An energy savings target can be expressed in a number of different ways. Figure 6 - 36 illustrates four different ways of expressing the current 20% energy savings target. In all four cases the target is based on the same baseline (i.e. PRIMES 2007) and savings potential numbers. Still the monitoring requirements and the ability to accurately measure the progress towards an absolute reduction of energy use will differ substantially between the options:
1. Setting a cap on energy use in 2020. This approach would set a target value of Mtoe of energy use in the EU 27 for 2020. Such an approach would be comparable with the emissions cap set by the EU-ETS. Monitoring would be based on currently available energy statistics.
2. Setting a target for energy use in 2020 relative to a base year, e.g. 2005. This approach would be comparable to the current greenhouse gas emissions target of the EU for 2020. The 2020 energy use target would only change over time if the monitoring data of energy use in the base year of 2005 was redefined. Similar to option 1, monitoring would be based on currently available energy statistics.
3. Setting an energy savings target relative to a projected baseline energy use in 2020. This is how the current EU energy savings objective is expressed. Because the target is set as a relative target, its implications for the absolute energy use in the target year can be unclear. This is evident from the fact that several EU documents refer to the 20% target as an ‘energy efficiency’ target, rather than an energy use target. Also, this type of target setting does mostly not make explicit how the introduction of a new baseline projection affects the target.
4. Setting a certain volume of energy savings to be realised by 2020. This is somewhat comparable to the way current Member States’ targets under the Energy Services Directive are defined38. Targets set under existing national energy efficiency obligations for energy suppliers (e.g. UK) serve as another example. Typically, monitoring of a savings volume requires bottom-up data from sub-sectors or projects. This requires harmonised and data-intensive monitoring procedures. For example, reference (baseline) conditions have to be defined for each sub-sector or energy savings project. This option does not provide absolute energy use reduction targets.
A fifth approach, not shown in Figure 6 - 36 is to express an energy savings target as an improvement in energy intensity of the economy. Here intensity points to the ratio of energy use over GDP. For example, China has expressed its energy savings target as an energy intensity improvement. A target based on energy intensity allows for absolute growth of energy use, as long as the energy intensity improves. A key-sensitivity of expressing a target as energy intensity is that it masks whether intensity improvement occurs from implementation of more energy efficient technologies or from changes in the structure of the economy: for example, high growth of sectors such as the services sector or the tourism sector, also improves a country’s energy intensity.
38. The Energy Services Directive obliges Member States to save 9% or more of their final energy consumption in a base period (2000- 2005) in the ninth year of application of the Directive (i.e. from 2008 to 2016).
Energy savings targets should be transparent and easy to monitor
We have strong indications (see chapter 3.3.1) that the current 20% energy savings target is defined relative to a fixed projected baseline energy use in 202039. This means that the target actually expresses an absolute target for energy use in 2020. However, this has never been stated explicitly by the Commission, which gives room for multiple interpretations of the target definition. This is even apparent in the latest ‘EU 2020’ strategy
(EC, 2010) which defines “moving towards a 20% increase in energy efficiency” as a headline indicator, without being precise in its definition. At the same time the strategy postulates that “These targets ….. must be measurable … and based on sufficiently reliable data for purposes of comparison”. In other words, a target should be transparent and easy to monitor and measure. In our view, these criteria are a starting point
for any design of binding energy savings policies. 1. Setting a cap on energy use in 2020.
3. Setting an energy savings target relative to a projected baseline energy use in 2020.
2. Setting a target for energy use in 2020 relative to a base year.
4. Setting a certain volume of energy savings to be realised by 2020.
Figure 6 - 36 Four different ways to express the current 20% energy savings target. Upper (dotted) lines indicate baseline development of energy use in the EU 27.
Recommendation: define a target as absolute energy use in a target year
By far the most straightforward way to comply with these criteria is to define a target as absolute energy use in a target year and monitor the actual development of energy use over time. This allows for measuring energy use rather than estimating the savings. In this approach, the volume of energy savings, as compared to a baseline scenario, is only estimated once and upfront when setting the target. As a result, existing energy statistics, already implemented in all Member States through statistical offices, provide a straightforward way to monitor progress towards achievement of the target. This approach implies that other changes in energy use than those stipulated by energy efficiency improvement (e.g. structural change and volume effects due to higher or lower GDP growth) need not be corrected for when monitoring target progress. Also other variations in energy use, such as variable weather conditions and business cycles (a target year can be extremely cold or hot and industry can have extremely low or high output), should in principle not be corrected for. This is fully in line with e.g. the GHG emissions reductions target which is also defined without allowing corrections for such variables. Of course, in refining the design of a binding energy savings target, one could include the possibility to make ex-post corrections to the statistics
if a Member State can prove that the target year significantly deviated from the long term average in important respects.