How to shape a binding energy savings target for Europe that allows for effective evaluation

Abstract

This paper considers which design of a binding energy savings target for the EU is the most feasible to both make it work and to ensure it can be evaluated in an efficient and transparent manner. We look at four possible design options. We conclude that a binding target at Member State level applied to end-users is the most feasible. Such design option covers the vast majority of the cost-effective energy savings potential, maintains the flexibility for companies in the EU Emission Trading Scheme (ETS) and supports the most cost-effective achievement of a greater share of renewables. To allow for adequate evaluation, such binding end-use target should be defined in absolute energy terms (an “energy consumption cap”), which means that the energy use which remains is measured, rather than estimating the savings. We propose to express the target in (adjusted) final energy terms to avoid a disconnection between the target (when alternatively expressed in primary energy) and the energy statistics of endusers being also expressed in final energy. Such disconnection would unnecessarily make the job of the future evaluator more difficult. Insight into the potential contributions to the target of different energy carriers (fuels, electricity, district heat) and sectors (transport, residential, services, industry) would steer the evaluation of the energy efficiency policies that (are intended) to support target achievement and allow (if needed) for effective strengthening of existing policy instruments or adding new ones to the package.