Combining long term agreements with emissions trading: an overview of the current EU energy efficiency policies for the industrial sector and a proposal for a new industrial efficiency policy

Panel: Panel 1. Energy efficiency – a strategic choice for Europe

Authors:
Otto Starzer & Michael Sattler, E.V.A. – The Austrian Energy Agency
Paolo Bertoldi, European Commission,Directorate General JRC

Abstract

Industrial energy consumption is still responsible for about 28 % of final energy consumption and 41 % of the total electricity consumption in the EU. The energy intensity in industry has been steadily improving due to gains in energy efficiency and to structural changes. However, industry still offers a large cost-effective potential for CO2 emission reduction of about 12 % as indicated in the ECCP final report [ECCP 2000].

Traditionally in the EU the industrial energy efficiency policy has been left to Member States’ initiatives. These initiatives have resulted in different instruments being adopted or used, in particular long term agreements (e.g. NL, UK, D, B), energy or CO2 taxes (UK, DK both combined with agreements) and energy audits (e.g. SF, F). The EC itself has expressed some interest in the agreements instrument and has proposed some harmonisation in the criteria.

Recently the EC has adopted a proposal for emissions trading (COM(2001)581 final) to reduce GHG emissions. The proposal addresses energy efficiency, however, only for large industrial and power-production installations for which emissions allowances are allocated. Because the proposed emissions trading scheme covers only direct emissions, it does not focus on electricity end-use energy efficiency options directly.

The paper presents an overview of the policy instruments and initiatives to promote energy efficiency in the industrial sector an proposes a process how to combine emissions trading with energy efficiency instruments such as agreements and audits. The introduction of indicative efficiency targets per each sector – e.g. by using the benchmarking approach – is also discussed to facilitate the integration of the two instruments.