Europe Moves Closer to Energy Demand Law

BRUSSELS, Belgium, April 9, 2003 (ENS) - Managing the demand for energy is emerging as a European strategy for meeting the targets set by the Kyoto Protocol for the reduction of greenhouse gas emissions. These emissions of carbon dioxide and other gases occur when fossil fuels such as coal, oil and natural gas are burned to produce energy.

The European Commission will propose an EU law on energy demand management by the summer, according to sources. The long promised measure is intended to boost energy efficiency and help meet the EU's Kyoto Protocol commitment to reduce greenhouse gas emissions.

Initial proposals by the Commission's Energy Directorate are said to envision a range of actions designed to influence energy users.

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Lights of London, England (Photo credit unknown)
Among these will be a first ever European Union push to encourage the development of an energy services market in which services involving the use of energy are sold, rather than the energy itself.

In the past, efforts to promote the provision of energy services by power companies stalled for reasons ranging from low consumer interest to poor incentives for suppliers, since electricity prices started falling as a result of liberalization.

The new law, known as a directive, appears likely to endorse a "market orientated" approach that would enjoy the support of the electricity industry.

"There's an underlying need and potential for cost-effective measures," an EU source said, and a growing awareness that, with energy markets liberalization now fully under way, the demand side needs to be addressed. "If we provide the right framework and incentives, the rest will probably fall into place," the source added.

The directive would set indicative targets for countries that are members of the European Union to achieve one percent annual savings in energy efficiency. Each country would then decide how to distribute this target among sectors.

The Commission envisages covering all distribution sectors, from electricity and gas to district heating and transport fuel.

An estimated 40 to 45 million metric tons of carbon dioxide emissions could be saved every year once the directive comes into effect, according to a study carried out for the EU's climate change program.

Controversially, the new directive aims to cover all end users, including non-energy intensive industries and transport, except for aviation and foreign shipping. "We're very keen to see the transport sector included," our source said, "since it's contributing most to the increase in greenhouse gas emissions."

The public sector would have special responsibilities through additional green procurement requirements. Financial instruments would be put in place to facilitate the buying and selling of energy services, and to support the setting up of specialist energy services companies.

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