intelligent energy ex ante en

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Ex ante evaluation of a renewed

multiannual Community programme inthe field of energy (2007-2013)

Final Report

Ref: TREN/A1/17-2003: Lot 1 - Framework Contract for ImpactAssessments and Ex-ante Evaluations (lead contractor ECORYS)

ECOTEC Research and Consulting LtdECORYS Nederland BV

ECOTECResearch & Consulting Limited

12-26 Albert StreetBirminghamB4 7UDUnited Kingdom

Tel: +44 (0)121 616 3600Fax: +44 (0)121 616 3699Web: www.ecotec.com


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Ex ante evaluation of a renewed multiannualCommunity programme in the field of energy(2007-2013)

Final Report

Ref: TREN/A1/17-2003: Lot 1 - Framework Contract for ImpactAssessments and Ex-ante Evaluations (lead contractor ECORYS)

ECOTEC Research and Consulting LtdECORYS Nederland BV

C2719

September 2004

ECOTEC Research & Consulting Ltd12-26 Albert StreetBirmingham B4 7UDTel: 0121 616 3600

Fax: 0121 616 3699Web: www.ecotec.com

Offices:

Brussels, London, Leeds, Cardiff, Madrid

Contact: Lis Broome, Kerstin Junge

Tel: +44 121 616 3600Email: [email protected]


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Ex ante evaluation of a renewed multiannual Community programme

in the field of energy (2007-2013)

EXECUTIVE SUMMARY

The Directorate General for Energy and Transport is designing and preparing the proposal of the

Commission for the renewed multiannual Community programme in the field of energy, the

Intelligent Energy - Europe II (EIE-II), for the period 2007-2013. This new programme follows on

from the current EIE programme, which operates between 2003-2006.

The proposal for the new programme has budgetary and resource implications, therefore an ex ante

evaluation is required as part of the procedure for obtaining approval for the proposed programme.

Ex ante evaluation is a process that supports the preparation of proposals for new or renewed

Community actions. Its purpose is to gather information and carry out analyses that help to defineobjectives, to ensure that these objectives can be met, that the instruments used are cost-effective and

that reliable later evaluation will be possible. The evaluation has was based on a variety of inputs,

including existing assessments on previous programmes, relevant market reports and taking into

account the results of structured stakeholder consultations.

Competitiveness, sustainable development and EU energy policy

Reliable, secure and affordable energy is essential to a modern, competitive economy. The

aim of the Lisbon Strategy, agreed by the European Council in 2000, is for Europe tobecome a dynamic and competitive knowledge economy, with sustained growth, more andbetter jobs and greater social cohesion. Energy is a key element of achieving the Lisbonobjectives. Subsequently the Gothenburg European Council in 2001 recognised theimportance of combating climate change through reducing greenhouse gas emissions anddecoupling economic growth from resource use. Fostering more efficient and renewableforms of energy production and consumption, and more sustainable transport, or in otherwords promoting sustainable energy, are central to achieving these objectives.

The EUs energy policy focuses on addressing problems associated with increased external

dependence on energy resources, and the importance of dealing with adverse environmentalimpacts of increased energy consumption as well as of sustaining competitiveness. TheCommunity has established targets for the uptake of sustainable energy, including:

doubling the share of renewable energy sources in EU energy consumption to 12% by2010,

increasing to 22% the share of electricity generated by renewable sources in the EU-15(21% in the EU-25) by 2010,

having 5.75% of biofuels in all petrol and diesel used for transport by 2010, stabilising energy consumption and reducing energy intensity, aiming at saving at least

1% more energy each year.


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However, recent estimates indicate that these targets are unlikely to be achieved withoutenhanced action at both Community and individual member state level. Actions aretherefore needed to boost energy efficiency and reduce energy intensity, and to providemeasures to support the promotion and development of new and renewable energy sources.

The liberalisation of the electricity and gas markets in Europe is underway. It is importantthat measures to stimulate real competition are established, notably investments ininfrastructure improvements and greater progress with renewables. Costs and benefits ofthese investments should therefore be viewed as strategic not only regionally but also butalso at a wider national and European level.

Developments in energy efficiency and renewables offer huge potential for new marketopportunities both within Europe and in export markets world-wide. This can create jobs aswell as reducing dependence on imported fuels. This is particularly important with therecent rise in oil prices when diversification of fuels is essential to maintain competitiveness.

The Intelligent Energy Europe - II programme

The overall objectives of the Intelligent Energy Europe - II programme (EIE-II) are tocontribute to achieving EU targets for sustainable energy and facilitate the achievement of theUNs Millennium Development goals (which address extreme poverty). EIE-II providessupport in the fields of energy efficiency, new and renewable energy sources and clean andefficient transport, and supports co-operation in these fields at international level. Theoperational objectives aim to accelerate uptake of sustainable energy technologies, through

increasing the level of investment in sustainable energy technologies and increasing thedemand for sustainable energy. Three main ways of delivering this objective are identified:strengthening policy and administrative capacity; measures to improve confidence andencourage increased levels of investment into sustainable energy technologies; anddissemination and promotion activities.

The EIE-II programme proposes to renew and extend the activities of the current IntelligentEnergy - Europe programme (2003-6):

EIE-II would have a proposed budget of 1,670 million over seven years (2007-13).

It would provide support in three fields of action in the EU-27: energy efficiency(SAVE), new and renewable energy sources (ALTENER), and clean and energy efficienttransport (STEER).

It would also provide support for co-operation in these fields at international level,including the neighbouring countries of the EU (COOPENER). This would be either asan integral part of the programme, or placed under the legal basis of the EC externalrelations instruments while keeping a strict connection to the other (internal) three partsof the programme.

As with the current EIE programme, activities under EIE-II would provide support topolicy development and implementation, and for institutional capacity building and

dissemination activities.


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EIE-II would also propose a new area of support, forreplication projects. These wouldaim to boost large investment in new and best performing technologies, through

providing support for first market replication of just-proven technologies of Europeanlevel interest.

Its target sectors would be centred in the public sector, private and public sector energyusers, industry and manufacturing, finance institutions, and the general public.

An overview of the links between the programmes objectives and its main areas for action ispresented in the Objective Tree below.

The links between the main fields of action and the types of instrument to be used in EIE-IIare summarised in the following table. This table demonstrates how the proposedinstruments would contribute to achieving the anticipated results.

CO2 emissionslevels reductionsachieve agreed

targets

Accelerated uptake ofsustainable energy

technologies

Energy demandstabilised and

increaseddiversification

Contribute to achievinglevel playing field to

encourage implementationof sustainable energy

technologies

Dependence onnon-EU countriesfor energy limited

Obligations as

regardsimplementationof regulationsare being met

High interest to

manufacture andinstall sustainableenergy products

Improved understanding ofbenefits presented by an

increased use ofsustainable energy

(improved admin capacityat local and regional levels)

Increasedlevels of

investment

Increasedawareness ofbenefits from

sustainable energy

Energy prices favour

sustainable energyinvestments

Increasedconfidence in

sustainable energytechnologies

Qualitystandardsdeveloped

EU targets forsustainable

energy achieved

Disseminationand promotionof sustainable

energyexpanded

Increased demandfor sustainable

energy

Objective Tree - Intelligent Energy Europe - II

Operational

Objectives

Results

Facilitation towards thedevelopment of the

Millennium Devt goals

Sustainable energycontribution tosustainable devt issignificant worldwide

Improvedcompetitiveness

Programme

scope

OUT

IN

Overall

Objectives

CO2 emissionslevels reductionsachieve agreed

targets

Accelerated uptake ofsustainable energy

technologies

Energy demandstabilised and

increaseddiversification

Contribute to achievinglevel playing field to

encourage implementationof sustainable energy

technologies

Dependence onnon-EU countriesfor energy limited

Obligations as

regardsimplementationof regulationsare being met

High interest to

manufacture andinstall sustainableenergy products

Improved understanding ofbenefits presented by an

increased use ofsustainable energy

(improved admin capacityat local and regional levels)

Increasedlevels of

investment

Increasedawareness ofbenefits from

sustainable energy

Energy prices favour

sustainable energyinvestments

Increasedconfidence in

sustainable energytechnologies

Qualitystandardsdeveloped

EU targets forsustainable

energy achieved

Disseminationand promotionof sustainable

energyexpanded

Increased demandfor sustainable

energy

Objective Tree - Intelligent Energy Europe - II

Operational

Objectives

Results

Facilitation towards thedevelopment of the

Millennium Devt goals

Sustainable energycontribution tosustainable devt issignificant worldwide

Improvedcompetitiveness

Programme

scope

OUT

IN

Overall

Objectives


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Contribution of proposed instruments to anticipated results:

Proposed instruments:

Anticipated results: Studies,strategies

Replication

projects

Localandr

egional

planning

Promotionof

sustainable

energy

systemsandequipment

Information,education

andtraining

Increased interest from manufacturers

Quality standards developed

Increased confidence in sustainableenergy technologies

Improved admin capacity at local andregional levels re. sustainable energy

Increased awareness of benefits fromsustainable energy

Dissemination and promotion ofsustainable energy expanded

The activities proposed include both soft and hard measures to achieve these results.Soft measures include activities such as the development of networks, training courses,dissemination, promotion, education and training. Hard measures provide funding tostimulate market replication of just proven technologies, and the development of standards, aswell as certification and labelling, to improve market confidence.

The need for the EIE-II programme

The central focus of the EIE-II programme addresses the fact that there is a slow uptake ofsustainable energy technologies that is insufficient to meet EU targets. The programme

provides assistance to reduce the non-technological barriers that still exist, in particularinstitutional barriers, low levels of investment, low demand, lack of awareness and low levelsof dissemination and promotion of the benefits of sustainable energy.

The EIE-II proposal has been reviewed and compared with alternative approaches. Theproposed delivery mechanism provides an effective way of achieving the programmesoverall aims and priorities, building on the activities and results of the current EIE

programme. The international dimensions of the programme justify delivery at EU level, toensure a European perspective to activities. In addition, the nature of the projects supported

provides a mechanism for local and regional stakeholders (particularly via energy agencies)to participate and to ensure synergy with initiatives taking place at local and regional levels.The inclusion of replication projects is strongly supported, because of the potential that thesetypes of projects have to achieve accelerated uptake of sustainable energy technologies, by

providing pump priming support. International (non-EU) projects providing policy supportand dissemination are valuable for political, environmental and security of supply reasons.


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Close links with other programmes

The EIE-II programme proposal is complementary to and coherent with other Communityinterventions, and achieves significant synergy effects. It is very important that the

programme links directly with other Community programmes and policies in order toguarantee mainstream funding, exploit synergies and multiply the impact of the wholeCommunity financial intervention. This is in particular true for those programmes impactingon the implementation of the Lisbon strategy of sustainable growth and competitiveness, onthe protection of the environment and on creating the conditions for improved access toenergy in third countries markets.

The current EIE programme is the main Community instrument for non-technologicalsupport in the field of energy. It follows on successfully from the Energy FrameworkProgramme (EFP, 1998-2002). Evaluations of the EFP concluded that there is a realneed for an energy programme, delivered through EIE as a single programme thatreinforces synergies and collaborations between the different work areas.

Prior to 1998, the THERMIE programme supported demonstration projects, includingtargeted projects - large-scale demonstration projects to demonstrate on a wider scalethe benefits of investing in new technologies. There is a clear and continued need forsupport for these types of project, which bridge the gap between successfuldemonstration and full-scale market uptake. The proposed replication projects in EIE-IIcan build on the success of and lessons learned from THERMIE.

For Fifth and Sixth Framework Programmes (FP5, FP6) in research and development,the replication component proposed under EIE-II appears to strongly complement short-

to-medium term projects still facing barriers to full market entry. The Seventh Framework Programme (FP7) is still under development, but it is clear that

FP7 and EIE-II will have the opportunity to complement each other in a very positiveway, forming a continuum of EU support for technologies of strategic importance.

EIE-II should continue to provide support to energy agencies, particularly in the newmember states, where the need for assistance in terms of policy development, capacity

building and awareness raising is very high. There are opportunities for other regionalorganisations to contribute to the development and delivery of work programme and

projects. Proposed legal bases for Structural Funds, Cohesion Funds, Trans-European Networks

and rural development for post-2007 were adopted by the Commission in July 2004.These proposals indicate that renewable energy, energy efficiency and clean transportare ranked high in the priority areas of action. EIE-II can therefore provide a valuablecontribution to achieving these priorities, through assisting policy development, buildingcapacity and raising awareness.

The COOPENER strand of EIE-II will ensure that international best practice andexperience is shared, based on available technologies and EU-wide networks. The

political weight of the EU can have a significant influence on local and regional policy,to encourage integration of energy issues into wider policy developments. Should theinternational component of the programme share a common legal basis with the

mainstream EC external cooperation instruments, effective co-ordination mechanisms


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will have to be put in place in order to ensure coherence, complementarity and synergiesbetween the internal EIE II strands and COOPENER.

At member state level, EIE-II complements national energy and sustainabledevelopment programmes, by enabling sustainable energy issues to achieve highervisibility. Member states can contribute to developing the detailed work programme,selecting priority areas and projects.

EIE-II links directly with the EUs Environmental Technologies Action Plan (ETAP),which presents a co-ordinated approach to EU activities supporting environmentaltechnologies. Renewable energy and energy efficiency are both directly relevant here.

The European Climate Change programme (ECCP) plays a central role in supportingand monitoring the EUs obligations under the Kyoto Protocol. There are clearsynergies between the various initiatives that integrate the ECCP and energy policy.

Budget and cost-effectiveness

The budget proposed for EIE-II is 1.639 billion (including for COOPENER). It is estimatedthat this level of funding can mobilise a minimum of 3.2 billion of public or private funds,as shown in the table below:

Estimates of match funding of eligible costs:

Aspect EIE-II aid

m

Maximum

EIE-II

contribution (%)

Match

funding of

eligible costs

required m

Total funding

m

Replication projects 896 35 2,560 3,456Policy development + implementation

Remove non technical barriers

Strategic/policy related

Policy development + implementation

Concerted actions

75

(assumed

10% of the

funding)

100 0 75

Remove non technical barriers

Promotion dissemination

668 50 668 1,336

TOTAL 1,639 3,228 4,867

It is estimated that an average total investment of 14-17 billion each year is needed from2007 to achieve the EU targets in renewable energy (12% of consumption by 2010). Thecontribution from EIE-II therefore represents less than 0.8% of the total investment required.A similar substantial level of investment is needed to achieve the necessary improvements inenergy efficiency.

Over the seven years of the EIE-II programme (2007-2013), the following level of successfulproject applications is anticipated:

About 25 replication projects each year, each about 5 million = 179 in total About 425 other contracts each year, average cost 0.25 million = 2,972 in total Total contract number is estimated at 3,151.


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Human resources

Technical and administrative support is proposed at 31 million over the seven year period,i.e. 1.9% of the intervention budget, with a further 1.05 million for missions, meetings, andother programme administrative and monitoring activities. The slight increase in these costscompared with the current EIE programme is justified to meet additional levels of monitoringrequired, to strengthen the level of promotion and dissemination carried out, and to meet theadditional demands of extended geographical scope in the EU-27 and internationally.

The administration of the new programme is proposed to follow on directly from themanagement of the current EIE programme, i.e. via an Executive Agency. Under thisscenario, there would be 22 officials within the Commission supported by staff within theAgency, of approximately 80 people. Pro-rata this is in line with the expansion of the budgetand work programme. It is anticipated that the smaller, more focused structure of the Agencywill result in faster procedures and more efficient project management. With the largenumber of project applications anticipated, it is important that the application process isdesigned to be robust and efficient from the start of the programme. Staff resources should

be appropriate to enable applications to be processed quickly, and administrative proceduresshould be made as streamlined as possible, to ensure the application timetable is adhered toand minimise delays to contract award.

Monitoring and evaluation

The current EIE programme has established arrangements for monitoring and evaluation atboth programme and project level. Management and monitoring is the responsibility of theExecutive Agency. These arrangements can be used and extended for EIE-II. Clear andmeasurable programme and project level indicators will be central to monitoring

performance. Project work programmes should clearly define objectives and targets, usingguidance and clear definitions provided from the start of the programme that specify data to

be collected during the project lifetime.

An annual evaluation of the EIE-II programme is proposed, to be submitted to the EuropeanParliament, the Council and the European Economic and Social Committee and the

Committee of the Regions. A mid-term evaluation of the programme is also proposed, inorder to provide an opportunity to make adjustments where necessary on the procedures,project selection, programme structure and delivery. Finally, an ex-post evaluation after thecompletion of the programme in 2013 can assess the programmes overall performance andimpact.

Efficient and effective monitoring and evaluation of projects is proposed. Critical evaluationis particularly important for large scale capital projects funded as replication projects.Indicators are needed that allow comprehensive measurement of results and effectiveness ofthe projects.

***


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Contents

1.0 Introduction..........................................................................................................................12.0 Problem analysis and needs assessment ..............................................................................4

2.1 EU energy policy .......................................................................................................4

2.1.1 Sustainable development .......................................................................................4

2.1.2 Sustainable energy policy in the EU......................................................................6

2.1.3 Progress towards achieving the strategic objectives..............................................9

2.2 Enlargement and sustainable development..............................................................10

2.2.1 Enlargement and new member states priorities ...................................................10

2.2.2 Implementing the energy acquis ..........................................................................13

2.2.3 Renewable Energy ...............................................................................................14

2.3 The implications of post-2007 budget planning ......................................................15

2.3.1 Sustainability: also a budget issue .......................................................................15

2.3.2 Delivering the EUs sustainability policies: principles and instruments .............16

2.4 Global policy challenges..........................................................................................17

2.4.1 The EU as regional leader and global player on sustainability............................17

2.4.2 EU energy policy and developing countries ........................................................20

2.4.3 EU energy policy and neighbouring countries.....................................................202.4.4 Current energy programmes in the partner countries ..........................................21

2.5 Why is public intervention needed?.........................................................................22

2.5.1 The overarching problem - the problem analysis.................................................23

2.6 What is the target group and what are its needs?.....................................................27

2.7 SWOT analysis ........................................................................................................28

3.0 What are the objectives, expected results and indicators for the programme?..................313.1 Establishing the baseline..........................................................................................31

3.2 The objectives for the programme...........................................................................34

3.3 Laying the ground for programme monitoring and evaluation: definition ofindicators ..............................................................................................................................38

3.4 Assumptions.............................................................................................................41

4.0 What alternative approaches were considered and why has this one been selected? ........464.1 Alternative delivery options.....................................................................................46

4.2 Intelligent Energy Europe II: Detailed assessment of delivery options..................48

4.3 Consideration of no-action....................................................................................514.4 The favoured delivery option...................................................................................53


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4.5 Risk assessment of the favoured delivery option.....................................................54

4.5.1 Failure to transpose EU directives .......................................................................54

4.5.2 Lack of integration with mainstream funding......................................................54

4.5.3 Lack of interest in the programme.......................................................................554.5.4 Institutional capacity / receptiveness ...................................................................57

4.5.5 Replication projects .............................................................................................57

4.5.6 Mismanagement, fraud ........................................................................................58

5.0 What lessons can be learned from the past? ......................................................................595.1 Introduction..............................................................................................................59

5.2 Descriptions and evaluation of current and previous programmes and initiatives ..59

5.2.1 Energy Framework Programme (EFP) (1998-2002) ...........................................59

5.2.2 Intelligent Energy Europe (EIE) (2003-2006) .....................................................60

5.2.3 Energy Agencies ..................................................................................................61

5.2.4 The THERMIE programmes................................................................................63

5.2.5 The CIVITAS and CONCERTO initiatives ........................................................64

5.3 US and Japanese experiences...................................................................................65

5.4 International energy programmes ............................................................................66

5.5 Critical factors affecting the implementation of a programme................................68

6.0 The added value of Community involvement....................................................................696.1 Introduction..............................................................................................................69

6.2 The added value of the EU energy-related actions ..................................................69

6.3 EU RTD programmes ..............................................................................................72

6.4 Structural and Cohesion Funding.............................................................................75

6.5 Other Community initiatives....................................................................................77

7.0 What monitoring and evaluation is planned?.....................................................................797.1 Monitoring and evaluation in previous programmes (EFP) ....................................79

7.2 The current EIE programme ....................................................................................79

7.3 The proposed EIE-II programme.............................................................................80

7.4 The application process............................................................................................81

7.5 Evaluation ................................................................................................................83

7.5.1 Programme evaluation .........................................................................................83

7.5.2 Executive Agency evaluation ..............................................................................84

7.5.3 Project evaluation.................................................................................................85

8.0 What is the cost-effectiveness of the proposed option?.....................................................86


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8.1 Cost effectiveness ....................................................................................................86

8.2 Human Resources ....................................................................................................90

8.3 Progress with developing the EIE Executive Agency to date (May 2004)..............91

9.0 Stakeholder consultations ..................................................................................................939.1 The consultation process..........................................................................................93

9.1.1 Issues Covered .....................................................................................................93

9.1.2 The ManagEnergy Reflection Group...................................................................94

9.1.3 The European Energy and Transport Forum........................................................95

9.1.4 International component ......................................................................................96

9.2 Result of the discussions with EC officials and other stakeholders.........................96

9.2.1 Problem Analysis and Needs Assessment ...........................................................96

9.2.2 Barriers.................................................................................................................97

9.2.3 New member states ..............................................................................................97

9.2.4 Beneficiaries ........................................................................................................98

9.2.5 Programme management .....................................................................................98

9.2.6 Replication Projects .............................................................................................99

9.2.7 International Co-operation...................................................................................99

9.2.8 Delivery Options................................................................................................100

9.2.9 Lessons from the Past and Improvements .........................................................100

9.2.10 Added Value/Integration....................................................................................101


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Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013)

1

ECOTEC Research and Consulting Limited

1.0INTRODUCTIONThe Directorate General for Energy and Transport is designing and preparing the proposal ofthe Commission for the renewed multiannual Community programme in the field of energy,

the Intelligent Energy - Europe II (EIE-II), for the period 2007-2013. This new programmefollows on from the current EIE programme, which operates between 2003-2006.

The Intelligent Energy Europe programme and its successor EIE-II address the fields ofenergy efficiency and renewable energy sources. Energy aspects of transport are alsoincluded. The programme therefore addresses the EUs agreed target areas for sustainableenergy, and contains actions to focus on and work towards achieving the targets.

The proposal for the new programme has budgetary and resource implications, therefore anex ante evaluation is required as part of the procedure for obtaining approval for the proposed

programme

1

.

The overall aim of the EIE-II programme would be to accelerate action in the field ofsustainable energy, building on the range of directives and other support mechanisms alreadyin place through EU and national policies that have been established to reach Communitytargets. The programme proposes to renew and extend the activities of the current IntelligentEnergy - Europe programme (2003-6). With a proposed budget of 1670 million, it would

provide support in four fields of action: energy efficiency (SAVE actions, 510 million) new and renewable energy sources (ALTENER actions, 560 million) clean and energy efficient transport (STEER actions, 450 million) supports for co-operation in these fields at international level (COOPENER actions, 150

million).The programme would provide support towards the removal of non-technical barriers throughthree types of intervention: supporting policy development and implementation boosting large investment in new and best performing technologies - particularly through

support for first market replication of just-proven technologies of European level interest removing non-technological barriers to sustainable energy through support for

institutional capacity building and dissemination activities.

Ex ante evaluation is a process that supports the preparation of proposals for new or renewedCommunity actions. Its purpose is to gather information and carry out analyses that help todefine objectives, to ensure that these objectives can be met, that the instruments used arecost-effective and that reliable later evaluation will be possible.

The purpose of this ex ante evaluation is as follows: To justify the Community intervention, including the level of funding proposed, To assist in the development of a clear set of objectives that can subsequently be used to

monitor and evaluate the programme,

1 Commission Communication on Evaluation (SEC(2000)1051)


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To establish a reliable basis on which subsequent interim and ex post evaluations can becarried out,

To identify management responsibilities and delivery.In its guidelines for carrying out ex ante evaluations2, the Commission recognises that the

practicalities of conducting an ex ante evaluation need to be decided pragmatically, andshould take account of the individual circumstances of the programme. It identifies that thescope of the ex ante assessment will depend, among other things, on the amount and qualityof information available from earlier evaluations, studies or other sources, on the amount ofexpenditure and resources involved and on the types of the decision making process.

Figure 1 shows how the current evaluation fits into the planning and evaluation schedule ofthe EIE programme and the earlier Energy Framework Programme (EFP). It demonstratesthe previous evaluations and current programme delivery, which have been used to informthis evaluation process.

Figure 1: Planning and reporting schedule, EIE-II

Timeline

As can be seen from the schematic in Figure 1, the amount of information available to carryout a comprehensive ex ante evaluation of EIE-II is limited. The most recent evaluationreports relate to the previous programme, the Energy Framework Programme (EFP, 1998-2002), for which a mid-term evaluation was carried out in 2002. An ex-post evaluation of theALTENER component of the EFP is to be completed in 2004, but there are no ex postevaluations available yet for the other components of the programme (SAVE, SYNERGY).We are aware that there is a review of SAVE energy agencies underway, but no details areyet available. In addition, the current EIE programme (2003-2006) has started only recently,

2 Ex ante evaluation. A practical guide for preparing proposals for expenditure programmes. December 2001.

1998-2002Energy Framework

Programme

2003-2006Intelligent Energy

Europe

2007-2013Intelligent Energy

Europe- II

EIE workprogramme

(2003-6)

first call for proposals, with2003 work programme

(deadline April 2004)

Decision text EIEwith ex ante

mid-termevaluation

EFP(2002)

ALTENER ex

post evaluation

(2004)


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with the first call for proposals closing in April 2004. This means that no evaluation reportsare available relating to the current EIE programme.

Our methodology for this ex ante evaluation must therefore adopt a pragmatic approachbased on the information available and the information needs for the development of theproposed EIE-II programme.

The sequence of the subsequent chapters follows closely the structure recommended in theCommissions ex ante evaluation guidelines. It also draws considerably from EuropeAidsProject Cycle Management guidelines3, particularly its guidance on the logical frameworkapproach.

Chapter 2 presents the problem analysis and needs assessment. It outlines the EU policycontext in which the proposed EIE-II programme sits. In doing so it focuses on areas that arespecifically relevant to the programme rather than higher level issues (most notably theKyoto protocol and Johannesburg summit) as these are well-rehearsed. It provides a

justification for public intervention, and identifies the target groups and their needs.

Chapter 3 develops the objectives, expected results and indicators for the programme. Thistranslates high level policy goals into tangible and measurable objectives, and identifies the

basis for measuring achievements.

Chapter 4 discusses alternatives to this delivery mechanism, and outlines possiblealternatives (including the no action option) in order to establish how EIE-II can be best

delivered.

Lessons from the past are important in order to avoid repeating mistakes and optimising theoverall running of the programme. Chapter 5 draws on recent evaluations of relevant energy

programmes order to establish which recommendations can be taken on board for thedevelopment of EIE-II.

Chapter 6 discusses the added value of Community action, where the European dimension isexplored to identify the value of the proposed intervention.

Chapter 7 describes the arrangements in place or planned for monitoring and evaluation ofthe programme, and makes recommendations for developing and improving thearrangements.

Chapter 8 analyses the cost implications of the proposed intervention, and the humanresources implications.

Chapter 9 concludes with a summary of the stakeholder consultations carried out in April -May 2004.

3 Project Cycle Management Handbook (March 2002); Project Cycle Management Guidelines (February 2004).Both prepared for EuropeAid Co-operation Office.


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2.0PROBLEM ANALYSIS AND NEEDS ASSESSMENTThis section presents the arguments to demonstrate the need for a public programme, and

forms the basis for the subsequent formulation of the programme design and delivery.

2.1 EU energy policyThe EIE-II programme sits within a policy strategy designed to promote sustainabledevelopment and address climate change. This section concentrates on discussing those

problems that the EIE-II programme aims to address, rather than focusing in great detail onhighest level issues, which have been well-rehearsed over the recent years. Thus, in providingan overview of key EU policy initiatives in the area of energy and transport we will highlighttheir relevance for the proposed EIE-II programme in order to clearly demonstrate the needand rationale for the proposed initiative.

2.1.1 Sustainable developmentSince the late 1990s, the EU has become increasingly active in the areas of sustainable energyand sustainability within the EU, and is a major global player pushing forward the Kyotoagenda.

The aim of the Lisbon Strategy4 is for Europe to become a dynamic and competitive

knowledge economy, with sustained growth, more and better jobs, and greater socialcohesion. This takes up most of the economic and social goals of sustainable development.

The environmental dimension was added explicitly to the Lisbon Strategy as a result of theGteborg European Council5. Combating climate change, through meeting the Kyoto targetsto reduce greenhouse gas emissions and de-coupling economic growth from resource use, arethe key energy-related elements of sustainable development. The promotion of more efficientand renewable forms of energy production and consumption, and more sustainable transport,

both have a key role to play in meeting both these objectives.

These developments also bring significant benefits in terms of a cleaner environment, whileactions on the competitiveness of energy markets bring better and more cost-effective energyservices. These aspects are clearly also consistent with economic and social dimensions of theLisbon strategy.

The European Council of Lisbon, March 2000, agreed in its conclusions on a new strategicgoal for the next decade: to become the most competitive and dynamic knowledge-based

economy in the world, capable of sustainable economic growth with more and better jobs and

greater social cohesion.

4 Presidency Conclusions Lisbon European Council 23-24 March 20005 Presidency Conclusions Gteborg European Council 15-16 June 2001


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Increasing the share of renewable energy sources in the energy mix and improving energyefficiency are essential for environment and competitive reasons and contribute to the goal ofthe Lisbon process to become capable of sustainable economic growth. This has been againstressed by the member States at the 2003 and 2004 Spring Council meetings.

As an example, the wind industry currently employs 75,000 people in the EU-15. TheGerman Government has confirmed the net creation of 135,000 jobs through its national

policy on renewable energy up to 2003. Nearly 100% of renewable energy production usesEuropean technology. Increasing the share of renewable energy sources and improvingenergy efficiency creates new jobs in research, industry and building sectors, agro andforest-based industry, waste treatment and consulting by developing new technologies and

by encouraging research and technical innovation. It is estimated that if renewable energysupplies 12% of the EU-15 energy consumption in 2010, the sector will employ between500,000 and 650,000 people in serving this EU market.

The European industry is also the world leader in wind technology and holds a good positionin hydro, photovoltaic and geothermal power. Export markets constitute a huge potential forthe European renewable energy industry, which will benefit from the expertise gained in thedomestic market. The export of renewable energy technology further creates a significantnumber of extra jobs in the EU and improves the competitiveness of new and renewableenergies by their massive deployment, thereby reducing their costs and improving the

performance of electricity generation, heating and cooling, mineral oil substitutes, such asbiofuels and hydrogen. This is particularly important for the EU industry especially in times

of rising oil prices during which diversification of fuels is essential.

The liberalisation of the electricity and gas markets in Europe are underway and arefundamentally changing energy markets and the energy sector. By 2007 the electricity andgas markets in all member states will be fully open, with access to different service suppliersfor consumers, offering choice on price and other grounds. In this transition period over thenext few years, it is essential that effective competition is established and consumers have areal choice of service suppliers. Quality of service is also vitally important, including highstandards of security of supply. Renewable energy therefore can play a strong role incontributing to energy provision, not only as a choice for consumers but also to contribute

indigenous, non-fossil energy resources into the market. This can help to reduce externaldependence on energy, at the same time as contributing to emissions reductions obligations.It will also require co-ordinated investment across the EU in appropriate infrastructure thatcan incorporate renewables into what has hitherto been a centralised distribution network forgas and electricity provision. Costs and benefits of investment in infrastructure shouldtherefore be viewed as strategic not only for the region in which the renewable energy plant issituated, but also at a wider, national and European level in order to fully benefit from thevalue of such investments.

Furthermore, the Gteborg European Council, June 2001, agreed on a strategy for sustainable

development and added an environmental dimension to the Lisbon process. In its conclusionsit invites the industry to take part in the development and wider use of new environmentally


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friendly technologies in sectors such as energy and transport and stresses the importanceof decoupling economic growth from resource use.

Climate and environmental protection are central components of sustainable development, toensure that the Kyoto Protocol target for greenhouse gas emissions reductions is achieved.Further EU support is needed to raise the impact and appeal of renewable energy and energyefficiency in order to meet the agreed targets in these fields.

Competitive technologies to provide sustainable and secure energy play an integral role in thecore components of sustainable development. Eco-efficient energy technologies are able toreduce environmental impacts whilst also contributing to competitiveness and growth. Many

potentially significant environmental and energy technologies exist, but are underused. Thisis the consequence of lock-in to existing technologies, difficult access to finance, lowinvestor awareness, and distorted price signals. These technologies can be promoted boththrough market-based instruments and from targeted policy initiatives to promote innovation.The Commission is confident that instruments in research, demonstration and innovation, aswell as regional policy and external co-operation, should improve the situation.

Research and technological development is one area where EU funding is able to make strongprogress towards achieving sustainable growth. The Union needs to contribute to improve itssupport to raise its performance, where it currently lags behind in world rankings (Europedevotes 2% of its GDP to research compared with 2.7% for the US and more than 3% forJapan).

Targeted research and development to support the development of competitiveness, includingin sustainable energy technologies, is recognised as central to the Unions priorities.Partnerships between public and private sector, for example, can help to develop newgeneration of energy technologies in areas such as fuel cells and the hydrogen economy, solarenergy, offshore wind. Of equal importance to achieving these goals, the Commissionrecognises that action is needed in the field of dissemination of research results, and EU

participation and leadership in global initiatives.

2.1.2 Sustainable energy policy in the EUIn addition to drawing up policies on sustainable development in general, the EU also has aset of energy policies that feed into the sustainability agenda. A combination of five factorsmakes this a necessity:

Energy consumption in the European Union varies from year to year. Between 2000 and2001 final energy consumption increased by 2.6% (EU25). However, between 1998 and2000 energy consumption remained relatively stable.

Predictions of future rises in energy consumption indicate that demand for energy willcontinue to increase in the EU, and that energy demand world-wide will rise by more than70% between 2000 and 2030, rising from 10 billion tonnes of oil equivalent (bn toe) in


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2000 to a predicted 17 bn toe by 2030. Asia in particular will more than double its energydemand (see Figure 2).

Figure 2 Trends in global gross inland consumption by region, 1990-2030

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2000 2010 2020 2030

Mtoe

Asia

Africa

Middle East

Latin America

CIS

CEEC

OECD Pacific

Europe OECD

North America

Source: European Energy and Transport Trends to 2030. Directorate-General for Energy and Transport, January 2003

At the same time, dependence on non-EU countries for energy is starting to rise above50%. EU energy production is currently in decline and is unable to meet increasingdemand (Table 1).

Table 1: Primary production of fuels in the EU-25 (Mtoe)

1990 2000 2010 2020 2030

Solid fuels 351 203 152 124 102Hard coal 213 120 81 64 55Lignite 138 83 71 60 47

Liquid fuels 120 164 132 102 86Natural gas 140 197 197 148 117Nuclear 197 238 245 214 185Renewable energy sources 71 97 133 152 170Total 878 899 859 739 660

EU-15 708 761 743 635 573EU-25 170 138 116 103 87

Source: European Energy and Transport Trends to 2030. Directorate-General for Energy and Transport, January 2003

If no measures are taken in the next 20 to 30 years, this figure could increase to more than65% (Table 2).


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Table 2: Fuel import dependency predictions 1990-2030 (%)

1990 2000 2010 2020 2030

Solid fuels 17.4 30.1 37.4 50.8 65.7

Liquid fuels 80.9 76.5 81.4 86.1 88.5Natural gas 47.6 49.5 61.4 75.3 81.4Total 44.8 47.1 53.3 62.1 67.5EU-15 47.6 49.4 54.3 62.9 67.8EU-25 28.6 29.9 45.7 56.7 65.2Source: European Energy and Transport Trends to 2030. Directorate-General for Energy and Transport, January 2003

Serious environmental damage caused by the energy supply system, whether accidental(oil slicks, nuclear accidents, methane leaks) or connected to emissions or pollutants have

highlighted the weaknesses of fossil fuels and the problems of nuclear energy. 94% ofgreenhouse gas emissions are attributable to energy consumption and transport isresponsible for 90% of the increases in CO2 emissions.

Finally, energy efficiency and renewable energy sources are an important part of the setof measures needed to comply with the previsions of the Kyoto Protocol aiming tocontribute to the reduction of greenhouse gas emissions by 8% by the period 2008-2012.

Article 174 of the EC Treaty provides for the prudent and rational utilisation of naturalresources. In its 2000 Green Paper Towards a European Strategy for the security of Energysupply6 the Commission highlighted the problems associated with increasing external

dependence and flagged the importance of dealing with the adverse environmental impacts ofincreased energy consumption. The paper called for the following actions in a long-termenergy context: An energy policy focusing primarily on demand rather than supply Promotion of an active policy on energy saving and diversification for the transport and

construction industries as well as the electrical equipment sector so as to promote non-polluting forms of energy

The development of new and renewable energy sources.Reinforcing the points made in the Green Paper, the White Paper for a Community Strategy

and action plan for renewable sources of energy7

specifies the objective of doubling theirshare in the energy supply quota from 6 to 12% and increasing electricity production basedon these energy sources from 14 to 22% by 2010. It also provides for measures to supportthe promotion and the development of renewable energy sources.

The 2000 Action Plan to boost energy efficiency8 provides for a reduction in energy intensityof 1% per annum, while the current trend is close to zero. The implementation of the action

plan requires the setting up of systems for monitoring and follow up. Most of theCommunity measures concerned with energy efficiency and/or aimed at achieving a greater

6

COM(1997) 599 Final, COM(2001) 69 Final7 COM(2001) 69 Final8 COM(2000) 247 Final


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market penetration of renewable energy sources call for increased promotion at Communitylevel by means of specific programmes in order to create the conditions to move towardssustainable energy systems.

The White Paper on transport European Transport Policy for 2010: time to decide9addresses the conflict between the increasing demands for mobility and the problems ofworsening congestion, poor quality services, environmental damage, safety and isolation ofsome regions. A key statement comes from the Gteborg European Council that placed

breaking the link between economic growth and transport growth at the heart of theSustainable Development Strategy. The White Paper includes a range of 60 measurescombining charging, revitalisation of non-road transport modes and targeted investment inthe trans European network. The White Paper recognises that other policy areas areimportant in achieving its aims, such as economics, planning and land use, social andeducation, urban transport, fiscal, competition and research.

Of the measures described in the Transport White Paper there is none that appears to pose aserious risk of duplication with the activities in EIE. Given that transport policy aims toreduce environmental damage (including climate change) and break the link betweeneconomic growth and transport growth (e.g. improve energy efficiency) the aims of EIE areclearly complimentary.

Negotiated self-commitments are an important element of the Community's strategy to reduceCO2 emissions from passenger cars and improve fuel economy. Commitments have beenconcluded with the European (European Automobile Manufacturers' Association - ACEA),

the Japanese (Japan Automobile Manufacturers' Association - JAMA) and Korean (KoreanAutomobile Manufacturers' Association - KAMA) automobile industries. All threeCommitments are equivalent having the following main features:

The CO2 emission objective: The three Commitments contain the same quantified CO2emission objective for the average of new passenger cars sold in the European Union, i.e.140 gCO2/km (to be achieved by 2009 by JAMA and KAMA and by 2008 by ACEA). Inother words the fleet of new passenger cars put on the market in 2008/2009 will consumeon average about 5.8 l petrol/100 km or 5.25 l diesel/100 km.

Means of achievement: ACEA, JAMA and KAMA have to achieve the CO2 targetmainly by technological developments and market changes linked to thesedevelopments.

2.1.3 Progress towards achieving the strategic objectivesOver the last years, a number of directives and regulations have been adopted in order toachieve the strategic objective in the fields of sustainability and sustainable energy. Some ofthese are summarised in Table 3.

9 COM(2001) 0370


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Indeed, in its 2004 Communication The share of renewable energy in the EU10 theCommission concludes that a comprehensive EU regulatory framework in the field of energyhas been put in place over the last four years. Nevertheless, the Commission also concludesthat targets for 2010 will only be met if the full implementation of this legal framework bymember states is accompanied by complementary proactive measures according to nationalconditions and additional measures notably financial are also needed at EU level.

Table 3: Measures in place to address sustainable energy objectives

Measure To be transposed by

member states by

Directive 2001/77/EC: The Promotion of Electricity fromrenewable energy sources in the internal energy market.

27 October 2003

Directive 2003/30/EC. Promotion of the use of biofuels or otherrenewable fuels for transport

31 December 2004

Directive 2004/08/EC: Promotion of cogeneration based on usefulheat demand.

21 February 2006

Directive 2002/91/EC:Energy Performance of Buildings 4January 2006

Directive 2002/40/EC: Energy Efficiency Labelling of electricovens

1 January 2003

Directive 2002/31/EC: Energy Efficiency Labelling of airconditioners

1 January 2003

Directive 2002/66/EC: Energy Efficiency Labelling of refrigerators 30 June 2004

Directive 2003/96/EC: For the taxation of energy products and

electricity

31 October 2003

Directive 2000/55/EC: on energy efficiency requirements forballasts for fluorescent lighting

1 November 2000

Regulation (EC) No 2422/2001: on Community energy efficiencylabelling programme for office equipment

15 December 2001

Proposed Directive: Energy end-use efficiency and energy services(published 10 December 2003)

1 June 2006

Proposed Directive: 2003 on Eco design requirements for energyusing products

31 December 2005

2.2 Enlargement and sustainable development

2.2.1 Enlargement and new member states prioritiesThe key driver for the new member states is to meet the commitments that they gave to theEU in their accession negotiations, or which they have signed up to through internationalagreements. While all legislation was expected to be in place by the date of accession,

10 COM(2004) xxxx


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implementation is not always complete (generally where transition periods have been grantedfor investment-heavy or institutionally complex legislation).

In relation to the Energy Chapter (14), this relates mainly to energy supply andcompetitiveness: opening up energy markets, with implications, for example, for the coalindustry. Unfortunately, opening up energy markets has too often been seen as an opportunityto raise cash through privatisation without considering issues such as security of supply.

In practice, the Environment Chapter (22) is also a strong market driver, particularly throughthe Large Combustion Plants (LCP)11 and Integrated Pollution Prevention & Control (IPPC)12Directives. The LCP Directive impacts mainly on the supply side (large power plants), whilethe IPPC directive has an impact on the demand side, because energy efficiency is acomponent of the Best Available Techniques (BATs) that must be used.

Greater use of district heating or cogeneration (combined heat and power, CHP) is a priority,in order to improve comfort levels and contain rapidly increasing costs to end users andhousing. As far as international agreements are concerned, Kyoto is the main issue, but ingeneral the decline in industry in the Central and Eastern European new member states overthe last 15 years implies that the targets for the new member states are not too demanding.

Romania and Bulgaria are scheduled to join the EU in 2007, and have similar drivers to thenew member states, but longer timescales. The opportunities beyond 2006 are therefore evengreater than in the new member states from the perspective of the EIE-II programme. Turkeyand Croatia do not yet have target dates for joining, but again the drivers are similar. Again,

the opportunities beyond 2006 will be larger still. One can expect further EU legislativedevelopments that will give energy efficiency and renewable energy a higher profile andpriority.

The progress towards renewable energy and higher levels of energy efficiency is closelylinked with new member states progress in implementing key environmental legislation.

Nearly 100% of the environmental acquis has been transposed into national law by the newmember states. Administrative capacity has also been reinforced to contribute to improvingtheir ability to implement legislation. Nevertheless, the Commission recognises13 that there isstill some progress required in a number of key environmental areas. This includes the

provision of access to environmental information, for which the new member states havenegotiated agreed transition periods.

The new member states have already achieved some significant environmentalimprovements. Despite this progress, the environment is one of the areas where the newmember states still have to catch up with EU standards: emissions are on average higher percapita than in the EU and the energy sector often uses outdated technology and relies on

poorer quality fuel. Thus, it is recognised that the level of investment in the environmentmust continue to be raised. In order to achieve full implementation it is estimated that the

11

Directive 2001/80/EC12 Directive 96/61/EC13 Enlarging the European Union - achievements and challenges. Report of Wim Kok, 26 March 2003.


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new member states will have to spend on average 2-3% of GDP on the environment. Currentexpenditure is generally well below this target.

National funding, particularly investment, is severely stretched by accession commitments inmost new member states; discretionary projects, such as most energy projects, are not a high

priority. The main EU Funding Programmes are Cohesion Funds (CF) and Structural Funds(SF). The current programmes run to 2006, and it is not yet clear what will change from2007, as budget and programme planning are still under development. Current CF onlyapplies to the poorest regions with the lowest GDP/capita, and are focused on larger publicinfrastructure projects transport such as Trans European Networks, airports and roads, andenvironment investments in water supply, wastewater treatment and waste management. The

programmes are managed in-country.

From 2004, following enlargement, the level of EU assistance through Structural andCohesion funds will increase threefold to a total of 21.7 billion. Of this, 6bn is for theCohesion Fund, with 3bn specifically earmarked for environment. Environmental actionsare also included in all of the future SF programmes, each as separate earmarked sections oras cross-cutting themes.

The Commission recognises the importance of expenditure on the environment, and hasidentified four priority areas:

Supporting institutions that implement environmental legislation Climate change - although the new member states have seen a drop in their greenhouse

gas emissions since 1990, the trend is now rising again. Transport and energy inparticular are seen as areas for concern that should be integrated into national climatechange policies.

Transport - rapidly rising, hence it is essential that priorities for sustainable transportprojects should be implemented.

Energy - energy intensity is still far poorer than the EU-15 and needs to be improved. Thenew member states have adopted targets in the framework of the Directive on electricityfrom RES, but like the EU-15 there is a large challenge for most of the new memberstates in order to achieve the target.

Current SF focus depends on Operating Programmes (OPs) prepared by new member statesand approved by the European Commission. Some countries have Environment OPs whichcould include energy, most have industrial/regional OPs, which could include energy.

Competition and state aid rules have an impact, but there are some dispensations for energyefficiency projects. Many projects are not funded by the Commission at the maximumintervention level, so there may be scope for links with EIE-II. Several InternationalFinancial Institutions (IFIs) and bilateral funding agencies have programmes focused onenvironment or even energy specifically. Private match-funding, which includes most energysupply investments, should be less of a problem than public funds, but there are still

constraints of affordability.


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In general, technical standards such as engineering are good, but related commercial andfinancial skills are much more difficult to find in country. The capacity to implementlegislation through inspectorates etc. is still limited in many countries - this mainly applies tothe environment sector, but energy will also be a problem. Capacity to prepare projects

properly for funding is particularly limited: institutional strengthening is still needed atregional level in all new member states.

Implementation of energy efficiency projects will be in the hands of large-scale utilities,private companies and the public sector: capacity and access to finance is highly variable forall three of these groups. Implementation of projects depends on the extent of marketliberalisation, but there will be limited capacity unless/until programmes are established,except where responsibility rests with utilities.

Implementation of sustainable transport projects rests mainly with local authorities: there isonly very limited expertise and experience in this field.

Candidate countries: For Bulgaria and Romania the situation is similar to that in the newmember states, but the capacity for effective implementation is even more limited and there ismuch more still to be achieved. Croatia is further behind than Romania and Bulgaria. Turkeyhas good technical skills, but is stronger than new member states commercially, as it has beena market economy much longer. In Turkey implementation of legislation remains a

particularly weak area, and there are particular issues linked to the fact that many industries,including energy supply, are still state-owned.

2.2.2 Implementing the energy acquisThe challenge of meeting EU objectives on sustainable energy is particularly high for the newmember states and lags behind the implementation of environmental legislation. The energyacquis places requirements on the new member states not only to implement adequatelegislation but also to develop appropriate related institutions. Some new member states havemade considerable progress over the past years, however more action is necessary and thiswill require large amounts of investment funding. Although the EU has providedconsiderable funding through pre-accession support, it is recognised that the bulk of financewill have to be provided from the countries themselves.

Of direct relevance to EIE, new member states are required to: develop an overall energy policy with clear timetables for sector restructuring implement the legislative measures under the internal market, particularly the renewables

electricity directive and regulatory bodies as required in the electricity and gas directives implement measures to waste less energy and increase the use of renewable energyOther requirements relating to energy investments include measures to prepare for crisissituations (particularly oil stocks); addressing the social, regional and environmentalconsequences of the restructuring of mines; and ensuring safety of nuclear power plants andnuclear waste handling.


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2.2.3 Renewable EnergyRenewable energy accounts for only a small percentage of the energy mix in the new member

states, averaging 5.1% of electricity generation in 200014, compared to a figure of 14.7% forthe EU-15 in the same year. Within the new member states there are considerable variations

between countries. 95% of renewables electricity generation in new member states is fromhydro, particularly in Slovakia, Slovenia, the Czech Republic, Latvia and Poland. In theframework of the accession process, indicative targets for the proportion of electricity to be

produced from renewable sources have been set for the ten new member states. The targetaverage is 21% by 2010. Clearly this is a much more ambitious increase than that set for theEU-15 (from 15.4% in 2001 to 22% in 2010). For the future accession countries, the settingup of targets is part of the agenda of negotiations for accession. The renewables-electricityshare per member state is presented in the chart below, comparing the situation observed in

1997 and 2002 with the indicative national targets for 2010.

0

10

20

30

40

50

60

70

80

90

Austria

Belgi

um

Denm

ark

Finla

nd

Fran

ce

Germ

any

Greece

Irelan

dIta

ly

Luxe

mbo

urg

Nethe

rlands

Portu

gal

Spain

Swed

en UK

Cyprus

CzechRe

publi

c

Eston

ia

Hungary

Latvia

Lithua

nia

Malta

Polan

d

Slovakia

Slovenia

RES-Esharein%o

fgrosselectricityconsumption

RES-E % in 1997

RES-E % in 2002

RES-E % 2010

Source: European Commission, DG TREN, June 2004

Complying with EU standards can provide incentives to the new member states and accessioncountries to save energy and use more renewable energy sources. However, some serious

barriers remain to be overcome if the future member states are to meet the targets that havebeen set.

While the adoption of the acquis in the field of energy will help the new member states tocreate a transparent and liberalised national energy market, serious concerns remain overtheir administrative capacity to implement the acquis. Financial assistance delivered mainlythrough the PHARE programme has aimed to address this issue through institution buildingactivities within public administrations and organisations that have responsibility in

14 EUROSTAT. Data for 2001 not yet available for new member states.


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implementing and enforcing EU legislation. The PHARE programme has also funded theparticipation of Candidate Countries in Community Programmes such as SAVE andALTENER. Despite this assistance, a considerable increase in resources as well as furtherCommunity support remains essential to ensure that future member states reach the requiredstandards as regards sustainable energy.

2.3 The implications of post-2007 budget planning

2.3.1 Sustainability: also a budget issueAfter successful completion of the first eastern enlargement in May 2004, EU policy

priorities are focusing on meeting the expectations associated with this process. The 2004

Communication Building our common future15

highlights three policy priorities for theenlarged Union, two of which are relevant for this evaluation:

Sustainable development - higher sustained growth, more and better jobs, particularly ininnovation and technology and competitiveness, and

The role of Europe as a strong global partner.The proposed new financial framework for the period 2007-2013 reflects these EU policy

priorities. The 2004 Communication proposed to commit the Unions resources according tothe following appropriations:

1. Sustainable development

1a. Competitiveness for growth and employment1b. Cohesion for growth and employment2. Sustainable management and protection of natural resources3. European Citizenship

3a. Freedom, security and justice3b. Access to basic goods and services3c. European culture and diversity4. The EU as a global partner

4a. Neighbourhood Policy4b. Sustainable Development4c. Global player4d. Policy mix5. Administration

This new financial framework would contribute to achieving the EUs sustainabilityobjectives by permitting:

15 Building our common Future. Policy challenges and budgetary means of the Enlarged Union 2007-2013.COM (2004) 101 final/2 26.2.2004


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Complete phasing-in of new member states for agriculture, fisheries and management ofother environmental resources and the implementation of CAP and CFP reform

Boosting competitiveness for growth and employment, covering research, education andtraining, and EU networks and technologies to promote innovative and sustainable energysolutions, prevent dissipation of natural resources and protect the environment

Resources to meet solidarity commitments and focus further on growth and employment Fresh action in the area of citizenship, freedom, security and justice The EU to become an effective neighbour and a stronger global partner in support of the

Millennium Development goals.

Renewable energy and energy efficiency are integral components of these new goals. Budgetplanning for energy programmes will need to be incorporated into the financial commitmentsaccordingly.

2.3.2 Delivering the EUs sustainability policies: principles and instrumentsEfficient delivery instruments and sound economic governance are fundamental to achievingsuccessful policy delivery. Community resources need to be allocated wisely. TheCommissions principles concentrate Community resources on a few major initiatives,combined with consistency and partnership with all actors involved.

The concept of the roadmap is used, which brings together goals, objectives, instrumentsand indicators, as well as a timetable and benchmarking towards the targets. EU energy

policy already clearly identifies the principle goals and objectives for sustainable energy, and

the delivery programmes (including EIE) demonstrate the instruments and indicators thathave been developed to measure progress towards the goals.

The Communication on the future financial perspectives of the enlarged Union also discussesthe various elements of delivery instruments in detail. Options available include regulation,co-ordination and budgetary support. Whichever option is chosen, it is essential to ensureconsistency and prevent duplication, and to ensure that the delivery chosen represents valuefor money. These issues are considered within this ex ante evaluation in section 3.0, page 31.

Finally, in the area of external relations, the Commission proposes a simplified approach

based on six instruments that replace more than 100 such instruments that are in existencetoday, including a single instrument focused on economic co-operation and development.

Programme management is also considered, including alternatives to in-house directmanagement. The Commission recognises that its core administration should in future focuson the development and monitoring of policies. The follow-up of the programmes and otherexecutive activities at a European level will where appropriate be delegated to other bodies.

Different ways of delivering programmes already exist, including shared management withlinks with regional and national programmes, or delegated administrative offices. At arms-length, there are also a number of agencies in operation or planned, these cover a wide range


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of functions. Of relevance to EIE-II is the role of executive agencies, which are under thedirect control of the Commission. These were first established as means for programmedelivery through a Council regulation in 200216. Tasks from programmes of an executivenature, with a specific duration in time, can be delegated to executive agencies, although theCommission retains control of the delivery mechanism.

2.4 Global policy challenges

2.4.1 The EU as regional leader and global player on sustainabilityIn its Communication A sustainable Europe for a better world: A European Strategy forSustainable Development17 the Commission proposes a long-term strategy for sustainabledevelopment and presents the objectives and actions needed to allow effective response to

future challenges and threats. This Communication focuses inter alia on six themes, one ofwhich is limiting climate change and increasing the use of renewable energy. Under thistheme, the headline objective is to meet the EUs Kyoto commitment and help other countriesto comply. The Commission also stressed that the global dimension of sustainabledevelopment was to be taken into account and that it should look beyond its borders throughco-operation with countries and international organisations such as the OECD, WTO, WorldBank, and UNEP.

The Communication Towards a global partnership for sustainable development 18 builds onthe inclusion of the global dimension in the Gteborg Conclusions (see section 2.1.1) and

also represents the Commissions input to the World Summit on Sustainable Development(WSSD)19. Priorities set out in this Communication include the development of sectoral andintermediate objectives in some key sectors water, land and soil, energy and biodiversity.The importance of climate change is recognised and linked to energy production andconsumption. The point is made that, as developing countries invest in energy and transportinfrastructure, renewable energy resources, as well as energy savings and improved energyefficiency have an important potential in terms of sustainable development and in de-coupling resource consumption and pollution from economic growth.

During the WSSD, participating countries and organisations accepted that the Millennium

Development Goals cannot be achieved without adequate access to sustainable energyservices (see Box 1). Energy is among the five WEHAB imperatives for sustainabledevelopment listed below, and plays a crucial role in the other four: Water: sustaining communities and industry without waste or pollution Energy: generated from renewable sources Health: ensuring clean water, air, and sanitation Agriculture: renewable base with sustainable forms of irrigation16 Council Regulation EC 58/2003 of 19 Dec 200217

COM (2001) 26418 COM (2002) 82 Final 13.02.200219 Johannesburg, September 2002


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Biodiversity: elimination of habitat destruction, such as energy poverty induceddeforestation practices, or water depletion and contamination in fossil/nuclear powergeneration.

Box 1: The World Summit on Sustainable Development, Johannesburg 200220

Balancing the gains of development against the detrimental effects of growth on the natural environment is anongoing challenge for countries around the world. One of the most difficult elements of this dilemma ismanaging energy. Furthermore, the growing number of people without access to very basic energy supplypredicates a rapid growth in demand in the coming years. The challenge lies in finding a way to reconcile thenecessity and demand for energy supply with its impact on the natural resource base in order to ensure asustainable path of development.

This complex challenge was highlighted at the United Nations Conference on Environment and Developmentheld in Rio de Janeiro in 1992 and is discussed throughout Agenda 21. Energy was further one of the majorthemes of the Ninth Session of the Commission on Sustainable Development (CSD-9) and was again animportant topic of debate at the World Summit on Sustainable Development (WSSD). Agenda 21 highlights the

fact that current levels of energy consumption and production are not sustainable, especially if demandcontinues to increase. It stresses the importance of using energy resources in a way that is consistent with theaims of protecting human health, the atmosphere, and the natural environment.

During WSSD countries committed themselves to expanding access to the two billion people that do not haveaccess to modern energy services. The Declaration and Plan of Implementation (PoI) that followed the WSSDhighlighted the issues of poverty reduction and environmental protection, and strengthened in this regard theareas of sustainable production and consumption, water and energy. Energy is one of the ten key commitmentsreferred to. Under Paragraph 20 of the PoI the following types of action are called for: a greater share of the energy mix to renewable energies, improving energy efficiency and greater reliance

on advanced energy technologies, including cleaner fossil fuel technologies; Combine, as appropriate, the increased use of renewable energy resources, more efficient use of energy,

greater reliance on advanced energy technologieswhich could meet the growing need for energy services

in the longer term to achieve sustainable development; Diversify energy supply by developing advanced, cleaner, more efficient, affordable and cost-effective

energy technologies; Phase out of subsidies for types of energy that are not consistent with sustainable development.While the WSSD mobilised US$1 billion to water-related activities, the financial sourcesallocated to energy were only a fraction of this. The EU Energy Initiative (EUEI, see Box 2)was launched at the WSSD to initiate similar attention to be drawn to energy and to raiseawareness among developing countries policy makers that energy is a sine qua non forsustainable development. Through the EUEI, the EU proposes to work with developingcountries towards creating the necessary conditions in the energy sector to achieve their

national economic, social and environmental objectives, in particular by maximising energyefficiency, including more efficient use of fossil fuels and traditional biomass, and increasingthe use of renewable energy.

20 Based on: UN Division for Sustainable Development (http://www.un.org/esa/sustdev/)


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Box 2: The EU Energy Initiative21

Currently, 2.4 billion people rely on traditional biomass wood, agricultural residues and dung for cookingand heating. Achieving the goal of lifting people out of poverty and freeing the poor from hunger requires,

among other things, access to energy in a sustainable manner. Despite the importance of energy for povertyreduction and sustainable development, current market and aid mechanisms will not bring modern energyservices to the poor in the foreseeable future. In order to respond to unmet needs for energy services, theEuropean Union (EU) developed the Initiative for Poverty Eradication and Sustainable Development.

The EU Energy Initiative focuses on improving access to adequate sustainable energy services in rural, peri-urban and urban areas, through a menu of technical and institutional options, including: Rural electrification Enhanced energy efficiency (including cleaner, more efficient fossil fuel technologies, technology for more

efficient appliances and the more efficient use of traditional biomass) Decentralised energy systems Increased use of renewable energy (such as hydropower, biomass, solar energy, wind power, tidal, wave, or

geothermal energy) Institutional capacity building and restructuring Policy, planning and transfer of knowledge and skills

With the EU enlargement of 1 May 2004, the external borders of the EU have changed. Toprevent the emergence of new dividing lines between the enlarged EU and its neighbours, theCommission has recently developed a European Neighbourhood Policy (ENP). A majorelement of the ENP will be the enhancement of the strategic energy partnership with theneighbouring countries. Since many neighbouring countries seek an improved access to theEUs energy market, either as supplier or as transit country, an improvement in energy

connections between the EU and its partner countries, as well as legal and regulatoryconver

intelligent energy ex ante en

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