Policy Context

The following section illustrates our understanding of some of the key current issues of relevance to energy efficiency in the context of regional development. There are four main parts to this:

  • A summary of why energy efficiency is an objective worth pursuing, i.e. the drivers.
  • A summary of the main barriers that are restricting its uptake.
  • A summary of the legislation, policies and programmes that are in place to help overcome these barriers.
  • This section ends with a description of how the INTERREG IVC programme fits within the energy efficiency policy framework.

This section sets the context for the review of the projects, describes the barriers that the project objectives should seek to address, the drivers that the projects should seek to promote and describes the policies and programmes that the projects should be seeking to align with or signpost to.

1. Drivers for Energy Efficiency

Energy efficiency is becoming an increasingly important policy objective for a wide variety of reasons. These reasons centre on a realisation that it remains arguably the most cost-effective way of reducing the use of fossil fuels. This is increasingly desirable for the following environmental, economic and political reasons:

Environmental

Reducing GHGs - Cutting the use of fossil fuels reduces the main source of greenhouse gases (GHGs), which are the primary cause of global warming. The levels of atmospheric carbon dioxide have recently passed 400ppm, compared to a pre-industrial (1800) level of 280. Reducing the use of fossil fuels also decreases emissions of other harmful chemicals such as NOx, SOx and particulates. An increased focus on energy savings is crucial for achieving long-term GHG reduction goals. The Stern Report for the UK Treasury reviewed the available evidence on climate change and concluded that it “presents very serious global risks, and it demands an urgent global response”.

Economic

Reducing energy imports - Reducing the use of energy decreases the (mainly) non-EU bound expenditure on imports of oil, gas and coal. Europe currently imports 54% of its energy requirements, though this figure is much higher in many member states.

Reducing the consumer’s energy bill - At the level of the individual business (or householder), improving energy efficiency is a sound investment, as it reduces expenditure for the same output (production for businesses and building services, heat, cooling, lighting and power for householders). For non-industrial customers, the average EU27 cost per unit of electricity increased by 18% between 2007 and 2011, the increase for gas was 26%.

Contributing to the green new deal - The economic downturn has also led to some governments (and the European Commission) that are looking for opportunities to utilise public funds to support schemes which offer work opportunities to as many individuals as possible while bringing as many wider social and economic benefits as possible. Large scale investment in energy efficiency is seen as a very good fit with these criteria, particularly in the refurbishment of social housing.

Political

Energy efficiency policies show poor performance relative to renewable policies – As a whole, the EU currently appears to be on target to meet its 2020 target of a 20% share renewable energy of total final energy consumption. However, the 2011 Energy Efficiency Plan of the European Commission indicates that, at the current rate of progress, the EU is likely to meet only half of the indicative 20% energy savings target in 2020 without additional policies. Moreover, analysis has shown that the Effort Sharing Decision (the binding GHG target for the non-ETS sectors, covering energy efficiency in the building environment and transport) provides limited and imbalanced incentives for energy efficiency improvement among Member States. (7) The relative lack of progress is a concern, and policymakers are urgently reviewing what actions can be taken to address this.

2. Barriers for Energy Efficiency improvements

Barriers to energy efficiency improvement exist in all markets for goods and services; market barriers to energy efficiency uptake occur as a result of three general conditions (8):

  • When there is a low priority for reducing energy costs versus other (operating) costs;
  • When the energy-efficient markets are incomplete;
  • When the capital markets inhibit (limited access to finance) purchase of/investment in energy efficiency actions and measures.

These three conditions match the overall classification of market barriers that is given in the majority of the literature (9). The four main defined categories of market barriers are:

  • Financial barriers;
  • Institutional and administrative barriers;
  • Information and awareness barriers; and,
  • Separation of expenditure and benefit.

The next figure visualises these four different categories of market barriers, including the main barriers observed under each category (10).

Figure 2.2 Market barriers to energy efficiency take-up

The following section describes some of the key issues, including a discussion of related issues not included in the diagram text, within each of the barriers.

  • Financial barriers
    • Access to finance – This barrier refers to a lack of funds and/or inability to secure finance on acceptable terms. The significance of this barrier depends on both the country and sector. In particular, small-sized energy efficiency projects (very common in the building environment) generally have difficulties in accessing funds (unless they are bundled, which also presents some difficulties). Their perceived high risks (often due to a lack of real understanding of how these projects are to be implemented) discourages investors and commercials banks, who tend to see them as too much effort for too little profit. Furthermore, the EU financing mechanisms that target large energy efficiency projects, with high thresholds (the European Local ENergy Assistance (ELENA) programme (see section 4. below) for example has a threshold of €50 million), might not be adequate for some countries.

      Effect of the crisis:

      Given the need to reduce public deficits, countries are tending not to prioritise energy efficiency investments (in any sector), thus limiting the funds available for this purpose. Access to public funds, even for projects that had been approved, is delayed in countries implementing austerity plans, given the major budgetary constraints. Additionally, the credit crunch is having an effect on access to finance, particularly in Southern Europe, affecting the lending markets in such a way that consumers and financial institutions are less willing to take risks.

      Payback expectations – Most of the energy efficiency investments are financially rational, however, energy efficiency investments can have relatively long payback periods (more than 10 years), which makes them unattractive. This barrier is very visible in the industrial sector, where there is often a short-term perspective from the market participants. Also in the building environment, especially in Western and Northern Europe, the investments with the shortest returns have often already been made. There are also significant differences between home-owners with different levels of income and between those in owner occupied and rented dwellings.

      Competing purchase decisions – The fact that only a low percentage of the budget is dedicated to energy expenditure (in residential and tertiary buildings) makes energy efficiency improvements a minor concern. Businesses will prioritise their core investments instead of energy efficiency. Furthermore, the invisibility of implemented energy efficiency measures can also play a role in the decision-making process for investments, making energy efficiency investments less attractive.

      Price signals – Energy pricing structures often do not reflect the full (environmental) costs, making energy efficiency investments less attractive. Energy subsidies and the uncertainty in energy prices are also concerns when evaluating energy efficiency investment options.

  • Institutional and administrative barriers
    • Regulatory and planning issues – A variety of regulatory and planning obstacles can be identified. These include the lack of comprehensive energy efficiency strategies backed up by strong regulatory frameworks that promote energy efficiency. The fact that in 2010, 17 (out of 27) Member States have had infringement procedures started against them regarding the transposition of the Energy Performance of Buildings Directive (EPBD), should be highlighted. Other regulatory barriers concern public procurement. In the transport sector, state planning and modal shift (i.e. from private to public transport) towards the most efficient transport systems are key. In the industrial sector, ambitious regulation is key in order to force companies to implement additional energy efficiency improvements. However, this should be followed up by appropriate monitoring schemes, which have not always been in place.

      Administrative procedures – Administrative procedures can be complex and lacking in transparency, however, in most Member States, these are not the most crucial market barrier. The need for permits and certificates in order to implement certain energy efficiency improvements are also barriers, and these strongly depend on the national administration. Administrative procedures can also be a barrier when trying to obtain financial incentives (e.g. subsidies or fiscal incentives), public or EU funding. Complex and slow administrative procedures to access these incentives/funding prevent investors from implementing energy efficiency measures, especially if the projects are small and the benefits are not large in relation to the effort expended.

      Multi-stakeholder issues – Various barriers exist as a result of the involvement of multiple stakeholders and owners of the energy efficiency improvement measures. This is very common in the building environment, where it can be difficult to agree on the energy efficiency investments in multi-stakeholder properties due to difficulties in, or lack of, coordination among stakeholders who have to either approve a decision or make a financial contribution. Furthermore, the different views of the stakeholders and the inherent complexity may prevent the bundling of small projects together, which would make a more attractive business case. However, this can also occur at an institutional level, where there are different organisations and institutions involved in energy efficiency but there is a lack of cooperation amongst them.

  • Information and awareness barriers
    • Lack of awareness of potential – The awareness of the energy efficiency potential determines the success of the investments and is a pre-requisite for realising the financial benefits that can be derived from implementing energy efficiency measures.

      Another persistent barrier to the uptake of energy efficiency is awareness and attitudes. This applies to the willingness to accept new technologies and new ways of working and living. The education and persuasion required applies to both the public in general and local politicians. Local politicians are particularly important for the public sector as they often have the final say on the implementation / realisation of policies and, without their buy-in, many schemes can fail.

      There are a number of technologies at a relatively early stage which should be of key importance to improving energy efficiency. One of the most important of these is smart metering / smart grid. This technology and approach could be significantly helped via regional policy levers, for example spatial planning attitudes to electricity infrastructure changes, or the use of public housing stock to trial technical and other approaches.

      Insufficient and inaccurate information – Imperfect (insufficient and/or incorrect) information can cause agents to make sub-optimal investments in energy efficiency. This barrier can be present at different levels. Insufficient capacity and technical expertise of those responsible for energy efficiency is also a relevant barrier related to information. This also involves the lack of skills (including language skills) required to take full advantage of the existing (EU) financing instruments. Another issue is the general lack of awareness among financial intermediaries and commercial banks regarding the available mechanisms for energy efficiency project structuring and financing. In addition, investors have a lack of understanding of the different financing mechanisms available and application procedures for undertaking the energy efficiency improvement investments.

      Bounded rationality – This is directly linked to the information barrier. Since, most of the time, there is incomplete information, decisions are made on a partly rational basis. For example, household energy refurbishments are often only carried out when things do not work properly anymore. This is due to high initial investment costs, and the fact that consumers do not consider the investment’s life-cycle.

  • Separation of expenditures and benefits
    • Split incentives – These are particularly important in the building environment (landlord-tenant problem) where the landlord typically wants to minimise capital costs and the tenant wants to maximise the realised energy efficiency in order to benefit from a reduction in energy costs. Split incentives are more relevant in countries where the household market is mainly rentals (e.g. the Netherlands). However, split incentives also occur when building designers and builders do not have an incentive to favour energy efficiency measures that are more costly due to the fact that the final occupants of the buildings (either tenants or owners) will be responsible for the energy costs.

3. Policies, legislation, and programmes relevant to Energy Efficiency

  • 3.1 Energy Efficiency policies and legislation
    • A review of EU energy policy-making over the last ten years illustrates that it is an issue that has steadily climbed up the policy agenda. However this increasing political profile is not being matched by an increase in the realisation of projects (and energy savings).

      The EU considers energy efficiency as one of the most cost-effective ways to enhance the security of energy supply and reduce emissions of greenhouse gases (GHG) and other pollutants (12). Additionally, improvements in energy efficiency can reduce the need for investment in energy infrastructure, cut the economy wide expenditure on fuel, increase competitiveness and improve consumer welfare. Energy efficiency is specifically mentioned in the Lisbon Treaty as one of the four primary objectives of EU energy policy (13). The European Union has created a comprehensive framework of legislation to improve energy efficiency.

      The 1995 EU Whitepaper ‘An Energy Policy for the European Union’ (COM (95) 682 final) mentioned energy efficiency as a matter of sustainable development and competitiveness. The 2005 Green Paper on Energy Efficiency broadened the energy efficiency debate and, for the first time, the European Commission indicated that Europe ‘could save at least 20% of its present energy consumption in a cost-effective manner’. The Green Paper was followed by the Energy Efficiency Action Plan of October 2006 (14) which included an (indicative) 20% energy savings target for 2020 with Energy efficiency in the building sector identified as a top priority and the transport sector considered of special importance.

      The Climate and Energy Package of 2008 confirmed the 20% energy savings by 2020 as one of the pillars of achieving the overall 20% GHG target by 2020. Legal adoption of the 20% energy savings target is, however, not explicit. In early 2010, the Commission proposed the 'Europe 2020 strategy for smart, sustainable and inclusive growth', which was agreed at the European Council in March 2010. Moving towards a 20% improvement in energy efficiency is one of the headline targets of this overarching strategy. In March 2011, the Energy Efficiency Plan, an update of the 2006 Energy Efficiency Action Plan was launched by the Commission. This Plan repeats the 20% target but also indicates that, without additional policies, Europe will only achieve half of the savings target.

      The Energy Efficiency Directive (EED – 2012/27/EU) established a common framework of measures for the promotion of energy efficiency in order to bridge the energy savings gap, help to achieve the 2020 20% energy savings target and to pave the way for further energy efficiency improvements beyond 2020. It established an energy savings obligation for suppliers, set energy performance standards for central government buildings and defined a long-term building retrofit roadmap. In addition, it promotes the establishment of indicative national energy efficiency targets for 2020.

      As Europe is not on track to meet its 2020 energy savings target, there has been considerable debate concerning the adoption of binding as opposed to indicative energy savings targets. This was considered in the final draft text of the new Energy Efficiency Directive, which left the option of binding targets explicitly open for the period beyond 2014; however, this statement was adjusted in the adopted Directive: If still not on track mid-2014, the European Commission will propose ‘further measures’. Article 3 of the EED states that each Member State shall set an indicative national energy efficiency target, based on either primary or final energy consumption, primary or final energy savings, or energy intensity. Article 7 states that each Member State shall set up an energy efficiency obligation scheme that will ensure that energy distributors and/or retail energy sales companies achieve a cumulative end-use energy savings target by 31 December 2020. That target shall be at least equivalent to achieving new savings each year of 1.5% of the annual energy sales to final customers by volume.

      National Energy Efficiency Action Plans (NEEAPs) provide a framework for the development of national energy efficiency strategies. Member States need to report the energy efficiency improvement measures implemented in view of their indicative targets, as well as the expected and/ or achieved energy savings in the National Energy Efficiency Action Plans. The NEEAPs will be complemented with updated estimates of expected overall primary energy consumption in 2020, as well as estimated levels of primary energy consumption.

      The Effort Sharing Decision (406/2009/EC) establishes annual binding GHG emission targets for Member States for the period 2013–2020. These targets concern the emissions from sectors not included in the EU Emissions Trading System (ETS), such as transport, buildings, agriculture and waste. Each Member State will contribute to this effort according to its relative wealth. Overall, it will deliver a 10% reduction of emissions from the covered sectors in 2020 compared with 2005 levels. Together with the reduction of the ETS, it needs to accomplish the overall emission reduction goal of the EU Climate and Energy package (20% below 1990 levels by 2020). Whereas the EED does not set binding targets for energy savings, the effort sharing decision implicitly does by setting binding GHG target for the non-ETS. As the built environment is non-ETS, and a CO2 target has direct consequences for energy use, it may become the main policy driver for getting things done in the built environment.

      The main legislative documents that aim to realise the energy-saving potential of the European Union’s building sector is the 2002 Energy Performance in Buildings Directive (EPBD) and its 2010 recast (Directive 2010/31/EU). The first European Directive on the Energy Performance of Buildings (EPBD) was adopted on 4 January 2003. Member States had a three year period to build up relevant systems and measures to convert and apply the requirements. The recast of the directive was shaped in line with the EU objective to reduce the energy consumption of the Union by 20% by 2020 and the relation between this objective and the building sector. The recast places more responsibilities on the local authorities, as it acknowledges the leading role the public sector should play in energy performance, given that publicly owned or used buildings account for 12% (in area) of the total building stock in the EU. (15) The EPBD recast obliges Member States to establish and apply minimum energy performance requirements for new and existing buildings, ensure the certification of building energy performance and mandate the regular inspection of boilers and air conditioning systems in buildings. The Directive also requires Member States to ensure that, by 2021, all new buildings are so-called ‘nearly zero-energy’ buildings.

      Other relevant policy initiatives include the Directive on Eco-design Requirements of the Energy Related Products (2009/125/EC). The Eco-Design Directive aims to reduce the environmental impact of energy using energy related products, including energy consumption throughout their entire life-cycle. This is achieved by setting specific eco-design requirements. The inclusion in this directive of ‘energy-related’ products is particularly important for the building sector, as it includes building components like windows, doors and insulation. Building components that consume energy, such as boilers and air conditioners were already covered in the Eco-design Directive (2005/32/EC) and set out in Implementation Measures.

      The Energy Labelling Framework (2010/30/EU) is related to the eco-design directive and was adopted on 19 May 2010, with the aim to assist customers when choosing products with energy labels indicating the energy the product will use. Energy labels also provide incentives for the industry to develop and invest in energy efficient product design.

  • 3.2 Programmes to promote and finance Energy Efficiency
    • The focus of much of the recent energy efficiency policy development for the European Commission, and others such as the European Investment Bank has been on the ways in which energy efficiency investments can be financed. This reflects recognition of the persistent issue of the capital cost barrier of many investments but also the more recent effects of the economic downturn which have placed a greater strain on the availability of public finance. This is leading to a renewed interest and desire to promote the concept and use of Energy Services Companies (ESCOs), which are able to structure the finances of projects in such a way that the initial capital cost is much reduced (or even removed) in return for a share of the energy savings. The potential for green public procurement to improve energy efficiency is also high. This reflects the large and long term investments that public authorities make in everything from street lights to vehicles to office equipment where there are energy efficient choices on offer. There are also a growing number of innovative finance mechanisms and technical assistance programmes designed to help overcome financial (and capacity) barriers to energy efficiency. A number of examples of these are provided at the end of this section.

      The EU has a number of financial instruments and programmes of relevance to energy efficiency. These include:

      * Structural and Cohesion funds;
      * The 7th Framework Programme for Research and Technological Development (FP7);
      * The Intelligent Energy Europe Programme;
      * The European Energy Programme for Recovery (EEPR);
      * Others – the European Energy Efficiency Fund, LIFE+

      Structural & Cohesion funds

      EU regional policy is financed by three main funds that can be used for a wide range of policy objectives. The funds aim to reduce regional disparities in terms of income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes:

      * European Regional Development Fund (ERDF);
      * European Social Fund (ESF);
      * Cohesion Fund.

      The ERDF and ESF are referred to as Structural Funds. These funds can fund a broad range of measures that help to achieve its targets. For example, Structural funds can be used:

      - To provide subsidies for projects or investment programmes;
      - To fund research aimed at delivering useful lessons to make progress with, for example, the organisational approach, the design of effective implementing strategies, effective project structures (e.g. organisational or financial) and technologies;
      - To fund the setting up and delivery of programmes and instruments aimed at raising awareness of subjects such as energy savings; or aimed at promoting investments.

      While the structural funds are mainly distributed through subsidies (funding), the EU is shifting its policy towards the deployment of its instruments via other methods, such as loans, investments and guarantees. This is most clearly illustrated by the introduction of Joint European Support for Sustainable Investment in City Areas (JESSICA) and Joint European Resources for Micro to Medium Enterprises (JEREMIE), which are aimed at providing loans, equity and guarantees to investment projects, programs and companies. While anything is possible, it is expected that this trend will continue in the next programming period.

      The 2007-2013 cohesion policy can be characterised by closer cooperation between the EC, the EIB and other financial institutions. A number of technical assistance (TA) and financial instruments in support of the efficient management and implementation of the Structural Funds have been launched in light of this cooperation:

      The current policy is that 4% of the ERDF should be allocated to energy efficiency (16). In the current period 2007-2013, the Regional Policy programmes, including Cohesion Funds and Structural Funds, have allocated over EUR 4.2bn to the promotion of energy efficiency in a vast range of activities, including industry, commerce, transport and public buildings, co-generation and local energy production, innovation for sustainable energy, and training for monitoring and evaluation of energy performance.

      The expenditure in the current ERDF round has been defined and directed largely via regional / member state level setting of priorities. This has led to considerable variation between member states. The amount spent on energy efficiency via the ERDF went up each year indicating its rise up the policy agenda. In the future programming period, the high level objective is to reduce disparities and achieve Europe 2020 goals. The European Commission also wants more impact from funds and more concentrated use. Of the 11 high level thematic objectives, three are relevant to energy efficiency: Research and development, SME competitiveness and a shift to a low-carbon economy. The total funds expected to be available for energy efficiency are approximately €17bn. The 4% ceiling on investing in energy efficiency in residential buildings from ERDF sources has also been abolished. There are five areas of funding expected – Renewable Energy sources (RES), energy efficiency and RES for SMEs, energy efficiency in buildings, smart grid and low-carbon in urban areas. There is a clear link to the research and innovation objectives and the national / regional innovation strategies for smart specialisation. Energy efficiency is also relevant to the sustainable urban development aspect of the proposal for future structural funds, which accounts for 50% of the ERDF budget (to support integrated social, environmental and economic development projects). Political agreement on the new budget is expected in 2013. This should be followed by the drafting of a strategic framework, member state partner agreements, then operating plans and actions.

      The Seventh Framework Programme for Research and Technological Development (FP7) is the EU's main instrument for funding research in Europe, which has been running since 2007 and will end in 2013. Its budget, allocated to the energy sector, is around € 2.3 billion (2007 - 2013), 7% of its cooperation budget. Key aspects of the FP7 on energy research involve smart energy networks, energy efficiency & savings, and knowledge for energy policy-making.

      The Framework Programme (FP6 and FP7) also funded the CONCERTO initiative. CONCERTO aims to demonstrate that the optimisation of the building sector of whole communities is more efficient and cheaper than the optimisation of each building individually. It started in 2005, and over three tranches has co-financed 58 communities in 22 projects in 23 countries. The total amount of EU funding for the CONCERTO initiative is €175.5m. CONCERTO includes examples of a wide range of technologies. These include innovative energy efficiency measures with a substantial contribution from decentralised renewable energy sources (RES), smart grids, renewables based cogeneration, district heating/cooling systems and energy management systems. The intention is to optimise the technologies and measures in order to take account of the local site, climate, cultural and political aspects.

      CONCERTO is described as “the intermediate step from the individual building via the community to the whole city approach, as planned in the Smart Cities & Communities (SCC) initiative”. The SCC is described as being aimed at “accelerating the deployment of innovative technologies, organisational and economic solutions to significantly increase resource and energy efficiency, improve the sustainability of urban transport and drastically reduce greenhouse gas emissions in urban areas”.

      SCC is intended to fund demonstration and propagation activities covering cost-effective technological and innovative non-technological solutions on the verge of commercialisation. There is a clear intention to focus on areas where energy production, distribution & use and technologies in mobility, transport, information and communication are intimately linked and offer new inter-disciplinary opportunities to improve services while reducing energy and resource consumption as well as GHG and other polluting emissions. The first phase of funding is through a call in the 2013 FP7 programme. Subsequent funding will be via the Horizon 2020 programme (the successor to FP7 in addition to other programmes). The intention is that other sources of both EU (e.g. structural and cohesion funds) and MS funds will be used to supplement SCC, particularly to support wider demonstration and rollout.

      The Intelligent Energy – Europe programme (IEE) was launched in 2003. IEE is part of the Competitiveness and innovation Programme (CIP) and is operated by the Executive Agency for Competitiveness and Innovation (EACI). IEE support a number of activities:

      ◊ Funding projects. The majority of the programme's budget goes to funding projects across the EU that support and promote energy efficiency and renewable energy. Funds can be used to cover up to 75% of the project's costs. The programme has four strands: Energy efficiency and the rational use of energy (SAVE); New and renewable resources (ALTENER); Energy in transport (STEER); and Integrated initiatives (covering cross-sectoral and technology issues).

      ◊ Procurement of products and services. Procurement is used to obtain any studies and services that the European Commission or the EACI need to achieve the objectives underlying the IEE Programme. The EACI sub-contracts services to private companies and organisations via calls for tender;

      ◊ ELENA (European Local ENergy Assistance) Financing facility for cities and regions. ELENA is a technical assistance facility that makes funds available to cities and regions across the EU that are investing in sustainable energy. ELENA covers a share of the cost for technical support, which is necessary to prepare, implement and finance the investment programme, such as feasibility and market studies, structuring of programmes, business plans, energy audits, preparation for tendering procedures. ELENA is run by the EIB and the KfW Group.

      Money is available through each of these different financing streams, although the majority of the budget is given over to funding projects. €730 million is available between 2007-2013 to fund projects and put in place a range of European portals, facilities and initiatives, including, for example, the Covenant of Mayors (CoM). The CoM involves local and regional authorities, voluntarily committed to increasing energy efficiency and to using renewable energy sources on their territories. Each signatory has to produce a Strategic Energy Action Plan (SEAP) describing how these targets will be met. IEE also supports additional technical assistance and training schemes such as the ManagEnergy portal and the BuildUp Skills initiative and information and awareness raising components such as U4Energy, the Sustainable Energy Week and European Campaign.

      The European Energy Programme for Recovery EEPR, established by Regulation (EC) No 663/20091, is one of the major initiatives taken by the EU to address the global economic and financial crisis that started in 2008. On 1st July 2011, the European Commission launched a new European Energy Efficiency Fund (EEE-F) as part of the EEPR. The EEEF will allocate around €146m from the EEPR (3.7% of the total EEPR budget) to a new financial facility dedicated to energy efficiency and renewable energies projects. The EEEF will invest in energy saving, energy efficiency and renewable energy projects, particularly in urban settings, achieving at least a 20% energy saving or GHG/CO2 emission reduction. At its launch, the initial fund volume was €265m: in addition to the EU contribution (€125m), the European Investment Bank (EIB) invested €75m, Cassa Depositi e Prestiti SpA (CDP, Italy) €60m and the designated investment manager (Deutsche Bank) €5m.

      Across the EU, several financing schemes and government programmes have been initiated to address energy efficiency investment barriers in housing. An EU-wide evaluation of 25 of these financing schemes (25) underlined the importance of tailoring these financing schemes to the socio-economic conditions of the target group. Depending on the type of housing or the income class of its occupants, some barriers can be more prominent than others.

      The European Commission’s LIFE+ programme is their financial instrument for the environment. It is the latest round of a programme, which has existed since the early 1990s. The programme has a number of themes, broadly split between Nature, Biodiversity and the Environment. One of the ten sub-themes of the Environment is Climate Change – Energy. Some of the projects funded under this theme relate to energy efficiency technologies and behaviours.

4. The added value of Interregional Cooperation on Energy Efficiency

Given the number of other programmes that partly or wholly focus on energy efficiency, it is important to consider what the added value of the INTERREG IVC supported projects is.

An important element of added value from the INTERREG IVC projects is their focus on improving the effectiveness of regional policies. INTERREG IVC projects focus on making European level legislation and policies more relevant and easier to put in place at the local and regional level. This is achieved through the exchange and transfer of experiences among EU regions. An aspect specific to INTERREG IVC is the cooperation between regional and local levels. Both civil servants and local politicians are involved and the INTERREG IVC programme actively enables a real improvement in energy efficiency policy and approach at the regional and local level: for example, through the transfer and testing of the latest public lighting technology in the PLUS project, the development of partner specific energy policies in Europe 2020, IMAGINE, RE-GREEN and others and advice on how to realise green public procurement in EnercitEE, SERPENTE and others. These examples illustrate how regions have developed effective approaches that are adapted to their own local circumstances. See section 3 for more details on these examples.

INTERREG IVC projects enable the transnational dissemination of best practice between local authorities. The programme gives local authorities (civil servants and politicians) a budget to travel and allows them to better understand what can be done in this field (for example energy efficiency in buildings. The projects bring local politicians together in an international arena. This helps overcome the administrative barriers to implementing energy efficiency that are often associated with local (and sometimes national) politics by increasing the know-how and interest among these politicians. The cooperation between cities, regions and experts often continues beyond the duration of the INTERREG IVC projects. 

Another added value of the INTERREG IVC projects compared to the projects and programmes described above is the range of levels of innovation that are helped to be transferred between partners (and others). Transferability was recognised as a key issue by all of the projects reviewed. A number of the projects (such as CO2FREE and IMEA) stressed the importance of recognising that the partners within their project are at varying stages of progress in terms of energy efficiency, so it is important to reflect this and let each region have its own plan for implementation. This point is also relevant when considering what is new or innovative for a particular region, as what may have been common practice for a number of years in certain cities will be unknown, new and innovative elsewhere. This is arguably a key strength of the INTERREG IVC programme in comparison to other EC programmes, as it is designed to engage and support all levels of take up, from the cutting edge to the replication of what is common practice to some. For example, the use of common rental bicycles from a large pool sited at key locations has been used in some European cities for many years (e.g. Brussels), so this would not be considered innovative on an EU scale, but, in many other eastern European cities, this approach would be entirely new and innovative. This is in contrast to many other EC energy efficiency support programmes (e.g. IEE, FP) where the focus is much more on innovation and being the first (or among the first) to demonstrate new ideas at the EC level as a whole.

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