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IEA Efficiency

AUSTRALIA Updated June 2003


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

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.

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
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.


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

annum by 2020. The programme is expected to save purchasers over A$4 billion1
by 2018. More information can be found at:

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

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.

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

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.

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.
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.

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.


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

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

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

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

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.

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

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 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 .

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

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 , 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.

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
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:

Ian Cronshaw
General Manager,
Domestic Energy Policy Branch
Energy and Environment Division
Department of Industry, Tourism and Resources
Tel: +61 (2) 6213 7879
Fax: +61 (2) 6213 7902

IEA Efficiency

Updated June 2003


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

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

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

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).

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

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.

Measures in this category are expected to reduce CO2 emissions by 4 million
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

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
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.


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

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

tons of CO2 equivalent per annum once fully implemented.


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

For more information on the Climate Strategy, see:


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

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
• 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:

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
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:

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

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.

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.


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

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

ƒ Legal requirements to provide information for comparison of household
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).

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

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

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:

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

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
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
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:


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
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.

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

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

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 €

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

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.

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

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.

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

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.


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

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

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

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

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

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:

Bundesministerium für Wirtschaft und Arbeit, Sektion IV
Schwarzenbergplatz 1
A - 1015 Wien
Tel: +43 (1) 711 00
Fax: +43 (1) 714 35 83

IEA Efficiency

BELGIUM Updated August 2003


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:
CREG (Commission for Electricity and Gas Regulation):
Federal Planning Bureau:
Brussels-Capital Region
Brussels Institute for Management of the Environment, IBGEBIM,
Flemish Region
Natural Resources and Energy Department:
VREG (Flemish Electricity and Gas Regulatory Commission):
Sustainable Energy Agency, ODE-Vlaanderen:
Energy and Environment Information System:
Walloon Region
Administration for Energy: and
CWAPE (Walloon Electricity and Gas Regulatory Commission):
Information site on renewables:
Energy desks: (click on "particulier")
Renewable Energy Agency:

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.

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
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

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 of the

Federal Public Service – Economy – Energy Division
( considers
measures in the field of energy, mobility, fiscality and product standards such
as defined in the Federal Plan for Sustainable Development, especially with

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

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

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 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.


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:


For new lodgement buildings (residential, but also hospitals, hotels, boarding
2 3
schools, barracks, prisons) either the K55 standard or the Be 450 standard
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.


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.


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.

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.
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.
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.

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

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

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.


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

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

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

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.
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.


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

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

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

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.


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
On average in 2000, BEF 1 = US$ 0.023.

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.

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-

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.


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

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

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

In Flanders, the VLIET programme – Vlaams Impulsprogramma voor

Energietechnologie (Flemish programme for the promotion of energy
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.

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

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

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

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

Regional policy to promote CHP

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



• 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.


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


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


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.


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

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

support of the Walloon Region.


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%.

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:

• 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 . Since then, it is regularly updated and
improved. It gives, by model, all official technical data, such as the fuel

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.
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

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.

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

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

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,

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.

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.

• 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.
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

• 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.

Other Employees who cycle to their work place are rewarded BEF 6 per kilometre.
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

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:

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,
Tel: +32 (0)2 206 4261/4545
Fax: +32 (0)2 206 5732
Site :


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. -- -- 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:

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.

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
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.


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.

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

standards for specific equipment sold or leased within their respective

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

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

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

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

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

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.


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

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

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.

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.

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.


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

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: ), 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.

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:

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

IEA Efficiency

CZECH Updated December 2002


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

· 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

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-

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.
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

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.

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

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

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

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.


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

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.


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

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.

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

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

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.

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

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.

· 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

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

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

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

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

Measures under

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.


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

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

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

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
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.

. 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.

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

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.


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).

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

The Government of the Czech Republic should:

· Strengthen fiscal and financial incentives for energy efficiency projects.


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
· Support for the development of combined transport, through a wide range of
measures such as favourable taxation, adequate infrastructure, special railways,
· 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

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.

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

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

The Government of the Czech Republic should:

· Carefully monitor the development of energy efficiency programmes and their


Further For further information, please contact:

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


DENMARK Updated April 2003


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

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
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
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

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

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-
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

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%
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.
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.

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.
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


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

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
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.
(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

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

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

windows, and information campaigns carried out in 2001 in co-operation with
branch organisations and companies. From 1998 to 2000 the Danish Energy
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

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

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-

On average in 1999 DKK 1 = US$ 0.145 and in 2000, DKK 1 = US$ 0.123.

scale CHP are natural gas and waste and, to a lesser extent, biogas and other

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.

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

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

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

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%.

Education and

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

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.


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

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

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

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).


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

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

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.

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
- 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

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).
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

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.


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

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

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.

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:

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

IEA Efficiency

FINLAND Updated October 2003


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
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

Efficient implementation of all these measures calls for their support through
information services, training and motivation. Energy conservation activities of

On average in 2000 Fmk 1 = US$ 0.154 and in 2001 Fmk 1 = US$ 0.151

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.

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
• 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

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

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.


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

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

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

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.

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

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.

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


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

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

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

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

• 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

poles, 1 500 r/min., continuous use, most common motor type on the
• 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.


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.


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

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 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

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

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.
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’

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

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

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

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

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%.


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

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

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 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

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

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:

Pentti Puhakka
Energy Department
Ministry of Trade and Industry
P.O. Box 32
Tel: +358 (9) 160 648 13
Fax: +358 (9) 160 639 97

IEA Efficiency

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

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
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


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.

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

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. (with
information in English).

In the context of the national climate response plan, the government decided
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

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

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
• 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.

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
• 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.


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.

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

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
• 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.

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

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

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
• 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.

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

Energy Energy auditing will become mandatory when renting or selling a building.

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

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.


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.

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.


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


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

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.

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.

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


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.


Measures already
existing and/or
being improved

Transport and
Light Goods

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-

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

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.

Freight Transport
(excluding Light

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.

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.

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

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.


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

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.

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:

Mr. François Moisan
27, rue Louis Vicat
75737 Paris Cedex 15
tel. +33 (1) 47 65 20 95
fax +33 (1) 40 95 74 53

IEA Efficiency

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
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:
• 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
On average in 1998: DM 1 = $ 0.57 = € 0.51.
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.

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

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

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

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

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.


Measures already
existing and/or
being improved

Buildings and

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

Euroheat and Power is a non-governmental international association for district heating, cooling and combined
heat and power (CHP).

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
• Fuel cell plants and new small plants (up to 50 kW e) receive € 0.0511 per

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

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
• Interest free loans and grants from the federal and Länder governments
for the development of district heating systems in the old Länder.


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

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.


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

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

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-

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

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

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:

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

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
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

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.

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
· 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

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:
· 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
· 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.

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
· Reduce greenhouse gas emissions by putting more focus on demand side

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



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.

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

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

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.


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.

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

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.


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


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

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.

· 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).

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-

· 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

(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

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

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:

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

IEA Efficiency

HUNGARY Updated July 2003


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
• 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

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.

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
Energy Centre founded by government decree 1031/2000 is a non-profit
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:
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).

Also known as the Energy Efficiency, Environment and Energy Information Agency.
The number of staff is high as some are working only part time, on secondment.

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

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.


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).

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

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
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.

The District Heating Law defined rules and responsibilities in district heating; however it could not solve the
problem of cross-financing.

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
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
• 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
• 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

The 2002 Electricity Act raised the limit from 20 MW to 50 MW.

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.


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.

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

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.


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.

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.


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

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

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

• 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.

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

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

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:
• 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
• Renovation of bridges across the Danube and increased river-crossing

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
• Implementation of an investment programme for track maintenance.
• Modernisation and upgrading of lines along EU transportation corridors to

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

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
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
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:

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

IRELAND Updated July 2002


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

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

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
· 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
· 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.

· 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:
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.

Terms of Reference
In light of these developments the Interdepartmental Climate Change Team
re-established the Emissions Trading Advisory Group with revised terms of

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

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:


· 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
· 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

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

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

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.


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

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:

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,

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

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.


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,

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

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:
· 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

Measures under

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.


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
€ 12.7 million (Ir£10 million ) for energy efficiency initiatives in public sector

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

On average in 2001, Ir₤1 = US$ 1.138.

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.


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.

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

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

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.


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.

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

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:

Ms. Ciara O’Sullivan
Sustainable Energy Division
Department of Communications, Marine & Natural Resources
Leeson Lane
Dublin 2
tel. +353 (1) 604 1596
fax +353 (1) 604 1274

IEA Efficiency

ITALY Updated January 2003


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

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

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

· 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.

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
- 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.


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

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

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.

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.


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
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 (
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

Another voluntary agreement dated 31 July 1996 between the government

and FIAT is aimed at producing low impact gas, electric and hybrid fuelled

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.

On average in 1999, L 100 = US$ 0.056. In 2001 L 100 = US$ 0.046.

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:
· 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.

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
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

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
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

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
· 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.


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

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

develop reduction plans for the years 2005 and 2010 by December 1998.


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

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

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

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

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.

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:

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

IEA Efficiency

JAPAN Updated December 2002


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

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.


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

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.

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.


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

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.

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

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.


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,

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


· 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.


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-
conditioning and are expected to cost around ¥ 1 million per house.


Energy Two alternative special taxation measures are offered to promote investment
Taxation in the installation of energy-efficient equipment.
· 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
· 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.


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.

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.

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.


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

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

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

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
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

Financial Measures In FY 1999 a system of subsidies was established to promote the

for commercialisation of energy-saving technology.
Technology, Financial support is provided for the development of unused energy sources
Development and at district level:
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

Pioneering energy-saving model programme (factories, offices)

Under the programme, businesses that have made considerable energy-

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

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

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
· 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

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

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
· Share of new additional measures: 0.4 million kl
Introduction of High-performance industrial furnaces to small to
medium-size companies.

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.


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.

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:
· 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
· 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

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

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
1-3-1 Kasumigaseki 1-chome
Tokyo, 100
Tel: +81 (3) 3501 1728
Fax: +81 (3) 3580 5308

REPUBLIC Updated July 2002

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
· 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
· Re-establish the National Energy Strategy to cope with economic social
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
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

On average in 2000, Korean won 100 = US$ 0.088.

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

· 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

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.

· 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
- Energy Technology Data Exchange (ETDE).
- Energy and Environmental Technologies Information (EETIC), in
- 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.

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.


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

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

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-
· 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
· 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

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


Measures already
existing and/or
being improved


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

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

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.

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

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

(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 ( ). Manufacturers or importers should
label each product according to this energy efficiency grade.

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.
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.

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.


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.

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.

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

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

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

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

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 ( ), 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.


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