Tuesday, May 31, 2005

European Union plans tough efficiency targets

The European Union is working on one of the most ambitious plans ever to reduce energy waste in its economy. A draft plan - a Green Paper - which emerged last week, aims to slash 20% off the energy consumption level of 2005 by 2020. Instead of growing by 0.6% a year, primary energy consumption in the EU could be reduced by 0.9% a year through the use of existing technologies and in a cost-effective way, the paper says.

This reduction would cut energy consumption by 360 million tonnes of oil equivalent and yield financial savings of €60bn per year. This target would have to become part of Europe's competitiveness drive - the so-called Lisbon strategy. It would also greatly help achieve long-term climate policy plans.

The main tools which the paper envisages to achieve these EU targets are tax breaks and state aid to promote cleaner products and services. In the transport sector, the main tools to promote the use of the most efficient cars are fiscal incentives (tax breaks) and green pricing adjustments.

However, harmonising taxation in the European Union is notoriously challenging - and may become even more difficult as a consequence of the results of the referendum on the Constitution in France, which may slow down European integration. So the paper says that smaller groups of willing member states - as opposed to the whole trading block of 25 countries - should be encouraged to go ahead with harmonised policies.

Other measures reccomended by the paper include encouraging companies to include a percentage of energy efficient cars in their fleets. In addition, toll road charges could be differentiated according to the efficiency of cars that use them.

In the buildings sector, the paper reccomends considerably strenghening existing legislation on the minimum performance of buildings.

The target in the paper resembles a proposal that environmental group WWF has been pushing for years. The European Commission faces both internal and external opposition to the setting of stringent targets on efficiency, as has been the case during the debate on a Directive on Energy End-Use Efficiency and Energy Services, currently under discussion.

The draft green paper is available on the website of Environment Daily, the European publication that first obtained the draft.
  • leaked draft Green Paper (contains some French-language text)

  • WWF's "Energy Efficiency Challenge" paper (PDF)