energy and environment in the european union...1 energy and environment in the european union...

Environmental issue report No 31

Energy and environmentin the European Union

1

Energy and environment in the European Union


Prepared by:AEA Technology Environment , partner to

European Topic Cent re on Air and Climate Change,

Aphrodite Mourelatou and Ian Smith,European Environment Agency

Project manager:Aphrodite Mourelatou

European Environment Agency

Energy and environment in the European Union2

Note

The contents of this report do not necessarily reflect the official opinion of the EuropeanCommission or other European Communities institutions. Neither the EuropeanEnvironment Agency nor any person or company acting on behalf of the Agency isresponsible for the use that may be made of the information contained in this report.

A great deal of information on the European Union is available on the Internet. It can beaccessed through the Europa server (http://europa.eu.int).

Cataloguing data can be found at the end of this publication.

Luxembourg: Office for Official Publications of the European Communities, 2002

ISBN 92-9167-468-0

© EEA, Copenhagen 2002

European Environment AgencyKongens Nytorv 6DK-1050 Copenhagen KDenmarkTel.: (+45) 33 36 71 00Fax: (+45) 33 36 71 99E-mail: [email protected]: http://www.eea.eu.int

Cover: EEALayout: Folkmann Design A/S

Printed in Denmark

3

Foreword ................................................................................................................. 7

Summary ................................................................................................................. 9

Introduction..................................................................................................................9

1. Is the use of energy having less impact on the environment? ...........................11

1.a. Greenhouse gas emissions ..........................................................................11

1.b . Air pollution .................................................................................................12

1.c. Other energy-re lated pressures ...................................................................13

2. Are we using less energy? ..................................................................................14

3. How rap id ly is energy e fficiency be ing increased? ............................................ 15

4. Are we switching to less-polluting fue ls? ...........................................................16

5. How rap id ly are renewable energy technolog ies be ing implemented? ............ 17

6. Are we moving towards a pricing systemthat better incorporates environmental costs? ..................................................18

Int roduct ion .....................................................................................................................19

1. Is the use of energy having less impact on the environment? ............................. 23

1.1. Greenhouse gas emissions ..................................................................................24

1.2. Air pollution......................................................................................................... 28

1.3. Other energy-re lated pressures ...........................................................................30

2. Are we using less energy? .................................................................................... 36

3. How rapidly is energy efficiency being increased? .............................................. 39

3.1 Efficiency in energy supply ...................................................................................40

3.2 Efficiency in energy consumption .........................................................................44

4. Are we switching to less-pollut ing fuels? ............................................................. 47

5. How rapidly are renewable energy technologies being implemented? .............. 51

6. Are we moving towards a pricing systemthat bet ter incorporates environmental costs? .................................................... 54

Annex ............................................................................................................... 61

References ............................................................................................................... 62

Acronyms and abbreviat ions ...................................................................................... 67

Contents


Summary figures

• Change in energy-re lated greenhouse gas emissions byeconomic sector, 1990–99 ............................................................................................11

• Performance in reducing total and energy-re lated greenhouse gasemissions to meet Kyoto Protocol targets, 1999 .........................................................11

• Change in total and energy-re lated emissions of nitrogen oxides, 1990–99 ..............12

• Exp lanations for the reduction of emissions of sulphur d ioxide in thee lectricity sector, 1990–99 ............................................................................................12

• Marine environment oil pollution from re fineries and offshoreinstallations, and from accidental o il tanker sp ills (above 7 tonnes per sp ill) ..............13

• Annual quantit ies of spent nuclear fue l from nuclear power p lant ..............................13

• Final energy consumption and e lectricity consumption growth, 1990–99 ...................14

• Final energy consumption.............................................................................................14

• Share of gross e lectricity production from combined heat and power p lant,1994 and 1998 ..............................................................................................................15

• Annual change in final energy intensity, 1990–99 ........................................................15

• Total energy consumption by source ............................................................................16

• Electricity production by source ...................................................................................16

• Share of total energy consumption provided by renewable energy sources ...............17

• Share of e lectricity consumption met by renewable energy sources, 1999 .................17

Report figures

Figure 1. Examples of the environmental pressures imposed at diffe rent stages of the energy supply and demand chain ...........................................20

Figure 2. Greenhouse gas emissions.............................................................................24

Figure 3. Change in total and energy-re lated greenhouse gas emissions ....................26

Figure 4. Energy-re lated greenhouse gas emissions .....................................................27

Figure 5. Change in total and energy-re lated sulphur d ioxide emissions .....................28

Figure 6. Change in total and energy-re lated emissions of nitrogen oxides ................30

Figure 7. Change in total and energy-re lated NMVOC emissions ................................31

Figures and boxes

5

Figure 8. Energy-re lated primary and secondary particulate emissions.......................33

Figure 9. Marine environment oil pollution ...................................................................34

Figure 10. Annual quantit ies of spent nuclear fue l from nuclear power p lant ................35

Figure 11. Final energy consumption..............................................................................37

Figure 12. Growth in final energy consumption and e lectricityconsumption, 1990–99...................................................................................38

Figure 13. Ratio of final to total energy consumption ....................................................40

Figure 14. Improvement in fossil fue l e lectricity production e fficiency ...........................42

Figure 15. Share of gross e lectricity production from combined heat and power p lant ............................................................................................43

Figure 16. Final energy consumption, gross domestic product andfinal energy intensity ......................................................................................44

Figure 17. Annual change in final energy intensity, 1990–99 ..........................................44

Figure 18. Annual change in sectoral energy intensities and related drivers,1990–99..........................................................................................................45

Figure 19. Total energy consumption by source .............................................................48

Figure 20. Electricity production by source.....................................................................49

Figure 21. Share of total energy consumption provided by renewableenergy sources ................................................................................................52

Figure 22. Share of e lectricity consumption met by renewable energysources, 1999 ..................................................................................................53

Figure 23. Proportion of tax in final energy prices ..........................................................56

Figure 24. Change in the absolute value of taxation app lied to fue ls, 1985–2001 ........56

Figure 25. Estimated d istribution of d irect energy subsid ies (1990–1995 average) .......59

Figure 26. Energy research and deve lopment expenditure ............................................60

Boxes

Box 1. Relationship between environmental pressures and thedrivers for energy demand.............................................................................21

Box 2. The DPSIR assessment framework .................................................................21

Box 3. Kyoto mechanisms ..........................................................................................24

Box 4. How have reductions in nitrogen oxides and sulphur d ioxidebeen achieved in the e lectricity sector?.........................................................29


Figures:

Explanations for the reduction of emissions of nitrogenoxides in the e lectricity sector .......................................................................29

Explanations for the reduction of emissions of sulphur d ioxide in thee lectricity sector.............................................................................................29

Box 5. What further improvements can be anticipated in emissions ofnitrogenoxides and non-methane volatile organic compoundsfrom energy-re lated activit ies?.......................................................................32

Figures:

Emissions of non-methane volatile organic compounds ................................32

Emissions of nitrogen oxides..........................................................................32

Current and future vehicle emission standards for non-methanevolatile organic compounds ...........................................................................32

Current and future vehicle emission standards for nitrogen oxides ..............32

Box 6. Why is overall EU energy conversion e fficiency not improving? ....................41

Figures:

Schematic illustration of the opposing e ffects of increasede lectricity demand and improved e lectricity production e fficiencyon the ratio of final to total energy consumption ..........................................41

Components of total and final energy consumption.....................................41

Box 7. How to measure the e fficiency of energy consumption .................................46

Box 8. How has fue l switching affected carbon d ioxide emissions fromthe e lectricity production sector?...................................................................50

Figure:

Explanations for the reduction of emissions of carbondioxide in the e lectricity sector ......................................................................50

Box 9. The re lationship between energy prices, energy consumption andenergy re lated environmental pressures ........................................................57

7

Sustainable development is about improving the quality of life while reducing the use ofnatural resources and pressures on the environment. Our quality of life is greatly enhancedby energy and the services it provides. The main question is how to make use of availableenergy resources sustainably without precluding the needs of future generations.

Sustainable development and integrating environmental considerations into Communitypolicies are EU goals (Articles 2 and 6 of the EU Treaty). The process of achieving thesegoals was initiated in 1998 at the Cardiff Summit, where the Energy and several otherCouncils were asked to establish environmental integration and sustainable developmentstrategies, identify indicators and monitor progress.

A main tool for ensuring the proper development and implementation of environmentalintegration and sustainable energy policy is the regular assessment of progress. This shouldcover not only the current situation, which may not change much from year to year — forexample whether environmental pressures and impacts have been reduced or increased andwhether there has been progress towards agreed quantitative or qualitative targets — but alsotrends and prospects, and most importantly the conditions for change that are needed toprogress towards a more sustainable energy policy and more environmentally-friendly energyuse. Such an assessment should help to identify the measures required to achieve these goals.

Assessing progress is the purpose of this report. It is part of the European EnvironmentAgency’s general mandate to carry out integrated assessments of the state of theenvironment and the pressures placed on it, and to provide information of direct use forshaping and implementing environmental and sustainable-development policies.

The assessment work undertaken by the Agency is complementary to work undertaken inthis area by other Community organisations. The independence of the Agency guarantees abalanced assessment and its work underpins the good-governance principles of openness,participation, effectiveness, coherence and, particularly, accountability.

We see it as entirely natural to extend the regular reporting we have already established ontransport and environment under the transport and environment reporting mechanism(TERM) to energy and, over time, to other sectors. This was requested in 1998 by a jointEnvironment-Transport Council and is undertaken in full cooperation with the Commissionservices. The Agency is currently working on its third TERM report and has also started workon preparing a similar report on agriculture and environment — in cooperation with andfinancially supported by the Commission.

The aim of this introduction is to really make the case for the Agency’s role and contributionin producing this report on energy and environment in the European Union as the need forit is not yet clearly recognised amongst all partners. It is my personal conviction that thisreport will prove its added-value for the governance of energy policy.

The report follows the TERM model. It has been designed to provide policy makers with theinformation they need to assess how effectively environmental policies and concerns arebeing integrated with energy policies. This is achieved with the help of selected indicatorsmeasuring the extent of progress.

So what does the report show?

In most of the areas of environmental integration covered, there have been some successesbut overall progress has been insufficient.

Curiously enough, we see that energy and environmental goals are often complementary.Security of supply is a main goal of energy policy, and its significance has been highlighted

Foreword


again recently by fluctuations in crude-oil prices as a result of restrictive output policies byoil producers and fears over the vulnerability of nuclear power stations. Increased use ofrenewable energies and improved energy efficiency benefit security of supply while reducingthe pressure on the environment.

Similarly, stricter environmental controls on energy production and consumption reduceenvironmental pressures and externalities, thus providing for fairer competition and moresustainable competitiveness, another main energy policy goal. Energy market liberalisationbenefits competitiveness through reduced costs. However, unless appropriate policymeasures, such as fiscal measures, are taken to internalise external costs and improve energydemand management, these lower costs may bring price reductions that are likely to act as adisincentive to energy saving and even encourage greater energy consumption. Suchdevelopments run counter to the environmental and security-of-supply goals of energy policy.

This report shows clearly that ‘where there is a will, there is a way’. Many countries haveshown the way forward by improving the energy efficiency of their economies. However,others have become more inefficient and consequently have a worse environmental record;in particular, their lack of progress towards meeting their greenhouse gas emission targetsunder the Kyoto Protocol is a source of great concern. This strengthens the case forimproved energy demand management, and for fiscal measures to improve it.

Another finding is that good progress has been achieved where effective and efficientpolicies have been implemented. This is particularly the case with emissions of air pollutionfrom industry, energy production and even from households and transport. However,progress in these last two sectors has been partly offset by increases in the number ofhouseholds and cars.

The report also points to some key ‘vital signs,’ such as strong growth in renewables,particularly wind and solar energy. These could show even higher growth if they wereprovided with more favourable market conditions, such as the internalisation ofenvironmental costs, and not neutralised by unsustainable growth in overall energy demand.

I hope that both the highlighted successes and failures provide a useful input to move theintegration and sustainability processes forward at the EU level, thus making the case forCommunity policies, for example in the area of taxation, to steer the liberalisation of energymarkets towards sustainability. I also hope that the information on successes and failures willbe useful not only to EU countries but also to all EEA member countries and that it will serveas an initial input for country benchmarking.

This report is intended to be part of the accountability mechanism of EU energy policy butshould also be accountable in its own terms. It should be relevant to policy-making and thepublic participation process, and it should serve information needs. The Agency is keen onfeedback so that we can move from providing BAI, or ‘best available information’, to BNI, or‘best needed information’ or ‘badly needed information’. I invite readers (including critics!)to comment on this first report on energy and environment so that we can improve futureeditions.

Lastly, I would like to thank all those who have already contributed input to this reportthrough the review process, and Eurostat for providing most of the data used.

Domingo Jiménez-BeltránExecutive Director

9

Summary

Int roduct ion

This is the first indicator-based report produced by the European Environment Agency onenergy and the environment. It covers the European Union (EU), and is designed toprovide policy-makers with the information necessary for assessing how effectivelyenvironmental policies and concerns are being integrated with energy policies, in line withthe environmental integration process initiated by the European Council’s Cardiff Summitin 1998. The report aims to support the EU sixth environmental action programme and inthis way to provide input, from an environmental perspective, to sustainable development inthe EU.

Energy is central to social and economic well-being. It provides personal comfort andmobility, and is essential to most industrial and commercial wealth generation. However,energy production and consumption place considerable pressures on the environment,including contributing to climate change, damaging natural ecosystems, tarnishing the builtenvironment and causing adverse effects to human health.

EU energy policy reflects these wide-ranging issues and has three main goals:

• security of supply• competitiveness• environmental protection.

While these areas may be considered separately, they are strongly interrelated. For example,improvements in energy efficiency both benefit security of supply by reducing the amount ofenergy consumed and reduce emissions of greenhouse gases and pollutants by reducing theconsumption of fossil fuels. On the other hand, energy market liberalisation and more pricecompetition benefit competitiveness through reduced costs, but unless external costs arefully internalised and energy demand management improves, the reduction of costs maybring price reductions that are likely to act as a disincentive to energy saving and evenencourage energy consumption.

In line with the energy policy goals, the specific environmental objectives of EU energy policyon environmental integration (as detailed in the European Commission communication onenvironmental integration within Community energy policy, 1998) are to:

• reduce the environmental impact of energy production and use• promote energy saving and energy efficiency• increase the share of production and use of cleaner energy.

This report provides an assessment, based on indicators, of progress by the energy sectortowards environmental integration. These examine performance in the EU as a whole, aswell as in individual Member States, and are supported, where possible, by an analysis ofprogress towards quantitative targets. Factors that have affected change are examined andquantitative analysis is provided where feasible. The indicators examine trends over theperiod 1990–99 and compare these with baseline projections to 2010, which originate fromEuropean Commission studies and assume both a continuation of policies adopted by 1998,and that the EU voluntary agreement with the car industry on reducing carbon dioxideemissions from new passenger cars will be honoured.

In line with the sectoral reporting strategy adopted by the Agency, the report addresses sixpolicy questions to provide a systematic evaluation of all aspects of the environmentalintegration of the energy sector.

Energy and environment in the European Union1 0

1. Is the use of energy having less impact on the environment?2. Are we using less energy?3. How rapidly is energy efficiency being increased?4. Are we switching to less-polluting fuels?5. How rapidly are renewable energy technologies being implemented?6. Are we moving towards a pricing system that better incorporates environmental costs?

Overall, while there have been some successes, there has been insufficient progress in mostof the areas of environmental integration covered by this report. In relation to the above sixquestions, the following conclusions can be drawn:

1. (a) Emissions of greenhouse gases in the EU fell between 1990 and 2000, but withoutadditional measures are unlikely to fall further to 2010 and beyond because ofincreased energy-related emissions. Ongoing successful initiatives in some MemberStates appear to point the way forward.

(b) Measures taken to reduce atmospheric pollution from energy use are provingsuccessful, with a number of Member States on track to meet the reductiontargets set for 2010.

(c) Oil pollution from coastal refineries, offshore installations and maritime transporthas been reduced, but still places significant pressures on the marine environment.

2. Energy consumption is increasing, mainly because of growth in transport but also inthe household and services sectors. However, the rate of increase is expected to slow by2010 as fuel efficiency improvements in transport are realised.

3. Improvements in energy efficiency have been slow, but improvements in some MemberStates are showing the potential benefits of good practices and strategies.

4. The EU is switching from coal to the relatively cleaner natural gas, but after2010 no further switching is expected. Furthermore, some nuclear installationswill retire and, if these are replaced by fossil fuel plants, increases in carbon dioxideemissions are likely. This underlines the need to further strengthen support forrenewable energy sources.

5. Renewable energy targets are unlikely to be met under current trends, but experience insome Member States suggests that growth could be accelerated by appropriate supportmeasures.

6. Despite increases in energy taxation, most energy prices in the EU have fallen, as aresult mainly of falling international fossil fuel prices but also of the liberalisation ofenergy markets. In the absence of appropriate policies to internalise the externalcosts of energy and improve energy demand management, reduced prices arelikely to act as a disincentive to energy saving and may encourage energy consumption.

The following sections provide an assessment of each of the key energy and environmentpolicy questions.

1 1

1. Is the use of energy having less impact on the environment?

1.a. Greenhouse gas emissionsGreenhouse gas emissions in the EU related to the use of energy fell proportionately lessthan total greenhouse gas emissions between 1990 and 2000, increasing their share of thetotal to 82 %. The reduction in energy-related emissions can be partly attributed to one-offreductions in Germany and the UK. Nevertheless, the EU achieved its commitment tostabilise carbon dioxide emissions in 2000 at 1990 levels.

However, it will be difficult for the EU to meet its Kyoto Protocol target of reducing total green-house gas emissions by 8 % from 1990 levels by 2010. Without additional measures, total emis-sions in 2010 are likely to be about the same as in 1990, with a further fall in non-energy relatedemissions being offset by a rise in energy-related emissions, driven mainly by the transport sector.

Assuming that the Kyoto Protocol target will be met using only domestic measures, themajority of Member States have not made sufficient progress to ensure meeting their targetsunder the EU burden-sharing agreement. Distance-to-targets analysis performed on the basisof 1999 data shows that Finland, France, Germany, Luxembourg, Sweden and the UKreduced total emissions at least enough to be on track to achieve their 2010 targets.However, in all Member States, with the exception of Sweden, energy-related emissionsbetween 1990 and 1999 either fell less than or increased more than total emissions.

Beyond 2010 energy consumption levels are expected to continue to increase, at least to2020. Meeting the European Commission’s proposed EU total emission reduction target of 1 %per year from 1990 levels up to 2020 would require long-term changes in energy productionand consumption patterns (power plants, buildings, transport, etc.). These patterns will bedetermined by decisions taken imminently, so reducing future energy-related emissionsrequires policy action now.

A number of initiatives to pave the way for long-term greenhouse gas emission reductionsfrom energy use are ongoing in Member States. For example, seven Member States havealready introduced carbon taxes.

-15 -10 -5 0 5 10 15 20 25

Energy supply

Industry

Households and services

Transport

% change

Change in energy-related greenhouse gasemissions by economic sector, 1990–99

Source: EEA.

Note: The d iagram ind icateswhether a Member Statewas on track in 1999 to meetits shared Kyoto Protocoltarge t. A negative valuesuggests an over-achievement and a posit ivevalue an under-achievementagainst the linear targe tpath from 1990 to 2010. Forthe purpose of this analysisit is arb itrarily assumed thatenergy-re lated emissions willbe reduced p roport ionate lywith to tal emissions.Source: EEA.

Performance in reducing total and energy-relatedgreenhouse gas emissions to meet Kyoto Protocoltargets, 1999

EU 15LuxembourgGermanyUnited KingdomFinlandFranceSwedenGreeceItalyAustriaNetherlandsBelg iumPortugalDenmarkIre landSpain

Energy-re latedgreenhouse gasemissions

Total greenhousegas emissions

Distance in 1999 to linear target path (index points)

-35 -25 -15 -5 5 15 25 35

Total EU greenhouse gas emissions fell between 1990 and 2000, but energy-related emissions, by far the largest component, fell considerably less, makingsignificant reductions in total emissions in coming decades unlikely.

Most Member States have failed to reduce greenhouse gas emissions in line with theirshare of the EU commitment under the Kyoto Protocol.

The reduction in energy-relatedgreenhouse gas emissions over the last decade wasachieved through considerable reductions by the manufacturing and energy supplysectors, mostly offset by growth in transport.


1.b. Air pollution

Energy use is a major source of atmospheric pollutants. It contributes just over 90 % of EUsulphur dioxide emissions, almost all emissions of nitrogen oxides, about half the non-methanevolatile organic compound emissions and around 85 % of particulates.

Measures taken to reduce atmospheric pollution from the use of energy have beensuccessful. These include the introduction of catalytic converters, the use of pollutionabatement technologies encouraged by the large combustion plant directive and the use ofbest avaiable techniques required by the integrated pollution prevention and controldirective. Fuel switching from coal and oil to natural gas has also made an importantcontribution to the reduction of atmospheric pollution.

In the electricity sector, more than half of the reductions in emissions of sulphur dioxideand nitrogen oxides resulted from the introduction of emission-specific abatement meaures,about a quarter from changes in the fossil fuel mix, and the rest from improved efficiency offossil-fuelled electricity production and increased shares of nuclear and renewables.

Target reductions for total (energy and non-energy related) emissions of sulphur dioxide,nitrogen oxides and non-methane volatile organic compounds for 2010, relative to 1990, havebeen set in the national emissions ceilings directive. Overall, the EU is on course to meet thesetargets and is also making good progress in reducing particulate emissions. The energy-relatedemissions of all these pollutants have been reduced more quickly than total emissions.

Most Member States have contributed to all these reductions but Greece, Ireland,Portugal and Spain need to take further action to ensure that they meet their targets.

Energy-related sulphur dioxide emissions fell considerably between 1990 and 1999.This is the main reason that the EU and most Member States are expected to achievetheir 2010 targets for reducing total sulphur dioxide emissions, as set in the nationalemission ceilings directive.

Energy-related emissions of nitrogen oxides also fell, placing the EU and someMember States on track to achieve their 2010 reduction targets for total nitrogenoxide emissions, as set in the same directive.

The reduction in energy-related emissions of non-methane volatile organiccompounds (NMVOCs) has greatly helped to put the EU and some Member Stateson course to achieve their 2010 targets for reducing total NMVOC emissions, as setinthe national emission ceilings directive.

Energy-related emissions of particulates fell by 37 % between 1990 and 1999, mainlyas a result of reductions from power plant and road transport.

1990

1993

199619

99

0

2

4

6

8

10

12

Million tonnes

Exclud ing the increased share of nuclear and renewable energy

Exclud ing efficiency improvements

Exclud ing fossil fue l switching

Exclud ing flue gas desulphurisation and the use of low sulphur fue ls

Actual emissions

Explanat ions for the reduct ion of emissions ofsulphur dioxide in the elect ricit y sector, 1990–99

% change -60 -40 -20 0 20

United Kingdom

Germany

Sweden

Luxembourg

Netherlands

Italy

Denmark

France

Finland

Belg ium

Austria

Ire land

Spain

Portugal

Greece

EU 15

Total NOx 1990–99

Energy-re lated NOx 1990–99

Target 1990–2010

Change in total and energy-related emissions ofnit rogen oxides, 1990–99

Source: EEA.

Note: Targe t values are fortotal emissions.

Source: EEA.

1 3

1.c. Other energy-related pressures

Other environmental pressures from energy production and consumption include wastesfrom mines and nuclear plant, water contamination from mining, oil spills and discharges tomarine waters, soil damage from spills and leakages of liquid fuels, and impacts onecosystems from the construction and operation of large dams.

This report provides information on spills and discharges of oil to the marine environment,and nuclear waste. Trends in these areas warrant monitoring, and data, though notcomprehensive, are of sufficient quality to indicate pressures from marine oil pollution andradioactive waste production.

Tanker oil spills continue to occur, although both their frequency and the volumes involvedhave declined over the past decade. This may reflect the irregular occurrence of suchaccidents, but it is encouraging that the apparent improvement has come despite theincreasing maritime transport of oil. Strengthened safety measures, such as the introductionof double-hulled tankers, have contributed to this. Additionally, oil discharges from offshoreinstallations and coastal refineries have diminished, despite increased oil production, as aresult of the increased application of cleaning and separation technologies.

Spent nuclear fuel is the most highly radioactive waste, in many cases taking up to severalhundred thousand years to decay. As the amount produced is determined mainly by thequantity of electricity generated from nuclear plants, the annual quantities of spent fuel arelikely to decrease as nuclear power production starts to decline. Work is ongoing to try toestablish final-disposal methods that alleviate technical and public concerns over thepotential threat that this waste poses to the environment. In the meantime, the wastesaccumulate in stores. The European Commission has proposed more support for researchand development on nuclear waste management in its sustainable development strategy.

Oil pollution from offshore installations and coastal refineries has been reduced, butmajor oil tanker spills continue to occur.

Highly radioactive waste from nuclear power production continues to accumulate. Agenerally acceptable disposal route is yet to be identified.

1985

1990

1995

2000

2005

2010

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Tonnes of heavy metal

United KingdomFrance

GermanySwedenBelg ium

SpainFinland, Netherlands & Italy

Marine environment oil pollut ion from refineriesand offshore installat ions, and from accidental oiltanker spills (above 7 tonnes per spill)

Notes: The vast majority ofhighly rad ioactive wasteconsists of spent fue l andspent fue l rep rocessingwastes. 2000 figures forSpain, Sweden and the UKare based on p rovisionaldata. Pro jected data is takenfrom national p ro jectionswith the excep tion ofSweden for 2010, which is apro jection from the OECD.Austria, Denmark, Greece ,Ire land , Luxembourg andPortugal do not havenuclear power p lants. Italyphased out commercialnuclear power in 1987. Theprojected increaseattributed to Finland , Italyand the Ne therlands is dueto a p ro jected increase fromFinland only.Source: OECD.

19901991

19921993

19941995

1996

19971999

19980

5

10

15

20

25

Oil d ischarge (thousand tonnes)

Offshore installationsRefineries

19901991

19921993

19941995

1996

19971999

19982000

0

20

40

60

80

100

120

140

160

Oil sp ilt (thousand tonnes)

(109 tonnes)

(171 tonnes)

(250 tonnes)

Annual quant it ies of spent nuclearfuel from nuclear power plant

Sources: Eurostat, OSPAR, CONCAWE, DHI, ITOPF.


2. Are we using less energy?

One of the aims of the EU strategy for integrating environmental considerations into energypolicy is to increase energy saving. Cost-effective energy saving has many benefits: itdecreases pressure on the environment, improves competitiveness and allows countries to beless dependent on energy imports.

Energy consumption by final energy users increased between 1990 and 1999 in all but onesector, with the fastest growth coming from transport. Manufacturing industry’s smalldecline in energy consumption reflects some improvements in energy efficiency but mainlyreveals the effect of structural changes, including a shift towards low energy-intensiveindustries, relocation of energy-intensive industries away from EU countries, and the post-unification restructuring of German industry.

Baseline projections to 2010 indicate continued growth in energy consumption, but at alower rate than between 1990 and 1999, mainly because of a slower rate of increase inenergy consumption by the transport sector. This is due to expected improvements in roadvehicle fuel efficiency as a result of the voluntary agreement between the car industry andthe EU, rather than a slowdown in road transport growth.

Electricity continues to take an increasing share of final energy consumption in all EUcountries, both as a result of more electrical appliances in the services and household sectors,and a greater use of electrically based production processes in industry. Electricity is producedfrom other fuels and the consumption of each unit of electrical energy requires theconsumption of two to three units of another energy source. Growth in electricity consump-tion will therefore result in a disproportionately greater increase in environmental pressures,especially in carbon dioxide emissions, unless it comes from high-efficiency, low-emissiontechnologies that reduce sufficiently the environmental consequences of electricity production.

The use of electrical energy for heating is a particularly inefficient use of the original energyresource. In Denmark, the Electricity Saving Fund, financed by a levy on domestic electricityconsumption, enables the government to grant subsidies for the conversion of electrically heateddwellings to district heating or natural gas. Also, natural gas companies encourage customers tochoose gas rather than electricity for cooking, with each new installation being supported by agovernment subsidy.

Energy consumption in the EU continued to grow between 1990 and 1999;this trend is expected to continue.

Electricity consumption in the EU grew faster than final energy consumption between1990 and 1999; this trend is expected to continue.

Final energy consumpt ion and elect ricit yconsumpt ion growth, 1990–99

United Kingdom

Sweden

Spain

Portugal

Netherlands

Luxembourg

Italy

Ire land

Greece

Germany

France

Finland

Denmark

Belg ium

Austria

EU15

Average annual % growth rate

Final energy consumption: total

-1 0 1 2 3 4 5 6

Final energy consumption: e lectricity

Source: Eurostat.

Final energy consumpt ion

0

200

400

600

800

1 000

1 200

Services

Households

Industry

Transport

Million tonnes of oil equivalent

1990

1999

2010

Source: Eurostat.

1 5

3. How rapidly is energy efficiency being increased?

The EU as a whole has an indicative target to decrease the energy intensity of finalconsumption (energy consumption per unit of gross domestic product) by an average of 1 %per year, between 1998 and 2010, above ‘that which would have otherwise been attained’. Theenergy intensity of the EU economy decreased by 0.9 % per year during 1990–99, with littleapparent influence from policies on energy efficiency and energy saving. The slow pace withwhich energy intensity decreased is due to a combination of a generally low priority for suchpolicies, abundant energy supplies and low fossil fuel prices. Only the substantial reduction inGermany, helped by energy efficiency improvements, prevented an increase in overall energyintensity. There were impressive reductions in Luxembourg due to one-off changes (theclosure of a steel plant) and in Ireland due to high growth in low energy-intensive industriesand the services sector. The implementation of energy efficiency policies in Denmark and theNetherlands played an important role in the reductions in these countries.

The overall efficiency of conversion of primary to usable energy did not improve between1990 and 1999 because efficiency gains in conversion processes were offset by a larger shareof converted fuels (e.g. electricity, petroleum products) in final energy consumption, a trendthat is expected to continue.

Combined heat and power (CHP) avoids much of the waste-heat loss associated with electricityproduction as it produces both heat and electricity as useful outputs. The EU has an indicativetarget to derive 18 % of all electricity production from CHP by 2010. This target may not bereached because CHP investment across the EU, and in particular in Germany, theNetherlands and the UK, has been hindered by increasing natural gas prices (the preferredfuel for new CHP), falling electricity prices and uncertainty over the evolution of electricitymarkets as liberalisation is extended. The German CHP law, passed in early 2002, provides anexample of how to alleviate this situation through a number of support mechanisms, includingagreed electricity purchase prices for existing CHP installations and for new, small-scale units.

Economic growth is requiring less additional energy consumption, but energyconsumption is still increasing.

With the exception of industry, no EU economic sector has decoupled economic/social development from energy consumption sufficiently to stop growth of its energyconsumption.

The efficiency of electricity production from fossil fuels improved between 1990 and1999, but electricity consumption from fossil fuels grew more rapidly, outweighing thebenefits to the environment from these improvements.

The share of electricity from combined heat and power (CHP) increased across theEU between 1994 and 1998, but faster growth is needed to meet the EU target.

-4 -3 -2 -1 0 1 2

PortugalSpainItalyGreeceBelg iumFinlandFranceSwedenAustriaUnited KingdomNetherlandsDenmarkGermanyIre landLuxembourgEU 15

Average annual change (%)

Annual change in f inal energy intensity, 1990–99

Source: Eurostat.

Share of gross elect ricit y product ion fromcombined heat and power plant , 1994 and 1998

0

10

20

30

40

50

60

70

80

%

1994

EU 15

Denmark

Netherla

nds

Finla

nd

Austria

Luxe

mbourg

Italy

Spain

Portugal

Germ

anyUK

France

Gre

ece

Irela

nd

Belgiu

m

Sweden

18 % target by 2010

1998

Source: Eurostat.


4. Are we switching to less-pollut ing fuels?

The European Commission strategy to strengthen environmental integration within energypolicy stresses the need to increase the share of cleaner energy production and use. This isreflected in the sixth environmental action programme which, as part of the climate changepriority actions, encourages the use of renewable and low-carbon fossil fuels for powergeneration.

The share of fossil fuels in total energy consumption declined only slightly between 1990 and1999. However the environment benefited from a major change in the fossil fuel mix, withcoal and lignite losing about one third of their market share and being replaced by relativelycleaner natural gas, resulting in reduced emissions of greenhouse gases and acidifyingsubstances. This was due mainly to fuel switching in power generation, encouraged by thehigh efficiency and low capital cost of combined-cycle gas plants, the liberalisation ofelectricity markets, low gas prices in the early 1990s and the implementation of the EU largecombustion plant directive. Oil retained its share of the energy market, reflecting itscontinued dominance in the ever-growing road and air transport sectors.

Baseline projections suggest only limited changes in the energy mix of total energy consumptionby 2010, highlighting the need to strengthen support for renewable energy (see next section).The projections also indicate that fossil fuels will take a larger share of increasing electricityproduction while the switch to gas-fired electricity production is expected to continue.

The switch from coal to natural gas is not expected to continue beyond 2010. Increasedelectricity production from fossil fuels, slow growth of electricity production from renewablesources and the decrease in nuclear-powered electricity production as nuclear plants start tobe decommissioned, are then likely to lead to increased carbon dioxide emissions.

Fossil fuels continue to dominate energy use, but environmental pressures have beenlimited by switching from coal and lignite to relatively cleaner natural gas.

Fossil fuels and nuclear power continue to dominate electricity production, but theenvironment has benefited from the switch from coal and lignite to natural gas.

Carbon dioxide emissions from electricity production fell by 8 % between 1990 and1999 despite a 16 % increase in the amount of electricity produced.

Note: Fue ls other than those listed in the legend have beenincluded in the d iagram but the ir share is too small to bevisib le .Source: Eurostat, NTUA.

Source: Eurostat, NTUA.

19901999

2010

0

200

400

600

800

1 000

1 200

1 400

1 600

Renewables

Nuclear energy

Natural gas

Coal, lignite and derivatives

Crude oil and products


Total energy consumpt ion by source

19901999

2010

0

500

1 000

1 500

2 000

2 500

3 000

3 500

TWh

Nuclear

Fossil

Renewables

Elect ricit y product ion by source

1 7

5. How rapidly are renewable energy technologies being implemented?

Meeting the renewable energy targets will be challenging. Taking account of the projectedincrease in energy consumption, the growth rate of renewable energy (both electricity andheat) will have to more than double compared with that between 1990 and 1999 if the EU’sindicative target of a 12 % share of renewable energy sources in total energy consumption by2010 is to be met. Similarly the growth rate in electricity from renewable energy sources willhave to increase roughly twofold to meet the EU indicative target of 22.1 % of grosselectricity consumption from renewable energy sources by 2010.

Financial, fiscal and administrative barriers, the low economic competitiveness of somerenewables and the lack of information and confidence amongst investors all hinder thedevelopment of renewable energies.

There are, however, encouraging signs that growth in renewable energy can be considerablyaccelerated with the right mix of support measures. For example the rapid expansion of EUwind and solar electricity was driven by Denmark (wind only), Germany and Spain and resultedfrom support measures such as ‘feed in’ arrangements that guaranteed a fixed favourable price.Similarly, Austria, Germany and Greece contributed 80 % of new solar thermal installations inthe EU between 1990 and 1999. Solar thermal developments in Austria and Germany benefitedfrom proactive government policy coupled with subsidy schemes and communication strategies,while in Greece the developments were helped by government subsidies.

Renewable energy contributes very little to the growing consumption of the transport sector.The draft EU directive on the promotion of the use of biofuels for transport would requirealmost 6 % of gasoline and diesel sold for transport purposes to come from biofuels by 2010.However, the production of these fuels is energy intensive and may compete with otherenergy crops for growing land. There is also some concern over the level of nitrogen oxidesemissions and particulates from biofuels.

The share of total energy consumption met by renewable energy grew only slightlybetween 1990 and 1999. Projections of future energy demand imply that the growthrate of energy from renewable sources needs to more than double to attain the EUindicative target of 12 % by 2010.

The share of renewable energy in EU electricity consumption grew slightly between 1990and 1999. Projections of future electricity demand imply that the rate of growth of electric-ity from renewable sources needs to double to attain the EU indicative target of 22.1 % by 2010.

0

1

2

3

4

5

6

12

%

19901999

2010

Biomass and waste

Hydro

GeothermalSolar and wind

EU ind icative target (12 %)

0

10

20

30

40

50

60

70

80

90 Indicative targets Large hydropowerAll other renewables (exclud ing IMW)Industrial and municipal waste

%

EU 15

Austria

Sweden

Finla

nd

Portugal

Italy

France

Denmark

Spain

Gre

ece

Germ

any

Irela

nd

Netherla

ndsUK

Luxe

mbourg

Belgiu

m

Notes: Industrial andmunicipal waste (IMW)includes e lectricity fromboth b iodegradab le andnon-b iodegradab le energysources, as the re are noseparate data availab le forthe b iodegradab le part. TheEU 22.1 % targe t for thecontribution of e lectricityfrom renewab le sources togross e lectricityconsumption by 2010 onlyclassifies b iodegradab lewaste as renewab le . Theshare of renewab lee lectricity in g ross e lectricityconsumption is the re foreoverestimated by an amountequivalent to the e lectricityp roduced from non-b iodegradab le IMW.National targe ts shown hereare re fe rence values thatMember States agreed totake into account whense tt ing the ir targe ts byOctober 2002, accord ing tothe renewab le e lectricity EUd irective .Source: Eurostat.

Note: Biomass/wastes include wood, wood wastes, otherb iodegradab le so lid wastes, industrial and municipal waste(of which only part is b iodegradab le ), b io fue ls and b iogas.Source: Eurostat, NTUA.

Share of elect ricit y consumpt ion metby renewable energy sources, 1999

Share of total energy consumpt ion provided byrenewable energy sources


6. Are we moving towards a pricing system that bet terincorporates environmental costs?

Energy prices currently do not always reflect the full costs to society, because prices often donot totally take account of the impacts of energy production and consumption on humanhealth and the environment. Estimates of these external costs for electricity, for example, areabout 1–2 % of EU gross domestic product and reflect the dominance of environmentally-polluting fossil fuels in its production.

The sixth environmental action programme stresses the need to internalise these externalenvironmental costs. It suggests a blend of instruments that include the promotion of fiscalmeasures, such as environment-related taxes and incentives, and the undertaking of a reviewof subsidies that counter the efficient and sustainable use of energy, with a view to graduallyphasing them out.

Energy subsidies between 1990 and 1995 remained focused on the support of fossil fuels andnuclear power, despite the environmental impacts and risks associated with these fuels.Energy research and development expenditure by Member State governments fell between1990 and 1998 but still concentrated on nuclear power. The share of the research anddevelopment budget devoted to renewable energy sources and energy conservationincreased, but diminished in absolute terms. More recent data are needed to see whetherthese energy subsidy patterns have continued.

With the exceptions of diesel and unleaded gasoline for transport, energy prices fell between1985 and 2001. This reflected trends in international fossil fuel prices and the move towardsliberalised gas and electricity markets which stimulated greater price competition. Thereductions occurred despite increases in energy taxation — other than that for industrialelectricity where the energy tax fell.

In the absence of an appropriate policy framework that aims at the full internalisation ofexternal costs to the environment, and at improved management of energy demand, thereduction of energy prices is likely to act as a disincentive to energy-saving investments andmay encourage energy consumption.

Energy prices generally fell between 1985 and 2001, offering little incentive for energysaving.

Despite increases in taxation from 1985 to 2001, energy prices for most fuels droppedand the overall demand for energy increased.

With fossil fuels supplying more than half the EU’s electricity, price levels would needto be increased to include the estimated external costs of electricity production.

Subsidies continue to distort the energy market in favour of fossil fuels despite thepressures these fuels place on the environment.

EU energy research and development expenditure has been reduced at a time wheninnovation is needed to develop less-polluting technologies.

1 9

Introduction

This is the European Environment Agency’sfirst indicator-based report on energy andthe environment.

Energy is central to social and economicwellbeing. It provides comfort and warmth inour homes, mobility for work and recreation,and services that are essential to mostindustrial and commercial wealth generation.Energy supply itself is a major source of wealthand employment in the EU. But all phases ofthe energy production and consumption chainplace pressures on the environment (Figure 1).Many of these are leading to exceedances oftolerable levels of some pollutants andcontributing to climate change and lastingdamage to natural ecosystems, the builtenvironment, agriculture and human health.

The report covers the European Union (EU)and is designed to provide policy-makerswith the information needed for assessinghow effectively environmental policies andconcerns are being integrated with energypolicies, in line with the environmentalintegration process initiated by theEuropean Council Cardiff Summit1 in 1998.It aims to support the EU sixthenvironmental action programme(European Commission, 2001a) and provideinput, from an environmental perspective, toEU sustainable development (EuropeanCouncil, 2001).

The three main goals of EU energy policy(Council of the European Union, 1995) —security of supply, competitiveness andenvironmental protection — are stronglyinterrelated. For example, improvements inenergy efficiency should benefit security ofsupply, by reducing the amount of energyconsumed, and abate emissions ofgreenhouse gases and other pollutants, byreducing the consumption of fossil fuels.Market liberalisation and more pricecompetition will benefit competitivenessthrough reduced prices, but may act as adisincentive to energy saving and encourageconsumption unless external costs are fully

internalised and energy demand is bettermanaged.

In line with the three main energy policygoals, the specific environmental objectivesof EU energy policy in the area ofenvironmental integration (EuropeanCommission, 1998a) are to:

• Reduce the environmental impact of theproduction and use of energy

• Promote energy saving and energyefficiency

• Increase the use of cleaner energy and itsshare of total production.

A key challenge for economic, energy andenvironmental policy is to developinstruments and measures to encouragefurther economic development, whilereducing and ultimately breaking thelinkage between the use of energy (bothproduction and consumption) andenvironmental pressures.

The link between environmental pressuresand the drivers for energy demand can berepresented by the following relationship(see Box 1 for a detailed explanation).

For a systematic evaluation of all aspects ofthe environmental integration of the energysector, the report addresses six policyquestions drawing on this relationship. Itprovides its assessment with the help ofindicators (Table 1) that are based on thesystem established by the EEA for reportingon environmental issues: the DPSIRassessment framework (Box 2).

The report builds on statistics contained inthe Eurostat publication Integration —indicators for energy. Data 1985–98 (Eurostat,2001) and on projections used in the report‘Economic evaluation of sectoral emissionreduction objectives for climate change’,

1 The Card iff Summit invited all re levant formations of the Council to estab lish the ir own strateg ies for g ivinge ffect to environmental integration and sustainab le deve lopment within the ir respective policy areas. TheSummit requested that the re levant formations of the Council should identify ind icators and monitorprogress, taking account of the Commission’s suggested guide lines, and invited the Transport, Energy andAgriculture Councils to start this p rocess (European Council, 1998).


produced by Ecofys, AEAT and NTUA onbehalf of the European Commission’sEnvironment Directorate General (Ecofys,2001)2. Information is also drawn fromworking documents, in the form of detailedindicator fact sheets, prepared by the EEAand its European topic centres andreviewed by the European EnvironmentInformation Observation Network(EIONET), and a number of EEA reports ongreenhouse gas emissions (EEA 2001a and2002a), atmospheric pollutants (EEA,2002b), and transport and environment(EEA, 2001b).

Special attention has been paid to publicelectricity production, because of its growingshare of energy use, and because it is a keyoption for introducing less-polluting energysources. The transport sector, which also hasa growing share of energy use, is dealt within detail in the European EnvironmentAgency’s report TERM 2001 — Indicatorstracking transport and environment integration inthe European Union (EEA, 2001b). It will alsobe the theme of the upcoming EEA TERM2002 report on transport and environmentindicators in accessioncountries.

Examples of the environmental pressures imposed at differentstages of the energy supply and demand chain

Figure 1

Ext ract ion of primaryenergy sources

• Methane from coalmining , natural gasand oil extraction

• Solid wastes frommining

• Groundwatercontamination frommining

• Radon from uraniumextraction

• Oil d ischarges

• Air pollution fromflaring

Transportat ion ofprimary energy sources

• Methane from p ipe lineleakage

• Oil sp ills

• Emissions ofg reenhouse gases andair pollutants fromenergy consumption intransportation

Energy conversion

• Greenhouse gas andair pollutantemissions, and oild ischarges from oilre fineries

• Solid and nuclearwaste from powerproduction

• Noise and visualintrusion fromrenewab le energyp lant

Energy t ransmission anddist ribut ion

• Methane emissionsfrom natural gastransmission andd istribution

• Sp ills and leakage ofliquid fue ls

• Emissions ofg reenhouse gases andair pollutants fromenergy consumed intransportation

Energy consumpt ion

• Greenhouse gas andair pollutant emissionsfrom fue l combustion

Energy supply Energy demand

• Is the use of energy having less impact on the environment, i.e. is the pressure beingreduced? (Section 1)

• Are we using less energy, i.e. are the driver and energy intensity (energy/driver)beingreduced? (Section 2)

• How rapidly is energy efficiency being increased, i.e. is the energy intensity beingreduced? (Section 3)

• Are we switching to less-polluting fuels, i.e. is the pressure intensity (pressure/energy) being reduced? (Section 4)

• How rapidly are renewable energy technologies being implemented, i.e. to what extentare we taking up these options for reducing the pressure intensity? (Section 5)

• Are we moving towards a pricing system that better incorporates environmentalcosts, i.e. are economic decisions taking account of the pressures that energy-relatedactivities place on the environment? (Section 6)

2 New updated base linepro jections will be re leasedby the EuropeanCommission in the secondhalf o f 2002.

2 1

The pressure placed on the environmentby any activity using energy will depend on:

• driver - the volume of activity thatgenerates demand for an energy-relatedservice (e.g. gross domestic product,industrial value added, demand for roadfreight delivery or passengertransportation)

• energy intensity - the amount of energyrequired per unit of driver

• pressure intensity - the pressure on theenvironment (emissions, discharges,wastes) per unit of energy use.

This points to a set of options for reducingthe environmental pressures associatedwith the use of energy (energy productionand consumption):• Reduce the driver by adopting

alternative social or economic practices(e.g. a modal switch from private topublic transport).

• Reduce the linkage between the driverand the use of energy (i.e. the energyintensity) through more efficient energyuse and the use of less energy-intensiveprocesses.

• Reduce the environmental pressuregenerated by the use of energy (i.e. thepressure intensity), for example by:

– less dependence on the morepolluing fuels through the developmentof alternative energy sources;

– deployment of advanced conversionand end-use technologies that are lesspolluting.

DRIVERSe.g. growth,

population, transport,industry

RESPONSESe.g. more efficient energy

use, policy targets,renewable energ ies,research, taxation

PRESSURESe.g. air emissions,

d ischarges, wastes,deple tion of resources

IMPACTe.g. climate change, lossof b iod iversity, ill health,

external costs

STATEe.g. greenhouse gas

concentration leve ls, water and soil quality

As shown in the figure, the DPSIR (Drivingforces, Pressures, State, Impact, Responses)assessment framework recognises theconnections between the causes ofenvironmental problems, their impactsand society’s responses to them.

• Drivers are the causes underlying theproblem.

• Pressures are the pollutant releases intothe environment.

• State is the condition of theenvironment.

• Impact is the effects of environmentaldegradation.

• Responses are the measures taken toreduce the drivers and pressures on theenvironment or to mitigate their Impactand effect on the state of theenvironment.

The report provides an indicator-basedassessment based on the DPSIR frame-

work. It assesses the factors affectingenergy use (driving forces), the emissionsand waste resulting from energyproduction and consumption (pressures),impacts on the environment and humanhealth (impacts) and the contribution ofpolicy measures designed to mitigateenvironmental impacts (responses).

Relat ionship between environmental pressures and the drivers for energy demand

Box 2The DPSIR assessment framework

Box 1


Policy quest ions Indicators Posit ion PageinDPSIR

Is the use of Greenhouse gas Energy and non-energy re lated P 24energy having emissions greenhouse gas emissionsless impacton the Change in energy and non-energy re lated P 26environment? greenhouse gas emissions (by Member State )

Energy-re lated greenhouse P 27gas emissions by economic sector

Air pollution Energy and non-energy re lated emissions of P 28sulphur d ioxide (by Member State )

Energy and non-energy re lated emissions of P 30nitrogen oxides (by Member State )

Energy and non-energy re lated emissions of P 31non-methane volatile organic compounds(by Member State )

Energy-re lated emissions of particulate matte r P 33

Other energy- Oil d ischarged to the marine P 34related pressuresenvironment from coastal re fineries,

offshore installations and oil tankers

Spent nuclear fue l (by Member State ) P/S 35

Are we using Final energy consumption by economic sector D 37less energy?

Growth in final energy consumption D 38and e lectricity consumption

How rapidly is Efficiency of Ratio of final energy consumption R 40energy eff iciency energy supp ly to total energy consumptionbeing increased?

Efficiency of e lectricity supp lied by fossil fue ls R 42

Electricity from combined heat and power R 43

Efficiency of Energy intensity (by Member State ) R/D 44energyconsumption Energy intensity by economic sector R/D 45

Are we switching Total energy consumption by source D/R 48to less-pollut ingfuels? Electricity p roduction by source D/R 49

How rapidly are Total energy consumption from R 52renewable energy renewab le sourcestechnologiesbeing Consumption of e lectricity from R 53implemented? renewab le sources

Are we moving Final energy prices D/R 55towards a pricingsystem that bet ter Energy taxes R 56incorporatesenvironmental External costs of e lectricity p roduction I 58costs?

Energy subsid ies D/R 59

Energy-re lated research and R 60deve lopment expend iture

Tab le 1 Indicators of environmental integrat ion of the energy sector

D = Driver, P = Pressure , S = State , I = Impact, R = Response

2 3

1. Is the use of energy having lessimpact on the environment?

The production and consumption of energyplaces a broad range of pressures on boththe natural and the built environment, aswell as on human health. Because fossil fuels(i.e. coal, lignite, oil and natural gas)account for the bulk of energy supplies inthe European Union (EU) (80 % in 1999)most attention in this section focuses on theenvironmental pressures arising from theiruse, namely: greenhouse gas emissions, airpollution from acidifying substances, ozoneprecursors and particulate matter, andoil discharges.

Options for reducing these pressures can bebroadly classified into improvedmanagement and maintenance, end-of-pipeclean-up, the use of new, less-pollutingtechnologies and switching to cleaner fuels,and, indirectly, more efficient energy useand the use of less energy-intensiveprocesses.

Some pollutants can be responsible for morethan one effect. For example methane isboth a greenhouse gas and an ozoneprecursor, and sulphur dioxide contributesboth to air pollution (directly and alsoindirectly by forming fine particulates) andto acidification. The reduction of onepollutant may therefore yield benefits in

Emissions of greenhouse gases in the EU fell between 1990 and 2000, but withoutaddit ional measures are unlikely to fall further to 2010 and beyond because ofincreased energy-related emissions. Ongoing successful init iat ives in someMember States appear to point the way forward.

Measures taken to reduce atmospheric pollut ion from energy use sector areproving successful, with a number of Member States on t rack to meet thereduct ion targets set for 2010.

Oil pollut ion from coastal refineries, offshore installat ions and marit ime t ransporthas been reduced, but st ill places significant pressures on the marine environment .

relation to more than one impact. Policiesand measures to reduce greenhouse gasemissions (e.g. switching from coal tonatural gas) also often lead to a reduction ofemissions of air pollutants. In contrast,however, in some exceptional cases actionsto reduce one pollutant may cause anincrease in another. For example the use ofthree-way catalysts has reduced emissions ofcarbon monoxide, nitrogen oxides (NO

X)

and non-methane volatile organiccompounds from petrol cars, but with anincrease in nitrous oxide emissions. Thedevelopment of an air pollution strategy hasaddressed this inter-linkage betweenpollutants by shifting to a multi-pollutant,multi-effect approach.

Not all pollution from energy-relatedactivities arises from the combustion of fossilfuels. Some combustion-related emissions,such as nitrogen oxides, arise from the useof biomass and waste as fuels. Also, whilenuclear power generation producesnegligible emissions during normaloperation, it is accumulating substantialquantities of long-lived and highlyradioactive waste for which no generallyacceptable disposal route has yet beendeveloped.

PR

ESSU

RE

DR

IVE

RE

NE

RG

YD

RIV

ER

PR

ESSU

RE

EN

ER

GY

XX

=


Total EU greenhouse gas emissions fell between 1990 and 2000, butenergy-related emissions, by far the largest component , fell considerably less,making significant reduct ions in total emissions in coming decades unlikely.

Notes: The Kyoto targe t isfor to tal emissions of carbon

d ioxide , methane , nitrousoxides and fluorinated

gases.The base linepro jections for 2010 are

taken from the reportEconomic evaluation of

sectoral emission reductionob jectives for climate

change p roduced by Ecofys— Energy and Environment,AEA Technology and NTUA

on behalf o f the EuropeanCommission’s Directorate

General Environment(Ecofys, 2001). See Annex 1

for an outline of the scenarioassumptions underlying

these p ro jections.Greenhouse gas emissionsfor 1990 to 1999 are taken

from the EEA EuropeanCommunity and Member

States g reenhouse gasemission trends 1990–1999

(EEA, 2001a) and theunderlying EU greenhouse

gas inventory maintained byEEA, assisted by the

European Top ic Centre onAir and Climate Change

(ETC-ACC).Source: EEA, Ecofys.

1.1.Greenhouse gas emissions

Concern over greenhouse gas (GHG)emissions and climate change is set to remain apriority in EU policy. The EU is committed totaking a lead in reducing global emissions, andthe first step is to meet its target, set under theKyoto Protocol, for an 8 % reduction in totalemissions by 2008–12 compared with the 1990level. Although challenging, this should beregarded as only a first step, since it isestimated that global emissions will need to bereduced by about 70 % in the long term if theatmospheric GHG concentration is to bestabilised at an acceptable level (IPCC, 2001).The European Commission has acknowledgedthis by proposing an EU target to reduceatmospheric emissions by an average of 1 %per year up to 2020, with a global target of20–40 % reduction by 2020, both from 1990levels (European Commission, 2001a and2001b).

Total EU GHG emissions (i.e. carbon dioxide,methane, nitrous oxide and fluorinated gases)fell by 3.9 % between 1990 and 1999 (EEA,2001a). According to data just released for2000 (EEA, 2002a) the EU achieved itsoriginal commitment to stabilise carbondioxide (CO

2) emissions in 2000 at 1990

levels. These early successes might suggestthat the EU is on track to achieve its KyotoProtocol target and to achieve more ambi-tious emission reductions in the longer term.

This is far from being the case3, for threereasons.

Firstly, the reduction in emissions came mainlyfrom a non-energy related reduction of 13.9 %.Energy-related emissions fell by only 1.9 %.Since non-energy sources accounted for only18 % of emissions (in 1999) a bigger contribu-tion to reductions will have to come fromenergy production and consumption if futureabatement targets are to be met. The new 2000data show that we are moving in the oppositedirection. Total emissions increased by 0.3 %from 1999 to 2000 as a result of increasedenergy-related emissions (EEA, 2002a).

Secondly, about half the stabilisation of CO2

emissions at 1990 levels by 2000 resultedfrom one-off reductions in Germany and theUK (Fraunhofer, 2001). From 1999 to 2000,carbon dioxide emissions stopped falling inGermany and increased by 1.2 % in the UK(EEA, 2002a).

Thirdly, baseline projections (see Annex 1),made for the European Commission (Ecofys,2001), suggest that total EU GHG emissionsin 2010 will be about the same as in 1990.Underlying this trend is an increase inenergy-related emissions, partially offset by afurther reduction in non-energy emissions.

The fact that energy-related GHG emissions areproving particularly difficult to reduce suggestslittle progress with the fundamental restructur-ing of energy production and consumption thatis vital if more ambitious long-term reductiontargets are to be attained. The nature of mostenergy production and consumption patternsfor the next 30 to 50 years (power plants,buildings, transport modes, etc.) will bedetermined by imminent decisions; reducingenergy-related emissions in the long runtherefore requires policy action now.

Figure 2

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

19901999

2010

N2O (energy use)

CH4 (energy use)

CO2 (energy use)

Non-energy re lated

Million tonnes of CO2 equivalent EU Kyoto target

3 This statement is based on the assumption, for the purpose of this report, that the EU will meet its KyotoProtocol targe t by using only domestic policies and measures (includ ing emissions trad ing within the EU).At the seventh Conference of the Parties to the UN Framework Convention on Climate Change (Marrakesh,November 2001) the Parties agreed to the rules for the use of both the flexib le mechanisms (jo intimp lementation, clean deve lopment mechanism, inte rnational emissions trad ing) and the sinks for meetingthe Kyoto targe ts (see Box 3) (UN 2001a, UN 2001b). Afte r ratification (expected in 2002), the EuropeanCommunity and the EU Member States could there fore also use these op tions to meet the ir targe ts,although it is not ye t known to what extent this will take p lace .

Greenhouse gas emissions

2 5

Box 3Kyoto mechanisms

In addition to domestic action byindustrialised countries, the KyotoProtocol provides three ways in whichaction taken abroad can help countries tomeet their own targets for reductions inemissions of greenhouse gases. The three‘Kyoto mechanisms’ comprise two project-based mechanisms (joint implementationand the clean development mechanism)and international emissions trading.

Joint implementation

Joint implementation (JI) is provided forunder Article 6 of the Kyoto Protocol. Itenables industrialised countries to worktogether to meet their emission targets. Acountry with an emissions reduction targetcan meet part of that target through aproject aimed at reducing emissions in anysector of another industrialised country’seconomy. Any such projects need to havethe approval of the countries involved andmust result in emission reductions thatwould not have occurred in the absence ofthe JI project. The use of carbon sinks(e.g. forestry projects) is also permittedunder joint implementation.

Clean development mechanism

Article 12 of the Kyoto Protocol sets out aclean development mechanism (CDM).This is similar to JI, but project activities

must be hosted by a developing country.As with JI, CDM projects must result inreductions that are additional to thosethat would have been achieved in theabsence of the project. They also have theadditional aim of promoting sustainabledevelopment in the host developingcountry. The CDM is supervised by anexecutive board, which approves projects.CDM projects have been able to generatecredits since January 2000 and these canbe banked for use during the firstcommitment period (2008–12). The rulesgoverning CDM projects allow only certaintypes of sinks projects (afforestation andreforestation) and countries will not beable to use credits generated by nuclearpower projects towards meeting theirKyoto targets. To encourage small-scaleprojects, special fast-track procedures arebeing developed.

Emissions trading

Article 17 of the Kyoto Protocol allowscountries that have achieved emissionsreductions over and above those requiredby their Kyoto targets to sell the excess tocountries finding it more difficult orexpensive to meet their commitments. Inthis way, it seeks to lower the costs ofcompliance for all concerned.


-50 -40 -30 -20 -10 0 10 20 30 40

Luxembourg

Germany

United Kingdom

Finland

France

Sweden

Austria

Denmark

Italy

Belg ium

Netherlands

Greece

Ire land

Portugal

Spain

EU 15

Total greenhouse gases 1990–99

Energy-re lated greenhouse gases 1990–99

Kyoto Protocol target 1990–2010

% change

The EU Kyoto Protocol target has beenshared amongst Member States in a way thatallows for their different economicdevelopment patterns.

Finland, France, Germany, Luxembourg,Sweden and the UK limited their total GHGemissions between 1990 and 1999 by at leastenough to be in line with their targets for2008–12 under the EU burden-sharingagreement4. The notable improvement inLuxembourg is due to the closure of aprimary steel plant (i.e. steel-making fromiron ore) with partial transfer of productionto electric steel-making using steel scrap.Germany has also made substantialreductions against a challenging target and,because it is the largest emitter, this,together with the UK reduction, has beenresponsible for the overall reductionachieved by the EU. However, as shown inthe indicator that follows, some of the factors

Figure 3

Most Member States have failed to reduce greenhouse gas emissions in linewith their share of the EU commitment under the Kyoto Protocol.

Change in total and energy-relatedgreenhouse gas emissions

Notes: Targe t values are fortotal emissions. The targe ts

for France and Finland arezero (i.e . no change on

1990). For Denmark,estimates that re flect

ad justments for e lectricitytrad ing (import and export)in 1990 g ive a reduction in

total g reenhouse gasemissions of 4.6 % be tween

1990 and 1999 comparedwith the increase of 4 %shown in Figure 3. This

methodology is used byDenmark to monitor

p rogress towards its nationaltarge t under the EU burden-

sharing agreement.Source: EEA.

driving these changes for Germany and theUK were one-off.

A number of Member States are finding itincreasingly difficult to control their GHGemissions. Some, notably the Netherlands,are beginning to pursue jointimplementation and clean developmentmechanism projects under the KyotoProtocol flexible mechanisms (see Box 3)to supplement domestic (including EU)abatement measures. It is not yet known towhat extent Member States will use theflexible mechanisms. The analysis in thisreport therefore assumes that only domesticpolicies and measures will be used to meetthe Kyoto targets.

For all Member States, with the exceptionof Sweden, the performance is worse forenergy-related than for total emissions. Thelarge proportion of total emissions that areenergy-related (79 % in 1990, rising to 82 %in 1999) means that further progresstowards the Kyoto burden-sharing targets,and even more for later and biggerreduction targets, will require additionalcuts in emissions from energy productionand consumption.

A number of initiatives in Member States andthe EU are paving the way for long-termreductions of emission from energy use. Forexample seven Member States have alreadyintroduced a CO

2 tax and the UK launched

the first national emissions trading scheme inearly 2002. At the EU level, the EuropeanCommission proposed a directive on aninternal EU-wide trading scheme to start in2005 which would have the dual benefit oflimiting the cost of meeting emissionreduction targets while giving the EU an earlyexperience in emissions trading before aglobal trading scheme possibly gets off theground in 2008, as part of the Kyoto flexiblemechanisms (European Commission, 2001j).Following sections provide further examplesof successful Member State and EU initiatives.

4 This conclusion is based on a ‘d istance-to-targe t’ assessment which measured how far emissions in 1999were from a linear emission reduction targe t path from 1990 to 2010, and assessed whether a MemberState was on track to meet its targe t. For a g raphical illustration of the results of this ‘d istance-to-targe t’ analysis see re lated graph in the Summary.

2 7

Transport5 is the main area for growth inenergy-related GHG emissions, havingincreased by 19.5 % across the EU between1990 and 1999, reflecting the growing demandfor personal and freight transport. Roadtransport dominates the sector, accounting for84 % of emissions in 1998. The bulk of trans-port emissions is of carbon dioxide (97 %), buttransport is also a growing source of nitrousoxide (up from 1.7 % to 2.9 % of transportemissions between 1990 and 1999). This gas isproduced in the vehicle exhaust catalysts usedto reduce nitrogen oxides and carbonmonoxide emissions from passenger cars, butthe effect should be reduced as new catalyststhat emit fewer nitrous oxides (while giving agreater reduction in emissions of nitrogenoxides) become available.

GHG emissions from industry6 fell by 8.8 %between 1990 and 1999. The main contributorwas Germany as a result of closures of old plantfuelled with coal and lignite, and structuralchanges towards less energy-intensivemanufactured products, particularly in theNew Länder, combined with investment inenergy efficiency measures. Without Germany,EU manufacturing industry emissions wouldhave been on a rising trajectory by 1999.

Between 1990 and 1999, GHG emissions fromthe energy supply sector7 fell by 9 % despite anincrease in energy demand of 23 %. The maincontribution to this was an 8 % cut in CO

2

emissions from electricity production. This islinked to switching from coal and lignite tonatural gas, increased efficiency in fossil-fuelled power plant and an expansion ofelectricity production from nuclear andrenewable sources. Much of the reduction wasachieved in Germany, mainly from the closureof low-efficiency lignite power plant, inparticular in the New Länder, and energyefficiency improvements, and in the UK mainlyfrom fuel switching from coal to natural gas.

Looking ahead, baseline projections (Ecofys,

Figure 4

The reduct ion in energy-related greenhouse gas emissions over the lastdecade was achieved through considerable reduct ions by the manufacturingand energy supply sectors, most ly offset by growth in t ransport .

Energy-related greenhouse gas emissions

19901999

2010

Million tonnes of CO2 equivalent

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

Transport

Household and services

Industry

Energy supply

Source: EEA, Ecofys.2001) expect total energy-related GHGemissions to grow between 2000 and 2010.This is driven mainly by continued growth ofemissions from transport, although thisshould be less than that experiencedbetween 1990 and 1999 because of thevoluntary agreement between the EU andcar manufacturers to reduce average carbondioxide emissions from the new passengercar fleet by an average of 25 % by 2008 (theACEA Agreement). The growth in emissionsfrom transport is partially offset by acontinued fall from industry, driven byfurther structural change and increasedinvestment in energy efficiency. Emissionsfrom the energy supply sector are expectedto stay about level between 2000 and 2010 asthe demand for energy continues to grow,but is offset by efficiency improvements andfurther switching to less carbon-intensivefuels, particularly natural gas.

Looking beyond 2010, there is an addedpotential for growth in energy-relatedemissions with the rundown of nuclearpower production should this be replaced byfossil-fuelled power stations.

5 Transport emissions exclude emissions from inte rnational transport in accordance with reportingrequirements of the EU greenhouse gas monitoring mechanism (and also the United NationsFramework Convention on Climate Change (UNFCCC)).

6 Industry emissions are those from all manufacturing industries, includ ing construction. Industry emissionsalso include emissions from e lectricity and heat p roduction by the industry.

7 Energy supp ly sector emissions include those from coal mining , o il and gas exp loration and extraction,pub lic e lectricity and heat p roduction, o il re fining and other industries engaged in converting primaryenergy into energy products. It also includes fug itive emissions from the exp loration, p roduction,storage and transport of fue ls.


1.2. Air pollut ion

Sulphur dioxide (SO2) is produced by the

oxidation of sulphur present mainly in coal,lignite and oil fuels. Together with nitrogenoxides it is the main energy-related cause ofacid deposition8 resulting in damage to soiland water quality, crops and other vegetationand terrestrial and aquatic ecosystems. Aciddeposition also damages buildings, and islinked to adverse health effects, both directlyand through particulate formation. SO

2 itself

also causes direct adverse effects on humanhealth.

Action to reduce SO2 emissions have been

taken at the EU level through measures thatinclude targets for reducing total SO

2

emissions for the EU and each Member Stateset in the national emission ceilings directive(NECD) (European Parliament and Council,2001c)9.

Energy-related sulphur dioxide emissions fell considerably between 1990 and1999; this is the main reason that the EU and most Member States areexpected to achieve their 2010 targets for reducing total sulphur dioxideemissions, as set in the nat ional emission ceilings direct ive.

Figure 5 Change in total and energy-relatedsulphur dioxide emissions

% change

Germany

Luxembourg

Denmark

United Kingdom

Finland

Austria

Sweden

Netherlands

Belg ium

France

Italy

Spain

Ire land

Portugal

Greece

EU 15

-100 -80 -60 -40 -20 0 10

Total SO2 1990–99

Energy-re lated SO2 1990–99

Target 1990–2010


Source: EEA.

Energy production and consumptionaccounted for over 90 % of emissions in1999 (see Table 2), with 51 % of this comingfrom power production. Total emissionshave been reduced by 59 % between 1990and 1999, putting the EU on track to achievethe 77 % reduction by 2010 (relative to1990) set in the NECD.

With regard to total emissions, most MemberStates are on track to achieve their NECDtargets. Exceptions are Greece, Ireland,Portugal and Spain10. The same is true forenergy-related emissions, although Spain’srate of improvement was marginally betterfor these.

All energy activities have contributed to thereduction. Energy supply cut emissions by59 % between 1990 and 1999, encouraged bythe requirements of the directive on largecombustion plant (European Parliament andCouncil, 2001a), but this remains the mainsource, accounting for 61 % of the total.More than half of the decrease can beattributed to the introduction of flue gasdesulphurisation (FGD) and the use of low-sulphur coal and oil. The remainder is duemainly to changes in electricity productionincluding fuel switching (mainly from coaland lignite to natural gas) and improvedefficiency, with a small element due togrowth in production from nuclear andrenewable sources (see Box 4).

The fall in energy-related emissions fromhouseholds and services (72 % in total) wasdue mainly to fuel switching to gas. Industryreduced energy-related emissions by 59 % bygreater use of gas in place of coal, ligniteand oil for space and process heating, fittingflue gas desulphurisation and as a result ofstructural change. The fall in transport(43 %) was achieved mainly through thereduced sulphur content of diesel fuel inresponse to the 1993 directive on thesulphur content of liquid transport fuels(European Parliament and Council, 1993a).

8 Ammonia emissions are also an important source of acid deposit ion but energy-re lated activit ies onlyaccounted for 2.4 % of total EU ammonia emissions in 1999.

9 NECD targe ts were se t in absolute te rms, but for comparative purposes they are presented here aspercentages. Consequently, should the 1990 emissions inventories be revised, this would result in a changein the percentage targe ts used here .

10 This conclusion is based on a ‘d istance-to-targe t’ assessment which measured how far emissions in 1999were from a linear emission reduction targe t path from 1990 to 2010, and assessed whether a MemberState was on track to meet its targe t.

2 9

Note: ‘O ther energy use ’includes households andservices.Source: EEA.

Tab le 2SO2 emissions by source (ktonnes)

1990 1999

Energy supp ly 10 104 4 132

Transport 828 469

Industrial energy use 3 023 1 221

Other energy use 1 596 445

Non-energy sources 811 463

Total 16 362 6 730

NOXand SO

2 emissions from electricity

production have fallen by 44 % and 60 %respectively over the period 1990 to 1999,despite a 16 % increase in the amount ofelectricity produced.

If the electricity production industry hadremained unchanged (in terms of thetype of power plant used and the fuelmix) from 1990, emissions of NO

X and

SO2 would each have increased by 16 % by

1999, in line with the increase inelectricity output. In fact, annualemissions of NO

X fell by 44 %, and SO

2 by

60 %, as a result of a number of changesduring the period.

For both NOX and SO

2, around 60 % of

the decrease was due to the introductionof emission-specific abatement measures.For NO

X the most important were the

introduction of flue gas treatment and theuse of low NO

X burners. For SO

2 emissions

they were the introduction of flue gasdesulphurisation (FGD) and the use oflower-sulphur coal and fuel oil.

Most of the remaining decrease, for bothNO

X and SO

2, was due to changes in the

fossil fuel mix (20–25 %), improvedefficiency of fossil-fuelled electricityproduction (about 10 %) and anincreased share of nuclear and renewables(about 10 %).

Explanat ions for the reduct ion of emissions ofnit rogen oxides in the elect ricit y sector

19901993

19961999

Million tonnes

Exclud ing the increasedshare of nuclear and renewable energy

Exclud ing efficiencyimprovements


Exclud ing combustion modification & flue gas treatment

Actual emissions0

0.5

1.0

1.5

2.0

2.5

3.0

Note: Data and analysis p resented here are p re liminaryresults of ongoing work to re fine and improve associatedstatist ics and methodology.Source: EEA.

Explanat ions for the reduct ion of emissions ofsulphur dioxide in the elect ricit y sector

19901993

19961999

0

2

4

6

8

10

12

Million tonnes

Exclud ing the increased share of nuclear and renewable energy

Exclud ing efficiency improvements


Exclud ing flue gas desulphurisation and the use of low sulphur fue ls

Actual emissions

Note: Data and analysis p resented here are p re liminaryresults of ongoing work to re fine and improve associatedstatist ics and methodology.Source: EEA.

Box 4How have reduct ions in nit rogen oxides and sulphur dioxide been achieved in the elect ricit y sector?


Figure 6 Change in total and energy-relatedemissions of nit rogen oxides

Energy-related emissions of nit rogen oxides fell, placing the EU and someMember States on t rack to achieve their 2010 reduct ion targets for totalnit rogen oxide emissions, as set in the nat ional emission ceilings direct ive.

% change -60 -40 -20 0 20

United Kingdom

Germany

Sweden

Luxembourg

Netherlands

Italy

Denmark

France

Finland

Belg ium

Austria

Ire land

Spain

Portugal

Greece

EU 15

Total NOx 1990–99

Energy-re lated NOx 1990–99

Target 1990–2010


Source: EEA.


Acidifying nitrogen oxides (NOX) are

produced by the oxidation of nitrogenpresent in coal and lignite and incombustion air. They have similar impactson the environment as sulphur dioxide. Inaddition NO

X is an important precursor for

the formation of ground-level ozone, whichcan have adverse effects on human healthand can damage crops and other vegetation.

Energy use accounted for nearly all (97 %)of NO

X emissions in 1999, with over half of

this coming from transport (65 %) (seeBox 5). Total emissions fell by 25 % between1990 and 1999, which falls short of the 30 %reduction by 2000 targeted in the fifth EUenvironment action plan. However, if therate of improvement is sustained, the

national emission ceilings directive (NECD)target for an EU-level cut of totalemissions by 51 % (relative to 1990) shouldbe attained by 2010.

The NECD sets targets at Member Statelevel as well as for the EU overall. Germany,Italy, Luxembourg, the Netherlands,Sweden and the UK are currently on trackto attain their targets11. Other countriesneed to accelerate the reduction ratesachieved between 1990 and 1999, whileGreece, Ireland, Portugal and Spain needto reverse their growing emission trends.

Across the EU the greatest absolutereduction came from transport, due mainlyto the introduction of catalytic converterson motor vehicles. However, some of theenvironmental benefit from implementingthis technology has been cancelled by thegrowth in road transport. The energysupply and industry sectors alsoconsiderably reduced their energy-relatedemissions, by 43 % and 23 % respectively.This was achieved through a combinationof measures, encouraged by therequirements of the large combustion plantdirective (European Parliament andCouncil, 2001a), including the use ofpollution abatement technologies (e.g. lowNO

X burners, flue gas treatment and

selective catalytic converters) and fuelswitching from coal and lignite to naturalgas, and by the requirements of theintegrated pollution prevention andcontrol directive (European Parliamentand Council, 1996a) on the use of bestavailable technology. The reduction inemissions from manufacturing industry wasalso linked to some structural changes awayfrom energy-intensive industries.

3 1

-80 -60 -40 -20 0 20 40

Germany

Netherlands

United Kingdom

Austria

Luxembourg

France

Denmark

Italy

Belg ium

Sweden

Finland

Ire land

Spain

Greece

Portugal

EU 15

Total NMVOCs 1990–99

Energy- re lated NMVOCs 1990–99

Target 1990–2010

% change

The reduct ion in energy-related emissions of non-methane volat ile organiccompounds (NMVOCs) has great ly helped to put the EU and some MemberStates on course to achieve their 2010 targets for reducing total NMVOCemissions, as set in the nat ional emission ceilings direct ive.

Figure 7Change in total andenergy-related NMVOC emissions

Note: Targe t values are fortotal emissions.Source: EEA.

Non-methane volatile organic compounds(NMVOCs) in the atmosphere react withnitrogen oxides in the presence of sunlightto form ozone. Ozone formed by suchprocesses can build up at ground level,particularly in urban areas, having anadverse effect on human health as well asdamaging crops and other vegetation.

Energy use accounts for about half ofNMVOC emissions, with the bulk of thiscoming from transport (see Box 1). Total EUemissions were reduced by 28 % between1990 and 1999, which falls short of the 30 %reduction target for 1999 set in the fifth EUenvironment action plan. However, energy-related emissions were reduced by 35 %. Thenational emission ceilings directive (NECD)has set a target for a 60 % cut in totalemissions, to be attained by 2010, and theEU overall is on course to attain this target12.

Most Member States, led by Germany, theNetherlands and the UK, have shared in thereduction. Portugal and Greece increasedemissions over the 1990 to 1999 period.

The greatest absolute reduction came fromtransport (38 %), due mainly to theintroduction of catalytic converters andother exhaust gas treatments on roadvehicles, driven by stricter EU standards forboth passenger and commercial vehicleemissions (see Box 5). Nonetheless transportremains the largest source, accounting for 74% of all energy-related emissions in 1999.Emissions from the energy supply sectorwere also reduced (37 %), mainly through acut in fugitive emissions from the storageand distribution of petrol, driven byimplementation of the EU directive on thecontrol of volatile organic compound (VOC)emissions from petrol (European Parliamentand Council, 1994).



Despite significant improvements between1990 and 1999, transport remains by far thelargest source of NO

X (> 60 % of total

emissions) and the main energy-relatedsource of NMVOCs (37 % of total emissions).

The downward trend in road transportemissions should be maintained in thefuture through the increasingly stringentstandards for vehicle exhaust emissions set inthe Euro I, II, III and IV standards for cars,goods vehicles and heavy-duty vehicles(European Parliament and Council 1991,1993b, 1998a and 1999). Non-road transportemissions arise mainly from off-road vehiclesand shipping.

The actual rate of reduction will bedetermined by the rate of replacement ofthe EU vehicle fleet and the rate of growthin demand for mobility. Car lifetimes areof the order of 10 to 15 years, so the fullbenefit of these improved standards willnot be gained for some time. Moreover,there are uncertainties over the long-termperformance of exhaust catalysts underactual operating conditions. However, inthe long term the reduction will besubstantial in view of the largeimprovements in emission standardsrequired for 2000 and 2005 vehicles.

Source: EEA.Note: The re lat ive emission standard shows how the standard has beentightened re lative to the first that was se t. For example the emissionstandard for NVMOCs from pe tro l cars in 2008 is only 16 % of the 1992-93 standard and the re fore has a re lative emission standard of 0.16.Source: EEA.

0

2

4

6

8

10

12

14

16

Million tonnes

1990 1999

Non-energy

Other energy

Industry

Other transport

Road transport

Energy supply

1992-93

19962000

20052008

0.0

0.2

0.4

0.6

0.8

1.0

Petrol cars

Diese l cars

Heavy-duty vehicles

Relative emission standard

0

2

4

6

8

10

12

14Million tonnes

1990 1999

Non-energy

Other energy

Industry

Other transport

Road transport

Energy supply

1992-93

19962000

20052008

0.0

0.2

0.4

0.6

0.8

1.0 Petrol cars

Relative emission standard

Heavy-duty vehicles

Diese l cars

Emissions of non-methane volat ile organic compounds Emissions of nit rogen oxides

Current and future vehicle emission standardsfor non-methane volat ile organic compounds

Current and future vehicle emission standardsfor nit rogen oxides

Source: EEA. Source: EEA.

Box 5 What further improvements can be ant icipated in emissions of nit rogen oxides and non-methane volat ileorganic compounds from energy-related act ivit ies?

3 3

0

5

10

15

20

25 SO2

NOX

Primary PM10

Other transport

Road transport

Other energy

Industry

Energy supply

1990 Sector 1999 Sector 1990 Pollutant 1999 Pollutant

Million tonnes

Breathing in fine particulate matter can havean adverse effect on human health. Theimpact is predominantly associated with PM

10

(particulate matter with a diameter of10 µm or less). Inhalation of such particlescan increase the frequency and severity ofrespiratory symptoms and the risk ofpremature death.

PM10

results from direct emissions (primaryPM

10) and from precursors, such as

nitrogen oxides, sulphur dioxide andammonia, which are partly transformed intoparticles by chemical reactions in theatmosphere (secondary PM

10). Energy-

related particulate emissions accounted for87 % of total EU emissions in 1990, falling to83 % in 1999. Of these, about 14 % camefrom primary sources, 61 % from NO

X and

24 % from SO2. However, these estimates are

less accurate than for other pollutantsbecause of uncertainties in emissions ofother particulate species, such as organicand inorganic carbon compounds.

Total energy-related PM10

emissions areestimated to have fallen by 37 % between1990 and 1999, with most of the reductioncoming from the NO

X (13 %) and SO

2

(23 %) precursors. Energy supply, roadtransport and industry contributed most tothis reduction through fuel switching tolower-sulphur fuels, end-of-pipetreatments in industry and power supply, andincreased penetration of catalytic convertersin road vehicles.

There are no emission limits or targets forPM

10 within the EU, although the area

Figure 8Energy-related primary andsecondary part iculate emissions

Energy-related emissions of part iculates fell by 37 % between 1990 and 1999,mainly as a result of reduct ions from power plant and road t ransport .

Notes: PM10 arising fromNH3 is included in the totalsbut it is not visib le in thegraph because it is such asmall fraction. Estimates forpart iculates are much moreuncertain than for other airpollutants.Source: EEA.

benefits from limits to the precursors underthe national emission ceiling directive. Airquality concentration limit values are setunder the ambient air quality directive(European Parliament and Council, 1996c).Despite the improvements described above,the Auto-Oil II programme (EuropeanCommission, 2000c) has estimated that theseair quality standards are likely to beexceeded in urban locations, mainly as aresult of the continued growth of roadtransport.


Figure 9

Oil pollut ion from offshore installat ions and coastal refineries has beenreduced, but major oil tanker spills cont inue to occur.

Marine environment oil pollut ion

19901991

19921993

19941995

1996

19971999

19980

5

10

15

20

25

Oil d ischarge (thousand tonnes)

Offshore installationsRefineries

19901991

19921993

19941995

1996

19971999

19982000

0

20

40

60

80

100

120

140

160

Oil sp ilt (thousand tonnes)

(109 tonnes)

(171 tonnes)

(250 tonnes)

From refineries and offshore installat ions

From accidental oil tanker spills (above 7 tonnes per spill)

Sources: Eurostat, OSPAR, CONCAWE, DHI, ITOPF.

1.3. Other energy-relatedpressures

Oil pollution from coastal refineries, off-shore installations and maritime transportplace significant pressures on the marineenvironment. Refinery emissions have beencontrolled under national integratedpollution control regulations and are nowalso subject to the EU directive on integratedpollution prevention and control, whichrequires the application of the best availabletechnology to new and refurbished plant.Discharges from offshore installations areregulated by the dangerous substancesdirective (European Parliament andCouncil, 1976) and the OSPAR Conventionfor the Protection of the MarineEnvironment of the North East Atlantic.

Oil discharges from offshore installationsand refineries were reduced by about 40 %between 1990 and 1999. Refineries reducedtheir discharges by 68 % and offshoreinstallations by 35 %. These reductions wereachieved through the increased applicationof cleaning and separation technologies anddespite increasing production.

Tanker oil spills continue, although both thefrequency and amounts involved havedeclined over the past decade. This mayreflect the erratic occurrence of suchaccidents, but it is encouraging that theimprovement has come despite increasingmaritime transport of oil. Increased safetymeasures, such as the introduction ofdouble-hulled tankers, have contributed tothis improvement. However, the data do notinclude spills and discharges below 7 tonnes,and therefore underestimate oil pollutionfrom maritime transport.

3 5

Nuclear power is responsible for a steadyaccumulation of radioactive waste that posesa potential threat to the environment. Therelease of radioactivity to the environmentcan result in acute or chronic impacts that,in extreme cases, can cause loss of biota inthe short term and genetic mutation in thelonger term, both of which may result inunknown or fatal effects. Increased levels ofradioactivity can also be passed up throughthe food chain and affect human foodresources. Radioactive waste consists of threecategories:

• Low-level waste (LLW) — slightly radio-active materials, such as safety clothing;

• Intermediate-level waste (ILW) — moreradioactive materials such as sludge fromwater clean-up and some reprocessing anddecommissioning wastes;

• High-level waste (HLW) — initially thiswaste is predominantly spent nuclear fuel(the fuel removed from nuclear powerplant after most of its energy has beenused up). Some spent fuel is reprocessedto separate plutonium and uranium forreuse as nuclear fuel. The liquid rafinateleft over from this process is stored forsome years and then vitrified into a solidform, which constitutes the secondimportant source of HLW. Spent fuel andvitrified HLW is the most highlyradioactive waste, in many cases takingseveral hundred thousand years to decay.

LLW and some ILW is routinely disposed ofat surface or near-surface burial sites. Plansfor the disposal of ILW not suitable for near-surface disposal and all HLW generallyinvolve deep burial, but at present mostwaste of this type is held in engineered storesawaiting agreement on the location anddesign of deep repositories. Progress inidentifying suitable sites for deep burial isslow because of a lack of scientific consensuson the methods to be used and publicconcerns over safety aspects (EuropeanCommission, 1998b).

The quantity of spent fuel producedprovides a ‘reliable representation of theradioactive waste disposal situation and its

Figure 10Annual quant it ies of spentnuclear fuel from nuclear power plant

Highly radioact ive waste from nuclear power product ion cont inues toaccumulate: a generally acceptable disposal route is yet to be ident if ied.

Note: The vast majority ofhighly rad ioactive wasteconsists of spent fue l andspent-fue l rep rocessingwastes. 2000 figures forSpain, Sweden and the UKare based on p rovisionaldata. Pro jected data aretaken from nationalp ro jections with theexcep tion of Sweden for2010, which is an OECDprojection. Austria,Denmark, Greece , Ire land ,Luxembourg and Portugaldo not have nuclear powerp lant. Italy phased outcommercial nuclear power in1987. The p ro jectedincrease attributed toFinland , Italy and theNetherlands is due to apro jected increase fromFinland only.Source: OECD.

evolution over time’ (OECD, 1993). Nuclearwaste data other than for spent fuel are notcomprehensive or up-to-date. The totalamount of spent fuel discharged fromnuclear power plant, measured in tonnes ofheavy metal, increased by more than 48 500tonnes between 1985 and 2000, reflectingthe total amount of nuclear power producedover that period (OECD, 1999). With onlylimited potential for increasing the efficiencywith which nuclear heat is converted intoelectricity in existing power stations orgetting more energy out of each tonne offuel (increased burn-up), a quite similar rateof nuclear fuel discharge can be expectedover the next decade for all countries exceptthe UK, reflecting similar rates of nuclearpower production. Discharges in the UK areexpected to decline from 2000 to 2010 assome plants are retired.

The European Commission has proposedmore support for research and developmenton nuclear waste management in itssustainable development strategy (EuropeanCommission, 2001b).

19851990

19952000

20052010

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

4 500

Tonnes of heavy metal

United KingdomFrance

GermanySwedenBelg ium

SpainFinland, Netherlands & Italy


2. Are we using less energy?

Energy consumpt ion is increasing, mainly because of growth in t ransport but alsoin the household and services sectors. However, the rate of increase is expectedto slow by 2010 as fuel efficiency improvements in t ransport are realised.

One of the aims of the EU strategy for integrating environmental considerations into energypolicy is to increase energy saving (European Commission, 1998a). All things being equal,an increase in energy use will result in a corresponding increase in environmental pressures.Therefore one way of reducing such pressures is to use less energy, by reducing energydemand (e.g. for heat, light, personal mobility, freight delivery), by using more energy-efficient devices (thereby using less energy per unit of demand), or by a combination of thetwo. This section looks at the overall pattern of energy consumption while section 3examines whether we are finding ways of improving energy efficiency.

PR

ESSU

RE

DR

IVE

RE

NE

RG

YD

RIV

ER

PR

ESSU

RE

EN

ER

GY

XX

=

3 7

Figure 11Final energy consumpt ion

0

200

400

600

800

1 000

1 200

Services

Households

Industry

Transport


19901999

2010

Energy consumpt ion in the EU cont inued to grow between 1990 and 1999;this t rend is expected to cont inue.

EU final energy consumption13 grew by anaverage of 1.1 % per year between 1990and 1999, compared with average grossdomestic product (GDP) growth of 2.1 %per year. It increased in absolute terms inall sectors except manufacturing industry,which had recovered to roughly its 1990level by 1999. The relative decline inindustry’s consumption reflects someefficiency improvements but mainlystructural changes, including a shifttowards less energy-intensive industries, ashift in the location of energy-intensiveindustries away from industrialised EUcountries, and post-unificationrestructuring of German industry. Thefastest growth in demand was for transport,which increased its share from 29.4 % to32 % over the period. The services sectoralso had faster-than-average growth,increasing its share from 13.3 % to 14.0 %.

Baseline projections developed for theEuropean Commission14 (NTUA, 2000a)expect continued growth in consumptionfrom 2000 to 2010, but at a lower rate.Consumption is expected to increase in allsectors. The rate of increase in thetransport sector is expected to be less thanfor 1990 to 1999. This is due to expectedimprovements in road vehicle fuelefficiencies, stemming from the voluntaryagreement between car manufacturers andthe EU (the ACEA agreement), rather thanto a slowdown in the growth of demand formobility.

Within this demand pattern, importantchanges are occurring in the mix of energysources. Consumption of coal and lignite(outside electricity production) halvedbetween 1990 and 1999, and is expected todecline further. Coal and lignite are majorsources of energy-related acidifying gasesand particulate emissions, as well asreleasing more carbon dioxide per unit ofenergy consumed than other fuels. Asshown in the previous section, theenvironment has already benefited fromthe trend away from these fuels. In contrastelectricity continues to take an increasingshare of the market and, if it is produced

Source: Eurostat.with the current fuel mix, the pressure onthe environment could increase. Oil-derivedfuel consumption (mainly for transport) alsogrew between 1990 and 1999, and this isexpected to continue in absolute terms,although it may take a slightly smaller shareof a growing total market by 2010. Thisreflects the dominance of oil-based fuels intransport, with alternative fuels that couldplace less pressure on the environment atonly an early stage of commercialdevelopment.

13 Final energy consumption is the consumption of the transport, industrial, household and services sectors. Itincludes the consumption of converted energy (e lectricity, pub licly supp lied heat, re fined oil p roducts,coke , e tc.) and the d irect use of p rimary fue ls such as natural gas or renewab les (e .g . solar heat or biomass).

14 See Annex 1 for information on the base line projections.

1990 1999

Coal and lignite 8 % 4 %

Oil 44 % 46 %

Natural gas 18 % 21 %

Electricity 18 % 20 %

Other 12 % 9 %

Tab le 3Percentage shares of energysources in f inal energy demand

Source: Eurostat.Note: O ther energy sources are pub licly supp liedheat and d irect use of renewab le energy sources suchas solar heat and b iomass.


Figure 12 Growth in f inal energy consumpt ion and elect ricit yconsumpt ion, 1990–99

Elect ricity consumpt ion in the EU grew faster than final energy consumpt ionbetween 1990 and 1999; this t rend is expected to cont inue.

Source: Eurostat.

United Kingdom

Sweden

Spain

Portugal

Netherlands

Luxembourg

Italy

Ire land

Greece

Germany

France

Finland

Denmark

Belg ium

Austria

EU15

Average annual % growth rate


-1 0 1 2 3 4 5 6

Final energy consumption: e lectricity

Electricity is particularly important to theinteraction between energy consumption andthe environment for a number of reasons:

• Its flexibility of use and the importanceplaced by consumers on the energy servicesit provides mean that demand is growingsignificantly faster than for total final energy.

• Demand is also being affected byelectricity market liberalisation that istending to drive down prices.

• Because electricity is produced from otherfuels with a conversion efficiency of typic-ally 30–50 %, consumption of one unit ofelectrical energy results in the consump-tion of two to three units of another ener-gy source. Since most electricity is produc-ed from fossil fuels, growth in electricityconsumption without other changes wouldresult in a dispropor tionate increase inenvironmental pres sures, in particular incarbon dioxide emissions.

• A large proportion of electricity isproduced in large centralised plants that

provide better economies of scale forpollution abatement measures.

• There is a strong drive for innovation inelectricity production to produce cheaper,cleaner and more efficient technologies.

• Combined heat and power offerssubstantial energy efficiency gains.

• Electricity offers a route for developingand exploiting non-fossil energy sources.

Consequently an increase in electricityconsumption is not necessarily bad for theenvironment, providing this comes fromhigh-efficiency, low-emission technologies thatreduce sufficiently the environmentalconsequences of electricity production.

Electricity consumption across the EU grew atan average annual rate of 1.9 % between 1990and 1999. This compares with a GDP growthrate of 2.1 % per year and overall final energygrowth of 1.1 % per year, which shows that thelinkage between electricity consumption andeconomic growth remains stronger than foroverall final energy consumption. Growth inelectricity consumption was particularly strongin the services sector followed by the house-hold sector. In both cases this was linked toadditional energy demand rather than thesubstitution of electricity for another fuel.

The use of electrical energy for heating is aparticularly inefficient use of the originalenergy resource, since the vast majority ofelectrical energy is produced from heat.Member States are finding ways to address thisissue. In Denmark, the Electricity SavingFund, financed by a levy on domesticelectricity consumption, enables thegovernment to grant subsidies for theconversion of electrically heated dwellings todistrict heating or natural gas. The fund isexpected to facilitate the conversion ofaround 50 000 electrically heated dwellings by2006. Also, natural gas companies encouragecustomers to choose gas rather than electricityfor cooking. Each new installation issupported by a subsidy from the government.

Electricity consumption across the EU isprojected to continue to grow to 2010 at anannual average rate similar to that between1990 and 1999 (NTUA, 2000a). Once againgrowth in consumption is expected to bestrongest in the economically buoyant servicesarea. Transport-related electricity consump-tion is also expected to grow significantly,driven by further electrification of the railnetwork, but this will be from a very low base.

1990 1999 Annual g rowth indemand 1990–99 (%)

Household 45 54 2.2

Industry 69 77 1.2

Services 38 49 2.8

Transport 4 5 2.2

Total 156 185 1.9

Tab le 4 Elect ricit y consumpt ion by sector (TWh/year)

Source: Eurostat.

3 9

3. How rapidly is energy efficiencybeing increased?

The EU sixth environment actionprogramme identifies the promotion ofenergy efficiency as a priority action(Council of the European Union, 2002).The Barcelona European Council, March2002, stressed the need to show substantialprogress in energy efficiency by 2010(European Council, 2002).

Energy efficiency is concerned withminimising the energy needed to meet thedemands for energy-related services thatoriginate from economic and social drivers(e.g. economic growth, demand for freighttransport, personal mobility, warmth andcomfort in the home). Cost-effectiveimprovements in the way we use energycontribute to all three main goals of energypolicy: security of supply, competitivenessand environmental protection.

Improvements in energy efficiency have been slow, but improvements in someMember States are showing the potent ial benefits of good pract ices andst rategies.

Energy efficiency applies both to theproduction and the consumption of energy.

Efficiency in the energy supply industries(e.g. electricity production, oil refining) isthe ratio of energy input to energy outputand thus comparatively easy to measure.Energy intensities are used in this report tomeasure trends in energy consumptionefficiency. Energy intensities measure theenergy needed to support economic activity(e.g. energy per unit of gross domesticproduct (GDP) or value added) or toprovide social needs (e.g. energy per capita).They therefore indicate trends in energyefficiency and measure changes arising fromboth structural and technological change(see Box 7).

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3.1. Efficiency in energy supply

The overall efficiency of conversion ofprimary into usable or final energy is theratio of final energy consumption15 to totalenergy consumption16. The differencebetween these is the energy used inconversion processes such as electricitygeneration and oil refining, the energysupply industry’s own consumption, andlosses in distribution and delivery.

The ratio remained fairly constant at about65 % between 1990 and 1999. Efficiencygains in conversion processes were offsetby converted fuels (e.g. electricity, refinedpetroleum products) taking a larger shareof final energy consumption (see Box 6).

Figure 13 Rat io of f inal to total energy consumpt ion

The overall efficiency with which energy is converted for final consumpt ion didnot improve between 1990 and 1999.

19901993

19961999

0

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60

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%Source: Eurostat.

15 Final energy consumption is the energy consumption of the transport, industry, household , agriculture andservices sectors. It includes the consumption of converted energy (i.e . e lectricity, pub licly supp lied heat,re fined oil p roducts, coke , e tc.) and the d irect use of p rimary fue ls such as natural gas or renewab les (e .g .solar heat or b iomass).

16 Total energy consumption is also known as gross inland energy consumption (GIEC). It is a measure of theenergy inputs to an economy and can be calculated by add ing total ind igenous energy production, energyimports minus exports and ne t withdrawals from existing stocks.

4 1

The ratio of final to total energy consump-tion remained almost constant at about 65 %over the period 1990-99 mainly as result oftwo approximately equal but opposingeffects, illustrated in the diagram below.They are:

• The overall efficiency of electricitysupply (including own use anddistribution) improved by about 5 %between 1990 and 1999, so theelectricity industry consumed by about5 % less energy than it would otherwisehave consumed. On its own, this wouldhave increased the ratio of final to totalenergy consumption (i.e. less totalenergy would be needed to satisfy thedemand from final consumers).

• The share of electricity in finalconsumption increased by 2 % between1990 and 1999. This increased theamount of energy consumed in electric-

ity production in 1999 by 2 % dividedby the overall efficiency of electricityproduction in 1999 (i.e. about 36 %),which is about 6 % in total. On its own,this would have decreased the ratio offinal to total energy consumption (i.e.more total energy would be needed tosatisfy the demand from final consumers).

In addition to the changes in electricityproduction, the efficiency of oil refining fellby about 1 % between 1990 and 1999,reflecting the additional energy needed toproduce higher-specification fuels (i.e. lowsulphur, unleaded). This on its own wouldhave decreased the ratio of final to totalenergy. However, less energy was consumedby other energy supply industries, due tofactors such as the rundown of coal mining,which on its own would have increased theratio. Overall these trends again effectivelycancelled each other out.

0

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Consumption by other energy supply industries

Consumption for e lectricity production

Other

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Components of total and f inal energy consumpt ion

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Increase in final energy demand due to growth in e lectricity consumption

Increase in energy consumptiondue to increased demand for e lectricity

Decrease in energy consumptiondue to increased e lectricityproduction efficiency

ALMOST CANCELLED OUT BY

Schemat ic illust rat ion of the opposing effects ofincreased elect ricit y demand and improvedelect ricit y product ion eff iciency on the rat io off inal to total energy consumpt ion

Notes: 1. ‘Consumption of other energy supp ly industries’includes o il re fine ries, fossil fue l extraction, heat p roductionby pub lic p roducers, heat and e lectricity p roduction byautogenerators and the p roduction of other p rocessed fue lssuch a smoke less so lid fue l.2. The ‘O ther’ category in final energy consumption includesheat and b iomass/waste .Source: Eurostat.

Box 6Why is overall EU energy conversion eff iciency not improving?


With electricity taking an increasing share ofEU energy consumption, it is important forelectricity production to operate withmaximum efficiency. This is doublyimportant for fossil-fuelled plant, a majorsource of greenhouse gases and airpollutants. The share of electricity producedby such plant remained steady at a little over50 % over the period 1990–99. Someimprovement in efficiency can be gained bybetter operational management, but majorimprovements come from the retirement ofold, inefficient facilities when they reach theend of their design lives (typically 25 to 40years). Imminent investment decisions onnew plant will affect the environmentalperformance of electricity production forseveral decades.

Although electricity production from fossil-fuelled plant has remained steady, therehave been significant changes to the mix offuels used (see later indicator) and in themix of technologies in operation (Table 5).The most important are the switch to gasfiring, which increased from 14 % ofproduction in 1990 to 33 % in 1999, andinvestment in gas-turbine combined-cycle(GTCC) plant. Such plants can achieveconversion efficiencies of the order of50–60 %, with the prospect of even higherefficiencies in future plant, compared with36–38 % for the steam turbine plant usedwith coal and lignite (European Commission,2002). This made a significant contributionto the overall improvement in the efficiencyof electricity production from fossil fuelsrecorded between 1990 and 1999.

The efficiency of elect ricity product ion from fossil fuels improved between1990 and 1999, but elect ricity consumpt ion from fossil fuels grew morerapidly, outweighing the benefits to the environment from these improvements.

Figure 14 Improvement in fossil fuelelect ricit y product ion eff iciency

Notes: The calculation ofthe e fficiency of e lectricityp roduction from fossil fue lsincludes fue l inputs for bothe lectricity and heatp roduction from pub liccombined heat and powerp lant, and only e lectricityoutput from combined heatand power p lant. The fue linput and output datainclude b iomass/waste whichaccounted for 3 % ofe lectricity p roduction in1999.Source: Eurostat. 1990

19931996

199996

98

100

102

104

106

Index (1990 = 100)

Tab le 5 Percentage of fossil-fuelled elect ricit yproduct ion capacity by technology

1990 1993 1996 1999

Steamturb ines 91 % 88 % 82 % 78 %

Gas turb ines(sing le cycle ) 7 % 7 % 8 % 8 %

Gas turb ines(combined cycle) 1 % 4 % 8 % 12 %

Oil andgas eng ines 1 % 1 % 2 % 2 %

4 3

Combined heat and power (CHP)technology uses fossil fuels, biomass or wasteto generate a mix of heat and electricity. Inso doing it avoids much of the waste heatlosses associated with normal electricityproduction, thereby utilising more than80 % of the energy in the fuel rather thanthe average of about 36 % in current plantproducing only electricity. An expansion ofCHP could make an appreciable contributionto energy efficiency and consequently to theenvironmental performance of electricityand heat production. The EU has set anindicative target to derive 18 % of allelectricity production from CHP by 2010(European Commission, 1997a).

CHP increased its share of electricityproduction from 9 % to almost 11 %between 1994 and 1998, although this rate ofexpansion is not sufficient to achieve the EUtarget.

Growth was strongest in Member States thathave ambitious programmes and targets forthe technology such as Finland, Denmark,Italy, the Netherlands and Spain. However,progress in other countries with ambitioustargets, such as Germany (20 % of power by2010) and the UK (increase capacity from 3to 10 GW, 1994–2010) was less.

Concern is raised by preliminaryinformation for 2001, which suggests thatthe CHP share of production has declinedsince 1998 (COGEN Europe, 2001). Thisreverse is spread across the EU, but mostsevere indications were noted in Germany,the Netherlands and the UK.

This decline has been caused by acombination of factors.

• Increasing natural gas prices (gas is thepreferred fuel for new CHP) havereduced the cost-competitiveness of CHP.

The share of elect ricity from combined heat and power (CHP) increased acrossthe EU between 1994 and 1998, but faster growth is needed to meet the EUtarget ; preliminary informat ion suggests that the share of elect ricity producedby CHP declined between 1998 and 2001.

Figure 15Share of gross elect ricit y product ion fromcombined heat and power plant

Source: Eurostat.• Falling electricity prices, resulting from

market liberalisation and increasedcompetition, have also hit thecost-competitiveness of CHP.

• Uncertainty over the evolution ofelectricity markets as liberalisation isprogressively extended is makingcompanies reluctant to invest in CHP.

• Aggressive pricing has been used byelectricity utilities to protect their market.

Clearly further measures are needed acrossthe EU to achieve the target of producing18 % of electricity from CHP, against abackground of growing electricity demandand increasing liberalisation of electricitymarkets. The German CHP law, passed inearly 2002, provides an example of how toalleviate this situation through a number ofsupport mechanisms, including agreedelectricity purchase prices fro existing CHPinstallations and for new, small-scale units.

0

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1994

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18 % target by 2010

1998


19901993

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Gross domestic product (constant 1990 prices)


Final energy consumption: intensity

3.2. Efficiency in energyconsumpt ion

Overall performance in improving energyefficiency can be measured by the final energyintensity indicator (i.e. final energyconsumption per unit of GDP) — see Box 7.

Final energy intensity in the EU fell by anaverage of 0.9 % per annum between 1990

Economic growth is requiring less addit ional energy consumpt ion, but energyconsumpt ion is st ill increasing.

Figure 16 Final energy consumpt ion, gross domest icproduct and f inal energy intensity

Source: Eurostat.

-4 -3 -2 -1 0 1 2

PortugalSpainItalyGreeceBelg iumFinlandFranceSwedenAustriaUnited KingdomNetherlandsDenmarkGermanyIre landLuxembourgEU 15


Figure 17 Annual change in f inal energy intensity, 1990–99

Source: Eurostat.

Tab le 6 Average annual rates of change of final energy intensity

Change in final energy intensity (%/year)

1973-90 - 1.9

1990-99 - 0.9Source: Eurostat.

and 1999. However, this was not sufficient toprevent an increase in final energyconsumption because average GDP growthwas higher at 2.1 % per year.

The European Commission proposed, and theCouncil supported, an EU indicative target ofreducing final energy intensity by 1 % per yearabove ‘that which would have otherwise beenattained’ for the period 1998–2010 (Council ofthe European Union, 1998; EuropeanCommission, 2000e). However, ‘that whichwould have otherwise been attained’ has notyet been defined, so it is not clear how such atarget can be measured and monitored.

The final energy intensity of Member Statesin 1999 varied by more than a factor of two,reflecting differences in their state ofdevelopment, the structure of theireconomies, climate variations and thesuccess of energy efficiency measures. Therewere impressive reductions between 1990and 1999 in Luxembourg due to one-offchanges and in Ireland due to high growthin low energy-intensive industries and theservices sector. The overall intensity for theEU would have increased if it were not forthe substantial reduction in Germany helpedby energy efficiency improvements. Theimplementation of energy efficiency policiesin Denmark and the Netherlands played animportant role in the reductions in thesecountries.

The rate of improvement in final energyintensity between 1990 and 1999 was less thanfor earlier years. During the 1973 and 1990period the EU achieved an average annualreduction of 1.9 %. This was driven by the oilprice rises of the 1970s and early 1980s, whichprompted energy-saving measures thatpersisted after oil prices fell again. However,in the 1990s the combination of abundantenergy supplies, low fossil fuel prices and agenerally low priority for energy saving hasresulted in a slower rate of improvement.EU GDP is expected to grow by an average of2.3 % per year between 2000 and 2010(European Commission, 1999a). If finalenergy intensity continues to improve between2000 and 2010 at the rate recorded from 1990to 1999, this rate of economic growth wouldresult in a further energy consumptionincrease between 2000 and 2010.

4 5

The linkage between the growth and theenergy consumption of a sector can only bebroken if the rate of reduction of its energyintensity at least equals its rate of growth.

The industry sector has shown a sustainedimprovement in energy intensity, averaging 1 %per year between 1990 and 1999, which wassufficient to offset the rate of growth in thesector measured in terms of value added.Many factors contributed to this, includingstructural changes in favour of higher value-added products, changes in some industriesto less energy-intensive processes, directimprovements in energy efficiency, andimport substitution. There is still a largepotential for energy saving in this sectorwhich the EU and national governments areseeking to achieve through voluntaryagreements with individual productionsectors and the promotion of combined heatand power (European Commission 1997aand 2000d).

The services sector has also shown areduction in energy intensity, averaging 0.2 %per year between 1990 and 1999. About 84 %of energy consumption in the sector isassociated with installed devices such asspace heating/cooling, water heating andlighting (European Commission, 2001d)with the remaining 16 % made up mainly ofoffice equipment. Energy saving in theseareas will benefit from the proposeddirective on the energy performance ofbuildings, which has suggested that a 22 %reduction on present consumption byinstalled devices in the service sector anddomestic buildings can be achieved by 2010(European Commission, 2001d). The sectoris also leading the growth in electricitydemand, particularly for office equipmentand lighting. This trend is being addressedthrough the EU’s plans to strengthen theenergy-efficiency labelling scheme for officeequipment (Council of the EuropeanUnion, 2001), and the requirement to assessthe economic potential for combined heatand power in new buildings and majorrefurbishments (European Commission,2001d).

Decoupling transport growth from economicgrowth is an important objective of therevised Common Transport Policy (EuropeanCommission, 2001e) and the EU strategy for

With the except ion of indust ry, no EU economic sector has decoupledeconomic/social development from energy consumpt ion sufficient ly to stopgrowth of its energy consumpt ion.

Notes: Energy intensit ies forthe industry and se rvicessectors have been calculatedas the ratio of final energydemand to value added .Energy intensity in transportis the ratio of final energydemand to g ross domesticp roduct, while forhouseholds it is final energydemand per cap ita. Theenergy intensit ies are notd irectly comparab le and areshown on the g raph forillustrative purposes only.Source: Eurostat.

Figure 18Annual change in sectoral energy intensit iesand related drivers, 1990–99

-1 0 1 2 3

Energy intensityTransport

Industry

Services

Driver (GDP)

Driver (value added)

Energy intensity

Driver (value added)

Energy intensity

HouseholdsDriver (population)

Energy intenstiy


sustainable development (European Council,2001). Overall the energy intensity of thetransport sector stayed fairly constantbetween 1990 and 1999. In 1998, 85 %17 oftransport energy use was associated withroads. Technical developments withpassenger cars may have yielded someimprovement in fuel efficiency between 1990and 1999 although this was partly offset bythe use of heavier and more powerfulvehicles and devices that increase comfortand safety. Passenger car fuel efficienciesshould improve further in the next 10 yearsthrough the voluntary agreement betweenthe EU and the car manufacturers (theACEA agreement). This aims to reduce theaverage carbon dioxide emission of new carsto 140 g CO

2/km by 2008–09 (equivalent to

a 25 % fuel efficiency improvement on 1995vehicles). However, these technicaldevelopments alone are not sufficient toyield an improvement in road transportenergy intensity (ADEME, 1999). This isbecause energy consumption also dependson other factors including driver behaviour,congestion, journey types, choice of vehicle,vehicle maintenance and rate of replace-ment of old cars. Taking account of thesefactors, and of the expected growth ofdemand for both passenger and freighttransport, energy consumption in thetransport sector is expected to continue toincrease. More detailed analysis is given inthe TERM 2001 indicators report (EEA,2001b).

17 This figure excludesfue ls forinte rnationalshipp ing from totaltransport energy use .Includ ing fue ls forinte rnationalshipp ing changesthis figure to 74 %.


Assessing the efficiency of energyconsumption is not simple because there ismore than one way to consider andmeasure energy efficiency. There are twobasic sets of indicators for energyefficiency:

• Economic and social: these are energy-intensity indicators and measure theenergy needed to support economicactivity (e.g. energy per unit of grossdomestic product or value added) or toprovide social needs (e.g. energy percapita). They measure changes in energyefficiency arising from both structuraland technological change.

• Technical: these are specific energyconsumption indicators and measurethe energy needed to produce a unit ofphysical output (e.g. one tonne of steelproduction). They measure changes inenergy efficiency arising fromtechnological changes alone.

The economic and social indicators aremore broadly based since they measureboth technological improvements andthose stemming from structural and socialchange. For example individual citizenscould reduce their energy consumption byusing public transport in preference to acar, living in smaller, better-insulated

houses, or using more efficient appliances.Similarly businesses could use less energyper unit of value added by cutting theirenergy consumption, or switchingproduction to products that require nomore energy but yield a higher addedvalue.

The economic and social indicatorsmeasure energy efficiency improvementsstemming from deliberate energy-savingactions and policy measures together withimprovements driven by factors not relatedto energy efficiency considerations, such asproduct development and the impact offoreign competition.

In this report the energy intensityindicators (i.e. economic and social) areused to measure trends in energyconsumption efficiency. These indicatorsare used partly because both EU andMember State policies aim to reduce theenvironmental pressures associated withenergy consumption while maintainingeconomic development and the prosperityof EU citizens (European Commission,2001b). At present there are insufficientdata to support a comprehensiveassessment of technical energy efficiencyimprovements. Eurostat is currentlyworking to collect such data sets.

Box 7

The energy intensity of the household sector,measured as household energy use percapita, increased between 1990 and 1990.This is because improvements in houseinsulation and the efficiency of applianceswere offset by an increase in the number ofdwellings (up by 10 % between 1990 and1999) and their average size, increasedcomfort levels (e.g. home heating) as livingstandards improve, and growth in thepurchase and use of appliances includingtelevisions, computers, freezers and airconditioning. The potential for energy savingsin the household sector is high (~ 22 %), andwill be encouraged by the proposed directiveon the energy performance of buildings,which includes minimum standards for newbuildings and for certain existing buildingswhen they are renovated, and therequirement for all buildings to have energy

performance certificates (EuropeanCommission, 2001d). The sector should alsobenefit from the EU’s appliance labellingscheme (European Parliament and Council,1992). Schemes that call for energyefficiency standards may help to furtherdecrease energy intensity. For example, inthe UK energy utilities are obliged toencourage or assist domestic customers totake up energy-saving opportunities such asfitting insulation or converting to moreefficient domestic appliances. A small fee iscollected from all domestic customers whichis pooled and used to fund, partly fund orpromote the uptake of more energy-efficientgoods and services. By the year 2000, about3 million households had benefited from thescheme, saving an average of approximatelyEUR 200 since the scheme began in 1994.

How to measure the eff iciency of energy consumpt ion

4 7

4. Are we switching to less-pollut ingfuels to meet our energy needs?

The EU is switching from coal to the relat ively cleaner natural gas, but after 2010no further switching is expected. Furthermore, some nuclear installat ions willret ire and, if these are replaced by fossil fuel plants, increases in carbon dioxideemissions are likely. This underlines the need to further st rengthen support forrenewable energy sources.

The European Commission strategy tostrengthen environmental integration withinenergy policy stresses the need to increasethe share of production and use of cleanerenergy sources (European Commission,1998a). This is reflected in the sixthenvironment action programme whichencourages renewable and low-carbon fossilfuels for power production, as part of theclimate change priority actions (Council ofthe European Union, 2002).

The main source of environmental pressuresfrom the production and consumption ofenergy is from fossil fuels that releasegaseous, liquid and solid-phase pollutants.The magnitude of these pressures can bereduced by adopting advanced technologiesthat limit such releases, either by cleanercombustion techniques or with end-of-pipetreatments. An additional, or in some casesalternative approach, is to use cleaner fuels.This section and section 5 examine thissecond option.

Coal and lignite are generally the mostpolluting fuels, followed by oil, with naturalgas being the cleanest of the fossil fuels. Thismerit order also applies in relation togreenhouse gas emissions, with natural gas

typically producing only 63 % and oil 80 %of the emissions of coal per unit of energy.

Renewable sources such as biomass, windenergy and hydro-power producecomparatively little air pollution orgreenhouse gas emissions. Therefore theirdeployment would have an even greaterbenefit in reducing pollution than a switchto natural gas, although they can have someadverse impacts on the environment such asloss of natural amenities, loss of habitat,visual intrusion and noise. The EU and mostMember States have taken action to supportthese technologies as discussed in detail inSection 5 of this report.

Nuclear power also produces little pollutionunder normal operations. However, there isa risk of accidental radioactive releases, andhighly radioactive wastes are accumulatingfor which no generally acceptable disposalroute has yet been established. It is also ofconcern that nuclear energy, which currentlyaccounts for more than 15 % of total energyconsumption in the EU, is expected to beginto run down production beyond 2010, andthis will result in further growth of emissions,especially carbon dioxide, if it is replaced byfossil fuels.

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Fossil fuels cont inue to dominate energy use, but environmental pressureshave been limited by switching from coal and lignite to relat ively cleanernatural gas.

EU total energy consumption continued toincrease between 1990 and 1999 at anaverage of 1 % per year. Moreover, the sharetaken by fossil fuels declined only slightly,from 81 % in 1990 to 79 % in 1999. Thissmall loss was taken up by increases innuclear and renewable energy. Althoughsmall in terms of market share, there was a29 % growth in renewable energy over theperiod (see renewable energy indicator,Figure 21).

Within the share of total energyconsumption supplied by fossil fuels, there

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Figure 19 Total energy consumpt ion by source

Note: Fue ls other than thoselisted in the legend have

been included in thed iagram but the ir share is

too small to be visib le .Source: Eurostat, NTUA.

was a major change in fuel mix, with coaland lignite loosing about one third of theirmarket, and being replaced by natural gas.This was due mainly to fuel switching inpower production. Oil retained its share ofthe energy market, reflecting its continueddominance in road and air transport. Thisgrowing dependence on oil and gas, with asubstantial share of both being met byimports, resulted in EU dependence onimported fossil fuels increasing between1990 and 1999.

The baseline projections for the EuropeanCommission (NTUA, 2000a) indicate totalenergy consumption continuing to increaseto 2010, but at a reduced rate. Natural gas isexpected to continue to replace coal andlignite, but not so rapidly as in the 1990-99period, while oil products continue todominate road transport. Renewable energyis also expected to increase, but the rate ofgrowth is not sufficient to increase its shareof total consumption.

The baseline projections are based onpolicies and measures adopted by 1998(including the ACEA Agreement). The factthat they suggest only limited changes in theenergy mix by 2010 underlines the need tostrengthen support for renewable energysources.

4 9

Electricity production remains a major sourceof pollution emissions. However, because ofthe limited number of facilities involved, therapid rate of technological advance, andopportunities for switching to less-pollutingfuels such as natural gas and renewables, it isa key area to achieve improvements inenvironmental performance.

Between 1990 and 1999 electricityproduction grew at an annual rate of 2.3 %,and fossil fuels maintained their share ofoutput at a little over 50 %. However, majorchanges occurred in the mix of fossil fuelsused, with coal and lignite, and to a lesserextent oil, being replaced by natural gas.This has yielded environmental benefits, asdiscussed previously, in terms of reducedemissions of carbon dioxide, acidifying gasesand particulates. This trend has been drivenby a combination of factors:

• The high efficiency and low capital cost ofgas combined-cycle plant;

• Liberalisation of the electricity supplymarket bringing in new generators, readyto invest in low capital cost gas plant;

• Low gas prices in the early 1990s;• The EU large combustion plant directive

that sets emissions limits that are moreeasily attained with modern and cleanernatural gas technologies.

Nuclear power increased its output by anaverage of 2.1 % per year between 1990 and1999 through a combination of commission-ing of new plant and improved performanceof existing facilities. The other majorcontributor to electricity production wasrenewable sources, which increased theirmarket share from 14.7 % in 1990 to 15.5 %in 199918. Hydro was by far the largestrenewable source accounting for 85 % ofrenewable electricity production. However,this figure hides remarkable growth in theproduction from some ‘new renewable’sources, discussed in the next section.

Baseline projections (NTUA, 2000b)anticipate fossil fuels taking an increasingshare of a market that continues to grow at a

Fossil fuels and nuclear power cont inue to dominate elect ricity product ion, butthe environment has benefited from the switch from coal and lignite to naturalgas.

Source: Eurostat, NTUA.similar rate to 2010. This is because theprojections are based on the policies andmeasures in place in 1998, (see Annex 1),and neither nuclear power nor renewableenergy sources are expected to expandsignificantly under these policies. The trendto switch from coal and lignite to natural gasis also expected to continue, although thisprojection is particularly sensitive to futurefossil fuel prices. The switch to natural gaswill clearly bring environmental benefits interms of reduced emissions of carbondioxide, acidifying gases and particulates.

However, looking beyond 2010 the trend forincreased electricity production from fossilfuels, and in particular the slow growth ofrenewable electricity production, is a matterfor concern. After 2010 the switch from coaland lignite to natural gas is not expected tocontinue and nuclear plant will start to bedecommissioned. If nuclear capacity isreplaced by fossil plant it seems inevitablethat there will be a growth in emissions,especially carbon dioxide emissions. Onceagain this highlights the importance ofpolicies and measures to stimulate thedevelopment and deployment of renewableenergy technologies.

18 Note that e lectricity p roduction is equal to e lectricity consumption less imports p lus exports and so theshare of renewab les in e lectricity p roduction stated here is not equal to the share of renewab les ine lectricity consumption in Figure 22.

Figure 20Elect ricit y product ion by source

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2 500

3 000

3 500

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Nuclear

Fossil

Renewables


Carbon dioxide emissions from electricityproduction fell by 8 % over the period1990–99, despite a 16 % increase in theamount of electricity produced; 80 % ofthe decrease is due to fuel switching.

If the structure of electricity productionhad remained unchanged from 1990, thenby 1999 emissions of CO

2 would have

increased in line with electricity output by16 %. In fact, there were a number ofchanges in the electricity industry in theEU that caused annual emissions of CO

2 to

fall by 8 %.

Changes in the fossil fuel mix from coaland lignite to natural gas accounts for 46% of the reduction. A further 20 % camefrom an increase in the efficiency of fossil-fuelled electricity production and much ofthis is also linked to the switch to high-efficiency gas-turbine combined-cycletechnology. The remaining 34 % of thereduction is attributable to the increasedshare of nuclear power and renewableenergy sources.

Box 8

19901993

19961999

0

200

400

600

800

1 000

1 200Exclud ing the increasein share of nuclear and renewable energy

Exclud ing efficiencyimprovements

Exclud ing fossil fue lswitching

Actual emissions

Million tonnes

Note: Data and analysisp resented here arepre liminary results ofongoing work to re fineand improve associatedstatist ics andmethodology.Source: EEA.

Explanat ions for the reduct ion of emissions of carbondioxide in the elect ricit y sector

How has fuel switching affected carbon dioxide emissions from the elect ricit y product ion sector?

5 1

5. How rapidly are renewable energytechnologies being implemented?

Renewable energy targets are unlikely to be met under current t rends, butexperience in some Member States suggests that growth could be accelerated byappropriate support measures.

Renewable energy sources are an importantoption for reducing the pressures on theenvironment from energy use. They can alsocontribute to energy security by replacingimported fossil fuels. The significance ofrenewable energy has been recognised in anumber of EU policy documents concernedwith accelerating its deployment, notably therenewable energies White Paper (EuropeanCommission, 1997b), which sets anindicative target to derive 12 % of the EUtotal energy consumption from renewablesources by 2010. Similarly the directive on

the promotion of electricity from renewableenergy sources (European Parliament andCouncil, 2001b) sets an indicative target toderive 22.1 % of EU electricity consumptionfrom renewable sources by 2010. TheCommission has also proposed a directive onthe promotion of biofuels for transport(European Commission, 2001g). However,the promotion of renewable energy is also amatter for Member States since theresources vary between countries as do theinfrastructures and market conditions intowhich they need to fit.

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Over the 1990–99 period, renewable energysources were used mainly to supply heat andelectricity, with roughly a 50:50 split. Overallrenewable energy output grew by an average of2.8 % per year over the period, which increasedits share of total energy consumption from5.0 % to 5.9 %. Taking account of the projectedexpansion in energy consumption, this growthrate needs to be increased to over 7 % per yearif the EU indicative target to derive 12 % oftotal energy consumption from renewablesources is to be met by 2010. However, thebaseline projections for the EuropeanCommission (NTUA, 2000b) suggest thatrenewable energy growth will be much lessthan this, and probably will only be sufficient tomaintain current market share to 2010.19

The main sources of renewable energy arebiomass/waste (63.5 %) and hydro-power(31 %), although wind (1.5 %) and solar energy(0.5 %) recorded the fastest growth ratesbetween 1990 and 1999, albeit from low initialbases. The distribution of renewable energyproduction is uneven across Member States,mainly reflecting their access to biomass/wasteand hydro resources but also the effectivenessof national support measures (EEA, 2001c).

The development of renewable energies hasbeen hindered by financial, fiscal andadministrative barriers, the low economic

The share of total energy consumpt ion met by renewable energy grew onlyslight ly between 1990 and 1999; project ions of future energy demand imply thatthe growth rate of energy from renewable sources needs to more than double toat tain the EU indicat ive target of 12 % by 2010.

Figure 21 Share of total energy consumpt ionprovided by renewable energy sources

Note: Biomass/wasteincludes wood, wood

wastes, othe r b iodegradab lesolid wastes, industrial and

municipal waste (of whichonly part is b iodegradab le ),

b io fue ls and b iogas.Source: Eurostat, NTUA.

competitiveness of some renewables, and thelack of information and confidence amongstinvestors. Nevertheless, where the right mix ofpolicies and measures was set up, renewablesdeveloped successfully. For example Austria,Germany and Greece contributed about 80 %of new solar thermal installations over the1990-99 period. Solar thermal developments inAustria and Germany benefited from proactivegovernment policy coupled with subsidyschemes and communication strategies; inGreece the developments were helped bygovernment subsidies. Similarly, Austria andSweden dominated the increase in output frombiomass district heating installations. Due tothe high costs of developing heating networks itis common, in Member States such as Austria,to provide considerable financial supporttowards biomass district heating schemes. InSweden, biomass district heating expanded,without large direct subsidies, as a result of theintroduction of carbon and energy taxes (fromwhich biomass is exempted) and considerableresearch and development support.

Road transport is a major and growing area forenergy consumption and consequentlyemissions of carbon dioxide and pollutants.However, it is an area which is the almostexclusive preserve of oil-derived fuels, with littlesubstitution from fuel cells or renewable energysources. In 1999 only 0.1 % of energyconsumption by road transport was sourcedfrom renewable biofuels. The EuropeanCommission has recently proposed a directiveaimed at promoting the use of biofuels intransport (European Commission, 2001g), withan indicative target of replacing 2 % of petroland diesel consumption with biofuels in 2005,increasing to almost 6 % by 2010. This actionhighlights the pressing need to begin to replacefossil fuels in road transport; however, there issome concern over a number of environmentalimpacts associated with the production andconsumption of biofuels. This arises becausebiofuels are energy intensive in their produc-tion, requiring a third to half their energycontent for cultivation, fertilisers, harvesting,transport, etc. (DTI, 1996). Moreover, theremay be competition for land from other energycrops that could be used for electricity or heatproduction. There is also some concern overthe level of nitrougen oxides and particulateemissions from biofuel combustion.

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%

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Hydro

GeothermalSolar and wind

EU ind icative target (12 %)

19 These base line projections missed the trend of increased renewab le energy production in the second halfof the 1990s. It is likely that the updated, new version of the baseline projections, to be released in the secondhalf of 2002, will show a slight increase in the contribution of renewables to total energy consumption by 2010.

5 3

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%

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Spain

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The share of renewable energy in EU grosselectricity consumption grew from 13.4 % in1990 to 14 % in 1999. This was achievedthrough an average annual growth in outputof 2.8 % per year over the 1990–99 period.Renewable electricity was dominated bylarge hydro-power, which had a 74 % shareof output in 1999, followed by small hydro(11 %) and biomass/waste (10 %). Largehydro is an established technology, but itscapacity is not expected to increasesubstantially because of concerns linked toits impact on the environment through theloss of land and the resultant destruction ofnatural habitats and ecosystems. Growth inrenewable electricity will therefore have tocome from sources such as wind energy,solar power, biomass and small hydro.

The share of electricity from renewablesources varies considerably among countries,reflecting the resources within theirboundaries and the effectiveness of supportmeasures. In its directive on the promotionof electricity from renewable sources the EUproposed indicative targets for MemberStates and agreed to an EU overall indicativetarget of 22.1 % of gross electricityconsumption from renewable sources by2010 (European Parliament and Council,2001b). Taking account of projected growthrates for electricity consumption to 2010, theindicative target will require the rate ofgrowth of renewable electricity supply toroughly double if the target is to be met.

Baseline projections of future electricityproduction (NTUA, 2000b), based on thepolicy position in 1998 (see Annex 1),indicate a negligible increase in the sharetaken by renewable energy sources20. Clearlythe additional measures contained in the EUdirective, together with measures taken atMember State level, need to give a strongerstimulus to the deployment of renewableelectricity technologies for the indicativetarget to be reached.

There are encouraging signs that this may bepossible with the right mix of support

The share of renewable energy in EU elect ricity consumpt ion grew slight lybetween 1990 and 1999; project ions of future elect ricity demand imply thatthe rate of growth of elect ricity from renewable sources needs to double toat tain the EU indicat ive target of 22.1 % by 2010.

Figure 22Share of elect ricit y consumpt ionmet by renewable energy sources, 1999

Notes: Industrial andmunicipal waste (IMW)includes e lectricity fromboth b iodegradab le andnon-b iodegradab le energysources, as the re are noseparate data availab le forthe b iodegradab le part. TheEU 22.1 % ind icative targe tfor the contribution ofrenewab le e lectricity tog ross e lectricityconsumption by 2010 onlyclassifies b iodegradab lewaste as renewab le . Theshare of renewab lee lectricity in g ross e lectricityconsumption is the re foreoverestimated by an amountequivalent to the e lectricityp roduced from non-b iodegradab le IMW.National ind icative targe tsshown here are re fe rencevalues that Member Statesagreed to take into accountwhen se tt ing the ir ind icativetarge ts by October 2002,accord ing to the EUrenewab le e lectricityd irective .Source: Eurostat.

measures (EEA, 2001c). For example, therapid expansion of wind power (38 % peryear across the EU in the period 1990-99)was driven by Denmark, Germany and Spain,and was the result of support measuresincluding ‘feed-in’ arrangements thatguarantee a fixed favourable price forrenewable electricity producers. Similarly,the rapid expansion of solar (photovoltaic)electricity was driven by Germany and Spain,mainly as a result of a combination of ‘feed-in’ arrangements and high subsidies.Biomass/waste resources have also expandedrapidly, at a rate over 9 % per year, and havethe added benefit that they can be used inhigh-efficiency combined heat and powerplant. Finland and Sweden contributedabout 60 % of new electricity productionfrom biomass-fuelled power stations. Bothcountries provided considerable researchand development support and subsidies tothe biomass power industry. In Sweden, theintroduction of carbon dioxide and energytaxes from which biomass is exempted alsohelped the expansion of biomass powerplants.

20 The base line projections missed the trend of increased renewab le e lectricity p roduction in the second halfof the 1990s. It is like ly that the updated , new version of the base line projections, to be re leased in thesecond half of 2002, will show a slight increase in the contribution of renewab les to e lectricity consumptionby 2010.


The price of energy is an important factor inthe interaction between energy and theenvironment. Energy prices can influencedemand, decisions on energy-savinginvestments and the choice of energy sources(see Box 9).

Other factors remaining unchanged, theenvironment would benefit from a reductionin energy consumption resulting from highenergy prices. However, energy pricing isalso important to other policy areasconcerned with economic and socialdevelopment, employment protection andmarket liberalisation. Generally thesepolicies aim for low energy prices, forexample:

• EU and Member State energy policiesgenerally aim to ensure secure supplies ofenergy at reasonable prices. This isimportant both to support industrialcompetitiveness (particularly for energy-intensive industries) and socially, toensure that all EU citizens can afford theenergy services they need.

• Indigenous production of fossil fuels maybe supported to contribute to security ofsupply or to maintain employment ineconomically depressed areas.

• Market liberalisation aimed at reformingthe structure of energy supply hasincreased competitiveness and resulted inreduced prices to consumers.

Consequently this is an area whereenvironmental concerns can run counter toother issues driving energy policy in theabsence of an appropriate policy frameworkthat aims at full internalisation of externalcosts to the environment and better energydemand management.

6. Are we moving towards a pricingsystem that better incorporatesenvironmental costs?

Despite increases in energy taxat ion, most energy prices in the EU have fallen, asa result mainly of falling internat ional fossil fuel prices but also of theliberalisat ion of energy markets. In the absence of appropriate policies tointernalise the external costs of energy and improve energy demandmanagement , reduced prices are likely to act as a disincent ive to energy savingand may encourage energy consumpt ion.

Energy prices do not always reflect the fullcosts of energy to society because they donot, or not completely, take account of theimpacts of production and consumption onnon-traded factors such as human healthand the environment. Strictly these externalcosts should be included in energy prices toensure that decisions on the choice andvolume of energy consumption take accountof all the costs involved. However, there aresignificant uncertainties in the evaluation ofexternal costs, particularly those linked toenvironmental impacts, due to factors suchas their diversity, geographical variations andthe difficulty of setting exact values on non-traded goods. In practice governmentstherefore seek to introduce external costsassociated with energy in less direct waysthrough regulation, taxation, incentives,tradeable emissions permits, and subsidyreview.

The sixth environment action programmestresses the need to internalise the externalcosts to the environment. It suggests a blendof instruments that include the promotion ofthe use of fiscal measures, such asenvironment-related taxes and incentives, apossible use of tradeable emissions permitsand emissions trading, and the undertakingof an inventory and review of subsidies thatcounteract the efficient and sustainable useof energy, with a view to gradually phasingthem out.

This section examines the evolution ofenergy prices over the 1985–2001 period,and considers if this is consistent with theEU’s environmental objectives.

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5 5

The real prices of all fuels, with theexception of diesel and unleaded gasolinefor transport, fell between 1985 and 2001.The decrease was greatest in the years1986–87 when the crash in crude oil priceshad knock-on effects on natural gas, theprice of which tends to be indexed to crudeoil. The slower decline since then wassustained by continuing low oil prices,opening-up of additional natural gassupplies to the EU, and progressiveliberalisation of the gas and electricitymarkets leading to greater pricecompetition. This last factor, which iscontinuing, was driven by the EU electricityand gas directives (European Parliament andCouncil, 1996b and 1998b). Oil pricesincreased appreciably in 1999–2000following an agreement within theOrganization of the Petroleum ExportingCountries (OPEC) to restrict production,and this contributed to an increase in theprices of oil products and natural gas in2000. However, electricity prices were notaffected by the oil price rise. This is due tothree factors: growing competition inelectricity markets, only a small fraction ofelectricity being generated from oil, and theweakening of the linkage between naturalgas and oil prices in a competitive gasmarket.

Energy prices generally fell between 1985 and 2001, offering lit t le incent ivefor energy saving.

Fuel Price Price Percentage change in1985 2001 price 1985–2001

Heavy fue l o il: industry 11.2 5.1 - 54 %

Natural gas: industry 8.6 5.1 - 41 %

Electricity: industry 26.2 13.6 - 48 %

Heating oil: households 17.0 11.0 - 35 %

Natural gas: households 16.7 12.2 - 30 %

Electricity: households 43.6 30.8 - 29 %

Diese l: road transport 757 772 2.6 %

Unleaded gasoline : 699 922 32 %road transport

Tab le 7End-user energy prices (euro/GJ at 1995 prices)

Notes: Unleaded gasolineprice data are for 1991instead of 1985. Transportp rices are in euro/1 000 litre .Prices are those app licab lein January of each year.Industry p rices exclude valueadded tax (VAT).Source: Eurostat.

Unleaded gasoline was the only fuel torecord a substantial increase in price. Thiswas due mainly to moves by Member Statesto progressively increase taxation on roadtransport fuels such that tax on unleadedgasoline accounted for 72 % of the price in2001, an increase from 64 % in 1991.However, much of this tax increase wasabsorbed by reductions in the non-tax priceof unleaded gasoline, and most of the priceincrease came in 2000, associated with theincrease in crude oil prices in that year.


Taxation offers one method for internalisingthe external costs of energy consumptioninto prices. It also offers a mechanism forintroducing price differentials to encouragethe use of less-polluting fuels.

The pattern of taxation across the EU between1985 and 2001 has been to increase theproportion of energy prices accounted for bytax. This has occurred in part throughincreases in the rate of tax, but it is also linkedto a reduction in before-tax energy prices. Asdiscussed in the previous section, this hasoccurred through a decline in fossil fuel prices

Despite increases in taxat ion from 1985 to 2001, energy prices for most fuelsdropped and the overall demand for energy increased.

0

10

20

30

40

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1985

2001

Unleaded

gasolin

e:

transp

ort Diese

l:

transp

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Elect

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:

household

s

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l gas:

household

s

Heating o

il:

household

s

Elect

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:

indust

ry

Natura

l gas:

indust

ry

Fuel oil:

indust

ry

%

Figure 23 Proport ion of tax in f inal energy prices

Note: Data for unleadedgasoline are for 1991

instead of 1985.Source: Eurostat.

combined with greater price competition inthe electricity and natural gas markets.

Energy taxation has also increased inabsolute terms, but, as shown in theprevious section, not sufficiently to preventoverall reductions in energy prices for allbut road transport fuels. One importantexception is electricity consumption inindustry for which taxation in absoluteterms has fallen. This is because before-taxprices have been reduced considerably as aresult of strong competition betweensuppliers, and this tax is generally appliedas a percentage of the before-tax price.

The European Commission has proposed adirective for restructuring the Communityframework for taxing energy products(European Commission, 1997c), whichincludes suggested minimum tax levels foreach fuel. This has not yet been agreed butit is noteworthy that, on average for the EUas a whole, actual taxes on transport fuels,oil-based heating fuels and electricity in2000 were higher than the proposedminimum tax levels for 2000. Actualtaxation on natural gas was about equal tothe proposed minimum for the year 2000for industry and above the minimum forhouseholds.21

The generally modest increases in tax onindustrial energy consumption reflectconcerns over the impact of fuel prices onnational competitiveness, with MemberStates seeking to encourage energyefficiency through alternative schemes suchas voluntary agreements, awarenesscampaigns and capital allowances. SomeMember States have adopted a ‘carrot andstick’ approach with energy taxation,combined with the option of significantrebates if energy-efficiency targets are met(DEFRA, 2000; EEA, 2000). Also studieshave suggested that a combination ofincreased energy taxes and reducedemployment taxes could yield the doubledividends of reduced pollution andincreased employment (EuropeanCommission, 2000f).

Note: Changes for unleadedgasoline are for the period1991–2001.Source: Eurostat. 21 These conclusions hold true at the EU overall leve l. Diffe rent conclusions may be drawn for ind ividual

Member States.

Figure 24 Change in the absolute value oftaxat ion applied to fuels, 1985–2001

-20 -10 0 10 20 30 40 50 60

Unleaded gasoline: transport

Diese l: transport

Electricity: households

Natural gas: households

Heating oil: households

Electricity: industry

Natural gas: industry

Fuel oil: industry

Absolute change (%)

5 7

Taxation of transport fuels increasedsubstantially between 1985 and 2001, but theimpact on prices was partially offset by theeffects of falling crude oil prices and marketcompetition. Tax rates have been highest inthe UK, which from 1993 to 1999 applied afuel duty escalator that increased taxes by upto 6 % per year. The UK government hasestimated that tax increases between 1996and 1999 will have cut UK transport-relatedcarbon dioxide emissions by between 1 and2.5 million tonnes of carbon per year by2010 (i.e. 2 to 5.5 %) (DETR, 2000).

There is concern that fuel taxation is not themost equitable way of taking account oftransport impacts. This is because off-peak

and rural travel are taxed at the same rate asurban rush-hour travel but, due to theirlower volume of activity, do not cause thesame damage to health or the environment.Consequently additional forms of taxationmay be introduced in future such as roadpricing and differential taxation of vehiclesaccording to their energy efficiency.

Taxes on the household consumption ofelectricity and natural gas have increasedsignificantly, particularly in the last few yearsof the 1990s. This has had the effect ofoffsetting price reductions resulting fromenergy market liberalisation and theincreased price competition this causes.

The price of energy can have a directinfluence on demand and on the pressuresplaced on the environment from energyconsumption. This arises through threemechanisms.

First, price can affect the volume of de-mand for some energy-related services (i.e.the driver).

Second, price can affect the amount ofenergy consumed to deliver energy-relatedservices (i.e. energy/driver) through:

• Adopting alternative methods forgaining the energy-related service (e.g.switching between private and publictransport);

• Using more efficient devices forconverting energy into energy-relatedservices (e.g. more efficient cars, trucks,boilers, lighting);

• Moving to different manufacturing andservice activities that require less energyper unit of added value (i.e. structuralchange).

Other things being equal, people are likelyto demand less energy-related services,

adopt less energy-intensive lifestyles andbusiness activities, and invest in moreefficient devices when the energy price ishigh.

Third, price may influence the types ofenergy we buy (coal, gas, oil, electricity,etc.). Again, with all other things beingequal, it is logical to select the lowest pricesource. Since some fuels are more pollut-ing than others it follows that price candirectly affect the pressures placed on theenvironment by energy use (i.e. pressure/energy).

Nonetheless, price is not the onlydeterminant of demand for energy orchoice of technologies or fuels. Many otherfactors affect the decisions of businessesandcitizens, in particular the fiscal andregulatory policy framework. Other factorsthat affect decisions include the availabilityand reliability of supplies, past experience,existing infrastructure, capital constraints,lack of information, fashion preferences,general affluence and, increasingly,environmental awareness.

Box 9The relat ionship between energy prices, energy consumpt ion and energy-related environmental pressures


Estimation of the external costs of electricityproduction (i.e. those associated with impacts onthe environment and human health) is complexand needs to take account, for example, of:

• Location—specific impacts determined byfactors such as the vulnerability of theenvironment and the density of population;

• The exact specification of the fuel beingused (for example the sulphur content ofcoal varies appreciably);

• The age of the plant and what emissionreduction devices are fitted.

The most comprehensive source of external costassessments is the European Commission’sExternE project (European Commission,1999b), which considered a range of electricitygeneration technologies located across EUMember States. This assessment examinedexternal costs related to impacts on humanhealth, crops, materials, forests and ecosystems,as well as giving separate consideration toclimate change; it is the source of the datapresented here. The evaluation of climatechange was particularly uncertain because ofinadequate knowledge of the timing and severityof the impacts, the capacity of systems to adapt,the valuation of impacts in other world regionsand the discount rate to apply to impactsoccurring well into the future. Mid-range valuesare included in the data presented here.

The external cost ranges presented inTable 8 reflect the above uncertainties and

With fossil fuels supplying more than half the EU’s elect ricity, price levelswould need to be increased to include the est imated external costs ofelect ricity product ion.

the differences in the type of location, fuelspecification and age of the technologiesexamined. For example, the comparativelyhigh external cost of coal generation inBelgium arises because an older plant withless pollution control was examined.

Nonetheless the data show the graduation incosts that can be expected, with most ligniteand coal having the highest costs and somerenewable energy sources offering thelowest. The low nuclear external costs reflectthe small health and environmental impactsof this technology under normal operation;however, it is noted that further work isneeded to estimate the costs with sufficientreliability because of the complexity of thefuel cycle (European Commission, 1999b).

For the EU, it has been estimated that theexternal costs of electricity production amountto 1–2 % of GDP, excluding the costs of globalwarming (European Commission, 2001h).

Comparison of these external costs with thecurrent prices for electricity show that theexternal costs of coal and lignite electricityproduction are of the order of 20–120 % ofhousehold electricity prices and 50–240 % ofindustrial electricity prices. For gas-firedelectricity production external costs are 7–38%for households and 13–73 % for industry.Clearly the external costs are greatest for coaland lignite, but they are still significant for gas.

External costs Prices

Coal and Oil Gas Nuclear Biomass Hydro Wind Price of Price oflignite industrial household

e lectricity e lectricity

EU – – – – – – – 5.6 11.1

Austria – – 1–3 – 2–3 0.1 – 7.8 12.5

Be lg ium 4–15 – 1–2 0.5 – – – 6.3 12.4

Denmark 4–7 – 2–3 – 1 – 0.05 7.6 16.7

Germany 3–6 5–8 1–2 0.2 3 – 0.1–0.2 6.2 13.9

Spain 5–8 – 1–2 – – – 0.2 5.7 8.1

Finland 2–4 – – – 1 – – 4.3 6.7

France 7–10 8–11 2–4 0.3 1 1 – 5.5 10.6

Greece 5–8 3–5 1 – 0–1 1 0.2–0.3 4.0 5.1

Ire land 6–8 – – – – – – 4.9 6.6

Italy – 3–6 2–3 – – 0.3 – 7.0 16.8

Netherlands 3–4 – 1–2 0.7 0.5 – – 5.4 14.6

Portugal 4–7 – 1–2 – 1–2 0.2 – 4.7 9.1

Sweden 2–4 – – – 0.3 0.03 – 3.3 9.0

UK 4–7 3–5 1–2 0.3 1 0–0.7 0.1–0.2 5.9 7.5

Tab le 8 Comparison of est imates of the external costs of elect ricit y product ion from differentfuels with elect ricit y prices (euro cents/kWh at constant 1995 prices)

Notes: Electricity p ricesinclude all taxes and are

those app licab le in January2001. Industrial e lectricity

p rices for Austria, Denmarkand the Ne therlands are

those app licab le in January1999.

Source: EuropeanCommission, Eurostat.

5 9

Subsidies on energy production and/orconsumption change the relative prices ofdifferent energy sources, thereby affectingdecisions on which should be used. Theymay also keep prices lower than they wouldotherwise be, and consequently mayencourage increased consumption. Both ofthese factors affect the pressures of energy-related activities on the environment.

Governments use a broad range of methodsto provide subsidies including:

• Direct financial support to particularenergy supply industries

• State supply quotas or state obligationsto purchase

• Low-cost or underwritten loans• Limits on the liabilities of particular

energy industries• Price support• Preferential tax treatment• Failure to internalise external costs• Support for research and development.

Consequently it is difficult to developreliable estimates of the total value ofsubsidies to particular energy industries, letalone to monitor how these change overtime. The data in Figure 25 show the resultsof one estimate covering the 1990–95 period,which includes only direct subsidies22. Thisshows that most subsidies across the EU aredirected at supporting fossil fuels, with muchless support for renewable sources or energyconservation. Clearly this distribution ofsubsidies will not favour the reduction of theenvironmental pressures caused by energy

Subsidies cont inue to distort the energy market in favour of fossil fuels despitethe pressures these fuels place on the environment .

Note: Electricity subsid iesinclude support for researchand deve lopment onstorage methods, combinedheat and power, and cross-cutt ing factors such aspower cond it ioning and loadmanagement.Source: Ruijg rok andOoste rhuis, 1997.

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50

60

Fossil f

ue ls

Nuclear

Conserv

ation

Renewables

Elect

ricity

%

Figure 25Est imated dist ribut ion of direct energysubsidies (1990–95 average)

production and consumption. It is importantto determine if this distribution has changedin more recent years.

Subsidies are used as a tool to achieve policyobjectives, which in the case of energy mayinclude security of supply, industrialcompetitiveness and social/employmentconcerns as well as environmental factors.The challenge is to get an optimal balancebetween these policy drivers. Moreover, theremoval or reduction of subsidies may notyield environmental benefits in the shortterm if the subsidies have encouragedinvestment in durable infrastructure andplant that are only replaced over longperiods (20 to 40 years).

22 Direct subsid ies include d irect payments from public budgets, tax rece ip ts foregone due to tax reductions,government funded R&D, and payments that reduce the cost of energy production, consumption orconservation.


The environmental problems associated withenergy production and consumption areunlikely to be solved by fiscal and market-based measures alone. Innovativetechnologies will also be needed to captureless-polluting energy sources such asrenewable energy and to use energy withmaximum efficiency. This is particularly so inthe longer term when substantial reductionsin greenhouse gas emissions will be neededto limit climate change to tolerable levels.The longer-term research and development(R&D) needed to produce such innovativetechnologies is not always attractive tobusinesses that are required by their share-

EU energy research and development expenditure has been reduced at a t imewhen innovat ion is needed to develop less-pollut ing technologies.

Figure 26 Energy research and development expenditure

0

500

1 000

1 500

2 000

2 500

3 000

1990

1998

Million euro (year 2000 prices and exchange rates)

Nuclear

fissio

n

Nuclear

fusio

n

Non-nucle

ar

energy

Tota

l energy

R&D

Note: Data are ind icativeand are the result o f

comb ining two data se tsthat include d iffe rent

methodolog ies andde finit ions, covering

Member State expend itureand EU-leve l fund ing

through the R&D EuropeanCommunity framework

programmes. Frameworkprogramme expend iture hasbeen estimated as an annualaverage over the duration of

the p rogramme. Non-nuclear research includes

renewab le energy, energyconservation, fossil fue l

p roduction, powerproduction and storage

technolog ies, and cross-cutt ing research.

Source: IEA and EuropeanCommission.

holders to deliver short-term profitability,and therefore needs to be partiallysupported by public funds.

Total energy R&D expenditure in the EU fellby about 30 % between 1990 and 1998 (IEA,1999; European Commission, 2001i). Withinthis overall budget, expenditure onindividual technologies changed lessdramatically, with nuclear fission (34 %) andfusion (22 %) R&D still taking more thanhalf the total in 1998. The share of R&Dtargeted on renewable energy sources andenergy conservation increased, but inabsolute terms the budgets fell.

Budgets for fossil fuel R&D have declined,which may seem reasonable since these aremature technologies whose futuredevelopment should be left to industry.However, the major reductions ingreenhouse gas emissions needed in thelong term may require advanced fossil plantwith carbon dioxide abatement technologiesat source and carbon dioxide disposal.There is therefore a need for additionalresearch into this area including into thepotential environmental pressures associatedwith options for carbon dioxide disposal, toestablish whether they offer an acceptableapproach to reducing greenhouse gasemissions.

6 1

The baseline projections of energyconsumption and greenhouse gas emissionsused in this report were derived from workcarried out for the European Commission inproducing the report ‘Economic evaluationof sectoral emission reduction objectives forclimate change’ (Ecofys, 2001).

The energy projections were made with thePRIMES model, and were an update of anearlier baseline projection developed in theshared analysis project (EuropeanCommission, 1999a). This earlier set ofprojections was based on 1995 data andassumed a continuation of 1998 policies overthe full modelling period. In the update(NTUA, 2000a; NTUA, 2000b) an additionalassumption was made that the EU voluntaryagreement with the European, Japanese andKorean car makers (the ACEA Agreement),for a reduction in the average carbon dioxideemissions for all new cars to 140 g/km by2008-09, would be honoured. Other keyassumptions in the baseline projections are:

• EU economic growth in the period 2000to 2010 is in line with historic trends ataround 2.3 % per year.

• The long-established trend of restructur-ing EU economies towards services andhigh value-added products continues.

• Liberalisation and integration of theelectricity and gas markets are fullydeveloped in the second half of the2000–10 period.

• Energy taxes remain unchanged in realterms in all Member States.

Annex 1

• Technological improvements in energysupply and demand technologiescontinue.

• Support continues for renewable energyand combined heat and power.

• There is continued extension of thenatural gas infrastructure across MemberStates.

• Nuclear plant lifetimes are extended to40 years.

Results from the PRIMES model were alsoused to project the carbon dioxide emissionsattributable to energy use (NTUA, 2000a;NTUA, 2000b). Projections of non-energyrelated carbon dioxide emissions, andemissions of the other five greenhouse gasescovered by the Kyoto Protocol23, to 2010were made by a ‘bottom-up’ modellingapproach (Ecofys, 2001), based on emissioninventories for either 1990 or 1995, andassuming a ‘frozen technology’ referencelevel to 2010 — i.e. no change in the emissionlevel per unit of production compared withthe base year, with the following exceptions:

• Industrial emissions of adipic acid takeaccount of reduction measures takenbetween the base year and 2000.

• Waste sector emissions take account of theeffect of abatement measures taken as aresult of the landfill directive after thebase year.

23 The Kyoto ‘baske t’ of g reenhouse gases consists of carbon d ioxide , methane, nitrous oxide ,hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride .

Background to the baseline energy and greenhousegas emissions project ions


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6 5

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6 7

ACEA European Automobile Manufacturers AssociationBAT Best available technologyCHP Combined heat and powerCO

2Carbon dioxide

CONCAWE Oil companies’ European organisation for environment, health and safetyDG Directorate General of the European CommissionDG ENV Directorate General Environment (of the European Commission)DG TREN Directorate General Energy and Transport (of the European Commission)DHI DHI Water and Environment, DenmarkDPSIR Driving forces, Pressures, State, Impact and ResponsesEEA European Environment AgencyEIONET European Information and Observation NetworkETC European Topic CentreETC-ACC European Topic Centre on Air and Climate ChangeEU European UnionEurostat Statistical Office of the European UnionExternE Externalities of fuel cycles projectFCCC Framework Convention on Climate Change (UN)FGD Flue gas desulphurisationGDP Gross domestic productGIEC Gross inland energy consumptionGJ GigajouleHFCs HydrofluorocarbonsIEA International Energy AgencyIPCC Intergovernmental Panel on Climate ChangeIPPC Integrated pollution prevention and controlITOPF International Tankers Owners Pollution FederationJAMA Japanese Automobile Manufacturers AssociationKAMA Korean Automobile Manufacturers Associationkm Kilometrektonnes Thousand tonneskWh Kilowatt hourMS Member State (of the European Union)Mt Million tonnesMtoe Million tonnes of oil equivalentN

2O Nitrous oxide

NMVOC Non-methane volatile organic compoundsNECD National emission ceiling directiveNO

XNitrogen oxides, including nitric oxide (NO) and nitrogen dioxide (NO

2)

NTUA National Technical University of AthensOECD Organisation for Economic Co-operation and DevelopmentOPEC Organization of the Petroleum Exporting CountriesOSPAR Joint Oslo and Paris CommissionsPFCs PerfluorocarbonsPM Particulate matterSO

2Sulphur dioxide

TERM Transport and Environment Reporting Mechanism of the EUtoe Tonnes of oil equivalentTWh Terrawatt hourUNFCCC United Nations Framework Convention on Climate ChangeWHO World Health Organization

Acronyms and abbreviat ions


European Environment Agency

Energy and environment in the European Union


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