district heating revenues (up to 80%), liberalisation
of the electricity market is likely to lower electricity prices and reduce the revenue of
CHP operators. To offset this, the new Energy Act includes an obligation of purchase
to transmission and distribution networks for the electricity generated by CHP.
However, the buy-back tariff is not set by the New Energy Act so co-generators and
buyers (distribution company or national grid) will have to negotiate the prices. Along
the same lines, the New Energy Act also contains an obligation of purchase for heat
generated from CHP, industrial process, renewable energy and environmentally
clean incineration. However, there are exemptions from the obligation where the
end-consumer will not accept a higher tariff or for non-compliance with technical
parameters.

The Ministry of Finance regulates the household tariff for each network on a cost-
plus-fees analysis method. Since 1994, regulation on prices for industrial heat users
has been lifted.

As 50% of households have individual meters and flow regulation, household tariffs
for the remaining consumers do not reflect actual consumption of heat but are based
on the size of the apartment and/or the number of persons per apartment. This tariff
structure appears complicated and inaccurate in evaluating effective heat
consumption and providing effective energy-saving incentives. Heat subsidies were
abolished in 1996 but the VAT rate remained at 5%. With the New Energy Act which
came in force in January 2001, the Regulatory Energy Office is in charge of pricing
and licensing.

Activities Implemented Jointly

In 1996-1999, five Activities Implemented Jointly (AIJ) projects were approved and
implemented by the Ministry of the Environment, two of which took place since 1998:

· A district heating plant burning biomass in the municipality of Hostetin in co-


operation with the Netherlands government.

7
· Modernisation of a CHP plant in the Skoda Mladá Boleslav automobile company
in co-operation with the German government.

The annual benefits of these projects led to a decrease in CO2 emissions of 49 kt


and 179 kt respectively.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Promote cost-effective cogeneration and metering at building level.


· Reconsider the obligation for electricity distribution companies to purchase
electricity from CHP.

Financial The Czech Energy Agency (CEA) is preparing a draft for MIT of the allocation of
Incentives state subsidies to support various energy efficiency measures for apartment buildings
and houses. This concerns the use of active solar systems which could reduce
energy consumption for water heating by 30%. A subsidy of up to 30% of the total
investment cost can be granted for demonstration of the systems, up to a maximum
of Kcs 5 million per project. The subsidy is limited to Kcs 250 000 per apartment. For
residential buildings built by traditional brick technology with low energy efficiency, a
subsidy can be granted for energy-efficient measures including the installation of
insulation and the reconstruction of existing heating systems aiming at an energy
saving of at least 45%. For demonstration actions, the subsidy amounts to 15% of
the total investments, up to a maximum of Kcs 10 million. The subsidy is limited to a
maximum of Kcs 30 000 per apartment in a residential house and to Kcs 80 000 per
house.

Under Programme I of the State Programme for 1999, a total of Kcs 81.54 million
was allocated through the CEA for 87 energy efficiency projects in residential
buildings. This resulted in energy savings of about 107 000 GJ/year (762 Kcs/GJ). In
2000 76 projects were supported, the subsidy amounting to Kcs 61.6 million with
energy savings 84 000 GJ/year (ratio 734 Kcs/GJ or 770 $/toe.

The Ministry of Regional Development (MRE) provides support for the repair,
reconstruction and modernisation of apartment buildings constructed using the
concrete panel technology, of which there are more than 1.1 million apartments in
the Czech Republic. Financial subsidies are provided along with contributions to
cover interest and guarantees for activities related to repairs and reconstruction of
concrete panel apartment buildings. Preference is given to economically depressed
areas and areas with disturbed environment. Support is also provided for insulating
buildings, improving heating systems, distribution pipes and sources of heat and hot
tap water, and use of renewable energy sources in buildings which could have a
favourable effect on energy efficiency, and thus on GHG emissions. The budget of
the programme for reconstruction of concrete panel buildings for 2001 equals about
Kcs 300 million and support is expected for the repair of about 20 000 apartments,
and then for about 50 000 apartments annually. The duration of the programme is
limited by the volume of financial means available.

Education One of the main activities of the CEA is the organisation of seminars and training
and Public sessions and publication of materials for energy consumers. Private energy
Awareness consumers are targeted through the network of 60 Energy Advice and Information
Centres (EKIS) installed by the CEA. They cover the entire country, offering free
brochures, guidebooks and software (products of advisory service) and provide a
practical advisory service.

Most of the EKIS centres are operated by private consultants selected by the CEA to
give energy information to the public. These firms specialise in one specific area but
have general knowledge on other subjects. SEVEn also provides free basic

8
consulting on energy savings in households and issues a quarterly information letter
"News at SEVEn". A country-wide information campaign on energy conservation
has not been carried out since 1990.

In the framework of Programme VIII. B, Public awareness, Processing of Products


for Consulting, of the Government Programme for Support of Energy Savings for
1999, funds were used to finance the following activities:

· Energy consulting and Information Centres: 50 agreements signed on provision


for consulting, with overall costs of Kcs 21.6 million, support Kcs 13 million.
· Handbooks, studies and other documents for consulting activities on energy
savings: 55 activities supported at a total cost of Kcs 11.97 million.
· Support for workshops, exhibitions on energy savings: 52 projects financed for a
total expenditures of Kcs 4.15 million.
· Printing of proceedings, handbooks, and computers programmes: 26
agreements signed for a total support of Kcs 4.87 million.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Strengthen the information, education and motivation campaign of the Czech


Energy Agency for energy savings by all end-users.
· Involve all economic players (municipalities, utilities, industries, building
developers) in energy efficiency information, dissemination and project
development.

Measures under
Consideration

Energy Both energy efficiency labelling and standards for household appliances in the
Efficiency Czech Republic are developed in the framework of the European Union SAVE II
Standards project, a task carried out by SEVEn. On the basis of knowledge of existing
legislation in co-operating EU countries (Austria, France, Greece) corresponding
laws, regulations and implementing documentation will be drawn up for the Czech
Republic. At the same time, the action plan for enforcing the legislation will be
prepared and measures and procedures for consumers and suppliers proposed.

PUBLIC SECTOR

Energy Audits in Based on Act No. 50/1976 as well as Act No. 22/1997, energy audits were not
the Public sector mandatory in all buildings of the public sector including the state, regions and
communes with the exception of some legally prescribed cases. The new Energy
Management Act includes mandatory audits for public and private facilities (with
respective consumption above 1500 GJ and 35 000 GJ) and the obligation to
implement low cost audit recommendations. However, funding for the audit as well as
the implementation of the recommended measures face the problem of limited
financial resources.

Model The Energy Management Act No. 406/2000 establishes the obligation for each of the
Energy 14 regions to prepare a regional energy concept within five years in order to create
Concepts conditions for efficient energy use.

The Ministry of the Environment supports the preparation of model energy concepts
for municipalities and regions through its Guidelines for Energy Concepts. A total of
80% of these concepts focus on the efficient use of energy and renewable energy
source potential.

SEVEn, which is involved in the preparation of feasibility studies and business plans

9
for towns and municipalities on supplying and using energy and in the preparation of
such energy concepts, offers guidance to the Czech Energy Agency (CEA) on model
energy concepts. These planning documents covering a 20-year period, which are
modified as necessary, include practical approaches for the economical use of
energy and of renewable energy sources, with an evaluation of the impact on the
environment.

Various energy concepts have been elaborated for several towns and regions, for
instance in 1999 for the Cities of Prague, Tábor, Bechyne, Nymburk.

According to the State Programme, in 2000, grants to design a model energy


concept for towns and municipalities amounted to 50% of the overall investment
expenses with a maximum of about Kcs 500 000 per project. In that year, 24 projects
were selected for a total subsidy of Kcs 4.92 million.

Energy In a 1998 contract with the Czech Association of Environmental Technology, SEVEn
Performance was in charge of proposing a model procedure for applying the Energy Performance
Contracting and Contracting (EPC) method to the public sector. The outcome of the work was to
ESCo support the installation of energy efficient equipment in public sector buildings
administered by the civil service, educational and health care institutions, defence,
and security organs, cultural bodies and the like.

The basis for implementing an EPC in the public sector was laid down in compliance
with Act No. 199/1994. ESCos have been developed for upgrading heating and hot
water systems in hospitals and schools and others.

For example, the Energy Performance Services Czech Republic (EPS CR), an
ESCo which is a subsidiary of a privately-owned energy services company based in
the United States, implemented two performance contracting projects in two large
hospitals, the Bulovka Teaching Hospital in Prague and the Jilemnice District
Hospital in north-east Bohemia. Both hospitals needed a significant upgrade of their
central heating systems but faced a lack of investment capabilities.

In the case of the Bulovka Teaching Hospital, EPS CR implemented in September


1995 four energy conservation measures: switching the existing central heating
system to district heating, implementing a new energy management system,
installing a new air handler recovery system and converting and upgrading to a new
high energy efficiency natural gas boiler. Total costs of these measures amounted to
about $2.7 million, producing annual energy savings of about $700 000,
corresponding to a four-year simple pay-back.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Encourage third-party financing.

IFC/GEF The IFC/GEF Efficient Lighting Initiative (ELI) is a $1.25 million programme funded
1
Efficient by the Global Environment Facility (GEF) and designed by the International Finance
Lighting Corporation (IFC) and by local counterparts in each participating country. ELI's goal
Initiative is to reduce greenhouse gas emissions by accelerating the penetration of energy-
efficient lighting technologies in emerging markets. It will lower market barriers to
efficient lighting technologies in the Czech Republic and also in six other developing
or transitional countries. The ELI budget for the Czech Republic is $1.25 million.

1
. The International Finance Corporation is the private-sector body of the World Bank Group and is the largest
multilateral source of loan and equity financing for private sector projects in developing countries. The Global
Environment Facility is a multilateral entity, which provides grants and concessional funds to recipient countries for
projects to protect the global environment.

10
Implementation began in the spring of 2000, with SEVEn as the Czech project
manager; the administration of the project is carried out by the Danish company
Danish Power Consult A/S. Other Czech organisations participate in its
implementation. In the Czech Republic, ELI will catalyse the installation of energy-
efficient lighting, primarily in the public sector, with special emphasis on street
lighting. It will also strengthen the capabilities of lighting businesses, particularly in
the area of project financing. ELI may also promote compact fluorescent lamps
(CFLs) for the residential sector. The initiative will run for three years (2000-2003).
The expected benefits are estimated in a direct impact on savings at a total of 390 kt
of CO2 emissions in 2000-2003 and, in subsequent years, as indirect benefits at the
level of 425 kt of CO2 emissions saved annually.

Manuals for Through a contract with NOVEM, the Dutch Energy Agency, SEVEn prepared a
Municipalities financial manual for cities and smaller municipalities entitled How to Develop
Municipal Energy Projects. The manual contains information on the purpose and
method for preparing a feasibility study and business plan; it includes an overview of
selected domestic and foreign sources of financing and a description of energy
performance contracting along with domestic ESCos that already offer such
services.

Co-operation In 1998 SEVEn took part in the European Union's long-term Urban and Regional
with Energy Efficiency Programme as a consultant for major Czech cities carrying out
Municipalities demonstration energy-saving projects under the programme in co-operation with EU
cities. Demonstration projects were carried out in the areas of energy-efficient public
lighting, central heating reconstruction, building insulation, and waste management.

INDUSTRY

Energy Energy audits are mandatory in industrial companies which consume 35 000 GJ/year
Auditing (or 835 toe). Audits proposed by CEA with limited cost contribution remain technically
orientated (flow chart) rather than focusing on cost-effective measures; there are
some doubts that industrialists appreciate the usefulness of energy audits.

State Subsidy The State Subsidy Programme for Energy Savings in Industry has been developed
Programme by the Czech Energy Agency since 1996 to support the implementation of measures
with lower energy intensity, the efficient use of energy losses from technological
processes and the application of modern technologies and materials for energy
saving measures. The proposed measures must use environmentally friendly energy
savings ideas. A new technology project is accepted on the condition that it has
been successfully implemented as a pilot project and after undergoing a series of
verifications. The programme's evaluation should offer entrepreneurs reliable
information to help them implement further measures.

Ten energy savings measures in the manufacturing industry were selected in 1997
at a total investment of Kcs 74.8 million and a state subsidy of Kcs 13.5 million.
Annual savings are 181.8 TJ representing 0.05% of the total manufacturing
industry’s consumption. In 1998 14 projects were supported for a total investment of
Kcs 158.7 million and a state subsidy of Kcs 19.7 million. Annual savings are
203.2 TJ. In 1999 24 projects were supported for Kcs 31.5 million, a total investment
of Kcs 420.6 million, energy savings 417.1 TJ/year. For the period 1997-1999, the
average unit investment cost was 817 Kcs/GJ, 412 Kcs/GJ in 1997 increasing to
1 010 Kcs/GJ in 1999.

PHARE To be eligible for loans from the PHARE Energy Saving Fund (see above), projects
Energy have to generate savings by reducing energy consumption of any type (electrical,
Saving gas use, space heating, coal technology), but also by saving the costs of energy
Fund (cheaper fuel), operation and maintenance or for labour costs. At least 40% of the
energy savings must be achieved through reduced energy consumption. The project
size must be at least Kcs 2 million and at the most Kcs 50 million. The duration of
loans and repayment terms are four years or longer (to a maximum of ten years).

11
The applicant companies are required to pay at least 40% of the total project cost.
The PHARE Energy Saving Fund awarded 13 loans for energy efficiency projects in
industry during 1998 amounting to Kcs 200 million (two-thirds of the available funds).

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Strengthen fiscal and financial incentives for energy efficiency projects.

Information

News at Since 1993, SEVEn has published News at SEVEn, a quarterly newsletter devoted
SEVEn to energy efficiency with a press run of about 4 400. It is distributed free of charge to
specialised manufacturers, project, service and consulting firms, public institutions,
local governments and other expert circles interested in the energy sector and
energy efficiency.

EEBW Since 1992, SEVEn has organised an annual international conference and exhibition
called Energy Efficiency Business Week (EEBW) which is an opportunity for
specialists from the Czech Republic, Central and Eastern European countries and
other countries to discuss current events and issues in the energy efficiency area.
EEBW 2000 took place on 17-18 October 2000 in Prague and focused on a range of
topics, the most important being:

· The role of energy saving during the liberalisation of the energy market.
· Energy saving in relation to the requirements for harmonisation of the economies
of associated countries with the European Union standards.

TRANSPORT In the context of the programme to stabilise and reduce CO2 emissions, the following
measures have been implemented and/or supported by the government in the
transport sector:

· Support for public transport provided by the Transport Policy of the Czech
Republic approved by government resolution in 1998 to enterprises which carry
out municipal public transport and to Ceske Drahy (Czech Railways) as an
alternative to individual car transport.
· Continued development of integrated public transport systems in cities through
state, municipality and district subsidies and tax breaks.
· Implementation of the Highway Development Programme, including the
development of ring roads and city bypasses as well as access roads to
highways.
· Support for the development of combined transport, through a wide range of
measures such as favourable taxation, adequate infrastructure, special railways,
etc.
· Speed limits of 90 and 130 km/h for cars and 80 km/h for lorries.
· Taxation only on lorries.
· Progressive charges on engine capacity.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Adapt the current energy efficiency strategy to market liberalisation and to


growing demand in the energy-consuming sectors, especially transport.

12
MONITORING Currently, the energy efficiency programme of the Czech Energy Agency is
AND independently evaluated each year by SEVEn. This has resulted in several
EVALUATION improvements in the state support programme regarding both project results and
administration.

The Energy Management Act stipulates that the Ministry of Industry and Trade, in
agreement with the Ministry of the Environment, has to prepare and assess the four-
year state programmes of energy efficiency and renewable energy sources at least
once every two years and that the government be informed of the results. If
necessary, the Ministry of Industry and Trade, in agreement with the Ministry of the
Environment, prepares proposals for changes in the State Programme and submits
them to the government.

In the 2001 in-depth review of the energy policies of the Czech Republic, the IEA
stated:

The Government of the Czech Republic should:

· Carefully monitor the development of energy efficiency programmes and their


cost-effectiveness.

Further For further information, please contact:


Information
Dr. Jirí Barton
Chief Executive
Czech Energy Agency
Vinohradská 8
12 00 Praha 2
Tel: +420 2 2421 7714, 2421 7774
Fax +420 2 2421 7701
email: cea@ceacr.cz

13
(QHUJ\
IEA (IILFLHQF\
8SGDWH

DENMARK Updated April 2003

BACKGROUND

Energy and The first National Energy Plan of 1976, together with further development of
Environment policies during the 1980s, resulted in major restructuring of the energy system
Plans in Denmark. The policies implemented included, inter alia:

x Massive change of heat supply from individual oil furnaces to district


heating and natural gas.
x Elimination of oil used for district heating in favour of local resources
(straw, wood, waste) and natural gas.
x Expansion of combined heat and power systems in order to increase total
system efficiency.
x Comprehensive energy saving programmes in the industrial and
residential sectors.
x Strengthening of standards for new buildings.

In 1988, the Danish government presented its Plan of Action on Environment


and Development as a follow-up to the recommendations set out in the report
from the World Commission on Environment and Development, the
Brundtland Report and in the United Nations’ Environmental Perspective to
the Year 2000. This action plan set out the targets to be reached and the
initiatives to be implemented in all sectors in order to obtain sustainable
development.

The Energy 2000 Plan (Energi 2000) followed in 1990 based on a political
agreement of 20 March 1990. It introduced the goal of sustainable
development in the energy sector and formulated the national objective of a
20% reduction in CO2 emissions by 2005 compared to 1988. This is still one
of Denmark's main objectives in energy and environmental policy. Energy
2000 focused on savings in energy consumption, increased efficiency of the
supply system, expansion of the use of renewables, especially wind, and on
research and development. Action in these areas has been followed up by
political agreements and legislation.

The Energy 2000 — Follow-up from 1993 contained a review of trends and
policies together with a number of other initiatives.

The energy plan, Energy 21 (Energi 2001), approved by the Danish


Parliament in April 1996, deals with international market conditions and long-
term environmental aspects as the overall challenges to the energy sector.
The major environmental challenge is to achieve convergence of emissions of
industrialised countries at a level that would be globally sustainable. The plan
sets out the framework for a number of initiatives focusing especially on
reducing the requirements for resources and the impact on the environment
from the energy sector. One of the targets of Energy 21 was the improvement
of energy intensity (defined as final energy consumption in the end-use sector
per unit of GNP) by 20% by 2005 in relation to 1994 figures. The June 1999
follow-up of Energy 21 projected that energy intensity would improve by 25%
in 2005 and by 34% by 2012, more than fulfilling the established targets.

Denmark is examining ways to reduce final consumption by an average of


0.5% per year. Sectoral targets were proposed in a September 2000 report of
the Danish Energy Agency (DEA) entitled Promotion of Energy Savings. The
savings target of 2.1 million tonnes of CO2 is 3.5% of the total Danish national
objective to reduce CO2 emissions by 20% by 2005 from 1988 levels.
In March 2000, the government presented Klima 2012 (Climate 2012), Status
and Perspectives for Denmark’s Climate Policy which offers a complete
overview of Danish climate policy and paves the way for a process whereby
the required groundwork is laid for Parliament to decide on Denmark’s
ratification of the Kyoto Protocol. To fulfil its national and international
obligations, the government will:

x Update the 1996 energy action plan, Energy 21.


x Submit an action plan for the transport sector.
x Establish a programme for analysis, developing and testing of the Kyoto
mechanisms.
x Determine future regulation of the industrial greenhouse gases.
x Submit analysis and assessments of greenhouse gas reduction potentials
in the agricultural sector.

Energy As the first step in strengthening energy-saving initiatives, necessary to reach


Saving long-term energy and environment policy targets, Act No. 450 of 31 May 2000
Act No.450 is a general act on the promotion of energy savings in energy consumption.
The Act is the overall framework for the work of realising energy savings
which are necessary to fulfil the Danish environmental commitments. The Act
determines the overall framework for co-ordination and priority given to both
centralised and decentralised savings initiatives for all sectors, actors and
measures. It enables the appointment of local energy conservation
committees to co-ordinate local efforts to save energy, and establishes new
initiatives for energy conservation in the public sector.

Natural Gas On 29 May 2001 a political Agreement was reached on natural gas and
Supply and energy savings. In this Agreement it was stated that further energy initiatives
Energy Savings were necessary to reach the environmental targets. The headlines in the
Agreement Agreement are the following:

x The establishment of energy savings targets in 2005 for individual sectors,


including the public sector, private trade and service, households and
manufacturing.
x The introduction of behaviour-regulating product taxes that promote the
sale of more energy-efficient products
x The translation of state energy-saving initiatives, including subsidy
schemes into framework programmes for which tenders are invited in
order to ensure the greatest possible efficiency in the activities.
x An expansion of the activities of the Electricity Saving Trust so that
purchase agreements and other schemes to promote energy-efficient
electric appliances are developed
x Energy saving efforts in the public sector to be strengthened by state
institutions; in municipal areas, enhancement is to take place through
agreements with the counties and primary municipalities.
x Energy saving activities within private trade and service within the
framework of a product-aimed strategy.
x Activities of the electric network undertakings in relation to large-scale
customers to be boosted so that at least 10% of their commercial
customers are offered energy advisory services every year.

This political agreement also stipulates that other economic incentives for
energy savings will be discussed with a view for adoption prior to the Energy
Saving Review in September 2002.

Institutional Following the general election in late November 2001, a new large Ministry for
Framework Economic Affairs, Trade and Industry was created in January 2002 led by the
Deputy Prime Minister; it is responsible for economic affairs, industry, trade,
the internal market of the European Union, shipping, financial institutions,
competition, housing consumers, tourism and energy. It manages ten

2
different, major government agencies, including the Danish Energy Agency.
The former Ministry for Environment and Energy is now only responsible for
environment issues. There is no Directorate General for Energy in the new
Ministry for Economic Affairs, Trade and Industry. The view is that energy
should be seen as an integral part of all the other responsibilities of the
Department. Nevertheless, energy and international co-operation on energy
are still high on the agenda for the Ministry.

CO2 The combined effects of Energy 2000 and the Transport Action Plan were
Reduction expected to be a more than 20% reduction in emissions from energy use in
Targets 2005 compared to 1988. This target was subsequently approved by
Parliament.

Internationally, Denmark made the commitment to stabilise emissions at the


1990 level by 2000 within the framework of the United Nations Climate
Convention, and as a contribution to the overall stabilisation by 2000 for the
countries of the EU to achieve a 5% reduction in 2000 compared with 1990.

Denmark signed the United Nations Framework Convention on Climate


Change in Rio de Janeiro in June 1992, ratified it in December 1993 and
submitted its first national communication entitled Climate Protection in
Denmark — National Report of the Danish Government in accordance with
Article 12 of the United Nations Framework Convention on Climate Change in
September 1994.

Denmark’s Second National Communication on Climate Change, submitted


under the UN Framework Convention on Climate Change was issued in 1997
prior to the third meeting of the Conference of the Parties at Kyoto.

Following the Kyoto agreement, Denmark has agreed under the Burden-
1
Sharing Agreement of 17 June 1998 to reduce its emissions by 21% of the
1990 levels for the period 2008-2012. Specifically, the Danish commitment is
compared to the adjusted 1990 emissions level of approximately 80 Mt CO2
equivalent.

On 30 May 2001, Denmark's Parliament agreed, by a sizeable majority, for the


government to ratify the 1997 Kyoto Protocol on global warming. Denmark's
actual ratification of the Treaty will take place along with that of other
European Union member states, anticipated in advance of the World Summit
on Sustainable Development in Johannesburg in September 2002.

Preliminary figures on future greenhouse gas emissions for 2000 showed that
overall CO2 emissions in Denmark have been reduced by 11% since 1988,
and that the country is on track to meeting its 2005 commitments for a 20%
2
CO2 reduction with initiatives already launched.

In Climate 2012 published in 2000, Denmark estimated that it will achieve a


reduction of 16.6% of CO2 (to 63.6 million tonnes of CO2) by 2008-2012 with
existing policies and measures. A further reduction of 3.2 million tonnes of
CO2 would need to be achieved to meet the Danish target of 21% (adjusted)
for the period.

Based on updated and consolidated projections prepared in connection with


the ratification legislation for the Kyoto Protocol, total Danish emissions of

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.
2
This total is only for CO2 and is calculated somewhat differently than for the Kyoto Protocol target which
includes six greenhouse gases. The Danish national target also includes emissions from international transport
(aviation and marine bunkers are excluded from Kyoto numbers). It excludes emissions from cement, lime and
yellow brick production and from flaring, and plastics in incinerated waste as well as removal by sinks: all these
are included in the Kyoto calculations.

3
greenhouse gases are now projected to be reduced 18.6% below 1990 levels
during 2008-12 (to 62.2 million tonnes of CO2). The projection is based on the
adjusted 1990 baseline, and on policies and measures already implemented
and adopted.

Denmark’s expected gap has thus been reduced since the estimate in Climate
2012, and now stands at 1.8 million tonnes of CO2 (adjusted).

Baltic The Baltic countries' energy ministers (BCSS) and the European Commission
Energy agreed on 1 December 1998 in Stavanger (Norway) on a joint working
Efficiency programme to enhance co-operation in the Baltic energy sector.
Group
This programme includes formation of a working group on energy efficiency
(including CHP and DH) – the Baltic Energy Efficiency Group (BEEG). The
BEEG assesses energy efficiency options and potentials with a focus on
combined heat and power and district heating (including technologies,
financing and legislation). This preparatory work included a seminar in
September 1999. BEEG will be co-chaired by Denmark and Poland and
consists of governmental representatives and experts from the eleven Baltic
countries plus the European Union.

The working group on energy efficiency continued its work in 2000 on the
following issues: New financial instruments, co-ordination and follow-up on
activities taken by other international institutions and organisations and
development of combined heat and power production (CHP).
In the May 2001 report, the working group pointed out that the results of the
Baltic Chain project, with the design of a new financing mechanism with the
establishment of a clearinghouse to ensure quality and facilitate the link
between projects and financing, is the essential keypoint. Furthermore it was
pointed out that the potential for CHP is huge and that the development of a
common regulatory framework and even market conditions for district heating
in the region would support the preferred development offering environmental
benefits and security of supplies.

In addition, the group recommends development of reference standards for


CHP technologies -- target values, check lists for improvement projects and
for efficient district heating systems and target values for improvement
projects.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building The code for new buildings was tightened in several stages in 1977 and 1985.
Codes As decided in the previous energy action plan, Energy 2000, a new code has
been introduced which will cut an additional 25% off net heating demand,
reducing it to about 70 kWh per square metre per year. The code also sets
limits on electricity consumption for ventilation and will enforce low
temperature heating systems to increase the efficiency of various heat supply
systems, such as district heating systems, condensing boilers, solar energy
and heat pumps. The new code entered into force in 1996 (large buildings)
and 1998 (small buildings).

A further reduction to 45 kWh per square metre is scheduled to enter into


force around 2005. Buildings respecting this limit through combined
exploitation of passive solar techniques, insulation and coated glazing are

4
already being built.

Energy Every house-owner may have an audit of his building, describing the present
Labelling energy conditions with recommendations for possible energy saving measures
of Smaller in the building shell and heating equipment. When dealing in real estate, an
2
Buildings audit is required if the building has an area of 1 500 m or less.

The result of the audit is an Energy Label describing the energy condition on a
scale from A1 to C5 (A1 is best). Heating, electricity and water consumption
are rated on the basis of a standard calculation – not actual consumption
because it is linked to the particular seller’s household (number of persons
and behaviour). Another part of the audit is an Energy Plan informing the
buyer which measures could be worthwhile carrying out in the short or long
run to save energy.

This mandatory scheme was implemented in 1 January 1997 and replaces the
heat inspection scheme that had been in operation since 1981.

The scheme was evaluated in 2000 and the conclusions were that there is a
large energy saving potential in existing buildings. Forty-five per cent of the
owners of labelled houses actually invested in heat saving measures. Even
though the scheme is mandatory, only around 50% of the traded houses were
covered by an energy certification. The largest group of labelled buildings is
single family homes. From 40 000 to 50 000 buildings are labelled every year.

On the basis of other conclusions about the set-up of the scheme, changes
were made in mid-2001 to empower the steering committee of the scheme to
take over more responsibilities for the success of the scheme.

Energy The annual supervision of larger buildings (more than 1 500 square metres) is
Labelling carried out by between 500 and 700 specially trained consultants. About
of Larger 25 000 buildings are concerned.
Buildings
(Eco-scheme) Every month all buildings, except industrial buildings, and those with very low
energy consumption, with a surface of more than 1 500 square metres must
register their consumption of heat, electricity and water. Once a year, a
consultant makes an audit comprising an Energy Label and an Energy Plan.
The Energy Label evaluates the consumption of heat, electricity and water on
scales from A to M (A is best) in comparison with average figures for
comparable buildings. The Energy Plan informs the building owner about
relevant measures for energy saving in the short and long run.

This new scheme runs parallel to the above-mentioned scheme concerning


smaller buildings. It replaces the VKO scheme (statutory heat inspection of
larger heat furnaces), in operation since 1981.

This scheme was also evaluated in 2000 and the major conclusions were that
the scheme works very well for those who participate in it, but around half of
the buildings still do not fulfil the requirements. Lack of awareness of the
existence of the schemes contributed to non-participation. The energy savings
in the buildings following the scheme are larger than in those outside the
scheme. Furthermore, the investments in energy savings are more focused in
buildings participating in the scheme and those responsible for energy are
more aware of the results of investments.

The DEA has developed an action plan to improve the implementation of both
schemes as well as further measures.

Inspection In the statutory annual inspection of oil burners, the owner has to show the
of Oil Burners chimney-sweep a contract with an authorised service provider or pay the

5
chimney-sweep for the inspection.

The inspection includes measurement of temperature, CO and CO2 content of


the smoke and an evaluation report for the owner. Based on fixed maximum
values for these figures, the chimney-sweep can oblige the owner to have the
oil burner adjusted within four weeks. The 700 000 small oil burning furnaces
in Denmark are inspected by 2 500 trained consultants.

Supervision has resulted in improved energy efficiency. For example,


average chimney heat loss has been reduced from 19% to 12-13%.

Energy In 1994, Parliament approved an act empowering the Minister of Energy to set
Efficiency efficiency standards for electrical appliances and other equipment. Efficiency
Standards standards for refrigerators/freezers were adopted in 1996 as EU-wide
standards and became effective late 1999, bringing efficiency improvements
of 15% compared to the 1992 market. The Directive does not include a
second phase.

Energy An extensive scheme for energy labelling of appliances was notified to the
Labelling European Union by the Danish government in April 1990. The EU Directive
for labelling of the first category of appliances (freezers and refrigerators)
came into force in January 1995. EU Directives for washing machines and
dryers were implemented in October 1996. Directives for other major
household appliances and light sources will follow.

A Danish system for informing consumers of the electricity consumption of


various appliances, and for facilitating comparisons between different
competing products (so-called "energy arrows"), has been devised by the
utilities with support from the government, as a complement to EU-wide
labelling Directives. These complete market lists of various consumer
appliances.

Individual Individual metering of the use of electricity, district heating, gas and water in
Metering buildings has been mandatory in new buildings since 1996 and in existing
buildings since 1997.

Informative This initiative aims at introducing informative electricity bills for households
Electricity and for customers in the public and private service sectors. The initiative will
Bills include more frequent meter readings, regular billing of actual consumption
and graphic presentation of the customers’ electricity consumption. The
Danish Association of Power Companies has appointed a working group to
prepare the practical implementation of informative electricity bills. The group
reported in February 1994. The informative electricity bills are currently used
by the utilities.

As a part of the new regulations for the electricity market, the distribution
companies have to introduce informative electricity bills. Minimum
requirements for such bills are developed in co-operation with the sector.

Ban on The government has amended the Heat Supply Act to extend the ban on
Conversion to electric heating to the conversion to electric heating of existing buildings
Electric Heating located within a district heating or natural gas supply network. The
in Existing amendment to the Heat Supply Act came into force on 1 March 1994. By
Buildings 2005, this amendment is expected to reduce the number of electrically heated
homes by about 7 000.

"Project In 1998 the government introduced a specific programme to promote energy


Window" efficient windows in households and the public sector. A result of the
programme was the introduction of an energy label system for windows. The
programme has also supported the development of more energy-efficient

6
windows, and information campaigns carried out in 2001 in co-operation with
branch organisations and companies. From 1998 to 2000 the Danish Energy
3
Agency initiated projects amounting to DKK 25-30 million in co-operation with
the manufacturer and branch organisations, etc. The market share for energy-
efficient windows has increased to around 60% in recent years. The
government anticipates that the annual energy saving will reduce CO2
emissions by about 150 000 tonnes by 2005.

District District heat is supplied by some 400 district heating companies, and today
Heating accounts for approximately 50% of Denmark’s heat demand, compared to
and CHP 30% in 1980. Most of the companies produce and supply the heat, but some
purchase heat from one of the “central” power plants. The average connection
rate in district heating areas is 82% and is still increasing. The district heating
network supplies heat not only to large consumers, apartment blocks and
institutions but also to a large extent to modern single-family houses. Danish
district heating companies are owned either by the municipalities, particularly
in the major cities, or by local consumer co-operatives or foundations. In 1996
average distribution losses were 20%.

In 1999, almost 80% of all district heat was produced from CHP plants, up
from just under 40% in 1980. In 1999, almost 50% of electricity generation
was from CHP, compared to just under 20% in 1980. Twelve of the 14 largest
power stations in Denmark deliver all or part of their surplus heat to a district
heating network. Nearly all large-scale power plants are located close to major
cities. This and the fact that 80% of the population lives in urban areas
allowed the combined development of district heating and CHP. The
conditions for industrial CHP were less favourable as Danish industry is
dominated by small and medium-sized companies with relatively low energy
demand.

The first steps in the development of CHP were taken in Copenhagen at the
beginning of the 20th century. In 1904 the first CHP plant was commissioned,
supplying heat and electricity to a hospital. By the mid-1930s the Copenhagen
district heating network was well established, even though heating was to a
large extent still provided by coal-fired boilers or small individual coal-fired
burners.

Today, ten major cities have city-wide district heating systems where almost
all of the heat (95 to 98%) is produced in large coal-fired or gas-fired CHP
plants and waste incineration plants, with a number of small oil-fired or gas-
fired heat-only units for peak-load and emergency. Since the early 1980s, no
new power plants have been commissioned unless provided with the ability to
perform CHP and to supply heat to the district heating networks. This was
motivated by environmental concerns and the wish to encourage energy
efficiency. Construction of new electricity generating capacity must be justified
by the need for new heat production capacity.

Small-Scale In addition to the large-scale CHP and district heating units, a large number of
CHP small-scale CHP plants exist. In Denmark, “small-scale” CHP designates CHP
plants outside the centrally supplied areas, i.e. the larger agglomerations. The
largest small-scale CHP plant has an installed electric capacity of 99 MW.
However, most of the plants range between capacities of 0.5 to 10 MW and
supply heat to small communities and institutional buildings. Often the plants
consist of more than one CHP unit. Small-scale CHP plants not connected to
a district heating network rarely exceed an electrical capacity of 1 MW. Small-
scale CHP plants are laid out to cover at least 90% of the local heat demand.
The electricity generated is sold to the public grid. Power utilities are obliged
to purchase the electricity from these plants. The main fuels used in small-

3
On average in 1999 DKK 1 = US$ 0.145 and in 2000, DKK 1 = US$ 0.123.

7
scale CHP are natural gas and waste and, to a lesser extent, biogas and other
biomass.

Small-scale CHP received government support through a 1986 Parliamentary


decision, adopted by the power utilities, to establish 450 MW e of small-scale
CHP using indigenous fuels (natural gas, waste, biogas or biomass). In
connection with the presentation of the Energy 2000 plan in 1990, a more
ambitious programme for small-scale CHP was put forward. To accelerate the
establishment of small-scale CHP, a state subsidy was introduced in 1992 for
power production from waste incineration, natural gas and renewables used in
small CHP plants. The subsidy originally amounted to 10 øre per kWh but has
been reduced to 7 øre per kWh, except for plants smaller than 3 MW.

The development of small-scale CHP peaked in 1994/95. About 80% of the


installed capacity (< 25 MW) is based on natural gas boilers, 16.5% are gas
turbines and 3.5% are biogas-fired boilers. Most of the installed gas boilers
have an electric capacity in the range of 0.5 to 4 MW e whereas gas turbine
units typically range in capacity from 4 to 25 MW e. There are more than 60
biogas-fuelled CHP plants, supplying heat to either the local district heating
network or supplying a single farm. The electricity is fed into the national grid.
The total installed electric capacity is now approximately 20 MW with only a
few facilities larger than 1 MW.

The feed-in tariffs for local CHP equal the purchasing utility's own long-term
marginal cost (avoided cost). Danish electricity feed-in tariffs are based on a
three-tier tariff system, with tariffs reflecting electricity demand patterns (low,
medium and high tariff periods). The resulting heat price from small-scale
CHP is very sensitive to variations in the gas price, but less sensitive to
changes in interest rates and investment costs. As a result of the support
measures, the capacity of local CHP was 3.4 times as high in 2000 as it was
in 1993, whereas “central” power capacity remained stable.

Industrial CHP Industrial CHP is used in industries with high demand for process heat,
especially the petrochemical, wood and paper industries. The food industry
and greenhouses can also use low-pressure steam or hot water from CHP. In
1990, Denmark had about 20 industrial CHP plants, mainly coal or oil-based
boiler or steam turbine units. However, the penetration of industrial CHP in
Denmark remained low before 1992, largely owing to the low energy intensity
of the Danish industrial sector compared to industry in neighbouring countries.

In 1992, an industrial CHP programme was launched. Its objective was to


realise the potential for industrial CHP, which was estimated at an additional
400 MW. Under the programme, investment subsidies were introduced for
industrial energy efficiency measures, as was a bonus system for electricity
production from gas and biomass in combined heat and power production.

Following the introduction of the first Green Tax Package (see below),
industrial companies could obtain state grants of up to 30% of investment
costs in energy efficiency, including CHP. This provision is still in force. In
special cases, small-medium size enterprises can obtain 40% coverage of the
investment of industrial CHP plants from the government. However, a time
limit of six years has now been set for the subsidy to industrial plants.

As a consequence of the support measures, the number of industrial auto-


producers rose to more than 100 by 1997. The total potential for industrial
CHP was reassessed in 1995 to be 750 MW. In 2000, installed capacity was
more than 300 MW and electricity production from industrial CHP was about
8% of total power generation. Industrial CHP is almost exclusively based on
natural gas, but a few biomass-fuelled plants have been commissioned.

8
The government plans to develop CHP further in future. The Energy 21
programme of 1996 set a number of CHP-related targets for the long run (to
2030), which are still in force:

x The bulk of future heat and electricity consumption is to be covered by


CHP.
x Individual gas-based heating systems are to be converted to CHP-based
district heating.
x Industrial CHP and mini-CHP are to be developed to a total capacity of
1 400 MW or approximately 10% of total public electricity generating
capacity in 2000.
x Coal use in power plants is to be phased out.
x Electricity from renewable energy sources, excluding large hydro and
electricity from waste, is to account for 20% of power generation by 2003
and 79% by 2030.

Conversion from electric to district or natural gas heating requires substantial


investments in buildings for the installation of a central heating system.
District heating currently accounts for close to 50% of energy demand for
space heating compared with 30% in 1972. Seventy per cent of district
heating production is now based on combined heat and power. Subsidies
have been initiated to overcome this barrier to conversion. Houses
constructed before 1950 that are situated in district heating areas are eligible
for subsidies for installation of central heating and hot tap water. The purpose
is to use excess heat at the central CHP plants efficiently. About 50% of
qualifying houses had been converted by 1997. Subsidies may be applied for
until the end of 2002. Total funds for subsidies amount to DKK 1 300 million
and the plan is expected to save 100-150 thousand tonnes of CO2.

The Danish Electricity Saving Trust (see below) has made an agreement with
more than 200 district heating companies using CHP and biomass to convert
electrically heated dwellings to collective district heating systems. Local
information activities are eligible for an annual subsidy of DKK 50-60 million.
During the period to 2007, 50 000 dwellings are expected to be converted (the
potential is 90 000), resulting in reductions of 555 000 tonnes of CO2.

Danish The Danish Electricity Saving Trust was established in 1997 (Act on the
Electricity Danish Electricity Saving Trust, 27 December 1996) with the primary goal of
Saving supporting the substitution of electrical heating by district heating or heating by
Trust natural gas in households and in the public sector. The Trust is managed by
an independent board that comprises representatives of consumer interest
groups and utilities, as well as experts in energy savings and economics. The
Trust extends conversion grants, currently available to electric heating
consumers in areas without collective heat supply, to consumers of electric
heating in areas with district heating and natural gas supply. A minor portion
of the subsidy grants will be used for other purposes, especially regarding the
development, market introduction and market dissemination of efficient
appliances.

The budget in 1997 for the scheme was DKK 50 million. From 1998 onwards
the scheme has been financed by a fixed amount of DKK 0.006 per kWh sold,
levied on the electricity consumption of households and the public sector. The
sum available is expected to be DKK 90 million a year.

In addition to the substitution of electrical heating, the Electricity Saving Trust


has introduced several other activities. Buy A-products is a campaign for
energy efficient lights (CFLs) and electrical household appliances. Buyer clubs
for public institutions and housing associations have been a valuable means
to facilitate the purchase of energy efficient appliances. In the autumn 2001 a
new campaign for low stand-by equipment (TV, VCR) will take off. A

9
homepage for consumers to find the retailers with the lowest prices on A-
labelled white goods is another popular initiative.

Subsidy Since 1993 State subsidies have been granted for energy-saving measures in
Schemes dwellings inhabited by pensioners with low incomes and relatively high bills for
heating. Subsidies of up to 50% of investment costs can be obtained up to a
maximum of US$ 3 600 per dwelling. Approximately 5 000 houses are
granted subsidies each year at a total cost of approximately DKK 40-70 million
per year.

Subsidies for energy-efficient boilers in private houses fuelled by natural gas


were given for the period 1999 to 2001. A subsidy of DKK 2 500 was given to
increase the market share of boilers with an annual efficiency of more than
95%. The size of the subsidy is calculated to cover around half of the extra
costs of the efficient boiler in comparison with a traditional boiler. The subsidy
scheme ended in the beginning of 2001 as planned. The latest figures indicate
that the market share of these boilers has increased from below 10% to
around 50%.

Information/
Education and
Motivation

Campaigns for This initiative means that the campaigns run by some power companies for
Replacement replacement of electrical appliances (particularly refrigerators and freezers
of Appliances and low-energy lighting) will be expanded into longer or permanent schemes
or campaigns covering consumers throughout the country.

Danish power companies have carried out a successful country-wide


replacement campaign for freezers. More country-wide campaigns may be
carried out in the future for other types of appliances.

Buying This initiative consists of organising buying clubs, each composed of users of
Clubs and a specific product -- for example, housing associations, large companies and
Buyer retail chains. The buying clubs draw up strict requirements concerning the
Policies product’s energy efficiency, price, materials, etc. The manufacturer that best
meets these requirements is rewarded with guaranteed sales of the product in
question.

Training A pilot project for supplementary training of store personnel to motivate them
in Energy to use the EU’s energy labelling of kitchen hardware as an active selling tool
Labelling was carried out in 1994. The experience from the project was used as the
basis for a proper, country-wide supplementary training scheme when the first
EU energy label was brought into effect in early 1995 and disseminated to all
EU countries.

PUBLIC SECTOR

Measures already
existing and/or
being improved

Energy Since 1992, energy management and annual reporting of energy consumption
Management have been mandatory in every building used by the State (central
in State administration and state institutions, defence, and state-owned entities like the
Buildings railways, etc.). Local energy managers must be appointed in every institution.

Financing The possibilities for financing investments in energy-saving measures in


central government buildings were improved through a special grant scheme
totalling US$ 1.4 million a year. Besides the energy tax, government

10
institutions had to pay a special tax of 5% of their energy expenses in 1996
and 10% in 1997 and 1998.

After an evaluation of the grant scheme and the special tax, both were
removed at the end of 1999.

New agreements with public organisations are under negotiations, with priority
given to green accounts, energy management and buying policies.

Energy- The Danish Energy Agency co-operates with the Danish Environmental
Conscious Protection Agency to ensure that due consideration is given to environmental
Buying in and energy aspects when products, especially electrical goods, are bought by
the Public government authorities. Information on the energy consumption of the best
Sector products on the market is distributed to public sector purchasers.

Local The government will improve the incentives to implement energy conservation
Government in public buildings. This can be achieved by ensuring that a proportion of the
Buildings money saved on the energy bill can be used for other purposes. Local
commitment should be ensured at the county and municipal level. Energy-
saving efforts will be promoted at the local level, including the introduction of
“green accounts”. In addition, it is intended to promote the use of third-party
financing of the implementation of energy-saving measures in the public
sector.

As a result of the political agreement of May 2001, there were negotiations in


autumn 2001 with municipal organisations to reach an agreement on energy
efficiency.

Local Energy In September 2001, around 25 Local Energy Saving Committees were
Saving established or planned. They consist of representatives from electricity,
Committees natural gas and district heating distribution companies as well as
representatives from municipalities and local environmental organisations.
Their aims are to co-ordinate and discuss the planned initiatives in the energy
distribution companies. They are the only forum for a local co-ordination
between energy saving activities in the three supply sectors (electricity,
natural gas and district heating). Municipalities and counties are obliged to
initiate local Agenda 21 activities which have to be co-ordinated with other
local measures of local agencies (environmental and energy agencies).

INDUSTRY

Measures already
existing and/or
being improved

Green The Danish energy tax on industry has been revised to improve energy
Tax efficiency in industry. The new legislation, which entered into force in January
Package 1996, introduced different carbon tax rates in the industry. The tax rates are
1995 to be gradually increased from 1996 to 2000. All the revenue raised by the tax
will be recycled to the industry.

The Green Tax Package has four principal elements:

x Three tax elements consisting of an energy tax, a CO2 tax and an SO2 tax.
x A distinction between three different purposes for energy use when
assessing the tax: space heating, light industrial processes and heavy
industrial processes.
x Provisions for a significantly reduced tax rate in the case of specific
energy-intensive activities, conditional upon a business committing itself to
reducing energy consumption through an agreement negotiated between

11
the company and the Danish Energy Agency.
x Gradual phase-in of the taxes, with the revenue returned to enterprises
largely through cuts in taxation on employing labour and reduced
employer’s social security contributions. The remainder will be returned
through investment grants for energy saving measures over and above
those that might be expected to be undertaken.

If the company does not fulfil the agreement, reimbursements already paid will
have to be returned and the tax will be imposed in full.

Differentiation of the taxes according to use has led to high taxes on space
heating (rising to the household level), moderate taxes for general process
energy and low taxes for energy used in specific purposes with high energy
intensity. Thirty-five specific processes are defined as energy-intensive,
covering more than one-third of industrial energy use. All energy use that is
neither an energy-intensive process nor space heating, is defined as energy
light processes. This residual category includes fixed lights, office machines,
refrigeration and air conditioning. No firm will pay less than DKK 3 per tonne
of CO2.

There are three categories of reimbursement to industry:

x Investment grants for energy saving measures in enterprises. The grants


are up to 30% of the initial outlay on projects with payback periods
between two and nine years. The investment scheme is expected to
lapse after 2000.
x Cuts in taxation on employing labour and lower employers’ contribution to
the ATP (additional labour market pension fund).
x Funds for small and medium-sized enterprises, which benefit only to a
limited extent from the reduced employers’ contribution.

The Green Tax Package was reviewed by the beginning of 1999. However,
independent evaluations of the investment grants scheme and the
agreements were carried out in 1998. The results show that the two initiatives
together will lead to the CO2 reductions in 2005 that were expected in 1995
when the Green Tax Package was approved by Parliament.

Voluntary As mentioned above in the framework of the Green Tax Package 1995,
Agreements enterprises with specific energy-intensive activities, or with energy tax
exceeding 3% of value added, can reduce their tax rate through a voluntary
energy savings agreement. The enterprise must first present an energy audit
prepared by an independent certified consultant and an action plan based on
the audit, which demonstrates how the enterprise will implement a system of
energy management, apply procurement policies favouring energy efficiency
and educate staff in energy efficiency. The audit may be disputed and
reviewed, or the enterprise may propose alternative measures to achieve
equivalent CO2 results.

The enterprise must commit to implementing the energy efficiency


investments recommended by the audit with payback times of up to four
years. On the basis of the action plan, the enterprise signs a three-year
agreement with the government and is guaranteed partial reimbursement of
carbon tax rates conditional on the fulfilment of the obligations in the action
plan.

By 2001, more than 300 enterprises accounting for about 60% of total energy
consumption by industry (VAT-registered companies) had concluded an
agreement with the Danish Energy Agency.

12
Subsidies From 1996 to 2000, subsidies for investments in energy efficiency amounted
in Industry to DKK 1.8 billion. About 80% of the subsidies went to the energy-intensive
industries. From 2000 onward, an additional DKK 175 million/year has been
allocated to the subsidy scheme, but the scheme is now open only to industry
(excluding agriculture and the trade and services sector). It provides grants for
three areas: investments in energy savings or efficient equipment, use of
consultants and information about energy savings. In 2001 efforts in trade and
services will focus on a strategy to develop, market, purchase and use more
energy-efficient products. The emphasis will be on lighting, cooling equipment,
ventilation, office equipment and buildings. Each year an action plan is
formulated and different categories of products are given priority. For industry,
the main focus in 2001 was on energy management, energy-efficient design,
development of energy-efficient technology, standardised solutions and
projects in selected industry sub-sectors.

The tax, subsidy and voluntary agreements package was evaluated in 2000.
The conclusion was that reductions of CO2 had met forecasts. In 1995 it was
estimated that the package would reduce emissions by 3.9% versus an actual
reduction of 3.8%. Sulphur reductions were better than expected(34 000
tonnes versus 32 000 tonnes anticipated) .The evaluation resulted in the
following assessments:

x The green taxation system for agriculture, trade and industry is an


appropriate instrument for attaining the environmental objective, is
economically effective and takes international competitiveness into
account.
- The administrative costs related to the voluntary agreement scheme are
too high.
x The voluntary agreements were consequently adjusted in 1999 by
replacing the mandatory audits with a requirement to implement an
independently certified energy management system. The certifying body
controls compliance with the agreement, thus reducing administrative
costs.

In the 2002 in-depth review of the energy policies of Denmark, the IEA stated:

The Government of Denmark should:

x Continue to place time limits on subsidy schemes, particularly on those to


boost market penetration of new energy-efficient technologies.

Integrated Integrated Resource Planning was imposed under the new Electricity Act in
Resource 1994 to achieve a balance between investments in electricity conservation
Planning and the development of electricity supply. ELSAM and ELKRAFT, the two
regional associations of vertically integrated power companies, are obliged to
present 15-year plans to the government specifying how they will achieve their
commitments on energy efficiency and environment policies.

Amendment On 29 March 2000, the Danish Minister for Environment and Energy launched
of the Heat a proposal to amend the Heat Supply Act (revised in June 1990).
Supply
Act The overall purpose of the amendment is to promote activities that will support
the national goal of reducing CO2 emissions by 20% in 2005. The objective of
the plan is to reduce the energy sector’s negative impact on the environment
and to promote renewable energy, and thereby support an environmentally
sustainable development.

According to the amended Heat Supply Act, the existing principle for heat
pricing, stipulating that heat supplies must be priced according to actual costs
on a non-profit basis, will be preserved. To increase the utilisation of

13
renewable energy resources and industrial surplus heat, new investors and
heat producers will be allowed to sell heat on commercial conditions, always
provided that the heat prices are below a defined price ceiling.

The Heat Supply Act will introduce demands on the producers of heat to
promote energy efficiency and to reduce the costs related to the production of
heat. These demands will be implemented through benchmarking and plant-
specific income caps with the aim of securing a more cost-effective production
of heat.

Electric The Danish power distribution companies, which are either consumer- or
Utilities publicly-owned, have established extensive information and consultancy
schemes recognised as a natural activity by the regulatory authorities. Most
companies are involved in local information activities directed at consumers
and educational institutions and offer a certain basic package of consultancy
on electricity savings free of charge.

Other initiatives include arrangements with stores and electricians to supply


low-energy light bulbs to consumers funded via the electricity bill, schemes for
distributing low-energy bulbs to all their customers free of charge, or for
buying back old, inefficient appliances when new efficient ones are sold.

TRANSPORT

Measures already
existing and/or
being improved

Transport In May 1990, the government adopted the Transport Action Plan for
Action Environment and Development which aims at stabilising CO2 emissions by
Plan 2005 and a 25% reduction by 2030, compared to the 1988 level for this sector.

White The Transport Action Plan was followed up in December 1993 by the White
Paper on Paper on Transport-Traffic 2005, which reviewed the implementation of the
Transport- energy and environmental targets. It was emphasised that fulfilment of the
Traffic 2005 target for CO2 emissions, while continuing to provide an efficient and flexible
transport system to the public and commercial sector will be the greatest
challenge to national transport policy in the years to come.

Action In 1996 the government decided on an action plan entitled Regeringens


Plan handlingsplan for reduktion af transportsektorens CO2-udslip (Government
1996 Action Plan for Reduction of CO2 Emissions from the Transport Sector)
containing ideas to reach the target of CO2 stabilisation. The action plan was
mainly a description of possibilities, with a few specific initiatives. The main
objectives in the plan were :

1. To promote higher efficiency for vehicles, as proposed by the European


Commission in connection with an agreement between the Commission
and the vehicle producers (3-4% reduction of CO2 emissions).
2. Thirty per cent higher fuel price before 2005 in 1996 prices (8% reduction
of CO2 emissions).
3. Other objectives regarding freight transport, public transport and bicycle
transport (4% reduction in CO2 emissions).

The March 2000 Based on a re-evaluation of targets, policies and measures (including a cost
Report evaluation) and the fact that emissions from the sector continued to rise – they
were about 14% higher in 1999 than in 1988 – Denmark proposed additional
measures in a March 2000 report entitled Limitation of CO2 Emissions from
the Transport Sector - Possibilities, Policies and Measures. Without new
initiatives, it was estimated that CO2 emissions would be 27% higher in 2005

14
and 31% higher in 2010 than in 1988. Policies have not been successful in
halting the upward trend in transport emissions, owing in part to higher than
anticipated economic growth and commensurate increases in transport needs.

The April 2001 In April 2001, the Danish government published a new Action Plan for
Action Plan reducing CO2 in the transport sector, drawing on earlier recommendations.
The targets were revised significantly downward. CO2 emissions are now to
be reduced 7% in 2010 below business-as-usual trends (representing an
actual increase in emissions of 22% over 1988 levels or 19% over 1990
levels). The 2030 target remained as established earlier – 25% below actual
1988 levels. The two main strategies in the Action Plan are increased energy
and transport efficiency. The first strategy is being implemented through:

x A feasibility study on promotion of environmentally-friendly transport


technology through adaptation of the tax system.
x An information campaign about new cars’ energy efficiency to supplement
the energy labelling on new cars in place since April 2000.
x Eco-driving and enforcement of speed limits.

The second strategy is to be implemented through information programmes


including promotion of public transport, bicycling and environmentally-friendly
freight transport, and other pilot projects.

The rise in energy consumption has been greatest for road traffic and aviation.
The government estimates that the new measures in the Action Plan, when
implemented, will allow the achievement of the 7% reduction from business as
usual by 2010.

Another new initiative also mentioned in the Action Plan is a proposal to


develop a national road pricing scheme with the main objective of reducing
motor traffic in major Danish cities. DKK 7 million will be allocated annually
from 2001 to 2003 for the promotion of road pricing projects to prepare the
way for the political decision on the pricing system. One element of these
projects will be to investigate the effects of road pricing on carbon dioxide
levels.

Information An information campaign on energy efficiency of new cars began in


and Labelling September 1997. Energy labelling of new cars has been established.

Taxation In 1997 there were some changes in taxation for pick-ups, vans, private cars
of Vehicles and electric vehicles. For pick-ups and vans the registration fees were
changed to promote the use of smaller vehicles. Furthermore, an annual tax
for private use of pick-ups and vans (medium-sized trucks up to 3 500 kg) was
introduced. The purpose was to encourage people to change from less
energy-efficient pick-ups and vans to more energy-efficient passenger cars
(when the use is only for passenger transport).

On 1 January 2000, the registration fee (purchase tax) for cars was changed
in order to provide more incentive to purchase new, more energy-efficient
vehicles. The registration tax for fuel-efficient gasoline cars consuming less
than 4 litres/100 km has been reduced, as has the registration tax for diesel
cars consuming less than 3.6 litres/100 km. The reduction in the registration
tax varies from 1/6 to 4/6 of the existing fee. In connection with this decision,
the range of diesel cars qualifying for the annual ‘green owner fee’ has also
been expanded. On 1 January 2000, another four categories qualified for the
green owner fee, and the lowest tax category is now for diesel cars which
consume less than 3.1 litres/100 km.

15
In the 2002 in-depth review of the energy policies of Denmark, the IEA stated:

The Government of Denmark should:

x Make further adjustments to the car registration fee and pursue road
pricing and other cost-effective policy instruments in the transport sector.

Public To reduce emissions in the cities, some 230 bus companies are using natural
Transport gas or LPG. These buses run almost entirely in the greater Copenhagen
area. They consume 1.1 km/litre on average. It has been decided to improve
the quality of local mass transport in conjunction with the revision of lower
fares. The subsidy allocated to public transport (excluding large infrastructure
investments) was approximately DKK 4.4 billion in 1997. About the same
amount was expected for 1998. Subsidies for public transport were increased
in September 1997 in order to reduce prices by 10%. After preliminary
studies, this seems to have been successful.

MONITORING/ As part of the overall savings plan, the government will present an annual
ASSESSMENT report on energy savings. The first report was presented in September 2000.
In this connection, saving targets for 2005 were set for the different sectors,
and it will be assessed whether new financial incentives or other new
measures should be introduced in order to meet the overall target.

In the 2002 in-depth review of the energy policies of Denmark, the IEA stated:

The Government of Denmark should:

x Continue to review the performance of existing energy-efficiency


programmes with a view to developing market-based and more cost-
effective policies. Loan payback schemes could substitute for outright
subsidies in some cases.
x Review the existing policy measures with a view to developing more cost-
effective policies. Governments’ interventions should be analysed on a
continuing basis for cost-effectiveness and should be prioritised
accordingly. Market-oriented approaches should receive priority.

Further For further information, please contact:


information
Peter Bach
Senior Adviser
Danish Energy Authority
Amaliegade 44
DK – 1256 Copenhagen K
Tel: +45 (33) 95 43 25
Bus Fax: +45 (33) 11 47 43
E-mail: pb@ens.dk

16
Energy
IEA Efficiency
Update

FINLAND Updated October 2003

BACKGROUND

Energy The Finnish Energy Strategy, which was completed in 1997, sets out the more
Strategy fixed objectives to limit greenhouse gas emissions. In the Energy Strategy, the
line of action for energy consumption defined in 1995 was made more
stringent. Research and development aimed to improve the efficiency of
energy use and the launching onto the market of new technologies were
stressed. The Strategy underlined the voluntary scheme of energy
conservation agreements, which were then in an initial stage of
implementation. In fact, it seems that, after about three years of experience,
this scheme is becoming the skeleton of systematic improvement of efficiency.

In recent years, the strongest justification for efficient use of energy has been
the need to reduce greenhouse gas emissions in order to prevent climate
change. However, the traditional criteria, such as energy supply and
competitive price of energy, still remain side by side with the climate policy.

New In September 2002, the Ministry of Trade and Industry appointed two working
Energy groups: one to revise the programme for promoting renewable energy
Efficiency sources, and the other to update the energy conservation programme dating
Action Plan from 2000. Both working groups submitted their reports on 16 December
2002. The principal task of the working groups, which completed their
assignments within a tight timetable, was to propose practical measures for
carrying out the statements concerning energy conservation and renewable
energy sources which were given by the Finnish Parliament in connection with
the debate on the National Climate Strategy and the debate on the new
nuclear power plant unit.

The working group on energy conservation has drawn up a proposal for a new
Energy Efficiency Action Plan. The measures proposed have been slightly
modified on the basis of comments received and included in the National
Climate Programme.

The Action Plan could reduce overall energy consumption by nearly 5% by


2010. This is roughly a quarter of Finland's target for reducing GHG and
would correspond to a reduction of 1.5 million tonnes of oil. The reference
situation is one where no new energy conservation measures were taken.
However this business-as-usual scenario already includes a great number of
actions started earlier, as well as the impact of these actions. In terms of the
State economy, the total cost of implementing the Action Plan would amount
1
to roughly Fmk 350 million per year, which is about Fmk 80 million higher
than the present level.

Priority activities to promote energy efficiency are:

• Further development of building codes and other normative measures.


• Development and wider use of voluntary agreements.
• Further development and promotion of energy audit activities.
• Targeted information activities.
• Research, development, demonstration and dissemination of new
technologies.

Efficient implementation of all these measures calls for their support through
information services, training and motivation. Energy conservation activities of

1
On average in 2000 Fmk 1 = US$ 0.154 and in 2001 Fmk 1 = US$ 0.151

1
the EU and other international organisations should also be supported and
used in implementing national measures.

In the long term, energy taxation should be developed in a direction that will
promote energy savings, taking into account the competitiveness of the export
industry and the national economy as a whole. State financing to enhance
energy conservation should be primarily focused on the development and
commercialisation of new technology, aid connected with energy conservation
agreements, energy renovations of buildings and information services
supporting the conservation measures. Integration of the urban structure will
require support and good management.

The energy conservation working group will continue its work with respect to
the legislative projects included in its assignment. A proposal will be prepared
for a general act on energy conservation, and the service obligation to be
placed on energy companies will be studied. These tasks should be
completed by 31 May 2003.

Energy Finland signed the United Nations Framework Convention on Climate Change
and the (UNFCCC) during UNCED in Rio in June 1992 and ratified it on 31 May 1994.
Environment It produced its first National Communication entitled Finland’s National Report
under the United Nations Framework Convention on Climate Change in
January 1995. This National Communication emphasises the role of energy
efficiency to achieve the target of stabilising CO2 emissions to 1990 levels
before 2000. At the third Conference of the Parties (COP-3) of the UNFCCC
held in Kyoto (Japan) in December 1997, Finland, among other members of
the European Union, made the commitment to reduce its GHG emissions by
8% from the 1990 level. Finland signed the Kyoto Protocol on 29 May 1998;
ratification is planned to take place in line with the other EU Member States.

As part of the European Union, Finland intends to curb her greenhouse gas
emissions during the first commitment period referred to in the Kyoto Protocol,
i.e. 2008-2012, to the extent that annual emissions will not exceed those of
1990, when they were equivalent to around 76.5 million tons of carbon
dioxide. The majority, roughly 70%, is carbon dioxide emissions arising from
the combustion of fossil fuels and peat. This stabilisation target takes into
account that Finland has already realised much of its energy efficiency
potential. Combined heat and power (CHP), for example, accounts for as
much as 32% of the country's electricity supply.

Finland’s Second Report under the Framework Convention on Climate


Change issued in 1997 surveys all the actions undertaken by Finland aimed at
meeting the objectives of the Framework Convention. Strengthening energy
efficiency in all the energy consumption sectors is considered a major tool to
fulfil the environment commitments.

Finland's Third National Communication under the United Nations Framework


Convention on Climate Change was adopted by the government on 15 March
2001 and supported by Parliament in its statement on 19 June 2001. This
Communication is largely based on the National Climate Strategy of Finland
(see below) as well as on the background documents, research and sectoral
reports of strategy formulation and on the work of an inter-ministerial
committee for preparing the third national communication.

In the 1999 in-depth review of the energy policies of Finland, the IEA stated:

The Government should:

• Continue its vigorous efforts to meet its international obligations in the


area of climate change.

2
National The National Climate Strategy, submitted to Parliament on 27 March 2001 in
Climate the form of a government report, contains the principles, targets and action
Strategy measures that the government finds necessary to meet the national target.
The Parliament supported the strategy in its statement of 19 June 2001.

Several investigations and studies on emission trends extending as far as the


year 2020 have been carried out for the purposes of the climate strategy. The
courses of action recommended in the strategy are mainly aimed at meeting
the obligation during the first commitment period.

The following conclusions can be drawn from the findings:

• Greenhouse gas emissions will increase to volumes exceeding the target


level, unless determined and effective action is taken to curb emissions.
• Greenhouse gas emissions depend on a few major factors, such as the
growth and structure of the economy, and the structure of electricity
supply.
• In order to meet the climate strategy targets, it is necessary to implement
an energy conservation programme and a programme promoting
renewable sources of energy. Together these two programmes could
account for about a half of the targeted emission reduction.
• The growing use of coal must be reduced considerably by increasing the
use of natural gas, by building nuclear power plants, or by a combination
of these two measures.
• Implementation of this strategy will mean increased expenditure for
consumers of energy and the entire national economy, and will result in a
sizeable additional investment by the State.
• The alternative based on the increasing use of natural gas will lead to
somewhat greater expenditure for the economy as a whole than the
alternative favouring nuclear power as a source of electricity supply.

With reference to economic growth and other starting points, the calculations
are based on the basic principles and conditions concerning the formulation of
the climate strategy set out in the Government Programme. In terms of the
above, the target adopted for Finland will be met in such a way that the
necessary measures would neither weaken the economy nor promote
unemployment, but would support a reduction of the national debt.

Measures need to be taken in energy production and consumption, transport,


the building sector, town and urban planning, in controlling the emissions from
agriculture and forestry, and waste management. Meeting the targets calls for
research and development, economic control measures, such as taxation and
various financial support systems, statutes and regulations, voluntary
agreements, and encouragement of consumers’ spontaneous actions.

Promoting energy conservation, the use of bio-energy and other forms of


renewable energy and research into energy technology are essential elements
of the National Climate Strategy.

Support to energy investments and survey projects is an important component


of the Strategy. Energy subsidies are considered as a central means of
reducing carbon emissions with the following objectives: to promote the
introduction of innovative energy technology; to increase the use of renewable
energy sources and to reduce any environmental effects caused by the
production and use of energy.

The new Government Decree on energy subsidies came into effect on


1 August 2002. Energy subsidies amounted to € 29 million in 2002, or nearly

3
50% more than in 2001. The energy subsidy situation for 2003 also looks
encouraging: the government proposes a commitment of about € 29 million.

When approving the government's decision-in-principle concerning a fifth new


nuclear plant unit, the Parliament, on 24 May 2002, passed four statements:
these apply to more efficient means of conserving energy, restricting the use
of coal, promotion of renewable energy use and a report to be given to
Parliament on the implementation of these measures. The Ministry of Trade
and Industry has already taken action prompted by these statements. Energy
efficiency measures based on the Energy Efficiency Action Plan will be
intensified in keeping with Parliament's statement and the government's
statement on electricity conservation issued on 17 January 2002. To update
the energy efficiency programme, the Ministry appointed a working group
which should complete its work by the end of 2002.

Motiva In 1993, MTI established Motiva, the Information Centre for Energy Efficiency
to implement the government’s energy conservation programme.

MTI, representing the State of Finland, purchased the stock of Motiva from
Finntech Finnish Technology Ltd OY, a technology transfer company.
Following the sale of the stock, Motiva became an independent limited liability
company owned by the State; its ongoing projects will continue without
interruption.

The starting point of Motiva's operations is as an impartial and reliable service


centre with solid expertise. Motiva compiles, processes and distributes
information, develops methods and encourages the use of advanced
technology in households and in companies. Motiva's activities support the
goals specified in the government's Energy Strategy, where efficient use of
energy and renewable sources play a central role.

Motiva actively co-operates with energy consumers, companies providing


services and products related to energy, communities, energy suppliers and
authorities involved in the field of energy and the environment. Motiva’s area
of activities includes:

• Influencing attitudes towards rational energy use and saving.


• Developing and marketing energy audits and other procedures to promote
energy efficiency.
• Promoting the implementation of energy-efficient technologies.

In January 1998, promotion of the use of renewable energies was added to


Motiva’s mission.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building The National Building Code of Finland, which applies to all new building
Code projects (both residential and non-residential) and which was revised in 1985
by the Ministry for the Environment, is supervised by the local building
authorities. The current standards are prescriptive thermal insulation
requirements for walls, roofs and windows, thermal conductivity values for
building materials, and requirements related to indoor air quality, ventilation
rates, equipment and design.

The Ministry of the Environment is revising the Building Code to improve the

4
energy efficiency of new buildings. These new regulations should come into
force in 2003. The aim is a 30% reduction in energy consumption in new
buildings compared to buildings constructed on the basis of today’s
regulations.

Energy Energy labelling and energy efficiency standards for domestic appliances
Labelling have been implemented in accordance with the principles within the European
and Standards Union.

Energy Labelling
Energy labelling of refrigerators and freezers began in accordance with EU
labelling directives in 1995. Energy labelling of washing machines and tumble
dryers started in 1996 and washer-dryers in 1998. In 2000 the energy
labelling of dishwashers and household lamps came into force. The
introduction of energy labelling has been supported by extensive information
and training carried out by Motiva and directed at consumers and retail staff.
As a result of labelling, consumers’ energy awareness has risen and the
availability of energy efficient appliances on the market has increased.

Energy Efficiency Standards


Minimum efficiency requirements for hot-water boilers (according to the EU
Directive) were implemented in 1998 and for refrigerators and freezers (EU
Directive) in 2000 and for ballasts for fluorescent lighting in 2002. Finland also
supports the adoption of minimum efficiency requirements for other
appliances.

Voluntary MTI and the Finnish Association of Building Owners and Construction Clients
Agreements signed in May 1999 an Energy Conservation Agreement relating to the real
estate and construction business. This agreement provides the commercial
sector, for example shops, banks, insurance companies and media, with the
opportunity to join the energy conservation agreement and the activities
subject to it. By the end of 2001, the coverage of the agreement was 73%.

The target is to have 10% less specific heat consumption in buildings in 2005
and 15% less in 2010 compared to 1998. There is also a target to stop the
increase in electricity consumption and reverse the trend before 2005.

Metering Demonstration projects are under way on metering and billing of heat energy
and Billing on the basis of actual consumption, looking at cost-effectiveness and actual
savings. In 1995 there was a study on experiences of users and occupants.
The work in this field was based on the 1995 Government Decision on Energy
Conservation. The first phase, from 1992 to 1995, dealt with studies
amounting to about ECU 100 000. The second phase, starting in 1996,
includes demonstrations. The budget for demonstrations in 1995-1996
amounted to about ECU 1 million. Some results of the demonstration projects
are positive, others less so. The guidelines for further actions are in the
Energy Efficiency Action Plan. New buildings will be required to have
apartment-specific measurement of service water and electricity as well as
billing based on actual consumption. As for heat, the measurement
requirement will be introduced along with the development of measurement
technology and transfer technology of measurement data.

Renovation The state supports the renovation of housing by, for instance, the repair grant
Grant scheme that is prepared each year by the Ministry of the Environment. The
Scheme basic grant is 10% of the total repair cost. For certain energy conservation
measures, the amount is 20%. The Ministry of the Environment follows up on
the grant's use. These grants fund actions such as the adjustment of heating
systems, cleaning and adjustment of ventilation systems and construction of
heat recovery systems for exhaust air.

5
District District heating (DH) was introduced in Finland’s major cities in the 1950s and
Heating 1960s and in small towns after the 1970s oil crisis. DH covers 48% of total
space heating demand and in 2001 as much as 75% of DH was produced by
combined heat and power (CHP). Most DH utilities are owned by
municipalities. DH systems cover almost all regions of Finland where the sale
of district heat is profitable.

In Helsinki, as well as in other cities, DH has been developed with no direct


financial support. The state does not interfere directly in the production and
distribution of power and heat and there is no price regulation. General
practice for the construction of a DH system is that the sale of district heat
must be profitable even without CHP. On the other hand, the sales price of
district heat must be competitive with other forms of heating.

In the 1999 in-depth review of the energy policies of Finland, the IEA stated:

The Government should:

• Consider involving EMA (Electricity Market Authority2) in the OFC’s (Office


of Free Competition) monitoring of district heating prices, especially cross-
subsidies between heat and electricity supply.

Technical Tekes, the National Technology Agency, supports and organises R&D
Assistance projects in the construction and building sector. One of the technology
programmes going on in this sector which includes energy efficiency targets is
INFRA – Construction and Services Technology Programme for the years
2001-2005. The national public research institute, the Technical Research
Centre of Finland, VTT, carries out R&D and offers expertise on technical
building services, structures and building systems.

Information/ The LINKKI 2 research programme on energy conservation decisions and


Motivation behaviour, started by the Finnish Ministry of Trade and Industry in 1997,
ended in 2001. An independent evaluation of the programme has been made.
The programme consisted of 26 projects, which for their part have promoted
the implementation of the Energy Conservation Programme approved in 1995
and the Energy Strategy.

Measures under
Consideration

Technology Motiva Oy organises and co-ordinates technology procurement competitions.


Procurement In 2001, the MotiVoittaja competition was finalised with the commercialisation
of eight small house packs representing the highest level of energy efficiency.
MotiVoittaja houses produce a saving of 40-50% in energy and water bills.

Energy efficient devices are obtained for the Finnish market also by means of
international acquisition competitions. The winner of the IEA Copier of the
Future competition was brought onto the market in 2001. The EU´s Green
Light programme to enhance the energy efficiency of lighting piloted and
modelled a basic lighting audit model in five companies and organisations.

Through Motiva, Finland has also actively participated in the European Union
Technology Procurement SAVE Study.

2
The Electricity Market Authority (EMA) established by the Electricity Market Act (386/1995) in force since 1 June
1995, is the regulatory institution of the electricity supply industry responsible, inter alia, for supervising grid
access and pricing

6
INDUSTRY

Measures already
existing and/or
being improved

Energy At the end of 2001 there were a total of nine audit models for industrial and
Audits service properties. Audits are conducted by experts who identify potential
ways of achieving savings in the areas of heating, water consumption,
electricity and air conditioning. Motiva Oy is responsible for the development,
marketing and quality assurance of audit activity and for training the auditors.
The Ministry of Trade and Industry (MTI) provides subsidies for audits, which
are normally 40% of the auditing cost. In the period 1992-2001 more than
4 900 audits had been supported by the MTI at a total cost of € 13.7 million.

Audit activity speeded up at the end of the 1990s when the first energy
conservation agreements began to be implemented. In 2001, 95% of audits
were carried out at companies and organisations falling within the scope of
energy conservation agreements. A substantial share of energy consumption
in industry has been audited. In SME industry saving potential observed in
audits are on average 8% in electricity and 25% in heating. According to the
questionnaire circulated in year 2000 approximately two-thirds of the saving
potential will be realised.

Motiva develops and maintains the Motiwatti programme, which harmonises


and eases the calculation of energy savings in audit projects. To monitor the
auditing work, a computer-based follow-up system, MOTICOP, was developed
in August 1994. Motiva also produces marketing and support materials and
ordering guidelines for auditing companies and their customers. The quality of
audits is safeguarded by checking the reports on all objects and by providing
the auditors with feedback. Customer feedback is also gathered from the
purchasers of audits.

Voluntary Industrial energy efficiency policy relies mainly on voluntary agreements


Agreements initiated in 1992 and significantly extended in 1997. In November 1997, MTI
signed six new framework agreements on energy conservation with the
organisations of industry and employers, energy producers and energy
distributors. The parties concluding the agreements with MTI were the
Confederation of Finnish Industry and Employers, the Association of Finnish
Local and Regional Authorities, the Finnish Energy Industries Federation, the
Finnish District Heating Association, the Finnish Electricity Association and the
Finnish Petroleum Federation. The State Real Property Authority signed a co-
operation programme which is equivalent as regards its objectives to an
agreement and to which most of the other governmental real estate entities
have acceded. The agreements will remain in effect until 2005.

In signing the framework agreements, the industrial organisations are


committed to promoting energy conservation and inducing their members to
accede. A company joining an agreement is committed to appointing
someone to take charge of energy conservation affairs, auditing and analysis
of energy consumption, preparing its own energy conservation plan, taking
measures according to the plan, and reporting annually to the sector
organisation concerned.

Some 115 companies had joined the voluntary industrial agreements at the
end of 2001, representing about 85% of total energy use by Finnish industry.
All the major energy users have joined. In the power plant sector, 22
companies have signed an energy conservation agreement, representing 90%
of Finland's electricity production. The agreement in the district heating sector
has been signed by 40 companies, accounting for 70% of the district heat

7
energy sold in Finland. An agreement on electricity transfer and distribution
has been concluded with 42 companies, covering 76% of electricity supply to
final consumers.

The agreements signed by MTI cover 55% of municipalities, 73% of


commercial buildings and 10% of truck transport. On 28 March 2001, the
Ministry of Trade and Industry, the Ministry of Transport and Communications,
the Ministry of the Environment, and the Finnish Bus and Coach Association
signed the energy conservation agreement on bus transport. It currently
covers 35% of the sector's energy consumption

In addition, two co-operation programmes – which correspond to energy


conservation agreements – are under way: one applies to the State’s own real
estate and the other, renewed in June 2002 together with the Finnish Oil and
Gas Federation and Ministry of Environment and the Association of
Entrepreneurs for Installation Services, applies to buildings heated by oil. The
conservation agreements have given a major boost to energy audits. One of
the targets of the Voluntary Agreements is to have 80% of the energy use in
industry and commercial and public buildings audited by the year 2005.

With regard to agreements made by industry, the energy sector, and


municipalities and joint municipal boards, their annual reporting data from
2000 reveal that the total impact of the conservation measures implemented
so far in the companies and corporations encompassed by the agreements is
2.2 TWh/year. Of this total, 2 TWh/year, or over 90%, comes up in the annual
reports of industry.

An interim evaluation of conservation agreements in industry and in the


energy sector commissioned by MTI, has been completed. The goal in the
evaluation of individual agreements was to provide an overall picture of the
benefits of the agreement procedure and to give recommendations for
development of the scheme. Concluding that the agreement system works
well, the evaluation team proposed that the agreements be kept unchanged
until the end of the present agreement period in 2005.

Concerning industry's conservation agreements, the conservation measures


implemented, decided and considered by enterprises in 1998-2000 totalled
4.2 TWh per year for heat and fuels and 1.3 TWh per year for electricity. The
evaluators pointed out that the magnitude of these figures is important, even
when compared to the national energy balance.

The evaluators also presented a number of recommendations for developing


operations during the current period. The main recommendations are:
introduction of renewable energy sources in the system and development of
reporting so that the reporting process would be speedier and the reports
would also serve the needs of enterprises better. Extra attention should be
paid to the means that maintain enterprises' motivation for the conservation
agreement scheme. The evaluators recommend that enterprises should
include energy conservation targets in their environment and quality systems.
The evaluators also propose that, at this stage of the system, setting of
agreement-specific energy conservation targets should be considered.

The results of the evaluation will be discussed in the respective management


groups which will decide how operations should be channelled for the rest of
the agreement terms.

Alongside the implementation of the agreements already concluded, the


Ministry of Environment, together with the Ministry of Trade and Industry, is
preparing an extension of the agreements practice to the residential building
sector.

8
In the 1999 in-depth review of the energy policies of Finland, the IEA stated:

The Government should:

• In its voluntary agreements, set concrete targets for the different sectors,
based on thorough audits and estimates of likely trends, and further
develop monitoring of the results.

Grants MTI provides grants for energy audits and investments to improve the
efficiency of energy production and use and to increase the use of bio-energy
or other renewable sources. Grants of up to 30% of the capital expenditure
are provided for qualifying investment projects and up to 50% for audits. Total
subsidies were Fmk 135 million in 1999 and Fmk 130 million in 2000.

Combined Heat Finland leads the world in the combined production of heat and power (CHP).
and Power Co-generation is widely applied for the heating of communities and for heat
and power from the utilisation of waste fuels from industrial processes. The
amount of energy Finland saves annually through CHP corresponds to 6% of
all primary energy used in the country.

In 2000, approximately 31% of electricity consumed was produced in


combined heat and power stations. This production is divided quite evenly
between industrial auto-producers and plants owned by local distribution
companies. These power plants may be between 0 and 400 MW in unit size,
but most of them are between 30 and 40 MW in unit size. Pulp and paper
mills and other heavy industry generate two-thirds of their own electricity
needs. Many of them use peat, waste wood or natural gas.

There is no preferential treatment in dispatching for CHP. Although small


biomass-fired CHP plants can get a subsidy from MTI for up to 30% of the
investment, the subsidy is usually 10 to 20%. The electricity tax is refunded
for peat-fired CHP plants of less than 40 MW and for any power plant using
wood or wood-based fuels.

Energy Motiva started developing standard ESCO contract documents in 1997 and
Service launched the first pilot project in the autumn of 1998. The model contract
Companies documents were released in 2000. The idea of the developed Motiva ESCO
(ESCOs) Concept is to show one transparent way of applying energy performance
contracting in the Finnish market. ESCOs can benefit the model when drafting
their own concepts.

In 2001, as part of Tekes’ Climtech programme, the Jumesco project was


launched with the objective of implanting ESCO activity in the municipal
sector. The activity of energy service companies from the standpoint of
climate change is to be examined in another Climtech project started in 2002.

Motiva is involved in the IEA´s international ESCO project lasting until the end
of 2002, which will investigate the state of activity in eight countries all over
the world. The results of the project will be utilised by applying them to Finnish
conditions.

Technology As an international pilot project within the IEA DSM Agreement Annex III,
Procurement Motiva organised the IEA Hi-Motors Competition. The goals of the project are
to:

• Establish electric motors with losses of some 25-50% less than average
motors, at a price and performance level which guarantees a significant
long-lasting market share.
• Establish highly efficient electric motors in the market (three-phase, four

9
poles, 1 500 r/min., continuous use, most common motor type on the
market).
• Produce electric motors with an energy efficiency higher than in any
previous motor and get them to the marketplace.

With a buyer group of more than 30 Finnish industrial companies, the project
has led to commercially available motors by ABB with extremely high energy
efficiency – not seen in practice before.

Technology Tekes is the main financing organisation for R&D in Finland. It provides
Development funding and expert services for R&D projects and promotes national and
international networking. Energy efficiency is one of the criteria that are taken
into account horizontally in different technology sectors when granting aid to
R&D projects. Tekes also finances some technology programmes where
energy saving is one of the key targets. The Process Integration Technology
Programme (2000-2004) is an example of this with a total budget of around
€ 17 million. In 2001 Tekes spent about € 20 million for the R&D projects the
main target of which was energy conservation.

PUBLIC SECTOR

Energy A third of public buildings are audited. According to the reported audits, the
Audits average saving potential in audited buildings of the public sector is 16% for
heating, 7% for electricity and 8% for water consumption.

Voluntary Energy conservation agreements introduced in 1992 are an important element


Agreements of Finnish energy policy.

Voluntary agreements have been developed with the public sector (and with
industry) for energy intensity reductions. A public sector agreement was
signed by MTI with the Association of Finnish Local and Regional Authorities
(representing all municipalities) and another with the City of Helsinki in 1993.
The municipal sector agreements were renewed in 1997.

Municipalities, in co-operation with the Association of Finnish Local and


Regional Authorities, draft individual energy conservation agreements for
signature by MTI. Each municipality concluding such an agreement is
committed to carry out measures similar to those taken by companies.
Coverage of the agreements is 55% and 62 municipalities and joint municipal
boards have joined the system. The target is to have 10% less specific heat
consumption in municipal buildings in 2005 compared to 1990. The agreement
was in force until the end of 2002.

Recommendations HYMONET, a tool for the environmental control of procurements, was brought
for Energy into use in spring 2001. The extranet database guides users to select energy-
Efficiency of efficient products in accordance with MTI´s recommendations on public
Public procurements.
Procurements

TRANSPORT

Measures already
existing and/or
being improved

Environmental The Ministry of Transport and Communication has had an environmental


Guidelines for management programme of transport policy since 1994. A new programme
Transport Sector was adopted in July 1999 when "Environmental Guidelines for the Transport
Sector" were published (Ministry of Transport and Communication 1999). The
new programme is a standardised environmental management programme

10
based on ISO standard 14 001. The programme defines the environmental
objectives, responsibilities of various actors and concrete measures to reach
the objectives. Moreover, the programme contains a monitoring and follow-up
mechanism. This new programme provides a practical tool for the
environmental management of transport policy. The Ministry of Transport and
Communications has also published a long-term strategic programme called
"Towards a sustainable and intelligent transport sector". The strategy aims at
reaching a transport system in which the demand for road transport
(passenger car traffic and road freight traffic) should peak by the year 2020
and gradually start to decrease thereafter. With the aim of promoting the
attractiveness and market share of sustainable modes of transport and in
accordance with the National Climate Strategy and the Environmental
Management Programme, the Ministry of Transport and Communications has
adopted the following programmes:

1) National Cycling Policy Programme with the aim of doubling cycling from
the 1998-99 level by 2020. An annual cycling week is held at the
beginning of May.
2) National Walking Policy Programme with the aim of incorporating walking
into transport policy and planning.
3) Public Transport Strategy with the aim of increasing the attractiveness and
competitiveness of public transport, e.g. with the help of door-to-door
travel chains and the introduction of travel centres.

Motiva Motiva has also worked actively in the transport sector since 1994. It
develops, launches and implements practical work according to the National
Climate Strategy. The goal is to activate companies, organisations and
consumers to improve energy efficiency and increase the use of renewable
sources of energy. Motiva operates in joint projects with companies and
organisations in the market.

Joint Efforts to The Ministry of Transport and Communications, Motiva and other relevant
increase Transport organisations and parties are working together in the following areas to
Energy Efficiency increase energy efficiency of transport and reduce transport related
greenhouse gas emissions.

LIPASTO LIPASTO is a calculation system for traffic exhaust emissions and energy
consumption in Finland. The system was developed by the Technical
Research Centre of Finland (VTT). The website www.lipasto.vtt.fi introduce the
system with its submodels and the results. The submodels are: LIISA – road
traffic, RAILI – railway traffic, MEERI – waterborne traffic and ILMI – air traffic.
In addition, the work machine emission model TYKO (in Finnish only) and unit
emission pages will be presented. Unit emission means here vehicle
emissions per transported mass or person and distance unit (g/tonne-
kilometre, g/person-kilometre).

All the material on these sites is public and available in English. The material
can be cited referring the source.

Monitoring of CO2 In accordance with EC legislation (Decision 1753/2000/EC) the Finnish


emission reduction Vehicle Administration has established a register to monitor the development
from new of energy efficiency and CO2 emission reduction of the new registered
registered passenger cars. Tampere University of Technology conducted a study in 2001
passenger cars on behalf of the Vehicle Administration to receive comparable historical data
from the years 1993-2000 for the register.

New Study In the study “Reducing carbon dioxide emissions of transport in Finland”
Completed carried out by Tampere University of Technology, several measures to reduce
carbon dioxide emissions have been analysed. In addition to the effect on
carbon dioxide emissions the applicability and feasibility of the measures have

11
also been assessed.

The assessed measures have been mainly allocated to the modes and source
areas where the emissions are greatest. The studied measures include
different means of transport pricing, legislative measures, development of
vehicle technology, promoting public transport, decreasing traffic congestion,
development of transport system, and changes of attitudes and life styles.

Among the most efficient measures to reduce carbon dioxide emissions would
be increasing the fuel price, decreasing the annual tax of diesel passenger
cars, promoting an economical driving style, and adding biofuel components
to traditional petrol and diesel fuels. Promoting railway transport and
increasing the highest allowed truck total weight to 70 or 80 tons would also
notably decrease carbon dioxide emissions. The most efficient measure of
public transport means studied was the development of light rail systems in
urban areas.

Fuel Fuel economy labelling of new passenger cars sold in Finland came into force
Economy at the beginning of 2001, in accordance with the EC Directive. The motor
Labelling vehicle database designed by Motiva for its homepage includes all passenger
car and cross-country vehicle models sold in Finland. Car sellers can print out
type-specific symbols directly from the electronic motor vehicle database.

The guide for choosing a car with fuel consumption and emission data
published by the Vehicle Administration and Motiva’s electronic database
helps consumers to compare consumption and carbon dioxide emission data
for passenger cars.

Fuel-efficient cars have been focused on by arranging a yearly competition to


designate the most ecological car of the year in co-operation with VTT, the
Technical Research Centre of Finland, and the most widely read motoring
magazine in Finland. The impact of cold starts on consumption has been
studied in the "Cold" project. As a result, recommendations on proper
preheating of cars and information on different technical solutions for
preheating have been circulated.

Promoting The annual funding for public transport is around € 0.4 billion. This funding is
Use of Public shared between the government (around two-thirds) and municipalities (one-
Transportation third). It is not expected that the annual governmental funding for public
transport will increase but it will be directed differently aiming at increasing its
efficiency, reducing the taxation rates set for the employment-bound public
transport tickets lower than their nominal value and funding the development
of passenger information services and establishing travel centres.

Motiva’s strategy is to work in joint projects with different actors and


administrative bodies. Examples include demand-based transportation
services, ticket systems, car-pooling and educational packages for different
grades in schools.

The international Car Free Day was held this year in Finland for the third time.
The “In town without my car” concept has attracted several towns and
municipalities to promote light traffic and public transport.

This year 18 localities took part in this event. Several companies,


organisations and associations organise their own happenings, events and
campaigns. Encouraging people to use optional ways of transport and the
advantages of leaving one’s own car at home (decrease in emissions, health
related reasons, atmosphere and environment of city centres) are
emphasised.

12
The impacts of the car free day are studied in Helsinki and Tampere: the
quantity of traffic, quantity of people using public transportation and parking
areas on that day compared to average working day. Air quality and noise are
also measured.

Motiva is the national co-ordinator of International Car Free Day. Finland is


considering arranging the Mobility Week in 2003.

Voluntary Energy The voluntary agreement scheme was launched in Finland in November 1997.
Conservation
Agreements At the end of 2001, an energy conservation agreement was in force in five
sectors and two co-operation programmes were underway. In the transport
sector, there are two agreements ongoing, one for trucks and vans and the
other for buses. The aims of this agreement procedure are to reduce specific
consumption of energy as well as to develop and introduce action models
which allow energy efficiency to become an integral part of the companies’
operations.

The target in the transport sector is to achieve an average of 5-10 % savings


in energy consumption by 2005. The most significant savings potential is in
fuel consumption, which can best be decreased through economical driving
habits. Motiva is responsible for the administration and monitoring of the
agreements.

The coverage of the agreement in the truck and van sector is some15% of the
vehicle stock in the agreement scheme, i.e. 400 companies and 2 380
vehicles.

The implementation of an energy conservation agreement in the bus and


coach sector was introduced in the spring of 2001. The sector obtained 34 %
coverage with 2300 vehicles and 54 companies by the end of the first
agreement year.

Economic Drive Pure Profit - Save Energy and the Environment


Driving
The aim of this project was to develop an educational package for energy
efficient driving for all driving schools in Finland. Theoretical and practical
instructions in energy efficient driving methods were introduced in all driving
schools.

An evaluation was completed among the 850 driving teachers involved in the
project and 90% thought that the material worked well. The fuel savings for
cars owned by driving schools vary in the range of 6 to 12%.

EcoDriving

Since 1997 EcoDriving has been increasingly integrated into the general
driving instruction that is given in Finland. Energy and environmental matters
pertaining to EcoDriving are included in stages I and II of the training provided
by driving schools.

For drivers already carrying a driving licence an educational package for more
efficient driving with less emissions has been developed. It is especially aimed
at companies and organisations that have environmental programmes or are
working to certify their operations according to the ISO 14001 standard.

In Finland, more than 200 000 driving school students and over 3 500 drivers
who already have a driving licence have been trained in EcoDriving.
EcoDriving reduces the average driver’s fuel consumption by 1.3 litres per 100
km (12-16 %). The EcoDriving method can be tailored to several target

13
groups. For example taxi-drivers and policemen have a tailor-made EcoDriving
training modules

KEY-Programme This professional traffic action programme is included in the environmental


management models and in energy conservation agreements of the truck and
delivery van sector and the bus and coach sector. It is important to build up
educational packages in the energy and environmental management systems
of these companies, mostly based on the structure of the ISO 9002 and ISO
14001 standards. The results of this programme for heavy vehicle drivers have
been excellent. At present, there are nearly 7 000 KEY-trained drivers in
Finland, whose fuel consumption has decreased after the training by 3–4 litres
per 100 km. The saving percentages vary from 8 to 12% and this has been
achieved with an increase in average speed with less traffic accidents and
lower service costs of the buses and trucks.

The EcoDriving and KEY driving habit training methods have been exported to
Sweden and Norway.

Travel virtually! In the Flight-exhibition in the Finnish Science Centre Heureka a new
multimedia travelling game was launched in September 2002. In the game you
travel virtually from Lisbon to Helsinki (via Manchester) by passenger car,
train, bus and airplane. The programme gives you information on the different
forms of travel: the fastest, the most economical, the least polluting and the
least fuel consuming. You can also compare the emissions and fuel
consumption as well as travel time and costs of different means of
transportation.

Next year this game wil be demonstrated at the exhibition in Lisbon.

During the Finnish Energy Awareness Week, Motiva launched a national


model of this game in which you travel virtually across Finland. This Internet
game is also suitable for schools.

The Finnish game is available at www.motiva.fi/matkallasuomessa also in


Swedish and in English.

Information Motiva publishes a wide range of leaflets, brochures, guidebooks and other
dissemination material concerning sustainable transport in co-operation with many
organisations and companies. The latest publication published this year is
called “Nyt menoksi” (Let’s go) and gives information and good tips for making
sustainable choices for you daily trips.

Measures under
Consideration

Automobile In reforming the automobile tax, fuel consumption will be considered one of
Tax the criteria on which the rate of tax would be based. Such studies on taxation
are in the programme of work of the Ministry of Finance.

CO2 Tax Finland was the first country to introduce a CO2 tax in 1990, initially with a few
exemptions for specific fuels or sectors. The tax was based on the carbon
content of the fuels. After a number of increases in the CO2 tax rate in the
early 1990s, the first major change occurred in 1994, when an additional
component based on the energy content of the fuels was introduced, as well
as special taxes on nuclear power and hydropower. Imported electricity was
taxed at the average rate applied to domestically produced electricity.

The second important revision of energy taxation took place in 1997,


prompted by the opening of the Nordic electricity market. To avoid harming
the competitiveness of domestic industries, the carbon/energy tax based on

14
fuel inputs in the electricity sector was scrapped and an electricity
consumption tax was introduced, with a lower rate for industry and
greenhouse cultivation (slightly above half the rate on households and service
sectors). Source fuels for heating and transport continued to be taxed, but
only on their carbon content, with a reduced rate for natural gas and peat.
Since then, tax rates have been raised on two occasions and further
exemptions added mainly for electricity production by renewable energy
sources. In addition, since 1998, some taxes paid by energy-intensive
industries are refunded.

MONITORING/ Preliminary impact assessments derived from the baseline scenario used for
ASSESSMENT the preparation of the climate strategy have been made on the full-scale and
successful implementation of the energy conservation programme proposed
by the working group appointed in September 2002. The updated energy
conservation programme could have an impact on primary energy
conservation that is about 50% higher than the impact of the previous
programme. Calculated on the basis of the average electricity generation
structure and fuel consumption, the reduction of greenhouse gas emissions
could total about 4 million tonnes.

In order to streamline and accelerate the implementation of the energy


conservation programme, and to assess its impact, the working group in
charge of updating this programme proposes the appointment of a follow-up
group that would consist of representatives of the principal executive bodies.
It would be good, however, if the measures were reviewed already in
connection with the national implementation of a potential EU-wide emissions
trading system.

In the opinion of the working groups appointed to update the renewable


energy and the energy conservation programmes, the expertise of
associations and other players in these sectors should be utilised widely when
implementing both the programme to promote renewable energy sources and
the energy conservation programme. Extensive assessments of the
implementation of the programmes should be carried out in 2006 at the latest.

Further For further information, please contact:


information
Pentti Puhakka
Energy Department
Ministry of Trade and Industry
P.O. Box 32
FIN – 00023 GOVERNMENT
Tel: +358 (9) 160 648 13
Fax: +358 (9) 160 639 97
E-mail: pentti.puhakka@ktm.fi

15
Energy
IEA Efficiency
Update

FRANCE Updated February 2003

BACKGROUND The fundamental objectives of French energy policy have not changed
significantly since the early 1970s. They continue to be to improve energy
security by reducing dependence on imported fossil fuels, maintaining reliable
low-cost energy supplies to ensure the competitiveness of the French
economy and protecting the environment. The basic strategy to achieve these
goals includes, inter alia, end-use efficiency and co-operation with other
countries through the IEA, the European Union and other international
organisations.

Energy France signed the Framework Convention on Climate Change (FCCC) at


and the UNCED in June 1992 and ratified it in March 1994. It submitted its first
Environment national programme entitled Programme National de Prévention du
changement de Climat (National Programme for the Mitigation of Climate
Change) in February 1995.

During the 1980s, France achieved substantial reductions in energy-related


CO2 emissions — a decrease of 23% between 1980 and 1990. At that time,
therefore, France adopted a target to limit by 2000 energy-related CO2
emissions to below 2 tonnes of carbon — or 7.33 tonnes of CO2 per capita per
year, which is roughly 10% above the 1990 level of per capita emissions.

At the Fourth Conference of the Parties (COP-IV) to the FCCC held in Kyoto
in December 1997, the European Union as a whole agreed to reduce the
emissions of a basket of six gases by 8% from 1990 levels by the period
2008-2012. In June 1998, the European Union Council of Environment
1
Ministers reached a Burden-Sharing Agreement on emission reduction
commitments, to re-allocate internally the 8% reduction agreed at Kyoto. The
reduction commitments are expressed as a percentage of 1990 levels for the
2008-2012 period.

Under the Burden-Sharing Agreement, France is committed to have its annual


average greenhouse gas emissions at 1990 levels for 2008-2012.

France submitted its second report entitled République Française: Second


National Communication of France Under the Climate Convention, in
November 1997. It provides a detailed description of policies and measures
mitigating greenhouse gas emissions.

A UNFCCC expert review team evaluated the Third National Communication


of France Under the Climate Convention on Greenhouse Gas Emissions. The
official report to the UNFCCC was published in November 2001.

Following the change of government in June 2002, the Ministry of


Environment became the Ministry of Ecology and Sustainable Development
(MED) and a State Secretariat devoted to sustainable development was
created under the responsibility of the MED. This demonstrates the
willingness of the government to give high priority to the theme of sustainable
development.

Institutional
Framework

Souviron In January 1994, the government launched a national debate on ways to


Report improve the security, environment-friendliness and efficiency of energy supply,
particularly electricity and gas. In December 1994, a synthesis report by the
rapporteur Jean-Pierre Souviron on the main conclusions of the debate,

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

1
including policy recommendations, was published. One of the main
conclusions and recommendations was that France’s international
commitments to limit CO2 emissions and local environmental problems require
more efforts in improving energy efficiency. One priority should be
enforcement of existing efficiency standards in the transport and building
sectors.

Energy This report was published in 1998. It outlined the major directions for French
2010-2020 energy policy: organising the liberalisation of the electricity and gas markets,
Report modifying underlying trends in the transportation urban planning sectors in
order to control consumption, preparing to replace electric power generating
plants while maintaining nuclear options open, and making energy tax policies
fairer and more environmentally friendly.

ADEME French energy efficiency policy is defined by the DGEMP (Direction générale
de l'énergie et des matières premières – Directorate-General for Energy and
Raw Materials) and carried out by numerous organisations. An important body
for the implementation of energy efficiency policies and programmes,
including information dissemination, technical assistance and R&D, is the
Agence de l’Environnement et de la Maîtrise de l’Energie, ADEME (Agency for
the Environment and Energy Efficiency). ADEME was set up in September
1991, bringing together the former energy conservation agency, Agence
Française pour la Maîtrise de l’Energie, AFME, with two environmental
agencies – the waste agency, Agence Nationale pour la Récupération et
l’Elimination des Déchets, and the air quality agency, Agence pour la Qualité
de l’Air.

ADEME has a staff of 700 in three locations (Paris, Angers and Valbonne) and
26 delegations in the French regions, in three overseas territories that operate
in a very decentralised manner, and in Brussels. http://www.ademe.fr (with
information in English).

In the context of the national climate response plan, the government decided
2
in February 1998 to set aside Fr 575 million in 1999 (compared with Fr 75
million in 1998) for activities in areas of efficient use of energy and the
development of renewables (plus the R&D budget). On the basis of this
increased budget, ADEME defined a new programme to mobilise economic
actors towards energy efficiency investments.

ADEME’s budget more than doubled between 1992, when it was slightly
above Fr 1 billion, and 1999, when it reached almost Fr 2.5 billion. Most of
ADEME’s resources were spent on waste, including the clean-up of
contaminated soils, which accounted for almost 40% of the budget in 1999.
The portion of the budget reserved for energy efficiency and renewables was
22%, and a further 14% was spent on transport and clean air.

In a special effort to re-launch French energy efficiency policy after the Kyoto
conference, the government in 1998 decided to allocate Fr 500 million a year
to help implement its climate change policy. This amount forms part of
ADEME's Fr 2.5 billion budget for 1999 but represents a stable and higher
energy-related portion than before.

A new planning contract was signed in June 2001 between ADEME and the
three Ministries in charge of Industry, Research and the Environment.
Priorities for the period 2000-2006 are in three areas: waste management,
energy efficiency, transportation policy and air quality. For 2001, ADEME's
total budget was € 400 million, 15% of which was devoted to research.

2. On average in 2000 Fr 1 = US$ 0.140 and in 2001.Fr 1 = US$ 0.137

2
Given the co-operation with each administrative region in the framework of
"ADEME-region" contracts, a total budget of € 230 million was available in
2001 for energy management in all sectors of the economy. Despite this large
budget, extensive and systematic subsidies by ADEME for energy
conservation remain impossible. ADEME therefore implements partnerships
with banks, large building stock managers, professional organisations and
municipalities.

In the 2000 in-depth review of the energy policies of France, the IEA stated:

The Government of France should:

• Continue to review its energy efficiency and renewables policy with


respect to all its main objectives.

Law on Air Law No. 96-1236 of 30 December 1996 on Air and Rational Use of Energy
and Rational was adopted to replace most of the existing legislation relating to efficient
Use of Energy energy use and is implemented through Decrees.

CIME A major evaluation of French energy efficiency policy (1973-1993) conducted


Report by an interministerial committee (CIME) was published in February 1998.
Seventeen investments and programmes were evaluated by officials and
consultants. The conclusions of the report will be used to define new policy
on energy efficiency to be implemented by ADEME. The major findings of the
assessment are:

• The public effort was too specific to the economic situation (following the
evolution of energy prices).
• A large number of measures labelled energy efficiency are devoted to
other public policies (building activities).
• In the transport sector, public intervention was poor and inefficient (only
on vehicle efficiency).
• Regulatory measures were well-designed (new buildings, audits in
industry) but lacking supervision and in some cases (boilers) not strict
enough.
• Subsidies for diagnostics in industry and for demonstration were effective.

National On 19 January 2000 the Prime Minister announced the adoption of the
Programme to Programme national de lutte contre le changement climatique (National
Combat Climate Programme to Combat Climate Change) elaborated by the Mission
Change Interministérielle sur l'Effet de Serre, MIES (Inter-ministerial Mission on
Climate Change).

According to this document, the stabilisation target, after climate correction


and for six gases, means that France has to bring its emissions back to 143.5
million tonnes of carbon equivalent by about 2010. The report quotes a
reference scenario that projects greenhouse gas emissions to rise to 175
million tonnes of carbon equivalent in 2010. Taking into account a number of
response measures decided later but not incorporated into the projections,
emissions in 2010 are estimated at 159.58 million tonnes of carbon
equivalent, 16.08 million tonnes above 1990 levels. To reach the stabilisation
target, France will have to reduce emissions at the end of the first budget
period by 10%. CO2 emissions alone are estimated to rise from 103.4 million
tonnes in 1990 to 122.8 million tonnes in 2010. The reference scenario is
based on the assumption of 2.2% annual GDP growth rate up to 2010. If a
2.8% growth rate is assumed, emissions rise to 171 million tonnes instead of
some 160 million tonnes.

3
The Programme presents a set of 96 measures designed to comply with the
French commitments to 2010. It identified three categories of measures to fill
the gap:

• Regulatory measures, standards, incentives: these traditional measures


would avoid 7 Mtc of GHG emissions.
• Fiscal measures such as carbon/energy taxes which will result in a
6.7 Mtc emissions reduction (including the reinforced impact of traditional
measures).
• New infrastructure development over the long-term from which the impact
in 2010 is assessed around 2.2 Mtc.

Through these measures the Programme identifies a potential of emissions


reduction of 3.4 Mtc in industry (13 measures), 4 Mtc in transport (22
measures), 2.7 Mtc in buildings (26 measures), and 2.6 Mtc in the energy
sector (12 measures).

Some of these measures should be implemented at the European level


through joint co-ordinated measures. The Programme's aim is to fulfil the
Kyoto target with domestic policies and measures (with an average economic
growth of 2.3% per year) but leave open the possibility to use flexible
mechanisms if necessary (stronger economic growth, for example).

The report required by the Chairman of the MIES from the Ministry of Planning
on "evaluation of the GHG measures of the National Programme to Combat
Climate Change" has been published. The report concludes that if in certain
cases the evaluation of a measure is valuable, it is also necessary to evaluate
a "package of measures" dedicated to a specific target. It also recommends
that a set of models for assessing long-term GHG emission forecasts should
be launched for five years and supported by the French administration. For
this purpose, the MIES carried out a European call for tender for a decision by
the end of 2002.

National On 6 December 2000, the Programme National d'Amélioration de l'Efficacité


Programme to Energétique, PNAEE (National Programme to Improve Energy Efficiency) has
Improve Energy been launched: its targets are to lessen the impacts of oil crisis, strengthen
Efficiency energy self-sufficiency and complement the National Programme to Combat
Climate change. The PNAEE includes the creation of a Local Information
Centres network towards consumers and a national public information
campaign (see below) in 2001. In addition the PNAEE includes various
technical measures to promote energy savings and the development of
renewable energy sources.

In the 2000 in-depth review of the energy policies of France, the IEA stated:

The Government of France should:

• Implement the measures set out in the National Programme to Combat


Climate Change swiftly, and according to the anticipated results.
• Provide greater continuity and stability to energy efficiency and
renewables policies.

4
RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Thermal As early as 1974, France took the initiative, in close co-operation with the
Regulations construction industry, to introduce mandatory heat insulation requirements for
in New new constructions. The regulations were strengthened regularly. Their
Residential adoption permitted a reduction of one half of average specific consumption for
Buildings housing built after 1975.

New strengthened thermal regulations have been applied since 1 January


1989. They were formulated in 1985 with a view to minimising the discounted
overall cost of energy (with additional investment bringing about a reduction in
energy consumption and hence in running costs).

In order to incorporate into the regulations advances made in the development


of low-emission glazing, technical solutions offered to professionals have been
changed. Strengthening of thermal regulations aimed at making them more
stringent to a level equal to the energy saved by the substitution of low-
emission glazing to standard double glazing, initially scheduled for 1 January
1997, was postponed until 1 January 1999. A savings of 5 to 10% in heating
needs in new housing units is to be expected from these measures.
Compliance with the thermal regulations amounts to 85% in collective
buildings but to only 30% in industrial buildings due to insufficient controls.

Energy regulations for new buildings were updated in 2001. In the residential
sector, energy consumption in new buildings should be reduced by 15% with
respect to the 1989 regulations. In the commercial and tertiary sector, a
performance improvement of 40% is expected (the previous regulation was
much less severe).

The new regulation "RT 2000" incorporates a general objective for the energy
performance of the buildings and not merely constraints on particular aspects
such as thermal insulation, thermal bridges, infiltration, etc. Space heating,
ventilation, air-conditioning and domestic hot water are concerned (as is
lighting in commercial and administrative buildings). The optimal combination
can be chosen by building designers from among all possible solutions,
thermal insulation, use of solar energy, high-performance space heating and
cooling systems, etc., taking into account the practical constraints of the
project and economic aspects.

A complete building energy evaluation tool, incorporating all aspects cited


above, has been developed by the Centre Scientifique et Technique du
Bâtiment,- CSTB (Scientific and Technical Centre for Building) and is being
distributed as free software among practitioners. For simple buildings such as
single-family houses or typical administrative buildings, a simplified version of
the thermal regulation is available as Technical Reference Solutions for which
no complete evaluation is required.

This new RT2000 regulation has been applied since June 2001. Based on the
same methodology and evaluation tools, it is planned to update it in 2005.

Thermal Former thermal regulations in force in the new commercial sector (buildings
Regulations other than housing) were less stringent than those applying to new housing
in New units since 1 January 1989. These regulations, as mentioned above, have
Commercial been revised according to RT2000 with the aim of gaining 40% energy
Buildings efficiency.

5
To incite professionals to design more energy-efficient buildings than the
current regulations require, sectoral guides have been produced by ADEME
and the Association of Air-Conditioning, Ventilation and Cold Engineers. Eight
guides (hotel, office, health, educational, retail, leisure, industry and
agricultural sectors) were published between 1992 and 1997.

On the assumption that new building projects continue at the present rate, a
gain in unit consumption of 25% with respect to the current regulations will
produce an energy saving of 90 000 toe a year for the buildings put into
service each year as from 1998.

Existing There are 28.9 million houses in the residential sector, including 23.9 million
Buildings principal residences occupied on a permanent basis, and 753 million square
metres of heated commercial premises. Most of this property, about 66% for
residential buildings and around 65% in the commercial sector, was built
before 1975, date at which the first thermal building regulations came into
force.

Policy aimed at this category of housing has been in place since 1975, based
on three types of action:

• Decision-making assistance aimed at encouraging owners to carry out


energy saving improvements, in particular through a thermal diagnostic
tool.
• Regulation and standardisation of components with, in particular, the
regulation of boiler performance as from 1975.
• Investment assistance, subject to various terms and conditions such as
direct subsidies or tax incentives.

It is estimated that investments in energy savings in housing built before 1975


carried out pursuant to these measures have permitted energy savings in
heating of around 10% of total heating consumption.

In 1997 and 1998, ADEME rarely financed thermal diagnosis. This


intervention was reinforced in 1999 as ADEME is now financing energy
diagnosis (at a rate of 50% of the cost) and also lighter studies (“pre
diagnosis” and “orientation advice” for a commune’s patrimony).

Twenty five concerted operations for a large-scale retrofitting of buildings are


in preparation. They will be implemented at the local level and will concern
energy savings on space heating, hot water, cooling and demand-side
management. The selection of municipalities and sites will be based on a
precise evaluation of the potential for energy savings and reduction of
greenhouse gas emissions in the area. All residential, commercial and
institutional buildings are concerned. Subsidies will be provided by ADEME,
the municipalities, ANAH (French Agency for Improvement of Existing
Dwellings) and by associated public bodies for pre-audits, audits and
feasibility studies, energy conservation investments, information and training.
Each operation will last four to five years. The 25 operations are to be
implemented by ADEME from now on.

A large-scale funding system gathering private and public money to finance


retrofitting operations will be implemented.

In the 2002 budget, building energy retrofits benefit from a tax reduction of
15% of expenses to a maximum of € 8 000 per family.

6
Energy The Law on Air and Rational Energy Use dated 30 December 1996 required a
Costs standardised estimate regarding annual energy costs of housing units or
Certificate commercial units for sale or lease. A decree should specify the rules on
computing the estimate. The decree for new buildings was issued in April
2000. A decree for existing buildings will be also be issued.

Energy On the basis of adoption of the European Union directives, mandatory


Labelling labelling for refrigerators, freezers and combinations was introduced in
September 1995, in November 1996 for clothes dryers and on 10 January
1999 for washing machines. In the second half of 1999, energy efficiency
labelling was made mandatory for dishwashers.

ADEME and EdF (national electricity utility), in partnership with equipment


manufacturers, have financed promotion campaigns for the general public.
Promotion has also been organised on the place of sales, with distribution
networks.

Local In the framework of the National Programme to Improve Energy efficiency, the
Information focus has been on the implementation of Local Information Centres ("Points
Centres Info-Energie") throughout the country to inform local people and small
companies about energy efficiency. ADEME set up these local centres and by
September 2001, 41 were in operation. The target was to have 84 centres by
the end of 2001 and 150 by the end of 2002. The network is organised
through a 30% funding in partnership between ADEME and local or regional
authorities.

Information A national public information campaign, sponsored by ADEME and the


Campaign Ministries of Environment and Industry, ran from June to November 2001, at a
cost of Fr 40 million. This campaign was aimed at consumers with the
objective of harmonising individual interests with the collective goal, in
particular with relation to climate change policies. The campaign was
supported by a mass media plan on television and radio, and field operations
with a partnership of professionals.

Financial/Fiscal Various financial incentives to improve existing housing have been introduced
Incentives focusing on projects that are the most efficient with respect to combating the
greenhouse effect. The amount of this public financing for energy savings can
be assessed at Fr 2.5 billion in 1992. The incentives are as follows:

• Tax reductions: income tax reductions were available from 1 January


1990 until 31 December 1995 for heat insulation improvements, heating
regulation, the replacement of boilers or in some instances the installation
of a wood stove in main residences built before 1 January 1982. This
measure was renewed in 1996.
The tax reduction is valid for any type of work (not only energy
management improvements) if it is carried out by professionals. The
CEKAL label for double glazing and the ACERMI label for insulation are
still in force but are no longer a condition to obtain this tax reduction.
• Grants for housing improvements: this government subsidy is to help low-
income homeowners improve their main residence if it is over 20 years
old.
• Grants from ANAH, the National Housing Improvement Agency: this grant
aims at helping improve privately owned rented housing units built more
than 15 years ago.
• Grants for rental and social housing improvements (PALULOS): this grant
assists organisations to improve the rental housing units they own or
manage for social welfare purposes, rented to house low-income people,
and which are more than 15 years old.

7
Measures under In 1997, the building sector was responsible for 17.5% of GHG emissions: the
Consideration Programme designs 26 measures for limiting emissions by 2.66 Mt CO2 by
2008/2012.

Energy Energy auditing will become mandatory when renting or selling a building.
Auditing

Building Building owners will be encouraged to undertake energy efficiency work in


Management their estates and allowed to increase rents, which will be counterbalanced by
a decrease of renting charges.

Heating charges will be adapted in collective buildings to encourage energy


efficiency work.

Those responsible for commercial centres and the rented building park will be
encouraged to implement energy efficiency work, thus motivating the other
building sectors to do likewise.

Regulation Starting in 2000, and over five years, the thermal regulation of buildings will be
and Technical progressively strengthened step-by-step to allow professionals to comply with
Control higher energy efficiency standards and to avoid too high increases in the
prices of materials. Implementation of the reinforced thermal regulation will be
carefully monitored through strengthened controls and, if necessary, penalties
for non-compliance.

Information Energy labelling and information to the public will be developed to encourage
and Training consumers to buy energy-efficient goods.

Information on the environmental quality of materials used in construction will


be delivered to the building sector.

Information and training for all categories of professional involved in building


(architects, specialists in heating and insulation) will be improved.

Financial/ For buildings in the tertiary sector which cannot benefit from specific support,
Fiscal a new incentive scheme will be created under precisely defined conditions.
Measures Financial incentives will be made available for condensed boilers in collective
buildings.

The TGAP (General Taxation on Polluting Activities) will be applicable to


businesses in the tertiary sector.

The VAT rate on the sale of heat from new and renewable energy sources
and on some highly energy efficient products will be lowered.

PUBLIC SECTOR

Government Each year government buildings consume 2.25 million toe and spend Fr 3
Buildings billion on energy.

In a circular dated 24 January 1991, the Prime Minister requested each


Ministry to implement an energy-saving programme in buildings under its
authority. These actions are co-ordinated at the national level by a group of
senior civil servants responsible for energy within each Ministry.

The priority, as of 1995, has been for investments for which the payback is
less than six years so that government buildings may serve as a reference in
the energy field; this applies to new buildings as well as renovations and the
operations of existing buildings. This programme is a priority action for
ADEME, which spent Fr 3.2 billion on it in 1996.

8
Energy consumption in existing government buildings could thus be reduced
by around 12%, i.e. a reduction of 200 000 tonnes of carbon emissions per
year by 2000.

Third-party financing has been authorised for energy consumption measures


in other public building.

At the local level, various programmes of thermal insulation improvement will


be launched through partnership between municipalities and the appropriate
public bodies.

A wide range of energy efficient measures will be implemented in public


buildings, such as services for energy management, energy audits, budgetary
allocations to promote energy efficient work.

Guide for The Climate Change Task Force published a Guide for local authorities to
Local help local public decision makers identify the impact of their investments in
Authorities GHG emission prevention; during 1999. Regional authorities prepared multi-
year contracts (2000-2006) with the State; these "contrats de plan" signed by
the State and elected regional authorities are implemented in all sectors of
regional responsibilities (land and urban planning, transport, community
services).The government's objective is to promote the prevention of GHG
emissions through investments in these contracts.

INDUSTRY

Measures already
existing and/or
being improved

Energy Mandatory energy audits, carried out by experts appointed by the Ministry of
Auditing Industry were required every three years from 1977 to 1997 for industrial
facilities consuming more than 300 toe per year (20 000 sites in France). The
degree of compliance in 1994 was only 40%, partly due to inadequate
resources. Energy savings identified are about 3% of energy consumption
with an average return of investment of four to five years. The regulation was
changed in September 1998 and these mandatory audits were suppressed.
ADEME, which was subsidising energy audits and specific studies for the
other establishments (SMEs essentially), will continue for all types of
enterprises, eventually in partnership with regions.

The regulation now concentrates on the obligation for audits on the energy
efficiency of energetic equipment including large boilers, for which efficiency
standards were updated in 1998.

Efficiency Efficiency standards for large boilers were updated in 1995.


Standards for
Large Boilers

9
Financial/Fiscal
Incentives

Subsidies for Since 1983, financial support of up to 50% of the cost is provided to
Audits and companies that carry out an energy audit or a feasibility study. The average
Feasibility support amounted to Fr 15 000 for an audit and Fr 40-100 000 for a feasibility
Studies study. Almost all investments with a rate of return of less than three years
have been implemented, the rate of “free-riders” being 10%. A public budget
investment of Fr 600 generates 1 toe of energy saving per year for ten years.
ADEME has reinforced its intervention in this area by subsidising both “light”
studies (“pre diagnosis”) or more specific ones (“diagnosis” and feasibility
studies).

Accelerated Since 1977, investment in various types of systems intended to save energy
Depreciation or produce electricity in cogeneration units has been eligible for accelerated
depreciation (depreciation over 12 months since 1991). This is equivalent to a
subsidy of 2 to 5%, depending on the useful life of the installation. It is not
possible to specify the impact of this very modest aid, which is of very little
interest to industries.

SOFERGIE Funds for energy efficiency investments in industry are available from
SOFERGIE, created in 1980 (a group of companies that finances energy-
saving investments) to facilitate lease financing for energy management with
the hope that this funding would give structure to a body of “third-party
investors” who would identify, analyse, carry out and finance investment in
“turn-key” energy conservation projects remunerated out of the resulting
savings. The role of SOFERGIE funding has ultimately been very small and,
according to the CIME assessment, maintaining this funding system does not
appear justified.

FIDEME FOGAME, the fund to guarantee energy management has been used less and
less in past years and consideration has been given to transforming this fund.
The FIDEME (Fonds d'Intervention pour l'Environnement et la Maîtrise de
l'Energie - Investment Fund for Environment and Energy Management) aimed
at small and medium companies was launched by ADEME. The subscription
to this fund guaranteed by ADEME with the banking sector started on 21
October 2002 and ended 31 December 2002. Total funding was € 45.7 million.

Voluntary Since 1995, the government has undertaken discussions with energy-
Agreements intensive industries covering energy efficiency improvements and emission
reductions. At this stage, voluntary agreements have been signed with six
partners (branches or industries): aluminium (the Pechiney Group), cement
industry, fat lime and magnesia lime manufacturers, the French steel
federation, glass packaging industry, and the “3 Suisses”-France (a large mail
order company).

Negotiations are under way with the French Smelters Union. In other
branches such as chemicals, paper and agro-food industries, discussions
have taken place but no agreement is in sight.

DSM Under an agreement signed by EdF and ADEME in February 1993, 19


regional and three national demand-side management (DSM) pilot
programmes have so far been launched. These cover the promotion of
energy-efficient appliances and compact fluorescent light bulbs (CFLs),
energy efficiency audits in industry, public lighting and efficient industrial
motors. One example of success is a decrease of over 20% in peak-load in
Guadeloupe achieved through an efficient lighting campaign.

10
Cogeneration Since the early 1990s, there has been a renewed interest in cogeneration in
France. Installed power reached 4 GW as of 1 January 1998, including
2.4 GW for steam turbines.

This situation was facilitated by a regulatory provision that obliges EdF to


purchase electricity produced by co-generation facilities up to 8 MW in size.
Beyond this limit, ministerial authorisation is required; the Ministry of Industry
agreed to approve this type of project up to a cumulated power of 1 GW in
2000. The purchase rate is determined by reference to the offset costs for
EdF assuming financially balanced production facilities (i.e. marginal long-
term cost).

A study by ADEME estimates the economic potential of co-generation in the


French industrial and commercial sectors (excluding district heating) to be
between 5 and 10 GW, depending on whether one relies on a return
investment payback of 5 or 12 years. This capacity would be added to
existing facilities.

District In addition to measures adopted to encourage the use of wood, solar thermal
Heating energy and geothermal energy, the development of district heating based on
renewable energy will be supported by fiscal incentives; feasibility studies will
assess the opportunity of adopting a public policy to promote district heating.

Information Communication, information and training programmes on energy efficiency


and Technical and environmental management are initiated by ADEME and carried out by
Assistance professional and technical organisations such as chambers of commerce and
industry, technical centres, ATEE (an association of 2 000 engineers in charge
of energy management in enterprises) and AFITE (an association of
environmental engineers and technicians).

Measures under In 1996, industry was responsible for 23% of the GHG emissions: the
Consideration Programme designs 13 new energy efficiency measures for limiting emissions
by 3.42 Mt CO2 by 2008/2012.

Energy It is planned to develop and strengthen the current energy labelling policy.
Labelling

Information Information for businesses will be improved and strengthened, particularly for
and Training the replacement of combustion devices and electric motors.

Professionals in firms will be better trained to deal with climate change


problems.

Financial Implementation of the financial measures already in place in 1998, for


Incentives example subsidies for feasibility studies, subsidies delivered by ADEME
guarantee of investments by FOGIME, etc., will be strengthened.

A new fund for promoting energy efficiency will be created by ADEME


(FIDEM: investment fund for energy efficiency): the fund will buy shares from
companies in rapid development, thus providing capital. It will be managed by
ADEME with ABN AMRO (a bank) and the Caisse des Dépôts et
Consignation, a French public bank. The loan rate will be much lower than the
capital risk market value.

11
TRANSPORT

Measures already
existing and/or
being improved

Passenger
Transport and
Light Goods
Vehicles

Technical Safety inspections have been mandatory since 31 December 1985 upon the
Inspection sale of a vehicle over five years old and under 3.5 tonnes. A regular safety
inspection has been required for all these vehicles, whether sold or not, as of
1 January 1992. The inspection is carried out in approved centres and covers
52 items defined in a decree dated 18 June 1991; these include inspection of
carbon monoxide emissions (gasoline) and exhaust fumes (diesel).

Since 1 January 1995, a safety inspection is required every two years for
vehicles over four years old. A decree of 5 July 1994 requires mandatory
repairs of vehicles that have failed pollutant emission tests during the safety
inspection, as follows:

• As of 1 October 1994 for gasoline vehicles without catalytic converters.


• As of 1 January 1996 for diesel vehicles.
• As of 1 January 1997 for gasoline vehicles with catalytic converters.

Safety inspections seem to have had a positive impact on the tuning of


gasoline vehicles since the failure rate observed was higher than 50% during
free inspection drives sponsored by ADEME in the early 1990s and is now
only 25% with current mandatory inspections.

An average drop of 10% in consumption and of 50% in pollutant emissions for


gasoline vehicles that were not in conformity in 1990 can be anticipated.

Bonus Bonus payments (“Prime Balladur”) corresponding to a cash sum of Fr 5 000


for Car were offered from February 1994 to 30 June 1995 for the retirement of old
Replacement vehicles (ten years and over). From 1 October 1995 to 30 September 1996,
an “automobile quality bonus” was provided. replacing vehicles that were over
eight years old.

Compared with natural renewal, it is estimated that these bonuses


encouraged replacement of close to 1 million additional old vehicles.

Economic France fully supports the Conclusions of the European Council of 25 June
and Clean 1996, announcing the objective of an average level of CO2 emissions for new
Vehicles cars sold in the European Union of 120 g CO2 per kilometre to be reached by
2005 or, at the latest, in 2010.

Pursuant to the conclusion of the Council, within the scope of voluntary


agreements with the automobile industry, the French automobile
manufacturers Renault and PSA Peugeot Citroën have voluntarily undertaken
to lower CO2 emissions of new vehicles sold within the European Union to
less than 150 g CO2/km in 2005.

Furthermore, the new PREDIT programme (Programme de Recherche et de


Développement pour l’Innovation et la Technologie dans les Transports
Terrestres) will maintain its research effort on the consumption of new
vehicles over the 1996-2000 period. Around Fr 2 billion will be spent on
programmes for energy-saving vehicles. Improvement in the fuel-engine-

12
depolluting cycle, research on materials and lighter vehicles, focus on non-
conventional engines, design of low consumption demonstration projects are
the main actions being considered on this issue.

Urban The Law on Air and Rational Energy Use of 30 December 1996, made it
Travel mandatory for all cities with populations of over 100 000 to draft urban travel
Plan plans. These urban travel plans, drafted and implemented by the authorities
organising urban travel in the relevant cities, focus in particular on automobile
traffic reduction, the development of less expensive and less polluting
transportation modes, the development and exploitation of street networks,
organisation of parking, transportation and freight delivery, etc.

Electric The Law on Air and Rational Energy Use of 30 December 1996 introduced a
and other number of measures aimed at fostering the development of electric vehicles
Alternative and other alternative vehicles powered by liquefied petroleum gas or natural
Vehicles gas. The main measures are the exemption or reduction in the tax on
company vehicles for electric vehicles or other alternative vehicles as well as
the requirement that the various public managers of vehicular fleets procure a
minimum of 20% of such vehicles when renewing fleets.

These measures complete existing measures aimed at encouraging the


purchase of electric vehicles (Fr 5 000 bonus from the government in effect
until 31 December 1998, limited to 10 000 vehicles) or the use of other
alternative vehicles (drop in the excise tax on LPG fuel).

The objective is that electric vehicles be purchased by the general public


which, in spite of efforts made by the two major French manufacturers in co-
ordination with the public authorities and other partners, is still at an early
stage. The French electric vehicle fleet remains marginal at around 3 000
vehicles.

In the 2002 budget, the purchase of a clean vehicle (LPG, NGV, electric and
hybrid) will benefit from a tax reduction of € 1 525 per vehicle, +50% if an old
vehicle is retired.

High-Speed Following the entry into service of the first TGV (high-speed train) line in 1981,
Trains France decided to build a high-speed rail network adopting as early as 1991 a
master plan of national high-speed rail links. This plan provides for around
4 700 km of new high-speed lines, of which 1 260 km were already
operational in 1995. In June 2001, the Mediterranean TGV became
operational, running from Paris to Marseilles and the first phase of the Eastern
TGV will begin from Paris to the Moselle Valley.

Moreover, mainly through PREDIT, the government is encouraging research


and development on high-speed trains, in particular the new generation TGV
programme. This effort will be pursued within the scope of the new PREDIT:
around Fr 500 million will be spent on the high-speed train system.

Traffic estimates by the SNCF (French National Rail Company) concluded that
the opening of the Mediterranean and Eastern TGVs would divert from air
travel 1.8 and 0.7 billion passenger/km per year respectively. Diversion from
road travel would reach 0.7 and 0.3 billion passengers/km per year.

It is estimated that this would lead in 2000 to fossil fuels replacement


equivalent to 130 000 toe per year for aircraft and 30 000 toe for road travel
with electric energy. The estimated gain in terms of CO2 emissions will
therefore be around 130 000 tonnes of carbon per year.

13
Freight Transport
(excluding Light
Trucks)

Intermodal In France, a country with much transit traffic, including freight, road-rail
Freight combined transportation still represents a small proportion of traffic. The
Transportation objective for 2000 in the field of combined transportation was to double the
volume compared with 1990 (+7 billion tonnes/km). In particular, efforts made
for expanding infrastructures are aimed at ensuring that the development of
combined transportation is not hindered by a lack of capacity.

The law of 13 February 1997 that established the public corporation Réseau
ferré de France (the French railroad network), responsible for developing and
enhancing the rail infrastructure, is a crucial stage in implementing the
European Union Directive 91/440/EEC providing for access to rail
infrastructures of the Member States to international combined transportation.

Substantial funding for research and development was devoted to inter-modal


transportation within the scope of PREDIT over the 1990-1994 period; with
the new PREDIT programme for 1996-2000, about Fr 400 million would be
devoted to inter-modal freight transportation.

Upgrading of major freight lines to gauge B+ is being pursued. Since 1985,


financing of the gauge upgrade has reached Fr 250 million; an additional
Fr 700 million was provided in 2000. Goods transport by rail will be developed
with Fr 740 million a year from the Ministry of Transport for investments in
infrastructure and material. ADEME will be involved in managing the transport
of goods through voluntary agreements with transport companies (Fr 90
million a year).

New transfer platforms were built in 2000 on four of the ten major focal points
of combined transportation in France (Bordeaux, Lille, Lyon and Marseilles).
Government and regional contributions to these investments equal Fr 100
million per year.

Regarding the development of the waterway network, projects under way


(Niffer-Mulhouse, dredging the Saône, Bray-Nogent) will permit keeping some
traffic that would otherwise have shifted to the road.

Pursuant to European Union regulation 1107/70/EEC as amended, the


government, ADEME and EdF introduced in 1990 subsidies to encourage
small and medium-sized trucking companies to purchase combinable
equipment. From 1990 to the end of 1996, the total amount of this financial
assistance amounted to Fr 17 million, for a total investment of Fr 102 million.

In the 2000 in-depth review of the energy policies of France, the IEA stated:

The Government of France should:

• In particular, implement the measures addressing demand and emissions


growth in the transport sector without delay, as these measures will
become fully effective only in the long-term.

14
Measures under In 1997, transportation was responsible for 22% of GHG emissions: the
Consideration Programme designs 29 measures to save 4 million tonnes CO2 by 2008/2012.

Measures
for Vehicles

ACEA In 1996, the European Community planned to introduce a strategy to reduce


Commitment emissions of CO2 from new passenger cars, setting a target of 120g/km to be
attained by 2005 (2010 at the latest). In addition to this proposal for a
Decision, the strategy also includes an agreement to be concluded with
manufacturers. In July 1998, the European Union withdrew its strategy which
was replaced by a voluntary agreement from car manufacturers.

Indeed, in the framework of the ACEA (Association des constructeurs


européens d'automobiles) all its car manufacturing companies have made the
commitment, in an environmental agreement, to achieve a reduction target of
CO2 emissions from new passenger cars: the target is to manufacture models
emitting 140 g CO2/km by 2008, measured according to Directive 93/116/EC,
on the average of the EU new car sales represented by ACEA.

This target will mainly be achieved by technological developments affecting


different car characteristics and market changes linked to these
developments. ACEA will aim at a high share -- up to 90% -- of new cars sold
being equipped with CO2 efficient direct injection gasoline and diesel
technologies. Compliance with this target translates for the automobile
industry into an average CO2 reduction of 25% for newly registered cars,
compared to 1995.

To assess compliance with these commitments, there is a joint ACEA/


European Commission monitoring of all relevant factors with regard to these
commitments.

The Programme national de lutte contre le changement climatique stresses


the importance of complying with this European voluntary agreement to
achieve a substantial reduction of the average fuel consumption of the car
fleet and to limit CO2 emissions.

In addition, the efficiency of the auxiliary devices, such as air-conditioning, will


be improved and it is considered that their consumption should be taken into
account in the calculation of the evaluation of the standard fuel consumption
of vehicles.

Management
Measures

Information Information and training of all categories of road users should take into
and Training account energy efficiency and environmental concerns.

Land Efforts will be developed in line with the above-mentioned Law to avoid
Planning unnecessary traffic. At the European level, co-operation will be set up to
manage the space so that the less polluting means of transport can be
organised.

Urban Urban collective transport will be developed (Fr 500 million/year from the
Collective Ministry of Transport). ADEME will allocate Fr 60 million/year for transport
Transport demand-side management (support of feasibility studies of local authorities).

Freight Regulations on heavy trucks will focus on speed limits and technical control on
Transport the road; a study on the benefits of a speed limit for light trucks will also be
carried out.

15
Intermodal Improving the intermodality between air transport and public transport will be
Freight made through, for instance, better co-ordination between national and
Transportation international flights, agreements between air and rail companies, etc.

Development of the combined rail-road and maritime-rail transport


infrastructures will be promoted.

Air Various measures will be considered to limit emissions in air transport when
Transport planes are awaiting for taking-off.

TGAP The Taxe générale sur les activités polluantes (TGAP) (general taxation on
Energie polluting activities) was planned to be implemented in 2001 on industrial and
tertiary enterprises. The government has fixed a level of Fr 150-200/tonne
C02 at the beginning to rise to Fr 500/tonne CO2 progressively by 2010. A
special regime for alleviating or exempting highly energy-intensive industries
has been studied to avoid distortion of economic competitiveness of the
French industry on the international market.

This project adopted in 2000 was criticised by industry and cancelled by the
Conseil Constitutionnel (The French Supreme Court). The Prime Minister has
decided not to reintroduce this project for an energy ecotax.

MONITORING/ As mentioned above, the French government is very concerned about some
ASSESSMENT of the weaknesses of its energy efficiency policies and measures and
launched in-depth assessments of its various programmes to overcome the
barriers – economic, technical regulatory – which impede or slow down such
energy efficiency efforts. The Souviron report and CIME report provided the
government with detailed information on this matter.

In the 2000 in-depth review of the energy policies of France, the IEA stated:

The Government of France should:

• Continually monitor the effects of various economic incentives. Adjust and


tighten policies in a flexible and market-compatible way if necessary in
light of the stabilisation target.

Further For further information, please contact:


information
Mr. François Moisan
ADEME
27, rue Louis Vicat
75737 Paris Cedex 15
tel. +33 (1) 47 65 20 95
fax +33 (1) 40 95 74 53
email: francois.moisan@ademe.fr

16
Energy
IEA Efficiency
Update

GERMANY Updated July 2003

BACKGROUND Germany is a federal country comprised of 16 Länder (federal states).


Responsibility for most energy policy issues (e.g. energy legislation) is at the
federal level. At the federal level, the main responsibility for energy policy lies
with the Federal Ministry of Economics and Technology (BMWi). This ministry
is also in charge of energy efficiency policy and support to renewables.
Environment policy issues related to energy are co-ordinated within the
Federal Ministry for the Environment, Nature Conservation and Nuclear Safety
(BMU). Issues related to transportation, such as policies to increase energy
savings, are under the responsibility of the Federal Ministry for Transport,
Buildings and Housing (BMVBW).

The Länder governments are responsible for the implementation of the federal
law. They are in charge of granting licences in their jurisdiction. Beyond those
matters that are under federal jurisdiction (e.g. energy regulation), Länder,
may take their own measures in the field of energy policy. Länder
governments and municipalities finance a wide range of measures to improve
energy efficiency, in particular through loans and grants to industries and
commerce. These measures have to be notified to the European Commission.
There are no legal or constitutional restrictions on the measures related to
energy efficiency that local governments are empowered to take, but, as a
general rule, a project is not allowed to receive funds from different public
authorities at the same time. Länder have no obligation to report to the
federal government on their activities. However, the federal government seeks
to be informed.

The reunification of Germany took place on 3 October 1990. Since 1991, the
federal government has taken measures to integrate the five new Länder into
the German regulatory and economic framework; major efforts have been
made at both the federal and local levels to integrate and increase energy
efficiency measures and policies.

Energy Report In October 2001, the Federal Ministry of Economics and Technology published
a new Energy Report entitled "Sustainable Energy Policy to Meet the Needs of
the Future". The report outlines the new orientation of the government's
energy policy for the 1998 to 2002 period. It describes the decisions already
taken by the federal government to assure the sustainable supply and use of
energy. It further explains how long-term trends for energy supply and use
might develop, depending on the climate policy targets that are set. The basis
for the Report are two scenarios, each relying on the reference year 2020 and
both assume a phasing out of nuclear energy use.

Eco Tax One of the main aims of the federal government is to reduce unemployment
on Energy by reducing social costs. To reduce these costs, and at the same time improve
Products the environment, the government set up an ecological tax, the so-called Eco
Tax. The tax is being introduced in two stages: 1 April 1999 to January 2000
and 2000 to 2003. Tax increases for the manufacturing industry and
agriculture amount to 20% of normal rates. The law also provides for further
rebates for energy-intensive industries. Railways must pay 50% of the
electricity tax.
Table 1: Eco Tax, 1999 and 2003

Energy Tax Increase


1999 2003
Electricity
standard rate 2 Pf/kWh 4 Pf/kWh
night storage heaters* 1 Pf/kWh 2 Pf/kWh
manufacturing 0.4 Pf/kWh 0.8 Pf/kWh
Gasoline/Diesel 6 Pf/litre 30 Pf/litre
Heating Oil
standard rate 4 Pf/litre 4 Pf/litre
manufacturing 0.8 Pf/litre 0.8 Pf/litre
Natural Gas
standard rate 0.32 Pf/kWh 0.32 Pf/kWh
manufacturing 0.064 Pf/kWh 0.64 Pf/kWh

*The reduced rate applies only to night storage heaters installed before 1 April 1999.

The second stage, adopted by the Bundestag on 27 November 1999, includes


the following additional measures for the period 2000 to 2003:
1
• An annual increase in fuel tax rates by 6 Pf/litre .
• The electricity tax will be raised gradually by an annual 0.5 Pf/kWh (see
Table 1).
• The introduction of a uniform tax rate for heavy fuel oil of DM 35
• The law provides special incentives for highly efficient cogeneration and
gas-steam-power installations; a special programme to promote
renewable energies is financed by revenues from the Eco Tax.

The government expects that additional tax revenues from the Eco Tax in the
2000 to 2003 period will amount to more than DM 35 billion. These funds will
be used to lower social security contributions of companies and their
employees by 2%.

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Develop and apply market-based instruments to give incentives to reduce


emissions in cost-effective ways. Review the energy taxes and the “eco
tax” system to better reflect the externalities of each source of energy.

German energy policy is increasingly influenced by environmental concerns.


Since the beginning of the 1990s, the federal government’s environmental
policy has given increased emphasis to global warming issues. In this
context, energy efficiency policies have been given more and more
importance because increases in energy efficiency contribute to CO2
emissions mitigation.

Environmental It is the responsibility of the federal government to adopt national targets and
Policies measures to achieve environmental goals. The Länder can establish their own
climate protection programmes with a wider range of local measures and all of
them have chosen to do so. Local authorities have increasingly included
climate change mitigation among their environmental policy goals. More than
400 cities, towns and rural districts have joined the Climate Alliance2 (Allianza
1
On average in 1998: DM 1 = $ 0.57 = € 0.51.
2
The Climate Alliance was founded in 1990 as a partnership between European local authorities and indigenous
rainforest peoples with the goal of protecting the atmosphere. Almost 1 000 European cities, municipalities and
district authorities have joined the Climate Alliance. By joining, the members have committed themselves to
certain goals, activity areas and measures. One of these is to halve CO2 emissions from the 1987 level by 2010.

2
del Clima) and thus undertaken a voluntary commitment to cut carbon
emissions in the energy and transport sectors. Citizens have also taken an
active role in energy and environment related policies through the many
strong environmental NGOs.

Germany deposited the instrument of ratification of the United Nations


Framework Convention on Climate Change (UN FCCC) at the United Nations
in December 1993 and submitted its first national report entitled
Environmental Policy: Climate Protection in the Federal Republic of Germany
pursuant to the United Nations Framework Convention on Climate Change, in
September 1994.

With resolutions dated 13 June 1990, 7 November 1990 and


11 December 1991, the federal cabinet approved a comprehensive CO2
emissions reduction programme, 25% to 30% less by 2005 compared to 1987.
In September 1994, the federal government confirmed this reduction
objective. At the COP-1 Conference in Berlin in 1995, the Federal Chancellor
mentioned as an objective a 25% cut in CO2 emissions between 1990 and
2005.

After the Kyoto commitment of December 1997, the European Union Council
of Ministers agreed on 17 June 1998 to the Burden-Sharing Agreement 3
towards achieving the 8% European Union commitment to reduce emissions.
In this context, Germany is committed to reducing its emissions by 21% of the
1990 level for the period 2008-2012. According to an estimate made by the
federal government, Germany’s GHG emission reductions by 2001 represent
75% of total reductions achieved within the EU since the “Burden Sharing”
agreement in 1998.

Germany submitted its second report entitled Climate Protection in Germany –


Second Report of the Government of the Federal Republic of Germany
pursuant to the United Nations Framework Convention on Climate Change in
1997. The report outlines greenhouse-gas emission trends in Germany and
presents projections for the future. It describes some 130 individual measures
that federal authorities have taken through a complex federal climate
protection programme, and provides an overview of similar measures taken by
the Länder, communities, industry and of other relevant groups.

The Federal Council passed a bill on the ratification of the Kyoto Protocol on
22 March 2002 and the Parliament gave its approval on 26 April 2002.

Climate On 18 October 2000, the German government adopted a new Climate


Protection Protection Programme which contains a package of measures to close the
Programme existing gap (50 to 70 million tonnes of CO2) and reach the 25% goal. This
programme is based on the fifth report of the Inter-Ministerial Working Group
on CO2 reduction, which is broken down into five sub-groups for the fields of
energy supply, transport, buildings, new technologies, and agriculture/forestry.
The further development and updating of climate protection measures will be
the subject of a sixth report by the Working Group; its completion is planned
for 2003. The report seeks to double the share of renewable energies by
2010, to expand co-generation considerably and to increase energy
productivity significantly.

By 1999, CO2 emissions had been reduced by 15.3% and those of the six
GHG named in the Kyoto Protocol by roughly 18.5% relative to their 1990
levels.

3
The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

3
Strategy for On 17 April 2002 the federal Cabinet adopted a comprehensive document on
Sustainable a Strategy for Sustainable Development. It contains estimates and scenarios
Development on an energy policy sustainable in the future.

According to this strategy the improvement of energy efficiency plays a key


role within the framework of a modernisation strategy for sustainable
development. Based on an analysis of some key energy efficiency indicators
of the entire economy, some suggestions for pilot projects for the further
improvement of efficiency are included. These projects refer to renewable
forms of energy, especially including the efficient use of energy in fuel cells,
the demonstration of redevelopment of old buildings using low-energy building
methods in all Länder, and energy efficiency contracting in federal government
property.

National To implement the measures contained in the Climate Protection Programme,


Energy Agency the Federal Minister of Economics and Technology established in September
(Dena) 2000 the German Energy Agency (Deutsche Energie Agentur -- Dena). Dena
is not a subordinate agency of a ministry, but was set up as a GmbH, a private
company. The stakeholders are presently the KfW (Kreditanstalt für
Wiederaufbau), the reconstruction bank (50%) and the Federal Republic of
Germany (50%) represented by the Federal Ministry of Economics and
Technology (BMWi), the Federal Ministry of Transport, Building and Housing
(BMVBW) and the Federal Ministry for the Environment, Nature Conservation,
and Nuclear Safety (BMU). Dena is a company which networks the various
players within the energy sector and was set up to implement energy-
efficiency policy and promote renewable energy sources, climate protection
and sustainable development. The most typical activities of Dena are running
pilot projects using new technologies together with the industry, and
information campaigns. Inter alia, Dena organises the campaigns together
with the 12 Land agencies for energy efficiency, but there are no formal
organisational links between them. It also operates the Energy Hotline, a toll-
free telephone service for advice to both companies and private individuals on
the rational use of energy in buildings, co-generation and renewable energy
sources. In 2002, the number of staff at Dena was about 40, and it aims to
increase the number of employees to 45 by 2003. Dena’s budget for 2002 is
€ 19 million.

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Ensure that energy intensity and energy efficiency continue to improve.


• Ensure adequate funding for cost-effective Dena programmes, and
support its co-operation with the private sector (industrial and financial
sectors) and the Länder.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Buildings and
Structures

Thermal On 1 February 2002, the new Energy Conservation Ordinance came into force
Insulation which aims at reducing the amount of energy consumed in heating, climate
control, and hot-water provision in new buildings by roughly 25 to 30%. It
unifies the previously separate thermal insulation and the heating installation

4
ordinances. The Energy Conservation Ordinance means that, for the first time,
an overall optimisation of measures for thermal insulation on the one hand,
and heat unit efficiency on the other hand, is possible and specifically
supported by statutes. Another new provision of the Ordinance is that new
buildings must have an energy-profile certificate showing information on its
energy demand.

The Energy Conservation Ordinance also encourages energy efficiency


improvements in existing buildings. The Ordinance requires that all boilers
installed before October 1978 must be replaced. There were some 2 million
such boilers in 2001. The ordinance sets stricter energy requirements when
modernisation or retrofitting measures are undertaken than did the 1995
Thermal Insulation Ordinance. In some specific cases the ordinance requires
retroactive improvement of insulation of floors, ceilings and piping.

Both the existing rules on energy conservation and the government assistance
have resulted in substantial improvements in Germany’s building stock.
Between 1978 and 1993, the specific heat energy consumption in residential
buildings in the west of Germany dropped by about 30% to an average of
200 kWh/m2.

For new residential buildings, the following ceilings have derived from the
measures:

1st Thermal Insulation Ordinance 1977-1984 below 200 kWh/m2/year


2nd Thermal Insulation Ordinance 1984-1995 150 kWh/m2/year
3rd Thermal Insulation Ordinance from 1995 100 kWh/m2/year
Energy Conservation Ordinance from 2002 70 kWh/m2/year

Following German reunification, it was necessary to tackle considerable


deficiencies in heat energy conservation in the new Länder. Since 1991, all
new buildings in the new Länder have had to meet the latest standards
applied in Western Germany: at present average energy consumption in
existing buildings — all types of buildings — amounts to 265 kWh per square
metre per year for space heat.

New The federal government set new standards for the energy-efficient
Administrative construction of administrative buildings. The new buildings, constructed for
Buildings the relocation of parts of the federal government to Berlin in 1999, use 20% to
50% less energy than is required by the recent Thermal Insulation Ordinance.
The figures are 44% for the Federal Chancellery, 34% for the Federal Ministry
of Economics and 29% for the Office of the Federal President.

Energy Since 1 January 1998, energy consumption labelling has been mandatory in
Labelling Germany. EU Directives have thus been transposed into national law (Energy
and Consumption Labelling Ordinance, Energieverbrauchskennzeichnungs-
Standards verordnung). Cooling and freezing equipment, washing machines, dryers,
combined washers/dryers, dishwashers and household lamps have to be
provided with uniform labels showing information on energy consumption and
other product characteristics before they get into the shops. A separate
Ordinance (Ordinance on Maximum Energy Consumption, Energie-
verbrauchshöchstwerteverordnung) to transpose the EU Directive on
maximum values of energy consumption by cooling and freezing equipment
came into effect on 13 June 1998.

The national legal basis for labelling and minimum energy performance
ordinances, the Energy Consumption Labelling Act, had to be amended in
particular to open legislation for the labelling of appliances other than 'white
goods'. The act became effective in February 2002. On this basis, the federal
government started to work out new ordinances on energy efficiency

5
requirements for ballasts for fluorescent lighting and on the disclosure of
motor vehicles' energy consumption levels, to include European Directives
into German law.

Prior to signing a purchase contract, buyers of motor vehicles will in future


have to be given information on the vehicle's fuel consumption and CO2
emissions at the place of sale. The rules, which will be uniform throughout
Europe, also require annual publication of a comprehensive set of guidelines
containing information on consumption and CO2 emissions of all new cars on
the market in Germany. The information may be obtained free of charge by
consumers at all new-car dealers and at a central office in Germany.

Furthermore, voluntary labelling programmes are being carried out or


prepared, including the labelling of the Group of Efficient Appliances (GEA) for
electrical appliances and the Energy Star designation for office devices. The
new energy agency Dena is preparing special activities to organise and
promote the Energy Star as a voluntary label for office equipment on the basis
of the EU programme.

In 2001 the Federal Ministry of Economics and Technology commissioned a


study entitled Evaluierung zur Umsetzung der Energie-
verbrauchskennzeichnungsverordnung (Evaluation of the Implementation of
the Ordinance on Compulsory Watt Labeling) that looked at the size of the
market shares of energy-efficient "white goods" -- refrigerators and freezers,
washing machines, clothes dryers, and dishwashers -- and the extent to which
manufacturers and retailers obey the requirement to place EU energy labels
on the appliances so that they can be easily seen by consumers. The results
of the study showed that:

• Since the introduction of the compulsory Watt labelling at the beginning of


1998 in Germany, there has been a significant increase in the
manufacture and sale of large, more energy-efficient household
appliances (efficiency classes A and B).
• Germany has now taken a leading position in the sale of energy-efficient
large electrical household appliances of classes A and B.
• CO2 emissions have been reduced by roughly 453 000 tonnes owing to
the share of more efficient appliances on the market. If the trend persists,
the experts forecast a possible CO2 reduction of just under 3.8 million
tonnes for the period 2000 to 2010.

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Enhance measures to address energy efficiency in buildings, in particular


existing ones.

Advisory On 1 July 1998, a support programme to provide advice on energy


Services conservation in residential buildings was reintroduced; it had ceased at the
end of 1997 for financial reasons. This programme involves “on-site advice” in
residential buildings for which permission to build was given before 1984
(1989 in eastern Germany). Under this programme, owners of dwellings
receive a grant if they are given on-site advice by professional experts on
potential energy conservation measures. Between the beginning of the
programme in 1991 and its end in 1997, a total of 16 000 on-site advice
sessions were promoted.

Small and medium-sized companies can also receive assistance under this
programme if the amount of turnover does not exceed an upper limit.
Depending on the number of dwellings, grants up to € 332are provided to the

6
owners of residential buildings as well as SMEs (within the programme no
distinction is made between private owners and SMEs with respect to the
amount of the grant). Despite the scarcity of public funding, Parliament
decided on an increase of funds provided in 1999 for energy consulting
services for consumers, small and medium-sized enterprises and builders.
The scope of information and advisory services supplied will thus be further
expanded, especially in collaboration with consumer consulting organisations,
consultant engineers and regional energy agencies. The assistance
programme, originally scheduled to expire after the summer of 2000, has now
been extended to the end of 2002.

With this consulting, owners receive detailed technical expertise on the


building. It contains an indication of whether the physical characteristics of the
building would make improvement of thermal insulation a viable option,
whether conversion or renewal of the heating system is recommended, and
whether the use of renewable energies might be worthwhile. The required
financial outlays and economies achieved by the proposed investments would
also be calculated.

The report can also be used to take advantage of the variable "Measures
Package 4" of the KfW's CO2 building modernisation programme. With this
package approach, the applicant is free to select the modernisation to be
made, as long as a recognised energy consultant confirms that a minimum of
40 kg of CO2 is saved every year per square metre of living space.

AgV, a consumer association working group, provides an energy advisory


service in 300 major cities — financed by the Federal Ministry of Economics
and Technology — on all questions related to economic and efficient energy
use, including the use of renewable energies. For 1998, it had the use of two
buses that systematically visited small and medium-sized communities
throughout the country.

Dena conducts a series of information dissemination sessions on the new


Energy Conservation Ordinance for architects and engineers.

Heat Since January 1996, rooms in occupied buildings in the new Länder have to
Consumption be equipped with heat consumption metering instruments as in the old Länder
Metering where this measure has been in force since 1981. Independent experts
indicate the energy efficiency effect of this regulation to be 15%.

Environmental Since 1977 the Environmental Certification Mark (Blauer Engel) has been
Certification used to draw consumers' attention to products supporting efficient, thrifty
Mark energy use, as well as the use of renewable energies. It is similar to the
European Ecolabel now being introduced.

Information The federal government has taken steps to enhance the transparency of
programmes promoting energy conservation. In co-operation with the state of
North-Rhine-Westphalia and the Association of Consumer Unions,
preparations have been made for the pilot project entitled “modernising
consultancy” designed to enhance the efficiency of recommendations by using
up-to-date media. A demonstration version of a CD-ROM providing advice on
such questions as: “How can walls be efficiently insulated in existing
buildings?” is now available. In October 1997, the Federal Ministry of
Economics and Technology set up an Internet data base on promotion
facilities which, for the first time, gives a complete and up-to-date overview of
all its promotion programmes, including those of the federal states and the
European Union.

Various information brochures on energy efficiency for the residential sector


have been published. These include a series of brochures on “thrifty and

7
efficient energy use” by the Federal Ministry of Economics and Technology,
the Guide to Saving Energy in your Home by the Federal Ministry for
Transport, Building and Housing, etc.

Dena’s Energy At a press conference on 29 October 2002 the German energy agency Dena
Efficiency (Deutsche Energie-Agentur) launched a nationwide energy efficiency
Campaign campaign ("Initiative EnergieEffizienz"), aiming at raising energy efficiency in
private households. This public awareness campaign has been organised as a
public/private partnership project. Three main associations of the electricity
supply companies (VDEW, VRE, VKU) provide € 8 million. Additionally € 2.8
million are being provided by the Federal Ministry of Economics and Labour
and € 2.2 million by the Federal Environment Foundation (Bundesstiftung
Umwelt), thus granting a budget of € 13 million to the whole project. The
financial contribution of the electricity supply companies is part of their
voluntary commitment to CO2 reduction as agreed with the Federal
Government.

Initial planning began in January 2002 and the entire campaign is designed for
four years ending in December 2004. The campaign focuses on three items:

ƒ Reducing standby losses of brown goods and office equipment.


ƒ Supporting efficient lighting with high comfort.
ƒ Raising energy efficiency of household appliances.

Part of the strategy of the campaign is to include retail trade and craftsmen as
well as co-operating with existing consumer advice centres. Six regional
project managers organise the project to cover all federal states organising
strong regional support. Regional energy agencies play a special role in this
concept.

The initiatives at a local level include information for the local media, opinion
polls, exhibitions and other public events. From October to December 2002
more than 300 reports on the campaign were published by the media,
including 164 articles in newspapers and magazines with an edition of 26
million. In particular, standby electricity consumption of appliances has been
a topic often covered by the reports.

Until May 2003 about 3 000 retail stores including small shops as well as big
chain stores joined the campaign and were equipped with special point of sale
materials by the Dena. The strategic guiding of the campaign is managed by
a project steering group consisting of representatives of the partners financing
it. An opinion poll organised by the Energy Efficiency Campaign in January
2003 provided more information on the challenges in the field of lighting in
private households. According to the results of the poll, the share of German
households not using energy saving lamps still amounts to 51%. Only 6% of
households use mainly energy saving lamps.

More information is available in German on the initiative's website


www.initiative-energieeffizienz.de.

Financial/Fiscal
Incentives

Climate Protection The Climate Protection Programme for Existing Buildings was launched in
Programme for January 2001 to provide financial support to the activity. It is a modernisation
Existing programme for buildings aimed at improving energy efficiency and reducing
Buildings CO2 emissions. Over the next few years, packages of measures involving the
modernisation of heating installations, thermal insulation and the replacement
of windows in more than 33 000 dwellings are to be supported by low-interest
loans from KfW. The condition is to reduce CO2 emissions by at least 40 kg

8
per square metre of floor space in buildings which were built before 1979. The
programme consists of four special packages. The first three packages
support the modernisation of heating installations, the change of the heating
system to more energy-efficient sources, the thermal insulation of the building
shell, the replacement of windows and some other measures in standardised
combinations, for which a reduction of CO2 emissions by at least 40 kg per
square metre per year is assumed. The fourth package is flexible: additional
measures can be financed if an expert carries out an analysis of the building’s
energy performance ensuring that the measures result in at least a 40 kg CO2
reduction. The programme budget is € 1.02 billion over the next five years. It
is to be expected that the KfW will thus be able to mobilise a loan volume of
some € 5.1 billion. From January 2001 to May 2002, more than 18 500
applications for cheap credits were brought forward. More than € 826 million
of loans were provided to energy conservation activities in nearly 50 000
residences. The expected volume of loans will amount to € 8 billion by 2007.

Loans for The programme on CO2 cuts adopted for the old federal states for a period of
Modernisation five years beginning 1996 under which low-interest loans (1-2% below market
of Buildings rates) are obtainable from Kreditanstalt für Wiederaufbau (KfW), the
in the reconstruction bank, has reached a total of DM 7.8 billion for 380 000 housing
Old Länder units. Of this, 38% was for thermal insulation, 44% for the construction of new
low energy and passive housing units, and 16% for the installation of
condensation and low temperature boilers. In 1999, the volume of approved
loans stood at more than DM 4.5 billion.

Loans for The housing modernisation programme of the KfW reconstruction bank
Modernisation provides loans at a rate 1-2% lower than market rates for a ten-year period for
of Buildings modernising and renovating housing in the new Länder. Up to the end of
in the 1999, low-interest loans totalling DM 78.4 billion had been earmarked for the
New Länder modernisation of 3.6 million dwellings. Some 22% of the funds were
committed to energy conservation. In a second phase of the programme, from
February 2000 to June 2002 about 11 400 loans comprising a volume of
€ 1 886 million were committed for financing the modernisation of 120 000
dwellings.

Tax Breaks The September 1993 amendment of the Assisted Areas Act provided for tax
for the breaks until end 1998 in the new Länder for the renovation of existing
New Länder buildings. This renovation work generally included improvements in energy
efficiency. Up to 50% of expenses for the modernisation of buildings that
generate revenue -- such as commercially-used buildings and rented
residential buildings -- could be written-off. Up to 10% a year of modernisation
expenses, to a maximum of DM 40 000, were tax-deductible as extraordinary
expenses for buildings used for (own) residential purposes. Tax deductions
were possible for both measures within ten years.

From 1999, the tax breaks have been replaced by investment allowances in
the new Länder: for modernisation and repair measures of buildings
constructed before 1991 an investment allowance of 15% is granted.

Architects On 1 January 1996, the fifth amendment to the Ordinance on the Fees for
and Architects and Engineers (HOAI) came into force. This updated version of the
Engineers Ordinance provides for fee-based incentives for architects and engineers to
encourage efficient use of energy and the use of renewable energy sources in
dwellings.

Assistance On 1 September 1999, an assistance programme for renewable energy came


Programme into effect. € 445 million have been allotted for 1999 to 2002 for the market
for Renewables incentive programme in support of the use of renewable energies -- above all
in the heat market -- by private investors. Since the programme started
operating, 157 604 applications have been approved in the assistance volume

9
of some € 292 million (as of 1 September 2001). A total of 142 759 solar panel
installations, for example, were installed. By 2002, roughly 200 000 additional
approvals are expected. During the first year the programme also supported
energy conservation in existing buildings. In combination with thermal solar
units, grants or loans amounting up to 20% of investment costs were available
for the insulation of roofs and external walls, window refitting, heat recovery
units, and heating modernisation. In the first eight months of its
implementation, nearly 10 000 applications for energy conservation were
submitted, of which 4 035 applications for thermal insulation measures, 604
for heat recovery units and 6 642 for heating system modernisation. In order
to concentrate the programme's financial means on the extended use of
renewable energies, the possibility to use it for energy conservation measures
was cancelled.

INDUSTRY The federal government relies more on market based measures such as
voluntary agreements in industry than on regulatory interventions. It considers
that additional regulations are not necessary because industries implement
the most cost-effective measures related to energy savings in order to be
competitive. The voluntary agreements signed by industry are aimed at CO2
emissions and improvement of energy efficiency.

Measures already
existing and/or
being improved

Voluntary In 1995, 14 industrial sectors, four associations included in the Federation of


Agreements German industries, entered into voluntary agreements (VAs) to increase
energy savings and reduce CO2 emissions. These sectors accounted for two-
thirds of industrial energy consumption. VAs with each sector depend on its
energy saving potential. Industries, including enterprises in the new Länder,
signed individual commitments. As a result of these VAs, German industry
was committed to an “up to 20% reduction between 1987 and 2005 of specific
CO2 emissions or specific energy consumption”. In some cases, the VA is
supplemented by absolute target reductions.

In March 1996, in its Declaration on Global Warming Prevention, German


industry made a commitment to an updated version of voluntary agreements.
In the updated version, it committed to reducing specific CO2 emissions “by
20% between 1990 and 2005” (i.e. the wording was changed from “up to
20%”). The agreement covered more than 70% of industrial energy
consumption and 99% of public electricity production. Potential reductions in
CO2 emissions in the manufacturing sector and in the electricity industry were
estimated at about 120 Mt. Between 1990 and 1998, observed CO2 emission
reductions amounted to 46.6 Mt in industry and 31 Mt in public electricity
generation.

On 9 November 2000, German industry and the federal government


concluded a further updated voluntary commitment for climate protection. By
2005, CO2 emissions are to be lowered by 28% and by 2012 the greenhouse
gases named in the Kyoto Protocol are to be lowered by 35% (each relative to
1990 levels). By another supplement to this agreement, CO2 emissions are to
be lowered by a further 45 million tonnes in 2010. A special focus is the
greater use of cogeneration, which will allow 23 million tonnes of CO2
emissions to be avoided in 2010. To support this measure, the German
government introduced new legislation for sustaining, modernising, and
expanding cogeneration.

The programme on VAs is supplemented by low interest loans given to


enterprises wanting to make investments in energy savings. Kreditanstalt für
Wiederaufbau (KfW) and Deutsche Ausgleichsbank (DtA) run pollution control

10
programmes to provide funding to these enterprises. In particular, this
organisation provides low-interest loans to medium-sized private businesses
for cogeneration projects.

The voluntary agreements include evaluation and monitoring by a research


institution. The results of the voluntary commitments are continuously
analysed and evaluated by the independent economic institute RWI at the
request of the federal government and the private sector. Three monitoring
reports dating from November 1997, March 1999, and December 2000 are
now available. These reports were also the foundation for the further
development of the accords in connection with the post-agreements.

According to the latest monitoring report of the Rheinisch-Westfälisches


Institut für Wirtschaftsforschung (RWI), published in December 2000, a CO2
reduction of 78 million tonnes had been attained by 1998 relative to 1990
levels. German industry is thus making a decisive contribution to CO2
reduction. The agreement will help attain more than one-third of the German
CO2 reduction target of a total of 25% by 2005.

DSM Public utilities in Germany are deeply involved in least-cost planning and
demand-side management (DSM). German utilities lead the development of
load management, and DSM activities are an integral part of business
policies. DSM projects consist of advising consumers on energy savings.
The Federal Ministry of Economics sees no need to be involved in such an
activity. Annual expenditures for information and consulting in this area
amount to about DM 800 million.

Combustion The Small-Scale Combustion Plant Ordinance sets maximum heat losses and
Facilities pollution levels for combustion facilities with heat output of less than 1 MW
(where solid fuels are used), less than 5 MW (liquid fuels) and less than
10 MW (gaseous fuels). The Ordinance of November 1996 amending the
Small-Scale Combustion Plant Ordinance further reduced heat loss
requirements in new and gas-fired heating systems. Heat losses in existing
plants must be progressively reduced to these levels after a transitional
period.

The length of this transitional period depends on the operational status as well
as on the nominal heat capacity of the combustion plant. It amounts to three
to eight years from the date at which the amendment entered into force (i.e.
1 November 1996).

Combined Heat Heat for district heating and industry is produced both in combined heat and
and Power/ power (CHP) plants and in heat-only boilers. The government estimates that
District Heating 12.5% of domestic electricity generation takes place in CHP plants. The
(CHP/DH) German Association of District Heating and CHP Producers (AGFW)
estimates that the installed electric capacity in CHP plants was 10 700 MW
and electricity generated by CHP was 28 TWh in 1999.

District heating is widely used in East European countries, including the


4
former East Germany. According to Euroheat and Power , the share of DH in
the total heat market in the New Länder was 28% in 1998, whereas the share
in the Old Länder was about 8% and the national average was 12%. The heat
sales were 84 000 GWh in 1998. The 250 district heating schemes in
Germany in 1998 were supplied by 621 CHP plants and 1 751 heat-only
boilers. About 75% of heat supplied to the district heating systems is produced
by CHP plants and the rest in heat-only-boilers. The total length of the district
heating pipeline system is 18 500 km. Natural gas has to some extent

4
Euroheat and Power is a non-governmental international association for district heating, cooling and combined
heat and power (CHP).

11
replaced coal in CHP and heat plants, which still accounted for 50% of heat
production in 1998, followed by natural gas (42%), waste (5%), oil (2%) and
other fuels (1%).

Heat price is not regulated. Prices are negotiated between the supplier,
usually the local stadtwerke, and the consumer.

Because electricity prices have decreased as a consequence of liberalisation,


and gas prices have increased to correspond to the oil price in the last few
years, many municipal CHP plants had originally lost competitiveness in the
late 1990s. The Berlin Energy Agency estimated that about 2 GW of CHP
capacity was closed after 1998. This created a political concern. Therefore, in
May 2000, the parliament adopted a law to guarantee temporary protection for
the existing co-generation units operated by public utilities. This law provided
a guaranteed minimum remuneration for their electricity amounting to € 4.6
per 100 kWh. This minimum remuneration was to be lowered by € 0.26 per
100 kWh per year. The feed-in tariff applied to the public CHP plants,
regardless of whether generated in the CHP (back-pressure) mode or in the
condensing mode. In principle it was possible to transfer the cost of the
scheme to consumers via the electricity price. The introduction of this law
slowed down the closure of the plants.

The difficulties mentioned above faced by CHP over the last few years,
triggered a broad debate to seek for adequate policy instruments to make
CHP sustainable. For example, CHP supporters suggested the introduction of
tradable certificates, which are similar to green certificates, issued for co-
generated power; the five largest electricity companies suggested new
voluntary agreements with fixed CO2 reduction targets. The government
decided to include into the new Climate Protection Programme the new
voluntary agreements with the industry and the introduction of a new CHP law,
which would again support co-generation by attractive feed-in tariffs.

In August 2001, the government presented a new CHP Law, replacing the
previous one, and its provisions on remuneration in 1 April 2002, mainly to
give incentives for the on-going operation and modernisation of existing co-
generation units. The law aims to lower CO2 emissions in 2005 by about 10 Mt
and in 2010 by 20-23 Mt compared to the 1998 levels. The law will be
effective until the end of 2010. The 2002 law allows CHP operators, feeding
electricity into the public transmission network, to receive bonus payments on
top of the revenue at market price. The estimated total cost of these bonus
payments is € 4.45 billion between 2002 and 2010. The law requires that an
interim assessment be carried out in 2004 to evaluate whether the climate
targets are met and the expenditure is within the budget. The legislation sets
requirements for the power-to-heat ratio to qualify to receive the bonus. The
bonus then varies according to the plant type:

• Existing CHP plants receive initially (i.e. 2002-2003) a bonus of € 0.0153


per kWh.
• After modernisation existing CHP plants receive initially (i.e. 2002-2004) a
bonus of € 0.0174 per kWh.
• Existing and new small plants (up to 2 MW e) receive initially € 0.0256 per
kWh.
• Fuel cell plants and new small plants (up to 50 kW e) receive € 0.0511 per
kWh.

The above rates will be progressively reduced from 2004 onwards except for
fuel cells and new small plants (up to 50 kW e). Payments will end in 2010 for
the small plants, and for plants built before 1990 and modernised in 2002 or
later. For non-modernised plants above 2 MW, payments end in 2006 if the
plant went into operation before 1990; for other plants, the payments end in

12
2009. The cost of the bonuses granted within the feed-in tariffs can, in
principle, be transferred to the electricity consumers through the electricity
prices. The cost is transferred in proportion to consumption but for large
consumers, meaning those consuming more than 100 MWh/year or those
whose electricity bill is more than 4% of annual turnover, the resulting price
increase has been limited for amounts exceeding 100 MWh/year.

In addition to the feed-in system, CHP is promoted by tax exemptions. Units


with a maximum 2 MW of electricity generation capacity are exempt from the
electricity tax for the autoproducers own use (article 9 of Electricity Tax Law)
and units with minimum 70% fuel efficiency exemptions from the mineral oil
tax (article 25 of the Mineral Oil Tax Law).

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Evaluate the bonuses granted within the feed-in tariffs for electricity
generated in CHP plants with the aim of reducing unreasonable costs.
• Evaluate the cost-effectiveness of expanding district heating systems thus
creating effective use of more heat from the CHP plants and smaller CHP
versus expanded district heating networks.

Third-Party In addition to voluntary agreements, another non-regulatory measure is


Financing energy conservation contracting (third-party financing) which has increased
considerably in recent years. In 1999, about 480 companies had invested
€ 6.6 billion for a total of 39 000 projects. The federal government has
supported the activity by granting exemptions from the “eco-tax” for co-
generation facilities established by the contracting companies and giving
assistance for the installation of renewable energy applications in buildings
under the Market Incentives Programme. The companies providing energy
conservation contracting can receive financing from special programmes
established by the Kreditanstalt für Wiederaufbau (KfW), the reconstruction
bank, and the Deutsche Ausgleichsbank (DtA).

Financial The government promotes investments in energy conservation through


Measures financial incentives as follows:

• Low-interest loans to small and medium-sized enterprises for investment


in energy efficiency amounting in 1990-1998 to credit volume of DM 8.8
billion.
• Interest free loans and grants from the federal and Länder governments
for the development of district heating systems in the old Länder.

PUBLIC SECTOR

Third-Party In order to further promote energy conservation in their own properties, the
Financing for federal government and Länder have initiated third-party financing projects.
Public Based on the first results of these projects, as well as of several projects
Buildings successfully conducted in Baden-Wurttemberg, the federal government has
recently published a guide to third-party financing for its own properties. The
building administrators have been instructed to use this guide for
implementing new projects. The federal government thus aims at supporting
the dissemination of this relatively new financing model in order to make it
better known.

The Land of Berlin has set in motion a project Berlin heat supply model to
modernise many inefficient heating facilities in the eastern part of the city.
Private sector operator models have managed to reduce considerably current
expenditure on fuels in schools without the state having to meet investment

13
costs. Based on this experience, Berlin has started a comprehensive project
entitled Energy Conservation Partnership Berlin. With three partners (so far),
energy management contracts have been concluded for a total of 120
buildings. The first interim results are very promising. It is planned to invite
bids for further groups of buildings.

Several Länder, including Bavaria, Brandenburg, North-Rhine-Westphalia,


Hesse, Rhineland-Palatinate and Thuringia are looking into similar projects.

Government The German government is determined to face the challenge of climate


commitment protection. Its goal is to reduce CO2 emissions within its sphere of operations
by 30% by the year 2010 and by 25% by 2005 (relative to 1990 levels). The
individual government departments will draft and implement their own
reduction programmes.

TRANSPORT

Measures already In the face of the rise in CO2 emissions in the transport sector, unlike the trend
existing and/or in other sectors, the federal government considers it particularly important to
being improved achieve substantial progress in this area. In its Climate Protection Programme
of 18 October 2000, it announced various measures to achieve this goal.

Voluntary The automobile industry committed itself to a 25% reduction in fuel


Agreement consumption by new cars built and sold in Germany between 1990 and 2005.
This means that the desirable average consumption level is 5.97 litres per
100 km. The achievement of this agreement is conditional on measures
undertaken by the federal government such as improving traffic flows, tax
breaks, introduction of an emission-based motor tax system and government
support of alternative fuels and vehicles. This commitment from the car
industry will be increased to 33%.

In addition, Germany supports voluntary agreements on a European level to


reduce fuel consumption and emissions of cars and trucks; for example, the
ACEA agreement on CO2 reduction, in which the German car producers take
part.

In 2001, the federal government drew up additional measures to reduce


greenhouse gas emissions and energy consumption in the transport sector:

ƒ As part of the Future Investment Programme, investment in the rail


infrastructure in the amount of € 3.1 billion and in road construction in the
amount of € 1.4 billion in the years 2001 to 2003.
ƒ Introduction of a mileage-based highway toll for heavy trucks as of 2003.
ƒ Reduced motor-vehicle tax (support for "three-litre cars" and continuation
of assistance for "five-litre cars") to assist low-fuel-consumption cars.
ƒ Agreement with automotive industry on possibilities to reduce
consumption (e.g. greater use of low-friction oil and consumption gauges).
ƒ Broadly designed information campaigns to inculcate good driving habits,
with the participation of the automotive industry and car and
environmental associations. A broadly designed traffic safety campaign,
begun in February 2001, also includes information on fuel-conserving
driving habits.
ƒ Introduction of emissions-related landing fees at German airports, in co-
ordination with neighbouring countries. In addition, the federal
government will work toward the introduction of an EU-wide emissions-
related aviation fee.
ƒ Introduction of integrated transport and housing-settlement planning
attuned to climate factors.
ƒ Employment of telematics and fleet management systems.
ƒ Observation and support for the traffic-sector energy strategy of German

14
automotive and energy companies with the goal of a broadly based
introduction of alternative fuels.
ƒ Financial assistance from the federal government in the amount of more
than € 8 billion a year for investment to improve traffic and transport in
local communities (community transport financing act, regionalisation act)
with an eye to the greater use of short-range public transport.

Vehicle In March 1997, the German Parliament adopted an amendment to the Motor
Taxation Vehicle Tax Act that took effect in July 1997. It allows for temporary
exemptions of the annual motor-vehicle tax for low pollutant emissions cars
(cars that meet the limit values laid down in the European Commission’s
proposal for the follow up Directive 94/12 EC) and higher taxes for some high
emissions cars. The tax rate was also reduced for cars that have a very low
level of specific consumption. Particularly energy-efficient and low pollutant
cars benefit from tax rebates: so called “5-litre cars” (120 g CO2/km) enjoy a
non-recurring tax rebate of DM 500 upon the date of first registration. The tax
rebate for so-called “3-litre cars” (90 g/CO2/km) is DM 1 000, irrespective of
the date of first registration. This amended Act is subject to renewal five years
after its implementation.

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Speed up the development of the national energy efficiency strategy in the


transport sector and take into account the cost-effectiveness of measures.

Eco-Taxation in The federal government raised mineral oil taxes in April 1999 and in the
Transport Sector following years, as part of the concept of eco-taxation (see details under "Eco
tax of energy products").

Vehicle Mandatory controls on emissions for all kinds of vehicles have been in place
Inspection since December 1993. The aim of the inspection is primarily to reduce
harmful emissions, not to improve energy efficiency

Railways The 1992 Federal Transport Infrastructure Plan called for more investments in
railways than in road transport. Between 1991 and 2012, it is planned to
devote DM 244 billion to the railways (DM 118 billion of which is for new
construction and development). It is also planned to devote DM 210 billion to
long-distance motorways (DM 109 billion for new construction and
development) and DM 30 billion for waterways (DM 16 billion for new
construction and development). Before the Plan, more funds were devoted to
motorways than to railways.

The Climate Protection Programme of 18 October 2000 announced additional


budget funds for investment in rail infrastructure in the total amount of DM 6
billion over the next three years in the framework of the programme "Investing-
in-the-Future".

Local Pursuant to Germany's Constitution, increasing the attractiveness of local


Public public transportation is mainly the responsibility of the Länder. Determination
Transport of funding for the Act on Financing Community Transport (GVFG), as well as
determination of federal programmes for local transportation, is subject to
approval by the Länder. Since 1967, the federal government has provided
substantial financial assistance for investments in local public transportation,
going beyond € 88 billion.

Trans-shipment Germany is a key transit country in Europe. The tonnage of freight increased
Terminals by over 25% in the period 1990/1995. The Federal Ministry of Transport
expects – as for passenger transport – an increase in freight haulage by 2010

15
of another 30%; over 60% of this increase will account for road haulage. For
this reason, the federal government has decided to expand the interfaces
between road haulage and railway transportation. This includes new
construction and/or expansion of 52 trans-shipment terminals. The federal
investment grants are to amount to DM 4.1 billion till 2010.

Town and In the interest of a long-term improvement in energy conservation in the


Country transport sector, the Town And Country Planning Act was amended effective
Planning 1 January 1998. The modified legislation includes improved conditions
governing the creation of traffic-minimising settlement structures.

Information In 1997, the Federal Ministry for the Environment, Nature Conservation and
to Drivers Nuclear Safety published a brochure entitled “My Agenda 21 – The Energy-
Saving Booklet as your contribution to climate protection” which incorporates a
chapter on mobility. The aim is to make drivers more aware of fuel-saving
driving habits, to encourage them to use public transport and, in general, to
foster greater environmental awareness on the part of automobile users.

The Climate Protection Programme will launch broadly structured information


campaigns on good driving habits, with the participation of the automotive
industry and the associations from the automotive and environmental
industries.

MONITORING/ Major efforts are under way to improve energy efficiency at the federal, Land
ASSESSMENT and municipal levels with the main objective of reducing CO2 emissions, a
priority of overall energy policy in Germany. Thus the federal government
places great emphasis on improving its monitoring and assessment efforts on
energy efficiency measures in order to concentrate on the most cost-effective
ones. However, the federal government has only limited information on the
various energy efficiency measures developed by administration at Land and
municipal levels.

In the 2002 in-depth review of the energy policies of Germany, the IEA stated:

The Federal Government should:

• Evaluate the cost-effectiveness of the measures used to achieve the


integrated fulfilment of all the energy and environment policy objectives
and publish the results.

Further For further information, please contact:


information
Wolfgang Stinglwagner
Deputy Head of Division, Energy Conservation
Federal Ministry of Economics and Labour
Villemombler Strasse 76
D – 53123 Bonn
Tel: +49 1888 615 2859 or +49 (228) 615 2859
Fax: +49 1888 615 3182 or +49 (228) 615 3182
Email: wolfgang.stinglwagner@bmwa.bund.de

16
GREECE Updated July 2002

BACKGROUND Greece signed the UN Framework Convention in June 1992 and ratified it in
April 1994 (Law 2205 on the Ratification of the United Nations Framework
Convention on Climate Change, Gazette A/60/15.4.94).

The first National Communication to the United Nations Framework


Convention on Climate Change (UNFCCC) entitled Climate Change. The
Greek Action Plan for the Abatement of CO2 and other Greenhouse Gas
Emissions was issued in February 1995.

The Greek government has accepted as a realistic objective for its national
programme the restriction of the total increase in CO2 emissions during the
1990-2000 period to 15% +3% (or 12.4 million tonnes). The margin of 3% is
to allow for unpredictable domestic or international developments and relevant
EU policy actions. The EU community policy on climate change agreed by the
European Council of Ministers in March 1997 allows a 30% increase in Greek
greenhouse gas emissions (CO2, CH4 and N2O) over the period 1990-2010.

After the Kyoto commitment of December 1997, the European Union Council
1
of Ministers agreed on 17 June 1998 on the Burden-Sharing Agreement
towards achieving the 8% European Union commitment to reduce emissions.
In this context, Greece is allowed to increase its emissions by 25% over the
1990 levels for the 2008-2012 period.

The second National Communication to the United Nations Framework


Convention on Climate Change: Review of the Greek National Action Plan for
the Abatement of CO2 and other Greenhouse Gases Emissions was issued in
June 1997 under the responsibility of the Ministry for the Environment,
Physical Planning and Public Works. It provides a full account of the progress
in implementing national policies and measures included or resulting from the
National Action Plan.

Main Legal
and Fiscal
Instruments

Development The Development Law 2601/98 replaced the previous Development Law
Law 2601/98 1892/90. It provides inter alia the subsidisation of industrial and tertiary sector
activities relative to energy saving, exploitation of agricultural, industrial and
municipal wastes and effluents, and the creation of mechanisms for energy
saving. The law also provides subsidies to industries or companies for the
production of electricity through the exploitation of indigenous renewable
energy sources. Investment subsidies range from 15 to 40%, depending on
the geographical location of the investment. An alternative scheme of loans at
reduced interest rates and tax credits is also provided. Up to 2001, 38
projects have been approved. Approximately 25 projects concern wind power
(more than 60 MW), ten projects concern small hydro (more than 3.4 MW) and
the rest concern energy conservation from heat recovery or substitution of
fossil fuels by natural gas. As for energy efficiency the Development Law
2601/98 has proved to be inefficient; very few investments have been made
in energy efficiency because the subsidies are less generous than under the
1990 Law and investors find the subsidies through the operational
programmes preferable.

The results of the 1990 Development Law were assessed by the Directorate
of Renewable Energy and Energy Saving in the Ministry of Development. The
subsidy scheme reduced primary energy consumption by 26.3 ktoe/year and

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

1
substitution of electricity and oil by gas and biomass by 37.4 ktoe/year
between 1993 and 1998.

Law 2208/97 Law 2208/97 for the Sustainable Development of Towns is a major legislative
development to ensure better the sustainable development of proper planning
of the urban and rural areas, emphasising the recycling and upgrading of the
built space instead of its expansion. The law grants subsidies to the local
authorities to enable them to proceed with the rehabilitation of urban
agglomeration aiming at the improvement of the built environment, the
aesthetic upgrading of buildings, protection of the environment and
conservation of energy and natural resources.

Law 2364/95 This law gives financial incentives to promote the use of natural gas and
(Article 7.17) renewable energy resources through a 75% tax reduction of the expenses for
the purchase and installation of domestic appliances or systems using natural
gas or renewable energy resources for the whole tertiary sector.

Law 1559/85 The possibility of exploiting renewable energy sources and promoting
and Law 2244/94 combined heat and power generation was established for the first time by Law
1559/85. However, as the results obtained after implementation of this law
were unsatisfactory, it has been replaced by Law 2244/94. (For detailed
information, see the paragraph on Combined Heat and Power].)

Operational An Operational Programme for Energy (OPE) of the Ministry for Development,
Programme for in which funds for investments in renewable energy sources and rational
Energy (OPE) energy use are made available, was launched in January 1994 and continued
until the end of 2001. The programme has a total budget of ECU 1 116
million, out of which 33.8% derives from the EU Community Support
Framework, 39.6% from the Public Power Corporation (PPC), 21% from
private contributions and 5.6% from state contributions. The amounts of
subsidies were up to 45% for energy efficiency investments (35% for
cogeneration) and 55% for renewable energy use. In addition, the European
Investment Bank can provide a loan of up to 50% of the project cost.

The budget has been used for projects in the following five categories:

· Increase in electricity production capacity (three PPC projects with a total


budget of € 561 million).
· Private investment projects in energy conservation and renewable energy
sources (332 investments with a total budget of € 477 million).
· Support to the development of renewable energy sources including
studies on wind potential and demonstration projects (23 investments with
a total budget of € 20 million).
· Supporting the exploitation of domestic energy sources including lignite
and geothermal energy (48 investments with a total budget of € 24
million).
· Development of the National Information System (see Energy Statistics)
and other projects to support energy policy (ten investments with a total
budget of € 2.9 million).

The OPE has been managed by a separate management authority within the
Ministry of Development. The evaluation of OPE project proposals was to be
carried out by independent evaluators following transparent criteria taking into
account a variety of factors including technology, energy saving, economic,
environmental and social considerations. The projects accepted have been
subject to continuous monitoring and energy audits, and a full evaluation of
the programme will be completed in 2002. Most, but not all, of the energy
objectives set for the programme, in terms of installed capacity of large-scale
electricity generation, cogeneration and generation from renewables, were
achieved. Private investments were smaller than originally estimated and

2
many investments in energy conservation and renewables were developed
with public support.

Operational The OPC was launched in 2000 and it will continue until the end of 2006. It
Programme for applies not only to the energy sector but also to a variety of other economic
Competitiveness activities. The three sub-programmes with energy objectives are the following:
(OPC)
· Support and Encouragement of Entrepreneurship: increased use of
renewables and CHP. Energy conservation, fuel substitution,
environmental protection.
· Promotion of Excellence in Enterprises: Improvement in the quality and
management of CHP, renewables and energy conservation technologies
used. Increased competitiveness of Greek energy technology.
· Security of Energy Supply and Promotion of Liberalised Energy Markets:
Energy Infrastructure to support security of electricity supply in the islands
and security of gas supply.
· Reinforcement of energy infrastructure to promote more electricity
generation from renewables. Improved operation of the liberalised
electricity market; support for the establishment and operation of the
Regulatory Authority for Energy (RAE) and the Hellenic Electricity
Transmission System Operator S.A (HTSO). Preparation for gas market
liberalisation.
· Energy and Sustainable Development: Transmission and use of energy in
an environmentally-friendly manner. Rational use of natural resources.

The first calls for energy project proposals were launched in 2001 with a total
budget of € 0.51 billion of which € 0.17 billion were EU Community Support
Framework grants. The programme received 310 proposals from the private
sector for renewables, cogeneration and energy efficiency.

In the 2001 in-depth review of the energy policies of Greece, the IEA stated:

The Government of Greece should:

· Formulate a comprehensive and clearly structured policy framework with


measurable objectives and targets that can be monitored and verified.
Choose measures based on their cost-effectiveness. Give priority to
market oriented instruments. Ensure that government support
programmes do not discourage market-oriented approaches.
· Ensure that the objectives of the Operational Programme for
Competitiveness are met. The programme should be assessed with
measurable criteria.

The Hellenic In 1996, the Ministry of the Environment (YPEXODE) developed the “Hellenic
Climate Change Action Plan for the Abatement of CO2 and other Greenhouse Gas Emissions”
Programme in 1995. The government’s objective, set out in the Plan, was to restrict an
increase in GHG emissions, namely CO2, N2O and CH4, from all sources in
2000 to no more than 15% ±3% (or 15.7 Mt +/- 3.1 Mt) from 1990 levels. The
margin of 3% was adopted to allow for unpredictable domestic or international
developments and relevant EU policy actions. As the emissions of the three
GHGs were 23.3% above 1990 levels in 2000, the target was not achieved.

In the industrial, residential and commercial sectors, emphasis was on


increasing energy end-use efficiency and fuel substitution by natural gas. In
the transport sector, emphasis was on improving the transport infrastructure
and measures related to fuel use and vehicle technology.

3
National The Hellenic Action Plan expired in 2000 and Greece is planning to introduce
Programme a new “National Programme for Reducing Greenhouse Gas Emissions 2000-
for Reducing 2010”. The plan was compiled by the National Observatory of Athens under
Greenhouse the supervision of the Ministry for the Environment, Physical Planning and
Gas Emissions Public Works, and partly the Ministry of Development. The first version was
completed in early 2002 but needs be approved by the two Ministers. The
government plans to establish a Special Action Unit to monitor and assess
progress in implementation.

In the 2001 in-depth review of the energy policies of Greece, the IEA stated:

The Government of Greece should:

· Complete and implement promptly the "National Programme for Reducing


Greenhouse Gas Emissions" and monitor the effectiveness of policies and
measures.
· Reduce greenhouse gas emissions by putting more focus on demand side
measures.

National Formulating energy policies is within the competence of the Ministry of


Institutions Development but the Ministry for Environment is responsible for policies for
energy use in buildings and the Ministry for Transport in transport. The
elements of energy efficiency policy can be found in the policy statement,
“Guidelines of Energy Policy”, issued by the Ministry of Development in July
1998. However, there exist no clearly structured policy, comprehensive
programme or targets for energy efficiency. The above elements include
improved efficiency of electricity production, transmission and distribution;
energy saving in all sectors with an emphasis on buildings and the transport
sector; promotion of CHP; consumer awareness; and new financing
instruments such as third-party financing. The government considers a recent
study, “Planning of national actions for the next decade in the energy sector in
compliance with the Kyoto Protocol national commitments”, conducted by the
Athens National Observatory in April 2000, to help in specifying energy
efficiency policy and strategy. The study includes specific recommendations
on energy conservation measures in all sectors, with estimates of their costs
and classifies them according to their cost-effectiveness.

In the 2001 in-depth review of the energy policies of Greece, the IEA stated:

The Government of Greece should:

· Ensure good co-operation with all the ministries involved in energy


efficiency.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Action Plan The Action Plan “Energy 2001” is the main action taken to comply with the
“Energy 2001” European Directive on reducing carbon dioxide emissions through building
energy efficiency programmes (SAVE Directive 93/76/EC). It was prepared
under the supervision of the Ministry of the Environment by a joint scientific
committee under the co-ordination of the Centre for Renewable Energy
sources (CRES). Financial incentives for energy saving measures in buildings
are being planned.

4
The Action Plan also stresses the use of renewable energy sources as a basic
prerequisite for sustainable development.

Ministerial A programme on sustainable buildings has been launched through a Common


Decision Ministerial Decision on the limitation of carbon dioxide emissions at the
21475/4707/98 building sector. (21475/4707/98 dated 19 August 1998) (Ministry for the
Environment, Physical Planning and Public Works/Ministry for Development/
Ministry of National Economy/Ministry of the Interior). A regulation for the
rational energy use and energy conservation in buildings (KOXEE) is being
prepared, which will replace the existing Regulation 2 on the thermal
insulation of buildings. Consequently, minimum energy standards for new
buildings will be established, as well as other measures, such as energy
audits, classification of buildings according to their energy consumption etc.

Energy Minimum energy efficiency standards were set by the EU for non-industrial
Efficiency boilers (Directive 92/42/EC) and refrigerators and freezers (Directive
Standards 96/57/EC). Greek legislation has been harmonised in accordance with both
EU standards through the Presidential Decrees 335/1993 and 178/1998.

Energy The general obligations for energy labelling are set by Directive 92/75/EC
Labelling (harmonisation by the Presidential Decree 180/1994), while particular
provisions are set for refrigerators/freezers (Directive 94/2/EC —
harmonisation by the Ministerial Decision 25810/1994), washing machines
(Directive 95/12/EC — harmonisation by Ministerial Decision 3972/96), dryers
(Directive 95/13/EC — harmonisation by Ministerial Decision 3972/96); for
combined washer-dryers (Directive 96/60/EC) — harmonisation by Ministerial
Decision 9142/97 and for dishwashers (Directive 97/17/EC) — harmonisation
by Ministerial Decision 10200/98).

Energy The Centre for Renewable Energy Sources (CRES), founded in 1988,
Auditing manages a programme of energy auditing. The programme provides money
and technical assistance for energy auditing in buildings as well as in small
and medium-sized enterprises and industry. As of November 1997, a total of
50 energy audits had been performed in the building sector (15 in hotels, 10 in
hospitals and 25 in public buildings).

The programme of energy auditing for energy managers in public buildings


was brought into force by the Ministry of the Interior, Public Administration and
Decentralisation.

Lighting A programme for the replacement of incandescent lamps with more energy
efficient lamps mainly in the islands (which are not connected to the mainland
electricity grid, and face significant problems because of high rates of increase
of electricity consumption) is in progress. The programme is co-ordinated by
the national electric utility (PPC) and provides fiscal incentives to customers
for lamp replacements (i.e. gradual payment of the relevant investment cost
through electricity bills). Approximately 120 000 bulbs were replaced in 2000-
2001 and the resulting energy conservation from the application of this project
is estimated to be 12 GWh.

Third Party Third party financing has, up to now, been little used in the private sector and
Financing is actually forbidden in the public sector. Only a couple of projects have been
established in private hospitals, despite the more favourable financing terms
offered by OPE. A draft law, which will shortly be presented to Parliament, will
create the necessary legal frame, which will encourage the use of third-party
financing in the private sector.

Information The government has established 18 energy centres at regional, local and
to Consumers urban levels as provided for by Law 2244/94 on the promotion of energy
conservation and renewable energy sources. The European Union, through

5
the SAVE programme, contributes most of the funding for these centres. The
main goal of the centres is to provide support to all energy consumers. They
use all available methods to disseminate energy efficiency technology,
procedures, etc. The centres also collect and disseminate energy-related
information. Three new centres were opened in 1998 in the framework of the
SAVE II programme. Law 2244/94 foresees the enactment of a Presidential
Decree that will establish CRES as co-ordinator for all regional centres.

The Public Power Corporation (PPC) promotes the conservation and efficient
use of electricity by all classes of consumers through information campaigns
and other measures.

In the 2001 in-depth review of the energy policies of Greece, the IEA stated:

The Government of Greece should:

· Give consumers detailed information on their energy use to help them


save energy , for instance, in connection with energy billing.

INDUSTRY

Measures already
existing and/or
being improved

Energy CRES conducts surveys on energy consumption using energy audits in


Audits industry and in the public and commercial sectors and makes
recommendations on energy efficiency. By November 2001, a total of 119
energy audits had been performed on industrial processes.

Mandatory The government planned to introduce mandatory energy inspections and


Energy controls for industries and businesses with heavy energy consumption, but no
Inspections legislation has been issued to implement them.

Combined CHP has mainly been promoted through investment support. The
Heat and mechanisms for this support are the Greek Development Laws (1982/90 and
Power 2601/98) and the Operational Programme for Energy 1994-1999 (OPE) and
(CHP) the Operational Programme for Competitiveness 2000-2006 (OPC), which
receive financing from the EU Community Support Framework. The investor
may choose the subsidy mechanism he prefers. The fuel efficiency
requirements for eligibility for a subsidy are 60% for the industrial sector and
65% for the services sectors. OPE provided subsidies of a maximum 35% of
the investment cost leading to an 185 MW e increase in CHP capacity. The
investment subsidy under OPC will also be 35% and the estimated increase in
CHP capacity is 375 MW e and 690 MW th.

Under the Development Law of 1998, the investor can benefit from a 40%
investment subsidy. Most investors have preferred the lower subsidy from the
Operational Programmes because it is available at the beginning of the
investment project whereas the subsidies under the Development Law are
paid only upon completion of the project.

Law 2773/99 replaced the provisions of Law 2244/94 on the buy-back tariffs
for electricity produced by CHP. In the interconnected system, the generator
receives compensation for energy, which is 90% of the energy part in the
medium-voltage end-use tariff and for capacity that is 50% of the capacity part
in the same tariff. Prices in the non-interconnected system are determined as
percentages of the current PPC low-voltage residential tariffs, ranging from
60% for CHP using fossil fuels to 90% for CHP using renewable energies.

6
There were some barriers to wider use of CHP other than weak economic
competitiveness. For environmental reasons, the prevailing legislation does
not allow the installation of CHP or any other industrial plants in the Region of
Attika (surrounding Athens). There have been plans to revise the legislation to
allow CHP installations using natural gas.

District The Public Power Corporation (PPC) has initiated the implementation of a
Heating (DH) cogeneration programme in its lignite-fired plants by setting up a district
heating network in northern Greece. Specifically:

· Medium pressure steam from the lignite-fired power station of Agios


Demetrios in northern Greece is already used for the district heating of
part of the nearest town of Kozani. The thermal capacity of the installation
is 67 MW th. With the construction of a new power unit in Agios Demetrios,
the network will be expanded by another 70 MW th to cover the entire town.
· Medium pressure steam from the lignite-fired power station of Ptolemais is
used for the district heating of approximately 45% of the nearest town of
Ptolemais. The thermal capacity of the installation is 50 MW th.

There are plans to develop a DH network in the town of Florina (70 MW th) and
another to supply heat to the town of Amyntaio (40 MW th). In addition, the DH
unit for the town of Megalopolis (Peloponnese), with a capacity of 20 MW th
has been approved for cofinancing by the OPE.

Financial One of the programmes of the Operational Programme for Energy (OPE) was
Support for energy conservation aiming at increasing energy efficiency in the industrial
and services sectors with subsidies of up to 45% for energy conservation
investments. The projects approved for the programme were implemented
between 1997 and 2001and had a total budget of € 127 million of private
investments for activities in energy end-use efficiency and the projects.

The Operational Programme for Competitiveness 2000-2006 (OPC) continues


the subsidies for energy conservation investments. Both the programmes give
subsidies not only to promote efficient energy in end-use but also to
cogeneration and fuel substitution. The total budget used for these three
activities under OPE was € 168 million and the estimated primary energy
savings achieved are 280 ktoe/year.

Measures under
Consideration

Industrial Within the framework of the Development Law 1892/80, six projects
Projects concerning energy conservation and he use of exhaust gas heat in sectors
such as cement and glass industry, pottery and dryers have been submitted
for approval. For half of these, the financing procedure at the Ministry of
National Economy has been completed, for the rest it is still going on.

Third-Party The financing of all possible interventions in the industrial sector poses a
Financing serious problem. In this context, the mechanism of third-party financing (TPF)
— through which the economic risk of investments in the field of renewable
energies, rational energy use and energy conservation is undertaken by a
third party (mainly the Energy Services Company/ESCO) instead of the end-
user — is under consideration. An appropriate legal framework is being
formulated by the Ministry for Development (formerly the Ministry for Industry,
Energy and Technology), while a favourable evaluation is foreseen for
proposals comprising TPF schemes which are submitted for approval within
the OPE framework. Furthermore, it is planned to extend the TPF mechanism
on the environmental and energy projects supported by Laws 1892/90 and
2234/94. No ESCO has yet been created.

7
PUBLIC SECTOR

Energy By mid-1999, all government and public sector buildings had established
Management Energy Management Offices (EMO) in charge of planning energy saving
Offices measures. Provision had been made for a specific timetable of action;
procedures and responsibilities were specified and plans of action suggested.

Energy As of 2000, new public buildings (2004 for all public buildings including
Certificate existing ones) are required to have an energy certificate i.e. an energy identity
card, stating the energy performance of the building based on an energy audit.
The cost of this instrument is estimated at €1,130 million by 2010; energy
savings are estimated at 0.14 Mtoe/year and the reduction of CO2 emissions
0.53 Mt/year in the Greater Athens area. A proposal for the methodology and
procedures for energy certificates has been prepared under the EU SAVE II
Programme but the final details still have to be issued by the Ministry of
Environment, Physical Planning, and Public Works. The certificate system will
be launched together with an introduction of the new building energy code.

Third Party Third Party Financing is forbidden in the public sector. However, a draft law to
Financing permit third party financing in the public sector is under preparation

TRANSPORT

Measures already
existing and/or
being improved

Mandatory According to the law 1350/83, regular technical control of vehicles is


Inspections mandatory. The control takes place at the Centres for Technical Control of
Vehicles (to date, 58 centres operate all over Greece). As the frequency of
controls carried out was not satisfactory due to problems in the prefectures
related to infrastructure and personnel, Law 2963/2001 was introduced. This
law provides for the establishment of private technical control centres, the
improvement of public ones and the development of a special service that will
supervise the operation of the above-mentioned centres.

Since 1994, an exhaust control card (renewed annually) is required for all
vehicles. The implementation of the measure was expanded beyond the Attica
prefecture and in 2001 covered 34 prefectures in total (covering 85% of
vehicles). The card is issued exclusively by certified auto-mechanics repair
shops. By 2001, approximately 4 000 shops have been certified.

Furthermore, for the inspection of the implementation of the measure, mobile


inspection units have been established. By 2001, there were ten such units in
the Attica prefecture and ten more in the other prefectures. During 2000, the
units carried out some 28 000 vehicle inspections.

Renewal of Law 1921/91 provided for reduced taxes on new car purchases if the buyer
the Car Fleet scrapped an old automobile without a catalytic converter. By 1995, some
395 000 cars had been withdrawn from service and imports of vehicles
equipped with catalytic converters reached 652 000. These figures are
substantial in relation to the 1995 automobile stock of about 2.2 million. The
incentive was stopped in 1993. In 1997 the Finance Ministry proposed a
second round of tax reductions for the period 1999 to 2004, but this has not
yet been implemented as law as other measures, such as the reduction of the
special tax for new car purchases, are also being considered.

Restrictions Access to the commercial centre of Athens by all types of vehicles (including
on the use of taxis and motorcycles, but excluding public buses) has been prohibited since
Private Cars 1995. This measure resulted in a significant improvement in traffic conditions

8
and, in combination with the circulation of flexible mini-buses, promoted the
use of public transportation.

Since the mid-1980s, an alternating traffic system has restricted the use of
passenger cars in central Athens. During the busiest hours, cars with odd-
numbered plates may be used only on odd-numbered days and cars with
even-numbered plates only on even-numbered days. It is not clear, however,
what the impact of the measure has been on energy efficiency and the
reduction of environmental pollution given that the car users buy second cars
with low energy efficiency and often more polluting with a different licence
plate number.

Vehicle Vehicle taxation (Law 2682/99) is differentiated according to engine size and
Taxation environmental performance.

Improvements The efforts of the Ministry for the Environment, Physical Planning and Public
in Transport Works to enhance the existing infrastructure have primarily focused on the
Infrastructure following targets:

(a) Road grid improvements in large urban centres. The major part of these
improvements refers to the broader Athens area. During the three years
1994 to 1996, significant infrastructure work on the existing road network
was carried out, while an additional ECU 50 million has been spent on
road grid improvements during the period 1998 to 2000.

(b) Reconstruction of the major highway arteries. A number of significant


infrastructure works in the national highway grid are actually in progress.
Specifically:

· Construction of the highway linking Patras-Athens-Thessaloniki (total


length: 730 m, total budget ECU 2 433 million). This highway will cross
the country from the north to the south and will link five administrative
regions, ten prefectures, 14 towns and five ports.
· Construction of the Egnatia highway in northern Greece (total length:
680 km, total budget ECU 2 333 million). The work will permit direct
access to 19 large towns in Northern Greece, five ports, eight airports,
ten important industrial areas. To date, 122 km have been completed
and 280 km are under construction.
· Construction of the Rio-Antirrio bridge (total budget ECU 733 million).
The work will be completed by 2004. It will significantly reduce the
travelling distance from Peloponnese to Central and Northern Greece.
· Undersea highway of Maliakos Gulf (total budget ECU 333 million).
The new highway will reduce the travelling distance by 44 km compared
to the existing road grid. The work will be completed by 2002.
· Construction of the Stavros-Elefsina highway (total length: 70 km, total
budget: ECU 1 667 million). The work will be completed by 2002 and
will link the west part of Attica with the new airport of Spata, which is
operative, without the need to cross the town of Athens.

(c) Improvements in the traffic light system. Within the framework of the
programme Attica SOS (an on-going programme developed in 1994 in
order to tackle the serious environmental problems in the Attica region),
improvements in four major road arteries of Athens have been carried out.
In addition, a computerised system for the control of the traffic light system
in the centre of the Piraeus area has been completed. Additional work is
in progress in the town of Thessaloniki, within the framework of the
programme Thessaloniki SOS (an initiative similar to the one for the
region of Attica).

9
Interventions (a) Improvements in the existing Athens metro line. Additional wagons have
in Public been added to the existing trains, increasing capacity during peak hours
Transport by 15%, thus reducing car traffic.

(b) Construction of metro lines. Two new metro lines have been designed to
supplement the already existing Athens underground service. To date,
most of the work has been completed.

(c) Efficiency improvements in buses. In Athens, old buses have been


replaced by 614 new more energy-efficient and less polluting ones. By
1998 approximately 1 000 more new buses had been purchased. The
provision of 295 CNG buses, as well as the construction of a central refueling
station in Athens was financed. The program was completed with success and the
buses have entered the bus network of Athens.

(d) Interventions in the traffic network of buses. New bus-lines in Athens were
developed and set into operation, while some of the existing ones were
expanded. These bus-lines cover areas of the centre where there is heavy
traffic during peak hours. The programme, co-ordinated by the competent
body for public transportation in Athens (OASA), is still in progress and six
more bus-lines are going to be completed by 2002.

In order to further promote the use of public buses, OASA placed itinerary
maps in 3 500 bus stations. This action forms part of a large programme
to provide information to passengers. At the end of the programme, all
7 000 bus stations in Athens will be equipped with such maps. In
addition, in order to promote the combined use of public transport means
in Athens (buses, subway, trolleys, train etc.), itinerary maps –
continuously updated – were placed in train and subway stations.

(e) Improvements in the Athens suburban railway network. This measure


includes the improvement of railway stations, the provision of vehicles, the
renewal of traffic lights and the development of park-and-ride stations.
The work is in progress.

(f) Reconstruction of the national railway network. The Railway Operational


Plan is financed by the Community Support Framework 1994-1999 with a
total budget of ECU 490.1 million. The Plan includes the following sub-
programmes:

· Improvements in the railway line of Athens-Thessaloniki-Edomeni.


· Provision of railway material and maintenance installations.
· Improvements in the rest of the railway lines grid.
· Connection with the port of Kavala, in Northern Greece.

The progress of work is satisfactory.

Furthermore, additional work is financed by the Cohesion Fund of the


European Union with a total budget of ECU 497.4 million, including the
construction of two supplementary railway lines, electrification of the
Piraeus-Athens-Thessaloniki railway line. This will facilitate a shift of
goods and passenger transportation from gasoline and diesel vehicle to
railway.

(g) A pilot project cofinanced by the OPE provides for the operation of buses
fuelled by natural gas. It also includes construction of the necessary
infrastructure.

MONITORING/ The Greek government is aware that the biggest challenge to the
ASSESSMENT implementation of its energy efficiency and climate change programmes is the
need for accurate monitoring and assessment mechanisms. For the climate

10
change programme, it is planned to establish a Special Action Unit
responsible for monitoring and assessment. The accepted projects under the
Operational Programme for Energy 1994-1999 (OPE) have been monitored
on a regular basis and their results will be assessed.

In the 2001 in-depth review of the energy policies of Greece, the IEA stated:

The Government of Greece should:

· Establish an effective monitoring system to achieve energy efficiency


targets . Ensure that all programmes are evaluated objectively, preferably
by a third party, so that new programmes can be better designed.

Further For further information, please contact:


information
Ms. Helen Gratsia
Head of Energy Statistics Section
Ministry of Development
Energy Policy Directorate
80 Michalakopoulou str.
Athens 101 92
Tel: 30 1 77 03180
Fax: 30 1 77 17612
email: gratsiae@ypan.gr

11
Energy
IEA Efficiency
Update

HUNGARY Updated July 2003

BACKGROUND

Energy The Energy Policy Concept was approved by the Parliament in April 1993
Policy (Resolution 21/1993 (IV.9) OGY). It identifies the following strategic
Concept objectives:

• Security of energy supply through diversification of energy sources and


elimination of import dependence on the former Soviet Union (mainly
Russia).
• Contribution to environmental protection.
• Modernisation of the supply-side energy systems.
• Increased demand-side energy efficiency through the modernisation of
supply structures and better management of electricity consumption.
• Improvement in public information on energy consumption.
• Attracting foreign capital for the necessary investments.
• Approaches to the EU and other international organisations.

Hungary became a member of the IEA on 3 June 1997.

The Energy Policy Concept included an objective to increase the share of


renewable energy sources in the primary energy balance to 5-6%, almost
double the current figure. The estimated total utilisation of renewables can at
present be put at 35 PJ, or 3% of total primary energy supply.

For Hungary, the main objective is accession to the European Union; after the
general elections of May 1998, the Energy Policy Concept was reoriented to
be in line with the European legal system.

The National Energy Savings and Energy Efficiency Improvement Programme


was established in the framework of the Energy Policy Concept. This
programme, adopted by the government in 1995, aimed at analysing the
current situation, the savings potential and the ways in which the legal,
institutional and financial framework of Hungary's energy efficiency policy
could be strengthened.

Energy Saving Based on this National Programme, the Energy Saving Action Plan 2399/1995
Action Plan (XII.12) (ESAP) was adopted by the government in 1996. ESAP consists of
four major sets of measures:

• Penetration of renewables.
• Energy efficiency improvement.
• Energy efficiency labelling.
• Education, information and encouragement of technology innovation.

Hungarian Energy In 1999, following developments in Hungary and the European Union (e.g.
Policy Principles privatisation of the Hungarian energy sector, the EU liberalisation Directives,
the Kyoto commitments, etc.), the government deemed it necessary to adapt
the country's energy policy. This adaptation resulted in the government
approved document The Hungarian Energy Policy Principles and the Business
Model of the Energy Sector (Decision 2199/1999 VIII.6).

It defined the following objectives:

ƒ Creation of an efficient domestic energy market functioning as an


integrated part of the single European energy market, but respecting
national particularities, serving the competitiveness of the economy and
protection of consumers (competitive natural gas and electricity markets,
competitive district heating sector, market compatible regulation,
detachment and regulation of monopolies).
ƒ Preservation and increase of the security of supply.
ƒ Enforcement of environmental protection requirements on both future
developments and existing generating and energy-consuming plant.
ƒ Improvement of public scrutiny and information, democratic control, and
for the remaining monopolies, transparent price regulation.

The report recognises that energy efficiency must be brought up to a level


close to that of the EU Member States. It stresses the main energy efficiency
policy actions that Hungary should implement as a matter of priority in order to
do this. The report mentions that it is important that Hungary fulfil its
international obligations regarding environmental protection through some
major measures.

The document on Hungarian Energy Policy Principles states that an overall


energy conservation programme must be drawn up to address the issue of co-
ordinating individual energy conservation programmes already operating in
Hungary, to prepare a proposal on earmarking funds for energy conservation
in the state budget, to explore further channels of funding from international
sources, and to find a way of handling such funds in a more co-ordinated
manner.

Szécheni Plan The 2000 "Szécheni Plan: A National Development Plan" covers all areas
where Hungary’s distance behind the European Union slows down the
development of the economy as a whole and hinders the process of closing
the economic gap. This is not a complex economic political strategy, but a
system of focal areas and breakout points that can be assimilated to the
already existing economic political strategy.

As such, the Szécheni Plan includes energy-savings programmes; the 2001


objectives of the Energy-Saving Programmes of the Plan included various
programmes entitled: Communal, Local Government, Public Lighting, District
Heating, Production Company Audit, Local Government Audits, Energy
Saving Projects for Small and Medium-sized Enterprises, etc. The Energy
Conservation and Energy Efficiency Improvement Action Programme (see
below) is part of the Szécheni Plan.

Energy Based on the principles in Business Model of the Energy Sector and related
Conservation and policy decisions, the government adopted the new Energy Conservation and
Energy Efficiency Energy Efficiency Improvement Action Programme (Decision 1107/1999) that
Improvement began in 2000 and is to run for ten years until 2010. This Action Programme is
Action Programme part of the Szécheni Plan, a broad effort to fund modernisation of the
Hungarian economy launched in 2000. The Action Programme also includes
initiatives related to renewables. The Programme lists 15 sectors and areas
for financial support. It targets a 7-8% reduction in energy consumption per
year (approximately 1.8 Mtoe) until 2010 in those 15 sectors and areas.

This Action Programme has an annual budget of Ft 1 billion. In 2000,


measured in terms of total final consumption savings, the Programme was
thought to be successful, and the government increased its annual budget to
Ft 5 billion in 2001. The Action Programme estimates that Ft 200 billion
(€ 820 million) is needed to finance this programme over its duration, of which
Ft 50 billion will come from the state. Support for the residential sector mainly
involves grants of up to 30% for new and additional investments. Other
sectors are offered a variety of measures ranging from loans with favourable
interest rates to full grants.

The Action Programme is reviewed every two years and amended by the
government according to the results of the reviews.

2
From 2003 the support programmes of the earlier Szécheni Plan are being run
under a new name – the National Energy Saving Programme.

Energy Centre To facilitate the administration of this programme, two earlier organisations,
the Energy Centre and the Energy Information Agency, were merged. The
1
Energy Centre founded by government decree 1031/2000 is a non-profit
2
company, with around 50 work stations . Its capital is owned by the founders:

ƒ Ministry of Economic Affairs and Transport 60%


ƒ Ministry for Environmental Protection 25%
ƒ Hungarian Energy Office 15%

The Energy Centre has the following main functions:

ƒ To administer the Energy Efficiency Improvement Action Programme by


presenting a shortlist of applicants to an inter-ministerial committee on
energy efficiency (established in 1999). The agency provides a
substantial contribution to the policy formulation process for energy
efficiency programmes supervised, hosted or guided by the government.
More targeted information aims at helping government bodies in the
selection of instruments, allocation of resources and refining of
programmes and policies for energy efficiency and the environment.
ƒ To manage the implementation of international energy efficiency projects
using multilateral or European funding (UNDP/GEF energy programme for
municipalities, EU-PHARE programme).
ƒ To produce energy information and statistics: the agency is responsible
for operating Hungary's energy data system. It reports directly all required
data to the IEA and provides relevant information to EUROSTAT via the
Hungarian Statistical Office

The Energy Centre is also responsible for preparing a number of legally


binding documents which are used by the Ministry of Economic Affairs and
Transport and the Hungarian Energy Office in their daily operations (e.g.
business plans reporting format to be used by energy companies, standard
licensing agreements, etc.).

Hungarian The Hungarian Energy Office also plays a role in the energy field; it has the
Energy following responsibilities:
Office
ƒ Licensing of companies operating on the gas and electricity markets.
ƒ Calculating wholesale and end-user regulated gas and electricity prices
and preparing the corresponding decrees which are then signed by the
Minister of Economic Affairs and Transport.
ƒ Protecting interests of consumers.

It covers electricity, gas and heat which is sold by power stations to district
heating (DH) facilities (roughly equal to 50 MW of capacity). Issues related to
DH are otherwise in the hands of the municipalities.

Hungarian The Hungarian Competition Office (HCO) monitors competition and mergers
Competition in the energy sector. The 1994 Electricity Act (act XLVIII of 6 April 1994 on the
Office Production, Transport and Supply of Electric Energy) describes the tasks and
responsibilities of the HCO (Magyar Energia Hivatal) (see below under District
Heating and Combined Heat and Power).

1
Also known as the Energy Efficiency, Environment and Energy Information Agency.
2
The number of staff is high as some are working only part time, on secondment.

3
In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

• Build on the positive steps already taken in establishing the Energy Centre
and provide it with adequate budget, staff and executive powers to allow it
to fulfil its tasks at both national and international levels.

Energy Hungary has been a signatory state to the United Nations Framework
and the Convention on Climate Change (UNFCCC) since 1994. Under Annex B of the
Environment Kyoto Protocol, Hungary is committed to reduce its carbon dioxide (CO2)
emissions by 6% in the time period 2008-2012 (six gases). As an economy in
transition, Hungary has the right to choose its base year, and has opted for
1985-1987 as its base line period.

Hungary submitted its First National Communication under the UNFCCC in


1994, six months after the ratification instrument was deposited. The Second
National Communication: Hungary: Inventories, Stabilisation and Scenarios of
the Greenhouse Gas Emissions and Removals of 1998 takes into account the
new and substantial developments arising since the First Communication and
presents the main policies and measures adopted or planned in the field of
energy efficiency.

Climate Hungary’s first National Environmental Programme (NEP) was adopted by


Change Parliament in 1997. The NEP covers a six-year period (1997 to 2002). Specific
Programmes quantitative targets have been set for the protection of air, water and soil, the
built environment (human settlements, human health), nature and landscape,
as well as special environmental issues (waste management, noise and
vibration abatement, environmental safety). The NEP takes into account
relevant international environmental policy action plans and programmes,
such as the Environmental Action Programme for Central and Eastern
Europe, the EU Fifth Action Programme and the Agenda 21.

The government adopted the Hungarian Strategy on Climate Protection on


13 September 2000 (Government Resolution 2206/2000). The Strategy
identifies the most important tasks in the various sectors, namely energy
production and supply, transport, industry, agriculture and forestry. The
energy sector has the highest priority since two-thirds of GHG emissions
come from fossil fuel combustion.

The Hungarian Strategy follows dual objectives: on the one hand it defines the
governmental and non-governmental tasks in the light of preparation for
accession to the European Union; on the other it gives a general planning and
conceptual framework until 2012. In particular, the strategy aims to:

ƒ Meet the Kyoto commitment entirely through domestic measures.


ƒ Develop and select measures through a dialogue with the different
economic and social interests groups in the country.
ƒ Support the development of an efficient monitoring and reporting system
for greenhouse gas emissions but also emission reduction projects, to
minimise administrative costs of Joint Implementation.
ƒ Use the flexibility instruments under the Kyoto Protocol only for additional
emissions savings. A system for Joint Implementation – the reduction of
emissions through specific projects and the transfer of these reductions to
other Parties – and emissions trading is to be developed in the longer
term.

4
In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Establish a clear institutional framework for Joint Implementation projects


to facilitate access of foreign investors and minimise transaction costs.
Consider whether to use the existing emission trading surplus under
Kyoto to encourage early investment in Joint Implementation projects.
ƒ Consider broader participation in international emission trading under the
Kyoto Protocol and how it can be managed by the government to improve
the environmental performance of Hungary, e.g. through financing of
additional projects to reduce greenhouse gas emissions.
ƒ Define a timetable for joining an emission-trading regime.
ƒ Maximise transparency on environmental issues, leading to a wider range
of alternatives and bringing public acceptance of the decisions.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Energy Most of the existing energy efficiency standards are considered obsolete and
Efficiency it has been decided to review and upgrade them all. In this context, and to
Standards match the European Union regulations, the Ministry of Industry, Trade and
Tourism and the Hungarian Energy Office are involved in the preparatory work
to upgrade the standards for buildings, motors and appliances.

The document Hungarian Energy Policy Principles and the Business Model of
the Energy Sector mentions that energy consumption efficiency can be
expected to increase when prices reflect the actual costs of energy
production. Tariffs based on actual costs will significantly improve the pay-
back conditions of energy efficiency investments both in manufacturing
industry and in households.

Building The Hungarian Insulation Standard MSZ 04-110-2-192, which regulates


Codes buildings, the walls, floors, doors and windows, and defines the k insulation
ratio, has been in force since 1992. But although Hungary adopted very strict
mandatory building codes, comparable to the strictest standards in the EU,
enforcement and quality control in buildings are lacking. As numerous
standards in place were not respected, the government made the standards
voluntary in 1994. The architect has to include in his report a statement that
the design of the building is correct in this respect.

Parliament has introduced the Act on the Formation and Protection of the Built
Environment LXXVIII. Based on this new Act a ministerial decree
39/1997(KTM-IKIM r.) was introduced on the qualification requirements of the
building materials in line with the European Union Directive (89/106/EEC)
relating to construction products.

Energy To comply with the EU regulations, five ministerial decrees regulate the
Labelling energy labelling of household electric refrigerators, freezers and their
combinations (5/2002 GM decree of the Minister of Economic Affairs and
Transport), the labelling of washing machines and dryers (6/2002 GM decree
of the Minister of Economic Affairs and Transport), the energy labelling of
household dish washers (7/2002 GM decree of the Minister of Economic
Affairs and Transport), and the energy labelling of household lamps (4/2002
GM decree of the Minister of Economic Affairs and Transport).

5
The ministerial decree (12/2002 GM-KöViM-KöM decree) is about fuel
efficiency and carbon-dioxide emission requirements for newly distributed
cars. Based on this decree it will be obligatory for dealers to indicate clearly
for consumers – by labelling the cars and advertising on posters at the dealer
point – the fuel consumption and carbon-dioxide emission data of the product
based on the technical documentation. This data must be displayed on all
advertisements.

The Ministry for Environment and Regional Policy established an


environmentally friendly labelling scheme in 1994. Energy efficiency is one of
the requirements with which applicants have to comply.

One of the barriers to the introduction of labelling is lack of funds to finance


related research and qualification activities, and to maintain accredited
laboratories. Although manufacturers would be willing to pay for the labels,
this would not be sufficient to finance the operation of the institutional
background for qualification.

Building In order to introduce the building’s certification system required by the Energy
Certificates Saving Action Plan, two feasibility studies have been undertaken to work out
the data sheet related to energy consumption, heat supply, heating, hot water
production, gas and electricity supply. The introduction of such certification
should increase the energy performance of each building.

District Because of its hot water springs, Hungary has more than 60 years of
Heating/ experience with district heating, and the first district heating (DH) system
involved geothermal steam piped from Margit Margaret Island in Budapest.
However, DH was only developed on a large scale in the 1960s, when major
housing construction programmes began.

Today, Hungary has 142 DH companies which operate 240 systems in 109
towns and cities. These companies supply some 644 000 apartments, which
represent about 16% of the roughly 4 million households in Hungary. Total
final consumption of heat was 2.29 Mtoe in 1990, but fell to 1.42 Mtoe in 1997.
Natural gas accounts for 66% of the fuel used for district heating; coal and oil
account for 19% and 11%, respectively; and renewables, waste and other
fuels represent 4% of inputs.

About 19 of the 103 municipalities distributing heat buy it from the


independent generators who operate combined heat and power (CHP) plants
near the big cities. An example is the privately-owned Budapest Power Plant
Company, which operates several CHP plants on the outskirts of Budapest.
Those municipalities who do not buy heat from the Hungarian Power
Company (MVM) generally produce it themselves in CHP or heat-only plants.

For a long time, DH companies received significant amounts of financial


support from the central government, through a 30-40% subsidy to end-user
prices. These subsidies were abolished in 1991. The issue of strong regional
price discrepancies and remaining amounts of cross-subsidies led to
consideration of a uniform, national regulatory framework for district heating: a
District Heating Law was adopted by the Hungarian Parliament in March
3
1998 . Before that, the ownership of DH companies was handed over to the
municipalities through the Municipality Act. Special rules of the District Heating
Law of 1998 and the Law on Concessions allow a restricted privatisation of up
to 49% of the capital, maintaining ownership of the majority of the shares by
the municipality. A private concession for the operation of the DH system is
also allowed if 100% of the capital remains in the hands of municipalities.

3
The District Heating Law defined rules and responsibilities in district heating; however it could not solve the
problem of cross-financing.

6
Responsibility for municipal DH, including the setting and control of end-user
prices, was also transferred to municipalities in 1998, through the District
Heating Law. The Minister of Economic Affairs exercises the power to settle
prices of heat supplied by power plants over 50 MW. Price determination and
DH licensing falls under the responsibility of the Hungarian Energy Office
4
insofar as it involves an electricity production capacity of 50 MW or more .
District heating companies operating under the authority of municipalities have
to purchase heat at artificially high official prices while their tariffs for selling
heat to their customers are kept low for social and political reasons and in the
context of strong competition from natural gas suppliers in the residential
sector. Gas prices are official prices also decided by the Minister, and kept
artificially low.

The document Hungarian Energy Policy Principles and the Business Model of
the Energy Sector states that it is necessary to improve the whole district
heating system, to modernise it and make it competitive. The complete
reorganisation of the network involves the following actions:

• Renovation and modernisation of heat generating plants.


• Reconstruction of district heating supply systems (pipelines and heat
centres).
• Provision by local governments owning the systems to create competition
between DH operators, to remove the current monopolies in service
provision, thus paving the way for more technically advanced and more
economical service.
• Reconstruction and renovation projects for residential buildings served by
DH.
• Introduction of charges based on metering of building's actual
consumption, as provided by the Act on DH supplies.
• Implementation at the discretion of individual residential communities of
output-side cost sharing and control-per-radiator.

The document mentions that the current environmental regulation must be


modified to enable the environmental advantages of DH systems to be more
fully exploited.

In its action No. 15, The Energy Conservation and Energy Efficiency
Improvement Action Programme of October 1999 considers that the
reconstruction of the district heating system is of high priority, the objective
being to save 10 PJ of energy per annum until 2010. The modernisation of the
systems benefited from a total € 19 million in 2001 on the supplier and
consumer side in the form of non-reimbursable direct capital support, based
on the government’s Szécheni Plan. The maximum of the subsidy was 30% of
the investment cost. The new government has now changed its support to
preferential credits. There are also other funds for improving the district
heating available, such as the Environment Protection Fund, the German Coal
Aid Revolving Fund-GCARF.

Combined Heat Total capacity of CHP in 1999 amounted to 873 MW. CHP produced 4.8 TWh
and Power (CHP) of electricity and 46 PJ of heat in 2000. According to the Ministerial Decree
55/1996, the electricity transmission company (MAVIR) or electricity
distribution companies are required to purchase electricity produced from
renewable sources and from small scale CHP (from 0.5 MW up to 20 MW) at
guaranteed prices. Under the new Electricity Law of 2002 (to enter into force
in 2003), mandatory purchasing will be enforced with guaranteed prices from
0.5 MW up to 50 MW (up to 5 MW only for industrial CHP and hydro-power),
and with market prices above the given limits. Since 1 January 2001,
purchase prices are very attractive (between Ft 14 and-15 per kW) and are

4
The 2002 Electricity Act raised the limit from 20 MW to 50 MW.

7
also applied to heat prices. Future prices for electricity and heat will be
regulated by the Hungarian Energy Office.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Investigate through the Hungarian Energy Office (HEO) and the Hungarian
Competition Office (HCO) whether prices for heat are being set on a
reasonable cost reflective basis and, if not, devise and implement an
appropriate solution to avoid harmful price distortions between heat and
power affecting negatively investments and modernisation of CHP and
district heating systems.

Education, During the 1990s the awareness activities launched by the central
Public administration decreased. By the middle of this period, many actors
Awareness recognised the need to increase energy efficiency awareness. Promoting
energy efficiency is also of concern to the electricity industry. Both the
Hungarian Power Co. (MVM) and the distribution companies launched local
public relations campaigns that included energy saving related elements.
MVM opened an education facility in Budapest, where information related to
energy saving is provided to the general public. The gas utilities are also
beginning to show some interest in this activity.

Another promising initiative is the Green Bridge movement. Starting in Pécs,


energy utilities established a local organisation to promote energy efficiency
and environmental control. They publish and distribute pamphlets, organise
schools programmes, launch campaigns and provide advice to consumers.

Hungarian Energy Policy Principles of July 1999 states that a national


programme must be set up to spread awareness of energy conservation and
the use of renewable energy sources, conveying their advantages and the
means of implementing them. A key target should be to communicate their
importance convincingly to young people. Basic training on energy saving
should also be integrated into vocational skills training.

The Action Programme of October 1999 stresses the need to strengthen


information on energy savings in the educational system, to support advisory
networks and consumer offices and to spread widely advertisements,
brochures for consumers and media campaigns to encourage consumers to
save energy. The widespread use of energy efficiency labelling is also
recommended. The objective is to save up to 10 PJ energy per year until
2010: to this end Ft 25 million of grants was to be spent in 2000 and Ft 50
million in 2001, with the target of increasing this to Ft 100-200 million per year.

In 2002, in the framework of the Szécheni Plan, a public awareness


programme was implemented and directed mainly at the education sector.
Non-governmental organisations have played an important role in this field.
The Energy Efficiency Advisory Network launched by environmental NGOs,
the Enterprise Development Agency (MVA), the Hungarian Alliance of
Technical and Science Association (MTESZ) form a group of some 20
Regional Energy Advice Centres throughout the country. To develop these
energy advice centres, Hungary benefited from funds channelled through the
EU PHARE Programme and the Dutch energy agency NOVEM.

Financial/Fiscal
Incentives

Revolving The energy saving programme German Coal Aid Revolving Fund (GCARF)
Fund came into force on 1 August 1991 relying on a German coal support facility.

8
The original target was to provide finance to the private sector to support
energy efficiency investments and at the same time reduce environmental
pollution. The GCARF is administered by the Hungarian Credit Bank and is an
integral part of the bank’s lending operations. Its scope has been expanded to
municipalities, enterprises and institutions they own. The main objectives of
GCARF are to replace traditional energy sources with renewables or waste
related energy sources, to induce energy saving businesses and to reduce
energy waste at the lowest possible cost. The preferential interest under this
facility is one-third of the central bank’s base rate with an additional 2.5%
interest. From 1 August 1991, the date at which the credit application scheme
started until the end of 2002 the total amount of investments approved for “live
projects” by the Professional Jury in charge of managing the programme has
run to Ft 19.5 billion, of which Ft 11.9 billion is made up of preferential credits.

In 2000, the GCARF allocated more than Ft 1 billion in preferential credit for
small and medium-sized enterprises, which resulted in an energy saving
potential of 325 TJ/year and in a total investment of Ft 1.6 billion.

In 2001 with the total sum of Ft 0.89 billion preferential credit started
investments with a value of Ft 1.41 billion. The estimated energy saving
potential was 0.22 PJ/year.

In 2002 the amount of the preferential credit was raised to Ft 1.51 billion. The
total investment of Ft 3.53 billion will result an energy saving of 1.04 PJ/year.

The GCARF has achieved substantial success, allowing an annual energy


saving of 8.16 PJ up to 2002 which corresponds to an annual saving of
Ft 7.091 billion. The expenditures envisaged for the development project are
refunded after an average of two or three years.

About 83% of the approved energy rationalisation projects have already been
completed and monitored and the value of energy savings with the
commissioned facilities has surpassed the overall target figures laid down in
the bank contracts by 8%.

Energy To modernise the large number of poorly insulated housing blocks, Hungary
Efficiency launched a reconstruction programme (the SZT-EN-1 Programme) within the
Grant for Szécheni Plan. This non-reimbursable grant is given to people wishing to
Households make energy efficiency investments in their houses, such as heating
reconstruction, additional insulation and window and door replacements
(Ft 60 000 per apartment). In 2001, the Energy Centre supported around
4 000 applications; total grants amounted to Ft 1.51 billion. In 2002 out of
8 400 applications 7 900 were supported (the rest were not because of lack of
available grant) and may reached Ft 2 475 billion for 2002. The new
Hungarian government launched the same type of energy efficiency support
scheme with a new name: National Energy Efficiency Programme. This new
programme is also managed by the Energy Centre and the available amount
for the year 2003 is Ft 2.97 billion. The SZT-LA 2 Programme offers non-
refundable grants to carry out energy efficient renovations in residential
buildings made with prefabricated technology and for retrofitting of company
buildings with industrial technology (block houses). In 2001, total grants
amounted to Ft 2 billion.

Pilot In 1996, a Pilot Panel Programme (PPP) was launched to improve the thermal
Panel insulation of buildings. The first phase of the PPP aimed at improving the
Programme thermal performance of almost 5 000 apartment blocks. The Central
Environmental Fund provides almost Ft 60 000 in grants to upgrade the
insulation of each individual dwelling. The average payback time of the
investment is less than ten years. The pilot programme is managed by the
Hungarian Foundation of Enterprise’s Development. The association of

9
producers and sales representatives of insulation materials and technologies
are also involved in the project’s implementation. After evaluation of
experiences gained in 1997, the programme is expected to be extended.

Preferential In the first half of 1996 the government adopted a decision according to which
Interest preferential interest borrowing facilities have to be offered to collectivities
Borrowing wanting to carry out energy-efficient renovations in buildings made of
Facilities prefabricated components.

Any residential building made with prefabricated technology and consisting of


at least ten apartments or one or several blocks of apartments may be the
object of an application when the energy resource used is inefficient and the
renovation is expected to result in energy saving. A credit may also be used
for any other residential building or blocks of such buildings for which the
renovation results in energy saving.

The state support is designed to help pay the interest on the loans provided by
financial institutions for the implementation of energy efficiency projects, if the
residential building does not meet the heat-engineering standard. The work of
renovation, modernisation and heat insulation has to cover the outside walls,
roofs and ceilings, and the replacement of outside doors and windows.

In the case of prefabricated technology-based residential buildings, composed


of at least ten apartments, the interest subsidisation amounts to two-thirds of
the interest charged by the financial institution. It is refunded by the budget to
the financial institution on a monthly basis. Regarding other residential
buildings, the amount of support provided to the credit facility based on
deferred interest payment is 4% of the principal owed at the beginning of the
period of amortisation or of the period of new interest calculation in the first
five years of the amortisation; it is 3% in the second five years.

Non-reimbursable As proposed by the professional association of domestic manufacturers and


Support distributors of heat insulators, Phase I of the National Building Insulation
Programme started in 1997 with the co-operation of the Hungarian Foundation
for Enterprise Development. The Programme’s goal is to supply heat
insulation to 5 000 apartments, for which a non-reimbursable support of Ft 300
million (Ft 60 000 per apartment) will be provided through the applications
scheme by the Central Environmental Protection Fund.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Give priority to strengthening energy efficiency in the building sector,


through the implementation of energy efficiency standards in the household
sector with reference to the EU regulations, improve and enforce the
mandatory thermal insulation standards, and strengthen the programme for
retrofitting the energy inefficient housing stock.

INDUSTRY

Measures already In the production sector, a growing number of industrial companies realise the
existing and/or interrelation between energy wastes and profit losses. Many of them know at
being improved least what ought to be done. Recently, as more and more companies become
stabilised, they are starting to implement energy efficiency plans. Certain big
companies such as Mol (oil company), MÁV (national railways), Richter
(pharmaceuticals), Cereol (vegetable oil), Nitrokémia (chemicals) and others
have made good progress in energy efficiency programmes on a voluntary
basis and without governmental co-ordination or obligation.

10
Energy Within the framework of the Szécheni Plan, non-refundable grants are
Audits: provided for energy audits in companies with energy costs of Ft 30 million per
year or higher. In 2001 32 company audits were supported for a total amount
of Ft 119 million. In 2002, the support amounted to 50% of the total audit
(maximum amount per application: Ft 5 million). Eight company audits were
supported with an amount of Ft 20 million.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Strengthen energy audits in industry (including small and medium


enterprises), and measures to encourage the audited enterprises to
implement recommended cost-effective measures.

Financial The government has designed financial support to promote energy efficiency
Incentives in industry by soft loans or through support systems based on the German
Coal Aid Revolving Fund, the Central Environmental Protection Fund and the
PHARE Energy Efficiency Credit Fund.

The Hungarian Energy Policy document states that incentives must be


provided for investments increasing the efficiency of energy production and
transformation, and efficiency will also be served by imposing the least-cost
principle on new energy projects.

ESCOs Seven ESCOs operate in Hungary: they focus on heating projects, in


particular gas-fired boiler plants, and, to a lesser extent, on public lighting and
thermal insulation.

The Hungarian Energy Efficiency Co-financing Programme (HEECP)


developed in 1997 by the World Bank and funded by the Global
Environmental Facility Programme (GEF) facilitates the establishment of
ESCOs and maintain the stable economic conditions for their development.

PUBLIC SECTOR

Measures already
existing and/or
being improved

PHARE One of the various PHARE projects of the European Union is the PHARE
Revolving Revolving Fund (PRF) established as a soft-loan credit facility to support the
Fund energy efficiency investments by medium-sized and small enterprises from
the private sector and by municipal-owned companies and institutions. The
investments are co-financed by the European Investment Bank (EIB) and/or
by one of the two Hungarian commercial banks selected for the operation of
the credit scheme. A grant of ECU 5.0 million was provided by PHARE in two
portions in 1998 and 2000 and it is used as a revolving fund.

The scheme functions as a preferential credit scheme where the interest on


the PHARE share is zero while the share of the international financial
institutions (i.e. EIB) and/or that of the Hungarian banks bears a market
interest. The two can then be mixed into a preferential “interest”. The loans
are offered by the two commercial banks and the Energy Centre is
responsible for the project evaluation and co-ordination. The facility is
supervised by an inter-departmental steering committee. Full operation of the
PRF started in the winter of 1998.

By the end of 2002 over 90 loan applications were submitted to the two banks
operating this credit scheme, of which 77 projects were found eligible for

11
funding. The total investment cost of eligible projects is over € 45.6 million,
with a total loan amount of about € 28.4 million, including € 7.5 million interest-
free PHARE component. The total savings in energy are estimated at
2 241 TJ/year of primary energy, corresponding to a reduction of CO2
emissions of about 203 kt/year.

Energy The Energy Saving Credit Programme (ESCP) was launched at the end of
Saving 1996 as a preferential-loan facility following a government decree by the
Credit Ministry of Industry, Trade and Tourism. In 1997, the main objective of the
Programme ESCP was to support the energy efficiency investments aimed at the
modernisation of energy use in municipality-owned institutions (schools,
hospitals, social and health care buildings, etc.). In the first year, 1977, the
credit line amounted to Ft 780.5 million, provided by commercial bank loans.
The preferential interest rate was at 50% and the cover for it was provided by
the Provisions for Economic Development. An important criterion is that at
least half of the costs saved by the investment should be reached by the
reduction of the energy bill. One other criterion prescribes a minimum
(specific) saving on the primary energy use, therefore the simple fuel
switching projects (without efficiency improvement) are not accepted.

As a result of the 1997 programme, an annual fuel saving totalling a heat


value of 256 TJ has been achieved with a CO2 emission reduction of about
18 000 tonnes.

The government adopted a resolution which rules that, first, the energy-saving
projects of the municipality-owned public institutions should be further
encouraged; second, a multi-year programme has to be started for the
modernisation of the district heat supply system; and, third, the principles of
“third-party” financing and the relevant institution have to be elaborated.

In 1998, the municipality-related programme continued following approval by


the government. Subsidies/preferential loans amounted to Ft 971.3 million for
a total investment of Ft 1 277.6 million, corresponding to an energy saving of
270.8 TJ and a CO2 emission reduction of 18 000 tonnes. In 1999 and 2000,
the subsidies reached Ft 877.9 and Ft 1 024 million for total investments of
Ft 975.8 and Ft 1 612 million respectively. This resulted in energy savings of
189.8 TJ in 1999 and 325 TJ in 2000. The CO2 emission reductions amounted
to 11 000 tonnes and 31 000 tonnes.

The Hungarian Energy Policy document stresses that the Energy Saving
Credit Programme will be extended by the launch of the district heating
reconstruction sub-programme.

There is a programme for the reconstruction of the DH supply side launched in


2000 and continued in 2001 with a budget of Ft 315 million.

Activities In March 1995, the governments of Hungary and the Netherlands expressed
Implemented their wish to realise jointly a series of AIJ projects. The aim of these projects
Jointly (AIJ) would be to promote AIJ as a feasible concept. One of the projects involves
energy conservation in local municipalities. The project is a small-scale
energy efficiency project for municipalities and utilities managed by NOVEM
(National Energy and Environmental Agency of the Netherlands) together with
EGI (Institute for Energy Management, Hungary) consulting and engineering
in Budapest.

In this simulation study, a number of energy efficiency projects initiated by


local governments are analysed. In most cases, these projects are identified
based on expert advice provided earlier through the Dutch bilateral PSO
programme and through twinning arrangements with Western European cities
within the EU — PHARE/ECOS/UVERTURE “urban twinning” programme. A

12
total of 62 projects are monitored in 12 different cities. In addition, a
combination of a small-scale cogeneration (CHP) project and a demand-side
management (DSM) project at the Technical University of Budapest is
incorporated. These projects were developed by the Dutch utility Westland
and the Budapest gas utility Fögáz and are implemented by a joint venture of
both companies.

Implementation of the measures is financed by the local governments


themselves. This is done either from own resources or by attracting external
funds. These external funds can be commercial loans, but soft-loan
arrangements (e.g. the German Coal Aid Revolving Fund) or third-party
financing have also been used by local governments to generate the financial
resources required. These varying financing mechanisms generate additional
experience and input for the AIJ simulation.

SCORE The SCORE programme (1997-2000) (Supporting the Co-operative


Programme Organisation of Rational Use of Energy) was supported by the Netherlands
Ministries of Economics, Environmental Protection and Foreign Affairs, and its
implementation was supported by the Hungarian Ministry of Industry, Trade
and Tourism, the Ministry of Environmental Protection and Regional Affairs,
and the Ministry of Finance. The programme aimed at improving energy
efficiency in Hungary by the establishment of institutions and the support of
demonstration-type projects. The Netherlands ministries provided Ft 65
million in support of the SCORE programme, and an additional Ft 100 million
was subsequently made available from other Dutch sources for the
implementation of projects. Three major projects have been identified and
implemented:

• The study on Macro-Economic Assessment of Energy Efficiency reviewed


and evaluated strategic concerns of energy efficiency. It developed
models that help understanding of the effects of energy efficiency on the
state budget, and on economic and environmental processes.
• The project entitled Development of Energy Awareness initiated changes
in people’s behaviour and encouraged them to undertake actions they can
implement themselves. The core of the effort was a series of short films
broadcast by national television, and several regional and local television
companies. This was supported by background activities including
publication of the film material in brochures, establishing a network of local
advisory centres, a co-ordinated campaign of other media and active
participation of utilities, manufacturers, etc.
• The third project covered the selection and establishment of a
demonstration region for energy efficiency where the various alternatives
of energy saving were presented. Demonstration-type energy efficiency
projects were carried out which could subsequently be implemented in
other regions in a similar way. Two organisations have been selected for
these activities in Miskolc and Debrecen.

The programme was finalised in 2000 including several successful


programmes carried out in the last year, such as a national energy efficiency
contest for schoolchildren, an energy efficiency advisory campaign in shops
selling household appliances, etc.

One of the most important objectives of the Score programme was the
establishment of a sustainable infrastructural background of energy efficiency
and in this respect the programme was absolutely successful.

The network of the energy efficiency advisory centres was formed from green
NGOs, enterprise development agency offices and from the MTESZ offices.
The SCORE programme made this uniform network possible by providing a
training course for the organisations.

13
UNDP/GEF This programme, funded by UNDP, the Global Environment Facility (GEF) and
Programme on with additional funding from the Hungarian government through the
Public Sector national energy efficiency programme, aims at improving the country's
Energy energy efficiency in the public sector, thus mitigating GHG emissions,
Efficiency mainly CO2. It seeks to remove barriers to energy efficiency in municipal
buildings (including schools, hospitals and other public buildings).
Preparation for the implementation of the programme started in January
2001. The programme has to achieve three broad objectives:

ƒ Improve the development of energy efficiency policy, increase


awareness, and improve co-ordination of energy efficiency policies.
ƒ Identify, develop and finance energy efficiency projects in municipalities.
A fund co-financing energy audits and feasibility studies helps to achieve
this objective.
ƒ Improve the knowledge base on energy management and energy
efficiency technologies. Most training curricula targeted regions with
specific needs and initiated some training activities which will be
supported by the Regional Advice Centres. Information materials will be
disseminated as "Best Practice" series.

The Energy Centre runs this programme.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Continue and strengthen the close co-ordination between all energy


efficiency plans involving national, European and international institutions
to make the optimal use of such expertise and funding.

Public A subsidised programme of preferential credits is to be launched to moderate


Lighting the costs of public lighting (change of bulbs, voltage regulations). Energy
savings amounting to 1.2 PJ per year will be achieved.

The programme was launched in 2000 and continued in 2001 with a total
budget of Ft 150 million per year.

Energy To improve the energy management in all local governments, the Action Plan
Management of October 1999 provides grants to help them to design local energy saving
in Local concepts, energy supply plans and for audits on energy losses. The total
Governments available resources are a Ft 125 million loan at a rate of 06% below BUBOR.
The support is a subsidy on the interest at a rate of 50% of the rediscount rate.

Other In addition to the above programmes, other international support facilities are
Programmes available. For example, in the framework of the European Union, there is the
SYNERGY programme designed to help shape energy policy, the THERMIE
programme for the implementation of energy technology related and other
developments and projects, and the SAVE programme which have been
opened up to associate countries of the EU (including Hungary).

TRANSPORT In June 1996, the Hungarian Parliament passed a new framework


transportation policy, which is designed to guide policy development up to the
year 2000 while integrating policy objectives for after 2000.

Road Transport

Import Because of the high share of relatively old, fuel-inefficient cars, the profile of
Restrictions the vehicle fleet is problematic with regard to air pollution and fuel economy.
The government took steps to limit the inflow of old, polluting cars by

14
prohibiting imports of vehicles more than six years old and those with two-
stroke engines. In 1996, the age limit was tightened to four years.

Vehicle To stimulate fleet renewal, a vehicle scrapping programme offering Ft 30 000


Scrapping in public transport tickets has been set up as an incentive to retire old two-
stroke Trabant cars from the fleet. This programme resulted in the scrapping
of 10 000 vehicles in 1993; 100 00 vehicles were retrofitted with subsidised
catalysts.

Mandatory Mandatory vehicle inspections are carried out at licensed service stations;
Vehicle owners whose vehicles do not meet the standards have 15 days to make
Inspection improvements. Since 1992, the number of vehicles passing the yearly
emissions tests has increased and average emission levels have dropped.
Since 1995, emission standards for new and imported used petrol vehicles are
equivalent to those introduced in the European Union in 1993; the application
of emission standards (UN-ECE standard 49.2) for new diesel vehicles
including buses and trucks is strict.

Development The 1996 Transport Policy cites as one of its principal objectives the building
of Transport “at the earliest possible date” of major motorways from Budapest to the
Systems country’s borders. In addition, a system of connecting roads to the primary
radial network is necessary. For Budapest, the completion of the city ring
road is cited as a development plan. Further objectives include increasing
national highway capacity; building bypasses in congested areas; and
repairing and completing existing infrastructure.

To improve the organisation of freight transport by road, the Energy Centre


will launch an Internet site with a wide range of relevant data on the freight
and the vehicles with their different destinations. This system could be
extended in the future to water and rail transportation so that road transport
can be shifted towards shipping and rail.

Urban The 1996 Transport Policy calls, inter alia, for the following measures:
Transport
• Improvements to parking facilities at railway and bus stations, park and
ride opportunities.
• More attractive fee structure to attract ridership.
• Re-examination of state and local government authority over public
transport.
• Renovation of bridges across the Danube and increased river-crossing
capacity.

To help the Budapest Transport Company (BKV), discussions on credit


opportunities have begun, and in 1995 investments from the World Bank and
the EBRD were accorded to improve the tram, bus and metro systems.
Renovation of the vehicle fleet has also been undertaken, including purchases
of new buses and reconstruction of bus engines. Tariffs have been
significantly raised over the past five years as subsidy support has been
reduced. Further increases in tariffs are envisaged over the coming years as
BKV aimed to attain a 50% cost recovery requirement by 2000 that was
imposed in the international loan conditions.

Rail Objectives outlined in the 1996 Transport Policy for railway transport
Transport development from 1995 to 2000 include the following:

• Restructuring and renewal of railway organisation, increased safety,


improvement in service quality and competitiveness, and capacity
improvements.
• Implementation of an investment programme for track maintenance.
• Modernisation and upgrading of lines along EU transportation corridors to

15
a 160 km/h limit.
• Reorganisation of MAV (Hungarian National Railways); restoration of the
organisation’s solvency.

These objectives are considered by the government to be ambitious and


difficult to reach given the time frame provided and the poor economic and
financial situation of MAV.

RABA/IKARUS The RABA/IKARUS project will transfer technology to enable Hungarian


Project (AIJ) industries to produce buses with compressed natural gas engines. The
technology will be provided by Deltec, a producer of gas-fuelled engines, and
the TNO research organisation, both in the Netherlands. Participating firms
are the Hungarian RABA, producer and installer of bus engines, and IKARUS,
the Hungarian bus manufacturer.

It is estimated that some 3-4 000 buses provide transportation in the major
Hungarian cities. Most of them currently run on diesel oil and emit CO2 and
other pollutants to an extent that varies with the type of engine and the size of
the bus.

The installation of CNG engines on all Budapest buses that currently have an
old diesel engine would prevent emissions of 6 400 tonne of CO2 per year.
The AIJ partners estimate that in Budapest all full-size buses (90 passengers
or more) together cause CO2 emissions of 120 000 tonne per year.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Establish and implement a comprehensive long-term energy efficiency


Transport Plan with clear objectives supported by adequate cost effective
measures and investments funded on the long-term to limit the growth of
road transport. Include measures to stimulate investments in public
transport, on driver behaviour (car labelling for example) and on the
diffusion of cleaner fuels and low emission vehicles.

MONITORING/ Monitoring the efficiency of the programme of measures requires the


ASSESSMENT installation and operation of an appropriate measurement and control network.
A conceptual plan and the related action plan for developing the national
measurement network have been prepared.

Assessment of This research project was initiated by the University of Applied Sciences of
policy instruments Zittau (Germany) for eight energy agencies in transition countries based on
mainly in the field the experience of East-Germany. The basic concept is the analysis of
of energy implemented policy instruments in the field of energy. The consumption
efficiency patterns of transition countries are inadequate because of the application of
inefficient technologies, inadequate energy management within the industry,
due to lack of measuring tools, defective regulating technology, insufficient
building insulation within heat supply in buildings. Subsidised energy prices
give unsuitable signals for households.

The project aims at mapping the barriers to energy efficiency: laws,


regulations, standards, requirements and prohibitive rules will be examined in
the frame of this project. The different experiences with policy instruments will
be evaluated.

Cross-country comparisons will be made of results arising from the


implementation of different energy policy concepts. The purpose is to detect
the strengths and weaknesses of transition countries in the field of energy
efficiency. The most successful instruments will be recommended to all

16
participants. The instruments examined are the following:

ƒ Effectiveness of energy price and fiscal policy.


ƒ Subsidies received for the use of renewable.
ƒ Existing standards for energy consumption (buildings, household
appliances).
ƒ Subsidies for the introduction of CHP.
ƒ Subsidies for the implementation of effective heating systems.
ƒ Implementation of measurement and control devices to determine energy
consumption.
ƒ Identification of applied management methods.
ƒ Identification of existing institutional obstacles of energy efficiency.
ƒ The duration of the project: 40 months.

In the 2002 in-depth review of the energy policies of Hungary, the IEA stated:

The government should:

ƒ Strengthen the appropriate measures and capacities to carefully monitor


and assess all the energy efficiency programmes and measures to adjust
them according to the changing economic context.

Further For further information, please contact:


information
Mr. Gabor Bartus
Director of Strategic Division
Energy Centre
H-1092 Budapest
Raday u. 42-44.
Tel: +36-1 456 43 79
Fax: +36-1 456 43 01
E-mail: gabor.bartus@energycentre.hu

17
IRELAND Updated July 2002

BACKGROUND

National The Economic and Social Infrastructure Operational Programme of the


Development National Development Plan (NDP) 2000-2006 sets out as a key priority those
Plan 2000-2006 areas of expenditure that will assist Ireland in complying with its obligations
under the Kyoto Protocol. The NDP made a provision of € 222.52 million for
the promotion of energy efficiency and renewable energy initiatives.
Sustainable Energy Ireland (SEI) (see below) has sub-divided the funding into
the following categories:

· Strengthening the activities of Sustainable Energy Ireland; € 46.7 million.


· Built environment: € 36.56 million.
· Research and Development: € 72.43 million.
· Renewable and Grid: € 66.83 million.

Energy Ireland signed the UN Framework Convention on Climate Change in Rio de


and the Janeiro on 13 June 1992, ratified it on 20 April 1994 and submitted its first and
Environment second National Communications under the United Nations Framework
Convention on Climate Change in October 1994 and July 1997 respectively.

In December 1997, under the Kyoto Protocol, the EU agreed to reduce


1
greenhouse gas emissions by 8%. Under the EU Burden-Sharing Agreement
of 17 June 1998, Ireland is allowed to increase its emissions of a basket of
greenhouse gases to 13% above 1990 levels, which represented a reduction
of approximately 15% below a business as usual scenario. The commitment
period for the target is for 2008-2012; the Protocol also requires that
demonstrable progress be made towards achieving this target by 2005.
Carbon dioxide is the largest component of Ireland's greenhouse gases (60%
in 1999). Energy use is responsible for 32% (1990 levels) of emitted carbon
dioxide.

Ireland published its National Climate Change Strategy in October 2000. Its
objectives are to put in place a framework for action required to meet Ireland's
commitment under the Kyoto Protocol. Key energy-related initiatives include:

· Expansion of renewable energy.


· Introducing greenhouse gas taxation from 2002, giving priority to carbon
dioxide.
· Participating in international trading in emissions.
· Ensuring that measures to improve energy supply would permit the
ceasing of coal-use and fuel switching towards less carbon-intensive
fuels.
· Measures on fuel efficiency, demand management and modal shift.
· Measures to reduce emissions from the built environment, including
improved land-use, further review of building regulations to promote better
insulated and more energy-efficient new buildings, and restructuring
grants for new houses to favour more energy-efficient houses.
· Full liberalisation of CHP.

Ireland's Second National Communications under the United Nations


Framework Convention on Climate Change reflects policy developments since
the First National Communication and outlines a range of measures which are
in place to mitigate greenhouse gas emissions in all sectors. Since
publication of this report in July 1997, there have been a number of further
policy developments which, inter alia, address climate change and energy:

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

1
· Increased support for renewables including the launch of five Alternative
Energy Requirement (AER) Schemes.
· The reduction of excise duty on LPG (liquefied petroleum gas) in the
December 1998 budget.
· Revised Technical Guidance Documents under the Building Regulations
will result in better insulation in new buildings with projected CO2
reductions of 300 000 tonnes per annum by the year 2012.
· The extension of integrated pollution prevention control licensing (IPCC)
by the Environmental Protection Agency to the power generation sector,
will mean that all large-scale new and existing power generation plants will
be required to operate using the best available technology (BATNEEC,
Best Available Technology Not Entailing Excessive Costs).
· The establishment of Sustainable Energy Ireland to promote renewable
and energy efficiency initiatives; matched by a government commitment of
€ 222.52 million funding.

The Third National Communication will be submitted in September 2002.


Ireland also deposited its instrument of ratification of the Protocol at UN
Headquarters on 31 May 2002.

The Green Paper on Sustainable Energy was published by the Department of


Public Enterprise in September 1999. The Green Paper indicates how Ireland
will progress towards meeting its energy requirements in an environmentally
and economically sustainable way having regard to forecast economic growth
and security of supply objectives. It highlights the measures necessary to
promote energy efficiency among all the energy consuming sectors.
Implementation of the Green Paper remains a priority for the government and
initiatives already launched include a € 21.1 million R&D programme for
energy efficiency and a € 12.7 million Public Sector Design Programme.

Emissions A Consultation Group on Greenhouse Gas Emissions Trading was


Trading established December 1998 with the following terms of reference:
Group
To examine and advise the Minister for the Environment and Local
Government on the options for greenhouse gas emissions trading, both
domestically and in the context of developing international and EU
requirements, and to offer advice on the Irish position on international
trading as required.

The Group reported in July 2000, and the report was published together with
the National Climate Change Strategy in early November 2000.

The main recommendations of that report were:

· An acceptance of the importance of International Emissions Trading.


· A desire to see as many greenhouse gases as possible included in the
system rather than limiting the scheme to CO2.
· Almost all members of the group expressed the view that auctioning would
be the best allocation mechanism in the long run but that some form of
free allocation was likely in the short term.
· Opposition to the EU’s proposal for a concrete ceiling.

Significant progress has been made in establishing the principles, rules and
modalities for international emissions trading and the Kyoto flexible
mechanisms, including at COP6bis in July 2001, and COP7 in November
2001. The EU Commission also presented a draft Directive on greenhouse
gas emissions trading to the Council in December 2001.

2
Terms of Reference
In light of these developments the Interdepartmental Climate Change Team
re-established the Emissions Trading Advisory Group with revised terms of
reference:

In conjunction with potential participants in emissions trading and Kyoto


flexible mechanisms systems, to examine and advise the Inter-
Departmental Climate Change Team on Irish participation, and to offer
advice on the Irish position in international negotiations as required.

Membership of the Group


The group is chaired by the National Treasury Management Agency (NTMA)
and attended by representatives of organisations such as:

Irish Business and Employers Confederation


Industrial Development Authority
Irish Farmers Association
The Environmental Institute, University College Dublin
The Environmental Protection Agency
Electricity Supply Board (ESB)
Aughinish Alumina
Statoil

and observers from the Departments of Environment and Local Government,


and Enterprise, Trade and Employment.

In the 1999 in-depth review of the energy policies of Ireland, the IEA stated:

The Government of Ireland should:

Environment

· Develop a national database on greenhouse gas emissions and


projections, as a basis for quantifying and evaluating the cost-
effectiveness of policy options to reduce the growth in greenhouse gas
emissions.
· Develop and announce detailed response measures to achieve its
greenhouse gas emissions target, including an assessment of expected
quantitative outcomes in physical terms.
· Publish the report of the advisory group on domestic emissions trading
and the implications for Ireland of an international trading regime; review
the report in light of the possible economic advantages to Ireland of
developing and exporting skills in financial services related to emissions
trading.

A national inventory on greenhouse gas emissions, which complies with


UNFCCC guidelines, is complied on an annual basis by the Environmental
Protection Agency (EPA). Emission projections, for the powergen and
industrial sectors, are produced by the Economic and Social Research
Institute by means of medium-term macro-economic modelling. Agricultural
emissions are profiled and projected by Teagasc using the FAPRI-Ireland ten-
year agricultural markets model. These projections will need to be
standardised if they are to be used as the basis for full cost-effectiveness
analysis.

INSTITUTIONAL
FRAMEWORK
An Energy Advisory Board was appointed in September 1994 by the then
Minister for Transport, Energy and Communications. The Board contained
representation from the main energy utilities and energy consumers and was

3
charged with overseeing national programmes and providing advice for the
Minister for Public Enterprise on matters of national policy regarding energy
efficiency, renewable energy and related research. The Board has not had
occasion to meet in recent times and the role of advising the Minister on the
matters aforementioned is now the responsibility of the Board of Sustainable
Energy Ireland (SEI).

Sustainable The Irish Energy Centre (now Sustainable Energy Ireland, SEI) is a joint
Energy Ireland initiative of the Department of Public Enterprise and Enterprise Ireland (the
(formerly the Irish National Industrial Development Agency). Funded by the EU through the
Energy Community Support Framework the Centre's mission is to promote the
Centre) development of a sustainable national energy economy. The Centre began
operating in September 1994 and provides technical advice and support on
energy issues in all sectors of the economy, co-ordinates a range of
promotional and educational initiatives and promotes a number of EU energy
programmes in Ireland.

A key element in the implementation of the Green Paper on Sustainable


Energy was the legislation to establish the Irish Energy Centre as an
independent statutory body. It proposed a framework for energy efficiency in
Ireland and envisaged a major role for the Irish Energy Centre in implementing
the government’s strategy on sustainable and renewable energy, particularly
in helping Ireland meet its obligations under Kyoto. It was recognised that an
independent Irish Energy Centre would be required to fulfil its role in this
regard. Legislation entitled The Sustainable Energy Act, 2002 was passed by
the Lower House in February 2002 to provide for the establishment of the
Centre on a statutory basis with a new title Sustainable Energy Authority of
Ireland and a working title of Sustainable Energy Ireland. The new Authority
was established on 1 May 2002. Importantly it gives the new Authority the
independence and resources to fulfil its mandate under the Green Paper, the
National Climate Change Strategy and the National Development Plan.

In the 1999 in-depth review of the energy policies of Ireland, the IEA stated:

The Government of Ireland should:

· Develop a programme of energy efficiency measures to replace the


current programme of the Irish Energy Centre, which includes the use of
pricing and mandatory regulations, and is based on quantitative analysis
of possible cost-effectiveness..

EU The SAVE (Specific Actions for Vigorous Energy Efficiency) programme of the
SAVE European Union is a major component of the country’s energy efficiency
Programme policy through the implementation of technical measures such as directives
and standards on, inter alia, boiler efficiency, insulation, energy audits,
performance standards and energy labelling.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building The national building regulations, which came into effect on 1 June 1992,
Codes detail the minimum legal requirements in relation to the design and
construction of new buildings and reconstruction of existing buildings. It is
estimated that 1 million of the current housing stock of approximately 1.2
million dwellings were built prior to 1 June 1992. Part L (and the associated
Technical Guidance Document) of the regulations sets out the requirements

4
relating to Conservation of Fuel and Energy. Overall energy use in new
buildings is estimated to have been reduced by up to 20%, as a result of the
introduction of the regulations in 1992.

In December 1997, the Minister for Environment and Local Government


published a revised building control package, which came into effect on 1 July
1998. Part of the revised package included the use of heat energy rating as
an optional method in demonstrating compliance with Part L.

On 6 June 2002 the Minister signed into law Regulations amending Part L of
the Building Regulations. The new Regulations will require new dwellings to
be much better insulated. New thermal performance standards for
replacement external doors, windows and rooflights (roof windows) in existing
dwellings where work commences on or after 1 July 2003 were also set.
These improved Regulations are a key part of the commitment to improve the
energy efficiency of the built environment as set out in the National Climate
Change Strategy. These Regulations are projected to reduce CO2 emissions
by 300 000 tonnes per annum by the year 2012.

Efficiency Statutory Instruments covering minimum efficiency requirements for new hot
Standards water boilers fired with liquid or gaseous fuels, and efficiency requirements for
household electric refrigerators, freezers and combinations thereof, are now in
force. The details of these regulations are as follows:

S.I. No. 260 of 1994 Regulations


European Communities efficiency requirements for new hot water boilers fired
with liquid or gaseous fuels regulations, 1994.
Transposed on 27 July 1994 with transition period up till 31 December 1997.
Amended by S.I. No. 72 of 1995 on 23 March 1995

S.I. No. 482 of 1997 Regulations


European Communities efficiency requirements for household electric
refrigerators, freezers and combinations thereof regulations, 1997.
Transposed on 4 December 1997.
Came into force on 3 September 1999.

S.I. No. 511 of 2001 Regulations


European Communities (Energy Efficiency Requirements for Ballasts for
Fluorescent Lighting) Regulations, 2001 transposing EU Directive on energy
efficiency requirements for ballasts into Irish Law.

Voluntary In December 1998 a Voluntary Agreement between CECED (Conseil


Agreements européen de la construction d'appareils domestiques)and the EU Commission
aimed at reducing the specific energy consumption of domestic washing
machines by 20% in the period 1994-2000 came into force. This agreement
has been successful and has resulted in about 1 100 models of washing
machine being withdrawn from the market and the elimination of all machines
with energy ratings of D, E, F or G. A revision of the Labelling Directive for
Washing Machines is now necessary and is being discussed by the Energy
Labelling Regulatory Committee (ELRC).

Negotiations are now underway between the EU Commission and Television


Manufacturers on a voluntary agreement for televisions. These negotiations
have some way to go before being ratified.

Energy European Union Council Directive 92/75/EEC is the framework directive for all
Labelling energy labelling, and it is transposed in conjunction with the Commission
Directives which implement energy labelling of the various appliances.

Regulations now in force include the following:

5
S.I. No. 122 of 1995 Regulations
European Communities energy labelling of household electric refrigerators
and freezers regulations, 1995.
Transposed on 17 May 1995.

S.I. No. 109 of 1996 Regulations


European Communities energy labelling of household electric washing
machines regulations, 1996.
Transposed on 18 April 1996 with six month transition period.

S.I. No. 110 of 1996 Regulations


European communities energy labelling of household electric tumble dryers
regulations, 1996.
Transposed on 18 April 1996 with six month transition period.

S.I. No. 208 of 1997 Regulations


European Communities energy labelling of household electric washing
machines (amendment) regulations, 1997.
Transposed on 13 May 1997.

S.I. No. 319 of 1997 Regulations


European Communities energy labelling of household combined washer-drier
regulations, 1997.
Transposed on 21 July 1997 with six month transition period.

S.I. No. 210 of 1998 Regulations


European Communities energy labelling of household dishwashers
regulations, 1998.
Transposed on 15 June 1998. Transition period runs till 31 July 1999.

S.I. No. 170 of 1999


European Communities (Energy Labelling of Household Lamps) Regulations,
1999.

S.I. No. 171 of 1999


European Communities (Energy Labelling of Household Dishwashers)
(Amendment) Regulations, 1999

Boiler A number of companies, including the gas company Bord Gáis Éireann
Services (BGE), operate heating installation inspection and maintenance schemes
(including boiler inspections) for their customers. Sustainable Energy
Ireland’s Boilers Initiative comprises a set of integrated measures designed to
support, encourage and educate boiler users and service providers. The
initiative aims to raise operational standards, increase energy efficiency and
improve competitiveness. The measures are complementary and supportive
of each other and are designed to engage those in Industry, Commerce and
the Services Sectors on a Partnership for Progress basis.

The Annual Boiler Awards Competition, organised by Sustainable Energy


Ireland was first launched in 1996. Since its inception, it has achieved savings
of over € 20.3 million in some 180 participating companies, primarily by
recognising and rewarding innovation and best practice in the operation and
implementation of energy efficient boiler technology.

The Steam Boiler System Evaluation Scheme ran from 1997 to 2000. It
involved a subsidised boiler audit in which Sustainable Energy Ireland
supported up to 40% of the cost of a boiler-house audit survey. The Scheme
was targeted at the 420 largest operators of steam boilers in the country and
approximately one in seven of these had an audit completed under the

6
scheme. Average savings identified were 9.5% of fuel usage with half of
these savings being achievable at low cost, i.e. with a payback period of less
than six months. The information collected through this exercise has also
contributed significantly to the design of new programmes for this sector.

Energy Energy Action is a Dublin-based charity, established in 1988, offering a free-


Action of-charge energy conservation service to the needy and elderly. The Energy
Action Programme is focused on simple cost-effective improvements such as
attic insulation, draught proofing and installing energy efficient light bulbs. It is
aimed at improving the living conditions of the poor and elderly. It is also
involved in the provision of training and work opportunities to unemployed
people that are creative, sustainable and ecologically sound. The provision of
improvements in the energy efficiency of the dwellings of the needy and fuel
poor, reduces costs and atmospheric pollution, while at the same time
increasing comfort and health. Since 1988, Energy Action has provided in the
region of 18 000 houses with insulation services .

Low Income A situation review of fuel poverty in Ireland was commenced in 2001, as part
Housing of a process leading to the development and implementation of an extended
Programme € 7.62 million programme administered by Sustainable Energy Ireland
targeting fuel poverty in low income homes nation-wide.

House of The House of Tomorrow Programme 2001-2006 launched in September 2001,


Tomorrow offers support for research, development and demonstration projects aimed at
Research, generating and applying technologies, systems, practices and information
Development and leading to more sustainable energy performance in Irish housing. The main
Dissemination focus of the programme which has a proposed budget of € 21.1 million in
Programme implementation over six years (within the National Development Plan) is on
stimulating widespread uptake of superior energy planning, design,
specification and construction practices in both new home building and home
improvement markets.

INFORMATION/
MOTIVATION

Energy Awareness Energy Awareness Week, co-ordinated by the Sustainable Energy Ireland
Week (SEI) in association with the Department of Public Enterprise (now the
Department of Communications, Marine and Natural Resources), represents
the most important series of activities for providing domestic consumers
accounting for about 26% of energy use in Ireland with a clear understanding
of the benefits of energy efficiency and the opportunity to make real
behavioural change. Energy Awareness Week was first held in 1992. The
primary objective of Energy Awareness Week in 2001 was to create greater
awareness for consumers of the importance of sustainable energy with
reference to matters such as sources of energy, the various environmental
impacts and national/international obligations. The awareness campaign also
highlighted the benefits of sustainable energy use including: added comfort,
cost savings, environmental protection and future energy availability. The
impact of the week is measured in terms of increased consumer investment in
the target products such as compact fluorescent lamps (CFLs), lagging
jackets and energy efficient appliances. In 2001, during the period of the
promotion there was an increase of over 400% in sales of these items, with
CFL sales growing from an average 52 000 units to a remarkable 293 000
units. This will result in an annual reduction of CO2 emissions of almost
16 000 tonnes.

Branding The Goldshield Home concept was launched in 1986 by the Electricity Supply
Board (ESB) and since then more than 50 000 such homes have been built
and sold by house-builders. The original aim in designing the all-electric
Goldshield concept was to provide the customer with a comfortable,

7
economical-to-run and energy-efficient home, using just one energy source –
electricity. The Goldshield concept included the following items in an
integrated design:

· A high standard of thermal insulation and draught-proofing.


· Individual room temperature control.
· Factory-insulated hot water cylinder with special controller.
· A combination of electric storage heating and panel/convector heating.
· Nightsaver electricity.

Bord Gais Eireann (BGE) promotes the Home Energy Rated brand as follows:

New homes built with natural gas central heating as standard are “energy
audited” to determine the amount of energy required to maintain a high level
of comfort in the home. The rating is given in terms of the number of kWh
required per square metre per year. The lower the energy rating, the less fuel
required.

Homes that achieve a rating of 250 or less are branded Natural Gas Energy
Rated Homes. This 'brand' has its own logo and is promoted through:

· Property press advertising.


· Trade press advertising.
· Showhouse certificates.
· Development signage/flags.
· Range of print material including brochures, for sale/sold.
· Showhouse stickers etc.
· Seminars for builders.
· Video.

Regional Sustainable Energy Ireland operates a number of regional offices from which
Energy some of the key initiatives are led. These include:
Offices
· The Energy Policy Statistics Support Unit.
· The Public Sector Investment Programme.
· The Renewable Energy Information Office.

Leaflets Sustainable Energy Ireland (SEI) publishes and distributes a wide range of
leaflets on energy efficiency aimed at the domestic, industrial, commercial,
public and renewable energy sectors. They vary from general information to
in-depth technical advice and recommendations.

Television The About the House television series sponsored by SEI reaches a weekly
Series audience of more than 450 000, which research has demonstrated are very
receptive to the message of improved energy efficiency.

The TV series deals with all aspects of home building and home improvement
and as a result of the involvement of SEI carries significant emphasis on all
energy matters. The presenter has also been involved with Sustainable
Energy Ireland in the presentation of local information sessions as part of an
Energy Roadshow during Energy Awareness Week.

Educational For a number of years Sustainable Energy (SEI) Ireland has been developing
Initiatives a wide range of programmes towards active energy education within the
school system. Activities are based on carefully researched and piloted
schemes which integrate closely with the curricula at primary and secondary
level.

8
Measures under
Consideration

Heat Energy SEI led the development of a heat energy rating software package for use by
Rating architects, designers and building contractors. The purpose of this package is
to enable the users to demonstrate compliance with the updated Building
Regulations, as it relates to consumption of fuel and energy for buildings
constructed after the Regulations came into effect. The Building Regulations
are to be revised in January 2003 and Sustainable Energy Ireland will update
the package to address the more stringent requirements.

SEI has initiated a programme to develop a comprehensive Home Energy


Rating Scheme. This line of activity will establish an energy rating system for
homes and ensure that those homes rated are included in a national
database. The emphasis will, in the first stages at least, be on the pre-1980
housing stock where energy performance is particularly poor.

The energy rating of houses will be promoted with the aim of making energy
efficiency a significant factor in rental and purchase decisions.

PUBLIC SECTOR

Measures already
existing and/or
being improved

Government The Green Paper on Sustainable Energy outlines the need to make significant
Buildings energy savings in the public sector as part of the wider obligation to reduce
Greenhouse Gas emissions. In that context the government decided in July
2001 to require all public sector Departments, agencies, non-commercial state
bodies, health boards and local authorities with responsibility for new building
construction or major refurbishment to use best practice in both materials and
technology and to avail of opportunities being promoted by the Irish Energy
Centre (now Sustainable Energy Ireland). In addition the government decided
that all government departments and state bodies be required to report
annually in their Annual Reports to Government and the Oireachtas (the two
houses of Irish Parliament) on measures to reduce energy usage in buildings
occupied by them.

The programme consists of a number of complementary schemes that will


promote innovation and develop the market for goods and services to
strengthen existing energy efficiency measures in the wider arena.

The Economic and Social Infrastructure Operational Programme within the


framework of the National Development Plan 2000-2006 provides
2
€ 12.7 million (Ir£10 million ) for energy efficiency initiatives in public sector
buildings.

The Design Study Support Scheme, launched in June 2001, will provide
financial support of € 2.02 million (Ir£1.6 million) to public sector bodies for the
purposes of procuring external professional expertise to examine and report
on the technical and economic feasibility of energy efficient design and
technology solutions in new building and refurbishment projects.

The “Model Solutions” Investment Support Scheme, launched in August 2001,


will provide investment assistance of € 9.08 million (Ir£7.15 million) to selected
projects undertaken by public sector organisations whereby they propose
additional investment in building energy conservation technologies or

2
On average in 2001, Ir₤1 = US$ 1.138.

9
measures in new or existing buildings.

A scheme to provide financial support of € 1.6 million (Ir£1.25 million) to


energy management bureau operations to encourage the development of
energy management service companies to provide off-site energy control and
management for public sector buildings has just been launched.

The Irish Energy Centre (now SEI) administers these schemes and plans will
be developed by them to extend the example given by public sector buildings
to the private commercial sector.

The installation of a comprehensive Building Energy Management System is


the latest on-going development in this sector and is central to the success of
the energy conservation programme for state buildings. This system concept
which was developed with the support of SEI, when completed, will facilitate
rapid collection and analysis of energy data relating to the 150 largest
government department buildings. Included in the benefits will be the timely
receipt and processing of the data which will allow for faster intervention in the
event of abnormal specific energy consumption being detected.

Local National House Conditions Survey


Authorities An energy module has been included in the current survey, with a strong
Buildings and focus of energy use and energy conservation, allowing a greater integration of
Public Housing energy efficiency considerations into housing policy in the future. A number of
questions on heating and types of heating fuel consumption and methods of
insulation have been included. It is expected that fieldwork will continue until
May 2002, and the final report will be published in the autumn.

New House Grants


The Housing (Miscellaneous Provisions) (No 2) Bill 2001, published in
December 2001, contains a provision enabling the making of regulations
providing for greater flexibility for the payment of new house grants in the
future, including differential rates to encourage more efficient use of energy,
and the use of renewable forms of energy.

Regeneration of Housing Area


Current regeneration programmes have a positive impact on greenhouse gas
emissions, as all new units are to current standards and refurbished existing
units are brought to a higher standard than heretofore.

INDUSTRY

Measures already
existing/and or
being improved

Energy SEI organises seminars, workshops and publishes case studies and guides in
Management support of energy managers in industry and commerce. Recent and current
topics covered under these activities include building energy management
systems, boiler efficiency, variable speed drives, compressed air, lighting and
lighting controls and combined heat and power.

Voluntary The Annual Self-Audit and Statement of Energy Accounts Scheme is a


Agreement voluntary agreement to which companies subscribe as a public commitment to
good energy management practice. The Scheme, administered by
Sustainable Energy Ireland, was established in 1994. Companies commit
themselves to setting out an energy management policy, the core of which will
be an annual internal audit of their energy performance, coupled with a public
statement of energy accounts, including targets and plans for the coming year.

10
The performance and targets set are recorded in the Scheme's Annual report
which also summarises the technical and organisational measures undertaken
by firms to achieve their energy savings targets.

The fourth annual report was launched in late 2001 and showed that the
scheme accounts for over a third of the energy use in the industrial sector with
a total energy spent in 2000 of approximately € 234 million. In 2000, the Self-
Audit Scheme resulted in the reduction in CO2 of in excess of 124 000 tonnes,
representing a cumulative energy saving of € 16 million.

In the 1999 in-depth review of the energy policies of Ireland, the IEA stated:

The Government of Ireland should:

· Discuss with industry the need for mandatory energy efficiency targets
and measures, possibly implemented through enforceable agreements
entered into voluntarily.

Information/ Sustainable Energy Ireland (SEI) has responsibility for various national
Technical information and technical assistance activities. Most of the workshops have
Assistance an industrial focus. Many energy efficiency seminars have been run as part of
or in association with the EU programmes THERMIE and SAVE.

DSM DSM Performance (1997-2000)


The Electricity Support Board (ESB) commenced its demand-side
management (DSM) programme in 1991 both to delay future investment in
power generation and to reduce environmental emissions by encouraging
customers to use electricity more efficiently.

ESB maintained the DSM programme in its original format until the end of
2000. Modifications to the programme were introduced in 2002 related to the
new electricity supply industry structure. The DSM programme secured total
savings of 324 GWh (Gigawatt-hours) over the period 1997-2000 inclusive.
These savings are based on the savings achieved in a single year for the
measures implemented. The corresponding savings in tonnes of CO2
emissions for each of the individual years 1997 through to 2000 were 100 000,
60 000, 50 000 and 40 000 respectively.

DSM/Energy Efficiency Performance (2001)


The changed approach to DSM and promotion of energy efficiency reflects
changes in roles and responsibilities in this regard arising from market
liberalisation. Forty per cent of the Irish electricity market is now open to
competition. All customers were given access to green suppliers in 2002.

During 2001, ESB Customer Supply entered into discussions with the
Commission for Electricity Regulation (CER) on its future role in delivering
energy efficiency services. For the period 2002-2005, CER agreed to allow
ESB Customer Supply funding for ongoing energy efficiency programmes
within ESB’s regulated revenue stream as the Public Electricity Supplier.

ESB Customer Supply also agreed to change the basis of the reporting of
energy savings starting in 2001. This means efficiency savings would be
reported on the basis of lifetime savings for the measures implemented rather
than for a single year as with the 1991-2000 programme. Also, it was agreed
that ESB would report savings for projects significantly influenced by ESB
since the market for energy efficiency products is now well established. In the
1991-2000 programme, huge efficiency savings were claimed, especially in
the residential sector, because of ESB’s key role in market transformation. As
2001 represented a transition year, ESB reported efficiency savings based on
the lifetime of the measures. The total lifetime energy savings achieved in

11
2001 amounted to 126.5 GWh, equivalent to 100 000 tonnes of CO2.

Combined At the end of 1997, there were 53 CHP installations operating in Ireland with a
Heat and total installed capacity of 86.65 MW. The Fourth Alternative Energy
Power Requirement Scheme (AER4) competition was launched in September 1997
to support the competitive development of CHP. The Department of Public
Enterprise (formerly the Department of Transport, Energy and
Communications) appointed the UK Agency ETSU to run the competition on
its behalf. The AER4 competition, the results of which were announced in
August 1998, produced offers of up to 50 MW. The objective of this
competition was to secure 25 Mwe of newly installed electricity-generating
capacity from existing similar systems. In actual fact, only 18.35 Mwe was
commissioned. This period of incentivisation resulted in slow but continuous
growth and by the end of 1999 122 Mwe was installed in 78 plants around the
country.

Another critical component of the Green Paper was the commissioning of a


report from Sustainable Energy Ireland, to examine the status of combined
heat and power (CHP) in the current Irish market, in the light of market
liberalisation, technology advances, fuel sources, extension of gas grid and
financial incentives. The government clearly indicated its aspirations for CHP
in this strategy document in response to the Kyoto Protocol. This strategy
allocates 0.25 Mt CO2 per year saving from the use of CHP by the year 2010.
This equates approximately to the installation of an additional 250 Mwe of
CHP plant, a tripling of current capacity. The report – An Examination of the
Future Potential of CHP in Ireland was presented to the Minister of State in
December 2001 and was subsequently put out to public consultation. This
consultation is now complete and following consideration of its results, a
decision will be taken on the necessary measures to facilitate the achievement
of the target in the National Climate Change Strategy.

In the 1999 in-depth review of the energy policies of Ireland, the IEA stated:

The Government of Ireland should:

· Give priority to gas market issues which impact on electricity sector


reforms, such as non-discriminatory allocation rules for potential gas-fired
power generators, including small cogenerators in the commercial and
household sectors.

TRANSPORT

Measures already
existing and/or
being improved

Operational Rail network


Programme Total investment in the mainline rail network will amount to about € 1.3 billion
for Transport focusing on track renewal, modern signalling systems and rolling stock,
encouraging greater use of the railways for passenger and freight transport.

Road Network
The overall target of the operational programme is to provide a national road
network to give an inter-urban travel speed of 80 km/h. With a total planned
investment of over € 6 billion over the course of the National Development
Plan 2000-2006, this commitment is aimed at improving the road network
between the main urban centres, removing bottlenecks on those routes and
reducing urban congestion by the provision of new river crossings, ring-roads
and relief roads.

12
Modal shift from private to public transport is an important facet of Ireland’s
approach to reducing greenhouse gas emissions. The government’s transport
strategy for 2000-2016 for the Greater Dublin Area (A Platform for Change)
aims to reduce growth in the demand for transport, particularly for private
transport, and to reduce the need for car commuting by improving the
reliability, availability and quality of public transport. The strategy is based on
the two interdependent elements of demand management and public transport
infrastructure/service improvements, and will be reinforced by complementary
land use policies.

Through demand management it is intended to reduce growth in travel and to


encourage modal transfer from the private car to sustainable modes of travel,
such as public transport, cycling and walking.

Vehicle Car testing which is a requirement under EU Law was introduced in Ireland on
Testing 4 January 2000. Its introduction will enhance road safety and environmental
protection.

Measures under Sustainable Energy Ireland is currently working on a transport programme


Consideration strategy, the details of which have not yet been put out to public consultation.

MONITORING/ The Green Paper on Sustainable Energy was published by the Irish
ASSESSMENT government in September 1999. In preparing the Green Paper, the views of
interested parties were sought through a public consultative process. In all 67
submissions were received from a wide range of interests.

In May 1998, the Energy Advisory Board commissioned a report London


Economics Study on Energy Efficiency Policy post 1999 on future options for
energy efficiency policy. The report was also a part of the consultations, which
eventually culminated in the Green Paper on Sustainable Energy.

The report covers the period 2000-2005 and assesses the potential scale of
improvements in energy efficiency in Ireland; reviews the objectives of Irish
energy efficiency policy; reviews international best practice in energy
efficiency measures and their relevance to Ireland; develops
recommendations on future programmes, institutions and funding.

Further For further information, please contact:


information
Ms. Ciara O’Sullivan
Sustainable Energy Division
Department of Communications, Marine & Natural Resources
Leeson Lane
Dublin 2
Ireland
tel. +353 (1) 604 1596
fax +353 (1) 604 1274
email ciaraosullivan@dpe.ie

13
Energy
IEA Efficiency
Update

ITALY Updated January 2003

BACKGROUND

NEP’88 The 1988 National Energy Plan (NEP’88) includes the improvement of energy
efficiency and conservation as a primary objective of general energy policy.

Law The basic law on energy efficiency is Law No. 10/1991, entitled Regulations
No. 10/1991 for the implementation of the National Energy Plan with regard to the rational
use of energy, energy savings and the development of renewable energy
sources. It is a framework law to introduce regulations aimed at the efficient
use of energy sources in all end-use sectors including the specific reduction of
energy consumption in production processes, especially in buildings and
heating plants. The law provides for tax relief and the payment by local
authorities of incentives to support the adoption of the most efficient
technological solutions.

Situation and At the end of 2001, the Italian Parliament, via its Commission for the
Perspectives in the Productive Activities of the Chamber of Deputies, promoted a major national
Energy Sector investigation into the energy situation and its perspectives. After intensive
work, the Parliament Commission approved and published on 18 April 2002 a
document entitled Situation and perspectives in the Energy Sector. This
document indicates three strategic paths, including the increase of energy
efficiency in end uses, taking into account that a mix of energy efficiency and
renewable energy sources allows for the costs incurred by the reduction of
greenhouse gas emissions to be minimised.

Energy Italy signed the Framework Convention on Climate Change (FCCC) in Rio de
and the Janeiro during UNCED in June 1992. Parliament approved Italy’s agreement
Environment FCCC by Law No. 65 of 15 January 1994. The Programma Nazionale per la
limitazione delle emissioni di anidride carbonica nel 2000 al valore del 1990
(National Programme for Limiting Carbon-related Emissions to 1990 levels by
2000) was approved by the Interministerial Committee for Economic Planning
(CIPE) in the session of 25 February 1994.

This National Programme describes, inter alia, existing measures for energy
efficiency and sets out in broad terms additional actions that Italy could take.
The First Italian National Communication of January 1995 is based on the
information and programmes contained in the National Programme for
Limiting Carbon-related Emissions which gave high priority to energy
efficiency through the following steps:

· Financial incentives in the industrial and transport sectors.


· Efficiency standards in transport, industry and residential sectors.
· Voluntary government-industry agreements on energy efficiency.
· Demand reduction programmes in the residential sector.
· Information dissemination and expanded product labelling and certification
in the transport and residential sectors.

A report was prepared by CIPE (Governmental Economic Planning


Committee) for the Second National Communication to the FCCC and
released on 3 December 1997. The report envisaged several measures to be
taken, i.e. regulatory measures, economic investments, promotion of
renewables and voluntary agreements with industry.

At the Fourth Conference of the Parties (COP-IV) to the FCCC held in Kyoto
in December 1997, the European Union as a whole agreed to reduce the
emissions of a basket of six gases by 8% from 1990 levels by the period
2008-2012. In June 1998, the European Union Council of Environment

1
1
Ministers reached a Burden-Sharing Agreement on emission reduction
commitments, to re-allocate internally the 8% reduction agreed at Kyoto. The
reduction commitments are expressed as a percentage of 1990 levels for the
2008-2012 period.

Under the Burden-Sharing Agreement, Italy is committed to reducing its


emissions by 6.5% between 1990 and 2008-2012.

In June 2002, the Italian Parliament approved the Law No. 120 to ratify the
Kyoto Protocol. According to this Law, a suitable national plan aimed at
reducing GHG emissions and increasing absorption will be submitted, before
30 September 2002, to the Interministerial Committee for Economic Planning
(CIPE).

An interministerial group was created, comprised of the Ministries of Industry,


Transport, Research, Public Works, Finance and Agriculture and chaired by
the Ministry of the Environment. According to the report released in
November 1998, in a business-as-usual scenario, greenhouse gas (GHG)
emissions would increase 12% to 622 Mt in 2010. The report lists more
detailed measures than those in the 1997 plan to decrease GHG emissions by
about 100 Mt from business-as-usual growth and to meet the Kyoto target.

CIPE The guidelines and actions for the containment and reduction of GHG
Deliberation emissions were identified by the CIPE Deliberation 137/98 published on
137/98 10 February 1999. It includes, inter alia, the following measures:

· Increasing energy efficiency in the production sector and among


consumers.
· Reducing GHG in the transport sector and in sectors other than the
energy sector.
· Reducing GHG in the generation, transport and distribution of electricity.
· Promoting international co-operation for the reduction of global emissions.

Legislative On June 2001, the Ministry of the Environment enacted a Legislative Decree
Decree providing the list of selected programmes and related funding according to
of June 2001 Decree No. 337/2000. The total amount addressed to supportive actions and
programmes for GHG emissions reduction is worth € 25 million for national
programmes and € 17.5 million for international co-operation programmes
regarding Kyoto mechanisms. For the former, selected programmes relate to
demonstration projects in the fields of cogeneration plants in the production
and civil sectors; improvement in energy efficiency in the industrial,
residential, tertiary and transport sectors and development of engines at low or
zero emission.

Institutional As far as energy is concerned, the Legislative Decree of 31 March 1998


Arrangements (No. 112/1998) as modified by the Legislative Decree of 29 November 1999
(No 443/1999) shares the responsibilities among the state, the regions and
the local authorities.

The state is still responsible for the elaboration and definition of energy policy
objectives and guidelines, and for action to address and co-ordinate energy
planning at the regional level. The new text of article 117 of the Constitution,
introduced by the Constitutional Law of 18 October 2001 (No. 3) has inserted,
among the subjects of current legislation, the production, transport and
national distribution of energy: this means that the State sets the policy, the
main guidelines and the general objectives by law, while the Regions concur
to determine specific laws and rules for the realisation of the objectives.

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

2
The Region's main responsibilities are as follows:

- The drafting and adoption of programmes aimed at promoting energy


efficiency and renewable energy sources.
- Funding energy savings and controlling energy efficiency of industrial
plants.
- Assisting local authorities responsible for the control of energy savings,
rational use of energy and other rules laid down by regional legislation.
- Licensing for the building and management of electricity plants below 300
MW th.
- Granting licences for onshore hydrocarbon production.

A Programme Agreement between the regions and ENEA (the National


Agency for New Technology, Energy and Environment) was designed to
provide a framework for co-operation. ENEA provides expertise upon request,
and regions pay for the service. A Regional Co-ordination Group for Energy
was created in which ENEA acts as a secretariat to deal with issues under the
regions' jurisdiction.

Responsibility for energy policy lies primarily with the Ministry of Productive
Activities (formerly Ministry of Industry, Commerce and Crafts), in co-
ordination with other Ministries (including the Ministry for the Environment),
interministerial Committees, government organisations and independent
agencies. The Interministerial Committee for Economic Planning (CIPE) co-
ordinates national energy policy with economic policy. It issues deliberations
which give a framework to energy policy.

In the 1999 in-depth review of the energy policies of Italy, the IEA stated:

The Italian Government should:

· Clearly define the responsibilities of the regions and the local authorities
for energy efficiency measures and ensure that they are carried out
effectively in co-operation with ENEA. Ensure that regions focus on the
most cost-effective measures.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building Regulations on mandatory efficiency codes, drawn up by ENEA, for all new
Standards buildings and renovation of old buildings, were introduced in October 1993.
ENEA is also preparing additional non-mandatory building codes.

Ministerial Decrees of 7 October 1991 and 6 August 1994 revised the


mandatory minimum energy efficiency standards for the shell of newly
constructed buildings, residential and non-residential, and the introduction of
rules and methods of calculation to determine the seasonal energy
consumption of buildings.

Ministerial Decree of 13 December 1993 sets out the procedure for


submission of the technical report, described in Article 28, Law No. 10/91,
confirming the respect of rules limiting energy consumption in buildings.

At present, two new decrees are being prepared by the Ministry of Public
Works to implement Article 4c 1-2 of Law No. 10/91. These decrees will set
criteria for design and maintenance of buildings and will furthermore reduce

3
the limit values of specific power lost by transmission. Emissions of CO2
should be reduced by 10% in two years in the new built residential sector.

In the 1999 in-depth review of the energy policies of Italy, the IEA stated:

The Italian Government should:

· Continue to tighten building codes and to ensure that they are


appropriately implemented at the local level, especially in the renovation
of buildings.

Energy Since 1991, energy audits of buildings have been implemented by ENEA on
Audits the basis of a voluntary agreement concluded between ENEA and the Ministry
of Public Works. In four pilot towns, energy audits were performed in 10 000
apartments.

Inspection Presidential Decree No. 412 of 26 August 1993 implementing Law No. 10/91
of Boilers sets regulations limiting energy consumption with special reference to the
design, installation, running and maintenance of heating plants. Twelve
million heating plants are concerned. The programme, begun in 1994,
requires plants to be inspected every one or two years depending on the size
of the boiler. Air temperature in heated buildings must be 20°C + 2°C.
Sanctions for non-compliance are foreseen but are not yet in place. ENEA
supports the programme by providing training and information to the
municipalities who are responsible for the inspection.

Billing Billing of heating, air-conditioning and hot water costs is covered under Law
No. 10/91. Costs for heating are apportioned by surface. For new buildings
and existing buildings undergoing major renovation, it is compulsory to make
allowance for individual measurement, but it is not compulsory to install the
measuring equipment (Article 2.6 of Law No. 10/91). By requiring it at the
design stage, it will be easier to introduce individual metering if it becomes
mandatory. The local administration is requested to respect the norms. A
limited number of local administrations are tightening controls.

Financial/ Law No. 449/97 allows a fiscal reduction of 41% of the cost (VAT included)
Fiscal related to building restructuring carried out during 1998 and 1999. The
Measures reduction applies only to building owners who have to pay personal tax
(IRPEF) and is subdivided into five to ten annual rates. The reduction is
applicable for costs limited to € 77 468 per building unit per person per year.
About 200 000 requests were submitted in 1998. This law was not specifically
designed for energy purposes but to support the construction sector.

Information A five-year energy information campaign, co-ordinated by the Ministry of


Campaigns Industry (now, the Ministry of Productive Activities), ENEA, ENEL (the national
electricity utility) and ENI, the oil and gas company was launched in 1993.
ENEA’s activities (ERG-PROM, the Rational Use of Energy Division of
ENEA’s Energy Department) include the dissemination of information through
regional energy consulting centres and training programmes, particularly for
small and medium-sized industries.

An agreement between the Ministry of Industry and ENEA established a


budget of € 150 000 a year to support information on energy efficiency for the
residential/commercial sector.

Energy Italy has transposed the EU Directive on Energy Performance Standards for
Labelling and refrigerators and freezers and, in November 1998, the EU Directive on Energy
Certification Labelling for refrigerators and freezers. The Ministry of Industry envisaged an
incentive scheme for households which are willing to replace old appliances
with more energy-efficient ones.

4
In the 1999 in-depth review of the energy policies of Italy, the IEA stated:

The Italian Government should:

· Implement EU Directives on Energy Labelling and Standards in a timely


way and contribute positively to the development of other measures.

INDUSTRY

Measures already
existing and/or
being improved

Energy Under Laws No. 9/91 and 10/1991 and Decree 15/2/92, Italy supported
Audits energy audits in small and medium-sized enterprises. The programmes
2
started in 1992 and ended in 1995. About L 9 billion were provided for such
energy audits. Some 600 audits were undertaken.

Energy To implement Article 19 of Law 10/91, circulars of the Ministry of Industry No.
Managers 219/f of 2 March 1992 and 226/f of 3 March 1992 issued regulations on the
compulsory appointment of energy managers for all industrial, commercial,
public and transport sectors companies and organisations consuming more
than 10 000 toe per year (industry) or 1 000 toe per year (other); 750
companies have appointed energy managers. Energy managers can also
operate within an Energy Saving Company (ESCO) to recognise, plan,
manage and eventually finance energy saving interventions. Companies that
fail to comply with this regulation are not eligible for grants for energy
efficiency investments and are liable to be fined.

The FIRE (Italian Federation for the Rational Use of Energy) association
collects and represents the 2 000 Italian energy managers on behalf of the
Ministry of Productive Activities. The FIRE web site (http://www.fire-italia.it)
contains a forum which actively aims to define energy efficiency indicators for
several energy-saving interventions

Through an agreement between the Ministry of Industry, ENEA and FIRE an


annual budget of € 400 000 is available to support this network of energy
managers in all sectors.

Voluntary Since 1998, the Italian government has developed a joint voluntary
Agreements programme with FIAT, the major Italian car manufacturer, for the development
of low consumption vehicles. FIAT is committed to the following goals: by
2000, a general public model with a consumption of 4.5 litres/100 km, by
2005, a model in production with a consumption of 3 litres/100 km and by
2010, the average vehicle produced should consume less than
5.5 litres/100 km. Furthermore, FIAT should build a platform for used car
recycling.

Another voluntary agreement dated 31 July 1996 between the government


and FIAT is aimed at producing low impact gas, electric and hybrid fuelled
vehicles.

The glass industry has concluded a voluntary agreement with the government
establishing a programme to reduce GHG emissions by about 10% by 2005.
This agreement includes monitoring mechanisms and if the manufacturer fails
to comply with the agreement, the government imposes standards at the
national level.

2
On average in 1999, L 100 = US$ 0.056. In 2001 L 100 = US$ 0.046.

5
In November 1998, the industry entered into a framework agreement with the
government entitled Patto per l'energia ed ambiante that will later lead to
voluntary agreements to reduce CO2 emissions through increased energy
efficiency and use of renewable energy sources.

In July 2000, ENEL, the Ministry of Productive Activities and the Ministry for
the Environment signed a voluntary agreement on demand side management
for collaborating in GHG reduction, through the following actions:

· Supplying energy services after the meter.


· Increasing energy efficiency in electrical end-uses.
· Optimisation of public lighting.
· Development and dissemination of electrical equipment and technologies.
· Defining agreements with its suppliers in order to produce and use low
GHG emission products and equipment.

In the 1999 in-depth review of the energy policies of Italy, the IEA stated:

The Italian Government should:

· Continue to develop Voluntary Agreements with industry, taking account


of the experiences in other countries, and monitor their results to ensure
that these Voluntary Agreements lead to energy efficiency improvements
significantly beyond the business-as-usual trend.

Combined As of December 2001, total installed power of CHP (combined heat and
Heat and power) plants accounted for some 11 900 MW, of which:
Power
· 7 700 MW were from IPPs.
· 4 200 were from auto-producers.

According to the provisions of the Legislative Decree of 16 March 1999


(No. 79/99) entitled Implementing the European Directive 96/92/EC with
common rules for the single market of electricity:

· The GRTN (the public transmission system operator) must ensure


precedence for the co-generation plants' dispatching (immediately after
the plant fed by renewable sources): there is the obligation for any
producer or importer handling more than 100 GWh/year to feed the
system with at least 2% of CHP or renewable sources produced by plants
that entered into production after 1 April 1999.
· From 1 January 2002, outputs from cogeneration plants are exempt from
the obligation to introduce into the electricity network (or to acquire) a
quantity of electricity from renewable sources equal to 2% of the electricity
generated by conventional sources.

In early 2002, the Regulatory Authority for Electricity and Gas defined the
conditions under which a CHP plant can be considered a cogeneration plant.
The criteria take into account the efficiency of generation and the relevant
savings as compared to a separate production of the same quantity of power
and heat. Furthermore, a minimum value (15%) has been set for the ratio
between the heat and the total energy produced by the plant.

Industrial DSM Legislative Decrees No. 79/1999 and No. 164/2000, enacted to comply with
Promotion and the European Directives concerning the opening of the electricity and gas
Assistance markets, specify that the government concession to companies to undertake
the distribution of electricity and gas shall include the implementation of
measures for the improvement of energy efficiency in end-uses according to
quantitative targets.

6
The quantitative targets, the modalities for designing and implementing the
programmes and the monitoring and assessment procedures of the energy
saving programmes were defined by two Decrees issued on 24 April 2001 by
the Ministry of Productive Activities in collaboration with the Ministry of the
Environment. The Regulatory Authority for Electricity and Gas is drawing up
guidelines for the identification and selection of suitable projects and the
monitoring of the results achieved.

The targets are progressive from 2002 to 2006. In the first year (2002), the
primary energy saving should be 0.50 Mtoe (0.3 for the electric sector and
0.2 Mtoe for the gas sector); in 2006, the energy saved should exceed
2.9 Mtoe/year of which 1.60 Mtoe for the electric sector and 1.30 Mtoe for the
gas sector. The obligations are in force for those distributors providing
electricity or gas to more than 100 000 end-users by 31 December 2001. The
quota of energy saving to be achieved by a single distributor is proportional to
the ratio between the electricity or gas it distributes at a local level and the
total electricity or gas distributed at a national level. Fines are envisaged for
distributors who do not achieve their assigned targets.

The projects designed to comply with the requirements of the Decrees may be
implemented in three ways:

a) Actions carried out directly by distributors.


b) Through companies owned/controlled by the distribution companies
themselves.
c) Through ESCOs.

The costs incurred by distributors for the implementation of projects can be


covered with part of the annual proceeds coming from the carbon-tax and
from tariffs paid by all end-users (either captive and eligible customers).

It is expected that the implementation of energy efficiency programmes carried


out under the two above-mentioned Decrees will achieve by 2006 a GHG
emissions reduction of 7.3 Mtoe, that is about 15% of the Italian commitment
under the Kyoto Protocol.

Under the 1991 planning agreement between the Ministry of Industry and
ENEL, negotiated under Law 9/91 and covering 1991-1995, ENEL undertook
to promote savings in electrical end-uses through technical assistance, advice
and information dissemination. Programmes focused on efficient heat pumps
for water heating and air conditioning; compact fluorescent light bulbs; solar
panels in the residential and commercial sectors; capacitors to improve power
factors on customer premises; and cogeneration in small and medium-sized
enterprises.

The separation of generation, transmission, distribution and supply phases is


a fundamental issue of the energy market reform in Italy. Relevant efforts
addressed at disaggregation of the power industry resulted in a restructuring
of ENEL. The following companies have been set up: in the generation area,
Enel Produzione together with Erga for activities in the sector of renewable
sources; three new companies (Euroen, Elettrogen and Interpower) to be sold
on the market, with power plants having an overall net capacity of 15 000 MW;
in the area of the transmission, Terna which has the ownership of the high-
voltage grid; in the distribution area Enel Distribuzione together with Enel
Trade for the contracting and selling of electricity to eligible clients and Enel.si
for post-meter services. The main options that have been identified include
efficient lighting systems, heat pumps, solar panels, insulation and
temperature control, and motive power and power factor correction, including
household appliance labelling and efficient industrial transformers. Finally, the

7
management of public lighting plants has been entrusted to So.l.e.

Financial/ Under Law No. 10/91 and Decree 15/02/92, financial contributions were
Fiscal provided to support investments in energy efficiency and renewables in all
Incentives energy sectors. The main contributions which were made to help industry and
the industry sector were stopped in 1994 at the central level but some regional
subsidies are still in operation. A total of 211 projects have been completed
and 132 projects are currently under way. A total budget of 1 040 million ECU
was presented (in 1991 currency), but 330 million ECU (in 1994 currency) was
effectively engaged and 145 million ECU (in 1996 currency) has already been
allocated. The government’s financial difficulties have led to these successive
postponements of funding for these grants.

Under Law No. 9/91 and the Decree of the Prices Committee No. 6/92, the
public utility ENEL purchases at avoided costs the electricity produced by
renewable sources, waste and cogeneration. This regulation came to an end
in 1997. Proposals for about 16 000 MW were presented but ENEL accepted
only 7 200 MW, i.e. 3 700 MW of cogeneration, 1 400 MW for plants based on
waste and 2 100 MW based on renewable sources. A total of 5 000 MW is
already in operation; plants must be completed by 2001. Avoided costs and
incentive premiums paid by consumers to producers are provided for the first
eight years. This resulted in 1998 in a total surcharge on electricity
consumers of about € 1 200 million.

By Decision of the Council of Ministers of 26 November 1999, the amount of


L 300 billion will be used to fund sectoral compensating measures with
incentives for energy efficiency, emissions reduction and renewable energy
sources. In 1999, the interventions eligible for co-financing were:

· National actions for emissions reduction, such as reduction of energy


consumption in transportation (sustainable mobility, intelligent transport
systems, hybrid and electric vehicles for public fleets); reduction of energy
consumption in the civil and industrial sectors (energy efficiency in end-
uses of electricity, highly efficient systems for heating and air conditioning,
efficient energy components in industry).
· Programmes for information on climate change and for research on
climate.
· Encouragement of Kyoto mechanisms (financial support up to 50%).

Information ENEA and FIRE provide information on energy efficiency and organise
updating courses. Several institutions organise local educational courses.

PUBLIC SECTOR

Measures already
existing and/or
being improved

Energy As mentioned under INDUSTRY above, Law No. 10/91 makes it mandatory
Managers for all administrations consuming more than 1 000 toe (primary sources) to
appoint an energy manager. Local administrations in charge of energy
regulation should use the network of energy managers to resolve sectoral
problems.

Local Law No. 10/91 requires communities with a population of over 50 000 to
Energy establish local energy plans with emphasis on renewable energy sources and
Plans combined heat and power (CHP). Due to weak administrative management
and budget constraints, few plans have been developed so far, with the
exceptions of Rome and Turin and some smaller cities like Padua or Rovigo.
However, Italian municipalities were to set up their energy budgets and

8
develop reduction plans for the years 2005 and 2010 by December 1998.

TRANSPORT

Measures already The state is in charge of railways, air, maritime and fluvial transport as well as
existing and/or motorways and national roads. The Italian authorities are well aware of the
being improved need for a better distribution in transport flows between road and rail traffic,
improvement of the public transport system and for increased efficiency of the
vehicles themselves but stress that these tasks are complex and costly to
implement. In recognition of these insufficiencies, transport policy is moving
away from direct state intervention to a more market-based strategy.

In the 1999 in-depth review of the energy policies of Italy, the IEA stated:

The Italian Government should:

· Increase the share of public transport and ensure that regions effectively
co-operate on inter-regional transport issues.

The General The General transport Plan (PGT), revised every three years, sets out national
Transport Plan transport objectives. In accordance with these objectives, Regional Transport
Plans are to be developed by regional authorities, Urban Traffic Plans (PUT)
and Urban Mobility Plans (PUM) by municipal authorities, and mobility plans
by companies with over 300 employees.

The 2001 PGT reiterates many of the 1994 objectives, with the primary goals
of bridging the gap between transport supply and demand and improving
economic efficiency and environmental effectiveness.

Vehicle Vehicle taxation is proportional to engine power and is equal to € 2.58/kW per
Taxation year for unleaded gasoline or Eco-gas-oil vehicles in the entire territory, with
the only exception of Venetia (€ 2.84/kW/year) and Marche (€ 2.79/kW/year).
The tax is increased for polluting vehicles and strongly reduced for low
environmental impact vehicles. For example, the tax on gas-oil vehicle (non-
Eco-gas-oil) amounts to € 7.82/kW/year); for hybrid (gasoline/methane or
gasoline/LPG vehicle, the tax is € 2.58/kW/year and only € 0.65/kW/year for
electric vehicles – after five years – and for methane or LPG vehicles. Electric
vehicles benefit from a zero tax the first five years.

Local Local public transport is not yet as cost-effective as it could be. It suffers from
Public lack of rail infrastructure, relatively low levels of equipment and services, and
Transport heavy reliance on congested road transport (67%). Urban bus use fell by 6%
between 1990 and 2000, whereas private car use for urban trips increased by
37%. While efforts to expand urban railways are showing initial results, the
overall supply remains low; underground lines in Milan, Naples, Rome and
Genoa total some 122 km, whereas tram lines in Turin, Milan, Rome, Naples,
Genoa and Trieste total some 407 km.

Financial assistance to regions and municipalities provided by government,


supports environmentally-friendly public transport and the modernisation of
local public transport services and vehicles. The purchase of new buses is
part of a ten-year plan (1998-2008) and of the 2001 PGT.

Vehicle In 1998, energy performance monitoring in vehicle certification was set up and
Certification is being progressively implemented.

Railway The weakest part of the transport system has always been the railways with
Network low train frequency, lack of punctuality, inadequate train schedules and
obsolete rolling stock. To overcome these problems, which discourage
potential travellers, the government has launched a complex investment plan

9
to expand the railway network and a plan to build high-speed lines is being
implemented. The cost would be L 88 000 billion by 2000 of which
approximately L 39 000 billion was already covered up to 1998.

Incentives for Government incentives were introduced in 1996 to progressively eliminate old
Renewal of cars and reduce the share of vehicles bought after 1990 to 75% by 2000.
Car Fleet Combined with incentives for low-emissions vehicles, they have resulted in
renewal of the car fleet and reductions in air emissions. The proportion of old
passenger cars has fallen to 37.2%; the share of cars equipped with catalytic
converters increased from 8.5% in 1992 to almost 50% in 2000. However, the
number of cars in use and the average engine size have increased. The share
of vehicles over ten years old remains considerable where trucks (50.8%),
buses (60.9%), and two-wheelers (56.6%) are concerned. In the period 2001-
2003, the Ministry for the Environment will support purchases by citizens of
new electric, methane or LPG vehicles and the retrofitting of cars with
LPG/methane investing a further € 7.7 million per year.

Measures under
Consideration

Intermodal Inter-modal transport (i.e. combined sea-land and rail-road transport) has
Transport progressed with the growth of trans-shipment terminals at several Italian ports,
inter-port hubs, and connections with rail and road networks. Container
movements at Italian ports have increased by 219% since 1990.

Carbon- Among substantial decisions adopted to fulfil the Kyoto commitment, a


Energy Carbon-Energy Tax was established by Law No. 448/1998 of December 1998
Tax with the twofold purpose of reducing CO2 emissions and reviewing fiscal rates
on oil in order to harmonise energy products taxation in the European Union
context.

The Law established the value of the excise taxes for 1999 (€ 0.52 per metric
tonne of coal, petroleum coke and "orimulsion" used in combustion plants) and
those for 2005, to be reached progressively. The increases between 1999 and
2004 were to be decided on a yearly basis by the government and set by
Decrees of the President of the Ministers' Cabinet. However, in September
2000, the CO2 tax increases were suspended by Decree No. 268/2000. The
structure of energy taxation has not changed since 1998, and the government
is presently considering revising the methodology of excise tax increases.

The proceeds from the tax are about L 2 180 billion for 1999 and L 2 271
billion in 2000 and 2001. They will be used to fund a reduction of manpower
cost, a reduction in employers insurance contribution and a contribution to
finance environmental projects.

On 22 November 2000, a decree was issued allocating L 300 billion from


proceeds of the 1999 carbon tax to measures and programmes for GHG
emissions reduction, including the promotion of renewable energy and energy
savings.

The interventions in energy efficiency eligible for co-financing are:

· Reduction of energy consumption in the transport sector: this concerns


formulation and updating of urban traffic plans, intelligent technologies for
transport systems (ITS), innovative vehicles (i.e. electric, hybrid) and fuels
(bio-fuels, natural gas) for urban mass transport fleets.
· Reduction of energy consumption in the industrial, residential and tertiary
sectors: this concerns energy-environment audits in industry, high
efficiency electric components (motors and drives) and appliances, low-
impact innovative fuels in industry.

10
MONITORING/ In recognition of the need to update the guidelines on energy policy and set up
ASSESSMENT a joint framework for both administrative and operational initiatives, the
government approved at the end of March 1998 the organisation of a National
Conference on Environment and Energy that took place in November 1998.
The Conference focused on environmental, social and economic aspects of
the energy sector: the primary goal is to achieve voluntary agreements
among government, companies and unions to pay increased attention to the
importance of energy availability for development, environmental protection
and achievement of national objectives.

In the concluding document, the government set, inter alia, the following
objectives: to promote sustainable development and to account for
environmental concerns in energy policy. The government plans to devote at
least L 5 000 billion from 1999 to 2004 to specific actions which were decided
at the National Conference, including increased efficiency in final energy use,
especially in the transport sector and to start a programme to reduce
greenhouse gas emissions.

Further For further information, please contact:


information
Ing. Dario Chello
Ministry of Production Activities
Directorate for Energy
Via Molise 2
I – 00100 Rome
tel. +39 (06) 4705 2651
fax +39 (06) 4705 2269
email dario.chello@minindustria.it

11
Energy
IEA Efficiency
Update

JAPAN Updated December 2002

BACKGROUND

Long-Term The 1990 Long-Term Energy Supply and Demand Outlook of elaborated by
Outlook the Advisory Committee for Energy, the advisory board of the Minister of
International Trade and Industry (MITI) was first revised in June 1994 and
approved by the Council of Ministers in September 1994. It illustrated the
targets for future supply and demand under the fundamental objectives of
Japan’s energy policy, the so-called “3Es”: economic growth, energy
security and environmental protection.

This Long-Term Outlook was revised again in June 1998 and presents
Japan’s supply and demand outlook for the year 2010, with reference to the
framework of the third Conference of the Parties (COP3) of the UN FCC
agreed in Kyoto in December 1997. On the demand side, it stresses the
need to control energy demand through the implementation of steady energy
conservation measures that are, to the extent possible, technologically and
economically feasible.

At COP3, Japan committed itself to achieve the target of reducing by 6%


over the period 2008 to 2012 the emission level of global warming gases
compared to the 1990 level. This represents a cut of about 150 million
tonnes of CO2 equivalent from 1995 emission levels. Japan's target for
energy-related carbon dioxide emissions, which account for about 80% of all
greenhouse gas emissions, is stabilisation at the fiscal year (FY) 1990 level
by FY 2010. To achieve this goal, the government established the
Guidelines of Measures to Prevent Global Warming.

The Japanese Diet approved ratification of the Kyoto Protocol on curbing


global warming at its plenary session on 30 May 2002. The ratification
documents were then submitted to the United Nations on 7 June 2002, and
Japan became the 74th of the 111 signatories to ratify the treaty.

Guideline of The Guideline of Measures to Prevent Global Warming of 19 June 1998


Measures to proposed a full package of measures, of which energy demand-side
Prevent Global measures such as: introduction of the "Top-Runner" method; rationalisation
Warming of energy use at factories and development of action plans for energy
conservation; development of infrastructure to improve the efficiency of
distribution, introduction of sophisticated road traffic systems to reduce traffic
congestion; development and diffusion of new energy conservation
technologies, including clean energy vehicles.

To achieve the Kyoto Protocol commitment, Japan revised and approved on


19 March 2002 the above-mentioned Guideline as a national plan: indeed,
the original Guideline of 1998 was considered insufficient to comply with the
Kyoto target. The new Guideline introduces 45 fresh approaches including
further promotion of renewable energy and energy conservation and energy
efficiency, giving a total of more than 100 approaches. In light of these
approaches, Japan has introduced two energy-related bills: one is the
"Amended Law Concerning the Rational Use of Energy" and the other is the
"Special Measures Law Concerning the Promotion of the Use of New Energy
by Electricity Suppliers"

The new Guideline features present the reduction goals to be imposed on


each sector for the first time. The industrial sector is required to carry out a
7% cut of GHG emissions, while a 2% reduction is sought in the residential/
commercial sector. It also calls for the transport sector to halt growth of gas
emissions at 175 above the 1990 level. Thus, the reduction of CO2

1
emissions from energy use in the form of fuel combustion is expected to go
back to the 1990 level.

The new Guideline also indicates that Japan will achieve 0.5% of the 6% cut
through the reduction of emissions not from energy use, 2% through the
development of innovative technologies and citizens' efforts, 3.9% through
forest absorption, and 1.6 % through the so-called Kyoto Mechanism. Since
there is also a 2% increase in some GHG emissions, the total reduction
expected to be achieved is the targeted 6%.

1993 Law In this context, in 1993 it was judged essential to amend the Law Concerning
Concerning the the Rational Use of Energy, known as the Energy Conservation Law, and at
Rational Use of the same time establish the Law Concerning the Rational Use of Energy and
Energy Recycled Resources Utilisation, known as the Energy Conservation
Assistance Law, and apply it to actions assisting business operators who
voluntarily tackle such activities as the rationalisation of energy use and
utilisation of recycled resources.

The promotion of energy conservation measures included the promotion of


energy conservation equipment and systems; the accelerated development
and practical application of energy conservation technologies; the
formulation and proper application of guidelines based on the Law
Concerning the Rational Use of Energy, enhancing awareness of energy
conservation through publicity, etc., and the active promotion of an energy
conservation labelling system.

1998 Revised Law An important development in energy efficiency in Japan was the revised Law
Concerning the Concerning the Rational Use of Energy that was issued on 5 June 1998. The
Rational Use of main points of the revision approved by the Japanese Diet in June 2002 (to
Energy become effective on 1 April 2003) are that more factories, automobiles and
appliances will have to comply with stricter energy efficiency standards. (For
detailed information, see the following developments.)

The revised Energy Conservation Law must be considered in the general


context of the efforts made by the government which resulted in the setting
up in December 1997 of “the Headquarters of Measures to Arrest Global
Warming” to address comprehensive energy conservation measures to
control CO2 emissions.

CO2 Emissions The Joint Advisory Committee showed that the energy-related CO2
Estimated by emissions in FY 2010 would exceed by about 20 million tonnes of carbon
Advisory equivalent (of which about 6 million tonnes would be attributed to the
Committees demand side) the current countermeasure scenario in Japan. It therefore
in March 2001 showed that it is necessary to persist with the existing measures and monitor
the progress of their implementation to maximise their effectiveness, with
additional measures being introduced if necessary.

The total energy conservation effect in the residential/commercial sector,


industrial sector, transportation sector and cross-sectoral measures is
57 million kilolitres (kl), i.e.

· Share of existing measures: 50 million kl.


· Share of new measures: 7 million kl.

Government Energy In January 2001, the Ministry of International Trade and Industry (MITI)
Organisation became the Ministry of Economy, Trade and Industry (METI). The Agency
for Natural Resources and Energy (ANRE) has been reorganised into five
units, and is still responsible for comprehensive energy policies to ensure
strategic energy security, realise an efficient supply and promote energy
policies in harmony with the environment.

2
RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Energy Efficiency For items designated “specified equipment” by government ordinance, the
Standards and Energy Conservation Law established standards for improved energy
Labelling efficiency for manufacturers and importers (“manufacturers”) and made
energy efficiency labelling mandatory.

Under the 1993 Energy Conservation Law, if a manufacturer fails to comply


with a directive for appropriate labelling, the Minister of International Trade
and Industry is empowered to make the case public and issue an order. A
manufacturer who fails to obey an order is subject to a penalty.

The Revised Law of June 1998 sets a new fine for manufacturers and
importers of appliances in the case of non-compliance with government
instructions.

The energy efficiency standards adopted in the framework of the 1993


Energy Conservation Law are as follows:

· Energy efficiency standards for single-purpose air-conditioners and


combined air-conditioners and cooling units call for an average
improvement of 5-6% in energy efficiency over the FY 1992 results by
the end of September 1998.
· Standards for fluorescent lamps call for a 3-7% improvement in energy
efficiency by 2000 compared to that of FY 1992.
· Standards for televisions call for a 5-25% improvement in energy
efficiency by FY 1998 compared to that of FY 1991.
· Standards for copying machines call for a 3% average improvement in
energy efficiency by FY 2000 compared to that of FY 1992.
· Standards for electronic computers call for a 30% average improvement
in energy efficiency by FY 2000 compared to that in FY 1992.
· Standards for magnetic disk units call for an average improvement in
energy efficiency of 60% for single disk units and 80% for multi-disk
drives by FY 2000 compared to that of FY 1992.

Top Runner One of the main points of the revised Energy Conservation Law in force
Programme since 1 April 1999 is the Top Runner Programme; according to the Long-
Term Energy Supply-Demand Outlook of Japan, the country must adopt
drastic energy-savings measures of 56 million kl to reach the Japanese
commitment of the Kyoto Protocol, thus making energy consumption in 2010
similar to the 1996 level. Foremost among the measures needed are
measures imposed by legal action that aim to realise energy savings of 27
million kl. The Top Runner Programme is expected to achieve a saving of 9
million kl and reduce the emission of GHG by 6% by 2010.

In the Top Runner Programme, the energy efficiency target is based on the
product having the highest energy efficiency of all the products in the same
group that are sold on the market and where efforts are made to reach the
target number by the time set for each type of product. The Programme will
apply to both Japanese and imported products. It will apply to the following
12 categories of product: passenger cars, diesel passenger cars, trucks,
diesel trucks, air-conditioners, fluorescent lights, electric refrigerators, TV
sets, computers, VCRs, magnetic disk units, and copying machines.

3
Since each of the products has a variety of models with different sizes and
functions, it is unreasonable to apply the same single energy efficiency to all
of them: so, the Top Runner Programme divides each product into several
groups and establishes an energy efficiency target for each of the groups.
The principle is that the target is chosen from the model having the highest
energy efficiency of each product group and if a further improvement in
efficiency is expected by the target year as a result of technical progress,
this is added to the current highest efficiency.

If manufacturers fail to reach the target set by the programme, measures


such as a recommendation to take steps to raise energy efficiency are
issued by METI, followed by the publication of their name, etc. If
manufactures do not follow the recommendation, a penalty is imposed to
maintain the programme's effectiveness. Whether the target is reached is
not determined for each product; instead, it is assessed whether the
weighted average of the energy efficiency of the products which belong to a
group having the same target is above the target level or not for each
manufacturer or importer.

Expansion of In June 2002, the Japanese Diet approved the expansion of the Top Runner
the Top Runner Programme to come into force in April 2003. Committees of experts set
Programme target values relative to 2000 level and target years as follows:

- Gas Space Heaters -1.4% in 2006


- Oil Space Heaters -3.8% in 2006
- Gas Cooking Appliances -13.9% in 2006
- Gas Water heaters -4.1% in 2006
- Oil Waters Heaters -3.5 % in 2006
- Electric Bath Seat Warmer -10.0 % in 2006
- Vending Machines -33.9 % in 2005
- Distribution Transformer < AC 7 000 V
- Oil-immersed -30.3% in 2006
- Moulded -30.3% in 2007.

Reference: http://clearing.e-gov.go.jp/cgi-bin/HpSchearch.cgi?LANG=

New In the framework of the revised Law, more appliances — for example
Target refrigerators — will be added by Ordinance to the currently designated home
Values and electric appliances. Furthermore, this future energy efficiency target
value will be strengthened, i.e. set at a level higher than that of the appliance
with the highest energy consumption efficiency of the currently
commercialised products (except special items).

Standby Power In Japan, 10% of energy consumed in the domestic sector is standby power.
Reduction Three major manufacturers associations have set voluntary targets for
products requiring standby power to satisfy their functions to reduce this
standby power to 1 W or less by fiscal year 2003 (by the end of FY 2004 for
air-conditioners). Their voluntary target for standby power of the other
products is close to zero by the end of fiscal year 2003.

New Energy The current system


Efficiency Under the revised Energy Conservation Law of 5 June 1998, energy
Labelling labelling of the product's name, model, energy consumption efficiency and
System the electric power consumption of designated products is mandatory.
However, this labelling system does not require the energy consumption
performance of a product to be labelled in terms of a relative comparison
with that of other products. Hence, the new labelling system is aimed at
complementing this current system, so as to allow relative comparisons
between products and to provide the consumer with readily understandable
information regarding energy efficiency performance when selecting a
product.

4
Background of the new system
After an in-depth study of the advantages and disadvantages of the labelling
systems in the United States (the Energy Star Program) and in the European
Union, the Energy Conservation Standard Subcommittee of the Advisory
Committee for Energy, an advisory body to the METI Minister, developed a
proposal to display the rate of the existing Top Runner Standard on labels in
Japan; the proposal was submitted for consideration by the Japanese
Industrial Standards Committee (JIS), as the government's policy is to
promote the new system as a voluntary labelling system based on the JIS.

Scope of the new system


The products subject to the Top Runner Programme can be grouped into
three categories: automobiles, electrical appliances for commercial use, and
electrical appliances for home use. The automobile group will not be subject
to the new labelling system, as the mandatory requirement to label the
distance travelled per litre of fuel is estimated to be sufficient to inform
consumers on comparisons with the energy efficiency of other automobiles.
As for the energy efficiency of electrical appliances, it is believed that such
an indicator was not available to allow consumers to make accurate
judgements on energy efficiency, including comparisons with other products,
as in the case of automobiles. As for electrical appliances for commercial
use, since procurement departments within corporations generally make
purchase decisions, it follows that specialist opinion is required with regard
to energy efficiency as well. Thus, it was decided to apply the new labelling
system only to electrical appliances used by general consumers.

Implementation
After this matter was studied by the JIS in May 2000, the World Trade
Organisation procedure was fulfilled: the new JIS labelling system was
established in July 2000 and at the same time the details were made public.

Energy Conservation Target of Designated Machinery

Target Year Energy


Saving Effect

Air conditioner (for heating and cooling) 2004 (partly 2007) 63%
Air conditioner (exclusively for cooling) 2007 14%
Television set 2003 16%
Video tape recorder 2003 59%
Fluorescent light fixture 2005 17%
Copying machine 2006 30%
Computer 2005 83%
Magnetic disk device 2005 78%
Electric refrigerator/electric freezer 2004 30%

Energy saving effect : improvement from the 1997 performance

Energy The International Energy Star Programme is intended to use joint energy
Star conservation standards and a common logo in the approved countries
Programme (Japan and the United States). This has the effect of mutual recognition that
the products satisfy the standards. The Energy Star logo affixed to products
is also valid in the other approved country. Products concerned are personal
computers, displays, printers, facsimile and copying machines. Japanese
products meeting the standards may have the international Energy Star logo
affixed to them in the other approved country. The Energy Conservation
Center, Japan (ECCJ) is responsible for this programme.

Committee on Until now, energy conservation measures have focused on the supply side.
Advanced DSM However, with newly developed technologies, it is possible to implement

5
measures on the demand side: for instance, ECCJ selected 800 households
at random across the country and installed meters that showed power
consumption in both volume and cost terms in real time. A survey found that
these households' electricity consumption in FY 1998 was reduced by an
average of about 20% from the previous fiscal year. Based on this
experience, the Agency of Natural Resources and Energy under METI
(METI/ANRE) set up in March 2000 the Committee on Advanced Demand
Side Management as an advisory body to the Agency's Director General.
The Committee is studying DSM from the consumer's side with particular
emphasis on the residential/commercial sector where energy consumption is
expected to grow strongly in the near future.

Matters under investigation focus on:

· Ways of encouraging users to install systems that allow them to gain an


accurate knowledge of energy costs incurred.
· The introduction of systems that encourage energy conservation.
· Policies for the promotion of businesses that provide support for energy
conservation activities.
· Policies that will encourage users to invest in energy-saving equipment.

Following the positive experience of metering realised by the Energy


Conservation Center, Japan the Committee on Advanced DSM is examining
different plans to promote the installation of such metering systems. As for
the systems that promote energy conservation, various schemes have
already been devised in relation to electricity and gas rates, such as
increase of unit cost as the total power consumption increases, discounts for
supplies at night. In office buildings consuming large amounts of energy, it is
now mandatory to appoint someone in charge of energy management, which
will certainly increase interest in ESCo services. Regarding the question of
how to encourage investments in energy conservation equipment, the
Committee plans to examine ways to promote co-generation and block heat
storage systems.

Publicity
Activities

The Energy The Energy Conservation Center, Japan (ECCJ) is responsible for
Conservation disseminating information on energy conservation. Newspaper, magazine,
Centre radio and television advertisements were sponsored by ECCJ in both
summer and winter since FY 1977. Promotional activities such as energy
conservation republics, poster contests by the students of elementary school
and high schools have been operated by ECCJ.

ECCJ held the Smart Life 2001 Campaign. This campaign invited consumers
to use energy efficiently and promoted simplicity in many aspects of
Japanese life (clothing, meals, houses, offices, education, etc.). Examples
of this activity include proposals to reduce energy consumption for air-
conditioning; educational initiatives to deepen environmental awareness and
energy efficiency; a proposal for fuel efficient driving.

Energy The Energy Saving Republic is one of the activities of the Energy
Saving Conservation Center, Japan (ECCJ). It is the group of people who implement
Republic energy saving actions, recycling, and better environment to contribute to
solving the problems of energy and global warming. Elementary schools and
local communities are at the centre of this activity which is planned to be
expanded to include corporations, shopping associations or universities.

Support provided by ECCJ includes distribution of the tabloid paper "Energy


Conservation Ambassadors", issued six times a year; tools for publicity,

6
information leaflets on Republics; the Republic's web site; implementation of
energy audits; and subsidies for community's energy conservation activities.
As of 31 December 2000, the number of the Republics amounted to 37, 26
of them for elementary schools.

To promote conservation as a nation-wide movement, the government has


established:

· The Energy Conservation Day on the first day of every month to create
greater opportunities to review energy conservation activities and ensure
their results.
· The Energy Conservation Month in February as a nation-wide
movement involving general consumers and public institutions,
implementing energy conservation programmes in industry, holding
exhibitions and various campaign events on energy efficiency.
· The General Check-Up Day for Energy Conservation on 1 August and
1 December, for a check-up and review of daily energy conservation
activities and habits.

Housing

Insulation In February 1992, the performance standards for housing installations


Standards designed in 1980 were strengthened to levels comparable with those of the
cold regions of Europe and North America.

Stricter application of building standards for heat insulation was enforced in


April 2001. The new standards could save 20% of energy use for air-
1
conditioning and are expected to cost around ¥ 1 million per house.

Financial/Fiscal
Measures

Energy Two alternative special taxation measures are offered to promote investment
Taxation in the installation of energy-efficient equipment.
System
· A tax deduction amounting to 7% of the equipment acquisition cost
(which should not be more than 20% of the income tax or corporate tax
payable).
· A special depreciation that allows the company to depreciate a
maximum of 30% of the acquired value, in addition to the normal
depreciation in the year of acquisition.

Home and Building METI provides subsidies through the New Energy and Industrial Technology
Energy Development Organisation (NEDO) to introduce Home Energy Management
Management and Building Energy Management Systems. These help manage energy
Systems consumption of appliances such as lighting, air conditioning, and hot-water
supply by using information technology systems. These systems enable
automatic management of several appliances at the same time leading to
energy savings and reduced environmental impact.

Commercial

Standard For five kinds of buildings (offices, shops, hotels, hospitals or clinics, and
Values schools) standards for prevention of heat loss and efficient utilisation of
energy in air conditioners, mechanical ventilators, lighting systems, hot water
tub equipment and elevators were established in July 1993, based on the
Energy Conservation Law, setting thermal performance values and energy
consumption efficiencies.

1. In July 2001, ¥ 100 = US$ 0.801.

7
Fiscal/ Taxation measures for energy investment have been set up for building
Financial equipment with high energy efficiency, including heat pumps, floor heating,
Measures and thermal storage air-conditioning and hot-water equipment.

The 1993 Energy Conservation Assistance Law established guarantees of


obligation and interest subsidies where the builder of a commercial building
adequately meets the energy conservation levels in the guidelines for
voluntary energy conservation efforts laid down by the ministry concerned.

Since FY 1993, the Japan Development Bank has provided long-term low-
interest loans for the total construction costs of buildings having high energy
efficiency and incorporating measures to reduce the environmental burden
("eco-care buildings").

From this fiscal year, facilities to produce energy-efficient appliances, which


comply with the revised energy conservation law, qualify for financing with
low interest by the Japan Development Bank, etc.

Enterprises that adopt appliances certified by the International Energy Star


Programme can also apply for low interest loans from the Japan
Development Bank, etc.

Energy Design costs are subsidised for efficient energy use systems located in
Efficiency areas undergoing extensive urban renewal.
and the
Management Project feasibility studies are subsidised for "environment-harmonised district
of Cities development", which provides a large number of energy-efficient buildings
while integrating the efficient use of energy at the district level.

The Energy/Resources Conservation Promotion Meeting recommended the


action plan which government should implement by itself. This meeting will
be held to carry out action plans for dissemination and publicity of energy
conservation particularly in summer and winter when energy consumption is
highest, for the purpose of stabilising awareness of the necessity for energy
conservation and promoting energy conservation.

The action plan enacted in 1995, originated by the Basic Environmental Plan
which was enacted in 1992, has also been carried out. Surveys of its
implementation status have been conducted and published annually.

The new Green Procurement Law which promotes purchasing equipment


with lower environmental impacts was enacted in May 2000. Definition of the
group of equipment for which the government should take the initiative for
purchasing with the procedure was reviewed. Hybrid vehicles and/or natural
gas vehicles will be introduced soon.

In the 1999 in-depth review of the energy policies of Japan, the IEA stated:

The Government of Japan should:

· Consider strengthening energy conservation standards for buildings,


adopting energy conservation information systems for residential
buildings and developing a process of energy audits/certification for
buildings as part of the documentation prepared when buildings are sold.

8
Energy Energy conservation effect in residential/commercial sector: 18.6million kl in
Conservation total.
Effect Proposed
by the Committee Share of existing measures: 14 million kl
· Improvement of equipment efficiency via Top-Runner performance
control: 5.4million kl
· Improvement of energy conservation performance of houses and
other buildings: 8.6 million kl
Share of new measures: 4.6 million kl
· Widening of equipment subject to Top-Runner performance control:
1.2 million kl
· Accelerated introduction of high efficiency equipment: 500 000 kl
· Reduction of standby power consumption: 400 000 kl
· Introduction of residential energy management systems: 900 000 kl
· Introduction of commercial energy management systems:
1.6 million kl

Note: 1 million kl is to be achieved through activities of ESCos.

INDUSTRY

Measures already
existing and/or
being improved

Energy- In 1979, the Ministry of International Trade and Industry (MITI) issued
Control standards for items that included rationalisation of fuel combustion and
Designated heating, prevention of heat loss and recovery and utilisation of waste heat.
Factories They applied to designated energy management factories (a factory or place
of business with an annual fuel consumption equivalent to at least 3 000
kilolitre of crude oil or an annual electricity consumption of at least 12 GWh).
This concerns about 3 500 factories.

The 1979 Energy Conservation Law required designated energy-


management factories to hire a certified energy manager and report the
status of their energy consumption every year to MITI and the Ministry
responsible for the sector concerned.

The 1993 Energy Conservation Law was accompanied in July 1993 by a


complete revision and strengthening of the standards with the aim of
reducing domestic energy consumption by at least 1% annually on average
for all operators.

Under the 1993 law, for an operator who fails to prepare a rationalisation
plan, the appropriate ministers are authorised to publicise the case and
issue an order. He is also subject to a penalty. It is mandatory for
designated energy management factories to report annually to the
appropriate ministers on their energy consumption.

Newly The revised Energy Conservation Law of June 1998 established a new
Established category of “designated energy-management factories”, those with an
Energy Control annual fuel consumption equivalent to over 1 500 kilolitres of crude oil or an
annual electricity consumption over 6 GWh, designated by Ordinance. This
concerns about 9 000 medium-sized factories and business sites. The
measures to promote energy conservation include:

· Obligation to make efforts to conduct rationalisation according to the


judgement standards. The judgement standards are instituted by METI
and concern energy control and the targets of rationalisation to ensure
proper and effective implementation of the rationalisation of energy use

9
in factories.
· Obligation to select energy managers.
· Obligation to attend lectures on energy conservation.
· Obligation to record the conditions of energy use.

A Recommendation is issued by the METI Minister when records of


rationalisation are markedly insufficient compared with the judgement
standards.

The Energy Conservation Law stipulates that the METI Minister can instruct
a designated energy management factory to create a rationalisation plan if
such a factory is found to be substantially lacking in its efforts to rationalise
its energy use; however, this provision has never been implemented and the
procedure has to be established. As the need to strengthen energy efficiency
is becoming more urgent than ever, it is necessary to establish a transparent
process and criteria so that factories can be instructed to create
rationalisation plans when necessary.

On-site surveys at factories conducted up to now have focused mainly on


efforts to broaden and enhance awareness of the Energy Conservation Law.
With the new guidelines, the policy is to check each principal item of
equipment at factories with regard to whether or not energy management
manuals have been compiled, measurements are taken and recorded, and
maintenance and inspections are carried out, and to evaluate such check
items. These specific checks constitute the core requirements to be met by
the factories under the Energy Conservation Law. As for evaluation, survey
forms sent in advance to factories are completed by them, and then METI
and the Energy Conservation Center carry out on-site survey at each factory
and cross-check the evaluations. If the evaluation shows results below a
certain level, an on-the-spot inspection is carried out, and if the situation is
not satisfactory, the factory will be instructed to draw up a rationalisation plan
in accordance with Article 12 of the law.

Implementation of the on-site surveys based on the new guidelines on an


industry-wide basis started in April 2001. All designated energy
management factories are to be checked within about five years. In fiscal
year 2001, the steel industry, paper and pulp industry and the non-ferrous
metal manufacturing industry were checked.

Energy Energy audits for small and medium-sized companies began in 1978 and
Audits approximately 5 600 assessments have been carried out nation-wide. The
target companies are those with a capital of less than ¥ 100 million or less
than 300 employees. They are free of charge.

Number of assessors: 1-2; number of days: 1-2; items to be assessed:


a) advice on heat energy, b) advice on electric energy.

These energy audits are carried out by the Energy Conservation Center,
Japan (ECCJ).

For large and medium-sized companies, detailed energy audits are also
carried out by ECCJ. A fee is charged.

Two or three experts carry out a preliminary survey that is then followed by a
detailed survey of the production process. A list of areas in need of
improvement is drawn up and prioritised. Concrete measures are suggested
to address these priorities and a proposal is made presenting the expected
benefits from the measures as well as the investment required to implement
them.

10
Energy The Law Concerning Rational Use of Energy and Recycled Resources
Conservation Utilisation of 25 June 1993, known as the Energy Conservation Assistance
Assistance Law Law, will be in force for ten years. Its main purpose is to assist business
operators who voluntarily undertake such activities as rationalisation of
energy use and utilisation of recycled resources.

The following three categories of activities are defined as “specific business


activities”, and any business operator, etc. who is going to carry out these
activities can prepare and submit an activity plan to the competent minister
for approval:

a) To install or improve the equipment contributing to the rationalisation of


energy use in a factory or other business location in one of the following
categories: manufacturing, mining, electric power supply, gas supply
and heat supply.
b) To use any building material or to install or improve any equipment
contributing to the rationalisation of energy use in the construction of a
building.
c) To conduct R&D on the manufacturing technique of an industrial product
contributing to the rationalisation of energy use.

For the specific business activities conducted in conformity with the


approved activity plan, the following assistance measures can be taken:

a) Very low interest rate: The interest rate, as of 16 February 1996, is far
lower than the lowest interest for fiscal investments and loans (3% for
the specific activities of factories, etc., and also for those of buildings).
Financial institutions (Japan Development Bank, etc.) who lend the
necessary funds have the interest partially covered by the Oil Special
Account (budgetary action with no legal provision).
b) Bond under Industrial Foundation Improvement Fund.
c) Exemptions from taxation.

Low A system of low interest loans has been instituted by some banking
Interest institutions such as the Japan Development Bank for the installation of
Loans energy efficiency equipment. Other banks, such as the Smaller Business
Finance Corporation and the People’s Finance Corporation, provide loans to
promote energy efficiency use, mainly in support of environment protection
measures.

Financial Measures In FY 1999 a system of subsidies was established to promote the


for commercialisation of energy-saving technology.
Energy-Saving
Technology, Financial support is provided for the development of unused energy sources
Development and at district level:
Commercialisation
Local government support for the introduction of advanced energy-
saving equipment
Support is provided to allow local governments to introduce advanced
energy-saving equipment required for various local efforts and to establish
their “Local Energy-Saving Vision” to promote energy-saving activities.

Support of grass-roots local energy-saving activities


Support is provided to prompt nation-wide efforts by private-sector
organisations (NGOs) which can perform careful energy-saving activities at
the grass-roots level to ensure accelerated promotion of energy-saving
measures.

Pioneering energy-saving model programme (factories, offices)


Under the programme, businesses that have made considerable energy-

11
saving efforts are provided with support to further these activities.

Development of practical energy-saving techniques


Excellent technology possessed by private-sector businesses or produced
by the New Sunshine Project is used to support the development of practical
energy-saving techniques.

Development of techniques for electrical loss reduction and optimum


device control in operating equipment
Technical developments are supported to ensure overall energy
conservation in entire communities and facilities, to be achieved through the
development of control techniques that permit efficient energy use in
operating equipment and development of control equipment for related
facilities and machines.

Medium to small businesses energy conservation programme


(Programme for Providing Guidance to Promote Introduction of
Equipment Designed for Efficient Energy Consumption)
Energy consumption and heat generation are measured for each factory to
enable experts to provide detailed instructions for energy conservation. The
programme also provides support for surveys of systems and the
development of energy-saving techniques aimed at efficient physical
distribution by medium-to-small businesses.

Development for energy-efficient techniques to create new industries


Support is given to private businesses engaged in technical developments
that will help create a new industry by providing techniques to reduce energy
consumption.

Promotion of field tests for the introduction of high-performance


industrial furnaces
Demonstration tests of high-performance industrial furnaces are carried out
in various factories to verify their practical performance and reliability, etc.

Promotion of construction and extension of energy-saving housing


and office buildings
Demonstration tests are carried out to determine the effectiveness of high
energy-saving energy systems introduced in housing or other buildings.

Development of high-efficiency current-light transference compound


st
semiconductors (Technical development under “21 Century’s
Lighting” Programme)
Lighting equipment that incorporates light emitting diodes to achieve a high
current-light transference rate is being developed with the aim of putting
commercial products on the market in around 2007.

Financial/ At the end of March 1998, installed cogeneration capacity for the residential
Fiscal and commercial sector in Japan was approximately 790 000 kW, about 3.51
Support million kW for the industrial sector (except steam turbine) and about 4.3
for CHP million kW at the total of power generation.

The special taxation and financial support system to stimulate the


introduction of cogeneration is as follows:

· Project promoting environmentally adjusted energy community creation:


15% assistance towards the equipment cost for large-scale cogeneration
projects.
· New energy utilities support project: part of project cost (less than one-
third) will be provided for energy utilities which introduce new energy or
natural gas cogeneration following the plan based on the Law on

12
Specific Measures concerning the Promotion of New Energy Utility.
Debt guarantee is also provided by the New Energy and Industrial
Technology Development Organisation (NEDO).
· Taxation system to encourage investment in structural reform of energy
supply and demand: special depreciation of 30% of the cost obtained at
the first year or tax exemption of 7%.
· Long-term financial assistance at a low rate provided by government
financial institutions such as the Japan Development Bank.

Voluntary The Japan Federation of Economic Organisations (Keidanren) has set up


Actions by the Voluntary Action Plan on the Environment that includes a total of 36
Industry industries and 137 organisations. The Voluntary Action Plan is an entirely
voluntary effort in which each industry uses its own discretion, free from any
obligation by government or regulatory body. The Plan’s participants cover
an extremely wide range of industries including distribution, transportation,
construction, foreign trade, non-life insurance and others. Many of the
participating industries have established quantitative targets for the
measures adopted. This Action Plan is subject to an annual review process,
the results of which are made public: the first review was in 1998.

Eighteen industries have spelled out their objectives in terms of


improvements in the level of energy input per unit of output or CO2 emission
per unit of output; 14 industries have defined their targets in terms of
reduction in the total amount of energy used or CO2 emitted and eight
industries have established energy conservation measures to lower energy
consumption. Improving the efficiency of energy use includes the
formulation of careful and detailed innovations related to operation control,
including energy conservation in offices, improvements in equipment and
processes and engaging in and implementing the developments from
technological research. In this Keidanren Voluntary Action Plan on the
Environment, the Japan Mining Industry Association decided that by 2010,
the non-ferrous metal industry (copper, zinc, lead, nickel) will reduce its
energy input per unit of output by 12% from the 1990 level. The Japan
Chemical Industry Association will make efforts to reduce the energy input
per unit of output in 2010 to 90% of the 1990 level. This provisional plan
drafted by the 80 organisations of the Chemical Industry Association will be
reviewed and efforts made to improve it.

In the 1999 in-depth review of the energy policies of Japan, the IEA stated:

The Government of Japan should:

· Evaluate the applicability to Japan of policies used in other IEA Member


countries to monitor and enforce voluntary agreements with industry.

Publicity A newsletter on energy conservation is also available for industrial


Activities associations.

Energy Energy conservation effect in industrial sector:20.5million kl in total


Conservation
Effect Proposed · Share of existing measures: 20.1million kl
by the Committee Voluntary action programme for environment of Keidanren, Japan
Federation of Economic Organisation.
Regulatory control under the Law Concerning the Rational Use of
Energy.
· Share of new additional measures: 0.4 million kl
Introduction of High-performance industrial furnaces to small to
medium-size companies.

13
Measures
Under consideration

Revised Law The June 2002 revision of the Law Concerning the Rational Use of Energy to
Concerning the become effective on 1 April 2003 requires that plans to build non-residential
Rational Use of buildings with a floor space of 2 000 square meters or more would have to
Energy in Non- include specific energy-saving measures. Non-residential buildings that
Residential would fall under the planned regulations include offices, stores, hotels and
Buildings hospitals.

If authorities determine a building fails to meet the energy-saving standards


and the building’s owner does not comply with orders to change the
construction or remodelling plans, his name would be publicised. If a building
owner fails to report construction or remodelling plans beforehand to the
local government, he would face fines up to 300 000 Yen.

in Industry The government expects 2 000 to 3 000 plans for building or renovating non-
residential buildings of that size to be submitted annually to local
governments. The local governments would press for measures such as
thermal insulation in the outer walls. If the measures are found to be
substandard, they would order the plans changed.

The June 2002 revision of the Law concerning the Rational Use of Energy,
to become effective on 1 April 2003, stipulates that the first category
designated energy management factory, which is currently limited to
manufacturing and four other industrial factories that use substantial
amounts of energy will be expanded to all industries, including large-scale
office buildings and other similar sites. Those designated businesses will be
subject to the mandatory preparation and submission of future energy
conservation plans (mid and long-term) and regular reporting.

In addition, based on the same revised Law, the second category


designated energy management factories will be subject to regular reporting
on energy consumption.

TRANSPORT

Measures already The original 1979 Law Concerning the Rational Use of Energy presented
existing and/or energy efficiency standards for gasoline-fuelled passenger vehicles and
being improved made labelling mandatory to indicate energy efficiency by the manufacturer
and importer (“manufacturer”). The 1979 fuel efficiency standards were set
towards 1985 and actually increased the average fuel efficiency of
passenger cars by 12.3% from 1978 to 1985.

The 1993 Law Concerning the Rational Use of Energy strengthened the
guarantees for mandatory labelling. If a manufacturer fails to comply with a
recommendation for labelling, the law empowers METI and the Minister of
Transport to publicise the case and issue an order. A manufacturer who fails
to obey an order is subject to a penalty. The energy consumption standards
were issued on 27 January 1993; the current fuel efficiency targets for
passenger cars for FY 2000 classified by vehicle weight are as follows:

· Passenger cars weighing less than 827.5 kg (light and economy cars):
fuel efficiency target = 19.0 km/litre.
· Passenger cars weighing 827.5 kg up to 1 515.5 kg: fuel efficiency
target = 13.0 km/litre.
· Passenger cars weighing 1 515.5 kg and over (standard-sized cars):
fuel efficiency target = 9.1 km/litre.

14
On average, the fuel efficiency improvement rate of passenger cars in FY
2000 was enhanced by 8.5% compared to that in FY 1990.

For gasoline-fuelled trucks, standards set fuel economy targets for FY 2003
at an average improvement of 4.8% to 5.8% over the 1993 results,
depending on the type of vehicle.

Revised The revised Law Concerning the Rational Use of Energy of June 1998
Fuel requires the government to set further strict standards equal to more than
Efficiency the best performance in each size category. Diesel automobiles will also be
Targets required to set similar standards. The new standards may be 25% for
gasoline cars and 15% for diesel cars to improve energy efficiency from
1995 to 2010. These measures are expected to cost ¥ 500 billion a year for
manufacturers and may lead to consumers paying more for cars and
premium gasoline.

Energy Conservation Target for Machinery

Target Year Energy


Conservation Effect
Passenger car (gasoline-powered) 2010 23%
Passenger car (diesel-powered) 2005 15%
Truck (gasoline-powered) 2010 13%
Truck (diesel-powered) 2005 7%

Energy saving effect: improvement from the 1995 performance

Other In the framework of the revised Law Concerning the Rational Use of Energy
Transport of June 1998, the following measures have to be implemented:
Modes
· Promotion of clean energy cars: Measures such as subsidies, tax
incentives and low interest loans will increase the number of electric and
hybrid cars to 1 million by 2010.
· More efficient logistics, distribution: Development of an information
infrastructure to promote television conferences and satellite office or
Small Office Home Office (SOHO) which could lead to reducing the
amount of traffic and encouraged use of railway and ocean
transportation.
· Encouraged use of public transport: The Traffic Demand Management
(TDM), including demand control of traffic and differentiation of start
times of office work to avoid traffic jams, and the Intelligent
Transportation System (ITS: advanced navigation system, and
automated toll collection system).

Energy Energy conservation effect in transport sector: 16.9 million kl in total


Conservation
Effect · Share of existing measures: 15.9 million kl
Proposed Improvement of equipment efficiency via Top-Runner performance
by the regulation: 5.4 million kl
Committee Wider use of clean energy motor vehicles: 800 000 kl
Energy conservation measures involving transportation systems: 9.7
million kl
・ Share of new additional measures: 1 million kl
Accelerated introduction of vehicles meeting Top-Runner performance
criteria: 500 000 kl
Promotion of widening of line-up of hybrid and other alternative vehicles
and like: 500 000 kl

15
MONITORING/ ECCJ conducted a field survey on energy saving diagnosis of 16 industry
ASSESSMENT factories (chemistry, iron, steel, oil refinery, electronic appliances
manufacturing, etc.) between 1997 and 2000. Results and proposals for
further savings for each industry were published in 2001.

In the 1999 in-depth review of the energy policies of Japan, the IEA stated:

The Government of Japan should:

・ Review policies to achieve improved energy efficiency, taking care to


distinguish between improvements attributable to government policies and
improvements that would have happened otherwise, and utilise the results
of reviews undertaken to adjust the package of policies intended to meet
Japan’s Third Conference of the Parties (COP 3) target, in particular the
possible need to adjust the balance between energy demand and energy
supply policies.

Further information For further information, please contact:

Takeo Ijuin
ANRE/METI
1-3-1 Kasumigaseki 1-chome
Chiyoda-ku
Tokyo, 100
Tel: +81 (3) 3501 1728
Fax: +81 (3) 3580 5308
E-mail: ijuin-takeo@meti.go.jp

16
REPUBLIC Updated July 2002
of KOREA
BACKGROUND

Rational As the Republic of Korea relies on imports for about 97% of its energy, it has
Energy for many decades given high priority to energy conservation, particularly after
Utilisation Act the two oil crises of 1974 and 1979. In December 1979, the Korean
of 1979 government began to implement comprehensive energy conservation
programmes based on the Rational Energy Utilisation Act, amended several
times thereafter, the legal basis for the enforcement of the government's
current energy efficiency policy.

Law on the The Law on the Rationalised Use of Energy and the Enforcement Ordinance
Rationalised Use (Industry and Energy Department notice No. 2000-101 of 23 November 2000)
of Energy form the basis of the country's energy efficiency policy. Its main articles are:

· Article 17 related to the designation by the Ministry of Commerce, Industry


and Energy (MOCIE, see below) of minimum energy efficiency standards
and energy labelling of the most widely distributed products.
· Article 18 related to measures adopted by MOCIE in case of non-
compliance with the energy efficiency standards by the manufacturer,
importer or seller of the product concerned.

2000 In 2000, MOCIE formulated the 2000 Blueprint to "implement policies


Blueprint harmonising energy, economy and environment". It stresses that "the nation
needs to improve energy efficiency while securing a safe supply of energy
resources, thereby establishing a solid economic foundation to buffer changes
in international energy market prices".

One of the objectives of the 2000 Blueprint is Transition to a low energy


consumption structure, which includes:

· Positively promote an energy conservation policy to cope with rising prices


of oil on world market (through voluntary agreements with energy-
intensive firms, development of ESCOs and other conservation support
measures).
· Encourage a spontaneous energy conservation movement by maintaining
energy prices at an optimal level.
· Promote energy technology development and commercialisation (boosting
the role of renewables in the energy mix and overhauling the ten-year
energy technology development plan of 1996).
· Adopt positive measures to achieve progress under the UN FCCC (see
below).
· Re-establish the National Energy Strategy to cope with economic social
st
and other changes in the 21 century.

For 2001, the Korean government prepared a set of comprehensive energy


policy objectives. MOCIE mentions that they are structured around different
pillars, one of them being "Establishing a less energy intensive socio-
economic structure".

Five-Year The first Five-Year Energy Conservation Programme was initiated in 1992
Conservation with special focus on energy-intensive industries to cope with problems faced
Programmes during the nation's restructuring into a less energy-intensive economy. This
1
effort called for an investment of 2.344 billion Won over a five-year period to
realise savings of 10.6% through improved energy efficiency and reduced

1
On average in 2000, Korean won 100 = US$ 0.088.

1
consumption levels.

The second Five-Year Energy Conservation Programme began in 1997 and


focused on mobilising market mechanisms, improving conservation systems,
developing energy technology and promoting participation of the private sector
and non governmental organisations (NGOs).

In the 2002 in-depth review of the energy policies of the Republic of Korea,
the IEA stated:

The Government of the Republic of Korea should:

· Continue to pursue energy diversification and to improve energy


efficiency.
· Ensure that energy efficiency receives high priority in the energy policy.
Strengthen energy efficiency policy by additional measures to curb energy
use in all sectors.
· Encourage international benchmarking of Korea's standards and energy
efficiency norms.
· Develop further energy efficiency policies in the process of defining
specific policy measures to reduce GHG emissions.

Energy Korea signed the UN Framework Convention on Climate Change (UN FCCC)
and the in June 1992 and ratified it on 14 December 1993. Korea submitted the first
Environment National Communication in March 1998 but has not yet set a target to stabilise
emissions of greenhouse gases (GHGs). Korea considers itself a developing
country with a need for continued economic growth and increasing energy
consumption to support that growth. The country, after initiating research
programmes to prepare its National Communication under the FCCC,
submitted it in March 1998.

Currently, Korea is not a member of Annex I Parties to the UN FCCC:


consequently it is not obliged to reduce its GHG emissions under the Kyoto
Protocol target. As a member of the UN FCCC, the Republic of Korea has
participated actively in the successive Conferences of the Parties. It took part
in the Asia Least-cost Greenhouse Gas Abatement (ALGAS) project
conducted with other Asian countries under the auspices of the Asian
Development Bank and UNDP-GEF. Rapid economic growth and a relatively
energy-intensive economy have led C02 emissions from fuel combustion to
increase 81% over the period 1990-1997, compared to the OECD average of
9.5%.

As the government is well aware of the urgent need to cope with the various
issues of environment protection, it has been implementing various policies
and measures to mitigate GHG emissions. The government has focused on
energy conservation policies as one of the most effective measures for
mitigating GHG emissions as CO2 emissions per unit of GDP remain high
(almost double the level of IEA countries in 1999: 0.72 kg of CO2 per 1995
USD for Korea against 0.44 for IEA countries).

To cope more efficiently with the issues of the Convention on Climate Change,
the government established in April 1998 the Inter-Ministerial Committee on
the Framework Convention on Climate Change led by the Prime Minister
which includes related government agencies, academia, and industry. In
December 1998, the government formulated the Comprehensive National
Action Plan to develop action plans for the reduction of GHGs and make use
of the Kyoto mechanisms. Korea puts forward the principles of:

· Common but differentiated responsibility.


· Partnership among government, industry and the public.

2
· Inclusion of all kinds of gases in every sector.

In November 1999 while attending the Fifth Conference of the Signatories to


the UN FCCC in Bonn, the Minister of Environment noted that Korea opted out
of the reduction obligation based on non-binding and voluntary regulations.

Centre for To maximise efforts to reduce GHG emissions, the Korea Energy
Climate Change Management Corporation (KEMCO) established the Centre for Climate
Mitigation Change Mitigation Projects (CCCMP) at the beginning of 1999. CCCMP has
Projects so far developed the energy consumption and CO2 emission inventory by
plant, technology and industrial process, supported the government's policy
making for climate change in the industry sector, particularly in regard to
demand-side management and raised public awareness on climate change
and CO2 emission reduction.

International Through the Technology Co-operation Agreement Pilot Project (TCAPP),


Co-operation CCCMP has established a bilateral partnership with the US government for
on the technology transfer under the UN FCCC. A Memorandum of Understanding
Environment was concluded between KEMCO and the US National Renewable Energy
Laboratory in July 1999. Both parties have drawn up the concept documents
on energy auditing and ESCO, heat pump technology and landfill gas use. In
relation to Working Group I (Energy auditing and ESCO), a US ESCO and a
Korean ESCO carried out the first pilot project: a joint audit of the Hyundai
plant at Ulsan in September 2000.

KEMCO has been firmly promoting co-operation with international agencies


for the exchange of technical and policy information, the development of joint
programmes, and to disseminate information to the interested parties at home
and abroad:

· In the field of bilateral co-operation, KEMCO keeps close relationships


with partners such as NEDO (Japan), DOE (US), ADEME (France), ETSU
(UK), NOVEM (The Netherlands), NUTEK (now STEM, Sweden), etc. to
exchange energy information and personnel and to develop training, joint
seminars or joint research.
· In the field of multilateral co-operation, Korea has been active in co-
operating with international organisations such as IEA, APEC, UNDP,
WEC, ESCAP, etc.
· Since the mid-1980s, Korea has participated in the following Implementing
Agreements:
- Energy Technology Data Exchange (ETDE).
- Energy and Environmental Technologies Information (EETIC), in
CADDET and GREENTIE.
- Energy Technology Systems Analysis Programme (ETSAP).
- Demand Side Management (DSM).
- District Heating and Cooling, including the integration of CHP.
- Assessing the Impacts of High Temperature Superconductivity (HTS)
in the Electric Power Sector;
- Advanced Fuel Cells.
- Hybrid and Electric Vehicles.
· KEMCO has participated in APEC Experts Groups on Energy Efficiency
and Conservation and New and Renewable Energy Technologies.

3
In the 2002 in-depth review of the energy policies of the Republic of Korea,
the IEA stated

The Government of the Republic of Korea should:

· Take more international environmental responsibilities, including those


under the UNFCCC.
· Strengthen bilateral and multilateral co-operation in order to contribute to
enhancing the global efforts for tackling climate change issues.

Institutional
Framework

MOCIE The Ministry of Commerce, Industry and Energy (MOCIE) is the authority
governing energy matters, in charge of energy policy planning and industry
supervision, climate change issues, price control, as well as energy industry
reform. Two main offices are responsible for energy policy: the Energy and
Resources Policy Office in charge of improving energy efficiency and the
Electricity Industry Restructuring Bureau.

In the 2000 Blueprint, MOCIE aimed at "implementing policies harmonising


energy, economy and environment", at a time when "the nation needs to
improve energy efficiency while securing a safe supply of energy sources,
thereby establishing a solid economic foundation to buffer changes in
international energy market prices".

KEMCO The Korea Energy Management Corporation (KEMCO) is a non-profit


government agency established in July 1980 by MOCIE under the Law on the
Rationalised Use of Energy. Its primary function is the implementation of
energy efficiency and conservation policy and programmes designed by
MOCIE.

KEMCO reports directly to MOCIE and must receive annual approval for its
expenditures under the Energy Management Fund. KEMCO also participates
in the development of policies and programmes through its interaction with
MOCIE.

KEMCO covers a wide spectrum of activities, such as:

· Management of energy-intensive industries, buildings and transportation


companies through energy audits, technical assistance and post-
management.
· Safety and efficiency management of the energy-using equipment through
inspection, standards setting, efficiency labelling, etc.
· Financial assistance for energy efficiency and conservation projects.
· Climate change mitigation project.
· Voluntary Agreement (VA).
· Energy Service Companies (ESCOs).
· Assistance to regional energy conservation planning.
· Planning, financing and management of RD&D on energy efficiency and
conservation technologies, new and renewable energy technologies,
clean fossil fuel technologies and resource technologies.
· Demand-Side Management (DSM).
· Education, training and publication, energy information service and public
relations.
· International co-operation.

About 50% of KEMCO funding comes from MOCIE and the balance comes
from services it renders, such as operating the Mok-dong DH/CHP facility on
behalf of the Seoul city government. KEMCO also owns and operates one

4
CHP plant and another is under construction. It earns some revenues from the
sale of heat and power, including Mok-dong. In charge of implementing the
energy efficiency policies, KEMCO is the principal funding allocating institution
with 600 billion Won spent on energy conservation in 2000.

KEMCO supervises the implementation of three major energy efficiency


programmes: the Energy Efficiency Standards & Labelling Programme, the
Certification of High Efficiency Energy-Using Appliance Programme, and the
Energy-Saving Office Equipment & Home Electronics Programme (see
below). These programmes aim at stimulating manufacturers to improve the
energy efficiency of their products by giving incentives and to encourage
consumers to purchase more energy-efficient products available on the
marketplace.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building
Standards

New Buildings Insulation in new buildings has been required since 1979. Building inspections
are required when buildings under construction are 50% completed to ensure
that standards insulation products and insulation thickness have been used.

Since 1985, the government requests that building permit applications for
large buildings be accompanied by an energy savings plan for the building:
the purpose is to encourage builders to go beyond the minimum required
prescriptive standards specified by the Law on the Rationalised Use of
Energy.

Since in 1992, an energy saving plan has to be submitted for new buildings
with a surface area in excess of 10 000 square metres.

Building design standards have been changed from prescriptive (for walls,
ceilings, and windows, etc.) to total building performance standards. Building
standards vary according to three climatic regions: central, southern and
Cheju.

Existing Since 1992, large buildings using more than 4 million kWh/year were
Buildings designated for intensive audits and supervision.

Under the Five Year Energy Conservation Plans, some 630 buildings that use
more than 6 million kWh /year and which have saved 10% of their electricity
use, compared with the previous year, would retain 20% of that saving
through reduced electricity charges.

Energy Energy audits and surveys have been conducted mainly by KEMCO. There
Audits are three different types of energy audit programmes for industry, commercial
buildings and transportation.

Energy audits are conducted under real conditions of energy management,


while energy surveys are undertaken to detect energy loss in the respective
energy-using facility. Currently, KEMCO conducts three kinds of audit:
Thermal Energy Audit, Electric Energy Audit and Thermal Video System Audit.

5
The Thermal Energy Audit for heat application equipment or facilities consists,
inter alia, of the following:

· Efficiency tests for boilers, furnaces and kilns; energy loss analysis and
efficiency improvement options; efficiency test of heat application facilities;
waste heat recycling and insulation; heating load analysis of buildings;
economic feasibility of new investment.

The Electric Energy Audit analyses electricity saving and improvement


potential in electrical applications in buildings and facilities; it includes:

· Efficiency of electrical supply system; load rate and improvement of load


rate power factor; energy saving options through improvements in
operation; waste heat recovery options.

The Thermal Video System (TVS) Audit examines the surface temperature of
applied facilities to check operational conditions to an accuracy of 0.1 degree
Celsius. It includes:

· Insulation levels in outer walls of buildings; heat distribution by heat


facilities such as boilers, smelters, heaters, etc.; insulation or heat loss in
various pipes; heat emitting from electrical equipment such as switches,
electric motors, wires etc.; accumulator cooling capabilities.

Energy audit candidates are buildings or factories consuming a large quantity


of energy; entities in need of cost saving and productivity improvement;
entities considering the introduction of new facilities; and entities desiring an
improvement in their management skills and quality of working environment.

The results of energy audits, together with recommendations, are reported to


clients for them to prepare and implement appropriate improvement
programmes and apply for further financial and/or technical support by
KEMCO.

In the building sector, energy audits are conducted for a fee in large
residential and commercial buildings at the request of the buildings owner or
manager, while free energy audits are offered for government and public
buildings. Depending on the results of the audits, technical assistance and
energy efficiency actions, such as thermal insulation and double-glazed
windows, are provided.

KEMCO provides financial support to the buildings, facilities or processes


when the energy audit shows that energy savings of more than 5% can be
achieved within three years.

Applicants can apply for loans of up to 90% of the cost of investment capital at
5.5% interest and a five-year payback period.

Energy KEMCO supervises the implementation of the Energy Efficiency Standards


Efficiency and Labelling programme set up in 1992. Its target is to eliminate inefficient
Labelling designs from the market and help consumers choose more energy-efficient
appliances. The labels attached to the products grade the energy efficiency
from 1 to 5. The label is intended to be attached to the front or side of
appliance where it can be easily seen.

This programme covers nine items: electric refrigerators and refrigerators-


freezers (September 1992), electric air-conditioners (January 1993), washing
machines (January 2001), incandescent bulbs (October 1992), fluorescent
lamps (October 1992), self-ballast lamps (July 1999), ballasts for fluorescent
lamps (July 1994), domestic gas boilers (August 2001) and passenger cars

6
(September 1992). It applies not only to domestic products but also to
imported products.

Procedure for Energy Efficiency Labelling:


The manufacturers or importers of the nine items have to apply to one of the
12 authorised test institutes which will estimate the energy efficiency of the
item and inform them and KEMCO of the results.

KEMCO checks the test report and publishes the energy efficiency grade on
the Internet ( www.kemco.or.kr/efficiency ). Manufacturers or importers should
label each product according to this energy efficiency grade.

Monitoring:
Marketplace inspections are taking place to ascertain whether all products
covered by the law are correctly labelled and that the labels accurately reflect
the product's energy efficiency.

Product inspections are made: random sampling tests are carried out to
ascertain whether testing results match the efficiency and rating reported by
the manufacturer or importer.

Certified items are distributed through various supporting programmes, such


as the Voluntary Agreement (VA) programme, Green Energy Family (GEF)
programme, and Energy Service Companies (ESCOs), see below.

Energy Energy efficiency standards are regrouped into "Minimum Energy


Efficiency Performance Standards" to regulate minimum requirements for the
Standards manufacture and sale of products, and "Target Energy Performance
Standards" designed to encourage manufacturers to enhance the energy
efficiency of their products to technically feasible and economically acceptable
levels. Such standards are compulsory for 19 items such as induction motors,
fluorescent lamps, heat recovery ventilators, etc.

When manufacturers, importers and suppliers fail to meet the "Minimum


Energy Performance Standards", MOCIE can prevent them from selling the
product concerned on the market, in accordance with Article 18-2 of the Law
on the Rationalised Use of Energy, and they can be fined up to 5 million Won
under Article 95-2 of this Law.

Certification of This programme is designed to enlarge the proportion of energy efficient


Energy Efficient appliances in the marketplace through authorisation and financial support.
Appliance
Programme KEMCO provides long-term and low interest loans to certified companies. In
2000, the financial support for high energy efficient products amounted to
US$ 20 million for equipment installation. There are two kinds of fund: an
installation fund of US$ 4 million and operation fund of US$ 0.4 million.

For small and medium-sized companies, KEMCO provides test fees. As of


October 2000, 19 classified items from 85 companies and 350 products
benefit from the programme.

Public KEMCO is actively engaged in public campaigns to support energy efficiency.


Information Currently, 15 Energy Consultation Centres operating throughout the country.

KEMCO produces and disseminates VTR films, movies, and various public
relation materials including fans, hats, and street campaign banners;
however, mass media such as TV, radio, newspapers and diverse types of
publications are the major instruments. It also organises exhibitions and
various cultural events on a regional basis to publicise successful cases of
energy conservation.

7
November is designated "Energy Conservation Month". The first Friday of
every month is designated "Energy Conservation Day". An energy
conservation exhibition, ENCONEX, has been organised by KEMCO each
year since 1975 to advertise up-to-date energy conservation technologies and
equipment and to provide information on specified technologies for interested
companies in the industrial, building and transport sectors.

INDUSTRY

Measures already
existing and/or
being improved

Energy In industry, there are two kinds of energy audits, in-depth audits and free
Audits audits. The in-depth audits or technical service audits are generally conducted
at the request of the users, while free audits are offered to small and medium-
sized industrial firms whose annual energy consumption is 250-5 000 toe or 1-
30 million kWh. Between 1980 and 1998, energy audits took place in 3 639
firms. These audits were carried out by private companies that received
financial support if they were able to identify energy savings above 5% within
three years of the implementation of new equipment.

A total of 196 companies consuming more than 30 000 toe per year are
targeted for energy audits in the second five-year plan through 2001. Under
this plan, the government will seek to reduce the overall energy consumption
of the designated companies by 10%.

Voluntary The voluntary agreement (VA) for energy conservation and GHG reduction, a
Agreement joint programme between the government and industry, is managed by
MOCIE and the Ministry of Environment.

A company intending to join the agreement should submit a firm action plan
within three months of submitting to KEMCO a letter of intent, specifying their
energy consumption and GHG emission reduction target. The action plan
must contain information on the operating organisation, energy efficiency
enhancement target, GHG emission reduction target, and detailed process
design. After evaluation of the action plan by KEMCO, the qualified company
and KEMCO conclude the VA contract.

A company which joins the agreement will be supported by low interest loans
and tax incentives for energy conservation and GHG reduction. Technological
support as well as public relations promotion for the company will be offered.

The VA record shows that as of 2000, the number of companies involved in


VAs totalled 212 in the fields of steel, chemical, textile, paper, ceramics, and
the food industry. The target is to reduce their CO2 emissions by 3 272
thousand TC, a 9% improvement in energy efficiency in 2000-2005, through
the adoption of energy efficiency technologies, the installation of facilities
using alternative energy such as CHP, the improvement of manufacturing
process, generation, the use of clean energy sources and the collected waste
heat and improvement of operation management. As it is considered that the
signatory companies have correctly implemented the agreements, KEMCO
will expand the programme. It is estimated that about 600 companies,
accounting for 70% of the industrial sector, will join the agreement by 2004.

In addition, a monitoring method and achievement index to measure the level


of implementation will be developed to encourage the participation of as many
companies as possible.

8
Energy Service ESCOs were introduced in Korea in 1992 under the Law on the Rationalised
Companies Use of Energy (Article 22) of 1991 to extend government-led energy
(ESCOs) conservation programmes to private companies. Boosting up the market for
ESCOs is one of the top priorities in Korea's energy conservation policy. As of
2000, a total of 102 ESCOs had been registered as private companies and
investments reached 85 622 million Won for 519 cases through credit loan
mortgaging on energy cost reduction. The major interventions of these
companies are high efficiency lighting, power production by new and
renewable sources of energy and waste heat utilisation.

ESCO operations include maintenance service using energy conservation


facilities, business related to energy-efficient facility investment and energy
conservation including energy management monitoring.

Government Financial support:


Support The government provided low interest loans for ESCO investment at the rate
of US$ 2 to 4 million per year until 1996. The amount increased to US$ 20
million in 1997, US$ 35 million in 1998 and US$ 54 million in 1999.

There are various forms of ESCO financial support, such as support for
operations in small and medium-sized ESCOs, credit loan mortgaging on
energy cost reduction, and factoring system to lighten debt burden for ESCOs.

Tax incentives:
The government provides tax reductions for energy users who have invested
in energy conservation facilities. ESCOs and their customers are beneficiaries
of tax reduction under the "Exceptional Taxation Limitation Law".

Public To promote ESCOs, KEMCO has held "Energy Mart" annually since 1996.
Relations Energy Mart is a fair in which ESCOs meet their potential customers and
propose energy conservation investment plans.

Energy-Saving This programme, operational since 1 April 1999 under the basis of Article 13
Office Equipment of the Law on the Rationalised Use of Energy and MOCIE's notification No.
2000-33, 2000.3.16 (Regulation on the Promotional Spreading of Energy
and Home Saving Office Equipment and Home Electronics), is a voluntary partnership
Electronics between manufacturers and KEMCO to reduce the standby electricity used by
Programme a product.

The 14 items subject to this programme are: computers, monitors, printers, fax
machines, copiers, scanners, multifunction devices, energy saving and
controlling devices, televisions, videocassette recorders, home audio
products, DVD players, microwave ovens, and battery chargers. Energy
saving standards have been fixed for the 14 items. Consumers can identify
the energy saving products easily by the energy saving label attached. In
addition, the products can be identified through the energy saving list posted
on the Internet site.

According to the Regulation, it is mandatory for all public institutions to


purchase and use the following eight items of energy saving office equipment
with the energy saving label attached: computers, monitors, printers, fax
machines, copiers, scanners, multifunction devices and energy saving and
controlling devices.

It is estimated that if it is possible to substitute these 14 items, including the 90


million computers in use in Korea, and sell 20 million units per year of
products with minimised standby electric power, this could save energy up to
5 216 GWh (521.6 billion Won) and reduce the CO2 produced by electric
power production by 690 000 tonnes, thus contributing to the prevention of
global warming.

9
Green Energy The Green Energy Family Movement (GEF) was initiated by KEMCO in 1995
Family (GEF) to contribute to addressing global environment problems by enhancing energy
Movement efficiency through the diffusion of energy-efficient facilities. GEF is a
partnership movement to engage the voluntary participation of citizens,
companies, NGOs and the press in CO2 reduction and energy savings.

Any entity willing to participate in GEF programmes must submit an


application to the GEF Centre and establish a voluntary agreement to pursue
the goal of the particular GEF programme.

Currently, GEF movement is directed toward four programmes:

GEF TASK I Green Lighting Programme (1996~)


The Green Lighting Programme is a project to replace 90% of conventional
lighting facilities with high efficiency bulbs within three years. It aims to reduce
20% of electricity use for lighting which accounts for 18% of total electricity
consumption.

GEF TASK II Green Motor Programme (1997~)


The Green Motor Programme is a project to replace industrial motors with
highly efficient motor systems. Its aim is to reduce energy use by motors by
5.5% within ten years, which is equal to the output of a 2.1 million kW power
plant. Electric motors account for 60% of total electricity consumption by
industry.

GEF TASK III Green Energy Design Programme (1998~)


The Green Energy Design Programme is a project to construct new buildings
with lower energy consumption than conventional ones. It demands that green
energy design standards be applied in more than 90% of total projects from
the construction design stage, three years after the agreement.

GEF TASK IV Green Cooling Programme (1999~)


The Green Cooling Programme is a project to diffuse alternative cooling
facilities to reduce the consumption of electricity for cooling purposes. It aims
at 100% substitution by a green cooling facility within five years. The dramatic
increase of cooling demand, 10% annually, has caused instability in the
electricity supply.

As of 2000, a total of 726 companies participate at 1 529 sites; 477 in the


Green Lighting, 106 in the Green Motor, 66 in the Green Energy Design and
77 in the Green Cooling Programme.

Demand-Side The energy supply companies KOGAS, the state-owned monopoly Korea Gas
Management Company, KEPCO, the Korea Electric Power Corporation, a majority state-
owned company and KDHC, the Korea District Heating and Cooling
Corporation implement load management programmes, including peak
clipping, peak shifting, load shaping and DSM tariff systems.

In 2000, KEMCO conducted DSM activities in the areas of electricity, gas and
district heating systems. Electricity DSM projects mainly focus on industrial
audits for estimation of DSM potential of large plants; electricity audits and
surveys of DSM potential for large buildings and for small and medium-sized
buildings.

Integrated Integrated energy supply refers to district heating and cooling (DHC) and
Energy industrial complex combined heat and power (CHP). To promote the
Supply programme, the government established the "Integrated Energy Supply Act" in
1991.

10
DHC, introduced in 1985, is now supplying heat and electricity to 912 000
households in 18 districts, covering 8.1% of total households.

Additional facilities were to be built by 2001 to provide energy to a total of 1.8


million households.

A total of 16 CHP plants are in commercial operation at 17 industrial


complexes and their number will be increased from 16 to 33 in 2001. In
contrast to DHC programmes which are run by public organisations, industrial
complex CHP projects are privately run.

Integrated energy suppliers can receive low interest loans, tax incentives and
support for the relaxation of environmental regulations.

Training and KEMCO is in charge of various kinds of training and education courses, such
Education as:

Practical Business Training Course:


Any energy manager or operator of energy-using equipment can be taught for
seven hours (one day) on policies of energy conservation, laws and
regulations, related to the rational energy use, efficiency and safety of energy-
using equipment etc.

Fostering Training Course:


Anyone who is not a certified engineer but desires to become the operator of
equipment subject to certification inspection takes this course. In it, the
structure and operation of the boiler and pressure vessel, fundamentals of
boiler management, fuel and combustion control, etc, are taught for 20 hours
(three days).

Anyone who is a certified engineer of the equipment subject to either general


or certification inspection, but desires to become a gas boiler operator takes
this course, too. Fundamentals of LPG and LNG, operation, maintenance and
safety control of gas boilers, etc., are taught for 20 hours (three days).

Education for Provincial Energy Planning Officials:


In 1999, about 290 provincial officials responsible for energy planning were
trained for five days on regional energy planning guidelines, governmental
energy conservation policies, etc.

Early Education:
A total of 26 elementary and six middle schools were designated by the
Ministry of Education as "Demonstration Energy Conservation Schools" in
1999. Besides financial assistance of about US$5 417 per school, KEMCO
supports educational aids, such as books, video-tapes and diskettes for the
designated schools.

Other Training and Education Courses:


There are other training and educational courses on energy conservation for
staff in co-operative organisations, in charge of public relation and education,
managers of heat-using appliances manufacturing companies, etc.

Energy KEMCO supports the energy conservation business through the collection,
Information analysis, processing and dissemination of information through Internet
Service ( http://innonet.ne.kr ), PC communication networks and publications. Analysed
and processed information is also offered to end-users such as universities,
industries, research centres and the general public.

11
PUBLIC SECTOR

Measures already Two measures have been adopted to promote energy conservation in public
existing and/or institutions: the Energy Utilisation Planning Consultation Programme and the
being improved Energy Conservation Guideline for Public Organisations.

Energy Under the Law on the Rationalised Use of Energy of 1993, the Energy
Utilisation Utilisation Planning Consultation Programme was launched in 1993 to
Planning examine energy utilisation plans and provide technical guidance and
Consultation assistance prior to launching a project or constructing a building that exceeds
Programme a certain size. For instance, targeted projects are: urban development over
2
600 000 m ; tourist site development over 500 000 square metres; railway
construction with an extension of over 10 kilometre; harbour construction with
annual loading capacity of over 1 million tonnes, etc.

The features of the Consultation Programme are a feasibility study on CHP,


installation of energy efficient equipment and facilities; utilisation plans for
waste heat and alternative energy, and consideration of CO2 emission
reduction options and effectiveness analysis. As of September 2000, the
Consultation Programme had completed consultation and monitored
installation of facilities in 224 cases, of which 126 in urban and tourist sites
and 49 in industrial complexes.

Energy The Energy Conservation Guideline for Public Institutions founded in 1997
Conservation requires that collective public institutions establish, implement and estimate an
Guideline for annual plan for energy conservation. Targeted institutions are central
Public administrative offices and public institutions; local governments (state, city)
Institutions and their corporations; government agencies and government corporations.
The main features of the Guideline are: establishment and implementation of
an energy conservation plan; agreement on and management of annual
energy conservation targets; energy conservation initiatives by ESCOs;
energy loss reduction and energy efficiency improvement through energy
management audits.

Every public institution has established and implements its energy


conservation plan. When the plan is completed, the institutions are expected
to have achieved a 10% energy consumption reduction by 2000 (base year
1997).

Individual institutions will receive an incentive or penalty in accordance with


their performances and achievements. An exemplary case will be publicised
and promoted to other institutions.

Regional The Regional Energy Programme supports various local governments


Energy activities to help stabilise energy demand and supply and rationalise energy
Programme use in the regions.

MOCIE grants subsidies to local governments to implement the regional


energy programme. KEMCO provides technological consulting, information
service, and education and training courses for public servants in charge of
the Regional Energy Programme. The Regional Energy Programme consists
of two sub-programmes:

· Infra build-up programme, such as regional energy planning, feasibility


study of the unused and new and renewable energy sources in the region,
public relation and education on energy conservation, etc.
· Model-project to invest in energy conservation facilities or the use of
unused and new and renewable energy.

12
TRANSPORT

Fuel The Law on the Rationalised Use of Energy (Articles 17 and 18) and MOCIE's
Efficiency notification No. 1998-99 of 27 October 1998 established fuel efficiency targets
Targets to encourage automobile manufacturers to make vehicles more efficient. The
target was to improve fuel economy within each vehicle category by 5% by
1996 and 10% by 2000 over the 1991 base year. The overall weighted
average fuel economy target would be 14.3 km/litre in 1996 based on the
1991 estimate of 13.6 km/litre.

The following organisation should test the fuel efficiency and report the result
to the Korea Energy Management Corporation and the applicant:

· The National Institute of Environmental Research.


· The Korea Institute of Energy Research.
· The Korea Automotive Performance Test Research.
· The Korea Automotive Technology Institute.

Fuel MOCIE has implemented a Fuel Efficiency Labelling Programme to inform


Efficiency consumers about the relative fuel efficiency of the vehicle they intend to
Labelling purchase. Since January 1988, sales advertisements have been required to
include information on vehicle mileage rating. This applies to domestic
passenger cars and imports. Since September 1992, new passenger cars
have been required to exhibit KEMCO's mileage ratings label on the vehicle to
provide consumers with better information on vehicle fuel economy. Vehicles
are classified into one of eight categories based on engine capacity. Within
each category, there are five gas mileage labelling ranks (first through fifth)
with 42% of all vehicles (domestic and import) falling into the third ranking.
This Fuel Efficiency Labelling Programme applies to 317 vehicle models of
domestic and imported passenger cars using gasoline and LPG (as of 1998).

Compared with cars of grades 2-5, a grade 1 car emits less emission (0.7 to
3.2 tonnes, or 20 to 50 % less per year) and reduces annual fuel costs by as
much as 17-50%.

Taxation by The government has imposed progressive taxation on cars according to


Engine Size. engine size to reduce the demand for motor vehicles and control the demand
for large cars. The taxation on private cars with an engine size above
3 000 cc is 370 Won/cc, while that on private cars with an engine size less
than 800 cc is 100 Won/cc. Households with more than one car pay double
tax on the additional car.

Promotion of The government encourages the purchase of light fuel-efficient cars. Various
Small Car incentives including tax reduction for light cars, such as a 2% registration fee
Ownership instead of the 5% for large or medium-sized vehicles and a 50% deduction in
the licence fee are provided.

Car Since February 1992, public sector employees have participated in the
Pooling voluntary Car Shift System Programme to encourage those with private
vehicles to take every tenth day off and ride with a colleague. The system has
also been encouraged in large industries and is promoted through a variety of
public information campaigns.

Public Since 2000, the government funds the replacement of current diesel-powered
Transport buses by CNG buses. The ultimate plan is to replace 20 000 city buses by
Systems 2007. At first, 5 000 buses will be replaced by early 2002 in cities hosting the
2002 World Cup.

13
In the 2002 in-depth review of the energy policies of the Republic of Korea,
the IEA stated;

The Government of the Republic of Korea should:

· Seek to achieve a better balance among economic, energy and


environmental objectives. Implement the recommendations made in the
1994 IEA In-Depth Review on transportation; full cost pricing, smaller
vehicles dissemination and the development of public transportation
systems.

MONITORING/ As mentioned under the Energy Efficiency Labelling programme, marketplace


ASSESSMENT inspections and product inspections take place to monitor the correct
implementation of the programme.

Further Mr. Jeon Sangh-Hwon


information First Secretary
Korean Delegation to the OECD
2/4 rue Louis David
F - 75782 Paris Cedex
Tel: 33 1 44 05 21 91
Fax: 33 1 47 55 86 70
E-Mail: sangh-jeon@hanmail.net

14
LUXEMBOURG Updated August 2001

BACKGROUND

 The general Energy Efficiency Law of 5 August 1993 has five targets: to
(QHUJ\ guarantee a sufficient, secure and economic energy supply; to promote
(IILFLHQF\ energy savings and the rational use of energy; to favour the use of renewable
/DZ energy sources, co-generation and the production of primary and secondary
energy; to alleviate the negative impact of the production and consumption of
energy on the environment and to co-ordinate all these activities in the
framework of the European Union.

The Energy Efficiency Law establishes the legal framework necessary to


adopt a wide range of complementary measures adaptable to the changing
energy context. It focuses mainly on energy efficiency.

1DWLRQDO3ODQ The National Plan for Sustainable Development, finalised in 1998, lays out a
IRU6XVWDLQDEOH strategy for sustainable development in the different economic areas of
'HYHORSPHQW Luxembourg. It sets objectives and proposes measures which are described
in detail below. The government considers these proposed measures as
guidelines to meet the following objectives:

• To ensure security of energy supply.


• To diversify energy supplies.
• To develop highly efficient co-generation.
• To improve energy efficiency in all consumption sectors.
• To increase the use of renewable energy.

The 1998 National Plan for Sustainable Development sets as an objective a


20% reduction in energy intensity between 1993 and 2010. Main energy
efficiency measures by sector are as follows:

General
• To introduce an energy tax compatible with EU regulations.
• To favour the use of the best available technology.
• To increase information and dissemination efforts.
• To favour investments for energy savings. The creation of a fund to
promote renewable energy and energy efficiency is under discussion.

Buildings
• To improve the energy efficiency of new and existing buildings.
• To reach a 30% reduction between 1990 and 2020 in the energy
consumed to heat a constant surface in buildings.

Industries
• To improve voluntary agreements.

Transport
• To set annual taxes on vehicles according to their fuel consumption and
emissions to incite the purchase of less polluting vehicles.
• To increase by 30% the share of public transport use for medium
distances between 1997 and 2010.
• To reduce the use of transport and to reduce travel distances.
• To reduce the use of the most polluting transport means.
• To link Luxembourg’s rail network to the high-speed rail network and to
improve international railway connections.

(QHUJ\ Following a government initiative, the Agence de l’Energie S.A. (Energy


$JHQF\ Agency) was established in June 1991 as a company under private law whose
shareholders are the government (50%), the electricity companies Compagnie
Grand-Ducale de l'Electricité (CEGEDEL) (40%) and Société Electrique de
l'Our (SEO) (10%). The Energy Agency undertakes feasibility studies for
energy efficiency and renewable energy projects and advises municipalities. It
has also managed the retrofitting of some micro hydropower plants with
funding from the EU Thermie programme.

The Energy Agency is managing the building of a demonstration park in


Remerschen, including an energy-efficient building, a 600 kW windmill and a
photovoltaic plant. The project is financed by the Ministry of Economic Affairs,
CEGEDEL the German utility RWE and SEO.

In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
stated:

The Government of Luxembourg should:

• Encourage the activities of the Agence de l’Energie, i.e. carrying out


studies on renewable sources and energy efficiency and advising
municipalities.

*RYHUQPHQW In 1999, the Ministry of Energy was changed to a Department of Energy within
6WUXFWXUH the Ministry of Economic Affairs. The Ministry of Environment is in charge of
policy to curb air pollution and CO2 emissions. Both ministries have authority
for energy efficiency and renewable energy issues.

The Grand Ducal regulation of 11 August 1996 established the Conseil


National de l’Energie (National Energy Council) as an advisory body to the
government on energy issues. It provides advice on questions put by the
Minister of Energy and can, on its own initiative, give advice on energy policy
matters which it considers useful.

In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
stated:

The Government of Luxembourg should:

• Continue to work towards close and effective co-operation among all the
ministries involved in energy policy.

(QHUJ\ Luxembourg ratified the UN Framework Convention on Climate Change by a


DQGWKH Law of 4 March 1994 that took effect on 7 August 1994.
(QYLURQPHQW
It submitted its first national communication entitled Rapport National du
Luxembourg en vue de la 1ère Conférence des Parties à la Convention –
cadre des Nations Unies sur les changements climatiques (Luxembourg
national report for the 1st Conference of the Parties to the Framework
Convention on climate Change), Ministère de l’Environnement, in March 1995.
No new national communication has been issued.

In November 1990, the government decided to stabilise anthropogenic


emissions of CO2 at 1990 levels by the year 2000 and to achieve a 20%
reduction of these emissions by 2005.

According to the Kyoto protocol, the EU as a whole agreed to reduce the


emissions of a basket of six gases by 8% from 1990 levels by the period
2008-2012. In June 1998, the European Union Council of Environment
1
Ministers reached a Burden-Sharing Agreement on emission reduction
commitments, to re-allocate internally the 8% reduction agreed at Kyoto. The

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.
reduction commitments are expressed as a percentage of 1990 levels for the
2008-2012 period. Under the Burden-Sharing Agreement, Luxembourg is
committed to reducing its emissions by 28%, the highest level of reduction in
the EU.

In May 2000, the Ministry of Environment issued a National Strategy to


Reduce GHG Emissions. The report stresses the need to ensure sustainable
development and to set up a medium term plan. The report recommends five
categories of actions:

• Improve energy efficiency in energy generation.


• Increase energy savings.
• Set an eco-tax progressively.
• Curb the increase in road transport
• Rely on flexible mechanisms allowed by the Kyoto protocol.

The plan lists 29 measures, some of which have already been taken or have
been envisaged in the 1998 National Plan.

In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
stated:

The Government of Luxembourg should:

• Develop and implement a comprehensive climate change mitigation plan


with concrete measures in order to start getting current GHG levels on
track toward meeting Kyoto commitments.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

,QVXODWLRQ The Grand Ducal regulation of 22 November 1995 on mandatory insulation


6WDQGDUGV standards for new buildings came into force on 1 January 1996. Its
implementation is monitored by certified architects or engineers
(Wärneschutznachweis) attesting that the insulation standards have been
taken into consideration; in case of non-compliance, penalties are imposed
and can mean cancellation of work.

9ROXQWDU\ The Grand Ducal regulation of 11 August 1996 organises energy audits in
(QHUJ\ residential and commercial buildings carried out by engineers, advisers or
$XGLWV specialised bodies agreed by the Minister of Energy, according to a Ministerial
regulation dated 13 December 1996.

The State subsidises up to 50% of the cost of the audit with a limit of
2
Lfr 150 000 per building or enterprise when the owner has completed the
work proposed by the expert in charge of the audit.

The former Minister of Energy developed these energy audits on the basis of
voluntary agreements concluded with the various professional sectors
concerned: industry (FEDIL), banks (ABBL), insurance (Groupement des
Assurances), hospitals (Entente des Hopitaux), trade (Confédération du
Commerce) and hotels (HORESCA).

2
On average in 2000, Lfr 1 = US$ 0.023
In residential buildings, the possibility of improving energy efficiency by this
system is high since 75% of flats are owned and not rented. Owners have a
direct interest in investing in energy efficiency in buildings as they get the
benefit of energy savings.

During the period 1990 to 2000, the overall energy efficiency gains in the
participating industries amounted to 14%. FEDIL concluded that the voluntary
agreement was an appropriated means to raise energy efficiency awareness
in industry. The voluntary agreement will probably continue to 2006 and
monitoring will be reinforced by individual energy audits.

(QHUJ\ In the framework of the three Directives 95/12/CE, 95/13/CE and 94/2/CE of
/DEHOOLQJDQG the European Union, Luxembourg has adopted several Grand Ducal
6WDQGDUGV regulations to comply with energy efficiency labelling of electric household
appliances:

• Grand Ducal regulation of 19 June 1996 on energy efficiency labelling for


washing machines.
• Grand Ducal regulation of 19 June 1996 on energy efficiency labelling for
tumble-dryers.
• Grand Ducal regulation of 28 June 1996 on energy efficiency labelling for
refrigerators, freezers and their combination.
• The Grand Ducal regulation of 11 August 1996 implements the EU
directive which sets minimum efficiency requirements for hot water boilers.
• Grand Ducal regulation of 17 August 1998 on energy efficiency labelling
for combined domestic washing-dryers machines (1998, A-72, p.1430)
• Grand Ducal regulation of 17 August 1998 on energy efficiency standards
for domestic refrigerators, freezers and combined devices (1998, A-72,
p.1439)
• Grand Ducal regulation of 17 August 1998 amending the Grand Ducal
regulation of 19 June 1996 on energy efficiency labelling for washing
machines (1998, A-72, p.1445)
• Grand Ducal regulation of 17 August 1998 on energy efficiency labelling of
domestic dishwashers (1998, A-72, p.1445)

,QIRUPDWLRQ The Compagnie Grand Ducale de l’Electricité (CEGEDEL), owned by the state
0RWLYDWLRQ (41%) and private companies, which supplies the public network with
electricity, is actively involved in information/motivation on energy efficiency
for electricity consumers. Its action in this field includes information leaflets
sent out with the electricity bills, mass media campaigns, information/
motivation lectures in schools, exhibitions on energy efficiency at fairs and in
shopping centres, etc.

PUBLIC SECTOR

Measures already
existing and/or
being improved

(QHUJ\ The aim of the 3rogramme d’actions d’(conomies d’(nergie dans les
6DYLQJVE\ &ommunes (PEEC) set up by the Grand Ducal regulation of 11 August 1996
0XQLFLSDOLWLHV is to launch initiatives and measures adopted by the municipalities to promote
the rational use of energy and renewable sources of energy. The Energy
Agency which is in charge of developing this programme assumes the
following tasks:

• To enter into consultation with the municipalities to help them to benefit


from PEEC at the stage of planning projects.
• To motivate the municipalities in their energy strategy in the framework of
the PEEC.
• To elaborate pre-feasibility studies.
• To inform them about the financial support, licensing, tariffs, etc. available.

In 1997, in the framework of PEEC, three projects were eligible for a total
subsidy of Lfr 1.4 million after examination by a special Commission
established by the Grand Ducal regulation. This concerns an information/
motivation campaign in nine municipalities on the rational use of energy and
renewable sources of energy, the installation of solar panel collectors in a
swimming pool and the installation of a wood-burning central heating system
in a primary school. In 1998, a total subsidy of Lfr 10.3 was granted to five
municipalities.

INDUSTRY

Measures already
existing and/or
being improved

9ROXQWDU\ The voluntary agreement signed in March 1996 by the former Minister of
$JUHHPHQWV Energy and FEDIL (Fédération des Industriels Luxembourgeois) includes a
target for an average 10% improvement in energy efficiency by 35 of its
members between 1990 and 2000.

No individual targets were set. Companies have been free to choose the best
means to improve their efficiency. FEDIL has monitored the progress of each
enterprise and provided an annual composite report to the Ministry of
Economic Affairs. FEDIL issued a complete report in 2000, including
recommendations for further progress.

Two other voluntary agreements were signed with the “Entente des hopitaux”
and with the financial sector for an average of 20% energy efficiency
improvement by their members in both sectors between 1991 and 2001.

Such negotiated agreements have the advantage of achieving real energy


savings through the improvement of energy efficiency as mandatory energy
audits do not necessarily produce real energy efficiency improvements.

In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
stated:

The Government of Luxembourg should:

• Encourage the Fédération des Industriels Luxembourgeois (FEDIL) to


continue the voluntary agreement with industry and to extend the
agreement to other economic sectors and improve the monitoring system.

&+3 Combined heat and power (CHP) is supported by the government; a


ministerial regulation of 6 December 1994 allocated a grant to non-industrial
co-generators of Lfr 6 000 per kW installed. The maximum grant is Lfr 6
million per installation. The benefits of the programme were restricted to the
first 5 000 kW installed, a limit which was reached in 1997. Total grants
amounted to about Lfr 38 million at the end of 1997.

The Grand Ducal regulation of 1994 sets the buy back tariff for electricity from
non-industrial co-generation and renewable sources. CEGEDEL (but not
SOTEL) has a purchase obligation. The buy back tariff for co-generators with
a capacity of 1 to 150 kW (cat. 1) averages Lfr 2.95 per kWh; from 151 to
1 500 kW (cat. 2), the tariff averages Lfr 2.3 per kWh for day supplies and Lfr
1.2 per kWh for night supplies. There is an annual subsidy of Lfr 4 500 per kW
installed if electricity is supplied during peak load. Electricity plants using
renewable sources receive the same subsidies as co-generators.

The company LUXENERGIE was set up in July 1990 to promote CHP on the
Kirchberg plateau. On 31 December 1997, 16 CHP unit were operational in
the domestic sector with a total installed capacity of about 10 MW. On 31
December 2000, 40 CHP units (cat. 2) were in operation with a total installed
capacity of 46.2 MW and 6 CHP units (cat. 1) were in operation with a total
installed capacity of 158.5 kW.

The National Plan for Sustainable Development of 1998 sets the target to
increase the share of co-generation in electricity consumption from 7% in
1997 to 15% in 2010.

The Grand Ducal regulation of 11 August 1996, which set up the PEEC,
promotes CHP units in municipal buildings through the grants mentioned
above on the condition that they operate more than 2 000 hours per year with
an annual efficiency of more than 80%.

In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
stated:

The Government of Luxembourg should:

• Consider phasing out subsidies to co-generation, as this is a mature


technology.

6XEVLGLHV The Framework Law of 27 July 1993 on economic development and


diversification, modified by the law of 21 February 1997, introduced specific
rules for subsidies at a maximum rate of 25% for investments for investments
by businesses aimed at environment protection and the rational use of energy.

3UHIHUHQWLDO The Law of 24 December 1996 modified and completed the law of
$PRUWLVDWLRQ 4 December 1967 and introduced special depreciation allowances for
company investments in new technologies for improving energy efficiency, the
use of renewable sources of energy and the recovery of waste energy in
industrial processes. To date, few enterprises have asked to benefit from this
law although this special depreciation allowance is far from being negligible.

TRANSPORT

Measures already
existing and/or
being improved

3URPRWLRQ The Ministry of Transport supports public transport, which is already well
RI3XEOLF developed in the City of Luxembourg, by low fares (which cover less than 15%
7UDQVSRUW of the costs), higher frequency of buses and trains and the creation of car
parks outside town centres connected with city buses.

&RPELQHG Because of the strategic position of Luxembourg as an important crossroads


5DLO5RDG for the international transport of goods, the government made the commitment
7UDQVSRUW to develop combined rail/road transportation. Particular focus is given to the
access and management of the rail terminal at Bettembourg to improve long-
distance transport of goods from Europe to the Belgian and Dutch ports.
Measures under
Consideration

)LVFDO3ROLF\ The 1998 National Plan considers an increase in taxes on cars to internalise
RQ9HKLFOHV better the environmental cost of transport.

2WKHU A wide range of measures such as the use of bio-fuels, electric vehicles, and
0HDVXUHV the introduction of car-pooling, etc., is being considered.

MONITORING/ In the 2000 in-depth review of the energy policies of Luxembourg, the IEA
ASSESSMENT stated:

The Government of Luxembourg should:

• Assess the cost-benefits of support for energy efficiency measures. In


particular, the government should put in place a framework to measure
the outcome of the programme to improve energy efficiency in existing
buildings.

Further information For further information, please contact:

Mr. Carlo Hastert


Ministère de l'Economie
19 Boulevard Royal
L - 2917 Luxembourg
Tel: +352 (478) 43 21
Fax: +352 (478) 43 11
E-mail: carlo.hastert@eg.etat.lu
(QHUJ\
IEA (IILFLHQF\
8SGDWH

NETHERLANDS Updated January 2003

BACKGROUND

7KLUG In December 1995, the Netherlands Government published the Third White
:KLWH Paper on Energy Policy, (Parliamentary Document II 1995/1996, 24 525,
3DSHU nos. 1 and 2) proposing a variety of reforms in the energy sector. The aim
was to achieve a sustainable energy economy within competitive energy
markets. In particular, it strives to improve energy efficiency by one third by
2020; and shift policy instruments from the supply side to the demand side.

The White Paper also deals with the increase of renewable energy in total
primary energy supply, the increasing liberalisation and internationalisation of
energy markets.

(QHUJ\ On 7 April 1998, the Minister of Economic Affairs presented the Memorandum
&RQVHUYDWLRQ on Energy Conservation (Energiebesparingsnota, EBN) to Parliament. This
3DSHUV Memorandum explored the possibility of increasing the emphasis placed on
energy efficiency and outlined proposals to meet the new efficiency target
fixed in response to the Third Conference of the Parties COP-3 (Kyoto,
December 1997, see below).

In May 1999, the government presented the Energy Conservation Action


Programme 1999-2000. This programme was a more concrete elaboration of
the EBN. It set out the contributions expected from the different sectors of the
economy and the various target groups in the 1999-2000 period. It also
described the government instruments that would be deployed in this period.
1
The government allocated a budget of Gld 690 million to the Energy
Conservation Action Programme in 1999. This was to increase to around Gld
910 million in 2001. In the same year, fiscal incentives for energy efficiency
would total Gld 300 million for companies and Gld 200 million for households.
This is twice what the government spent on energy efficiency in 1998.
Ultimately, about one quarter of the budget would be spent for subsidies and
the remainder for tax incentives. These monies did not include funding of the
CO2 reduction plan.

(QHUJ\ The Netherlands deposited the Act of Ratification of the Framework


DQGWKH Convention on Climate Change in December 1993.
(QYLURQPHQW
However, Dutch climate change policy had been established before the
Convention. In 1989 and 1990, targets and measures were announced by the
government in the National Environmental Policy Plan (NEPP). Subsequent
policy documents such as the Second National Environment Policy Plan
(NEPP-II), December 1993, and the Second Memorandum on Energy
Conservation, 17 December 1993, confirmed the Netherlands’ greenhouse
gas targets and intensified policies and measures to reach these targets,
particularly energy efficiency policies and measures.

In October 1997, the Dutch government sent a so-called Kyoto Letter to


Parliament describing the position of the Netherlands in preparation of the
Third Conference of the Parties of Kyoto (December 1997), including options
for further reductions for implementation in the Third National Environment
Policy Plan (NEPP-III).

The Netherlands’ Second National Communication on Climate Change


Policies was released in April 1997. As a number of major policy events
occurred at both the national and international level, it was decided to publish

1
On average in 2001 Gld 1 = $0.406.

1
an Update of the Second Netherlands’ National Communication on Climate
Change Policies in May 1998 (Ministry of Housing, Spatial Planning and the
Environment et al., The Hague). This update stated that in the period 1990-
1996, the CO2 equivalent of the six gases rose by 6.9% (temperature-
corrected figure). This was to a largely due to the 7.6% increase in CO2
emissions, which stemmed mainly from the transport and power generation
sectors. In 1996, CO2 contributed 75% to total CO2 equivalent emissions.
Between 1990 and 1997, CO2 alone rose by 11%.

At COP-3 (Kyoto, December 1997) the European Union accepted the target of
an 8% reduction in greenhouse gas emissions by 2008-12. Following the
European Environment Council of 17 June 1998 which adopted the EU
2
Burden-Sharing Agreement , and also the Kyoto Protocol, the Netherlands is
obliged to reduce CO2 and non-CO2 greenhouse gases by 6% in the first
budget period 2008 to 2012. Prior to the adoption of the Kyoto Protocol in
1997, the Netherlands only had a CO2 target. Due to strong CO2 emissions
growth between 1990 and 1997, the country adopted a six gases approach. At
present, greenhouse gas emissions are up 15% compared to 1990.

The 6% reduction target requires Dutch CO2 emissions to be 50 million tonnes


per year below what they would be in the 2008 to 2012 budget period if
policies were to remain unchanged. This figure is derived from the
Government’s White Paper on Climate Policy, issued in June 1999.

The White Paper on Climate Policy, in its global competition scenario,


forecasts emissions of 259 million tons CO2 equivalent in 2010. The scenario
was subsequently updated to include new policies that had been adopted,
with 256 million tonnes of CO2 as the basic assumption of the market outcome
if no further government action is taken. In terms of forecasting CO2
emissions, this scenario is relatively pessimistic, but the Dutch government
chose it deliberately, to be on the safe side.

The White Paper on Climate Policy also contains emissions growth forecasts
for each sector. It states that by 2010, unless extra policy measures are
adopted, emissions in the industrial sector will grow by 33%, in the energy
sector by 24%, in the transport sector by 15%, and in the residential sector by
9%.

The Fourth National Environmental Policy Plan published by the Dutch


government in June 2001 shows drastic targets for emission reductions for the
year 2030: CO2, 40%-60%; NOX and SO2, 80%-90%; VOs and ammonia at
least 75% and fine dust 85%. These targets are meant to start the transition
towards a sustainable, carbon-poor energy system. Most of these reductions
should come from improved energy efficiency, renewables and clean fossil
fuels. Nuclear energy, structural changes in the economy and changes in
consumption patterns can also make a contribution. The Plan claims that
targets like these are achievable and costs are reasonable: 1 to 2.5% of GDP.
The additional cost of the Fourth Plan is estimated at   000 million. The
Third National Environment Policy Plan (NEPP-III) remains in force.

,QVWLWXWLRQDO Much of the responsibility for energy efficiency policy in recent years has lain
)UDPHZRUN with the Ministry of Economic Affairs, which had primary responsibility for tax
incentives, long-term agreements, the regulatory energy tax and public
information and awareness campaigns. Other ministries had an important role,
especially the Ministry of Housing, Spatial Planning and the Environment.

The role of the Ministry of Economic Affairs is increasingly to play an initiating


and co-ordinating role. The government’s intention, mentioned in the Energy

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

2
Conservation Action Programme, is a clear allocation of responsibilities to the
different ministries directly involved. This implies that the Ministry of Economic
Affairs is to be primarily responsible for energy efficiency improvements in the
industrial and commercial sectors. The Ministry of Housing, Spatial Planning
and Environment takes responsibility for energy efficiency in the residential
and public sector. The Ministry for Transport, Public Works and Water
Management and the Ministry for Agriculture, Nature Management and
Fisheries and the Ministry of Finance are involved in numerous fiscal
measures to stimulate energy conservation and renewables. A re-shuffling of
responsibilities in Spring 2000 greatly furthered these objectives.

)LQDQFLQJ For the implementation of the CO2 reduction plan, an additional Gld 1 billion
per annum were set aside. The initial amount in 1996 was Gld 720 million;
another Gld 250 million were added later. The plan includes two subsidy
schemes. One is the Ministry of Economic Affairs’ Decree on CO2 Reduction
Plan Subsidies. This includes a number of sub-programmes: industrial
residual heat, heat pumps, advanced heat and power, process integration,
energy-intensive industry, drying/baking/melting/membranes, construction and
wood. The other scheme is the Ministry of the Environment’s investment
contribution scheme for non-industrial residual heat infrastructure. Resources
are also available for transport projects with a strong energy conservation
element.

The measures proposed in the Memorandum on Energy Conservation (EBN)


imply very substantial investment by energy consumers: some Gld 3 to 4
billion per year over several years. The government is expected to supply
some Gld 600 million of the cost, generated by the revenue from a corporate
tax on public energy utilities and higher taxes on energy use.

(QHUJ\ The government levies a number of taxes on energy. In addition to producing


7D[DWLRQ revenue, these taxes have an environmental purpose. Apart from VAT, there
are:

• Excise taxes on mineral oils (1998 revenue: Gld 10.8 billion).


• The environmental tax on fuels (1998 revenue: Gld 1.4 billion).
• The uranium tax.
3
• The regulatory energy tax (1998 revenue: Gld 1.9 billion) .

The regulatory energy tax came into effect on 1 January 1996. The purpose of
this tax is to provide financial incentives for energy conservation and the
reduction of CO2 emissions. It is also part of an environmental tax reform to
shift the tax burden away from direct taxes, e.g. on labour, towards indirect
taxes, especially on environmentally harmful goods and services. The
regulatory energy tax does not contribute to the general budget. Revenues are
recycled to taxpayers in the form of relief from other taxes.

The regulatory energy tax was phased in and only reached its full effect in
1998. However, in that same year, the Dutch government decided to double
energy taxes (regulatory energy tax and environmental tax on fuels) over the
following three years from Gld 3.4 billion of revenue per year to Gld 6.8 billion
in 2001. In practice, the increase applies almost solely to the regulatory
energy tax (estimated revenue in 2001: Gld 5.4 billion) and not to the
environmental tax on fuels (revenue in 2001: Gld 1.5 billion). The tax burden
of this increase is to be shared proportionally between households and
industries: 68% for households and 32% for industries.

About 85% of the revenue from the increase will be used to lower direct taxes
paid by households and industries. The remaining 15% will be used to

3
In comparison, the total tax revenue of the Dutch government in 1998 was Gld 180 billion.

3
promote energy efficiency. For industries, Gld 300 million will be used mainly
for tax credits for investments in energy-saving equipment. Households can
apply for support to investment in energy-efficient appliances such as
refrigerators and washing machines, and investments in insulation such as
double glazing and roof insulation (Energy Premium Scheme). They can get
free advice on which investments in their homes are most effective in reducing
energy consumption. Gld 200 million per year is available for this scheme,
including the advice.

In the 2000 in-depth review of the energy policies of the Netherlands, the IEA
stated:

The Government of the Netherlands should:

• Continue the current approach to tax reform, especially the re-distribution


of revenues to taxpayers if further tax increases prove necessary to
achieve both economic and environmental objectives.

NOVEM On behalf of the Ministry of Economic Affairs, the Netherlands Organisation


for Energy and Environment (NOVEM) promotes measures aimed at energy
conservation, energy management and energy-efficient construction and
renovation, both in residential and other constructions, and in non-residential
buildings. As an intermediary organisation, NOVEM bridges the gap between
theoretical knowledge and practical application.

As the environment in which NOVEM operates is changing rapidly, the


process of reorganisation is necessary. The conclusion so far is that its legal
status of a company with limited liability should be changed to an independent
part of the Ministry of Economic Affairs as an Agency. It might be that all
NOVEM employees become civil servants. In view of the types of activities
that NOVEM will carry out in the near future, this development will have quite
an impact. Activities and/or contracts that are open for the private market will
no longer be offered by NOVEM.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

(QHUJ\ Energy Performance Standards for new buildings and non-residential


3HUIRUPDQFH buildings came into effect on 15 December 1995, as part of the Housing Act
6WDQGDUGV supported by a programme implemented by NOVEM. The measures, among
others, promote non-conventional energy sources (solar and residual energy,
in particular) and are intended to achieve savings of between 15% and 20% in
energy consumption. At present, the requirements of the Energy Performance
Standard (EPN) for new residential properties is 1.2 which means that
3
buildings must be designed in such a way that no more than 1 200 m of
natural gas will be required each year for heating, hot water and cooking in a
standard-size dwelling. The EPN requirement was tightened to 1.0 as of
1 January 2000.

(QHUJ\ Energy Performance Advice for existing residential properties is under


3HUIRUPDQFH preparation. This advice will show which measures can best be taken, the
$GYLFH energy savings that will result and the costs. The EPA and the results
achieved will be evaluated in 2003. Progress will be monitored to this end and
will also provide information on the energy situation in existing buildings in the
Netherlands. Further steps to fulfil the efficiency potential in existing buildings
will then be determined on the basis of the results.

4
$SSOLDQFH The Energy Savings Appliances Act provides the basis for general regulations
/DEHOOLQJ for energy efficiency and labelling of appliances. Based on EU initiatives the
following measures can be mentioned. Energy labels for refrigerators/
freezers, washing machines and tumble dryers are in force. For lamps and
dishwashers energy labelling was to become obligatory on 1 September 1999
and 1 January 2001 respectively. Concerning voluntary labels on office
equipment, negotiations with Energy Star by the European Commission are
continuing.

(IILFLHQF\ Minimum efficiency standards for hot water boilers are still in force. For
6WDQGDUGV refrigerators and freezers, minimum efficiency standards came into force on
4 September 1999. For standby energy consumption of television sets and
VCRs, a voluntary agreement has been approved by the European
Commission. Concerning energy consumption of washing machines a
voluntary agreement is under consideration at the European Union.

,QGLYLGXDO At the moment, there is no national legislation for individual metering. The
0HWHULQJ energy distribution companies support individual metering through financial
incentives.

6XVWDLQDEOH In mid-1996, in co-operation with the Ministry of Housing, Spatial Planning and
%XLOGLQJ the Environment, a programme of model projects for sustainable and energy
efficient construction of dwellings and buildings began.

/RQJ7HUP The Netherlands has a tradition of developing voluntary agreements between


$JUHHPHQWV various economic sectors and the ministries responsible to secure the
/7$V acceptance of measures by all participants. The agreements usually take the
form of a Covenant or a Long-Term Agreement (LTA). (For more information
on LTAs, see below under Industry.)

In the commercial, education and health care sectors there are now six LTAs
(with a target of 25-30% energy savings), covering some 30% of total energy
consumption. With the exception of one LTA (KLM Royal Dutch Airlines and
Schiphol Airport), no monitoring results for the 1989-1995 period are available.
The greenhouse horticulture LTA (with a target of 65% energy efficiency in the
period 1990-2010) covers some 80% of total energy consumption in the
agricultural sector. Monitoring data shows that energy efficiency improved by
42% between 1980 and 1997.

In 1998, two new LTAs were established in the agricultural sector, Bulbs and
Mushrooms. The targets are 22% and 20% respectively in the period 1995-
2005. New in these LTAs are the sustainable energy targets (4% and 5%). A
covenant with the associations of social housing organisations was also
agreed in 1996.

The government intends to stimulate energy conservation in existing dwellings


and office buildings through LTAs with rental agencies in the social housing
sector and with relevant organisations for renting and maintaining office
buildings.

5ROHRI Energy distribution companies (gas and electricity) are grouped together as
3XEOLF EnergieNed. This organisation executes the Environmental Action Plans
8WLOLWLHV (MAP). MAP started in 1991 and was revised several times resulting in
MAP I, MAP II and MAP 2000, the most recent revision.

In MAP 2000, there was a target of 17 million tonnes of CO2 reduction in 2000.
In the period 1991-1997, 73% of this target was realised (12.5 million tonnes).

5
The main focus is on addressing the energy use of small-scale end-users
through advisory services and subsidy schemes for energy conservation. MAP
is financed by a MAP-levy of a maximum of 2% of the energy tariff. The
specific target groups are households, public and office buildings and industry.
On the production side, there are three main areas: heat market (CHP and
heat distribution), new technologies and renewable energy.

Fiscal/ Grants have been available since 1 March 1996 for the renovation of existing
Financial houses.
Measures
The Green Investment Scheme (low interest loans for environmentally
desirable projects) had a budget of Gld 12.5 million in 1996 and Gld 15 million
in 1997; the Vamil Scheme (free depreciation on environmental investments)
had a budget of Gld 30 million in both 1996 and in 1997.

The VROM (Ministry of Health and Land Planning) budgets contain insulation
subsidy schemes for housing. The temporary incentive Subsidy Scheme for
Sustainable Construction has budgeted Gld 125 million for the period 1996-
1998. About 70% of this budget is expected to be spent on energy saving
measures.

(QHUJ\ The first of three annual steps towards the increase in the existing Regulatory
3UHPLXP Energy Tax was taken in 1999, as provided in the 1999 Tax Plan. Some of
6FKHPH the additional revenues from this increase will be used to finance the Energy
Premium Scheme. This scheme provides a grant for buyers of energy-efficient
appliances. For the time being, this mainly involves the so-called "A-label", or
comparable appliances. Consumers who buy energy-efficient appliances and
take energy conservation measures in their homes receive support under this
scheme. The energy companies, which collect the regulatory energy tax
through energy bills, are to implement the programme. A total of Gld 200
million per year has been allocated for the scheme as from 1999.

INDUSTRY

Measures already
existing and/or
being improved

/RQJ7HUP Long-term agreements have become the key instrument in energy


$JUHHPHQWV conservation policy for industry. LTAs are primarily agreements between the
/7$V government (Ministry of Economic Affairs) and representatives from economic
sectors. Once it is effective, it puts energy efficiency into focus in many
individual companies.

The following steps precede the signature of an LTA:

Step 1: NOVEM, the government agency concerned, approaches a selected


industrial sector (or an individual company) for a Long-Term
Agreement.
Step 2: The sector records its willingness to undertake energy conservation in
a declaration of intent with the Minister of Economic Affairs.
Step 3: The sector’s energy conservation potential is inventoried, under the
guidance of experts.
Step 4: The results of the inventory are translated by Novem and the sector
concerned into a multi-year plan which forms part of the Long-Term
Agreement.
Step 5: The Long-Term Agreement is signed by the sectoral association, the
individual firms, the Minister of Economic Affairs and Novem and often

6
the Association of the Provinces of the Netherlands.

The average target of LTAs is a 20% increase in energy efficiency by the year
2000 from 1989 levels. The government agrees not to introduce other
regulations on energy efficiency in industry, and the industry voluntarily agrees
to reduce its energy intensity.

The first LTAs were signed in 1992 and as of mid-1998 the status was as
follows:

• 30 LTAS with industry associations.


• About 1 200 industrial companies participate in LTAS.
• Over 90% coverage of industrial primary energy consumption.
• 11 LTAS with groups of users in services sectors.

The Minister of Economic Affairs agrees to provide support to the programme


including:

• Financial instruments aimed at industry: tax abatement can be granted if


investments in Novemicient (or clean) technologies are realised. This
scheme, however, applies to all companies, whether they are signatories
to an LTA or not.
• Financial assistance within the framework of the LTA, including various
subsidy schemes.
• Increase of the above financial assistance if the programme is more
promising than expected.
• Support in the form of a detailed audit of the industries’ facilities.
• Co-ordination of regulatory measures aimed at energy efficiency in
industry, including requirements to obtain permit and energy taxes.

Part of the agreement involves a yearly monitoring system based on an


annual report of individual members of the sector. The aggregated reports are
submitted to NOVEM as operating agent and quantified in an energy
efficiency index for the sector. After some years the parties will evaluate the
results achieved and review the effectiveness of the agreement.

After intensive monitoring, the achievements were made visible; in 1997, the
energy efficiency of Dutch industry improved by 14.5% with respect to the
reference year 1989. This meets the expectations of the LTA programme. In
2000, annual savings of about Gld 1 500 million were anticipated for Dutch
industry. Industry sectors demonstrated a positive perception of the LTA
approach. In an evaluation, they expressed their support to the approach and
so far no sector has dropped out of an agreement.

Many of the LTAs expired in 2000. In the coming years, a total of 17 are
expected to be renewed and five new ones will be contracted. The new LTAs
will include some new themes:

• A more individual approach.


• In 2001 there was to be a standardised monitoring system at an improved
quality level.
• Reasonable measures will be taken, with an internal rate of return of at
least 15%. This corresponds to a recovery period of five years or less for
investments.
• They will focus mainly on the larger energy consumers.

New voluntary agreements have been reached, targeted at medium-sized


industries – the large energy-intensive enterprises take part in the benchmark
covenant. Partners include individual companies, approximately 20 industrial

7
associations, associations of municipalities and three Ministries: Economic
Affairs, Environment and Agriculture. These LTAs run until 2012.

The rate of increase in energy efficiency of large energy-intensive enterprises


might be lower in the next years because the energy conservation potential
seems to be lower.

/LJKW It is difficult to cover the whole industrial sector with LTAs. Hence, a different
0DQXIDFWXULQJ approach, the Light Manufacturing Industry Strategy is applied to the
6WUDWHJ\ remaining part, about 10% of the total and mainly comprised of small and
medium-sized firms. For this segment, the overall target is a 19% energy
conservation improvement in 2000 compared to 1989. NOVEM has developed
an action plan for these industries.

The first approach will be to offer energy conservation instruments via industry
associations. Possible examples are an energy registration system, an
energy management system and an overview of suitable conservation
technologies.

Various financial incentives and energy services are provided within the
framework of MAP 2000 by the energy distribution sector, aimed at energy
management and conservation for small companies without long-term
agreements.

The energy distribution sector (MAP 2000) takes care of information and
monitoring; energy advice and energy scans; leasing and pre-financing of
energy management techniques for heat recovery.

&RPELQHG The Third White Paper on Energy Policy of 1995/1996 set out an extremely
+HDWDQG ambitious objective for CHP: by 2010, 15 000 MW of CHP capacity were to
3RZHU &+3 be installed. This objective was repeated in the 1998 Energy Conservation
White Paper (EBN) and forms part of the global competition scenario and thus
the Dutch basket of measures for reaching the Kyoto target.

This capacity increase, which represents more than four times the installed
CHP capacity in 1990, was to be stimulated through a multitude of incentives
and support measures, as described below:

The 1989 Electricity Act contained a variety of incentives for CHP. These
expired when the Act expired in July 1998. The incentive measures included:

• An obligation on the centralised system to buy surplus electricity from


CHP plants at avoided cost. Avoided cost was set equal to the full cost of
new central generating facilities. This requirement was in force until 1995.
• Government subsidies of up to 17.5% of capital investment.
• Favourable natural gas pricing for small-scale CHP (until 2002).
• An exemption from paying for reserve capacity and ancillary services until
1997.

These support measures caused vigorous investment in decentralised CHP


facilities throughout the 1990s, often by energy distributors entering into joint
ventures with private companies. The number of new CHP plants was such
that Sep (Samenwerkende Elektriciteits-Productiebedrijven, co-operating
electricity production companies, the former Dutch electricity generating
board) had to limit output from existing, economic base-load plants to
accommodate over-capacity from the expensive new CHP plants. This led to
under-utilised capacity and higher unit cost. Prices, which would normally fall
in a market with over-capacity, instead rose to recover Sep’s higher unit costs.
Higher Sep prices in turn encouraged decentralised suppliers to develop more
CHP.

8
The Second Memorandum on Energy Conservation (SMEC) adopted in 1993
set the target for CHP at 8 000 MW and 30% of generation by 2000. This
objective has been reached as the present capacity of CHP is 8 000 MW.
However, severe competition with relatively low electricity prices, combined
with high gas prices caused a slow-down in the development of CHP. The
Minister of Economic Affairs announced measures to support CHP. A
temporary tax refund for co-generation power was introduced in the
Regulatory Energy Tax. For the years 2001 and 2002, the refund was 0.57
Eurocent for each kWh supplied to the grid. To be entitled to the refund, the
plant must have a minimum efficiency of 60%. A maximum of PLOOLRQLV
refunded per installation. This has resulted in an almost unchanged operation
of the co-generation plants.

In the 2000 in-depth review of the energy policies of the Netherlands, the IEA
stated:

The Government of the Netherlands should:

• Carefully weigh the costs and benefits of CHP expansion. Make the costs
as transparent as the benefits.

*DVXQLH NV Nederlandse Gasunie, the company responsible for the domestic supply of
3ODQ natural gas, is carrying out an Environmental Plan for Industry aiming at
improved energy conservation in industry.

&OHDQHU Cleaner Production is a joint initiative of the state government (the Ministries
3URGXFWLRQ of Economic Affairs and of Housing, Physical Planning and the Environment)
3URJUDPPH 63 and the provinces (the Interprovincial Consultation or IPO). The Cleaner
Production programme started in 1996 and will end in 2003. It is intended to
encourage small and medium-sized businesses to become more
environmentally (including energy) aware.

Cleaner Production reinforces and supports the activities of consultants, trade


and industrial organisations (the intermediaries). The Cleaner Production
programme includes not only assistance for intermediaries to offer them better
access to small and medium-sized businesses but also directly supports
companies.

Through the Tender Scheme Publicity and Short Scans (SP/V&D),


intermediaries are encouraged to start projects aimed at small and medium-
sized businesses. The budget for this scheme is Gld 1.7 million a year (1998
and thereafter). The maximum subsidy is 66.6%, or Gld 0.2 million per
project. A project has to focus on at least two themes. It is then up to the
intermediary to choose from several environmental care themes or to add the
theme energy conservation to the proposed project.

Through the Energy Conservation and Environmental Consultancy Subsidy


Scheme (SP/EMA), which forms part of the Cleaner Production programme
(SP), companies may receive a subsidy for engaging consultants to audit and
advise on their operations and products with regard to energy conservation
and environmental care. The EMA budget will be Gld 4.6 million per year
(1999 and thereafter). The maximum subsidy is 50% of costs or Gld 7 000-
15 000.

%HQFKPDUNLQJ The Energy Efficiency Benchmarking Covenant is a NEPP III development.


This paper states that “The energy-intensive companies offer to be (or
become) among the best in the world in terms of energy efficiency, in return
for which the government will impose no additional specific measures aimed
at energy conservation or reduction of CO2 emissions on the companies

9
taking part.” This means that they must be as energy-efficient as the most
energy-efficient comparable facilities that exist in the year 2012. However,
they need not go beyond their best competitor’s energy efficiency record; it will
be sufficient to equal the best competitor’s level. All corporate facilities
located in the Netherlands, with an annual energy consumption of at least
0.5 PJ may take part in a Covenant. The Benchmarking Covenant is a new
energy efficiency measure forming part of the basic package of CO2
measures.

6XEVLG\ The Tender Scheme for Industrial Energy Conservation (TIEB) was evaluated
6FKHPHV in 1998. As from 1998, there will be a tender scheme to stimulate
demonstration and market introduction projects for industrial energy
conservation. The budget will be Gld 10 million a year. The maximum
amounts of the subsidy are 30% for a demonstration project and 20% for
market introduction or Gld 1 million.

%UHDNWKURXJK To stimulate the development and market acceptance of new “breakthrough”


7HFKQRORJLHV technologies for energy efficiency, a multi-annual programme is being
formulated. This initiative is based on a demand-orientated strategy. Some
existing R&D facilities have also been included in this strategy. The
programme is planned to start in early 1999.

The funding programmes for breakthrough technologies are the SPIRIT


(breakthrough technologies for industrial energy conservation) and the BTS
(joint projects between companies and research institutes) programmes.
These are multi-annual programmes to stimulate the development and market
acceptance of new technologies.

Measures under
Consideration

*UHHQ The new electricity and gas liberalisation laws both contain provisions for the
&HUWLILFDWHV establishment of a “green certificates” trading scheme. Under such a scheme,
all ultimate gas and electricity consumers would acquire a certain number of
“green certificates”, depending on their total consumption. Although a
mandatory scheme was under discussion, the current government prefers a
voluntary certificates system. These certificates could be used to finance
energy-efficient technologies and renewables projects. Emissions would be
made tradable either when the scheme begins or shortly afterwards. The
market for green certificates began operating in 2001.

Details of the proposal, which has been under discussion for more than five
years, are being developed. The system will require an organisation that acts
as a “green energy” bank to issue certificates to producers, register
transactions, and collect the certificates again from consumers.

A possible model for the green certificates trading scheme is the “green label”
system now operated by the energy distribution companies. The system
supports their mutual goal regarding a renewable energy target. It is a closed
system only involving the energy distribution companies. The green labels are
tradable.

Another example is a plan under way in the Ministry of Housing, Spatial


Planning and the Environment regarding a trading scheme for NOx emissions
in the energy sector. The scheme intends to reduce these emissions by 55%
in 2005 compared to 1995 levels. A further 25% reduction is aimed for by
2010. Facilities that emit NOx will be able to sell their emissions reduction
surpluses to others who cannot meet the required reductions. Trading is to
occur on an annual basis. An NOx Exchange Board will be formed and enter
into contract with the parties concerned.

10
In the 2000 in-depth review of the energy policies of the Netherlands, the IEA
stated:

The Government of the Netherlands should:

• Speed up the development and introduction of the voluntary green


certificates trading scheme. Such schemes require much attention to
detail and consultation with participants. More concrete rules must be
proposed soon if the deadline for start-up in 2001 is to be met.

TRANSPORT Energy conservation in the transport sector is increasingly being undertaken in


collaboration with the Ministry of Transport and Public Works, and the Ministry
of Housing, Regional Development and the Environment. In both passenger
and freight transportation, the government seeks to reduce the use of energy
through spatial planning.

As for passenger transport, energy conservation is also aimed at


implementing fiscal measures and a fuel economy information scheme to
influence consumer choice.

In 2002 (end of government period) and 2005 (according to the Kyoto


Protocol), the Dutch government can decide whether other energy efficiency
measures have to be implemented regarding the development of GHG
emissions and international policies.

Measures already In 1996 three transportation policy documents Freight Transport in Balance,
existing and/or Working Together on Accessibility, and Memorandum on Vehicle Technology
being improved and Fuels were produced.

Various measures and programmes are carried out with the aim of reducing
the number of vehicle-km travelled with special attention being paid to the
improvement of public transport.

9HKLFOH A legislative measure was implemented in 1991 incorporating a mandatory


,QVSHFWLRQ check of engine adjustment as part of the annual vehicle inspections.

'ULYLQJ The government intends to influence driving behaviour through more stringent
%HKDYLRXU enforcement of speed limits, increased tyre pressure, and in-car instruments
such as cruise control and econo-meters. Increased tyre pressure reduces
fuel consumption by reducing friction between the car and the road surface
and is expected to contribute 0.3 million tonnes of CO2 savings. At present,
tyre pressure is too low in about half of all cars. Driving behaviour of truck
drivers is targeted with in-company training and education courses.

3XEOLF Measures are being taken to improve the cost of public transport to make it
7UDQVSRUWDWLRQ more attractive than private passenger transport.

5DLOZD\V A comprehensive investment programme to improve railroad connections is


currently being implemented (Rail 21). The introduction of connections
between the major cities in the Netherlands and the European high-speed
train system is under consideration.

)UHLJKW The Ministries of Economic Affairs, of Transport and Public Works, and of
7UDQVSRUW Housing, Regional Development and the Environment have set up a joint
venture with the three major employers’ organisations involved in freight
transport: the TRANSACTION joint project is investigating possibilities of
concluding Long-Term Agreements for improvement of freight transport. The
improvements being studied aim at reducing the number of road kilometres
without lowering the total volume of transport and at bringing about a

11
reduction of pollution and energy consumption. It is expected that the first
LTA for improvement of freight transport will be concluded in 1999.

MONITORING/ The Netherlands government considers it essential to monitor and evaluate


ASSESSMENT carefully its measures and programmes on energy efficiency on a regular
basis. They need to be adapted continuously to the changing situation at both
the national and international level.

In the Energy Conservation Action Programme, there is special focus on


energy monitoring. The Dutch Cabinet attaches considerable importance to
the systematic collection and processing of data relating to energy
conservation. This can show whether the Action Programme is on track and
whether its ambition will be realised. Monitoring will take place on three
levels: national (macro), the end-users or sectors (meso) and on the level of
measures or instruments (micro).

In the 2000 in-depth review of the energy policies of the Netherlands, the IEA
stated:

The Government of the Netherlands should:

• Continue to monitor energy market and emissions trends closely and


continue to respond to them in a flexible way.

Further For further information, please contact:


information
Mirjam Leijnse
Ministry of Economic Affairs
Directorate General for Energy
Energy Conservation and Renewable Energy
Postbus 20101
NL - 2500 EC’s-Gravenhage
tel. +31 (70) 379 74 26
fax +31 (70) 379 62 10
email: M.Leijnse@minez.nl

12
NEW Updated June 2002

ZEALAND
INTRODUCTION

(QHUJ\(IILFLHQF\ The government established the Energy Efficiency and Conservation Authority
DQG&RQVHUYDWLRQ (EECA) in October 1992 as an independent agency charged with determining
$XWKRULW\ and implementing practical measures to achieve greater energy efficiency in
New Zealand. It was governed by a Board that reported directly to the
1
Minister of Energy .

EECA’s functions, as defined by its Terms of Reference, are as follows:

• To develop, implement and promote strategies for energy conservation.


• To advise the government and the New Zealand energy industry on
matters relating to the development, implementation and promotion of
those conservation strategies.
• To monitor known energy sources, their use, and the investigation of
potential sources and applications, together with the economic, social and
environmental impacts, in both the short and longer term.

The government launched its long-term Energy Efficiency Strategy in 1994


2
with additional funding of NZ$ 8.5 million over three years. It focused
attention on a range of practical measures aimed at increasing efficiency in
selected energy end-uses across all sectors of the economy. Initial funding
for the Strategy ended on 1 July 1997, although many activities started during
this early phase have subsequently been integrated into EECA’s ongoing work
programme.

With the expiry of funding for the Energy Efficiency Strategy, government
funding for EECA fell from 1997 to 1999. This downward trend has since
been reversed. As part of the 2000/2001 budget, the government has
boosted EECA’s budget by extra funding of NZ$ 3 million per year from
2000/01. Initially, the extra funding supported:

• Additional grants to upgrade low-income housing with energy efficiency


devices.
• The development of minimum energy performance standards and
labelling for energy-using appliances.
• The development of a national strategy for energy use.

The government allocated a further NZ$ 3 million per year to fund energy
efficiency and renewable energy programmes, mainly through EECA but also
through the Ministry for the Environment. In the first year NZ$ 400 000 -- of
the additional NZ$3 million -- was used to fund consultation and
communication on climate change.

The government budgetary allocation to EECA for energy efficiency and


renewable energy activities in 2001/2002 is NZ$ 9.665 million and NZ$ 12.815
million in 2002/03.

In 1998/99 EECA streamlined its activities into the following four areas of
activity:

• Energy-Wise Business – to provide companies with tailored information


services, publications, fora, seminars, field support and annual awards for
outstanding energy efficiency performance.
1
The new EECA was created pursuant to the Energy Efficiency and Conservation Act 2000, with different
functions, but still responsible via a Board to the Minister of Energy.
2
On average in 1999, NZ$ 1 = US$ 0.533, in 2000, NZ$ 1 = US$ 0.451 and in 2001 NZ1 = US$ 0.420.

1
• Energy-Wise Homes -- to administer the Energy Saver Fund that provides
for the installation of household energy efficiency measures and
encourage improvement in the energy efficiency of whiteware products
and buildings.
• Energy-Wise Information -- to keep a range of target audiences fully
informed with timely information on energy efficiency and new renewable
energy developments through publications such as "Energy-Wise News"
and “EECA Update”; the EECA website (www.eeca.govt.nz); e-mail
newsletters; monitoring and analysis publications; technical publications
and seminars.
• Energy-Wise Government -- to service the energy efficiency needs of a
range of national and local government organisations and client groups
(e.g. through the Crown Loan Scheme to fund energy efficiency projects in
the public sector; Government Leadership Scheme; the Energy-Wise
Councils Partnership -- which targets the local government sector, and
giving advice to government processes including the climate change
policy debate).

(QHUJ\ The Energy Efficiency and Conservation Act passed by the Parliament on
(IILFLHQF\DQG 11 May 2000 entered into force on 1 July 2000.
&RQVHUYDWLRQ
$FW The Act provides the legislative basis for promoting energy efficiency and
renewable energy and includes:

• The establishment of the Energy Efficiency and Conservation Authority


(EECA) as a stand-alone Crown entity from 1 July 2000. It has a statutory
role to encourage, promote and support energy efficiency, energy
conservation and the use of renewable energy.

In the 2001 in-depth review of energy policies of New Zealand, the IEA stated:

The Government of New Zealand should:

• Take particular note of the requirements of the Energy Efficiency and


Conservation Act 2000 to establish only targets that are measurable,
reasonable and practicable; take into consideration the findings of the
IEA’s study on energy efficiency in New Zealand; ensure adequate means
to enforce compliance with the strategy.

• A requirement for the responsible Minister to develop a National Energy


Efficiency and Conservation Strategy (the Strategy) by 1 October 2001
(see below).

In the 2001 in-depth review of energy policies of New Zealand, the IEA stated:

The Government of New Zealand should:

• Ensure that the National Energy Efficiency and Conservation Strategy is


based on cost-effectiveness and is integrated into existing and proposed
policies on competitive energy markets.
• Give priority in the National Energy Efficiency and Conservation Strategy
to improving efficiency of energy use in transport, domestic space heating,
water heating and electrical appliances. Energy use in manufacturing
should be addressed only after data deficiencies are corrected and the
underlying causes of relatively low energy efficiency are better
understood.

• The Minister of Energy is now also responsible for promoting public


awareness of the importance of energy efficiency and conservation and
the use of renewable energy, and practices and technologies that further

2
these matters; monitoring and reviewing the state of energy efficiency,
energy conservation, and renewable energy use.
• A regulations-making power, for example, for minimum energy
performance standards and energy efficiency labelling, and powers to
monitor and review the state of energy efficiency, energy conservation
and renewable energy use and to promote public awareness of the
importance of energy efficiency and conservation and the use of
renewable energy, and practices and technologies that further these
matters.

The Ministry for the Environment has responsibility to provide primary policy
advice to government on energy efficiency and related issues while EECA has
a complementary policy advice role informed by its own operational
knowledge and expertise.

1DWLRQDO A draft National Energy Efficiency and Conservation Strategy was prepared
(QHUJ\ and released on 1 April 2001 for a large public consultation. The National
(IILFLHQF\DQG Energy Efficiency and Conservation Strategy -- Towards a sustainable energy
&RQVHUYDWLRQ future (the Strategy) was officially released on 27 September 2001. The term
6WUDWHJ\ of the Strategy is five years, but it may be replaced before that time if so
decided by the Minister of Energy.

The Strategy establishes objectives, targets and policies on energy efficiency,


energy conservation and the use of renewable sources of energy. One of its
benefits is to enable the government to quantify how these technologies and
measures will help New Zealand to meet its obligations under the Kyoto
Protocol. Development of the Strategy was led by EECA, in conjunction with
the Ministry of the Environment.

The Strategy has two high-level targets, one relating to energy efficiency and
the other to the level of energy supply from renewable energy sources; the
energy efficiency target is at least a 20% improvement in economy-wide
energy efficiency by 2012, the final year of the first commitment period of the
Kyoto Protocol. This energy efficiency target establishes a benchmark but is
not a mandatory requirement.

Progress towards the target will be communicated by a national energy


efficiency index. This index will be built up from a comprehensive programme
of sectoral and sub-sectoral monitoring which will include the development of
a number of key indicators for each sector. Some of the necessary monitoring
information already exists, but further expansion is required. EECA has
developed a framework to identify data gaps and determine key monitoring
indicators.

On 30 April 2002 the government announced that its preferred target for
renewable energy is an additional 30 PJ of consumer energy from renewable
sources (relative to year 2000 levels) by 2012. The government’s preferred
mechanisms to achieve this target are expanded renewable energy
programmes under the Strategy and a contestable projects mechanism.
Public consultation on the preferred target and mechanisms runs until mid-
June 2002.

(QHUJ\ New Zealand ratified the UN Framework Convention on Climate Change (UN
DQGWKH FCCC) in September 1993 and submitted its national communication entitled
(QYLURQPHQW Climate Change: The New Zealand Response. New Zealand’s First National
Communication under the Framework Convention on Climate Change, in
September 1994. This first communication integrated energy efficiency policy
as the main instrument to reach the reduction emission target.

The second national communication entitled Climate Change. The New


Zealand Response II, dated June 1997, provided a progress report on the

3
measures New Zealand had taken to meet its commitment under the UN
FCCC since the end of 1994.

New Zealand signed the Kyoto Protocol in May 1998. On 8 May 2000, the
Prime Minister announced that the government aims to ratify the Kyoto
Protocol by mid-2002. The government is committed to passing the legislation
needed to enable New Zealand to ratify the Protocol by this date. New
Zealand’s target under the Protocol is to hold emissions of six greenhouse
3
gases , on average, at 1990 levels between 2008 and 2012. To achieve this
goal, New Zealand intends either reducing emissions and/or purchasing
permits to offset any emissions that exceed 1990 levels.

The Resource Management Act 1991 (RMA) provides one means for local
and regional government response to climate change through granting
resource consents and developing plans and policies. The government does
not consider the use of this Act appropriate for meeting international
obligations and the Act is currently under review.

3ROLFLHVXQGHU The government has initiated a broad-based policy development programme


'HYHORSPHQW to examine how best to provide the framework to ratify the Kyoto protocol.
This programme involves a wide range of government departments, including
Environment, Economic Development, Agriculture and Forestry, Transport,
Research Science and Technology, Maori Development and the Treasury.
The options being examined include price mechanisms, such as emissions
trading and carbon charges, and non-price measures, such as improved
energy efficiency.

The energy efficiency measures will be explained in more detail below.

RESIDENTIAL
SECTOR AND
RELATED
ACTIVITIES

%XLOGLQJ In 2000, the New Zealand government passed regulations enhancing energy
&RGH efficiency provisions under the Building Code. This increased insulation
requirements in the cooler parts of the country, set maximum heat loss levels
for hot water systems and set limits on building heat loss and lighting levels in
commercial buildings.

Over the last year EECA and the Building Industry Authority have been
working on a further enhancement of the energy efficiency provisions of the
Building Code. The measures under consideration include minimum heat loss
levels for windows and a refinement of the economic criteria used to set
insulation levels. EECA is aiming to have these matters ready for
implementation by 2003. EECA is also reviewing the effectiveness of the
application of the 2000 enhancement to assess whether any further
information or training activities are needed.

3URGXFW Regulations covering mandatory energy performance standards and labelling


(QHUJ\ came into force in 2002. Initial product classes are electrical. Additional
(IILFLHQF\ classes of product are under investigation. The regulatory scheme is broadly
6WDQGDUGV compatible with its Australian equivalent, and generally utilises the same
DQG/DEHOOLQJ standards.

(QHUJ\ In 1995, the government created an Energy Saver Fund (the Fund or ESF) to
6DYHU be administered by EECA. The Fund was designed to “kick-start” residential
)XQG energy efficiency activities. Grants are allocated by competitive tender to help

3
The six Greenhouse gases are: CO2 (carbon dioxide), CH4 (methane), N2O (nitrous oxide), HFCs
(hydrofluorocarbons), PFCs (perfluorocarbons), and SF6 (sulphur hexafluoride) .

4
finance practical measures designed to improve the efficiency of energy use in
New Zealand homes. One of the funding criteria is whether projects address
market barriers (other than cost) to energy efficiency improvements, such as
lack of information, and whether the project would result in the more
sustainable provision of energy efficiency services.

Funding for the programme was judged to be increasing faster than the
developing energy efficiency services market could absorb it, and funding has
subsequently been reduced. ESF grants totalling NZ$ 1.85 million were
allocated during 1996/97 and nearly NZ$ 4 million was allocated in 1997/98.
The budget for 1998/99 was NZ$ 2.5 million. Additional funding of NZ 1.15
million per year was approved for financial year 2000/2001 onwards for
residential sector initiatives including the ESF, Maori housing, pilot residential
schemes for state housing as well as other energy/community based
measures. This brought to NZ$ 2 million per year the total to be allocated to
such measures. EECA also manages a NZ$ 1.1 million fund dedicated to a
particular Maori healthy housing scheme with a strong energy efficiency and
employment focus.

Over the first five years of operation, the Energy Saver Fund made grants to
improve energy efficiency in some 49 000 households, saving consumers
some NZ$ 50 million over the lifetime of the measures and around 300 000
tonnes of carbon dioxide. The total cost per kWh of the energy savings made
was under four cents -- very much less than the typical retail price of
electricity. The cost to government to achieve these savings is estimated by
EECA to be under two cents per kWh. Possible changes to the future
targeting and operation of the programmes may be made as the National
Energy Efficiency and Conservation Strategy is implemented.

In 2000/01 the government allocated NZ$1.1 million to EECA to administer a


Maori Healthy Housing and Employment Pilot part of its Maori Housing
Strategy. This pilot worked with three Maori service providers and involved
training and employment of unemployed Maori persons to install ‘healthy
housing’ energy efficiency retrofits in low income houses with high health
needs. The project successfully delivered whole house retrofits to 788
households, benefiting 2 959 residents. Twenty-one persons were trained
and 16 employed for at least six months. The retrofits cost on average
NZ$ 1 255 per house, and resulted in an estimated 20 million kWh of energy
savings over the lifetime of the measures, equating to 12 600 tonnes of CO2
reductions. Total dollar savings to the residents was NZ$ 2.2m at a cost to
government of 4.9c per kWh.

In 2000/01 and onward EECA redeveloped the Energy Saver Fund by


creating several more segmented and targeted grant schemes. These are still
being refined with a further revised scheme planned for 2002/02.

PUBLIC SECTOR

*RYHUQPHQW The Government Leadership Programme encourages improvements in energy


FRPPLWPHQWV efficiency within public sector agencies and institutions, demonstrating the
government's commitments to effective energy management and lowering
emissions of carbon dioxide.

The programme was established in 1993 with the following key elements: the
inclusion of energy efficiency objectives in chief executives' performance
contracts (now replaced with Memoranda of Understanding with individual
government bodies); funding of capital investments to improve energy
efficiency, provision of training and advice by EECA in conjunction with other
agencies, and encouraging energy cost accountability and annual monitoring
of energy performance outcomes.

5
As part of this programme, EECA and its predecessor organisation have lent
NZ$ 11 million since 1989 to public institutions in central and local government
to invest in energy efficiency projects, funded by the Crown Energy Efficiency
Loan Scheme. A further NZ$ 1 million will be spent during fiscal year 2000/01
in the wider public sector to encourage the application of energy efficiency
projects. Annual energy savings resulting from these investments are
estimated at NZ$ 4 million and reductions in CO2 amount to some 22 000
tonnes per year.

In November 2000, the government announced that it would extend and


strengthen its energy efficiency leadership commitments: the target is to
include more than the present 34 government agencies participating and take
in hospitals, schools, defence, etc. The voluntary scheme will be expanded to
include the wider state sector, with emphasis on agencies spending over NZ$
100 000 a year on energy. An energy saving goal of 15% by 2005 over 2000
has been set, equivalent to energy savings of NZ$ 14 million and carbon
dioxide savings of about 75 000-100 000 tonnes a year. The proposal would
require investment of NZ$ 30-40 million. As at June 2002 45 signatories had
joined the strengthened programme. The programme is seen as the basis for
seeking similar commitments from the local government and private sectors.

(QHUJ\:LVH Local governments have been targeted through the Energy-Wise Councils
&RXQFLOV programme. Priority has been given to information dissemination
3URJUDPPH (newsletters, seminars, fora), and better monitoring, reporting, benchmarking
and ranking among member councils. Special efficiency projects in the areas
of street-lighting, water and sewage pumping are also being given priority.

COMMERCIAL
AND INDUSTRIAL
SECTORS

Measures already
existing and/or
being improved

&RUSRUDWH The Energy-Wise Companies Campaign was launched in August 1994 and
&RPPLWPHQW serves to promote commitment to energy efficiency at the top management
level within companies. An effective partnership has been established
between the government and industrial and commercial sectors, which directs
management attention to the identification and implementation of cost-
effective energy-efficient practices and technologies. The main features of the
campaign are:

• A public commitment to energy management by company chief executives


and managing directors through endorsement of a common charter of key
principles.
• Endorsement of the campaign by the Minister for Energy and the Minister
for the Environment.
• Support from, and participation by, energy suppliers.
• Support from major business, consumer and environmental organisations.
• Practical information, advisory, and secretariat support from the EECA.
• Annual awards to companies making the most creative and significant
improvements in energy efficiency.

Over 600 of the country’s largest companies are now actively committed to the
campaign. They are implementing energy management practices and
drawing support, as needed, from EECA’s best-practice advisers and
technical literature including case studies of good energy management
practice. Annual returns from client companies indicate that energy savings of
NZ$ 23 million were achieved over the last year and, of these savings, NZ$ 4
million was directly attributed to EECA's involvement.

6
EECA is working through the Energy Management Association to establish
accreditation for auditors and to run seminars on new technologies. EECA
maintains a directory on energy service and product suppliers as well as a
database of consultants.

,QIRUPDWLRQ As part of a broader information dissemination strategy, some 90 seminars (to


2 400 attendees) were presented over three years; and each of six annual
issues of EECA’s flagship publication "Energy Wise News" continues to be
well received by approximately 12 000 professionals in the field. Over half the
respondents to a reader survey indicated that they apply energy saving advice
from "Energy Wise News".

9ROXQWDU\ In July 1994, as part of its CO2 Policy Package, the government announced a
$JUHHPHQWV programme of Voluntary Agreements (VAs). The government encouraged a
WROLPLW&2 broad range of business sector groups and companies to enter into voluntary
HPLVVLRQV agreements to reduce their emissions of carbon dioxide. Voluntary
agreements required companies or sector groups to specify the amounts of
CO2 that they would avoid emitting as a result of improvements or alterations
in current practices over the period 1990-2000.

The agreements were not legally binding and there was no penalty for under-
achieving. There was an expectation that they would be renegotiated if
annual reporting showed a major variation from what was expected to be
achieved.

Twenty-four VAs to reduce CO2 emissions were signed between September


1995 and March 1998, covering the majority of New Zealand’s largest CO2
emitters and 47% of New Zealand’s total 1990 CO2 output. The Ministry of
Economic Development (formerly Ministry of Commerce) was assigned the
role of implementing and monitoring the NGAs. EECA developed the
methodology for the agreements in consultation with industry participants.
They were audited and monitored independently, and the results reported
annually. These agreements terminated on or before 30 June 2001.

Most companies focused on increased energy efficiency of end-use and


generation, particularly co-generation, to reduce their emissions.

The performance of NGA signatories in terms of emissions growth has been


significantly better than the rest of the economy, which is affected by the
strong growth in transport emissions. An EECA study of February 1997
suggested that, while emissions across the whole economy were projected to
increase by 29% from 1990 to 2000, emissions from the 19 industrial NGAs
then in place (excluding the then state-owned electricity company ECNZ) were
projected to grow by 9% in the same period. This was despite a 25.5%
projected increase in aggregate output (production) for the same period.

By the end of the VA programme the signatories had reported emissions


reductions of over 1.5 million tCO2 per year, against an output-indexed or
"frozen efficiency" baseline.

It is planned to introduce a new programme of Negotiated Greenhouse


Agreements (NGAs) which will be legally binding agreements with the
"competitiveness-at-risk" emitters and sectors. The agreements are expected
to negotiate more challenging commitments and improve monitoring and
transparency in return for relief from emission charges in the 2008-2012
period.

7
TRANSPORT

Measures already
existing and/or
being improved

Vehicle Fleet Preliminary work for selecting effective measures has shown that expected
Fuel Modelling improvements in the technical performance of the vehicle fleet over time, and
the use of road space demand management measures, could lead to
considerable reduction in carbon dioxide emissions from the land transport
sector.

5RDG5HIRUP In December 1998 the government released a discussion document which


proposed wide-ranging reforms for the management of the country’s roads.
The impact of proposed fuel and road pricing could bring benefits for energy
efficiency and the environment by encouraging the use of other transport
modes and reduced demand for transport generally.

5ROHRI EECA is gearing up its information services and facilitation activities to


((&$ information on vehicle fuel efficiency, promoting greater adoption of
"rideshare" carpooling software; fostering energy efficient transport planning
and urban form at the regional and local level. The emphasis is on creating a
more energy efficient transport infrastructure; assisting decision-makers to
understand and support energy efficient options and better integrating energy,
transport and environmental objectives.

Measures under
Consideration

(FRHIILFLHQW For eco-efficient vehicles, the major short-term proposal of the Strategy is to
YHKLFOHV investigate measures to improve vehicle fuel efficiency. A report was
produced in late 2001 examining the options for applying vehicle fuel
efficiency standards and labelling as an option to encourage the purchase of
more efficient vehicles. Government subsequently decided to continue work
on the development of proposals for a practical labelling regime – along with
proposals for monitorinhg the fuel efficiency performance of the national
vehicle fleet. Ultimately, transforming the energy systems of vehicles is
fundamental to energy sustainability. While New Zealand has little impact on
the pace of such technology changes, the Strategy approach is to be pro-
active in adopting new innovations.

In the 2001 in-depth review of energy policies of New Zealand, the IEA stated:

The Government of New Zealand should:

• Determine the nominal (test) fuel economy of cars purchased new, and of
cars purchased used, to see how the two groups compare; develop
policies to encourage purchase of more efficient cars from either group.

9HKLFOH)OHHW It is planned to implement a Vehicle Fleet Emissions Control Strategy which


(PLVVLRQV includes techniques to assess the emissions impact of traffic management, a
&RQWURO requirement for all imported vehicles to meet emissions standards of the
6WUDWHJ\ country of manufacture, and a review of petroleum product specifications to
ensure available products match vehicles technologies.

7UDQVSRUW It is proposed to implement a Transport Strategy, possibly including transport


6WUDWHJ\ environmental objectives and performance targets, some of which may relate
to reducing greenhouse gas emissions.

8
MONITORING/ During 1997 an independent review of EECA’s activities was commissioned,
ASSESSMENT including a review of EECA's administration of the Energy Saver Fund. The
review found that core EECA activities such as information programmes,
commercial and industrial partnerships and the Energy Saver Fund are highly
regarded by intended audiences, but some smaller programmes had
questionable benefits. The results of the review contributed to the reconfigured
EECA that is in a stronger position to contribute to a sustainable energy system
and sustainable development in New Zealand.

Because EECA’s programmes are minimally interventionist and operate by


informing and facilitating competitive markets, it has proven difficult to
measure their full effect. However, the results of four programmes,
representing about 40% of the total resource EECA has applied, can be
quantified in robust terms. EECA estimated that up to the year 2000 the
energy savings from these programmes amounted to NZ$ 71 million in
present value terms using a 10% discount rate. This represents a return of
more than two dollars for every dollar of total government funding for energy
efficiency since EECA's establishment. The total benefits from all EECA’s
activities are likely to be considerably more than this, especially as there was
no attempt to put a value on greenhouse gas abatement and other
environmental benefits, health benefits, etc.

In addition, EECA also monitors energy end-use and efficiency patterns and
trends through data collection, use of indicators and sectoral analyses.
Results are published in a quarterly report and also provide valuable insights
useful in the design of new or amended energy efficiency programmes.

As mentioned above, it is planned to monitor and assess carefully the


progress towards achieving the energy efficiency target set up in the National
Energy Efficiency and Conservation Strategy.

In the 2000 in-depth review of the energy policies of New Zealand, the IEA
stated:

The Government of New Zealand should:

• Support data collection on energy end-use by funding and regulation.


• As far as possible, quantify the greenhouse gas emission benefits and
associated costs of the components of the National Energy Efficiency and
Conservation Strategy.

Further For further information, please contact:


information
Caroline Parlane
Senior Advisor, External Relations
Ministry of Economic Development
PO Box 1473, Wellington
Tel. 64 4 460 1372
fax 64 4 473 9930
E-mail: caroline.parlane@med.govt.nz

9
Energy
IEA Efficiency
Update

Updated March 2003


NORWAY

BACKGROUND

1991 An Energy Act came into force on 1 January 1991. It was designed to
Energy restructure Norway's electricity supply industry by introducing a clear
Act distinction between power production and sale, which is organised through a
market, and the grid, which is considered a natural monopoly. The Act also
allows customers at all levels to select their suppliers.

The 1991 Energy Act also changed the role of the utilities with respect to
energy efficiency activities and introduced specific requirements for local
energy utilities to provide customers with information and advice on efficient
use of energy.

1993 White In 1993, the Norwegian government submitted a White Paper to the Storting
Paper (Norwegian Parliament), entitled Energy Efficiency and New Renewable
on Energy Energy Sources. This Paper proposed a redirection of energy efficiency
Efficiency measures towards information, education and motivation campaigns, and a
Policy grant scheme for the introduction of energy efficient technology, and to
eliminate grant schemes for energy efficiency investments in various sectors.
Studies showed that the grant schemes for energy efficiency investments had
limited effect due to a high percentage of “free-riders”.

Environment Norway ratified the Framework Convention on Climate Change in July 1993
and Energy and signed the Kyoto Protocol in April 1998. It submitted its first National
Efficiency Communication under the Framework Convention on Climate Change on
21 September 1994. For the third Conference of the Parties (COP-3) of the
UNFCCC held in Kyoto (Japan) in December 1997, Norway submitted its
Second National Communication in April 1997. The Norwegian commitment in
the Protocol is to limit the increase in greenhouse gas emissions to 1%
between 1990 and the first commitment period (2008-2012).

The government’s White Paper on the Norwegian Implementation of the Kyoto


Protocol and the Parliamentary Bill on Green Taxes passed the Storting in
June 1998. This document, together with the earlier White Paper on
Environmental Policies for Sustainable Development, places high priority on
environmental policies. This is reflected, inter alia, in both enhanced efforts in
the field of energy efficiency to increase energy conservation and in new,
concrete policies to increase energy production from renewable energy
sources.

The Parliament decided to:

• Request the government to appoint a broad-based commission of experts


(the Quota Commission) to elaborate on a national trading scheme for
greenhouse gas emissions.
• Introduce a tax on final waste disposal, in order to increase energy
recovery and to reduce emissions of methane from landfills (see below).
• Exempt the building of wind turbines, biofuels, heat pumps, district heating
and micro and mini hydropower plants from the investment tax.
• Support electricity from windmills (reimbursement of half the tax on
power).

In December 1999, the Quota Commission presented its report. One of the
recommendations in the report was that, to fulfil the Norwegian commitment
under the Kyoto Protocol, an extensive national quota system should be
introduced with regulation by quotas from 2008. It was recommend that the

1
system include all six greenhouse gases. The quota system would be able to
accommodate almost 90% of Norwegian greenhouse gas emissions. To gain
useful experience, regulations for reporting and control routines were
recommended to be in put place well before 2008. The Commission
recommends that in an international system, where there are no limitations on
countries’ use of the Kyoto mechanisms, all concerned should be allowed to
make direct use of the Kyoto mechanisms. In its June 2001 climate policy
(see below) the government accepted most of the Commission's
recommendations.

On 30 May 2002, the Parliament (Storting) ratified the Kyoto Protocol.

1999 White In a White Paper on Energy Policy submitted to the Parliament in March 1999,
Paper on the government stated that it intended to pursue an energy policy that would
Energy support an ambitious environmental policy. Norway must prepare for a future
Policy in which energy, and electricity in particular, will be in shorter supply and
become a more valuable commodity. The necessary shifts in energy
production and use must take place in a way that has an acceptable impact on
public welfare. The government's objectives for limiting energy use, and
bringing about a shift in energy production and use are to:

• Limit energy use considerably more than would be the case if


developments were allowed to continue unchecked.
• Increase annual use of central heating based on new renewable energy
sources, heat pumps and waste heat by 4 TWh by 2010.
• Construct wind generators with a production capacity of 3 TWh/year by
2010.
• Increase the land-based use of natural gas.

To achieve these objectives, a package of energy measures will be needed,


including a gradual increase of the electricity tax combined with grants for
investments within a framework of up to NKr 5 billion over a ten-year period.
The government also intends to expand the role that the municipalities and
county municipalities play in energy policy.

The statements on limiting energy use and a shift in energy use and new
energy production were confirmed when the Parliament discussed the White
Paper on Energy Policy in March 2000. The financial package was also
confirmed. The only change is that natural gas projects can also be supported
by the NKr 5 billion grants.

2001 and 2002 On June 2001, the government presented a White Paper to the Storting on the
White Papers on national climate policy (St.meld. nr. 54 (2000-2001)). It describes the action
Climate Change that will be taken to deal with the obligations set by the Kyoto Protocol for the
Policy period 2008-2012. Carbon dioxide taxes, agreements with industry, emission
trading, and technology development are the key measures with which the
government proposed to meet Norway's environmental commitments.

The White Paper of June 2001 and a supplementary White Paper on Climate
Change Policy of March 2002 were both approved by the Parliament in June
2002.

Up to 2008, the government will pursue a number of climate–related


measures. These will include continuing to levy the CO2 tax and introducing a
quota-based domestic emissions trading system for the period 2005-2007 for
industries that are not currently subject to the CO2 tax. As a result, almost all
sectors will be regulated by climate policy instruments. This will help to meet
the requirement to make "demonstrable progress" by 2005, as set out by the
Kyoto Protocol.

2
A broad-based domestic emissions trading system covering about 80% of the
emissions will be introduced for the Kyoto-period 2008-2012.The system will
be designed to be compatible with the international emission trading system
under the Kyoto Protocol, and is based on the recommendations of the
commission of experts appointed to devise an emission trading system. The
government will also ensure that its policy is backed up by a coherent set of
instruments and measures with a long-term perspective as a basis for
accepting new and tougher commitments after 2012.

Financial/ The funds allocated to energy efficiency measures were particularly high in
Fiscal 1990-93 when temporary grants were provided for efficiency improvements in
Measures the residential, commercial, industrial and service sectors. In 1990, the grant
1
scheme amounted to a total of NKr 263.1 million and in 1992 to NKr 456.8
million.

Based on the findings in the work prior to the 1993 Report to the Parliament,
the different grant schemes were terminated. The government budget
declined to NKr 60 million in 1995, but increased every year thereafter. In
1999, the state funds for energy efficiency measures (including a support
scheme for the introduction of new energy technology and bio energy)
2
increased to NKr 248.5 million. The state funds were NKr 340 million in 2000
and NKr 347.2 million in 2001. In particular, projects concerning district
heating and wind energy have been given priority over the last few years.

Decentralised From 1994 to 2001 the responsibility for energy efficiency policies was divided
Organisation between the Norwegian Water Resources and Energy Directorate (NVE) and
the electricity companies through voluntary action. NVE largely delegated the
responsibility of executing the energy efficiency programmes to different
operating agents. Activities are primarily focused on buildings, industry,
information and education and the introduction of energy efficient technology.

Regional In the mid-1990s, the electricity companies encouraged the setting up of


Energy Regional Energy Efficiency Centres. By 1999, Regional Energy Efficiency
Efficiency Centres had been established in each of the 19 counties in Norway. Utilities
Centres could collect a supplementary charge of up NKr 0.003 per kWh on
transmission tariffs at the lowest grid level to finance energy efficiency
activities carried out through these centres.

Prior to the White Paper on Energy Policy submitted to the Parliament in


March 1999, a national energy committee reported to the government that the
responsibility for energy efficiency measures in Norway was fragmented. In
their view, these activities should be more purposefully organised. On 1
January 2002 a new agency, Enova, was established to take over the work in
the area of energy efficiency.

Enova On 27 March 2001, the Storting approved the creation of Enova SF, a public
enterprise that has responsibilities concerning energy efficiency and new
renewables. Enova, located in the city of Trondheim, has been operational
since 1 January 2002. Its aim is to secure a more cost-effective use of public
funding, so as to achieve greater reductions in energy use and more
generation of new renewables. Enova is an operative enterprise, but it has to
make use of several local and regional partners. This re-organisation has to
be seen in the light of the fast growing national use of energy over recent
years, electricity in particular, and the environmental context (national and
international) that exists for new energy generation.

1
On average in 1992, NKr 1 = US$ 0.161.
2
On average in 2000, NKr 1 = US$ 0.113 and in 2001.NKr 1 = US$0.111.

3
Enova will stimulate market forces and have the freedom to find the necessary
measures to reach the energy objectives approved by the Storting in Spring
2000 (see above). The money to achieve the objectives comes from a fee on
the electricity distribution tariffs and from ordinary grants over the state
budget. The Storting has indicated an amount of approximately NKr 5 billion
(approximately € 680 million) over a ten-tear period. The income is directed to
a separate energy trust established on 1 January 2002. Enova is in charge of
this trust, which secures a long-term financial frame over the years to come.
The activities of Enova will be evaluated after a four-year period.
Measurements and verification of energy savings will be a high priority for
Enova.

In the 2001 in-depth review of the energy policies of Norway, the IEA stated:

The Government of Norway should:

• In establishing the new agency for promoting energy efficiency and new
renewables,
set clear objectives for the agency, along with clear time scales for
achieving its objectives; require the agency to develop a range of
measures for improving energy efficiency, chosen according to their
cost-effectiveness, with a particular focus on electricity consumption.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building New building codes came into force on 1 July 1997. The 25% reduction of
Codes energy use in new buildings will be accomplished mainly by more stringent
insulation requirements in walls, windows, floors and roofs. The U-values
2
(W/m K) for heated areas (>20ºC) are:

New code Walls Roof Floor Windows Doors


Old code 0.22 0.15 0.15 1.6 1.6
0.3 0.2 0.2 2.4 2.0

These values can only be used if the total window, glass-roof and glass-wall
areas do not exceed 20% of the building’s net floor space. However, it is
possible to compensate large window areas with more insulation in the other
building elements.

Standards and Energy labelling for refrigerators, freezers and their combinations, washing
Labelling for machines and tumble dryers has been introduced following the European
Household Union Directives on this matter. Standards and labelling of lamps came into
Appliances force in January 2001.

Energy The Energy Efficiency Network for Buildings (EENB) was established in 1996.
Efficiency Through formalised co-operation, participants such as private owners of
Network commercial buildings, house building co-operatives, local authorities and
for Buildings building administrators exchanged information and experience on energy
efficiency projects completed in various buildings. The networks are also
used as a forum for developing strategies for energy administration in
buildings. Participants are obliged to submit information on their use of
energy in buildings. This information is fed into a national statistics database
on energy use in buildings. Yearly reports have been available since 1998.

4
In the 2001 in-depth review of the energy policies of Norway, the IEA stated:

The Government of Norway should:

• Undertake public awareness programmes to complement energy taxation.

Electricity In 1995 a pilot project with four energy utilities participating in three regions
Billing was completed which aimed at developing a more simplified and informative
electricity bill for household consumers. The goal was to give customers a
better understanding of both energy efficiency and a liberalised electricity
market. Customers participating in the pilot project receive frequent electricity
bills based on actual electricity consumption. The bills included a graphical,
temperature related figure which enabled the customers to compare their use
of energy over time. Information regarding energy efficiency measures, the
possibility of changing suppliers and information on tariffs was included in the
bill. A similar project carried out by the Nordic Council showed an energy
saving potential of 5-10%.

From 1 June 1999 all utilities are required to send their customers a simplified
electricity bill. Electricity bills are now sent to every customer quarterly, or
even more frequently, and are based on actual consumption instead of an
estimated consumption for each period. The aim of this measure is to increase
customers' awareness of their electricity consumption.

Financial The Norwegian Government Environmental Fund is a loan scheme


Measures administered by the Norwegian Industrial and Regional Development Fund.
through other The scheme was established to provide funding for projects that help to
Institutions reduce emissions of greenhouse gases and other environmentally harmful
gases, and provide funding for energy efficiency investments.

“Øko-bygg” is a development programme that was started in 1998. It provides


information, advice and grants to promote the use of eco-efficient technology,
including more efficient and flexible energy use in the construction industry.
The programme will end in 2002.

The Norwegian State Housing Bank offers various loan and grant schemes for
residential energy efficiency measures. From 2002 the housing bank also
offers NKr 140 000 in extra loans and NKr 10 000 in grants to homebuilders
who invest in water heating systems based on bioenergy, solar or that use
heat pumps.

INDUSTRY

Measures already
existing and/or
being improved

Industrial In 1999, the government tested a new concept to increase energy efficiency in
Energy industry. The main focus has been efficiency in core industrial processes. The
Efficiency programme is designed to detect the energy influence of using different raw
Analysis materials singly or in combination. The philosophy behind the programme is to
Model increase energy efficiency, reduce the cost of raw materials (feedstock),
increase output in production and increase competitiveness in the industry.
Pilot projects have been carried out in companies that produce:

• Non-ECSC ferro-alloys and pulp.


• Paper and paperboard.

These projects have shown that certain materials have a significant impact on
specific energy consumption, stability and output of the process. Average

5
energy reduction of electricity was between 5 and 10%, sometimes with little
or no capital investment. One of the pilot companies could save 50 GWh/year
and thereby save NKr 30 million annually with no investments made. The
programme will be continued, with the power intensive industry as the main
target.

Industrial Energy In 1989 an Industrial Energy Efficiency Network was established. The network
Efficiency currently has a membership of 650 companies from 13 industries. Through
Network their membership in the network, the companies are offered various forms of
assistance. There are two phases: in the first, the company has to establish
an energy monitoring system. In this phase the government supports the
company with training for key personnel and covers part of the consultant
fees. In the second phase, the company undergoes an energy audit.
Benchmarking is also a central network activity.

Company To assist companies that manufacture and deliver energy-efficient products, a


Specific grant is available from the authorities. The programme is focused on market
Introduction activities, with an emphasis on energy efficiency in the building industry.
Dissemination of information on energy-efficient solutions that become
available via various national and international networks is also important.

Voluntary As a component of its climate change action plan, the government hopes to
Agreements develop voluntary agreements with industry for improved energy efficiency
and emissions reductions.

To date, only one agreement has been concluded, with the aluminium industry
in 1997. The industry has agreed to reduce its greenhouse gas emissions by
55% by 2005, compared to its 1990 emissions. In 2000, a reduction in
emissions of 52% per tonne was achieved, exceeding the target in that year of
50%. Voluntary agreements with industry have proven to be difficult to
negotiate, possibly due to the discussion on quotas for domestic emissions
trading system.

In the 2001 in-depth review of the energy policies of Norway, the IEA stated:

The Government of Norway should:

• Consider the continuation of existing programmes directed at improving


energy efficiency in the industry and domestic sectors.

TRANSPORT

Measures already
existing and/or
being improved

Purchase The purchase tax on cars was initially fixed according to the value and weight
Tax of different models. Although no precise estimates of its effects are available,
the weight component may be an incentive to purchase lighter, more energy-
efficient cars. In addition, since 1996 the tax has been differentiated to
replace its value-base element with an energy performance component.

In the 2001 in-depth review of the energy policies of Norway, the IEA stated:

The Government of Norway should:

• Undertake an assessment of the effectiveness of the vehicle taxation


regime to determine if it is contributing to improvement in the vehicle fleet
as a whole; develop ways of improving overall fleet efficiency.

6
Taxation on The government considers cost-efficiency to be essential in regulating the
Fuels and environmental impact of transport. This also applies to energy efficiency.
Registration Economic matters, therefore, have an important role as an instrument in
Tax environmental policies in Norway. The duties on petrol and diesel, as well as
the registration tax on vehicles, are high. External effects at a national level
are an important basis for the setting of vehicle taxes.

Consumer GRIP, a foundation under the Ministry of Environment, gives consumer


Information information on fuel economy and emission from cars, buses and lorries. Work
has started on implementing the EU Directive (1999/94/EC) relating to
availability of consumer information on fuel economy and CO2 emissions in
respect of the marketing of new passenger cars. Norway has also
implemented EURO I and II, which are European Union norms on emissions
from vehicles. EURO III came into force 1 October 2000.

Measures under
Consideration

Road Norway has many toll rings in order to finance road infrastructure. The Ministry
Pricing of Transport and Communications is for the time being undertaking the
necessary steps to ensure a legal basis for the introduction of road pricing.
The purpose of a road pricing system will be to internalise external costs
created by road traffic in order to reduce congestion and improve local
environment. The Ministry also considers parking policy to be an essential
measure for reducing congestion and thereby environmental problems.

CO2 TAX

Measures already The CO2 taxes introduced in 1991 are at present the main instruments aimed
existing and/or at limiting CO2 emissions in Norway. The tax rates are high compared to
being improved similar tax rates that have been introduced or proposed in other countries.

The carbon dioxide tax covers approximately 64% of Norway's carbon dioxide
emissions and 48% of total greenhouse gas emissions. The tax rates vary
according to the different emission sources. In 2002 the tax rates are as
follows: The highest tax rate (NKr 315/tonne CO2) is levied on petrol; the tax
rate on oil and gas production in the North Sea is respectively NKr 277 and
NKr 308/tonne CO2. Reduced taxation ratios on mineral oil are applied to the
pulp and paper industry, the fishmeal industry, domestic shipping of goods
and continental shelf supply fleet. The main emissions that are exempted from
the CO2 tax are those from industrial processes. Taxation on coal and coke for
energy purposes amounts to NKr 0.49 per kg.

To encourage energy recovery and reduce methane emissions from landfills,


a tax on final disposal was introduced in 1999. The tax rate is reduced when
waste is used as a source of energy. The tax rates are: landfills NKr 320 per
tonne, incinerators NKr 80 per tonne plus an additional charge of up to
NKr 240 per tonne depending on the degree of energy recovery.

The Storting has recommended that the government adopt the 1996 Green
Tax Commission's proposal to exempt the buildings of heat pumps, district
heating systems, micro and mini hydropower plants, wind turbines and bio-fuel
plants from the 7% investment tax.

The carbon dioxide tax and other "green" taxes are treated as general
revenue and earmarked for any specific purpose. Revenue from the carbon
dioxide tax was expected to reach NKr 7 000 million in 2001.

7
Statistics Norway has evaluated the effect of the carbon dioxide tax. The
evaluation suggests that a carbon dioxide tax on private transport increasing
fuel price by 6% to 7% will reduce the use of fuel by 2% to 3% each year.
Most of the effect is achieved by reducing the transport volume by 1.5% to
1.9%. Although the analyses indicate that the tax has had an effect, the
calculations are uncertain. The long-run effects on fuel efficiency have not
been studied.

In the 2001 in-depth review of the energy policies of Norway, the IEA stated:

The Government of Norway should:

• Evaluate the efficiency and effectiveness of existing policies and


measures, in particular the carbon dioxide tax.

MONITORING/ Different types of energy efficiency activities are being evaluated


ASSESSMENT consecutively. Different evaluations carried out in 1998 and 1999 have shown
a need for a restructuring of work on energy efficiency and also of that on new
renewables. This need for restructuring is connected to the new quantitative
objectives set by the government and the Parliament.

From January 2002 the new government body Enova is able to choose the
most cost-effective measures to reach different government objectives.
However Enova will not deal with transport issues. The Ministry of Petroleum
and Energy will receive reports indicating the results Enova is achieving
annually.

Further For further information, please contact:


information
Anita Eide
Senior Advisor, Energy and Policy Analysis
Enova SF
Abelsgate 5
N-7030 Trondheim
Tel +47 73 19 04 39
Fax: +47 73 19 04 31
email: anita.eide@enova.no

8
(QHUJ\
IEA (IILFLHQF\
8SGDWH

PORTUGAL Updated January 2003

BACKGROUND The Portuguese Energy Programme adopted by Parliament in July 1994 had
the following goals: improve energy efficiency, diversify energy sources
(mainly the introduction of natural gas) and promote indigenous renewables.
The measures to reach these objectives have been financed mainly through
the SIURE programme (Incentive System for the Rational Use of Energy –
see below).
1
Between 1994 and 1999, total public funding was about Esc 140 billion (ECU
704 million), of which 44% came from EU FEDER funding. Public funding for
the introduction of natural gas accounted for 69% of the total, promotion of
renewable sources accounted for 22.6%, energy savings 7.5% and technical
2
assistance less than 1%. The Portuguese government decided to continue
the programmes, giving more emphasis to energy savings and progressively
reducing funding for the introduction of natural gas which is done within the
scope of the PLANO OPERACIONAL da ECONOMIA (POE) in the SIME and
MAPE schemes that are briefly described below.

The Directorate General for Energy (DGE) within the Ministry of Economy is in
charge of energy issues. Its main responsibilities include:

• Proposing legislation to regulate the energy sector and supervising its


implementation.
• Granting licences and authorisations to energy-based plants and
infrastructure and establishing their technical standards.
• Developing and implementing energy-related programmes (e.g. energy
efficiency programmes).
• Encouraging the dissemination of information on energy policy and energy
statistics.
• Carrying out studies on energy issues for the government.

On 15 January 2001, the Ministry of Economy published a new policy


programme, the Energy Efficiency and Endogenous Energies Programme
called E4 aimed at promoting energy efficiency and the use of endogenous
energy resources. The financing for the implementation of new projects,
10 609 million, is covered by the POE and the Global Incentive Programme
of the Ministry of Economy, aimed at modernising the Portuguese economy.
This programme is set for the period January 2000 to December 2006. It is co-
financed by the European Union to an amount of  290 million.

The Centro para a Conservação de Energia (CCE), a private institute owned


by Portuguese energy companies and public bodies with a staff of about 40,
was restructured in 2000 giving place to the Agência Nacional para a Energia
(ADENE) (Decree-Law 223/2000) that will also integrate the Portuguese
Center for Biomass (CBE). The main tasks of this new body are to prepare
studies on energy efficiency and renewables and on standards for electrical
appliances and to disseminate information. The Agency deals with all
economic agents and energy consumers, acting as the instrument for better
energy consumption management and use of endogenous energy resources.

1
On average in 2000 Portuguese escudos (Esc) 1 000 = US$4.577. and in 2001 US$ 4.466.
2
The technical assistance programme aims mainly at funding administrative costs, e.g. management of the
programmes, preliminary studies, information to the administration, advertising campaigns and assessment.
In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Set up new programmes for energy efficiency in the different sectors,


taking into account the results of the assessments of the previous
programmes to focus on the most cost-effective measures. Ensure that
these programmes are effectively funded.

(QHUJ\ Portugal ratified the UN Framework Convention on Climate Change on


DQGWKH 21 December 1993 and submitted its first national report to the UN FCCC
(QYLURQPHQW entitled Portuguese report in accordance with Article 12th of the United
Nations Framework Convention on Climate Change on 25 January 1995.

Portugal’s second national communication entitled Segundo relatório de


Portugal was released in November 1997. In this second report to the FCCC,
CO2 emissions were forecast to increase 69% between 1990 and 2010,
reaching 74.9 Mt in 2010. Energy-related CO2 emissions would increase 68%
to 62.5 Mt.

Portugal undertook a study to improve the estimates of GHG emissions. The


report was published in mid-2000.

At COP-3 (Kyoto, December 1997) the European Union accepted the target of
an 8% reduction in greenhouse gas emissions by 2008-2012. In the
European Environment Council of 17 June 1998, which adopted the EU
3
Burden Sharing Agreement , Portugal was allowed to increase its emissions
by 27% for the 2008-2012 period over the 1990 levels.

On 26 December 2001, Portugal decided to ratify the Kyoto Protocol; this


ratification should be official only when all the European Union Member States
decide to send their instruments of ratification to the Secretary of the United
Nations, taking account of the EU Burden Sharing Agreement.

The government is preparing a National Plan for Climate Change (PNAC). A


working version of the plan was published in March 2002 and the government
expects it to have been finalised during 2002. The working version quantifies
the emissions reduction required to achieve the Kyoto target under the most
probable socio-economic development and aims at opening public discussion
on the measures and their implementation. It also defines some immediate
measures and their potential for reducing emissions and their cost. One of the
conclusions presented in this version is that Portugal will rely heavily on
domestic measures to meet the emissions reduction target. The Plan is
currently under public consultation and it has been criticised for not providing
a detailed analysis of the emissions reduction potential, and the cost, of many
prospective measures. The government plans to introduce sectoral emissions
reduction targets, new measures and monitoring programmes in the final
version of the Plan.

To reduce GHG emissions, Portugal has been relying on energy efficiency


regulations in the industrial and household sectors, voluntary agreements with
some industrial sectors, development of public transport and tax credits on
photo-voltaic equipment.

3
The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

2
In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Release, as soon as practicable, its report evaluating GHG emission


trends so that a comprehensive assessment can be made of how much
Portugal must reduce its emissions to meet its climate change
commitments under the Kyoto Protocol..
• Revive its efforts to develop and implement a comprehensive climate
change mitigation plan in order to start getting current GHG levels on track
to meeting Kyoto commitments.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

7KHUPDO Regulations on the Characteristics of the Thermal Behaviour of Buildings


%HKDYLRXU (RCCTE) were published in Decree-Law number 40/90 of 6 February 1990
and came into force on 1 January 1991. These regulations are not strict in
terms of energy conservation, both because Portugal’s climate gives little
scope for energy savings that are economic in this sector and because the
focus is still on improving comfort in new buildings, with energy efficiency a
secondary rather than primary objective.

This regulation was the first step to improve thermal comfort in buildings,
quantifying the needs of the building in terms of energy and consumption and
taking into account the rational use energy. A revision of this regulation is in
preparation to strengthen the energy parameters.

In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Ensure that building codes are periodically revised to take into account
technical improvements. Ensure that these codes are effectively
implemented and that their implementation is effectively monitored at local
level.

$FFOLPDWLVDWLRQ The Regulation on the Energy Systems for Air Conditioning of Buildings
(RSECE) was published in Decree-Law No. 118/98 of 1998. This regulation
establishes the rules to be complied with in calculating the size of energy
systems for air conditioning to achieve higher energy efficiency ratios.

(IILFLHQF\ Efficiency labelling has been in force since 1994, by the Decree-Law No.
6WDQGDUGVDQG 41/94 of 11 February 1994. This Framework Decree-Law encourages
/DEHOOLQJ producers to manufacture and consumers to purchase more energy-efficient
appliances.

Order Nos. 1139/94 of 22 December 1994, 116/96 of 13 April 1996, 279/97 of


28 April 1997 and 117/96 of 15 April 1996 applied to refrigerators, washing
machines, dryers and washer-dryers, respectively. Manufacturers support the
costs of the test procedures and labelling systems.

The EU Directive on energy efficiency standards for refrigerators and freezers


was adopted in 1994.

3
A “Minimum Efficiency for Heating Boilers” has been in force since 1996 and
sets minimum efficiency requirements for hot water boilers.

In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Ensure maximum compliance with EU directives on labelling. Ensure that


the Regulation on the Energy Systems for Air Conditioning of Buildings is
periodically revised to adapt to new technologies. Contribute to the
elaboration of EU regulations on labelling and efficiency standards for
cooling appliances.

%RLOHU The 1963 Decree-Law No. 45115 requires all steam boiler plants with a total
2
6XUYH\ heating surface greater than 100 m to have periodic energy efficiency tests to
adjust air and fuel to give optimum combustion performance and to have
energy-efficient boiler plants. The Decree-Law was revised in 1990 to improve
the measurement of stack gases of the boiler plants according to the
parameters of temperature, pressure, humidity, flow as well as their
composition (CO, CO2, O2, N2) and the control of the pollution parameters. At
this stage of implementation, the results of these tests are not available.

,QIRUPDWLRQ In 1998 DGE promoted several energy efficiency activities; the Centro para a
Conservao de Energia was in charge of some rational use of energy projects,
for example: Energy Auditing in the Hotel Sector, Energy Auditing in Textiles,
Ceramics, Dairies and Wood and Cork Sector and two training courses on the
rational use of energy in industry.

Based on these audits, new values for the target specific consumption for
ceramics and textiles were published. Work is going on to reach new values
for the glass sector.

0HDVXUHVXQGHU
FRQVLGHUDWLRQ

(QHUJ\ Portugal is preparing specific legislation for a voluntary classification of new


&HUWLILFDWLRQ buildings according to their energy performance. A study began in 1999 to
define the type of certification to be attributed to buildings and to establish
standards for tests and methodologies to assess energy efficiency in
buildings.

PUBLIC SECTOR In designing energy efficiency policies in 1994, the government decided to put
greater emphasis on municipalities. Through the Directorate General for
Energy, it designed an Action Plan (Plano de Acção nos Municipios (PAM)) to
foster the creation of local energy entities and the implementation of energy
policy measures at the local level, using financial support available under the
Energy Programme.

This action is going on under the new incentive programme. Projects aimed at
reducing reduce the consumption by public lighting and water supply systems
are being developed.

INDUSTRY

Measures already
existing and/or
being improved

5*&( Management Regulations for Energy Consumption (RGCE) were established


under Decree-Law No. 58/82 of 26 February 1982 and regulated under the

4
Ministerial Order No. 359/82 of 7 April 1982. The primary objective of these
regulations is to instil in energy-intensive companies the concept of energy as
a cost factor. The regulations establish goals for companies to reduce
progressively their specific energy consumption. In addition, the regulations
require companies to audit their energy use twice a decade, to prepare and
carry out annual plans for rationalising their energy consumption and to
achieve the energy savings. All energy consuming facilities meeting one or
more of the following conditions are covered:

• Energy consumption of more than 1 000 toe in the last 12 months.


• Equipment with total nominal power rating of more than 0.3 toe per hour.
• Any one item of equipment with nominal energy consumption of more than
0.3 toe per hour.

The regulation obliges companies to control the results of the energy savings
measures and assures the successful execution of the rationalisation plans.
The objective was to reduce the specific consumption of energy by at least 5%
over the five-year period.

By the end of 2000, 549 installations (whose annual consumption represented


about 4 million tep) had performed energy audits and drawn up plans for
energy efficiency which were then submitted to DGE. The consumption of
these installations represents more than 50% of the total energy consumption
in the industrial sector.

The main industrial sub-sectors covered by the RGCE regulation are Food
and Drinks, Textiles, Wood and Cork, Pulp and Paper, Chemistry and
Cement, Ceramics and Glass.

The rational use of energy measures carried out were mainly energy
management systems, co-generation projects, thermal insulation, heat
recovery systems and installation of more efficient equipment.

Information for small and medium-sized enterprises is mainly provided through


seminars, conferences and a Web site.

The Directorate General for Energy has been monitoring the implementation
of RGCE in industrial installations where energy consumption is higher than
1 000 toe per year; the monitoring in done on the basis of a five-year plan.

As the transport sector experienced strong growth in energy consumption, it


was decided in 1988 that RGCE should be extended to transport. Although
the response of the sector to this type of measure has been reported as very
weak.

In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Carefully assess the results of the energy audits in industry to improve the
effectiveness of energy efficiency measures in this sector.
• Increase information to energy consumers on energy efficiency measures.
Focus on measures to improve energy efficiency in small industries, such
as providing information and expertise.

6,85( SIURE (Incentive System for the Rational Use of Energy) was the national
assistance system for energy projects. Its basic objective was to encourage
energy efficiency and promote the development of new sources or forms of
energy in all economic sectors (except the domestic sector), by providing
grants to companies carrying out related projects.

5
Decree-Law No. 188/88 of 27 May 1988 updated by Decree-Law No. 35/95
established the incentive system.

SIURE provided grants for energy auditing in the tertiary and transportation
sectors, energy research and feasibility studies, investments in energy
efficiency, co-generation projects, diversification of primary energy sources
and energy demonstration projects. SIURE helped to reduce high energy
dependence on oil products and improve energy efficiency. It made possible
6
245 ktoe energy savings per Esc 54x10 investment over the period 1994/98.
For this period the amount of incentives awarded to the projects was around
6
Esc 10x10 and includes grants and loans at zero interest rate.

The grants and loans for the energy efficiency projects in the industrial and
tertiary sectors represented about 82% of the total, with an energy savings
potential of 227 ktoe per year, for about Esc 49 million of investment.

The energy diversification projects and energy efficiency in transport


represented about Esc 5.2 million, with 18.3 ktoe of energy savings and
Esc 1.8 million granted. The financial support comes from the European
Union and the Portuguese State Budget.

SIURE was evaluated every year by the Energy Programme Manager. The
system ended in 2000 and has been replaced by MAPE.

3(',3,, PEDIP II (Strategic Programme for the Development of Portuguese Industry)


ran from 1994 to the end of 1999 and succeeded the previous PEDIP (1988 to
1992). The latter was initiated in the context of Portugal’s accession to the
European Union and received EU funding to modernise Portugal’s industry
and improve its environmental performance.

PEDIP was complemented by activities addressed to the targeted sectors:

• Energy audits and studies on more efficient use of energy and advertising
campaigns.
• Measures to demonstrate the technical viability of the implementation of
the monitoring and targeting system of PEDIP.
• Energy managers training to improve the skills in energy management of
human resources.

The PEDIP II programme ended in 2000 and has been replaced by SIME.

6,1'(3(',3 SINDEPEDIP support schemes consisted of grants or interest-free loans in


amounts and percentages depending on the type of operation and the volume
of investments. These schemes were:

• Support to studies and audits to help the management strategy of


industrial companies in the implementation of actions particularly in the
areas of environmental protection and energy management.
• Support to integrated investment projects in the various functional
company areas which may include environmental investments,
encouraging the use of cleaner production technologies as well as
investments in the area of energy rationalisation.
• Support for the promotion of dynamic competitiveness factors on the basis
of investment projects including actions for the protection of the
environment and improved working conditions, by providing help for the
purchase of equipment and the implementation of suitable technologies.
• Support for business demonstration activities through involvement in
areas having an effect on the competitiveness of companies, such as the
rational use of energy and protection of the environment.

6
To be eligible for SINDEPEDIP loans and grants, enterprises needed to
4
comply with Decree Law 58/82 . Enterprises that received the funds had to
report every six months on progress made, particularly on the evolution of
specific energy consumption.

SINDEPEDIP ended in 2000 and has been replaced by SIME.

0$3( MAPE, which is the successor to SIURE, is the national assistance system for
energy projects. Its basic objective is to encourage energy efficiency and
promote the development of new sources or forms of energy in all economic
sectors (except the domestic sector), by providing grants to companies
carrying out related projects.

MAPE provides grants for investments in energy efficiency, co-generation


projects, diversification of primary energy sources including the conversion to
natural gas and renewable energy. MAPE helps to reduce high energy
dependence on oil products and improve energy efficiency. The support
includes grants and loans at zero interest rate.

6,0( SIME support schemes, which replace PEDIP II and SINDEPEDIP, consist of
grants or interest-free loans in amounts and percentages depending on the
types of operation and the volume of investments.

The operations that can be funded are integrated operations aiming to


improve the competitivity of the companies. Those operations can include
investments in support to integrated investment projects in the various
functional company areas, which may include environmental investments,
encouraging the use of cleaner production technologies as well as
investments in the area of energy rationalisation.

&RPELQHG Decree Law 189/88 of 1988 has provided for must-take obligations by the grid
+HDWDQG company REN (Rede Electrica Nacional) and favourable buy back tariffs set
3RZHU according to the price paid by end-use customers. Decree 186/95 of 1995 set
minimum efficiency values and the minimum heat utilisation necessary for co-
generators to qualify. The buy-back tariff for co-generators is as follows:

• The buy-back tariff for co-generators below 10 MW is calculated according


to the price paid by end-use customers in the medium and high voltage
tariff range. A minimum of 55% efficiency is required to qualify.
• For co-generators above 10 MW, the buy-back tariff is based on avoided
costs calculated as the cost of building a new CCGT plant. Payments
increase when the heat rate value and the availability of the plant
increase.
• Co-generators pay for connection to the grid.
• Decree 538 of 1999 allows sales to affiliate companies as well as to
companies buying heat. This regulation will be valid for ten years.

As a result of these measures and in particular of the buy-back tariff, co-


generation capacity increased from about 600 MWe in 1990 to about
900 MWe in 1998. Generation amounted to about 5 TWh in 1998, including
3.1 TWh in auto-consumption.

The standards defining the conditions for the exploitation of the co-generation
plants and respective tariffs have recently been revised.

4
Some other PEDIP programmes had environmental aspects. In these cases compliance with these regulations
was also required.

7
TRANSPORT

Measures already
existing and/or
being improved

RGCT The RGCT is being implemented in the public and private transport
enterprises where energy consumption is higher than 500 toe per year. The
RGCT requires these companies to carry out energy auditing and to publish a
plan for the rationalisation of their energy use every three years. The
Directorate General for Energy (DGE) monitors the audit results and the
plans when the companies apply for financial support.

9HKLFOH Control of vehicle energy efficiency using new technologies and mandatory
&RQWURO periodic inspections aimed at reducing the environmental impact of the
transport sector have been implemented.

5DLOZD\V The government announced in 1998 a three-year investment plan costing


Esc 600 million aimed at the electrification of all international railway lines and
the development of a new high-speed link between Lisbon and Porto.

The Directorate for Energy monitors the auditing and this triennial
rationalisation plan.

3XEOLF7UDQVSRUW The use of natural gas in vehicles began in the public transport systems of
Braga and Porto in 2000 and in Lisbon in 2001. The extra cost involved in
purchasing buses that use natural gas is partially financed through the OPE
Programme.

In the 2000 in-depth review of the energy policies of Portugal, the IEA stated:

The Government of Portugal should:

• Continue to increase investment in railways and to develop modern public


transport in the major towns.

8QGHUJURXQG In the Lisbon metropolitan area, which accounts for roughly 20% of the
7UDQVSRUW Portuguese population, there has been a surge in public investment in mass
transport. The underground system doubled its length in 1999, with improved
links to the railway and bus network. In Porto, a metropolitan railway system
is scheduled to start operating by 2001.

7UDIILF Until 1998, SIURE funds allocated for energy diversification and energy
0DQDJHPHQW savings in transport amounted to Esc 5.2 million. Funds were mostly granted
for information systems to improve the mobility of captive fleets.

The use of automation, the creation of lanes and corridors for public transport,
reversible direction zones, etc., aim to facilitate traffic flows particularly in
urban areas.

MONITORING/ When funds are granted by the Directorate General for Energy (DGE), energy
ASSESSMENT efficiency programmes are evaluated during the programme and afterwards
by DGE and the National Institute for Engineering and Industrial Technology
(INETI) on the basis of energy and CO2 emissions saved.

8
For information For further information, please contact:

Mr. José Antonio Penaforte Costa


Direccao-Geral de Energia
Direction of Services for Rational Utilisation of Energy
Av. 5 de Outubro, 87, P – 1000 Lisboa
tel. +351 (21) 792 2700
fax +351 (21) 793 95 40
email Penaforte.Costa@dge.pt

9
Energy
IEA Efficiency
Update

SPAIN Updated July 2003

BACKGROUND
According to Royal Decree 557/2000, 28 April 2000, energy policy is the
responsibility of the Ministry for the Economy, and implemented through the
office of the Secretary of State for the Economy, Energy and Small
Businesses, which, based on RD 689/2000, 12 May 2000, in turn acts through
the Directorate General for Energy Policy and Mines.

From 26 July 2002 and by Royal Decree 777/2002, the Institute for
Diversification and Saving of Energy (Instituto para la Diversificación y Ahorro
de la Energía, IDAE) reports to the Ministry for the Economy through the State
Secretary of Energy, Industry Development and of Small and Medium
Enterprises.

IDAE and the Directorate General for Energy Policy and Mines work in co-
ordination on the implementation of policies and actions to promote the
rational use of energy and diversification of energy sources.

As a national agency, IDAE seeks to strengthen links with the other agencies
with competencies in industry and energy in order to integrate and co-ordinate
actions at regional and local level. In Spain there are currently 20 regional and
local agencies whose aim is to promote actions in the fields of energy
efficiency and diversification of sources.

Energy After the Kyoto commitment of December 1997, the European Union Council
1
and the of Ministers agreed on 17 June 1998 on the Burden-Sharing Agreement
Environment towards achieving the 8% European Union commitment to reduce emissions.
In this context, Spain is obliged to ensure that its CHG emissions do not
exceed the 1990 level (306 Mt of CO2 equivalent) by more than 15% for the
2008-2012 period.

National Royal Decree 177/1998 of 16 February 1998 founded the National Climate
Climate Council (CNC) an associated body of the Government Department, belonging
Council to the Ministry of the Environment. It would establish a set of national plans
and programmes to adopt the necessary measures at a sector level to
confront climate change and at the same time fulfil the international
commitments signed by the government, basically the Kyoto Protocol and the
United Nations Framework Convention on Climate Change.

The different functions of the National Climate Council include:

• The elaboration and presentation for approval by Parliament of the Kyoto


Protocol National Strategy and subsequent modifications.
• Follow-up of plans and programmes included in the Strategy.
• Technical and scientific advice for Spanish delegations in inter-
government organisms.
• Co-ordination of the writing of national reports on climate change.
• Proposal of necessary measures to the government to fulfil undertakings
made in international agreements and protocols.

Spanish Climate Royal Decree 376/2001 of April 2001 established the Spanish Climate
Change Change Prevention Office (Oficina Española del Cambio Climático, CCPO). It
Prevention Office will be under the Ministry of the Environment, the General Directorate for
Environment Quality and Assessment. The composition and structure of the
new organisation were defined by Ministerial Order of July 2001.

The tasks of CCPO are, inter alia, to act as secretariat for the National Climate

1. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

1
Council, to follow-up of UNCC and promote Spanish policies and measures to
accomplish the commitment under the UNCCC and the Kyoto Protocol; and to
collaborate with the autonomous regions in giving advice.

The central government formulates the policies for mitigating climate change.
However, the regional governments (see below) are allowed to adapt policies
to their specific geographic area as long as they do not distort the intent of the
national policies. The regional governments also play an important role in the
implementation of policies in their region, such as licensing installations for
producing energy from renewables and CHP, and promoting energy efficiency
and transport planning.

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Encourage autonomous regions to formulate their policies towards CO2


emission reduction at local and regional levels in line with the national
policies.

Spain's GHG emissions have grown with its economy. According to IEA
statistics, Spain's energy related CO2 emissions have grown by 28.6% from
1990 to 1999. Meeting the Kyoto target requires the total GHG emissions to
be reduced by 17 Mt from the 1998 level.

The National Climate Council is currently preparing the Kyoto Protocol National
Strategy. However, no clear timeframe for completion of the plan has been set.
The question of target-setting, by sector, by region or a possible combination, is
still under consideration. However, the reports Policies and measures for the
Fight Against Climate Change: A first Advance and the Plan for the Promotion of
Renewable Energy in Spain have been developed.

Plan for the The Plan for the Promotion of Renewable Energy in Spain (Plan de Fomento
Promotion of de las Energías Renovables en Espana, PFER), which was prepared by IDAE
Renewable (see below) on the basis of Law 54/1997 on the Electricity Sector (Ley
Energy 54/1997, del Sector Eléctrico) sets a target of 12% of Spain’s energy demand
being met from renewable sources by 2010, in line with the EU target defined
in the European Community's White Paper for Renewable Energy Sources,
The Plan was approved by the Council of Ministers on 28 December 1999.

In terms of primary energy, the Plan sets an output target of an additional


9 525 ktoe over its lifetime, of which 1 709 are to be from the utilisation of
renewable sources of energy for thermal uses. The estimated CO2 emissions
avoided by the Plan due to this increase in renewable sources is between
8.6% and 18.3% -- compared with CCNG or coal for electricity generation -- of
the total CO2 emissions in 1990.

Energy The Delegated Commission of the Spanish Government for Economical


Efficiency Affairs has approved the elaboration of the Energy Efficiency Strategy 2003-
Strategy 2012, whose basic objective will be to improve the energy intensity ratio.
2003-2012
To carry out the Energy Efficiency Strategy, six inter-ministerial working
groups were created, corresponding to the areas of energy transformation,
transport, building, tertiary and residential, industry and public services. In
addition to these sectoral groups, another group on institutional co-ordination
was created that will describe the horizontal objectives, the relations with the
autonomous communities (Spanish regions) and the local institutions, as well
as the development of the objectives with institutional character. IDAE
guarantees the co-ordination of all these groups.

2
In the State of the Nation Debate in July 2002 a Resolution specifying the
opportunity of elaborating a proposal about the same subject, with a
temporary horizon of a decade, was approved. The appropriate answer to
these requests recognises the necessity of having an effective strategy of
action programmes with the objective of promoting efficiency and saving
energy; it must include in its elaboration and performance the different
administrations (central, regional and local) and the sector actors. A
programme on monitoring and control will be designed to analyse the
weaknesses of the programmes and correct them accordingly.

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Speed up the development of the national Kyoto implementation plan; the


plan should identify priority measures based on their potential contribution
towards meeting the target in cost-effective ways
• Monitor emission reduction policies closely.
• Encourage autonomous regions to formulate their policies for CO2
emissions reductions in line with national policies.

Institutional The Spanish State comprises 17 autonomous regions, each with a local
Framework parliament. The State has general jurisdiction over energy, while the regions
have jurisdiction over issues exclusively within their territories.

The task of promoting energy efficiency and the rational use of energy in
Spain, together with the diversification of energy sources and promotion of
renewable energy, is the responsibility of IDAE, in compliance with the
functions enumerated in its articles of association (RD 802/86; RD 252/97 and
RD 2100/98).

In accordance with RD 696/2000, 12 May 2000, IDAE reports to the Ministry


for Science and Technology through the office of the Secretary of State for
Scientific and Technological Policy.

Three bodies are in charge of four different public financing sources for the
energy saving programmes:

• The central government gives direct subsidies for innovative and


demonstration projects through the energy branch of the Profit
Programme.
• Most of the autonomous regions also provide direct subsidies for projects
through specific programmes.
• IDAE provides loans for projects and recovers its funding. IDAE is also in
charge of managing the European Commission’s programmes in Spain
such as SAVE (for energy efficiency) and ENERGY–FP (to promote
innovative energy technologies).

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Enhance co-ordination of energy-related policies among different


ministries and regional authorities in order to improve the coherence of
energy policies. Consistency should be sought in the measures taken by
the autonomous regions.

3
IDAE IDAE is a state agency appointed by and reporting to the Ministry of Science
and Technology. It carries out the functions entrusted to it through diffusion
actions, technical advice, and the implementation of innovative projects:

• It puts forward planning proposals and presents studies which serve as


the basis for policies promoting energy efficiency and renewable energy.
• It manages and monitors subsidies and incentives for energy
conservation, saving, diversification and development, such as
encouraging the use of renewable energy, with funds both from the
general state budgets and European Community sources (global ERDF-
IDAE subsidy, cohesion funds, etc.). IDAE also supports the autonomous
regions in the management of territorial subsidies.
• In order to co-ordinate IDAE policies, the government and the regions
have set common objectives; to this end, IDAE has created the
Consultative Committee for Efficiency and Energy Saving.
• IDAE advises enterprises, informs consumers and organises professional
training and conferences.
• It provides financial and technical assistance for the installation of efficient
energy equipment and recovers its expenditure through a commission
collected on the energy savings realised (third-party financing). IDAE also
provides capital as a shareholder in companies and enters into
collaboration agreements to promote the development of new
technologies.

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Establish a new, coherent and comprehensive energy efficiency


programme to help slow growth in energy demand in all sectors; ensure
that the measures are cost-effective and consistent with their objectives,
and that the programme sets priorities, on both the supply and demand
sides.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Thermal Today's standards for energy savings in buildings were established by Royal
Insulation Decree 2429 of 1979, which sets mandatory minimum requirements (NBE-CT-
of Buildings 79) for thermal insulation. New more strict mandatory standards, in
compliance with the “SAVE Directive” will be introduced in 2002. The
autonomous regions will be responsible for the enforcement of these
standards. They will be based on an evaluation of the building project at the
planning phase and on random check-ups of new buildings.

Currently, IDAE is working on the development of instruments permitting


Spain’s adaptation to the so-called "Save Directive" of the EU (93/76/EEC)
regarding the Certification and Labelling of Buildings. Once the details of the
certificate are set by IDAE and a new law to make the certificate mandatory is
passed, the Directive will be enforced by the autonomous regions. The
certificate will be issued for the use of passive solar energy, the correct use of
thermal insulation materials, the use of low consumption electric lamps, the
evaluation of CO2 emissions and the assessment of building materials
according to regions. IDAE has developed two computer tools to support the
energy certification process, namely Energy Rating of Homes (Calificación

4
Energética de Viviendas, CEV) and Energy Rating of Buildings (Calificación
Energética de Edificios, CALENER).

In the 2000/2001 review of the energy policies of Spain, the IEA stated:

The Government of Spain should:

• Regularly verify compliance with building codes, in both new and


retrofitted buildings.

Energy The transfer to Spanish legislation of the different European Union Directives
Efficiency referring to energy efficiency labelling began with Royal Decree 124/1994 of
Labelling 28 January 1994, transferring European Union Directive 92/75/EC of
22 September 1992 (and the latter amendments) on energy efficiency
labelling on domestic electrical appliances.

Subsequently, a series of European Union Directives for specific domestic


electrical appliances has been transferred, in particular:

• Royal Decree 1326/1995 of 28 July, transferred from European Union


Directive 94/2/EC on the energy labelling of refrigerators and freezers.
• Royal Decree 607/1996 of 12 April, transferred from European Union
Directive 95/12/EC on the energy labelling of washing machines.
• Royal Decree 574/1996 of 28 March, transferred from European Union
Directive 96/60/EC on the energy labelling of tumble dryers.
• Royal Decree 864/1998 of 8 May transferred from European Union
Directive 97/17/EC on the energy labelling of dishwashers.
• Royal Decree 700/1998 of 24 April, transferred from European Union
Directive 93/32/EC on the energy labelling of washing machine/tumble
dryers.
• Royal Decree 284/1999 of 22 February, transferred from European Union
Directive 98/11/EC on the energy labelling of domestic lamps.

Public Under the Plan for Public Housing (Plan Vivienda de Protección Oficial 1998-
Housing 2001) potential beneficiaries of “qualified” finance include pilot schemes to
promote sustainable housing (i.e. housing compatible with both economic
requirements and the need to preserve the environment) by applying building
techniques that reduce the use of materials (primarily those whose use or
manufacture causes pollution), give greater energy savings, and reduce water
usage, including the design of homes that are suited to the bio-climatic
conditions of the area in which they are located.

Qualified financing is also available for refurbishment work meeting certain


minimum requirements regarding installations for water, electricity and, where
applicable, gas, HVAC, natural illumination and ventilation, thermal insulation,
soundproofing, bathroom and kitchen installations and other general facilities.

Additionally, the execution of work to enable energy savings to be realised in


the home is also eligible for finance under the Plan for Public Housing.

Other Based on Royal Decree 1751/1998 of 31 July 1998 referring to the Regulation
Measures of Thermal Installations in Buildings (RITE), the guidelines of the SAVE
Directive referring to the Valuing of Energy Consumption for Heating, Air
Conditioning and Hot Water and of Periodic Boiler Inspections, have been
incorporated into Spanish legislation.

The approval in September 2000 of RD 1663/2000 -- implementing the Law


on the Electricity Sector -- enabled the development of solar photovoltaic
energy in the residential sector. This Royal Decree laid down the
administrative and technical conditions for connecting solar-photovoltaic

5
installations with a nominal power of less than 100 kVA to the low-tension grid.
The regulations applicable to the procedure whereby owners of installations
apply for the connection point, and the technical conditions for connection,
avoid possible discrimination by electricity distribution companies against
access by small producers of electricity from renewable sources.

Information/
Motivation

Travel Under the name of “Travel throughout the Energies” this educational exhibition
throughout with a wide-ranging interactive content, graphic support, stage setting, as well
the Energies as a virtual host who answers to all the questions put by visitors in real time,
has been presented by the Institute for the Diversification and Saving of
Energy (IDAE).

The objective of this exhibition is to present the multiple aspects relating to


energy as the main element of development in the world and as an essential
element in our daily life, analysing its uses and consequences, reflecting on its
value and the necessity of adopting responsible consumption habits. In short,
the idea to be conveyed is that every citizen can contribute to the rational use
of energy and with lesser effect on the environment.

This show started in October 2002 in Santander and will be presented in 13


Spanish regions.

In Salamanca the inauguration of the exhibition was celebrated at the same


time as the 2002 Award Ceremony of the European Commission’s Renewable
Campaign in December 2002. In Madrid it was inaugurated on 5 February
2003.

PUBLIC SECTOR

Measures already
Existing and/or
being improved

Voluntary The main agreements signed by IDAE during 2001 and up to February 2002
Agreements are as follows:

• Framework co-operation agreement with RENFE (Spanish Railways), to


implement energy optimisation measures and also to use renewable
sources of energy in buildings, installations and on land belonging to
RENFE.
• Framework co-operation agreement with the Ministry of Education and
Sports for technical assistance in the call for tender for the supply of
electricity to various units of the Ministry considered as qualified
consumers.
• Framework co-operation agreement with the Aerospace Technology
Institute (Instituto de Técnica Aeroespacial) for the joint publication and
distribution of a publication on solar-thermal collectors in Spain (Guía de
Colectores Solares Térmicos en España) and to promote low-temperature
solar-thermal energy.
• Co-operation agreement with the Ministry of the Presidency for the use of
an electric vehicle, charging station and photovoltaic installation located
on the roof of a car park, generating electricity with which to recharge the
vehicle’s batteries.
• Framework co-operation agreement with Barcelona Council for the
implementation of the Programa Barcelona 2004 and the implementation
of the Barcelona Council Municipal Energy Plan.
• Framework co-operation agreement with Palma de Mallorca Council for

6
the joint development of a Municipal Energy Action Plan.
• Framework co-operation agreement with Majadahonda (Madrid) Council
for the development of a Municipal Energy Action Plan.
• Framework co-operation agreement with the Spanish Federation of
Municipalities and Provinces (Federación Española de Municipios y
Provincias, FEMP) for the promotion and dissemination of energy-efficient
technologies and renewable energy sources (RES) among Spanish
municipalities.
• Specific agreement with Saragossa (Zaragoza) Council and Saragossa
University for conducting feasibility studies regarding the application of
renewable energy sources (RES) and energy saving criteria in the
Valdespartera housing development.
• Co-operation agreement for the promotion of energy efficiency and
renewable sources of energy (RES) in Soto del Real.
• Territorial agreement with the Solar Energy Studies Centre (Centro de
Estudios de la Energía Solar, CENSOLAR) for the publication, distribution
and publicising of the IDAE’s technical specifications for solar thermal
systems and both stand-alone and grid-connected photovoltaic systems.

INDUSTRY

Measures already
existing and/or
being improved

Voluntary From 1994 to date, IDAE has signed voluntary agreements to improve energy
Agreements efficiency in nine industrial sectors, which form part of ten industrial
associations. These represent 56% of the total consumption in Spain's
industrial sector. Sectors that have signed voluntary agreements are pulp and
paper, structural ceramics, hollow glass, tanning, cement, food, chemicals,
automobile accessories and textiles.

The duration of these agreements varies from one to several years,


depending on the sector concerned.

These voluntary agreements result in activities and projects aimed at energy


saving, installation of cogeneration systems and replacement of other fuels for
natural gas and biomass. In energy terms, actions undertaken to date
following such agreements represent a total energy saving of 641 ktep
(equivalent to 4.5% of industrial consumption), replacement by natural gas of
341 ktep, installed power in cogeneration systems of 285 MW and biomass
replacement of 38 ktep.

Information/ Since 1998, dissemination of information and technical assistance to facilitate


Motivation access to the different support programmes in the industrial sector have been
supported by a new IDAE-FEDER Programme For Small and Medium-Sized
Businesses. It is a strategic move to promote the realisation of energy saving
and renewable energy projects in small and medium-sized businesses
through management and financing of turnkey projects in Objective 1 zones.
Total resources for the programme up to 2001 were € 67.9 millions.

To complement this programme, IDAE organises courses and seminars for


specific sectors. In the past two years, these have included the following
courses:

• Day congress on cogeneration with gas.


• Technological meeting on liquid ice.
• Energy efficiency seminar in the beer and malt sector.
• Technological meeting on heat pumps.
• Day congress on the use of industrial waste as alternative fuel in the

7
cement industry.
• Energy efficiency day congress for the agro-food industry.

During the implementation of the IDAE-ERDF programme a total of 121


applications for potential projects were received and processed, leading to the
definitive implementation of 50 installations, with a total value of € 37.7 million.
IDAE provided 49.2% of the finance for these projects and 50.8% was
provided by the European Union’s ERDF funds, in accordance with the co-
financing conditions laid down in the ERDF-IDAE global subsidy. In terms of
the energy technologies involved in the facilities installed, the investments
were distributed as follows:

• Final energy saving and substitution by natural gas: 39%.


• CHP: 25%.
• Mini-hydropower: 1.5%.
• Wind power: 24.2%.
• Biomass: 7.4%.
• Solar power: 2.9%.

Third-Party To support energy conservation in industry, and in addition to the IDAE-


Financing FEDER Programme, IDAE operates mainly as a third-party financier providing
finance and technical assistance for the installation of energy efficient
equipment and recovering its expenditure over three to seven years through
the energy savings realised.

The financing activity of IDAE during the year 2001 was associated with the
development of 33 different projects, representing a total investment of € 25.4
million, with the following share among the main technology areas:

• Final energy saving and substitution by natural gas: 20%.


• Cogeneration: 6%.
• Renewable: 74%.

Cogeneration Although the total installed cogeneration capacity was only 369 MWe at the
end of 1990, it was 5 520 MWe at the end of 2001 generating about 11% of
electricity. About 4 540 MW of new capacity was installed in 1991-2000,
which is two to three times the initial target. Co-generation capacity financed
through IDAE's third-party financing was 300 MWe, or 6.7% of the total
installed in 1991-2000. In addition, support from IDAE, the so-called “special
system”, has provided premiums to co-generators. However, high natural gas
prices in 2000 and 2001 discouraged installation of new co-generation plants.
According to the Plan for the Promotion of Renewable Energy in Spain
mentioned above, co-generation has a potential to reach 17% of the electricity
demand in 2011: that means a total installed capacity of 7 100 MW in 2011.

Almost all co-generation facilities are run by auto-producers, typically


industries. Therefore, the size of the installations is generally small; 16% of
the plants have capacity under 1 MWe, 53% 1-5 MWe and 17% 5-10 MWe.
The typical industries to invest in CHP production are ceramics and tiles, food
processing, textile, chemical and pulp and paper industries. No large-scale
public co-generation plants have been built yet.

The co-generation plants are eligible for premiums if they qualify under the
special generation system. Conditions are put on the electric efficiency but not
on the fuel efficiency of the CHP plants. The requirements on electric
efficiency depend on the size of the installation, the ratio of own energy
consumption to the electricity output to the network, fuel and technology used.
The premium also depends on the installed capacity. In 2001, the premium
paid to small co-generators (<10 MWe) was 24 euro cents per MWh for a
maximum of 70% of their total annual production. To larger co-generators

8
(between 10 and 25 MWe) it was on average 18 euro cents per MWh for
maximum of 50% of their total annual production. The premium system will be
revised in 2002. The co-generators have two possibilities to sell the surplus
electricity, either through the pool or in direct contracts with the retailing or
distribution companies.

IDAE has closely monitored the progress of the CHP market and identified
some constraints to the competitiveness of co-generation. First, it considers
the fuel prices for co-generators, essentially the price on natural gas, to be too
high compared to the price of fuels used in conventional power plants.
Second, the efficiency requirements for co-generation should be stricter than
they are today. Third, the buy-back tariff should take into account the
environmental externalities and transmission network costs that are avoided in
co-generation: electricity generated by co-generators is usually consumed
close to the production site and so does not burden the transmission system.

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Review subsidies for co-generation with a view to phasing them out fully.

TRANSPORT

Measures already
existing and/or
being improved

Replacement For some years the government has maintained its PREVER Programme
of old cars (formerly RENOVE) through the Ministry of Science and Technology. The
programme's aim is to encourage the replacement of old cars to achieve
environmental improvements and better road safety. In accordance with
Royal Decree Law 6/97 of 9 April 1997, the programme applies to automobiles
over ten years of age and light industrial vehicles over seven years. It
reduces the car registration tax by up to € 721 when scrapping of the old
vehicle (priority is given to leaded gasoline vehicles) is guaranteed.

Public Some examples of urban traffic management measures have been included in
Transport the traffic movement city plans of Granada, Vitoria, San Sebastian, Oviedo
and Barcelona. Madrid, Salamanca and Bilbao, for example, already have
buses fuelled by natural gas in their city transport fleets. In other cities such
as Valladolid and Bilbao, similar plans are being studied.

In 2001 IDAE promoted the following projects in this sector:

• La Ciudad, sin mi coche (The City, without my car): the organisers of this
event in Spain were IDAE and the Ministry of the Environment. The most
significant results, extrapolating from those of the 16 cities that took part,
were an 18% reduction in traffic; an 18.7% increase in passengers using
public transport; and a 4..3 million litres reduction in fuel consumption.
• Mejor sin coche (Better without a car): rational use of private cars and
improvement in urban mobility in the city of Gijón (Asturias). Awareness
raising project in which members of the public who took part obtained a
series of personal advantages, such as discounts for public transport,
sports centres and theatres, as well as taxis and shops taking part in the
scheme.
• Smile project: its aim was to gather information on best practice in urban
mobility so as to offer it to the public in the form of publications,
presentations and international conferences.

9
• Intatme project: IDAE participated in this project led by the Madrid
Transport Consortium (Consorcio de Transporte de Madrid) with the
principal objective of studying new forms of mobility using collective
means of transport.

In the 2000/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Promote the use of alternative transport fuels for energy efficiency and
environmental benefits.

Fiscal Reduced VAT on tickets for public transport can promote its use. Some public
Incentives transport, namely all rail and bus transport and travel between the mainland
and the Balearic Islands by air and sea, is subject to a reduced VAT rate of
7%. The full 16% VAT rate applies to all other domestic passenger transport
by air and sea. The annual vehicle taxes, levied by the municipalities, were
originally introduced solely for fiscal reasons but because they are
progressive, based on weight and engine size, they can also be considered to
enhance energy efficiency. Due to the level of the annual vehicle taxes, about
Ptas 12 000 per year at the most, the impact on energy efficiency
improvement may be modest.

Information/ Training programmes currently operating for efficient driving have received
Training support from the Spanish Confederation of Goods Transport, the Driving
Schools’ Association and the Government Traffic Department.

IDAE also edits several brochures on problems regarding fuel consumption in


transport, and city travel.

MONITORING/ IDAE carries out extensive monitoring of the actions developed nation-wide in
ASSESSMENT the fields of energy efficiency and diversification of energy sources.

In addition to the work that IDAE has historically carried out regarding the
monitoring of energy efficiency indicators and producing inventories of
combined heat and power (CHP) and renewable energy facilities, the
implementation of the Plan for the Promotion of Renewable Energy in Spain
2000-2010 (Plan de Fomento de las Energías Renovables en España 2000-
2010) has meant adapting the monitoring of renewable energy activities in
Spain to the requirements stated in the Promotion Plan.

In this new framework, since the autumn of 2000, IDAE has published a
newsletter on energy efficiency and renewable sources of energy entitled
Boletín de Eficiencia Energética y Energías Renovables, in which it
summarises the progress made, main milestones passed, and overall trends
regarding energy efficiency, CHP and RES at national level.

In the 200/2001 in-depth review of the energy policies of Spain, the IEA
stated:

The Government of Spain should:

• Monitor systematically the performance of measures taken.

10
Further For further information, please contact:
information
Carlos García Barquero
IDAE
Paseo de la Castellana, 95
E – 28071 Madrid
Tel: +34 (91) 456 49 00
Fax: +34 (91) 555 13 89
E-mail: cgbarquero@idae.es

11
Energy
IEA Efficiency
Update

SWEDEN Updated July 2003

BACKGROUND

1991 Energy policy was formulated by the Riksdag (Parliament) in the 1991 Energy
Energy Policy Bill with the purpose of creating the conditions for long-term sustainable
Policy political decisions on energy policy, whose goal was defined to be to secure
Bill the availability of electricity and other energy in the long and short term at
prices that are competitive on the world market.

It was observed in the decision that the time for the start of the nuclear power
phase-out, and the pace at which the phase-out would proceed, were to be
determined by the results of electricity conservation efforts, the availability of
electricity from environmentally acceptable power production, and the ability to
maintain internationally competitive prices.

From a climate viewpoint, it was considered urgent to avoid burning fossil


fuels whenever possible. According to the government Bill, this was to be
achieved through active energy conservation and using renewable energy
sources.

Government The guidelines established in the 1991 Energy Policy Bill were re-evaluated.
Bill on a A parliamentary Energy Commission was appointed in the spring of 1994 to
Sustainable examine the ongoing programmes for transformation of the energy system
Energy Supply, and analyse the need for changes and additional measures.
March 1997
On the basis of the work of this Energy Commission, in the spring of 1996 the
government invited the parliamentary parties to participate in deliberations
aimed at setting the foundations for sustainable long-term energy policy
decisions. In February 1997 these deliberations resulted in an agreement in
the Riksdag on guidelines for energy policy.

The 1997 Bill on A Sustainable Energy Supply strongly emphasises energy


efficiency.

State-administered work was carried out to increase knowledge about and


stimulate interest in economically and environmentally sound energy
1
efficiency. A total of SKr 450 million has been assigned over a five-year
period for the procurement of energy-efficient technology as well as for
information, training, municipal energy advisory services and the testing,
marking and certifying of energy-using equipment.

Guidelines The 1997 Guidelines for Energy Policy focus, inter alia, on the following
for Energy developments:
Policy
• The guidelines set down in the 1991 Energy Policy Bill remained
unchanged.
• The energy policy decision required the closure of the two nuclear
reactors, the first before 1 July 1998 and the second before 1 July 2001.
However, closure of the second reactor was conditional upon the loss of
its electricity production being compensated by new electricity production
from renewable sources and reduced use of electricity. On 16 June 1999
the Swedish Supreme Administrative Court pronounced its judgement
concerning the first reactor at Barsebäck. Barsebäck 1 reactor was shut
down in November 1999. In October 2000, the government issued a
written communication (2000/01:15) announcing its opinion that the
conditions for closing the second reactor had not yet been fulfilled.
According to the government, decommissioning should, however, be

1. On average in 2000 SKr 1 = US$ 0.109 and in 2001 US$ 0.097.

1
possible by no latter than the end of 2003. In October 2001, the
government again presented a written communication (2001/02:22) on the
renewed assessment of the conditions for the closure of Barsebäck II.
Again, the government found that the conditions for closure had yet to be
fulfilled. A further assessment of the conditions will be made during 2003.
• The launching in January 1998 of a seven-year programme for an
ecologically sustainable energy system. The programme includes work
intended to reduce electricity use and also to provide new electricity
production. The programme consists of two parts:

− The first part is a seven-year research, development and


demonstration programme aimed at promoting renewable energy
sources and new energy technology. The programme provides for
substantial investments in research, development and demonstration
of new energy technology relating both to the supply of renewable
energy and to greater profitability for improved energy efficiency.
− The second part of the energy policy programme is a five-year
subsidiary programme to promote energy efficiency and electricity
production from renewable energy sources such as bio-fuels, wind
and small hydropower plants. The support to energy efficiency
includes conversion of electrical heating to district heating, technology
procurement, information, labelling and municipal energy advisory
services. The use of electric boilers in district heating is to be
reduced.

The total cost of the programme was SKr 9.2 billion, of which SKr 5 billion
was for long-term research, development and demonstration programmes.

• The creation on 1 January 1998 of a new central energy authority, the


Swedish National Energy Administration (STEM) (www.stem.se)
responsible for implementing the greater part of the country’s energy
policy programmes, and with responsibility for co-ordinating the various
energy policy changeover and introductory measures. The responsibilities
of NUTEK in the energy area have thus been transferred to STEM. The
new English name of STEM is "Swedish Energy Agency".
• A committee was set up in January 2001 to develop future policies and
actions (after 2003) for the rational use of energy in buildings and industry.
A report was issued in October 2001.

2002 Energy Bill On 21 March 2002, the Swedish government presented its Energy Policy Bill
Co-operation for a Secure, Efficient and Environment-Friendly Energy Supply
(2001/02:143). This report, approved by Parliament on 11 June 2002, re-
affirmed the country's established energy policy objectives:

• Create the conditions for efficient energy use and cost-efficient Swedish
energy supply with low adverse impact on health, the environment and the
climate.
• Facilitate the transformation into an ecologically sustainable society,
promoting sound economic and social development in Sweden.
• Contribute to the creation of stable conditions for a competitive business
sector, and to the renewal and development of Swedish industry.
• Contribute to broadening co-operation within the Baltic region with regard
to energy, the environment and the climate.

The Energy Policy Bill also contains three main proposals:

• A new method to promote environmentally-friendly and renewable


electricity production through a quota-based trading programme for green
electricity certificates.
• Measures designed to encourage more efficient energy consumption

2
though the rationalisation of existing policy measures and the
dissemination of knowledge both nationally and regionally.
• Strengthening the competitiveness of combined heat and power (CHP) by
exempting such plants from certain taxes on energy products. The issue is
to be decided in connection with the budget decision for 2003.

Inter-ministerial On 1 March 2001, the government appointed an Interministerial Working


Working Group Group for Rational Energy Consumption to propose measures for the
promotion of energy-efficient use of energy. The Group presented the report
(Ds 2001:60) More Efficient Energy Consumption: Proposals for Market-
Based Measures in October 2001. Among the government initiatives proposed
in the report was the establishment of long-term voluntary agreements
between government and energy-intensive companies (see below).

Government The lead responsibility for developing energy policy rests with the Minister of
Energy Industry, Employment and Communications. STEM is the central government
Administration body responsible for most functions within the energy area. A number of
administrations have a role in implementing the energy policy programmes.
The Swedish Board of Housing, Building and Planning is responsible for
building codes and related issues. The regional authorities are responsible on
behalf of the Swedish Board of Housing, Building and Planning for the
implementation of those parts of the sub-programmes which concern private
households. The Swedish Consumer Agency is responsible for testing,
labelling and certification of energy use in household equipment, etc. The
transport authorities (Vägverket, Sjöfartsverket, Luftfartsverket, Banverket)
have responsibility within their sectors to promote energy efficient use. A
merger process, in effect since 1 January 2001, resulted in some restructuring
related to energy efficiency and energy-related research:

• The new Swedish Research Council for Environment, Agricultural


Sciences and Spatial Planning (FORMAS) (www.formas.se) has taken
over the activities previously pursued by the Swedish Council for Building
Research (BFR) responsible for energy-related building research and
parts of the Swedish Environmental Protection Agency responsible for the
supervision of environmental issues under the energy policy programme.
• The new Swedish Agency for Innovation Systems (VINNOVA)
(www.vinnova.se) has taken over the activities previously pursued by the
Swedish Transport and Communications Research Board (KFB) and by
parts of the Swedish Business Development Agency (NUTEK).
• The new Swedish Research Council (www.vetenskapsradet.se) has taken
over the activities previously pursued by the Swedish Natural Science
Research Council (NFR) and the Swedish Research Council for
Engineering Sciences (TFR) responsible for energy-relevant basic
research.
• The Swedish Energy Agency (STEM) monitors implementation of the
energy policy programme.

Given the emphasis put on co-operation in the Baltic region, the programme of
co-operation with the Baltic region and Eastern Europe in the energy field
administered by STEM includes, inter alia, a programme for more efficient use
of energy, conversion from fossil fuels to other forms of energy and
environmental improvements in plants producing electricity and heat. A
budget of SKr 350 million has been allocated to this programme.

3
In the 2000 in-depth review of the energy policies of Sweden, the IEA stated:

The Government of Sweden should:

• Clarify existing qualitative goals for efficiency improvement programmes to


ensure an objective assessment can be made on their cost-effectiveness
and, in particular, the contribution energy efficiency programmes may
make to offsetting any further reductions in nuclear capacity.

Energy Sweden has applied policies and measures for climate change since 1988,
and the when the issue was discussed in the Riksdag for the first time. A more
Environment comprehensive programme was adopted by the Riksdag in May 1993 when
the Bill regarding Strategies against Climate Change was adopted. The goal
established by the Riksdag was that by 2000 emissions of carbon dioxide from
fossil fuels should be stabilised at the 1990 level and decline thereafter,
pursuant to the UN Framework Convention on Climate Change (UN FCCC).

Furthermore, emissions of methane from disposal of wastes were to be


reduced by 30% between 1990 and 2000.

The main strategy to achieve the carbon dioxide goal is to limit the need for
fossil fuels and replace them with renewable energy sources, along with better
management and more efficient use of energy.

After ratification of the UN FCCC, Sweden issued its national communication


entitled Sweden’s National Report under the UN Framework Convention on
Climate Change, which was adopted by the Swedish government on
15 September 1994. The second national communication entitled Sweden’s
Second National Report under the UN Framework Convention on Climate
Change was adopted by the Swedish government on 17 April 1997. This
report was drawn up before the final adoption of the Bill on A Sustainable
Energy Supply. The third National Communication (NC3) to the UN FCCC
was adopted by the Swedish government in November 2001.
(http://unfccc.int/Resource/Docs/natc/swenc3.pdf )

In December 1997, under the Kyoto Protocol, the European Union agreed to
reduce greenhouse gas emissions by 8%. Under the EU Burden-Sharing
2
Agreement of 17 June 1998, Sweden is allowed to increase its emissions of a
basket of greenhouse gases to 4% above 1990 levels. The commitment
period for the target is 2008-2012.

Government Bill On 30 November 2001 the government issued a Bill on a Climate Change
on a Swedish Strategy (2001/02:55) formulating a climate strategy for the future. The
Climate Change government proposed that Swedish GHG emissions should be at least 4%
Strategy lower in 2008-2012 than in 1990. This national target should be reached
without using carbon sinks or flexible mechanisms. The strategy includes a
diverse array of measures to achieve the reduction goals. The primary tool will
be climate investment programmes undertaken by municipalities, which can
apply for funds for investments to reduce emissions. Funding is projected to
be SKr 200 million in 2002, SKr 300 million in 2003 and SKr 400 million in
2004. Additional measures include a system of green electricity certificates
for production from renewable sources, a strategy for alternative fuels and
greater dissemination to the public of information on climate change.
Furthermore, a commission will be established to analyse the areas in which
the efficiency of fossil fuels can be improved or where they can be replaced by
other fuels. The national target should be monitored and milestones for this
monitoring process should be the years 2004 and 2008. If the emissions
development is worse than expected, additional measures may be introduced

2. The Burden-Sharing Agreement covers CO2, CH4, N2O, PFCs, HFCs and SF6.

4
or the target revised. Industry's competitiveness should also be taken into
account.

Environmental In May 2001, the government presented its Bill Environmental Quality
Quality Objectives (2000/01:130) and in November 2001 the Parliament agreed to the
Objectives Bill proposals. The decision enhances the structure of the 15 Environmental
Quality Objectives voted by the Parliament in April 1999. Between three and
eight sub-targets have been established for each objective. Concrete
measures and strategies to reach the targets by 2010 have also been set out.

Resources allocated to environmental protection will be increased by 70%


between 2001 and 2004. The Swedish Energy Agency will be responsible for
the energy related aspects of three of the 15 Environmental Quality
Objectives, i.e. Reduced Climate Impact, Clean Air and Natural Acidification.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Building Thermal insulation requirements in building codes were introduced in 1960


Code and revised in 1975, 1980, 1988 and 1998. In some of these revisions the
changes were related to energy requirements. The revised building
regulations of 1988 introduced a building performance standard instead of
requiring insulation for certain building components. This performance
standard only includes requirements for overall energy performance. The code
only states what, in principle, should be achieved, and not how it should be
done. The aim is to promote cost-effective solutions. This means that the
building code does not include specific requirements for thermal insulation or
windows.

Appliance SKr 40 million has been assigned for information on, and trials, testing and
Labelling marketing of energy-using products and systems over a five-year period
starting in July 1997. The National Consumer Board is responsible for the
programme.

A national labelling programme for household appliances was introduced in


1993. Thereafter, Sweden introduced the EU labelling directive and applied it
to refrigerators/freezers, washing machines, dryers and dishwashers.
Voluntary energy efficiency labelling has been implemented for computer
screens.

Sales statistics on white goods show a large increase in sales of efficient


refrigerators/freezers (EU label categories A and B had achieved a 70%
market share by 1998). Probable causes are a combination of the impact of
the EU label, national information campaigns and price changes. Sales of
energy-efficient washing machines are also increasing, but more slowly.

Regarding labelling, recent Swedish efforts have focussed on a Nordic


labelling scheme for windows and a labelling scheme for ventilation and fan
systems. Work on high quality indoor environment and energy-efficient
ventilation has also taken place.

District It was in the 1940s that local authorities began to look at district heating (DH).
Heating Its use spread during the 1950s and 1960s as a result of the excellent
opportunities presented by the extensive investments in new housing and
other buildings being made during that period. The biggest growth in district
heating occurred in the period 1975 to 1985.

5
Until the beginning of the 1980s, most DH systems were operated as local
authority services. However, during the 1980s and 1990s, most were
restructured as limited companies owned by local authorities. In 2001, there
were about 220 companies supplying heat in Sweden, 68% of them owned by
local authorities, 13% privately owned, 10% owned directly or indirectly by the
State and 9% operated as local authority services.

The nominal connected load in 1997 amounted to about 22 GW, supplied


through about 9 600 km of mains. During the year, 42.2 TWh of heat was
supplied, equivalent to 43.1 TWh after correction for statistically average
climatic conditions. Fifty six per cent of the heat was supplied to residential
users, almost 36% to the service sector and over 8% to industry.

The Swedish National Energy Administration is responsible for the


administration of financial support for conversions from electric heating to
district heating that was approved by Parliament in the 1997 energy policy
decision. In 1998 and 1999, total support of about SKr 300 million was
granted, leading to the connection to district heating grids of 9 504 houses,
12 436 apartments, and another 174 premises. This is estimated to result in a
reduction in electricity use of 230 GWh.

The Bill Energy Markets in Transition-Better Regulations and Supervision


(2001/02:56) emphasises the need to stimulate competition in the DH sector
so as to increase productivity and encourage lower prices. The appointment of
a Commission of Inquiry to study the issue is in a planning stage.

Total installed CHP capacity today is about 3 484 MW where 57% is CHP
production based on biofuel. There is still a considerable potential to use more
biofuel for CHP in municipal district heating systems. CHP in industry is
normally 10% co-generation from annually 40 TWh of heat (100% biofuel)
from burning black liquor in the cellulose industry.

A programme for investment grants for CHP based on biofuel in the period
1998 to 2002 resulted in an increased electricity production capacity in
municipal DH plants of nearly 290 MW during 2001. The investment grants
were basically € 325 per installed MW electricity production capacity based on
biofuel, but not more than 25% of total investment cost.

According to the government Energy Policy Bill, Collaboration for a Secure,


Efficient and Environmentally Friendly Energy Supply (2001/02 143)
presented by the government on 21 March 2001, these grants will be replaced
by market based Green Certificate incentives: it proposed the adoption of a
quota-based Green Certificate system to promote production of electricity from
renewables to be implemented by January 2003.

In the 2000 in-depth review of the energy policies of Sweden, the IEA stated:

The Government of Sweden should:

• Consider increasing taxes on household electricity consumption as an


alternative to promoting the expansion of district heating as a means of
reducing electricity consumption.
• Harmonise taxation of heat and electricity production from combined heat
and power plants.

Information An important element of STEM's programme is the dissemination of


Education information, both nationally and locally, concerning the opportunities for using
Motivation energy-efficient technology, coupled with training and the provision of advisory
services. A budget of SKr 60 million has been allocated for information

6
activities carried out by STEM and support for organisations, such as regional
energy centres, for dissemination of information.

A budget of SKr 250 million has been allocated for local authority energy
advisory services. Municipalities can thus apply for funding for local energy
advisory services from the central national government.

The implementation of energy-efficiency measures and purchase of high


performance products are promoted by two purchaser group networks. In
addition to the already existing network representing a majority of real-estate
owners in the residential sector, a new network consisting of the majority of
real-estate owners of commercial buildings in Sweden has been established.
These networks serve as excellent platforms for the development of new
energy-efficient technologies, the dissemination of information and
demonstration projects. Another excellent network is the dialogue project
Building Living and Real Estate Administration for the Future (in short the
Bygga-Bo dialogue) where major real-estate owners and real-estate
administrative organisations and building contractors, together with the
government, have agreed to join efforts towards sustainable development
within the building sector. Furthermore, on the issue of Swedish experiences
with sustainability, a book Building Sustainable Energy Systems, edited by
Semida Silveira, has been published.

Research and The programme for research, development and demonstration of new
Development technologies includes grants for all those stages. An important goal of the
programme is to reduce the cost of new efficient technology and to achieve a
market introduction. Energy efficient products and systems in the residential,
commercial and industrial sectors are one of the priority areas.

PUBLIC SECTOR

Eco Energy The Eco energy municipality programme started in March 2001. Seventy
Programme municipalities applied for participation and ten were selected for the first year
of the programme. The responsibility of the municipalities is to decide on an
energy policy, carry out measures to improve energy efficiency and introduce
renewable energy sources. The municipalities will be offered seven different
educational packages.

INDUSTRY

Measures already
existing and/or
being improved

Standards and Voluntary standards have been established for lighting, fans, pumps,
Regulatory ventilation systems and other products used in production. Production
Instruments standards have been established in the engineering, plastics, metals, saw-
mill, rubber, and pulp and paper industries. Mandatory standards and
regulatory measures, which have been widely used in industry for emission
control, are now part of the programme for efficient energy use in industry.

Research and Research and development efforts are concentrated in three R&D
Development programmes – Climate 21, ELAN efficient use of electricity and Process
integration. The Climate 21 programme for more efficient refrigerating
machinery and heat pumps started in 1997. A central element of the
programme is the dissemination of information on costs and energy efficiency,
and the environmental impact of applications and systems to participating
companies. The results of the various development projects should be
directly applicable to the development of hardware, technologies and systems
design at the very cutting edge of what is possible to achieve. Process

7
integration is an umbrella name for methods for the design and conversion of
industrial processes in respect of capital and running costs, energy yields,
production capacity and environmental emissions.

Voluntary EKO Energy is a voluntary agreement programme within STEM directed at


Agreement larger energy-intensive industrial companies. It started in 1994 and aims at:
EKO Energy
• Decreasing carbon dioxide emissions to the 1990 level according to the
1997 Kyoto agreement. The industry sector in Sweden has a
considerable potential to contribute to this decrease.
• Contributing to the decision by the Swedish government to replace the
Barsebäck nuclear electricity production by increased energy efficiency.
• Following the EC Council Directive 93/76/EEC to limit carbon dioxide
emissions by improving energy efficiency.
• Pointing at energy use as one of the company’s most significant
environmental impacts, to work within their environmental management
programmes as EMAS (Eco Management and Audit Scheme) and/or ISO
14001, the international environment management scheme.

The voluntary agreement concluded between STEM and an energy-intensive


company consists of the following elements:

• STEM provides a comprehensive inventory and analysis of energy use in


the company production and premises, including a list of suggested
measures to be taken. The suggested measures mainly concern the
building (ventilation, heating, lighting) and surrounding equipment
(compressed air).
• The company sets energy and environmental targets and establishes an
action plan based on reasonably economically viable measures that the
inventory and analysis suggest. The action plan has to be revised every
year and submitted to STEM.
• STEM provides a comprehensive material flow analysis as well as
introductory comparison of the company environmental awareness and
environmental management compared to guidelines based on EMAS or
ISO 14001 standards.
• The company establishes long-term energy and environmental policy in
accordance with EMAS or ISO 14001.
• STEM provides an educational package on the process of energy-efficient
industrial purchasing, ENEU 94.
• The company establishes ENEU 94 as a company standard method to
purchase energy-efficient machines and tools. Energy-efficient purchasing
is a long-term activity that initiates energy issues into everyday life within
the company. ENEU 94 introduces investment calculations using life-
cycle analysis and not pay-off analysis. This is a very important part of
EKO Energy and also the most difficult part for the company to fulfil.
• STEM arranges goodwill activities such as spreading success stories to
the press and/or appointing the most successful EKO energy company of
the year in a ceremony covered by the media.

Should no action be taken, no sanctions exist against the company other than
lost goodwill.

More than 30 Swedish companies are involved in EKO energy activities. No


company has yet found that it could afford not to follow the expert advice on
energy efficiency measures. Energy efficiency has mainly been achieved in
areas such as ventilation (27%), motors and drives (22%), lighting (2%),
compressed air (7%), heating (8%) and process measurement areas (32%).

In 1998 energy saving in the ten companies reporting energy savings were
0.098 TWh (12% of their total consumption) of which 0.036 TWh was

8
electricity. The savings per energy efficiency measure range from 4% to 28%.

On 31 August 2000, the government appointed a special negotiator in the


Ministry of Industry with the task of preparing background material and
proposals for long-term agreements with energy-intensive industry. The aim is
to promote energy efficiency in industry.

A report was submitted to the government in October 2001 (Ds 2001:65),


proposing guidelines for a programme of long-term agreements. According to
the proposal, companies within the energy-intensive sector will be invited to
reach an agreement of some form with the government for a period of five to
ten years. The companies are to undertake to introduce energy management
systems, with the help of which they identify and seek rationalisation
measures and draw up plans of action, as well as follow up and revise these
efforts. The extent to which economic incentives can be offered to companies
that enter into such agreements is to be further examined. Further
Commissions of Inquiry in certain areas, and continued contacts and
discussions with representatives of industry, will be necessary to develop the
proposal on principles into a full-scale proposal.

Technology Technology procurement of energy-efficient products is a means of


Procurement encouraging the development and marketing of energy-efficient products and
systems. The methodology was developed by NUTEK, the National Board for
Industrial and Technical Development.

Technology procurement activities aim to improve the energy efficiency of


products by using companies’ competitive abilities to make better products
and thus to move the market toward more efficient products. The process
brings together customers to make functional demands, e.g. a better
refrigerator or energy-efficient high-frequency (HF) electronic ballasts. These
potential purchasers indicate that they are prepared to place an order if
specified conditions are fulfilled, and the suppliers then compete on the basis
of design and price.

NUTEK has initiated about 30 technology procurement projects and over


1 500 other projects. About 100 incentive agreements have been signed.
During 1998-2002 the Technology Procurement Programme resulted in the
introduction of more than 25 new technologies during the last 12 years
targeting the residential and commercial sectors. New technology
procurements are for resource efficient tap-water mixers, building automation
systems, integrated systems for solar screening and linking of daylight,
ventilation filters, and energy-efficient stoves. Additionally, guidelines on
procurement have been developed in several areas, such as heating systems,
cooling systems, ventilation, windows, lighting, appliances, standby losses,
etc. aiming at enhancing the purchase of efficient equipment

The technology procurement projects have resulted in a clear technology leap


for refrigerators/freezers and have accelerated the mass production of low-
energy appliances. The market for improved HF lighting systems has grown
rapidly. The success of technology procurements for visual display units
(VDUs) and heat pumps has also achieved savings and stimulated the
market. However, the technology procurement for high-performance windows
was a failure: the market introduction of high-performance windows coincided
with a recession in the building industry and the additional cost of these
windows meant they were not competitive with ordinary, cheaper windows.

The Swedish National Energy Administration’s budget allocated SKr 100


million over a five-year period for the development and introduction of energy-
efficient technology through technology procurement.

9
Corporate Corporate commitments have been launched by large chain stores with their
Commitment own manufacturing facilities. They have agreed with their suppliers, customers
and Recognition and NUTEK and STEM that energy-efficient products are to be used or
produced in virtually all stages of production and distribution. Under voluntary
agreements signed by several large enterprises, energy-efficient methods are
required for all semi-manufactured goods bought by the companies, as well as
for all production processes used in the companies. Products used in the
distribution and marketing of goods, such as lighting and ventilation, must also
be energy-efficient. Finally, for products sold by the companies, an adequate
and representative selection of energy-efficient technology is offered to their
customers. Participating companies receive a small subsidy to defray some of
the cost of adjusting their inventories and production methods to include
energy-efficient products and processes.

TRANSPORT

Measures already
existing and/or
being improved

1998 In 1998, the Riksdag adopted a new transport policy based on Transport
Transport Policy for Sustainable Development, a revised strategy for the long-term
Policy infrastructure plans which entails a continuation of the previously decided
investment in the expansion of the railway network. Electrically powered rail
transport is energy-efficient and has a very small impact on the environment.
This was one of the reasons why the government adopted a ten-year
investment plan for railway infrastructure amounting to SKr 36 billion in 1998.
This will enable Banverket to complete the work of adapting the railway for
high-speed trains. Since freight traffic is currently struggling with capacity
problems on several lines, SKr 10 billion is directly targeted at freight traffic
programmes. In addition, there are many projects involving improvements for
both passenger and freight traffic.

For the road network, the strategy entails a reorientation from big investments
in the national trunk roads to increased efforts to improve the existing road
network as regards accessibility, environment and traffic safety. A plan for the
period 1998-2007 has been prepared by regional and central authorities.

A new authority, Rikstrafiken, has been created to promote the long-distance


public transport system. It will encourage the use of public transport and
support unprofitable public transport considered socially desirable.

Information The Consumer Agency and the Swedish National Road Administration provide
consumers with information about the energy consumption of vehicles. The
Swedish National Road Administration and STEM co-operate with driving
teacher associations to accelerate knowledge about more energy-efficient
driving behaviour. Information campaigns are also carried out to encourage
companies to improve efficiency in their logistics and transport planning.

Fuel consumption figures for new cars must be given by the producers
according to Guidelines for Information about Fuel Consumption, Carbon
Dioxide Emissions and Environmental Class for New Cars published by the
Consumer Agency. Since 1977 the Consumer Agency has gathered and
published these figures annually in a brochure which has to be available in
every outlet selling new cars in Sweden. Car suppliers also have to provide
information about fuel consumption in all advertisements for specific models of
new cars. The brochure also contains advice on how to save money and fuel
and on how to protect the environment. It is distributed free of charge by
central and local consumer authorities and the information is also available on
Internet.

10
Taxation In Sweden, taxation of road traffic is an important element of transport policy,
providing an instrument to influence the composition and turnover of the motor
vehicle fleet, thus improving its average fuel efficiency. Since 1991, the tax on
petrol includes a carbon dioxide tax estimated to have generated about 11%
of the state’s revenues from road traffic-related taxes in 1996. VAT of 23.46%
was imposed on petrol in 1990, and has since been raised to 25%.

Up until October 1993, a tax was paid on diesel-powered trucks, cars and
buses, based on distance driven (kilometre tax). This tax required border
controls and was replaced by a diesel oil tax after Sweden joined the
European Union. Sweden also levies sales tax, annual vehicle tax and user
charges. Sales taxes are levied on light vehicles only. The annual vehicle tax
is differentiated according to vehicle weight and fuel. Only heavy goods
vehicles are charged so-called user charges (Eurovignette).

Changes have been made to the taxation of company cars so that drivers pay
for petrol either directly or indirectly. Further changes have been proposed by
the government in a white paper.

In April 2001, the government appointed a Commission of Inquiry with the


mandate to revise the taxation of road traffic. The investigation focussed
especially on issues related to environment, safety and competition while
taking into consideration the influence of the tax system on transport
efficiency. A special consideration was to investigate the possibility of
introducing financial incentives to promote low emission vehicles.

Rail transport is excluded from energy taxes, but there is a user fee system.
Parliament reduced this fee in 1998 in order to increase the relative
competitiveness of rail transport.

Energy taxes do not apply to maritime and air transport. Shipping pays
environmentally differentiated seaway charges, and aviation pays route
charges according to the Eurocontrol procedure.

MONITORING/ The various energy efficiency programmes are systematically evaluated each
ASSESSMENT year and the results submitted to the government. One of the main tasks
assigned to STEM is to monitor the implementation of the various measures
and to report on the effects of the closing down of the reactors in Barsebäck.

The short term energy programme (1998-2002) resulted in 2 TWh of new


electricity production and electricity savings by January 2001. The estimated
result -- calculated from sales statistics -- for the energy efficiency programme
is approximately 0.48 TWh. The new technologies developed during 2000,
financed by the technology procurement programme, include ventilation units
with heat exchanger for single family buildings (20% efficiency improvement),
cookers (30-40% efficiency improvement), refrigerator/freezers (33%
improvement) and new copiers (60% improvement).

As it is often difficult to quantify the gains in energy efficiency from the


programmes, a need has been identified to develop new methods for their
evaluation and assessment.

An evaluation plan was set by the Ministry of Industry, Employment and


Communications in 1999. This plan includes a range of performance
indicators for the various activities within the programme. Evaluation by
external evaluators is planned every second year, continuous monitoring is to
be carried out by the Energy Administration and reported to the Ministry in its
annual report. The Ministry sets the reporting requirements annually. It is also
the task of the Energy Administration to monitor developments on the energy

11
markets and energy systems, and to analyse relationships between energy
technology, the environment, climate and economic growth.

The Swedish Energy Agency has recently elaborated a report on its energy
efficiency activities over the four year period, 1998-2001. However, due to
difficulties in baselines (which could have happened anyway) it has not been
possible to assess the overall results except in very rough figures.

Further For further information, please contact:


information
Egil Ofverholm
Swedish Energy Agency
Box 310
S - 631 04 Eskilstuna
Tel: +46165442040
Fax +46165442099
E-mail: egil.ofverholm@stem.se

12
SWITZERLAND Updated November 2001

BACKGROUND The Decree on Energy Use (Energienutzungsbeschluss, ENB) of 14 December


1990, the corresponding Decree on Efficient Energy Use of 1 May 1991 and the
Federal Energy Law of January 1999, which replaces the Decree on Energy
Use, compose the essential legal basis for the current established measures of
energy policy at the federal level.

Energy The Energy 2000 Action Plan (Federal Council Decree of 6 November 1990)
2000 was in force from 1991 to 2000. Its goal was to stabilise the use of fossil fuels
(and hence CO2 emissions) by 2000 and to reduce them thereafter. Its strategy
was based mainly on energy efficiency but also on increasing the contribution of
non-hydro renewables to electricity generation, raising hydroelectric generation
and upgrading the capacity of existing nuclear power plants.

Energy 2000 was based on the following three principles:

• Voluntary measures for the efficient use of energy and for the use of
renewable forms of energy. The implementation of these measures rests
with seven “marketing departments”: Public Sector, Residential Buildings,
Industry, Small Industries and Services, Hospitals, Motor Fuels and
Renewables.
• State framework conditions for a supply of energy that is sufficient, safe and
acceptable economically and environmentally, and also for a non-wasteful,
efficient use of energy.
• Discussion of controversial themes (e.g. nuclear energy, measures for
saving energy) with interest groups and those affected.

Total federal government financing for the Energy 2000 Action Plan amounted
1
to SF 558 million for the period 1991-2000, less than what was planned when
the plan was launched (SF 170 million per year). Funding aimed mostly at
promoting voluntary actions. Around one-third of the funding was dedicated to
the promotion of renewables through information, advice, multi-level training,
quality guarantees and subsidised installations.

In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Review the process of setting voluntary measures to identify whether and


how it could be improved and consider setting more binding measures
where possible.

SwissEnergy The Energy 2000 Action Plan which was limited to ten years ended in 2000. It
was replaced by the Swiss Energy Action Plan ("SwissEnergy") which was
launched by the federal government on 30 January 2001 (Federal Council
Decree of 16.01.2001). The annual budget for SwissEnergy amounts to SF 55
million.

Since the cantons and municipalities still have major responsibility for energy
policy, they have to implement Energy 2000 programmes, the SwissEnergy
plan and the Federal Energy Law (see below) for them to become effective and
applicable. This, and the country’s broad, consensus-based approach, requires
consultation among all those active in energy markets and policy. SwissEnergy
thus brings together representatives from all levels of government, federal,
cantonal and local, as well as from utilities, supply companies, industry,
consumer groups and environmental organisations.

1. On average in 2000 SF 1 = US$ 0.590.


In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Establish a new Energy Action Plan Beyond 2000, based on a


comprehensive assessment of the Energy 2000 Action Plan. The new plan
should be adapted to the development of competition in the energy market.
• Strengthen public information on the cost effectiveness of policy measures
in the Plan. Cost effectiveness should be assessed, taking into
consideration economic trends.

SwissEnergy summarises both energy policy objectives and the measures to be


taken in co-operation with the cantons and the private sector. The key areas of
the Plan are energy use in buildings and transport, the economics of energy
production and use, and promotion of renewables and energy efficiency. Many
activities initiated under Energy 2000 will be continued.

In SwissEnergy, the government sets a target to reduce consumption of fossil


fuels by 10% and to limit the increase of electricity consumption to 5% between
2000 and 2010. Heat production from renewables is planned to increase by
3 TWh and electricity generation by 0.5 TWh during the same period.

Federal To replace the Decree on Energy Use of 1991, which expired at the end of
Energy 1998, a new Federal Energy Law was adopted by the Parliament in July 1998
Law and entered into force on 1 January 1999. The Energy Law envisages
measures to reduce energy consumption in the following areas:

• Regulations about stating the energy consumption of installations, vehicles


and equipment, and about reducing their consumption.
• Cantonal legislation in the building sector (heat insulation, individual
metering and billing of heating and hot water).
• Financial incentives for the efficient use of energy, renewable sources of
energy and waste heat and promotion measures (information, advice,
education, training, research, pilot installations, demonstration installations).
• Guidelines and regulations to ensure the economic and environmentally
friendly supply of energy (responsibility of the energy industry for the supply
of energy, the use of waste heat in power stations which run on fossil fuels,
regulations for independent power producers).

The new Energy Law made the following changes to the 1991 Decree:

• It calls for more extensive co-operation with the private sector, reaffirms the
principle of subsidiarity (cantons are free to act as long as there is no
federal regulation) and gives priority to voluntary actions rather than
regulations.
• It gives more responsibilities to the cantons in the field of regulations, in
particular for buildings.
• It allows the Confederation to fund measures in favour of the efficient use of
energy. The Energy Law requires an annual funding to the cantons on the
condition that they have set a programme in favour of energy efficiency and
renewables and when at least 50% of the cantonal funding is dedicated to
households. Direct Confederal funding to projects should be an exception.
Funding from the Confederation and the cantons cannot exceed 40% of the
investment cost (exceptionally 60%).

Energy Agencies The Energy Law and the Law on CO2 envisage the possibility of giving various
in the Framework tasks to private organisations to implement the SwissEnergy programme. In this
of SwissEnergy context, four Agencies have been created:
• The Agence de l'énergie pour l'économie (AenEc), Energy Agency for
Economy.
• The Agence suisse des énergies renouvelables et de l'efficacité
énergétique (AEE), Swiss Agency for Renewable energy and Energy
efficiency.
• The Agence de l'énergie pour les appareils électriques (EAE), Energy
Agency for electric appliances.
• The Agence suisse pour l'éfficacité énergétique (S.A.F.E.), Swiss Agency
for Energy Efficiency: information site: www.topten.ch

The AenEC, established in 1999, is supported by the Union suisse des arts et
métiers, energy associations for large energy consuming branches, machinery
industry and the Swiss company of manufacturers. Its main activity is the
preparation and conclusion of Agreements. It implements a monitoring system
for the benefit of the AenEC members involved in SwissEnergy or for
independent partners. The target is that, by the end of 2003, half of the
companies must be informed about AenEc activities and about the Agreement
process, and at least 40% of the industry and service consumption must be
covered by Agreements. For the period 2001-2003, the total budget financed by
the economy amounts to SF 13 million.

The AEE established in 1998 is supported by the major Swiss associations in


the field of renewable energy and the building industry. Its main task is to
promote the rational use of energy and to encourage renewable energy. It
receives the mandate by SwissEnergy to organise and support the marketing of
renewable energy, and the basic and updated training on renewables. The rate
of self-financing of AEE must reach at least 50%.

Energy Switzerland signed the United Nations Framework Convention on Climate


and the Change (UNFCCC) on 9 May 1992. In order to meet the commitment
Environment (Article 12 of the Convention), a first national communication (Confédération
Suisse, 1994) was submitted on 21 September 1994.

The Second National Communication of Switzerland 1997 — Greenhouse Gas


Inventory 1995, dated April 1997, documents activities undertaken with a view
to meeting commitments under the Convention.

Law on CO2 The federal law on CO2 emissions (Law on CO2) came into force on 1 May
2000. Under this law, total CO2 emissions should be reduced 10% by 2010
compared to 1990. CO2 emissions from petrol and diesel must be cut by 8%
and from other combustible fuels by 15%.

According to the Law, reduction of CO2 emissions must be reached through


measures related to energy , transport, environment and financial measures, as
well as through measures adopted by companies and private individuals on a
voluntary basis.

The law stipulates two phases of implementation:

Phase I: Voluntary measures:


The target of this phase is to avoid the implementation of a tax on CO2,
following the measures already implemented and the adoption of voluntary
measures. Indeed, SwissEnergy is being implemented as well as the Energy
Law.

The most important component of Phase I is the official commitment by


individual companies and associations of companies to comply with the
measures, the framework of which is set up in a new Directive (see below)
relating to industry, handicrafts and services. A further Directive in course of
preparation will concern the building sector. Compliance with the Directive
should exempt the companies from a CO2 tax (as set out in Article 9 of the law
on CO2). This tax is a subsidiary tool only to be implemented when the
measures adopted are insufficient and if the reduction target could not
otherwise be reached.

Phase II: Tax on CO2:


This CO2 tax, which could be introduced in 2004, would be levied on solid and
liquid fuels. According to the Law, its maximum amount will be SF 210 per
tonne of CO2. The Federal Council decides on the introduction and the level of
the tax on the basis of the CO2 reduction effectively achieved. The product of
the tax is reimbursed to the economy and the population.

Directive The target of the new Directive is to provide the economic actors with a stable
framework to implement measures adopted on a voluntary basis. It sets up two
types of framework:

1. The Convention concerns all enterprises willing to contribute on a voluntary


basis to the reduction of their energy consumption and as such to reduce
their CO2 emissions. This corresponds to Phase I of the Law on CO2.

2. The Engagement Formel (Formal Agreement) concerns all the


commitments voluntarily adopted which must be fulfilled by companies in
order for them to be exempt from the tax on CO2. The Engagement sets
out the calculation of the CO2 reduction target, and the monitoring and
reporting of the measures implemented. Under the Law, only large
companies or associations of at least five companies which together emit
more than 10 000 tonnes of CO2 per year are allowed to conclude
Engagements Formels. These associations could be organised under the
umbrella of the AenEc (see above). Small and medium-sized companies
wishing to conclude Formal Agreements must set up an association of at
least 30 companies and formulate a common target.

Institutional The Swiss political system is a Confederation with a federal government,


Framework parliament and court. The territory consists of 26 cantons (states), each of
which has its own government, parliament and cantonal courts. Responsibilities
are shared between the federal level and the cantons.

Responsibility for energy matters has traditionally been with the cantons and
municipalities. In a referendum held on 23 September 1990 the Swiss adopted
a Constitutional Energy Article, in force since May 1991, authorising the federal
government to carry out a national energy policy in pursuit of specific goals,
such as energy efficiency and an economic and environmentally benign energy
supply.

Subsidiarity plays an important role: the Constitution states that unless the
legislative power is explicitly attributed to the federal level, the cantons are
sovereign, i.e. entitled to legislate in an area of policy. Co-operation (between
the different political levels and between the government and the economy) is of
considerable importance in Switzerland.

In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Further enhance co-operation with the cantons on energy policy, especially


on the Energy 2000 Action Plan and on the introduction of competition in
the energy markets to ensure successful implementation of energy policy
measures.
Switzerland is a member of several international organisations (e.g. OECD, IEA,
World Bank Group, and all United Nations specialised agencies). However, it is
not a member of the United Nations or of the European Union.

Although Switzerland is not a member of the EU, most new Swiss laws or
changes in existing laws have voluntarily been made compatible with EU law.
This is to facilitate possible future adhesion to the European Union and may
also be explained by the strong economic ties with many European Union
countries, despite the formal political absence of Switzerland in the European
Union.

RESIDENTIAL/
COMMERCIAL

Measures already
existing and/or
being improved

Energy Household appliances


Efficiency For household appliances the implementation of the European Union energy
Labelling labelling scheme with efficiency-indicators A – G will be made mandatory in
2002. The categories involved are washing machines and tumbler dryers,
dishwashers, refrigeration and household lamps. Energy labelling for other
appliances will be extended.

Consumer electronics
The energy label was introduced at the beginning of 1994. Up to the end of
2000, the label was part of the Energy 2000 programme. The same label is now
used in the framework of the new programme SwissEnergy. The definition of
the criteria is co-ordinated in the Group for Energy Efficient Appliances (GEEA)
which includes eight European countries.

Office equipment
There is a trend to use more and more the Energy Star label, a joint US
Department of Energy/US Environmental Protection Agency programme,
instead of the energy label. The industry prefers the Energy Star label because
the criteria are easier to fulfil.

Energy Household appliances


Efficiency The European Union energy efficiency standards are implemented for
standards refrigeration appliances. Higher efficiency standards for refrigeration and also
for other categories of household appliances are planned for the next years.

In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Expand labelling for energy efficiency of domestic appliances and office


equipment.

Model Decree on The model decree on efficient energy use in buildings contains certain
Efficient Energy requirements concerning building shells and installation technologies used in
Use in Buildings the construction sector. With respect to the shell, there are two options to
2
choose from: observing either a specific heating energy requirement (MJ/m
2
per year) or individual U-values (W/m K).
With respect to household technology, the decree contains certain requirements
such as condensation gas boilers, maximum distribution temperatures,
adjustment controls in each room, requirements for air-conditioning systems,
etc. These sections are supplemented by the Clean Air Act, which calls for
homologation for heating boilers. Here, certain strict requirements have to be
observed with respect to exhaust and standby losses, and the Clean Air Act
also stipulates that periodic inspections must be carried out, in which exhaust
losses and air pollution levels have to be measured (carbon monoxide, soot,
non-burned oil particles, nitrogen dioxide).

Most of the cantons have already adopted and introduced this model decree
based on the standards of SIA 380/1, and the aim now is to work together with
the cantons to adapt it to the latest status of technology. The focus here is to
be on lowering the U-values and tightening up threshold parameters for heating
energy requirements, as well as on the promotion of renewable energies. For
example, one proposal that has been put forward is to demand that 20% of
heating energy requirements should be covered by the use of renewables. If a
developer does not want this, then he should be required to save this amount
by using more effective insulation. Another proposal involves drawing up
electricity consumption specifications for buildings in the services sector.

With the Programme of the Cantons for the 2nd Half of Energy 2000, adopted in
April 1996 by the Conference of Cantonal Energy Directors, cantons agreed on
strengthening their efforts in eight areas, including retrofitting in existing
buildings (already implemented in four cantons) and introduction of the
Recommendation SIA 380/4 related to the efficient use of electricity in public
buildings (already implemented in 14 cantons).

Consumption- At present, around 450 000 dwellings in Switzerland (out of a total of 1.2 million
Based that could be converted) use consumption-based heating cost allocation. It is
Heating and possible to achieve savings in heating energy of around 14% on average, even
Hot Water in times of low energy prices.
Cost Allocation
In its Energy Law, the federal government has only stipulated an obligation of
consumption-based heating cost allocation for new buildings. Cantons are
required to draw up corresponding provisions. However, they are at liberty to
introduce an obligation of consumption-based heating cost allocation for
existing buildings, and some of them have in fact done so, or are in the process
of doing so, even though house owners are against this.

Heating The project Operation of Building Infrastructure Systems of Energy 2000


Systems promotes the practical optimisation of the operation of heating systems by
encouraging all involved parties, from manufacturers to service engineers and
on to janitors, to use the existing energy saving potential of 10 to 15% through
correct operation and maintenance. More than 2 500 janitors have received
instructions. Energy 2000 check-ups for heating systems are available for
private house owners.

Technical The so-called impulse programmes RAVEL (Efficiency Use of Electricity),


Information PACER (Promotion of Renewable Energies) and IP-Bau (Maintenance and
Retrofitting of Buildings) came to an end in 1996.

The greater part of the educational material and documentation is being taken
over by professional organisations and, to some extent, by Energy 2000. It is
intended to improve continuously the training of specialists in the field of energy
in order to meet the constantly increasing practical demands. A new course
launched in 1995/96 in the field of household technology addresses
practitioners for the first time.
Management In the field of residential buildings, Energy 2000 has signed 120 partnerships
Partnership with property management organisations. Workshops provide target groups, for
example building caretakers and managers, with case studies in planning and
management of building renovation, thus emphasising their economic
advantages.

Low-Energy The project on ecological building methods is preparing the new standards of
Home tomorrow. Fifty pilot homes demonstrate that up-to-date technologies allow
buildings at competitive prices with a maximum consumption of energy for
2
space and water heating of 220 MJ per m per year, i.e. less than one-quarter
of the average consumption of a conventional modern house. Several banks
have offered to co-operate, making available “eco-credits” at reduced interest
rates. The cantons launched an initiative for the promotion of MINERGIE
standards and labels. According to this concept, heat consumption would not
2
be higher than 160 MJ/m per year without jeopardising comfort and
competitiveness.

The European Passive-house-Standards is entering the Swiss market.

Financial/ Since 1 January 1995, regulations on tax allowances for the costs of
Fiscal investments in existing private buildings for the efficient use of energy and the
Measures use of renewable sources have been revised, based on a Federal Ordinance.

Federal On 30 April 1997, the Federal Parliament launched an Investment Programme


Investment Energy 2000 aimed at creating employment, stimulating the economy and
Programme promoting sustainable development. The programme included SF 64 million to
be spent between 1997 and 1999 on subsidising private investments in energy
savings and renewable energies in the building sector. Owners must invest
more than SF 50 000 and subsidies amount to an average of 10% of the total
investment.

The Investment Programme Energy 2000 has been replaced by 23 cantonal


programme with the same focus and priorities (retrofit of dwellings). The
Federal Office of Energy supports the cantons with SF 9 million (2001).

PUBLIC SECTOR

Measures already
existing and/or
being improved

Energho Energho is an association of large energy-consuming public institutions. It


includes hospitals, cantonal and federal buildings. Its aim is to save 10% of
energy in ten years and to increase energy efficiency in public buildings through
Energy Performance Management, a voluntary commitment to save energy with
an action programme and targets, training and exchange of experience.

Energy In most cantons, municipalities are in charge of implementing the cantonal rules
Cities on buildings. In the framework of Energy 2000, the 47 municipalities labelled as
Energy Cities aim to serve as examples to reach the targets of SwissEnergy.
One of the purpose of SwissEnergy is to increase the number of Energy Cities
from 47 to 110 by 2005 (corresponding to an increase from 1.2 to 2 million of
inhabitants. The Energy City label will be improved to cover the regions and
expanded to the European level. The possibility to conclude agreements on
CO2 reduction at the municipal level will be considered.

Other Recommendations for the purchase and operation of electrical equipment have
Measures been addressed to employees of the federal administration to promote the
efficient use of electricity in federal offices.
Current measures to retrofit public buildings aim to save 50% of heating energy.
Evaluation of the results of these measures is being carried out over a two-year
period.

Energy concepts exist for the federal railways, the postal services (PTT) and the
Federal Office of Construction.

INDUSTRY

Measures already
existing and/or
being improved

Energy Since 1988 limited energy audits (only rough analyses) have been in place for
Audits industry. There are no financial or fiscal incentives to promote energy audits.

Voluntary The industry section of Energy 2000 focused its efforts on the “energy model”
Measures and the energy management course, which are more or less self-supporting.
The industrial partners of this section are: cement, pulp and paper, plastic
injection moulding and various chambers of trade and industry.

Around 120 large companies, for which the annual energy costs are over
US$ 100 000, representing 18% of the energy consumption of this sector, are
involved in voluntary actions which include sharing information about energy
savings. This section achieved between 15 and 30% of its objectives for 2000.

One of the measures introduced by SwissEnergy is the development of


voluntary agreements signed between the Federal Office of Energy and energy
producers and users which are applicable to the use of energy in vehicles,
buildings and electric appliances (see above: Law on CO2).

To strengthen the voluntary measures, SwissEnergy set up several Agences de


l'Energie (Energy Agencies) to intensify information dissemination on energy
efficiency among the public and those working in the energy sector.(see above:
Energy Agencies in the Framework of SwissEnergy).

TRANSPORT

Measures already
existing and/or
being improved

Fuel In December 1995, the federal government issued an Ordinance on the


Consumption Reduction of Specific Fuel Consumption for Passenger Cars. This Ordinance
Target sets an objective for car importers of a 15% reduction in specific fuel
consumption of new cars between 1996 and 2001. The Ordinance also
establishes the technical and organisational procedures for monitoring progress
in reaching the target. If car importers do not reach this target within the
prescribed time, the government is entitled to adopt other measures such as a
regulation on the fuel consumption of new cars.

Energy Within the national Energy 2000 Action Plan, several projects and programmes
Saving to increase energy efficiency in passenger and freight transport have been
Programmes sponsored by the government, with an annual budget of around SF 6 million,
co-financed by the private sector. These actions were started in the early
1990s and continued through 2000.

Examples of such programmes are:

• Eco-Driving. Several actions and simulation techniques promote an eco-


efficient driving style, mainly for captive fleets. Individual measurements
showed an energy saving potential of 10-15%.
• Car-Sharing Initiative. Drivers rent cars and pay the company according to
hours of use and distance travelled. About 30 000 members of the Swiss
co-operative Mobility CarSharing have some 1 200 cars at their disposition
located throughout 700 sites. Thanks to modern reservation systems,
members can conveniently reserve the car of their choice from home
(telephone, Internet) 24 hours a day. Cars are shared by individuals and by
business users. A survey for the Swiss Department of Energy showed that
an average co-operative member drives less than 1 000 kilometres a year,
which is about a quarter of the average distance covered by a family-owned
car. The federal government considers that many people are interested
and that there is a large savings potential.

It is planned in the SwissEnergy programme to develop the combined transport


system through a combination of improved individual transport and public
transport, as well as in daily transport and in leisure transport.

SwissEnergy has decided to increase the possibilities of combined traffic, such


as the development in railways stations of greater interaction between individual
and public transport for daily or holiday transport.

Transport New transalpine railway axes


of Goods
In September 1992, the Swiss electorate accepted a Federal Decree to build
two new Alpine tunnels through the mountains of Gottard (57 km) and
Lötschberg (36 km via the Simplon axis). The new tunnels aim at doubling rail
transit capacity to 70 billion tonnes a year and to speed up transit between
northern and southern Europe. Total cost is expected to amount to more than
SF 15 billion. This would allow implementation of the measures requested in the
April 1994 referendum, which requests a shift of total transalpine truck traffic
(from border to border) from road to rail within ten years.

New taxation on heavy goods vehicles

In February 1994 the Swiss electorate accepted a new article at the


constitutional level enabling the national government to introduce a new
distance and weight dependent charge on heavy goods vehicles (above
3.5 tonnes total weight) to replace the existing flat rate tax. Based on this
article, a law was adopted introducing a new tax on such trucks. This tax is
related to distance and weight and aims at internalising the full cost of freight
transport (infrastructure costs, noise accidents, damages to buildings and
health). This was accepted by a referendum in September 1998. A maximum
charge will be set which will increase from SF 0.016 km-tonne in 2001 to
SF 0.03 in 2005. In the second vote of 29 November 1998, the financing
scheme for the four large railway investment programmes (new transalpine
axes, Railway 2000, connections to the European high-speed network, noise
protection) was also adopted by the Swiss electorate. One-third of the tax
revenue will be given to the cantons; the remaining will be used by the
Confederation for investments in rail infrastructure.

In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Develop public transportation systems and increase their use. Strengthen


co-operation between administrations involved in energy policy and those
involved in transport policy.
MONITORING/ The federal government, as well as the cantons, places particular importance
ASSESSMENT on the need to monitor carefully and regularly and evaluate all the energy
efficiency programmes and measure under their responsibility. The measures
that have been taken are periodically evaluated to increase their effect and to
encourage the learning process for all participants. The reports entitled
Programme Energie 2000, 9ème rapport annuel 1999, année sous revue, juillet
1998--juin 1999, and Programme Energie 2000, Rapport final et 10ème rapport
annuel, Juillet 1999-Décembre 2000 were published by the Federal Department
of Environment, Transport, Energy and Communication. They provide a
detailed examination of the progress made in implementing Energy 2000,
assesses the degree of realisation of its different objectives and analyses the
expected results for each energy consuming sector both from the energy
efficiency and environmental points of view.

In the 1999 in-depth review of the energy policies of Switzerland, the IEA
stated:

The Swiss government should:

• Improve the review of the cantons’ energy policies. Promote co-operation


among cantons.

Further For further information, please contact:


information
Nicole Zimmermann
Office fédéral de l'énergie OFEN
CH – 3003 Bern
Tel: +41 (31) 322 56 04
Fax: +41 (31) 323 25 00
E-mail: nicole.zimmermann@bfe.admin.ch
TURKEY Updated August 2002

BACKGROUND Every five years the State Planning Organisation (SPO), with the assistance of
expert organisations from all sectors, including the energy sector, prepares a
Development Plan. The most recent Development Plan is the Eighth Five-
Year Development Plan for the period 2001-2005. After approval by the Board
of Ministers the Plan was published in the Turkish Official Gazette in 2000.

Energy policy objectives, largely unchanged from previous plans, are as


follows:

· To ensure sufficient, reliable and economic energy supplies in order to


support economic and social development.
· To maintain security of energy supply.
· To encourage sufficient investments to meet growing energy demand.

Within the Eighth Five Year Development Plan, the specific measure
(No. 1823) on energy efficiency reads as “with a view to control and reduce
the greenhouse gas emissions originating from transport, energy, industry and
settlements, arrangements shall be made towards increasing energy
efficiency and ensuring energy saving”.

Energy efficiency is considered to be the cheapest energy source. According


to estimates of the National Energy Conservation Centre (NECC), established
in 1992 as part of the Electric Power Resources Survey and Development
Administration (EÝE) within the Ministry of Energy and Natural Resources
(MENR), potential gains through increased energy efficiency are substantial.

Several government entities are directly or indirectly involved in energy


conservation issues and activities. Besides the EÝE/NECC, these include the
State Planning Organisation, the Ministry of Industry and Commerce, the
Ministry of Reconstruction and Resettlements, the Scientific and Technical
Research Council, the Ministry of Public Education and the Turkish Standards
Institute. The EÝE/NECC’s energy conservation activities concentrate on end-
use sectors .

Energy and The overall objectives of energy-related environmental policies in Turkey are
Environment to ensure sufficient, reliable and economic energy supplies to support
sustainable economical and social development while protecting and
improving the environment.

Energy and environment issues are addressed both in the National


Environmental Action Plan (1998) and in the National Agenda 21 (2001),
which are the most recent environmental policy documents. Policies regarding
energy efficiency and clean energy technologies are articulated among others.

The country’s environmental policy considers that energy policy should take
into account environmental problems and that a balance should be found
between increases in energy demand necessitated by economic development
and environmental concerns.

Although Turkey was a Member of the OECD in 1992 when the UNFCCC was
adopted (and as such was included among the countries of the Convention’s
Annexes I and II), it is still not fully industrialised. On the basis of this
argument, Turkey refrained until recently from being a party to the UNFCCC,
and requested to be deleted from the Annexes of the Convention. It was been
decided in COP7 in Marrakech in 2001 to remove Turkey from the Annex II list
and recognise its special circumstances as an Annex I Party. UNFCCC is
expected to be ratified soon in the Turkish Grand Assembly.

1
This fairly new position of Turkey will bring her some advantages, including
the introduction of foreign investments for energy efficiency and clean
technology projects through joint implementation, as well as emission trading.

Although Turkey has agreed in principle for a long time that it will attempt to
limit emissions, it has so far not developed a mandatory greenhouse gas
abatement strategy. For this reason, there are no specific greenhouse policies
such as carbon taxation or emissions trading schemes. Nevertheless, there
are policies, actions and other measures known to be already under way,
even if most of them are undertaken for local and economic reasons.

In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

· To reflect its respect for the spirit of the United Nations Framework
Convention on Climate Change (UNFCCC), Turkey should continue
striving to limit the growth of greenhouse gas emissions, and where
possible take additional measures. In particular, the government should
develop an implementation strategy that allows it to assume a greenhouse
gas emissions target no later than the second commitment period of the
Kyoto Protocol.

General energy and electricity planning studies are being carried out using the
Model for Analysis on Energy Demand (MAED) and the Wienn Automatic
System Planning Package (WASP) Models. To determine the environmental
impacts of these studies, a joint project supported by the World Bank with
Argonne National Laboratory/US Department of Energy aims at designing a
new energy and environment model for Turkey. Studies on this project are still
on-going and are expected to be finalised soon. Within this framework,
different kind of scenarios will be set up to mitigate the emissions arising from
energy.

In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

The Government of Turkey should:

· Increase the resources for the Ministry of the Environment and strengthen
collaboration with the Ministry of Health on air quality issues.
· Continue harmonising standards and regulations for environmental quality
with those of the EU and other international bodies.

Institutional The Ministry of Energy and Natural Resources (MENR) is the main
Framework organisation which is responsible for formulation and implementation of
general energy policies. The State Planning Organisation (DPT) also takes
energy efficiency policies into account in drafting the national plans.

The General Directorate of Electrical Power Resources Survey and


Development Administration (EÝE), one of the major organisations under the
auspices of MENR, has been involved in implementing energy conservation
programmes and in assisting MENR to develop the related policy. A new
department, Energy Resources Survey Department (DERS), within EÝE was
established by the approval of the Ministry of Energy and Natural Resources
(MENR) on March 31, 1981, to conduct studies on energy efficiency and new
and renewable energy resources. DERS was entrusted by MENR in
December 1992 with the responsibility to act as National Energy Conservation
Center (NECC) to enhance the activities on improving energy efficiency in all
end-use sectors and promoting the use of solar and wind energies.

2
On the other hand, the Energy Conservation Co-ordination Board (ECCB)
consisting of representatives of related ministries, governmental organisation,
private sectors, universities and associations, which was established by the
Prime Minister's Office on 9 April 1981, commenced its activities to promote
public awareness of energy conservation following the second oil crisis. The
Energy Conservation Co-ordination Board (ECCB) carries out activities such
as organising the annual Energy Conservation Week and contests for
students to increase public awareness. The Board has functioned under the
supervision of the General Directorate of Energy Affairs of MENR since the
beginning of the 1980s. Last year supervision of ECCB was transferred to
EÝE/NECC by MENR.

The public sector budget for improving end-use efficiency is small and deals
mainly with NECC’s expenditures on studies, energy audits, publications and
professional training. NECC also benefits from international loans and
expertise. ECCB is in charge of public campaigns on energy savings.

In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

The Government of Turkey should:

· Consider enacting appropriate energy conservation laws and establish or


tighten efficiency standards for industrial boilers and electric motors.
Increase the resources of energy efficiency organisations.

RESIDENTIAL/
COMMERCIAL

Measures already
in place and/or
being improved

Heat In the residential/commercial sector, more than 80% of the energy consumed
Insulation is for heating. According to an EÝE study carried out in 1997 based on
Standards questionnaires, energy use per unit of building area could be reduced by
nearly half by applying to all buildings the new Heat Insulation Standards on
building envelopes, issued in 1999 and effective in June 2000. (See below.)

In 1985, Turkey adopted mandatory standards for heat insulation in new


buildings. However, heat losses in new buildings have been estimated at over
2
200 kWh/m , a high level compared to average losses in Europe.

Revision of the Standard for Heat Insulation in Buildings was finalised in April
1998 and issued by the Turkish Standards Institute. This new insulation
standard and supporting regulation introduced in June 2000 makes it
2
mandatory to reduce heating requirements by 100-150 kWh/m a year,
according to the four degree-day regions of the country. The existing building
stock is increasing at an average rate of 5% annually. It is expected that a
50% improvement in energy efficiency in new buildings will be achieved.

For existing buildings, a code was developed by EÝE/NECC with the


participation of various governmental organisations and private sector
companies and submitted to MENR in July 2001. It is now under
consideration in the Ministry.

Boilers Boilers and stoves using wood, coal or fuel oil need a certificate based on a
and Stoves test of heat efficiency. The heat efficiency certificates are issued jointly by the
Ministry of Industry and Trade and the Turkish Standards Institute. Products
not having this certificate cannot be marketed.

3
Information EÝE/NECC has been conducting various kinds of promotional studies. In this
context, approximately 60 publications were published (Industrial Energy
Management Course Book (four parts), Series of Technical Tips, Technical
Manuals are a few that can be mentioned). The technical manual is the most
popular publication; it was also used in the universities as a source book for
energy management lectures. These publications have been distributed to
individuals and industrial establishments at their request at a reasonable cost.,
Videos and posters were also prepared and distributed nation-wide by
EÝE/NECC free of charge. Moreover, various national and international
seminars, conferences, and workshops have been organised, mainly co-
ordinated by EÝE/NECC. One of the recent main energy conservation
awareness activities of EÝE/NECC is energy conservation project contests in
industry run over the last two years. Successful Energy Conservation Project
Awards have been presented to the winners by the President and the Minister.
Last year the theme of the Project Award was “The successful case in
Cogeneration”. Awards were presented by Ministers on 23 May 2002.

Every year for the past 20 years, energy conservation week activities have
been organised by ECCB, MENR and EÝE/NECC. These activities cover
various contests among schools, and seminars and conferences related to
energy conservation in different sectors. At the 2002 Energy Saving Week, in
January, the Board organised television programmes on energy efficiency.
ECCB meets every month and prepares plans for activities with the aim of
increasing public awareness of energy conservation. In 2002, the Turkish
radio and television organisation will prepare six TV spots on energy efficiency
subjects with the financial support of some private sector associations,
members of the Board. Contests on painting, essay and projects on energy
conservation for primary and high schools have also been organised over the
last ten years with the co-operation of the Ministry of National Education. The
awards for the winners were distributed at the Energy Conservation Week by
the Ministers of National Education and Energy and Natural Resources.

In 2001 a seminar programme was initiated by EÝE/NECC for primary and


high schools. Every year, seminars on energy conservation and efficiency in
heat and electricity consumption have been organised in several schools
Seminars are also run at public institutions at their requests.

The publications and posters on energy conservation in the buildings sector


prepared by EÝE/NECC are distributed at the conferences, meetings and
seminars.

In addition, an Internet link has been established to facilitate the flow of


information between the energy managers of the plants and EÝE/NECC.

Measures under
Consideration

Energy Survey During 1998 and 2000, in Cupertino, a study was carried out by the State
Statistical Institute (SSI) on the analysis of energy consumption in residential
buildings in all geographical regions of Turkey. In this project, a representative
sampling method was used and energy consumption analysed in terms of fuel
and electricity, the insulation status, heating systems and the structural
properties of the residential buildings. SSI evaluated the statistical data
collected and the report was submitted to EÝE in 2001.

On the basis of a survey of 11.5 million residential buildings in Turkey, 10% of


the buildings are provided with roof insulation while 9% with double-glazing.
Therefore, for the purpose of improving energy efficiency in buildings utmost
priority has been assigned to legislative measures.

4
Energy Under the co-ordination and supervision of EÝE/NECC, and with the
Labelling/ participation of representatives of the related manufacturers and public
Standards organisations, working groups have been set up on energy efficiency of
household appliances, air conditioners and lightning. The related analytic
work reveals that new regulations are needed to increase energy efficiency for
the afore-mentioned equipment. In this context, studies to prepare energy
efficiency labelling standards and regulations for electrical appliances have
already been initiated by the Turkish Standards Institute and the Ministry of
Industry and Trade within the framework of the Harmonisation Programme for
EU legislation. Regulation on energy efficiency labelling for refrigerators was
issued on 24 March 2002. The other labelling regulations related to washing
machines, dryers, dish washers and lamps have been prepared and should
soon be published by the Ministry of Trade and Industry.

The energy efficiency regulation for outdoor (street) lighting is under review.

In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

The Government of Turkey should:

· Enhance Turkey's participation in international co-operation programmes


on energy efficiency, in particular on efficiency standards and labels for
household appliances and motor vehicles.

Subsidies In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

The Government of Turkey should:

- Consider establishing fiscal and economic incentives for conservation


measures in all sectors.

INDUSTRY

Measures already In a 1996 study, EÝE/NECC assessed the potential for energy conservation in
in place and/or industry at 4.2 million toe (nearly 24% of industrial energy use that year) and
being improved an approximate cash value of $1 billion/year. The total investment required to
achieve this conservation potential would be close to $2.3 billion. The payback
period for these investments would range from a minimum of one year to a
maximum of three years. The measures required to bring these savings about
would include the adoption of various forms of waste heat recovery, increased
use of co-generation of electricity and heat/steam, and the use of more
efficient boilers.

Energy Since 1990, EÝE/NECC’s Energy Audit Teams have been conducting energy
Bus audits (the Energy Bus Programme) in various plants of the Turkish industrial
Programme sector with vehicles equipped with the appropriate measuring equipment. The
surveys, of approximately one week duration, have usually been carried out
by teams of three engineers in the factories. The main objectives of the
energy audits focused on creating energy conservation awareness in industry
-- assisting the establishment of energy management units and identifying
energy efficiency projects in their plants, making surveys and compiling data
to identify the energy saving potentials of sectors and industry as a whole.
The Energy Bus Programme, carried out at the pre-audit level, consists of
following stages:
· Receiving application from the factory.

5
· Pre-visit to the plant.
· Confirmation of the study.
· Data collection and measurement.
· Data analysis and energy conservation projects identification.
· Pre-audit report submission

Up to date energy audits were conducted at approximately 70 plants both by


NECC team and foreign consultant firms. Fifteen plants were visited in the
food, textile and iron-steel sectors in the 2001-2002 period.

Moreover, TUBİTAK (the Scientific and Technical Research Council of


Turkey) has conducted detail energy audits in different sectors. In recent
years, TUBİTAK carried out approximately ten energy audits in energy
intensive industry such as the cement and iron and steel sectors with the co-
operation of Istanbul Technical University.

Training Under the NECC Training Bus Programme initiated in 1993, approximately
Bus 700 engineers had already been trained by the end of 2000 in energy
Programme efficiency subjects such as insulation, boiler house combustion, electrical and
steam systems. Seminar notes and technical manuals were prepared.

Energy To increase energy efficiency in industry, MENR issued a Decree in


Management November 1995, providing for non-mandatory measures concerning industrial
plants, i.e. private and public enterprises, including mining which consumes
more than 2 ktoe of energy per year, with the aim of establishing an energy
management organisation within the plant:

· The largest consuming plants should nominate an Energy Control


Committee; smaller plants should nominate an Energy Manager.
· The managers of these plants should complete energy audits within three
years. The results of the audits should be submitted to NECC.
· These plants should take the measures, adapted in co-operation with
NECC, to improve energy efficiency during operations and to take into
account this objective when the plants are expanded or modernised.
· The plants should monitor the results of the measures and report annually
to NECC on the evolution of energy savings for the plant’s three main
products.
· NECC will either organise professional training or give authorisation to
organisations for training at these plants.

Thus, NECC organised Energy Management courses in 1997 and authorised


three organisations in İzmir, Istanbul and Eskişehir to extend these courses
nation-wide. To date, nearly 457 engineers from different industrial sectors
have been trained as energy managers in the courses organised by EÝE
and/or other authorised organisations. Furthermore, Energy Management has
been included in the curricula of the engineering faculties of some universities.

According to the regulation, approximately 500 out of a total of 600 plants


have appointed energy managers. To date, energy management courses
have been organised in the iron and steel, arc furnaces, paper, cement,
textile, fertilizer, food, ceramic and non-ferrous metal sectors by both NECC
and the three authorised organisations. A total of 457 energy managers have
completed these courses. Energy managers have started to monitor specific
energy consumption in their plants.

A project was started in August 2000 in co-operation with NECC and JICA to
establish a new training centre with a model plant for energy conservation.
The construction and installation of the training centre and model plant has
been completed and NECC’s personnel trained to operate the model plant.
The training centre started its activities in October 2001. It is planned that

6
most energy managers will be trained over a five-year period through this
project. It is expected that the programme will increase energy efficiency by
10% throughout Turkish industry by 2010.

The Energy Conservation Training Center was established as an integral part


of EÝE/NECC within the scope of the Energy Conservation Project, carried
out jointly by JICA and EÝE/NECC since August 2000. It provides training
programmes, not only Turkish industry but also to neighbouring countries. The
first international energy managers course was held in Cupertino with UN-
ESCAP on 4-14 June 2002 for participants from central and west Asian
countries.

In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
stated:

The Government of Turkey should:

· Expand energy auditing programmes for industry, commercial enterprises


and homes, information campaigns and training of energy managers.
· Promote the formation of energy service companies to invest in such
opportunities.

DSM Some publications on electrical energy savings have been prepared and a
regulation on day and night electric tariffs in residential sector issued.

Combined At present, 113 auto-producers, mostly co-generation plants in industry,


Heat and generate an annual power output of 18 billion kWh which constitutes 14% of
Power total electricity production with an installed capacity of 3 350 MW. Applications
for auto-producer plants with a total installed capacity of 8 750 MW have been
received by MENR.

The “Electricity Market Law” (Law No. 4628) came into effect on 3 March 2001
for the purpose of unbundling, generation, transmission and distribution
activities and to ensure progress towards a liberalised electricity market within
the framework of fair, transparent and non-discriminatory market conditions.
Through the latest reforms, the power sector will soon undergo much more
profound reform than ever before, leading to the introduction of competition
and increasing private involvement. Within the framework of the Law, auto-
producers are being considered and encouraged.

Database In 1995, EÝE gave technical assistance to the State Statistical Institute (SSI)
Survey during the establishment of the Institute's energy statistics division. With the
purpose of monitoring energy consumption in the industrial sector, a project
was initiated in Cupertino with SSI and SPO to compile a new data base
system for information on plants consuming annually 500 toe or more energy.
Evaluation of the information for the period 1995-1998 has been finalised and
the results published by SSI. The evaluations for the years of 1999 and 2000
are under way.

A comprehensive industrial data base survey has been launched by NECC in


co-operation with SSI to define energy consumption, energy saving potential,
the energy management approach and systems and technical infrastructure in
the industrial sector such as boilers, motors and furnaces. Within the scope of
this study, questionnaires were sent to 1 300 manufacturers who consume
more than 500 toe of energy. The first data collection for 1995 was published
at the end of 1997. The survey will provide the data necessary for the
elaboration of energy efficiency indicators for the industrial sector.

7
PUBLIC SECTOR

Government In accordance with the circular entitled Measures to be taken by


Buildings Governmental Organisations and Institutions in order to reduce their energy
consumption issued by the Prime Minister, all governmental organisations
have prepared annual reports on energy consumption in their buildings.
These reports were sent to EÝE/NECC by the Ministry and evaluated by
NECC. These studies will also continue for the next few years. In 1999,
information concerning 2 037 governmental buildings was evaluated.
According to the evaluation results, the energy consumption of these buildings
was very high (more than 250 kWh per square metre); 48% of them have
double-glazing and 40% have roof insulation. For the next heating season, a
training seminar was organised in Ankara in September 2001, co-ordinated by
MENR and EÝE/NECC, for governmental buildings. Similar seminars are
planned for the other regions of Turkey in the coming years.

Another project will soon be started in co-operation with the German Technical
Organisation (GTZ), the Erzurum Municipality and EÝE/NECC. The duration
of this project will be three years. Its aim is to enable municipal authorities as
well as users of public and private buildings to take measures designed to
reduce the use of energy in buildings. Implementation of the project will be
realised in Erzurum and studies related to standards, regulations and training
will be carried out in Ankara.

TRANSPORT

Measures already
existing and/or
being improved

Vehicle In 1992, the Ministry of Environment issued a regulation providing for


Testing emissions testing for cars, trucks and vans. The regulation imposes penalties
for non-compliance with the maximum emissions allowed. Emissions testing
is mandatory for the sale of used vehicles. However, this testing does not
include any energy efficiency control.

Road The first stage of Ankara’s subway was inaugurated in September 1996 and is
Transport now being expanded. Another subway is also in use and additional lines are
being built in Istanbul.

Railway The government plans to increase the number of modern locomotives and the
length of electrified rails. It also plans to increase the operating efficiency of
the public railway company and to reduce its losses.

Measures under
Consideration

Energy A statistical survey of energy consumption patterns in the transport sector for
Survey 1998 was carried out by the State Statistical Institute in Cupertino together
with EÝE/NECC. The final report was submitted to EÝE in 2001.

MONITORING/ In the 2000/2001 in-depth review of the energy policies of Turkey, the IEA
ASSESSMENT stated:

The Government of Turkey should:

· Closely monitor energy supply and demand and revise the forecasts to
take account of the progress of liberalisation, energy efficiency
improvements, structural changes in industry and other major factors in
order to better inform all players' investment.

8
Although, there is not yet a regular or systematic nation-wide energy efficiency
monitoring system in Turkey, certain statistical studies have been carried out
by EÝE/NECC and SIS to analyse energy consumption patterns in sub-
sectors.

Industrial energy consumption surveys covering about 1 200 industrial


establishments were conducted by SIS in Cupertino, together with
EÝE/NECC, in the years 1995, 1996, 1997 and 1998. The results of the
survey reveal that the total amount of energy consumed by the establishments
with an annual energy consumption of 500 TEP and over, constitutes nearly
75% of the total energy consumption in the industrial sector. Results of the
studies are also used to assess industrial energy efficiency potential.

For several reasons it is very difficult to estimate accurately the amount of


energy savings achieved. The main reason is the very large fluctuations
occurring in the number of industrial establishments and capacity utilisation
rate observed in recent years.

However, EÝE/NECC has developed an Energy Managers Database based


on the regulation issued in November 1995 (Measures to be taken to Increase
Energy Efficiency in Industrial Establishments). The database has been used
to follow up energy management activities in industrial establishments.
Compared to the situation in 1997, it has been observed that almost all
industrial establishment have taken measures for energy conservation and
realised the projects; in addition, energy efficiency targets have been defined
for particularly large industrial establishments for the coming years.

At the end of 1997, a nation-wide statistical study for the analysis of energy
consumption in residential buildings was implemented by SIS. It is envisaged
that the consolidated data from the survey would be used to assess the
energy efficiency status in the building sector.

In pursuance of the circular issued by the Prime Minister's Office in November


1997, all government organisations are obliged to prepare annual reports
regarding energy consumption of their premises and to transmit these reports
to the Ministry of Energy and Natural Resources. These reports are then
forwarded to EÝE Administration by the MENR for evaluation. The review and
evaluation studies, performed by EÝE/NECC, will continue in the future.

Further For further information, please contact:


information
Ms. Tulin Keskin
Industrial Energy Conservation Division Manager
EÝE/National Energy Conservation Center
EÝE Gen.Müd.Eskisehir Yolu
06520 Ankara
Tel.: +90 (312) 28 784 51
Fax: +90 (312) 28 692 84
E-mail: tkeskin@eie.gov.tr

9
Energy
IEA Efficiency
Update

Updated March 2003


UNITED
KINGDOM
BACKGROUND The United Kingdom met its commitment under the UN Framework
Convention on Climate Change (FCCC) of returning emissions of CO2 and
other greenhouse gases (GHG) to 1990 levels by the year 2000.

Energy At the Third Conference of the Parties (Kyoto, December 1997) the European
and the Union as a whole agreed to reduce the emissions of a basket of six gases by
Environment 8% from 1990 levels by the period 2008-2012. In June 1998, the European
Union Council of Environment Ministers reached a Burden-Sharing Agreement
on emission reduction commitments to re-allocate internally the 8% reduction
agreed at Kyoto. The reduction commitments are expressed as a percentage
of 1990 levels for the 2008-2012 period. Under the Burden-Sharing
Agreement, the UK is committed to reducing its emissions by 12.5%. The
government has also set itself a challenging domestic target to reduce CO2
emissions to 20% below 1990 levels by 2010.

The UK signed the FCCC at Rio de Janeiro in 1992 and submitted its first
national communication in February 1994. In compliance with the FCCC
obligations, the UK’s second and third national communications were
published in February 1997 and October 2001 respectively. Following a period
of consultation with a wide range of stakeholders, the UK government,
together with the devolved administrations, published the UK Climate Change
Programme in November 2000. Further details on the final version can be
found at http://www.defra.gov.uk/environment/climatechange/cm4913/index.htm

The third national communication reports on the progress made to implement


policies to reduce emissions, and with policies to adapt to the impacts of
climate change. It provides additional information about the financial
assistance that the UK provides to developing countries, and the leading role
that the UK has been taking on research and systematic observation.

UK Climate The UK Climate Change Programme aims to:


Change
Programme • Deliver the UK’s legally binding target under the Kyoto Protocol. The
policies and measures that it sets out could cut greenhouse gas emissions
by an estimated 23% below 1990 levels by 2010. This means that carbon
dioxide emissions alone could be reduced by an estimated 19% below
1990 levels by 2010. Together with policies whose impact has not been
quantified, the measures could also achieve the domestic goal.
• Set out a package of cost-effective, flexible policies and measures in which
all sectors of the UK’s economy play their part. The package aims to
safeguard and enhance the UK’s competitiveness and deliver wider
benefits through lower energy costs for businesses and people, as well as
through less fuel poverty, improved air quality, reduced risk to health, and
new business and export opportunities.
• Respond to the need for action to cut emissions in the longer term (beyond
2010) by putting in place policies that give clear signals about the changes
that will be required.

Planned measures relating to energy efficiency are summarised below and


described in detail in the text on specific sectors.

Key elements of
the UK Climate
Change Strategy

Industry The following actions have been taken; for more information, see below under
Issues Industry.

1
• The Carbon Trust was established in April 2001 as a non-profit organisation
to lead on business and public sector energy efficiency and support the
creation of a low carbon economy in the UK. The Carbon Trust now
manage the non-domestic part of the old Energy Efficiency Best Practice
programme re-launched as Action Energy. Action Energy provides energy
efficiency advice and support to business and the public sector.
• The Climate Change Levy (CCL) effective from 1 April 2001 aims to
encourage energy efficiency and help meet the United Kingdom's targets to
reduce GHG emissions.
• The Climate Change Agreements between energy-intensive sectors of
industry and the Secretary of State are a new policy mechanism for
achieving environmental objectives.
• The Enhanced Capital Allowances Scheme introduced on 1 April 2001
gives 100% capital allowance in the first year for investments in any of the
technologies in the published list.

Buildings The UK Climate Change Programme related to the residential/commercial


Issues sectors includes the following issues:

• A review and tightening of the energy efficiency requirements in the


Building Regulations (Part L).
• Enhancements to the Standard Assessment Procedure (SAP) as a rating
tool for housing.
• Input to the development of the proposed EU Directive on the Energy
Performance of Buildings.
• New Home Energy Efficiency Scheme (Warm Front).
• Public Sector Targets.
• Energy Efficiency Commitments.

All these policies and measures will be dealt with below under the sections
Residential/Commercial and Industry.

Transport The UK Climate Change Programme aims at cutting emissions from the
Issues transport sector through:

• The UK Powering Future Vehicles Strategy, which sets the framework for
promoting the development, introduction and take-up of low carbon
vehicles and fuels.
• European-level agreements with car manufacturers to improve the average
fuel efficiency of new cars by at least 25% by 2008-2009, backed up by
changes to vehicle excise duty and the reform of company car taxation and
better information for consumers to encourage the purchase of more fuel-
efficient vehicles.
1
• Transport 2010, the 10 Year Plan: £180 billion of investment and public
spending on transport over the next ten years to cut congestion and reduce
pollution (see below under Transport)

Performance and On 25 June 2001, the government announced that the Performance and
Innovation Innovation Unit (PIU), attached to the Cabinet Office, was to carry out a review
Unit (PIU) of the strategic energy policy issues for Great Britain. The review was set
Review within the context of meeting the challenge of global warming, while ensuring
secure, diverse and reliable energy supplies at competitive prices. The main
aim of the review was to set out the objectives of future energy policy and to
develop a strategy that ensures current policy commitments are consistent
with longer-term economic, environmental and social goals. The review
considered the role of coal, gas, oil and renewable sources of energy in the
UK’s future energy balance as well as combined heat and power and the
enhancement of energy efficiency. The review also considered what role, if
any, the nuclear industry should play in meeting the objectives of the

1
On average in 2001, £1 = US$ 1.441.

2
environment and security of supply.

The project’s findings are expected to greatly influence the government’s


future policy on security and diversity of energy supply and on climate change.
The PIU Review Team reported to the Prime Minister at the end of 2001, and
the PIU review was published in February 2002.

The PIU project stated three main energy policy challenges and attempts to
develop ways of addressing these. The government also underlined that
competitive markets will continue to be central to energy policy. The three
challenges are:

• Managing potential conflict between energy and environmental objectives.


Meeting the long-term targets for emissions reductions, whilst ensuring
future projections for energy demand are met, is thought to require
fundamental changes in energy and fuel markets, the management of
energy demand, the development of new technologies, infrastructure and
policy.
• Ensuring continued security and diversity of energy supplies over the long-
term including ensuring appropriate investment incentives to maintain
sufficient spare capacity to be able to cope with supply shocks, especially
within the regulatory regimes for the energy utilities.
• Managing potentially conflicting policy goals for energy prices. Whereas
higher energy prices could be a potent instrument for advancing
environmental objectives, they are in potential conflict with fuel poverty and
industrial competitiveness objectives (see below).

The review put forward a programme to accelerate the UK’s energy efficiency
improvements. At its centre was the suggestion of a challenging new target to
improve domestic consumers' energy efficiency by 20% between 2002 and
2010, and by a further 20% between 2010 and 2020. This would approximately
double the existing rate of improvement. The gains in terms of energy savings
in a year could reach about 0.25% of GDP by 2020, over and above the cost of
the investment needed to unlock these savings.

See http://www.cabinet-office.gov.uk/innovation/2002/energy/report/index.htm
for further details on the PIU report.

Energy White In response to the PIU report, a public consultation was launched to consider
Paper - Our the issues raised and help inform the development of a new energy strategy
Energy Future – for the UK, the Energy White Paper. This consultation, which closed on
Creating a Low 13 September 2002, received submissions from over 6 500 individuals and
Carbon Economy organisations The White Paper was published on 24 February 2003 and is the
first comprehensive, forward-looking statement of energy policy in the UK for
over 20 years.

A major underlying theme of the White Paper is the need for the country to
move towards a low carbon economy. To this end, the government has
accepted a recommendation made in the Royal Commission on Environmental
nd
Pollution’s (RCEP) 22 report in 2000 that the UK should put itself on a path to
a reduction in carbon dioxide emissions of some 60% from current levels by
about 2050, with real progress by 2020. (A formal response to the RCEP
report was published alongside the White Paper.) Other key messages
relating to energy efficiency in the White Paper include:
• Energy Efficiency will have a key role to play in achieving the UK’s carbon
reduction goals. The government expects more than half the emissions
reductions in the existing Climate Change Programme – around 10 MtC per
annum by 2010 – to come from energy efficiency. Further ahead, the
government believes that energy efficiency can contribute around half of
the additional 15-25 MtC savings likely to be needed by 2020.

3
• The current Energy Efficiency Commitment (EEC) runs until 2005. The
government will consult on an expansion of the EEC to run from 2005 to at
least 2008, possibly at twice its current level of activity. A possible
extension of the EEC beyond the domestic sector will also be considered.
• The government will continue to work with the English Fuel Poverty
Advisory Group to find the most effective ways to deliver the Fuel Poverty
Strategy objectives, including the target that no household in Britain should
be living in fuel poverty by 2016-2018.
• The government remains committed to a target of 10 GWe of good quality
combined heat and power being installed by 2010. Further measures will
also be introduced to help address the current market difficulties and
support the achievement of our target.
• The government will strengthen its analytical and strategic capabilities in
the field of energy policy to ensure that the aims it has set out in the White
Paper are delivered. This will be achieved through the establishment of a
Sustainable Energy Policy Network (SEPN) of departmental policy units.
The Department of Trade and Industry (DTI), the Department of
Environment, Food and Rural Affairs (Defra), the Foreign and
Commonwealth Office (FCO), Treasury, Office of the Deputy Prime
Minister (ODPM), the Department of Transport (DfT) and the Devolved
Administrations are all likely to be involved in this network.

See http://www.dti.gov.uk/energy/whitepaper/.

RESIDENTIAL/
COMMERCIAL

Measures already
Existing and/or
Being improved

Building Minimum legal requirements for the energy performance of new buildings have
Regulations been in force since 1965, with the standards tightened regularly every few
years. The current building regulations, which came into force in July 1995,
raised the minimum standard so that new buildings must be 25-35% more
energy-efficient than before.

In January 1998 the government commissioned a further comprehensive


review to explore the practical possibilities of regulating the existing stock of
buildings, as well as further improving standards for new construction. Special
consultation procedures were set up in order to involve all parts of the industry
and energy activists throughout the review process.

Proposals for revisions to the regulations were published in June 2000 for
further consultation. As a result, the government laid down the Building
(Amendment) Regulations before Parliament on 11 October 2001 (SI 2001 No
3335); the accompanying Approved Documents L1 and L2 that give guidance
on ways of meeting the requirements were published on 31 October 2001.
These changes came into effect on 1 April 2002. The new Regulations form
an important part of the Climate Change Programme and include a number of
enhanced features. New dwellings will be required to meet improved
standards of insulation and heating and a new standard for lighting. Different
routes to compliance are available, including the use, for housing, of the
Carbon Index Method, calculated following the SAP procedure (see below).
For buildings other than dwellings, similar improvements are required for
insulation and there are new requirements for heating, lighting and air-
conditioning, including the provision of energy meters, and testing and
commissioning. A Carbon Performance Rating Method is included in the
documents as a way of showing compliance for office buildings and there are
other ways of carbon accounting for other types of buildings.

4
Standard The Standard Assessment Procedure (SAP), introduced in July 1995, is the
Assessment government standard for home energy rating. Under the Building Regulations,
Procedure new dwellings and conversions in England and Wales have since 1995 been
(SAP) required to have a SAP Energy Rating. The government is also working with
mortgage lenders to encourage them to incorporate SAP energy ratings and
energy efficiency advice into their survey reports and to offer "green loans" or
other financial services to improve energy efficiency. The government is also
working with house-builders to encourage them to use high SAP ratings as a
means of promoting the achievements of those in construction already building
to high standards of energy efficiency and to encourage others to follow their
example. A new version of SAP was published in 2001, updating the
calculation tables and incorporating additional features such as an extended
scale (to encourage even higher standards) and a carbon index to be used for
the new Building Regulations (see above).

Energy To comply with EU directives on mandatory energy labelling for domestic


Efficiency appliances, the UK has instigated regulations for refrigeration appliances,
Labelling washing machines, washer-dryers and tumble dryers. Regulations requiring
labels for light bulbs have been in force since 1 July 1999 and for dishwashers
since 8 July 1999. An EC directive was adopted on 27 January 1998.

Energy Minimum energy efficiency standards for refrigerators and freezers have been
Efficiency in place since 3 September 1997 to comply with EU directives. Similar
Standards standards came into force for fluorescent lighting ballasts on 21 May 2002.

For new central heating boilers, a transitional period operated from 1 January
1994 to 31 December 1997 when manufacturers could supply compliant or
non-compliant boilers. From 1 January 1998, all boilers have to comply with
the requirements of the directive.

The new Climate Change Programme plans the development of energy labels,
standards and other product-related measures designed to deliver "market
transformation" in the energy efficiency of lighting, appliances and other key
traded goods.

Energy The Energy Saving Trust (EST) is an independent non-profit-making


Saving Trust organisation set up in 1992 by the UK government, British Gas and the British
public electricity suppliers to develop and manage new programmes to
promote the efficient use of energy in the domestic and small business
sectors. The Trust works to promote, through partnership, the sustainable and
efficient use of energy, spreading the message of energy efficiency through
advertising programmes, advice centres and the endorsement of energy
efficient products. The Trust is also active in promoting energy services, and
encouraging local authorities to develop energy efficiency strategies.

In April 2000, the Energy Efficiency Partnership for Homes was launched by
the Trust. The Partnership, which is facilitated by the Trust, brings together all
those with an interest in promoting domestic energy efficiency and aims to
create a long-term framework for implementing energy efficiency in homes.

Government funding for the Trust in 2002-03 was made up of over £24 million
for work with the domestic and small business sectors and over £29 million on
transport-related programmes. The Trust also levers in considerable sums of
investment from outside bodies – an estimated £75 million in 2000-01.

By March 2001, the Trust’s programmes had levered in a minimum of £350


million in investment from non-Departmental sources; stimulated some
300 000 installations of energy saving devices and provided advice and energy
services to over one million individuals and organisations. Between 1996 and
2001, government-funded EST programmes achieved energy savings of over
4 000 GWh.

5
In 2000, a review of the Trust's government funded programme concluded that
the Trust has a valuable contribution to make to the government's objectives in
promoting energy efficiency and that there was a continuing case for
government funding in pursuit of those objectives which cannot be made
through other funding sources. No major weaknesses were identified by the
review, which was carried out by Defra's in-house consultancy unit.

“Warm Front” -- Warm Front is a radical reshaping of the former HEES (Home Energy
New Home Efficiency Scheme) which it replaced on 1 June 2000. It offers complete
Energy Efficiency packages of home insulation and heating improvements to those households
Scheme most vulnerable to cold-related ill health. The package offered to a household
is tailored to the property type.

Warm Front has two levels of assistance, acknowledging that the poorer over-
60s are unlikely to see significant increases in income as in other groups. The
two levels are:

• Warm Front – for households with children under 16 and in receipt of an


income-related benefit or a disablement benefit. Some 4 million
households are eligible. The maximum grant is £700 for households using
mains gas, solid fuel, oil or off-peak electricity for heating. For households
using more expensive on-peak electric, bottled gas or paraffin for heating,
the maximum grant is £1 500.
• Warm Front Plus – for the over-60s in receipt of certain income-related
benefits. Some 3.7 million households are thought to be eligible. The
measures now include central heating systems for the main living areas.
The maximum grant is £2 500. Gas central heating systems are provided
to owner-occupiers and private rented tenants. Warm Front will meet all
installation and maintenance costs through the period of the lease.

The focus of the scheme reflects that the private sector has the greatest need,
with nearly 70% of the fuel poor. In the early part of the scheme assistance
was also made available to the social sector up to a maximum value of £45
million or support over two years whichever came sooner. No new
applications for support in the social sector were accepted after October 2001.

This is a devolved area and Warm Front operates in England only. Wales,
Scotland and Northern Ireland have their own programmes.

UK Fuel Among the most important policy initiatives in UK energy policy is the UK Fuel
2
Poverty Poverty Strategy launched by the government on 21 November 2001 . The
Strategy phenomenon of fuel poverty in the UK is the result of a combination of multiple
factors. The UK housing stock is the oldest in Europe, and especially older
residential buildings and houses are poorly insulated as well as difficult to
insulate. Low-income households spend a comparatively large part of their
budget on space heating in any case, but in addition they are drawn to the low-
rent, poorly insulated end of the housing market, which is more expensive to
heat than the average housing stock.

Hence, fuel poverty stems from many factors, including the state of the
housing stock, available income (including social security benefits) and its
distribution, as well as energy prices. The government has defined a fuel-poor
household as “one that cannot afford to keep adequately warm at reasonable
cost”, i.e. one that needs to spend more than 10% of its income on all fuel use
and to heat its home to an adequate standard of warmth. Adequate standards
of warmth are defined as 21 C in the living room and 18 C in the other
occupied rooms, in accordance with the temperatures recommended by the
World Health Organisation. Taking into account the above definition, the
number of fuel-poor households in England in 2000 was 3.9 million if housing

2
Department of Environment, Food and Rural Affairs (Defra), Department of Trade and Industry (DTI): The UK
Fuel Poverty Strategy. London, November 2001.

6
benefits were not included as part of income and 2.8 million if they were. In
1998, the same numbers were 4.5 million and 3.3 million, respectively on the
same basis. In 1996, the number of fuel poor households in the UK was
estimated to have been around 5½ million on the first basis.

Households inhabited by the elderly, by children and by the chronically sick or


disabled are particularly vulnerable to fuel poverty. In 2000, this vulnerable
group was estimated at 2.2 million to 2.4 million households if housing benefits
were included as part of income, and 3.1 million to 3.3 million if they were not.

The government has set out in its 2001 Fuel Poverty Strategy document how
it, and, in particular, DTI, Defra and the devolved administrations, intend to
reduce fuel poverty in the UK. The document sets a target to seek an end to
fuel poverty for vulnerable households by 2010. Fuel poverty in other, less
vulnerable households will be tackled once progress is made on the priority
group. The specific interim targets are:

• England: by 2004, the government aims to have assisted 800 000


vulnerable households through Warm Front to reduce the number of non-
decent social sector homes by one-third.
• Scotland: by 2006, the government aims to ensure that all pensioner
households and tenants in the social rented sector live in centrally heated
and well-insulated homes.
• Wales: by March 2004, the government aims to have assisted 38 000 likely
fuel-poor households through Warm Front in Wales.
• Northern Ireland: by 2006, the government aims to have assisted at least
40 000 households in fuel poverty through the new Warm Homes Scheme
and partnership programmes.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Avoid, where possible, using energy policy measures to pursue social and
other policy objectives. If this is unavoidable, clearly delineate the trade-
offs and costs of such measures.

The Market Transformation Programme is a policy research, development and


support programme funded by Defra to improve the availability, adoption and
use of domestic appliances and traded goods in the commercial sector that
use less energy and do less harm to the environment. To date, the programme
has established sector reviews in ten major sectors, covering 27 product
types, representing 75% of UK electricity consumption. It is also seeking to
develop and implement practical policy measures, such as mandatory energy
labels, minimum energy efficiency standards and voluntary agreements
negotiated with manufacturers within the framework of the European
Commission. Defra monitors the product sales changes resulting from this
programme.

Affordable Transco’s Affordable Warmth Programme aims to tackle fuel poverty by


Warmth helping registered housing associations and local authorities to install gas
Programme energy efficient heating systems in up to 1 million homes through the use of
lease finance.

This new approach, developed by Transco plc, the national gas pipeline
operator, required a change in the tax rules relating to the leasing of heating
equipment. The new rules mean that Affordable Warmth leases, which are
targeted at local authorities and Registered Social Landlords (RSLs), are a fuel
poverty/energy efficiency programme attractive to both landlord and tenant,
because the installation is cheaper (owing to the lease basis and capital

7
allowances) and can be financed more flexibly. Transco is redesigning the
financial framework which will allow a further reduction in cost. More
information can be found at www.affordablewarmth.co.uk .

Design The Design Advice Service offers professional, independent and objective
Advice advice on the energy-efficient and environmentally conscious design of
Service buildings. The service covers both new-build and refurbishment projects and
is part of the Action Energy programme managed by the Carbon Trust.

Are you doing The Are you doing your bit? multi-million pound publicity campaign was
your bit? launched in 1998 with the aim of motivating people to make small but
important behavioural changes in their everyday lives to benefit their local and
global environment. Simple campaign messages encourage individuals to
“Fight global change by saving energy” and to:

• Reduce local pollution by changing the way we travel.


• Reduce waste.
• Conserve water

In addition to encouraging individual action, the campaign, through its national


media presence and promotional activity, supports partners' initiatives by
raising the profile of environmental issues and providing a cohesive "umbrella"
branding. More information can be found at: www.doingyourbit.org.uk

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Pursue its involvement in the residential/commercial sector to promote


energy efficiency while avoiding duplication. Reinforce the energy
efficiency measures targeted at the commercial sector, in particular
offices.

PUBLIC SECTOR

Measures already The public sector – including central and local government, schools, hospitals
Existing and/or and universities – accounts for a relatively small percentage of the UK’s total
Being improved greenhouse gas emissions, less than 5%. It has a responsibility to lead by
example in reducing emissions of greenhouse gases and is subject to the
climate change levy. This gives an added impetus for managers to ensure
that energy is used efficiently.

A number of energy consumption targets have been set for the public sector.

Central The government set a target for reducing energy consumption in its own
Government buildings by 20% on 1990/91 levels. By March 2000, savings of 17% had been
made, equivalent to just over 0.3 million tonnes of carbon. The government
has now set a new target of reducing CO2 emissions from its estate by 1% a
year against 1999-2000 levels and expects to introduce a new energy savings
target in due course, based on the results of the current exercise to
benchmark its estate.

Education UK Climate Change Programme gave a commitment to benchmark schools


and improve their energy management over a five-year period. It is expected
this will lead to 10% energy savings, equivalent to a reduction of 0.16 million
tonnes of carbon over the next nine years.

Health The government has set a mandatory target for National Health Service (NHS)
Sector bodies in England to reduce primary energy consumption by 15% of 2000
levels by 2010 (equivalent to 0.15 million tonnes of carbon).

8
Local Authorities

Home Energy The Home Energy Conservation Act (HECA) 1995 requires all UK local
Conservation authorities with housing responsibilities to prepare, publish and submit to the
Act 1995 Secretary of State, an energy conservation report identifying energy
conservation measures which they consider practicable, cost-effective and
likely to result in significant improvement in the energy efficiency of all
residential accommodation in its area. Significant improvement was defined in
guidance as 30% (34% in Northern Ireland) over ten years from an agreed
baseline of either April 1996 or April 1997. Authorities have developed their
strategies and set targets for improving energy efficiency. Using the help and
guidance available through central government programmes, and by building
on their existing activities and developing partnerships, authorities are now
implementing the measures identified in their strategies and reporting on
progress being made. In the first four years to March 2000, authorities
reported an overall energy efficiency improvement in the domestic sector of
just over 6%.

Energy The Energy Saving Trust is establishing effective methods for generating
Saving interest, capacity and action within local authorities to enable them to take
Trust forward the challenges raised by HECA and the climate change programme.
The Trust’s programme is designed to identify and pilot a range of support
activities for local authorities, including infrastructure support and grant
funding, and to enable and encourage local government to work with the
private sector to generate local consumer activity.

INDUSTRY

Measures already
Existing and/or
Being improved

The Carbon The industry-related elements of the UK Climate Change Programme focus on
Trust the Carbon Trust to deliver carbon savings from business.

The aim of the Carbon Trust is to help the UK move towards a sustainable, low
carbon economy whilst maintaining business competitiveness. In the short-
term, the organisation will concentrate on helping business save energy and
money. In the longer term, it will develop the UK’s capacity to meet the
problems of climate change, considering not only commercial and
technological factors but also wider socio-economic factors that hinder the
move towards a low carbon economy.

The Trust’s first year’s funding is up to £50 million, from Climate Change Levy
receipts and from the government’s Energy Efficiency Best Practice
Programme (EEBPP). The Trust has taken over the non-domestic part of the
EEBPP, and is now the UK’s main energy efficiency information, advice and
research programme for organisations in the public and private sectors. The
Carbon Trust also administers and promotes the government’s Enhanced
Capital Allowance (ECA) scheme for energy saving technologies that has been
operational since April 2001.

Climate The Climate Change Levy (CCL), effective from 1 April 2001, was introduced
Change on energy use in the non-domestic sector (industry, commerce, agriculture and
Levy (CCL) the public sector). Its aim is to encourage energy efficiency and help meet the
United Kingdom's targets to reduce GHG emissions. It applies to gas,
electricity, liquefied petroleum gas (LPG) and coal. The rates of the levy are
based on the energy content of the different energy products. They are
equivalent to 0.43 p/kWh for electricity, 0.15 p/kWh for gas, 1.17 p/kilogram for
coal and 0.96 p/kilogram for LPG. Fuel oils do not attract the levy as they are

9
already subject to hydrocarbon oil duty. The levy is added to energy bills
before VAT is applied.

Residential energy users, charities and very small businesses (using domestic
amounts of energy) are exempt from paying the levy. There are also further
exemptions for transport, for the production of taxable commodities and
hydrocarbon oils, use in "good quality" combined heat and power plants, and in
non-fuel uses. Energy-intensive businesses can reduce their levy payments by
participating in voluntary Climate Change Agreements. Companies can obtain
an 80% discount if they enter into Climate Change Agreements that extend for
a period of 12 years. There is a separate 50% discount for a period of up to
five years for horticultural producers. The levy package, including the Climate
Change Agreements, is expected to save at least 5 million tonnes of carbon
per year by 2010.

The revenues generated from the levy are recycled back to businesses via a
0.3 percentage point cut in the main rate of employers’ National Insurance
Contributions and additional support for energy efficiency measures. The
government calculates that there will be no net gain to the public finances from
this reform. The levy package as a whole will be broadly neutral for the
manufacturing and service sectors of the economy. The revenues also provide
money for improving business energy efficiency. The sum of £50 million was
available under the levy package in 2001-02 to support the provision of energy
efficiency advice, promoting the take-up of low carbon technologies and the
promotion of renewable energy projects. A further £70 million in 2001-02 was
allocated to finance a system of 100% first-year enhanced capital allowances
(ECAs) against tax for firms making energy saving investments. This was
increased by £20 million in the 2002-03 budget, although this includes support
for both energy-saving technologies and low-emission vehicles and fuel
infrastructure. The scheme is worth around £200 million in the period 2001-
2003, depending on take-up.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Consider again modifying the Climate Change Levy to reflect the carbon
content of fuels.

Climate The Climate Change Agreements between energy-intensive sectors of industry


Change and the Secretary of State are a recent policy mechanism to achieve
Agreements environmental objectives. In return for agreeing and meeting stringent targets
to reduce energy consumption or emissions, these sectors are entitled to an
80% reduction in the Climate Change Levy. Eligible for entry to agreements
are all users that operate processes subject to regulation under the Integrated
Pollution Prevention and Control (IPPC) directive, as implemented by the
Pollution Prevention and Control (England and Wales) Regulations 2000 (or
sites operating processes that would be subject to such regulation but for the
fact that they fall beneath the relevant threshold, except for combustion plants)

The rationale for this eligibility criterion is that the processes in question are
subject to a regulatory requirement to use energy efficiently. This requirement
does not apply to other non-domestic energy users. The levy discount is
designed to maintain the competitiveness of the energy-intensive sectors while
providing an incentive at the margin to improve efficiency further. The eligible
sectors cover all the main energy-intensive sectors of industry that are subject
to international competition.

Currently there are 44 sector level (“umbrella”) agreements with 40 industry


sectors. Some of these sector associations have a number of agreements to

10
cover specific industry sub-sectors. Around 5 500 “underlying agreements”
have been concluded with participating companies. The agreements cover
around 13 000 individual facilities, and more sites are joining.

Facilities that are covered by a Climate Change Agreement are entitled to pay
the reduced rate of Climate Change Levy until the end of March 2003. At the
time of writing (February 2003) sectors are being assessed on target
performance for the first “milestone” period of each agreement. Company
energy efficiency data have been supplied via sector organisations and will
permit actual energy savings to be compared against milestone targets. In this
process companies are required to report the performance of their facilities to
the relevant sector association. The sector associations will in turn report
performance to the Department of the Environment, Food and Rural Affairs
(Defra). Also, throughout the course of the agreements, the data are subject to
independent audit by auditors acting on behalf of the Secretary of State. Defra
undertook an informal progress review in January and February 2002 to
ensure that robust sector data processing systems were in place. This has
been repeated in January/February 2003.

The sector performance will be tested against the sector target adjusted for
exits and entrants, carbon trading under the UK Emissions Trading Scheme,
where applicable, product mix and/or throughput. If the sector (or sub-sector)
has failed to meet this adjusted target, the individual facilities will be assessed.
If the target has not been met, the relevant facilities will not be required to
leave the agreement. They can remain within the agreement, but they will not
be eligible for the levy discount for the next two-year certification period. If the
facilities catch up with projected energy savings targets at the next review
stage, then they can be re-certified and will, once again, pay the levy at the
reduced rate. In specific and isolated cases where regulatory or planning
requirements imposed by the government have prevented the facilities from
meeting their targets participants may be allowed to retain Levy discount.
However, the facilities will still need to demonstrate that they have made
satisfactory progress and that they have met qualitative requirements such as
the development of an energy management plan.

Companies that have entered into Climate Change Agreements will be able to
use the Emissions Trading Scheme to help them meet their emission targets.
Emissions trading is expected to be the principal mechanism for dealing with
fluctuations in performance within each target period. The agreements will
therefore have an important role to play in establishing emissions trading in the
UK as the agreements cover around 60% of the energy used by manufacturing
industry.

Facilities are also subject to audit requirements by other environmental, tax


and trading regimes e.g. by Defra for Combined Heat and Power Quality
Assurance, by the Environment Agency for Integrated Pollution Prevention and
Control (IPPC), by HM Customs and Excise for payment of the levy, and by
independent verifiers for trading. It is the government’s intention to co-ordinate
these regimes to avoid duplication of effort by both operators and auditors and
to minimise the need for data collection, recording and inspection.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Consider again eliminating restrictive definitions limiting the eligibility of


industries for voluntary climate change agreements, as well as incentives
and possibilities for free-riding.

11
Enhanced Using experience gained in other European countries, the UK introduced on
Capital 1 April 2001, a system of Enhanced Capital Allowances. While most capital
Allowances expenditure in the UK can be written off against capital allowance on a
Scheme reducing balance basis, energy-saving investments eligible under ECA allow
100% first year allowances against taxable profits in the first year of
expenditure. Initially, the scheme covers eight technologies: CHP, boilers and
add-ons, pipe insulation, motors, variable speed drives, lighting, refrigeration
and thermal screens. The technologies and criteria will be reviewed annually
and the Energy Technology Product list updated monthly. Administered jointly
by the Carbon Trust and the Inland Revenue, the scheme will be worth around
£70 million in 2001-2002 and £130 million in 2002-03, depending on take-up.
For more information see: www.eca.gov.uk

Energy The Energy Efficiency Best Practice Programme (EEBPP) launched in 1989
Efficiency was the UK's main energy efficiency information, advice and research
Best Practice programme. In July 2002 the programme was split into domestic and non-
Programme domestic sectors that are now managed by the Energy Saving Trust and the
(EEBPP) Carbon Trust respectively.

The EEBPP had a target, set in 1989 and subsequently upgraded, to stimulate
annual energy efficiency savings worth £800 million at 1990 prices, equivalent
to 5 million tonnes of carbon (MtC) a year by 2000, 4.5 MtC of which is in
industry and 0.5 MtC. In the residential sector; EEBPP supports the Negotiated
Agreements and its targets are thus linked with achievement of the sector
targets; it also assists those organisations subject to the full Climate Change
Levy in mitigating its effects.

The Programme web site http://www.energy-efficiency.gov.uk/ is continuously


updated and receives an increasing number of visits, about 50 000 per month
to the database. Five thousand users have registered.

European The success of the Best Practice approach to preparing and delivering
Best independent, high quality information and advice has been recognised
Practice throughout the world. Australia, Brazil, Canada, China, and New Zealand have
Initiative all adopted elements of the idea and adapted them to local conditions. More
recently, the European Community has taken up the idea. Building on a
feasibility study led by the UK and with major contributions from seven EU
countries to test the best approach on a European scale, a pilot phase,
supported by the EC SAVE Programme, and by national contributions will
focus on Europe-wide benchmarking of processes and on an international
Extranet linking energy agencies. Fourteen countries are participating,
including some EU Accession States.

Making a The voluntary Making a Corporate Commitment Campaign (MACC) was


Corporate launched in 1991 with the aim of obtaining top management commitment to
Commitment responsible energy management. MACC2 was launched by Michael Meacher,
Campaign Minister for the Environment in June 2000. MACC2 is a way of helping
(MACC) organisations improve their resource efficiency and environmental
performance in a managed, targeted and transparent way. It is designed to
work equally well in industrial, commercial and public sector organisations. By
signing up to MACC2, organisations are making a commitment to improve
their performance on:

• Greenhouse gas emissions.


• Production of waste.
• Consumption of water.

Organisations signing up to MACC2 commit themselves to:

• Publicly declare their commitment to achieve specific improvement targets.


• Register their commitment.
• Agree to make their commitment and targets public.

12
• Agree to report annually on their progress towards meeting their targets.

Eco- The EC Eco-Management and Audit Scheme (EMAS) is a Europe-wide


Management voluntary registration scheme launched in April 1995. It provides businesses
and Audit engaged in manufacturing, waste management, power generation and mining
Scheme and quarrying, with the opportunity of obtaining public recognition for a
(EMAS) commitment to improve their environmental performance. Participating
companies are required to implement an environmental management system
and produce an independently validated public statement about their progress.

Guidelines for These guidelines were designed to help and encourage companies to
Company measure and report publicly on their greenhouse gas emissions from energy
Reporting on consumption, transport and industrial processes. They provide guidance on
greenhouse gas sources of emissions, how to gather the data, and also how to convert the data
emissions (for example, from electricity bills) into CO2 equivalents. The guidelines
encourage companies to set public targets for emissions reductions, and since
their launch in 1999, have become widely used amongst the growing number
of companies that produce environmental reports.

See http://www.defra.gov.uk/environment/envrp/index.htm for a copy of these


and other guidelines on environmental reporting.

Action Action Energy is the main source of energy efficiency advice and support for
Energy business and the public sector in the UK. When the Carbon Trust took over
management of the non-domestic part of the EEBPP they relaunched it as
Action Energy. As well as providing all of the services available under the
EEBPP, including site visits and access to the extensive library of energy
efficiency literature, they have since added an interest-free loan scheme for
Small to Medium sized Enterprises to help towards energy efficiency projects.
Loans of between £5 000 and £50 000 (repayable over five years) are
available to help SMEs overcome the initial costs of energy efficiency projects.

See http://www.actionenergy.org.uk/ for further information.

Environmental Envirowise, formerly the Environmental Technology Best Practice Programme


Technology (ETBBP), was launched in 1994. It promotes the use of better environmental
Best Practice practices that reduce business costs for industry and commerce, and provides
Programme all sectors with information and advice on environmental technologies and
techniques by means of publications, events and a free Environmental
Helpline. The programme's projected budget, shared between Defra and DTI,
is £54 million over the 13 years to 2006/7. The overall target for the
programme is that it should stimulate annual cost savings for industry of £580
million by 2015.

Energy Both gas and electricity suppliers have a statutory responsibility to provide
Efficiency energy advice to consumers. The Energy Efficiency Commitment (EEC)
Commitments implemented from April 2002 replaced the previous programme known as the
Energy Efficiency Standards of Performance, EESOP; according to these
programmes, gas and electricity suppliers are required to encourage or assist
domestic customers to take up energy efficiency measures. The Utilities Act
2000 transferred responsibility for the EEC from the Regulator to the
government. The Energy Efficiency Commitment should provide a challenge
to energy suppliers while stimulating, in a sustainable way, the development of
the energy efficiency industry. By directing 50% of the energy benefits to a
priority group of low-income consumers, it will help reduce fuel poverty.

The overall target for the Commitment is 62 TWh, with 50% of the energy
savings being targeted at customers receiving benefits or tax credit. The EEC
will cut greenhouse gas emissions by around 0.4 MTC a year by 2005. The
Regulator's role is to administer the Commitment, apportion the overall target
to each supplier, determine which energy efficiency measures qualify and the
savings attributable, and monitor suppliers' performance against their targets.

13
The government has indicated in its Energy White Paper a desire to consult on
extending the Commitment to 2008, at possibly twice its current level of
activity, and beyond the bounds of the domestic sector.

See http://www.defra.gov.uk/environment/energy/eec/ for further details.

Combined In 1993 the government set a target of 5 000 MW installed capacity as part of
Heat and the Climate Change Programme. In 2000, CHP qualifying power capacity
Power (CHP) exceeded 4 600 MW on over 1 500 sites, and was expected to be 5 000 MW
by the end of 2001. While just under 50% of the CHP installations in the UK
are small plants, with an electrical qualifying power capacity of less than
100 kW, schemes larger than 10 MW account for over 80% of the total CHP
installed electrical capacity. In 2000, 6% of the total electricity generated in the
country came from CHP schemes. The government has set a target of
10 000 MW of CHP capacity by 2010 as an important part of the Climate
Change Programme. It has introduced a number of measures to promote CHP
power plants:

• The CHP Quality Assurance (CHPQA) programme certifies the energy


efficiency and environmental performance of CHP schemes; it exempts
"good quality" CHP. Over 1 200 CHP schemes have registered for CHPQA,
900 of which have been certified. Good Quality CHP is exempt from the
Climate Change Levy (subject to State Aid clearance), eligible for
Enhanced Capital Allowances on investment in energy saving technologies,
and exempt from business rates of the electricity generating plant and
machinery in CHP schemes.
• Recent high gas prices and low electricity prices (which have fallen partially
as a result of the implementation of the New Electricity Trading
Arrangements) have created commercial difficulties for CHP. A draft
government CHP Strategy addressing the market conditions affecting CHP
and outlining the contribution of existing and possible new measures was
consulted on in 2002.

Other new developments to encourage greater use of CHP include:

• The new £50 million UK-wide Community Energy Programme which aims
to promote community heating through grants to install new schemes and
refurbish obsolete infrastructure and equipment. This aims to benefit up to
100 000 people, mostly on low incomes, while contributing to reductions in
greenhouse gas emissions.
• The Revision of Planning Policy Guidance Note 3: Housing, June 2000,
which provides some leverage for local planning authorities to encourage
developers to explore the feasibility of energy efficient options, including
newly built CHP/district heating.
• That power station developers who are seeking consent under the
Electricity Act 1989 and the Energy Act must now demonstrate that they
have explored the opportunity for CHP and sought to identify heat loads for
the waste heat.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Consider again extending voluntary agreements to cover all larger


industries, and consider including small and medium-sized industries.

The exemption under the Climate Change Levy and inclusion in the Enhanced
Capital Allowances Scheme conform to this recommendation

In the Performance and Innovation Unit (PIU Review), combined heat and

14
power (CHP) was seen as a low-cost option for carbon abatement, but not
zero carbon. In the long term, it would benefit from policies that put a price on
carbon. The report suggested that current market and institutional barriers to
CHP should be removed.

Further measures were introduced in the Energy White Paper, which will be
taken into account in the final CHP Strategy. The government proposes to
issue this later this year.

TRANSPORT

Measures already
Existing and/or
Being improved

White The government’s White Paper on the future of transport: A New Deal for
Paper 1998 Transport: Better for Everyone, July 1998, recognised that the environmental
impacts of the growth in road traffic may be a threat to sustainable
development and emphasises the need to reduce those impacts.

Three key themes to emerge from the White Paper relevant to climate change
were:

• Improving fuel efficiency of road transport, for example through increases in


road fuel duties.
• Reducing car dependence, especially in urban areas, through better
planning and promotion of public transport, cycling and walking.
• Recognising that measures may be needed to manage or restrain road
traffic, especially in urban areas.

The government is also concerned about the environmental impacts of the


rapid growth of air transport.

Transport 2010, Transport 2010, the 10-Year Plan designed by the Department for
the 10 Year Plan Environment, Transport and the Regions and published in 2000 is an
investment plan for delivering the White Paper commitment to an integrated
transport system. The Plan focuses on surface transport, and improvements
in surface access to ports and airports.

The 10-Year Plan is a key part of the government's Climate Change


Programme. It is expected to deliver savings of 1.5 MTC per annum by 2010.
The Plan aims to tackle congestion and pollution by improving all types of
transport – rail and road, public and private – in ways that increase choice. The
Plan sets the strategic framework. Individual projects and programmes will
flow from decisions taken by a variety of agencies, the private sector, and
through Regional Transport Strategies and Local Transport Plans.

The 10-Year Plan envisages the necessary level of investments, total private
and public expenditure, to be £180 billion over the next ten years. The
breakdown is as follows: public investment: £64.7 billion, private investment:
£56.3 billion, public resource/revenue: £58.6 billion. The Plan sets the strategic
framework, and individual projects and programmes are to flow from decisions
taken by a variety of agencies, the private sector, and through Regional
Transport Strategies and Local Transport Plans, as well as public and private
partnerships.

All modes of transport will benefit from this massive new investment. Spending
on railways will total £60 billion, spending on roads, local and national, will total
£59 billion and local transport spending will also be increased substantially to a
ten-year total of £59 billion.

15
The Plan includes a wide range of measures that will help to reduce
greenhouse gas emissions, including:

• Sustainable distribution strategy involving both central and local


government and the haulage/logistics industry. The strategy is designed to
promote improvements in operational and fuel efficiency of the vehicle
fleet, in particular payload (tonnes per loaded vehicle kilometre) and empty
running (ratio of total vehicle kilometres to loaded vehicle kilometres).
• Eighty per cent growth in rail freight volumes as a result of improvements
in rail freight’s relative competitiveness through reductions in rail costs and
improvements in service quality. Electricity used for traction by rail freight
operators is also exempt from the climate change levy.
• Substantial improvements in local public transport, including up to 25 new
rapid transit lines in major cities and extensive bus priority schemes. The
Plan assumes that congestion charging schemes are introduced in central
London and eight other cities, and that workplace parking levy schemes
are introduced in 12 cities. We have also assumed that all net revenues
are recycled into transport improvements in the urban areas concerned.
• The delivery of a 50% increase in rail patronage, measured by passenger
kilometres – just under a quarter of which is forecast to come from car
users switching to rail because of reductions in fares and service quality
improvements; and the development of reliable, convenient and affordable
public transport services and better integration between modes.

Vehicle The increase in carbon dioxide emissions from traffic growth has been
Fuel compounded by the limited improvements in vehicle fuel efficiency, especially
Efficiency for passenger cars, since the mid-1980s.

Although there have been substantial improvements in engine efficiency during


the past decade, these have partly been offset by the effects of greater vehicle
weight, due to increased size, better safety standards and the provision of
additional features, such as air conditioning, some of which also require power
to operate them as well as meeting increasingly stringent European emissions
standards.

A significant improvement in vehicle fuel efficiency is essential for delivery of


the UK’s climate change targets. A sustainable market transformation is
therefore needed to stimulate the development, manufacture and purchase of
more fuel-efficient cars. This transformation must involve action to introduce
more fuel saving technologies into vehicle design and to encourage
consumers to buy more fuel-efficient cars.

The government is committed to encouraging a market transformation for


passenger cars through a combination of fiscal measures, the European
Voluntary Agreement with automotive manufacturers and through ensuring
that consumers have the information they need to choose more fuel-efficient
vehicles.. The future trend in the fuel efficiency of new cars is also one of the
government’s sustainable development indicators

European The European Voluntary Agreements with European, Japanese and Korean
Voluntary vehicle manufacturers will reduce new car CO2 emissions by 25% to 140g
Agreement to CO2/km by 2008 (2009 for KAMA, the Korean manufacturers association). The
reduce CO2 voluntary agreements have proved a highly effective mechanism for improving
emissions from the fuel efficiency and CO2 performance of new cars. They have provided
new cars manufacturers with a stable long-term framework within which to plan,
research and introduce fuel saving innovations. This approach, which focuses
on the levels of carbon emitted rather than on dictating particular technologies,
gives manufacturers the flexibility to develop the best and most cost-effective
solutions.

The government is supporting the aims of the agreements through the UK’s
taxation system and through other schemes to encourage people to buy more

16
fuel-efficient cars. It is estimated that the voluntary agreements, along with the
changes to vehicle excise duty and company car taxation outlined below, will
result in savings of around 4 MtC by 2010.

Powering The UK Powering Future Vehicles strategy was launched in July 2002. The
Future strategy – which was produced jointly by DfT, Treasury, Defra and DTI – is
Vehicles aimed at promoting the UK’s shift to low-carbon vehicle technologies and
fuels, to reduce transport’s impact on the global and local environment.

It sets out government targets that by 10% of new cars sold in the UK by 2012
will be low-carbon vehicles, defined as 100 or less grams of CO2 per km at the
tailpipe (compared with the current new car average of 178gm). It also sets the
target that by 2012, 600 new buses joining the fleet yearly (around 20%) will
also be low-carbon.

The government is supporting the shift to low-carbon by linking our


mainstream vehicle taxation, i.e. the graduated vehicle excise duty introduced
in 2001 and graduated company car taxation, introduced in 2002, CO2
emissions.

Delivering these objectives involves more than one part of government, and
the Prime Minister has set up a Ministerial Low Carbon Group to oversee the
delivery of the low-carbon agenda. The Ministerial Group will report annually to
Parliament.

The strategy looks further forward to the long-term shift to ultra-low carbon
vehicles and ultimately to zero emission transport. The government will put in
place further targets beyond the decade, accelerating the shift towards
technologies such as hydrogen fuel cells.

Economic The government is using the taxation system to support the aims and
Instruments objectives of the EU CO2 from cars strategy and to encourage consumers to
buy smaller or more fuel-efficient vehicles.

One measure, which has already delivered reductions in emissions from road
transport, is the fuel duty escalator – annual fuel duty increases above the rate
of inflation. The escalator was introduced in 1993, first at an annual rate of 3%
above inflation and then at 5%. It was increased to 6% in July 1997 and has
been very successful. It sent a clear signal to manufacturers to design more
fuel-efficient vehicles, and to motorists to avoid unnecessary journeys and to
consider alternatives to the car. Taken in isolation, increases in duties between
1996 and 1999 are estimated to have produced annual carbon savings of
between 1 and 2.5 MtC by 2010.

The Chancellor announced in his 1999 Pre-Budget Report that the appropriate
level of fuel duties would be set on a Budget by Budget basis, taking account
of the government’s economic, environmental and social objectives. Revenues
from any real increases in fuel duty will go into a fund to be ring-fenced for
improving public transport and modernising the road network.

Cars registered on or after 1 March 2001, are subject to graduated vehicle


excise duty (VED, an annual tax on road vehicles) based upon CO2 emissions.
Vehicles powered solely by electricity are exempt from VED and new gas
powered vehicles benefit from a small discount of £5 to £10. Diesel cars with
lower carbon dioxide emission rates than similar petrol cars pay a small
supplement to compensate for the fact that diesel cars may emit higher levels
of particulates and other local air pollutants such as NOx. It is these pollutants
that pose the greatest challenge in terms of meeting the UK’s air quality
standards. Budget 2002 announced the introduction of a new low carbon VED
rate for cars that emit less than 120 g/km of CO2. This increases the VED
differential between the least and most polluting cars to up to £100 per year.

17
Under Budget 2002 the new low rate of VED for cars producing less than 120
g/km CO2 is £60/year for cars using alternative fuel, £70/year for cars using
petrol and £80/year for cars using diesel.

The government also developed proposals for a comprehensive reform of lorry


VED, to reflect better the environmental and track costs of different lorries. The
proposals were welcomed by the road haulage industry. As a consequence,
the government’s 2001 budget introduced a new system of lorry VED that
came into effect on 1 December 2001. These rates reduce the total burden
that lorry VED imposes on the haulage industry, while at the same time
improving the environmental signals that hauliers face by encouraging the use
of lorries that cause less road damage and pollution. As a result of these
reforms, UK lorry VED rates are amongst the lowest in Europe for the cleanest
and least-damaging lorries.

Additionally, heavy goods vehicles fitted with certain emission reduction


technologies, e.g. particulate traps, or converted to natural gas, have for some
time benefited from lower VED rates under the Reduced Pollution Certificate
scheme. However, the government wants to go further in improving the
environmental signals from the VED system and therefore plans to offer
reduced VED rates for lorries meeting the new Euro IV standard from around
2004. The government also issued new motorcycle VED rates, reformed the
company car tax and fuel scale charges for fuel provided for private use, and
developed proposals for lorry road user charging.

From April 2002, the existing system of company car tax, based on 35% of the
car's price, subject to business mileage and age-related discounts, will be
abolished. The new system will apply to all company cars, including second
company cars. Company cars first registered after January 1998 are to be
taxed on a percentage of their list price according to one of 21 carbon dioxide
emission bands, measured in grams per kilometre (g/km). The reform will
remove the perverse incentive in the current system to reduce the tax due by
driving unnecessary, extra business miles and it will provide a significant
incentive to company cars drivers to choose more fuel-efficient vehicles.

It is estimated that the CO2-based reforms to VED and company car taxation,
along with the European-level voluntary agreements with car manufacturers,
will result in savings of around 4 million tonnes of carbon a year by 2010.

Awareness The impact of the economic instruments is reinforced by a range of initiatives


Raising and to raise public awareness and to change the behaviour of individuals and
Information businesses. These include the TransportEnergy Best Practice programme
(TEBPp) Motorvate (see below) and the "Are your doing your bit?" campaign.
The TEBPp provides a range of information and services to help organisations
develop and implement green fleet management practices and travel plans.
These include free guides and videos, case studies containing practical
information on how to implement measures and the availability of free, on-site
advice from expert advisors to help with establishing travel plans and green
fleet management strategies.

The strategy for action in the transport sector is being underpinned by the
government’s "Are you doing your bit?" campaign. This major publicity
campaign aims to help raise people’s awareness of the issues by encouraging
people to use their cars less and by conveying wider messages relating to the
impact on fuel consumption of driving more smoothly and better car
maintenance. The government is spreading these messages through a variety
of different media, including TV and radio advertisements, high profile
promotions in the national press, poster sites and bus side ads, and in
literature sent out by the Driver and Vehicle Licensing Agency and the Driving
Standards Agency.

18
Motorvate In 2000 the UK government launched a green fleet certification scheme known
as Motorvate designed to help UK business cut CO2 emissions and make
considerable savings on their fleet costs. Company cars make up nearly half
of all new car sales in the country and therefore have a knock-on effect on the
second-hand market. Improving the fuel efficiency of the business vehicle fleet
could therefore have significant impacts on the environment while helping UK
business to improve profitability; an average fleet of 200 vehicles can save
£34 000 a year by meeting Motorvate targets.

Companies can sign up for Motorvate for a modest fee to reduce their fleet
CO2 emissions by at least 12% over three years. For their membership fee
they receive fleet management guidance, a telephone advice service, on-site
assistance and public recognition for achieving an environmental reward.
Further details can be found at www.greenerfleet.org.uk

Developing and The Energy Saving Trust supports the development of markets for cleaner fuel
promoting new vehicles through its TransportEnergy PowerShift initiative. PowerShift
technologies and provides grants towards the additional cost of purchasing gas, hybrid and
alternative fuels battery electric vehicles. The initiative has been running since 1996 and by the
end of the 2002 FY had part-funded the purchase of over 12 000 vehicles.

In addition TransportEnergy also manage the New Vehicle Technology Fund


(NVTF), which has a budget of £3 million for 2002-2003. The NVTF provides
grants to demonstrate innovative low carbon vehicle technologies, as set out in
the Powering Future Vehicles Strategy

The NVTF is not limited to specific technologies and it supports any vehicle-
based technology with the potential to deliver significant lifecycle carbon
savings and to become a commercially viable product within a maximum of
five years.

Transport Land use planning will be vital in changing the way people travel, both now and
Planning in the future. In line with national guidance, locating development where it can
be easily accessible on foot, by bicycle and public transport will allow people to
make sustainable transport choices. It will also help to increase the
effectiveness of other transport policies that are designed to reduce the
amount of trips made by car. Town centres and retail development include a
sequential approach to choosing sites for retail, leisure and other town centre
uses. The first preference should be for town centre locations, followed by
edge-of-centre sites, district and local centres and, only then, out-of-centre
sites in locations that are accessible by all forms of transport. The revised
PPG13 on transport aims to integrate land use planning and transport at a
national, regional and local level to promote sustainable transport choices and
to reduce the need to travel, especially by car. This note advises that major
travel generating development should be located where it offers a choice of
transport modes.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Enhance the efforts to curb the energy consumption and CO2 emissions
from the transport sector. To achieve this, the government should
implement its 10-year Transport Plan swiftly and according to schedule,
with an emphasis on reducing greenhouse gas emissions and improving
energy efficiency.

MONITORING/ The UK sets targets for its government programmes and undertakes regular
ASSESSMENT monitoring to ensure that value for taxpayers’ money is maintained. Impact
Assessments are undertaken each year to measure the effectiveness of the

19
Programmes in stimulating energy savings. For example, the Impact
Assessment of the Energy Efficiency Best Practice Programme has shown
that the programme has helped stimulate savings in UK business and the
public sector worth about £750 million p.a. – equivalent to around 4 million
tonnes carbon a year. These savings have been achieved at a cost to the
taxpayer of a few tens of pounds per tonne.

The PIU report based on assessments of most of the energy efficiency


programmes and measures is a striking example of this government concern.
To get money from the Treasury, the government authorities in charge of
implementing the various energy efficiency programmes have to report to it on
the progress achieved.

Under the Climate Change Programme, the new programmes dealing mainly
with energy efficiency will generally have to report progress regularly against
interim targets towards the UK's Kyoto target (and the UK government's own
20% carbon reduction target for 2010). Some of the programmes involve tax
discounts (e.g. the Climate Change Levy) so will be subject to close scrutiny by
the tax authorities.

Energy efficiency policies are also assessed by some independent non-profit


organisations, such as the Green Alliance or the Association for the
Conservation of Energy, which formulate recommendations to improve their
effectiveness.

In addition, follow-up studies are regularly commissioned to monitor the


success of specific initiatives and to guide future activities.

In the 2002 in-depth review of the energy policies of the United Kingdom, the
IEA stated:

The Government of the United Kingdom should:

• Continue the systematic monitoring and evaluation of energy efficiency


programmes and use the results to enhance the quality of new and
existing measures and programmes.
• Review carefully the practical potential of energy efficiency policies to curb
energy consumption. Clarify the costs of specific policy measures.

Further For further information, please contact:


information
Pete Gorman
SEP8 – International, Sustainable Energy Policy
DEFRA
Ashdown House
123 Victoria St
London SW1E 6DE
Tel: +44 (0)207 944 6682
Fax: +44 (0)207 944 6559
E-mail: pete.gorman@defra.gsi.gov.uk

20
(QHUJ\
IEA (IILFLHQF\
8SGDWH

UNITED Updated November 2002


STATES
NATIONAL Responsibilities for energy efficiency policies are divided among the federal
ENERGY POLICY government, the state and municipal governments. The United States Federal
government has issued a series of national energy strategy papers. The most
recent strategy document -- the new National Energy Policy referred to as
the "NEP" -- was issued in May 2001. The NEP is a plan designed to help
bring together business, government, local communities and citizens to
promote dependable, affordable, and environmentally-sound energy for the
future. The NEP contains 105 policy recommendations addressing energy
supply, energy efficiency and conservation, infrastructure, and also initiatives
to strengthen global alliances. Fifty-four of the recommendations are related to
energy efficiency and renewable energy. More than 23 recommendations are
specifically targeted at improving energy efficiency. The entire report is
available at: www.whitehouse.gov/energy.

In the 2002 in-depth review of the energy policies of the United States the IEA
stated:

The Government of the United States should:

x Persevere with the development and implementation of the National


Energy Policy to ensure that the eventual outcome is a new and coherent
expression of US energy policies, instruments and programmes.
x Establish a stronger foundation for energy efficiency programmes by
continuing to:
- Improve the statistical basis for developing policies and programmes.
- Assess improvements in energy efficiency that are being achieved
without government intervention to set benchmarks for evaluating the
cost-effectiveness of existing and proposed policies.
- Improve transparency of information on energy consumption, energy
costs, and efficiency-enhancing products for consumers.
- Give attention to the potential energy security benefits of energy
efficiency measures.

CLIMATE
CHANGE POLICY

National The first national communication entitled Climate Action Report — Submission
Communications of the United States of America under the UN Framework Convention on
Climate Change was published in October 1994.

The second national communication entitled Climate Change Action Report –


1997 Submission of the United States of America under the United Nations
Framework Convention on Climate Change was published in July 1997.

The third national communications entitled U.S. Climate Action Report -- 2002
was released in June 2002. The US third national communications reports
that US climate change programmes reduced the growth of greenhouse gas
(GHG) emissions by an estimated 240 teragrams (million metric tons) of CO2
equivalent in 2000 alone. The report can be electronically downloaded from:
http://www.epa.gov/globalwarming/publications/car/index.html

Interim Report of In June 2001, the President issued the Interim Report on a Review of U.S.
the Cabinet Level Climate Change Policy, conducted at the Cabinet level. In the Interim Report,
Review of US the President has directed the Secretaries of Energy and Commerce and the
Climate Change Administrator of the Environmental Protection Agency (EPA) to improve
Policy climate change technology research and development, enhance basic

1
research, strengthen applied research through public-private partnerships,
develop improved technologies for measuring and monitoring gross and net
greenhouse gas emissions, and support demonstration projects for cutting-
edge technologies. The Interim Report is accessible at
http://usinfo.state.gov/topical/global/climate.

Global Climate In February 2002, the Global Climate Change Initiative was announced. The
Change Initiative new US approach to the challenge of global climate change contains
proposed policies that will harness the power of markets and technology to
reduce greenhouse gas emissions. As part of this initiative, the United States
commits to cutting greenhouse gas intensity of the economy by 18% over the
next ten years. Greenhouse gas intensity is the ratio of greenhouse gas
emissions to economic output. This reduction exceeds the 14% projected
reduction in greenhouse gas intensity in the absence of the additional
proposed policies and measures. The GHG intensity goal seeks to lower the
rate of emissions from an estimated 183 metric tons per million dollars of GDP
in 2002, to 151 metric tons per million dollars of GDP in 2012. The 18% GHG
intensity target would put the United States on a path to slow the growth of
greenhouse gas emissions. By significantly slowing the growth of greenhouse
gases, this policy will put America on a path toward stabilising GHG
concentration in the atmosphere in the long run, while sustaining the
economic growth needed to finance investments in a new, cleaner energy
technology and systems. This goal is comparable to the average progress that
nations participating in the Kyoto Protocol are required to achieve.
Information on the Global Climate Change Initiative can be found at:
http://www.whitehouse.gov/news/releases/2002/02/climatechange.html

Committee on In October 2002, a cabinet-level Committee on Climate Change Science and


Climate Change Technology Integration was established that will take direct responsibility for
Science and operational oversight of the federal interagency programmes in climate
Technology change science and technology development. The Committee substructure
Integration includes the Climate Change Science Program and the Climate Change
Technology Program.

The National The Interim Report of the Cabinet Level Review of the US Climate Change
Climate Change Policy included a Presidential Directive to the Secretaries of Energy and
Technology Commerce to develop a National Climate Change Technology Initiative
Initiative (NCCTI) (NCCTI). As of October 2002, NCCTI is continuing its in-depth review of
federal research and development activities, and is developing approaches to
pursue advanced technologies that can yield cost-effective means to mitigate
the risks associated with climate change. NCCTI will find creative ways to
motivate the development of innovative technologies, a process of open
solicitations for technologies to compete against each other using the criteria
of emissions reduction, avoidance, or sequestration potential is being
pursued. High priority technologies that are now being pursued include:
hydrogen-based energy systems, biofuels, low-speed wind turbines, fuel cells
for transportation, zero net energy buildings, CO, capture and geologic
sequestration, terrestrial sequestration research in forest management, and
agricultural land management.

2
In the 2002 in-depth review of the energy policies of the United States the IEA
stated:

The Government of the United States should:

x Acknowledge the influence of US emissions on global greenhouse gas


emission levels and climate:
x Quantify the impact of current energy-environment policies on projected
greenhouse gas emissions at the national and global levels.
x Develop specific targets for the control of US greenhouse gas emissions.
x -Complement current research and development efforts on climate-
friendly technologies with a policy framework, including economic
instruments, designed to achieve significant reductions in greenhouse gas
emissions over a specified period.

RESIDENTIAL/ Residential and commercial buildings consumed 36% of the nation’s energy in
COMMERCIAL 1999 and utilise almost two-thirds of all the electricity generated. The
production of energy consumed in buildings, primarily electricity, represents a
major source of acid rain, smog, and greenhouse gas emissions, and includes
47% of US sulphur dioxide emissions, 22% of nitrogen oxide emissions, and
35% of carbon dioxide emissions. The growth in the economy, as well as the
nation’s rising population is leading to more, larger, and better equipped
homes and commercial buildings, resulting in increasing energy consumption
in this sector. Introduction of new energy efficiency technology can have
significant economic and environmental benefits. In terms of economic
impact, Americans spend approximately one-quarter trillion dollars per year to
heat, cool, light and operate appliances and other equipment in buildings.

Sample of
Measures already
existing and/or
being improved

Buildings DOE develops, implements and co-ordinates the R&D to improve the energy
Research and efficiency of building components and integrated systems. Its R&D addresses
Development both the building envelope (walls, windows, roofs) and equipment (heating
and cooling equipment, lighting, etc.) and their integration into optimal "whole
building" designs. This "whole buildings" approach allows builders to
simultaneously reduce construction and energy costs and helps build energy
systems that deliver the proper amount of service (e.g. heating, cooling,
lighting, etc.) where needed. The approach also identifies ways that systems
can work harmoniously to provide increased energy and construction savings
as well as improve the quality and comfort of the buildings.

Weatherization The Weatherization Assistance Program provides cost-effective services to


Assistance low-income families who otherwise could not afford the investment in energy
Program efficiency, giving priority to households with elderly members, persons with
disabilities, and children. The programme has reduced the heating and cooling
costs of low-income households by weatherising more than 5 million homes
since its inception in 1976. A companion programme, called Weatherization
Plus, aims to expand the Weatherization Assistance Program from its current
focus on heating and cooling energy conservation in low-income homes to a
broader focus on whole-house energy usage and whole-community efforts.
The Weatherization Assistance Program is administered by the US
Department of Energy
http://www.Eren.doe.gov/buildings/weatherization_assistance/

Low Income Home The Low Income Home Energy Assistance Program (LIHEAP) is a federal
Energy Assistance block grant programme that helps low-income consumers pay the costs of
Program (LIHEAP) heating and insulating their homes in the winter, and cooling their homes in

3
the summer. Approximately 4 million low-income households receive
assistance through the LIHEAP each year. LIHEAP is administered by the US
Department of Health and Human Services. http://www.ncat.org/liheap/

Building During the 1970s almost all states and local governments established energy
Codes efficiency standards for new residential buildings. The 1992 Energy Policy Act
makes it mandatory for states to certify that their energy codes have been
updated to meet or exceed minimum levels of efficiency. To help states
update their codes law and ensure that codes are enforced, DOE is working
with state and local governments, home builders, and material suppliers to
improve energy code compliance. This is important since residential and
commercial buildings account for about 17% of US primary energy use. Two-
thirds of new US residential construction, amounting to some 900 000 homes
annually, falls under federal, state and local residential energy codes. Some
122 million square feet of additional commercial construction each year falls
under commercial energy codes. More information on buildings codes is
available at http://www.energycodes.gov/

In the 2002 in-depth review of the energy policies of the United States, the IEA
stated:

The Government of the United States should:

x Give priority to enhancing energy efficiency in the transport and building


sectors, notably by:

x Continuing to work with the states to strengthen building codes.


x Continuing to provide federal leadership through standards and guidelines
on products, buildings and systems designed to improve efficiency in
buildings.

Appliance Federal legislation mandates many appliance energy-efficiency standards.


Standards The 1987 National Appliance Energy Conservation Act (NAECA) sets
efficiency standards and establishes schedules for mandatory review of
standards for each product covered. By law the US must set standards at the
maximum improvement in energy efficiency that is technically feasible and
economically justified. Very detailed engineering-economic analyses keep the
requirements cost-effective for consumers. Since 1978, efficiency standards
have been established for a wide range of appliances. Residential products
covered under NAECA include refrigerators and freezers, room air-
conditioners, central air conditioners, furnaces, water heaters, washing
machines and dryers, and several other appliances. Some of these standards
set minimum energy efficiency levels, while others were prescriptive (for
example, washing machines were required to have a cold rinse option).

The 1992 Energy Policy Act amended NAECA to establish minimum


standards for commercial and industrial equipment, including commercial
heating and air-conditioning equipment, water heaters, and electric motors.

The standards revision process was modified in 1997. DOE improved, and
made more transparent, the standard-setting process, and developed a
comprehensive framework for standards analyses.

Since the process was revised, DOE has issued final rules for refrigerators,
refrigerator-freezers and freezers, room air-conditioners and electric ranges,
electric ovens and microwave ovens. For refrigerators, refrigerator-freezers
and freezers and room air-conditioners, DOE found that more stringent
standards were justified. The new standards for refrigerators, refrigerator-
freezers and freezers have been effective since 1 July 2001. The new room
air-conditioner standards became effective on 1 October 2000. DOE decided

4
not to institute energy efficiency standards for electric ranges, electric ovens
and microwave ovens. DOE determined potential estimated savings were not
sufficient to merit the added burden of costs to be placed on industry and
consumers.

In 2000, DOE published amended standards for commercial and industrial


fluorescent lamp ballasts that essentially require the use of electronic ballasts.
These standards will begin to go into effect in 2005. In 2001, DOE published
amended standards for washing machines, residential water heaters and
commercial heating, air conditioning and water heating equipment. The
washing machine standards will require a 22% reduction in energy use by
2004 and a 35% reduction in energy use by 2007. The residential water
heater standards will go into effect in 2004 requiring a 4% improvement in the
energy efficiency of electric water heaters and an 8% improvement in gas
water heaters. The standards for the commercial products cover 18 product
categories of commercial air conditioners, heat pumps, furnaces, water
heaters and hot water storage tanks. These standards will become effective in
2003.

Voluntary The US federal government is implementing a number of voluntary


Programs programmes in the residential/commercial buildings sector to accelerate the
adoption of highly-efficient building products, appliances and systems that can
significantly reduce energy use and GHG emissions.

These include, among others:

x Rebuild America
x Energy Star for Residential Market
x Energy Star for the Commercial Market
x Energy Star Labelled Products

Rebuild In Rebuild America, DOE is working with states and community partnerships
America to promote cost-effective energy efficiency investments in public housing,
commercial buildings, and multifamily residences. More than 465 partnerships
have been formed. Partnerships have completed nearly 420 million square
feet of building renovations and are committed to another 420 million square
feet of renovations. For more information about Rebuild America, visit
www.energystar.gov

Energy Star Energy Star for the Residential Markets programme provides guidance for
for Residential homeowners on designing efficiency into kitchen, additions, and whole-home
Markets improvement projects and works with major retailers and other organisations
to help educate the public. It also offers a web-based audit tool and a home
energy benchmark tool to help the homeowner implement a project and
monitor progress. Builders have constructed more than 55 000 ENERGY
STAR®-labelled new homes in the United States. For more information about
Energy Star, visit www.energystar.gov

Energy Star for The Energy Star for the Commercial Market leads building owners through a
Commercial comprehensive, five-stage strategy to capitalise on building system
Market interactions so as to maximise energy savings from a given amount of
efficiency investment. The programme works with more than 5 500
organisations across the country, and in 1999 introduced a system that allows
the benchmarking of building energy performance against the national stock.
For more information about Energy Star, visit www.energystar.gov

Energy Star The Energy Star® label is being used by EPA and DOE to promote products
Labelled and services that save energy and money and help the environment. The
Products Energy Star Labelled Products programme has been expanded in recent
years to more than 30 product categories. Examples of covered products

5
include appliances, heating and cooling equipment, consumer electronics,
home office equipment, windows, lighting, water coolers, dehumidifiers,
ventilation fans, ceiling fans, business office equipment, roof products, etc.
More than 630 million products with the government-backed Energy Star have
been purchased to date and thousands of companies are to adopt more
energy efficient practices. For more information about Energy Star, visit
www.energystar.gov

Partnership for The Partnership for Advanced Technology in Housing (PATH) is an


Advanced industry/government partnership, led jointly by DOE and HUD (Department of
Technology in Housing and Urban Development), to speed the creation and widespread use
Housing, and of advanced technologies, and radically improve the quality, durability, energy
Building America efficiency, environmental performance and affordability of housing, both
existing and new.

Run by the DOE, the Building America is a R&D programme implemented


through a private-public partnership that provides systems integration R&D
solutions for product housing to develop the best efficiency design strategies
for new and existing buildings. The programme promotes active investigation
and use of systems integration R&D solutions by homebuilders. It unites
segments of the building industry that traditionally work independently of one
another. It forms teams of architects, engineers, builders, equipment
manufacturers, material suppliers, community planners, mortgage lenders,
and contractor trades. Currently, there are five teams comprised of a total of
more than 150 different companies.

Measures under The National Energy Policy contains several recommendations aimed
Consideration specifically at improving energy efficiency in the residential sector. They are
listed below.

Additional Funding The National Energy Policy recommends an increase in funding for the
for Weatherization Weatherization Assistance Program and the Low Income Home Energy
Assistance Assistance Program (LIHEAP).
Program and
LIHEAP

Expand Scope Regarding standards, the National Energy Policy recommends that the
of Appliance President direct the Secretary of Energy to:
Standards
x Take steps to improve the energy efficiency of appliances.
x Support appliance standards programme for covered products, setting
higher standards where technologically and economically justified.
x Expand the scope of the appliance standards programme, setting
standards for additional appliances where technologically feasible and
economically justified.

In the 2002 in-depth review of the energy policies of the United States, the IEA
stated:

The Government of the United States should:

x Develop a comprehensive package of measures to achieve quantified


targets for efficiency of energy end-use, including.
x The use of economic instruments wherever possible.
x Mandatory standards.
x Information programmes to raise public awareness of the benefits of
energy efficiency and conservation strategies.
x Deployment programmes to ensure appropriate advanced technology
enters the market in a timely manner.

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INDUSTRY Industry is one of the largest energy-consuming sectors, accounting for about
35% of all US energy use.

Sample of
Measures already
existing and/or
being improved

Industries DOE’s Office of Industrial Technologies has created partnerships among


of the Future industry, government and supporting national laboratories and institutions to
accelerate technology R&D and deployment. Through the Industries of the
Future Program, DOE works with the nation’s most energy-intensive industries
to develop and apply advanced, energy-efficient technologies, processes, and
practices. Eight energy- and waste-intensive industries (agriculture,
aluminium, chemicals, forest products, glass, metal casting, mining, and steel)
are currently involved in the programme. Two key elements of the Industries
of the Future strategy are an industry-driven document outlining each
industry's vision for the future, and a technology roadmap to identify the
technologies that will be needed to reach that industry's goals. Further
information on the IOF programme can be found at:
http://www.oit.doe.gov/industries.shtml

Best Practices The BestPractices Program works with industry to identify plant-wide
Program opportunities for energy savings and process efficiency. Through the
implementation of new technologies and systems improvements, companies
across the United States are achieving immediate savings results.

The programme provides:

x Informational resources and tools


x Technical assistance
x Demonstrated emerging technologies

Coverage includes industrial systems (such as compressed air, motors,


process heating, and steam systems) as well as plant-wide assessments
where plants are selected through a competitive solicitation process,
and these plants agree to a minimum 50% cost-share for implementing the
assessment. A BestPractices team conducts an on-site analysis of total
energy use. More information can be found at:
http://www.oit.doe.gov/bestpractices/

Industrial In the Industrial Assessment Center Program (IAC), teams of engineering


Assessment faculty and students from over 26 universities around the country conduct free
Center comprehensive energy audits or industrial assessments. They provide
Program (IAC) recommendations to eligible small and medium-sized manufacturers to help
them identify opportunities to improve productivity, reduce waste, and save
energy. This programme expands on, and supersedes the earlier Energy
Analysis and Diagnostic Centers. One-to-two day on-site energy,
environmental, and productivity audits are performed for participating
companies and factories. The federal programme provides funding for the
university teams; however all recommended plant improvements that are
adopted are financed by the participating private sector companies, usually a
plant employing between 20 and 499 workers. More than 8 000 audits and
assessments have been performed since 1978 and over $200 million in plant
investments have been made based on IAC recommendations. Information
about the IAC programme can be found at: http://www.oit.doe.gov/iac/
3
NICE The National Industrial Competitiveness through Energy, Environment, and
3
Economics (NICE ) programme is a cost-sharing partnership between state
offices, industry, and the federal government. The grant programme provides

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funding to states and their industries for projects that develop and
demonstrate advances in energy efficiency and clean production technologies.
The programme selects projects through an annual solicitation and
competition ensuring the selection of highest benefit projects. State and
industry partnerships are eligible to receive a one-time grant of up to
$525 000. The industrial partner may receive a maximum of $500 000 in
federal funding. Non-federal cost share must be at least 50% of the total cost
of the project. In total, NICE³ has sponsored over 100 projects, with more
than half going to small businesses. Since 1991, NICE³ has leveraged $26.3
million in federal funds, with $81.8 million in state and industry funds.
http://www.oit.doe.gov/nice3/

Energy Star Energy Star for Industry is an EPA voluntary partnership programme that
for Industry enables industrial companies to evaluate and cost-effectively reduce their
energy use. It helps establish energy performance benchmarks, strategies for
improving energy performance, and provides technical assistance and
recognition for companies' reductions in energy. Energy Star for Industry is a
new initiative that integrates and builds upon the former Climate Wise
programme and offers a more comprehensive partnership for industrial
companies.

Measures under
Consideration

CHP Incentives The National Energy Policy contains a recommendation to direct the Secretary
of Treasury to work with Congress to encourage legislation that promotes
increased energy efficiency through combined heat and power (CHP) projects,
by shortening the depreciation life for CHP projects or providing an investment
tax credit.

PUBLIC SECTOR

Sample of
Measures already
existing and/or
being improved

Energy Efficiency In March 1994, a Presidential Executive Order 12902 called for reduced
and Water energy use in federal buildings. Under the order 12902, each federal agency
Conservation at shall develop and implement a programme with the intent of reducing energy
Federal Facilities consumption by 30% by the year 2005 compared to 1985 levels, based on
energy consumption per-gross-square-foot of its buildings in use, to the extent
that these measures are cost-effective. Various measures have been
implemented by individual federal agencies to reach this goal. The federal
government is well on its way to meeting this goal because, since 1985,
federal energy consumption has declined by almost 17%.
http://www.eren.doe.gov/femp/resources/exec12902.html

Energy-Efficient In August 2001, the President signed Executive Order 13221 regarding
Standby Power energy-efficient standby power devices. The Order directs federal agencies to
Devices purchase products that use no more than one watt in their standby power
consuming mode. If such products are not available, agencies shall purchase
products with the lowest standby power wattage. Agencies shall adhere to
these requirements where cost-effective and practicable.
http://www.eren.doe.gov/femp/resources/exec13221.html

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Measures under
Consideration

Information Several National Energy Policy recommendations are aimed at raising public
to the Public awareness on energy efficiency include:

x That EPA develops and implements a strategy to increase public


awareness of the sizeable savings that energy efficiency offers to
homeowners.
x That DOE explore potential opportunities to develop educational
programmes related to energy development and use. This should include
possible legislation to create public education awareness programmes
about energy.
x That DOE strengthen its public education programmes relating to energy
efficiency.
x Develop an education campaign that communicates the benefits of
alternative forms of energy, including hydrogen and fusion.

TRANSPORT In 2001, the transportation sector consumed 27% of the nation’s energy and
accounted for two-thirds of our petroleum consumption. Over 95% of
transportation energy is derived from petroleum, transportation, and this
contributes significantly to the US need for imported oil.

Sample of
Measures already
existing and/or
being improved

FreedomCar The FreedomCAR and Vehicle Technologies (FCVT) Program partners with
Research industry, research entities, state governments, and other federal agencies to
Partnership support the development and use of advanced vehicle technologies and fuels
which could reduce, and eventually eliminate, the demand for petroleum,
decrease emissions of criteria air pollutants and greenhouse gases. In
FreedomCAR, the DOE works with the US Council for Automotive Research
(USCAR). The new partnership supersedes and builds upon the successes of
the Partnership for a New Generation of Vehicles (PNGV) that began in 1993.
It is, however, different in scope and breadth. FreedomCAR shifts
government research to more fundamental, higher risk activities, with
applicability to multiple passenger vehicle models and special emphasis on
development of fuel cells and hydrogen fuel infrastructure.
http://www.ott.doe.gov/freedom_car.shtml

Automobile Corporate Average Fuel Economy (CAFE) standards for cars and light trucks
Fuel remain in force. Vehicle fuel economy labelling is also an important
Efficiency component of the fuel economy programme. The current automobile standard
Standards is 27.5 miles per gallon (8.6 litres per 100 km), and the light truck standard is
20.6 mpg (11.4 litres per 100 km). Neither of these standards has changed
significantly since the mid-1980s. These standards played a significant part in
increasing automobile and light truck fuel efficiencies beyond spontaneous
industry trends, mostly between 1979 and 1982 but continuing through the
first half of the 1980s when some manufacturers exceeded CAFÉ standards.
Later, as real fuel prices started to fall, CAFÉ caused manufacturers to
accelerate use of more advanced technologies and manage their sales
(through marketing and pricing) so that their average fleet fuel economy
continued to meet the standards. Recent trends suggest little or no
improvement in overall fuel economy levels because of the increased market
share of light trucks and sport utility vehicles. CAFÉ standards have been
frozen by Congress during the three fiscal years (FY) 1996 to 1998. These
fiscal years correspond to model years 1998-2000 since the standards are
issued 18 months in advance of their implementation.

9
Clean Cities DOE’s Clean Cities Program supports public–private partnerships that deploy
Program alternative-fuel vehicles (AFVs) and build supporting infrastructure, including
community networks. Clean Cities works directly with local businesses and
governments, guiding them through each step in the process of building the
foundation for a vibrant local organisation, including goal setting, coalition-
building, and securing commitments. Current and potential members of the
Clean Cities network also help each other by sharing local innovations,
addressing and relaying obstacles they encounter in pursuing alternative-fuel
programmes, and exchanging “do’s” and “don’ts,” based on experiences in
these programmes. Clean Cities continually pioneers innovations and aspires
to make strides nationally as well as locally.

Public The Commuter Choice Leadership Initiative is a voluntary employer-adopted


Transport and programme that increases commuter flexibility by expanding mode options,
Commuter using flexible scheduling, and increasing work location choices. Parking Cash-
Options Out offers employees the option to receive taxable income in lieu of free or
subsidised parking, and Transit Check offers non-taxable transit benefits,
currently up to $100 monthly.

Measures under
Consideration

Review CAFÉ The National Energy Policy recommends the President direct the Secretary of
Transportation to review and provide recommendations on establishing
Corporate Average Fuel Efficiency standards and look at other, market-based
approaches to increasing the national average fuel economy of new motor
vehicles.

Tax The National Energy Policy recommends the adoption of a tax credit for fuel-
Credits efficient vehicles as well as a temporary, efficiency-based income tax credit for
purchase of new hybrid fuel cell vehicles between 2002 and 2007.

In the 2002 in-depth review of the energy policies of the United States the IEA
stated:

The Government of the United States should:

x Give priority to enhancing energy efficiency in the transport and building


sectors, notably by:
- Strengthening CAFE standards.
- Reviewing the range of options available to improve the fuel economy of
personal and light-duty vehicles, including the possibility of increased
reliance on diesel engines following the introduction in 2006 of low-sulphur
diesel.

MONITORING/
EVALUATING
AND ADJUSTING

Emissions There are several mechanisms for monitoring emissions and sequestration
trends. In addition to various official bodies which continuously gather and
analyse data on energy production and consumption and greenhouse gas
emissions, electricity utilities and companies participating in voluntary
programs to undertake continuous monitoring and report on their efforts to
reduce greenhouse gas emissions http://www.epa.gov/

Energy The Energy Information Administration (EIA), created by the US Congress in


Statistics 1977, is a statistical agency of the Department of Energy. EIA provides
Reporting policy-independent data, forecasts, and analysis for use by the public, and

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policymakers. EIA produces a wide range of energy and energy-efficiency
publications, based on sound statistical surveys and data analysis.
http://www.EIA.doe.gov/

Voluntary The Energy Information Administration (EIA) in the Department of Energy


Reporting of GHG manages a voluntary registry programme for GHG emission reporting
Emissions (referred to as the 1605b programme). Under this programme, provided by
Section 1605b of the Energy Policy Act of 1992, more than 200 companies
have voluntarily reported their GHG emissions to EIA. The most recent report
published by the EIA in February 2002, reports that through voluntary actions
participating companies had reduced emissions by 73 million metric tonnes of
carbon equivalent in 2000, approximately 3.8% of total US greenhouse gas
emissions. Information of the 1605b programme can be found at:
http://www.eia.doe.gov/oiaf/1605/frntvrgg.html

Enhancing DOE’s Improvements are being investigated for creating a comprehensive and
Registry of GHG transparent programme to register and credit real greenhouse gas reductions.
Emissions and The new registry programme will achieve the objective of "measurement
Emission accuracy, reliability, and verifiability". Proposed improvements also include
Reductions developing fair, objective and practical methods for reporting baselines,
calculating real results, and awarding transferable credits for actions that lead
to real greenhouse gas reductions. After completion of this process that will
fully engage the many stakeholders who are concerned about climate change,
DOE plans to adopt new guidelines by January 2004, for reporting 2003
annual data. Information on efforts underway to enhance DOE GHG
emissions registry is found at:
http://www.pi.energy.gov/enhancingGHGregistry/index.html

Energy As part of the implementation of the National Energy Policy, DOE is


Intensity developing a new web-based system for information on trends in energy
Indicators intensity. This energy intensity information is being developed for the public,
System policy analysts, and policy makers. Energy intensity indicators are
constructed at the economy-level, as well as at lower sector levels (buildings,
industrial, transportation, electric power), sub-sectors, and for selected
categories of end-use. One example is “space-heat use and efficiency
indicator” (space heat energy per unit of home floor space). The new energy
intensity indicators system will be available in early 2003.

Further For further information, please contact:


information
Jeff Dowd
Office of Energy Efficiency and Renewable Energy
US Department of Energy/EE3B
1000 Independence Ave, SW
Washington, D.C. 20585
Tel: +1 (202) 586-7258
fax: +1 (202) 586-2176
email: Jeff.Dowd@ee.doe.gov

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