Intelligent Energy Ex Ante en

Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013)
Final Report Ref: TREN/A1/17-2003: Lot 1 - Framework Contract for Impact Assessments and Ex-ante Evaluations (lead contractor ECORYS) ECOTEC Research and Consulting Ltd ECORYS Nederland BV
ECOTEC Research & Consulting Limited 12-26 Albert Street Birmingham B4 7UD United Kingdom Tel: Fax: Web: +44 (0)121 616 3600 +44 (0)121 616 3699 www.ecotec.com
Final Report Ref: TREN/A1/17-2003: Lot 1 - Framework Contract for Impact Assessments and Ex-ante Evaluations (lead contractor ECORYS) ECOTEC Research and Consulting Ltd ECORYS Nederland BV
C2719 September 2004
ECOTEC Research & Consulting Ltd 12-26 Albert Street Birmingham B4 7UD Tel: 0121 616 3600 Fax: 0121 616 3699 Web: www.ecotec.com Offices: Brussels, London, Leeds, Cardiff, Madrid Contact: Tel: Email: Lis Broome, Kerstin Junge +44 121 616 3600 lis_broome@ecotec.co.uk
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 define objectives, 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 to become a dynamic and competitive knowledge economy, with sustained growth, more and better jobs and greater social cohesion. Energy is a key element of achieving the Lisbon objectives. Subsequently the Gothenburg European Council in 2001 recognised the importance of combating climate change through reducing greenhouse gas emissions and decoupling economic growth from resource use. Fostering more efficient and renewable forms of energy production and consumption, and more sustainable transport, or in other words 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 environmental impacts of increased energy consumption as well as of sustaining competitiveness. The Community has established targets for the uptake of sustainable energy, including: doubling the share of renewable energy sources in EU energy consumption to 12% by 2010, 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.
However, recent estimates indicate that these targets are unlikely to be achieved without enhanced action at both Community and individual member state level. Actions are therefore needed to boost energy efficiency and reduce energy intensity, and to provide measures 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 important that measures to stimulate real competition are established, notably investments in infrastructure improvements and greater progress with renewables. Costs and benefits of these investments should therefore be viewed as strategic not only regionally but also but also at a wider national and European level. Developments in energy efficiency and renewables offer huge potential for new market opportunities both within Europe and in export markets world-wide. This can create jobs as well as reducing dependence on imported fuels. This is particularly important with the recent 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 to contribute to achieving EU targets for sustainable energy and facilitate the achievement of the UNs Millennium Development goals (which address extreme poverty). EIE-II provides support in the fields of energy efficiency, new and renewable energy sources and clean and efficient transport, and supports co-operation in these fields at international level. The operational objectives aim to accelerate uptake of sustainable energy technologies, through increasing the level of investment in sustainable energy technologies and increasing the demand for sustainable energy. Three main ways of delivering this objective are identified: strengthening policy and administrative capacity; measures to improve confidence and encourage increased levels of investment into sustainable energy technologies; and dissemination and promotion activities. The EIE-II programme proposes to renew and extend the activities of the current Intelligent Energy - 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 efficient transport (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 as an integral part of the programme, or placed under the legal basis of the EC external relations instruments while keeping a strict connection to the other (internal) three parts of the programme. As with the current EIE programme, activities under EIE-II would provide support to policy 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, for replication projects. These would aim to boost large investment in new and best performing technologies, through providing support for first market replication of just-proven technologies of European level interest. Its target sectors would be centred in the public sector, private and public sector energy users, industry and manufacturing, finance institutions, and the general public.
An overview of the links between the programmes objectives and its main areas for action is presented in the Objective Tree below.
Objective Tree - Intelligent Energy Europe - II

Facilitation towards the development of the Millennium Devt goals CO2 emissions levels reductions achieve agreed targets Energy demand stabilised and increased diversification Improved competitiveness Dependence on non-EU countries for energy limited
Overall Objectives
Sustainable energy contribution to sustainable devt is significant worldwide
EU targets for sustainable energy achieved Accelerated uptake of sustainable energy technologies
Operational Objectives
Contribute to achieving level playing field to encourage implementation of sustainable energy technologies
Increased levels of investment
Increased demand for sustainable energy
Results
Obligations as regards implementation of regulations are being met
Energy prices favour sustainable energy investments
mme Progra ope sc
OUT
High interest to manufacture and install sustainable energy products
Increased awareness of benefits from sustainable energy
IN
Quality standards developed Increased confidence in sustainable energy technologies Dissemination and promotion of sustainable energy expanded
Improved understanding of benefits presented by an increased use of sustainable energy (improved admin capacity at local and regional levels)
The links between the main fields of action and the types of instrument to be used in EIE-II are summarised in the following table. This table demonstrates how the proposed instruments would contribute to achieving the anticipated results.
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Contribution of proposed instruments to anticipated results:

Promotion of sustainable energy systems and equipment Local and regional planning Proposed instruments: Information, education and training Replication projects iv
Anticipated results: Increased interest from manufacturers Quality standards developed Increased confidence in sustainable energy technologies Improved admin capacity at local and regional levels re. sustainable energy Increased awareness of benefits from sustainable energy Dissemination and promotion of sustainable 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 to stimulate market replication of just proven technologies, and the development of standards, as well 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 of sustainable energy technologies that is insufficient to meet EU targets. The programme provides assistance to reduce the non-technological barriers that still exist, in particular institutional barriers, low levels of investment, low demand, lack of awareness and low levels of dissemination and promotion of the benefits of sustainable energy. The EIE-II proposal has been reviewed and compared with alternative approaches. The proposed delivery mechanism provides an effective way of achieving the programmes overall 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, to ensure 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 these types of projects have to achieve accelerated uptake of sustainable energy technologies, by providing pump priming support. International (non-EU) projects providing policy support and dissemination are valuable for political, environmental and security of supply reasons.
Studies, strategies
Close links with other programmes The EIE-II programme proposal is complementary to and coherent with other Community interventions, and achieves significant synergy effects. It is very important that the programme links directly with other Community programmes and policies in order to guarantee mainstream funding, exploit synergies and multiply the impact of the whole Community financial intervention. This is in particular true for those programmes impacting on the implementation of the Lisbon strategy of sustainable growth and competitiveness, on the protection of the environment and on creating the conditions for improved access to energy in third countries markets. The current EIE programme is the main Community instrument for non-technological support in the field of energy. It follows on successfully from the Energy Framework Programme (EFP, 1998-2002). Evaluations of the EFP concluded that there is a real need for an energy programme, delivered through EIE as a single programme that reinforces synergies and collaborations between the different work areas. Prior to 1998, the THERMIE programme supported demonstration projects, including targeted projects - large-scale demonstration projects to demonstrate on a wider scale the benefits of investing in new technologies. There is a clear and continued need for support for these types of project, which bridge the gap between successful demonstration and full-scale market uptake. The proposed replication projects in EIE-II can 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 shortto-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 positive way, forming a continuum of EU support for technologies of strategic importance. EIE-II should continue to provide support to energy agencies, particularly in the new member states, where the need for assistance in terms of policy development, capacity building and awareness raising is very high. There are opportunities for other regional organisations 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 transport are ranked high in the priority areas of action. EIE-II can therefore provide a valuable contribution to achieving these priorities, through assisting policy development, building capacity and raising awareness. The COOPENER strand of EIE-II will ensure that international best practice and experience 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 the international component of the programme share a common legal basis with the mainstream EC external cooperation instruments, effective co-ordination mechanisms
will have to be put in place in order to ensure coherence, complementarity and synergies between the internal EIE II strands and COOPENER. At member state level, EIE-II complements national energy and sustainable development programmes, by enabling sustainable energy issues to achieve higher visibility. 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 environmental technologies. Renewable energy and energy efficiency are both directly relevant here. The European Climate Change programme (ECCP) plays a central role in supporting and monitoring the EUs obligations under the Kyoto Protocol. There are clear synergies 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 estimated that 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 (%) 35 100 Match funding of eligible costs required m 2,560 0 Total funding m
Replication projects Policy development + implementation Remove non technical barriers Strategic/policy related Policy development + implementation Concerted actions Remove non technical barriers Promotion dissemination TOTAL
896 75 (assumed 10% of the funding) 668 1,639
3,456 75
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668 3,228
1,336 4,867
It is estimated that an average total investment of 14-17 billion each year is needed from 2007 to achieve the EU targets in renewable energy (12% of consumption by 2010). The contribution 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 in energy efficiency. Over the seven years of the EIE-II programme (2007-2013), the following level of successful project 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, and other programme administrative and monitoring activities. The slight increase in these costs compared with the current EIE programme is justified to meet additional levels of monitoring required, to strengthen the level of promotion and dissemination carried out, and to meet the additional demands of extended geographical scope in the EU-27 and internationally. The administration of the new programme is proposed to follow on directly from the management of the current EIE programme, i.e. via an Executive Agency. Under this scenario, there would be 22 officials within the Commission supported by staff within the Agency, of approximately 80 people. Pro-rata this is in line with the expansion of the budget and work programme. It is anticipated that the smaller, more focused structure of the Agency will result in faster procedures and more efficient project management. With the large number of project applications anticipated, it is important that the application process is designed 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 procedures should be made as streamlined as possible, to ensure the application timetable is adhered to and minimise delays to contract award. Monitoring and evaluation The current EIE programme has established arrangements for monitoring and evaluation at both programme and project level. Management and monitoring is the responsibility of the Executive Agency. These arrangements can be used and extended for EIE-II. Clear and measurable programme and project level indicators will be central to monitoring performance. Project work programmes should clearly define objectives and targets, using guidance 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 European Parliament, 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, in order to provide an opportunity to make adjustments where necessary on the procedures, project selection, programme structure and delivery. Finally, an ex-post evaluation after the completion of the programme in 2013 can assess the programmes overall performance and impact. Efficient and effective monitoring and evaluation of projects is proposed. Critical evaluation is particularly important for large scale capital projects funded as replication projects. Indicators are needed that allow comprehensive measurement of results and effectiveness of the projects. ***
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Contents 1.0 Introduction..........................................................................................................................1 2.0 Problem analysis and needs assessment ..............................................................................4 2.1 EU energy policy .......................................................................................................4 2.1.1 2.1.2 2.1.3 2.2 2.2.1 2.2.2 2.2.3 2.3 2.3.1 2.3.2 2.4 2.4.1 2.4.2 2.4.3 2.4.4 2.5 2.5.1 2.6 2.7 Sustainable development .......................................................................................4 Sustainable energy policy in the EU ......................................................................6 Progress towards achieving the strategic objectives ..............................................9 Enlargement and sustainable development..............................................................10 Enlargement and new member states priorities ...................................................10 Implementing the energy acquis ..........................................................................13 Renewable Energy ...............................................................................................14 The implications of post-2007 budget planning ......................................................15 Sustainability: also a budget issue .......................................................................15 Delivering the EUs sustainability policies: principles and instruments .............16 Global policy challenges..........................................................................................17 The EU as regional leader and global player on sustainability............................17 EU energy policy and developing countries ........................................................20 EU energy policy and neighbouring countries.....................................................20 Current energy programmes in the partner countries ..........................................21 Why is public intervention needed?.........................................................................22 The overarching problem - the problem analysis.................................................23 What is the target group and what are its needs?.....................................................27 SWOT analysis ........................................................................................................28
3.0 What are the objectives, expected results and indicators for the programme? ..................31 3.1 Establishing the baseline..........................................................................................31 3.2 The objectives for the programme ...........................................................................34 3.3 Laying the ground for programme monitoring and evaluation: definition of indicators ..............................................................................................................................38 3.4 Assumptions.............................................................................................................41 4.0 What alternative approaches were considered and why has this one been selected? ........46 4.1 Alternative delivery options.....................................................................................46 4.2 4.3 4.4 Intelligent Energy Europe II: Detailed assessment of delivery options..................48 Consideration of no-action ....................................................................................51 The favoured delivery option...................................................................................53
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4.5 4.5.1 4.5.2 4.5.3 4.5.4 4.5.5 4.5.6
Risk assessment of the favoured delivery option.....................................................54 Failure to transpose EU directives .......................................................................54 Lack of integration with mainstream funding......................................................54 Lack of interest in the programme .......................................................................55 Institutional capacity / receptiveness ...................................................................57 Replication projects .............................................................................................57 Mismanagement, fraud ........................................................................................58
5.0 What lessons can be learned from the past? ......................................................................59 5.1 Introduction..............................................................................................................59 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.3 5.4 5.5 Descriptions and evaluation of current and previous programmes and initiatives ..59 Energy Framework Programme (EFP) (1998-2002) ...........................................59 Intelligent Energy Europe (EIE) (2003-2006) .....................................................60 Energy Agencies ..................................................................................................61 The THERMIE programmes................................................................................63 The CIVITAS and CONCERTO initiatives ........................................................64 US and Japanese experiences...................................................................................65 International energy programmes ............................................................................66 Critical factors affecting the implementation of a programme ................................68
6.0 The added value of Community involvement....................................................................69 6.1 Introduction..............................................................................................................69 6.2 6.3 6.4 6.5 The added value of the EU energy-related actions ..................................................69 EU RTD programmes ..............................................................................................72 Structural and Cohesion Funding.............................................................................75 Other Community initiatives....................................................................................77
7.0 What monitoring and evaluation is planned?.....................................................................79 7.1 Monitoring and evaluation in previous programmes (EFP) ....................................79 7.2 7.3 7.4 7.5 7.5.1 7.5.2 7.5.3 The current EIE programme ....................................................................................79 The proposed EIE-II programme .............................................................................80 The application process............................................................................................81 Evaluation ................................................................................................................83 Programme evaluation .........................................................................................83 Executive Agency evaluation ..............................................................................84 Project evaluation.................................................................................................85
8.0 What is the cost-effectiveness of the proposed option?.....................................................86
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8.1 8.2 8.3
Cost effectiveness ....................................................................................................86 Human Resources ....................................................................................................90 Progress with developing the EIE Executive Agency to date (May 2004)..............91
9.0 Stakeholder consultations ..................................................................................................93 9.1 The consultation process..........................................................................................93 9.1.1 9.1.2 9.1.3 9.1.4 9.2 9.2.1 9.2.2 9.2.3 9.2.4 9.2.5 9.2.6 9.2.7 9.2.8 9.2.9 Issues Covered .....................................................................................................93 The ManagEnergy Reflection Group...................................................................94 The European Energy and Transport Forum........................................................95 International component ......................................................................................96 Result of the discussions with EC officials and other stakeholders.........................96 Problem Analysis and Needs Assessment ...........................................................96 Barriers.................................................................................................................97 New member states ..............................................................................................97 Beneficiaries ........................................................................................................98 Programme management .....................................................................................98 Replication Projects .............................................................................................99 International Co-operation ...................................................................................99 Delivery Options ................................................................................................100 Lessons from the Past and Improvements .........................................................100
9.2.10 Added Value/Integration....................................................................................101
1.0 INTRODUCTION 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 Intelligent Energy Europe programme and its successor EIE-II address the fields of energy efficiency and renewable energy sources. Energy aspects of transport are also included. The programme therefore addresses the EUs agreed target areas for sustainable energy, and contains actions to focus on and work towards achieving the targets. 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 programme1. The overall aim of the EIE-II programme would be to accelerate action in the field of sustainable energy, building on the range of directives and other support mechanisms already in place through EU and national policies that have been established to reach Community targets. The programme proposes to renew and extend the activities of the current Intelligent Energy - 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 through three 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 renewed Community actions. Its purpose is to gather information and carry out analyses that help to define objectives, to ensure that these objectives can be met, that the instruments used are cost-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,
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Commission Communication on Evaluation (SEC(2000)1051) 1 ECOTEC Research and Consulting Limited
To establish a reliable basis on which subsequent interim and ex post evaluations can be carried 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, and should take account of the individual circumstances of the programme. It identifies that the scope of the ex ante assessment will depend, among other things, on the amount and quality of information available from earlier evaluations, studies or other sources, on the amount of expenditure 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 of the EIE programme and the earlier Energy Framework Programme (EFP). It demonstrates the previous evaluations and current programme delivery, which have been used to inform this evaluation process. Figure 1: Planning and reporting schedule, EIE-II
Timeline 1998-2002 Energy Framework Programme 2003-2006 Intelligent Energy Europe 2007-2013 Intelligent Energy Europe- II
mid-term evaluation EFP(2002)
EIE work programme Decision text EIE (2003-6) with ex ante ALTENER ex post evaluation (2004)
first call for proposals, with 2003 work programme (deadline April 2004)
As can be seen from the schematic in Figure 1, the amount of information available to carry out a comprehensive ex ante evaluation of EIE-II is limited. The most recent evaluation reports relate to the previous programme, the Energy Framework Programme (EFP, 19982002), for which a mid-term evaluation was carried out in 2002. An ex-post evaluation of the ALTENER component of the EFP is to be completed in 2004, but there are no ex post evaluations 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 are yet available. In addition, the current EIE programme (2003-2006) has started only recently,
Ex ante evaluation. A practical guide for preparing proposals for expenditure programmes. December 2001. 2 ECOTEC Research and Consulting Limited
with the first call for proposals closing in April 2004. This means that no evaluation reports are available relating to the current EIE programme. Our methodology for this ex ante evaluation must therefore adopt a pragmatic approach based on the information available and the information needs for the development of the proposed EIE-II programme. The sequence of the subsequent chapters follows closely the structure recommended in the Commissions ex ante evaluation guidelines. It also draws considerably from EuropeAids Project Cycle Management guidelines3, particularly its guidance on the logical framework approach. Chapter 2 presents the problem analysis and needs assessment. It outlines the EU policy context in which the proposed EIE-II programme sits. In doing so it focuses on areas that are specifically relevant to the programme rather than higher level issues (most notably the Kyoto 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. This translates 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 possible alternatives (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 the overall 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 the development of EIE-II. Chapter 6 discusses the added value of Community action, where the European dimension is explored to identify the value of the proposed intervention. Chapter 7 describes the arrangements in place or planned for monitoring and evaluation of the programme, and makes recommendations for developing and improving the arrangements. Chapter 8 analyses the cost implications of the proposed intervention, and the human resources implications. Chapter 9 concludes with a summary of the stakeholder consultations carried out in April May 2004.
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Project Cycle Management Handbook (March 2002); Project Cycle Management Guidelines (February 2004). Both prepared for EuropeAid Co-operation Office. 3 ECOTEC Research and Consulting Limited
2.0 PROBLEM ANALYSIS AND NEEDS ASSESSMENT This 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 policy
The EIE-II programme sits within a policy strategy designed to promote sustainable development 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 on highest level issues, which have been well-rehearsed over the recent years. Thus, in providing an overview of key EU policy initiatives in the area of energy and transport we will highlight their relevance for the proposed EIE-II programme in order to clearly demonstrate the need and rationale for the proposed initiative.
2.1.1
Sustainable development
Since the late 1990s, the EU has become increasingly active in the areas of sustainable energy and sustainability within the EU, and is a major global player pushing forward the Kyoto agenda. 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 social cohesion. 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 the Gteborg European Council5. Combating climate change, through meeting the Kyoto targets to reduce greenhouse gas emissions and de-coupling economic growth from resource use, are the key energy-related elements of sustainable development. The promotion of more efficient and 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, while actions on the competitiveness of energy markets bring better and more cost-effective energy services. These aspects are clearly also consistent with economic and social dimensions of the Lisbon strategy. The European Council of Lisbon, March 2000, agreed in its conclusions on a new strategic goal 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.
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Presidency Conclusions Lisbon European Council 23-24 March 2000 Presidency Conclusions Gteborg European Council 15-16 June 2001 4 ECOTEC Research and Consulting Limited
Increasing the share of renewable energy sources in the energy mix and improving energy efficiency are essential for environment and competitive reasons and contribute to the goal of the Lisbon process to become capable of sustainable economic growth. This has been again stressed 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. The German 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 uses European technology. Increasing the share of renewable energy sources and improving energy efficiency creates new jobs in research, industry and building sectors, agro and forest-based industry, waste treatment and consulting by developing new technologies and by encouraging research and technical innovation. It is estimated that if renewable energy supplies 12% of the EU-15 energy consumption in 2010, the sector will employ between 500,000 and 650,000 people in serving this EU market. The European industry is also the world leader in wind technology and holds a good position in hydro, photovoltaic and geothermal power. Export markets constitute a huge potential for the European renewable energy industry, which will benefit from the expertise gained in the domestic market. The export of renewable energy technology further creates a significant number of extra jobs in the EU and improves the competitiveness of new and renewable energies by their massive deployment, thereby reducing their costs and improving the performance of electricity generation, heating and cooling, mineral oil substitutes, such as biofuels 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 are fundamentally changing energy markets and the energy sector. By 2007 the electricity and gas markets in all member states will be fully open, with access to different service suppliers for consumers, offering choice on price and other grounds. In this transition period over the next few years, it is essential that effective competition is established and consumers have a real choice of service suppliers. Quality of service is also vitally important, including high standards of security of supply. Renewable energy therefore can play a strong role in contributing 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 external dependence 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 that can incorporate renewables into what has hitherto been a centralised distribution network for gas and electricity provision. Costs and benefits of investment in infrastructure should therefore be viewed as strategic not only for the region in which the renewable energy plant is situated, but also at a wider, national and European level in order to fully benefit from the value 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 conclusions it 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 importance of decoupling economic growth from resource use. Climate and environmental protection are central components of sustainable development, to ensure 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 energy efficiency in order to meet the agreed targets in these fields. Competitive technologies to provide sustainable and secure energy play an integral role in the core components of sustainable development. Eco-efficient energy technologies are able to reduce environmental impacts whilst also contributing to competitiveness and growth. Many potentially significant environmental and energy technologies exist, but are underused. This is the consequence of lock-in to existing technologies, difficult access to finance, low investor awareness, and distorted price signals. These technologies can be promoted both through market-based instruments and from targeted policy initiatives to promote innovation. The Commission is confident that instruments in research, demonstration and innovation, as well 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 strong progress towards achieving sustainable growth. The Union needs to contribute to improve its support to raise its performance, where it currently lags behind in world rankings (Europe devotes 2% of its GDP to research compared with 2.7% for the US and more than 3% for Japan). Targeted research and development to support the development of competitiveness, including in sustainable energy technologies, is recognised as central to the Unions priorities. Partnerships between public and private sector, for example, can help to develop new generation of energy technologies in areas such as fuel cells and the hydrogen economy, solar energy, offshore wind. Of equal importance to achieving these goals, the Commission recognises 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 EU
In addition to drawing up policies on sustainable development in general, the EU also has a set of energy policies that feed into the sustainability agenda. A combination of five factors makes this a necessity: Energy consumption in the European Union varies from year to year. Between 2000 and 2001 final energy consumption increased by 2.6% (EU25). However, between 1998 and 2000 energy consumption remained relatively stable. Predictions of future rises in energy consumption indicate that demand for energy will continue to increase in the EU, and that energy demand world-wide will rise by more than 70% between 2000 and 2030, rising from 10 billion tonnes of oil equivalent (bn toe) in
2000 to a predicted 17 bn toe by 2030. Asia in particular will more than double its energy demand (see Figure 2). Figure 2 Trends in global gross inland consumption by region, 1990-2030
18000 16000 14000 12000 10000 Mtoe 8000 6000 4000 2000 0 2000 2010 2020 2030 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 above 50%. EU energy production is currently in decline and is unable to meet increasing demand (Table 1).
Table 1: Primary production of fuels in the EU-25 (Mtoe) Solid fuels Hard coal Lignite Liquid fuels Natural gas Nuclear Renewable energy sources Total EU-15 EU-25 1990 351 213 138 120 140 197 71 878 708 170 2000 203 120 83 164 197 238 97 899 761 138 2010 152 81 71 132 197 245 133 859 743 116 2020 124 64 60 102 148 214 152 739 635 103 2030 102 55 47 86 117 185 170 660 573 87
If no measures are taken in the next 20 to 30 years, this figure could increase to more than 65% (Table 2).
Table 2: Fuel import dependency predictions 1990-2030 (%) Solid fuels Liquid fuels Natural gas Total EU-15 EU-25 1990 17.4 80.9 47.6 44.8 47.6 28.6 2000 30.1 76.5 49.5 47.1 49.4 29.9 2010 37.4 81.4 61.4 53.3 54.3 45.7 2020 50.8 86.1 75.3 62.1 62.9 56.7 2030 65.7 88.5 81.4 67.5 67.8 65.2
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% of greenhouse gas emissions are attributable to energy consumption and transport is responsible for 90% of the increases in CO2 emissions. Finally, energy efficiency and renewable energy sources are an important part of the set of measures needed to comply with the previsions of the Kyoto Protocol aiming to contribute 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 natural resources. In its 2000 Green Paper Towards a European Strategy for the security of Energy supply6 the Commission highlighted the problems associated with increasing external dependence and flagged the importance of dealing with the adverse environmental impacts of increased energy consumption. The paper called for the following actions in a long-term energy 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 nonpolluting 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 their share in the energy supply quota from 6 to 12% and increasing electricity production based on these energy sources from 14 to 22% by 2010. It also provides for measures to support the promotion and the development of renewable energy sources. The 2000 Action Plan to boost energy efficiency8 provides for a reduction in energy intensity of 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 the Community measures concerned with energy efficiency and/or aimed at achieving a greater
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market penetration of renewable energy sources call for increased promotion at Community level by means of specific programmes in order to create the conditions to move towards sustainable energy systems. The White Paper on transport European Transport Policy for 2010: time to decide9 addresses the conflict between the increasing demands for mobility and the problems of worsening congestion, poor quality services, environmental damage, safety and isolation of some 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 the Sustainable Development Strategy. The White Paper includes a range of 60 measures combining charging, revitalisation of non-road transport modes and targeted investment in the trans European network. The White Paper recognises that other policy areas are important in achieving its aims, such as economics, planning and land use, social and education, urban transport, fiscal, competition and research. Of the measures described in the Transport White Paper there is none that appears to pose a serious risk of duplication with the activities in EIE. Given that transport policy aims to reduce environmental damage (including climate change) and break the link between economic growth and transport growth (e.g. improve energy efficiency) the aims of EIE are clearly complimentary. Negotiated self-commitments are an important element of the Community's strategy to reduce CO2 emissions from passenger cars and improve fuel economy. Commitments have been concluded with the European (European Automobile Manufacturers' Association - ACEA), the Japanese (Japan Automobile Manufacturers' Association - JAMA) and Korean (Korean Automobile Manufacturers' Association - KAMA) automobile industries. All three Commitments are equivalent having the following main features: The CO2 emission objective: The three Commitments contain the same quantified CO2 emission 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). In other words the fleet of new passenger cars put on the market in 2008/2009 will consume on 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 target mainly by technological developments and market changes linked to these developments.
2.1.3
Progress towards achieving the strategic objectives
Over the last years, a number of directives and regulations have been adopted in order to achieve the strategic objective in the fields of sustainability and sustainable energy. Some of these are summarised in Table 3.
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Indeed, in its 2004 Communication The share of renewable energy in the EU10 the Commission concludes that a comprehensive EU regulatory framework in the field of energy has been put in place over the last four years. Nevertheless, the Commission also concludes that targets for 2010 will only be met if the full implementation of this legal framework by member states is accompanied by complementary proactive measures according to national conditions and additional measures notably financial are also needed at EU level. Table 3: Measures in place to address sustainable energy objectives
Measure Directive 2001/77/EC: The Promotion of Electricity from renewable energy sources in the internal energy market. Directive 2003/30/EC. Promotion of the use of biofuels or other renewable fuels for transport Directive 2004/08/EC: Promotion of cogeneration based on useful heat demand. Directive 2002/91/EC:Energy Performance of Buildings Directive 2002/40/EC: Energy Efficiency Labelling of electric ovens Directive 2002/31/EC: Energy Efficiency Labelling of air conditioners Directive 2002/66/EC: Energy Efficiency Labelling of refrigerators Directive 2003/96/EC: For the taxation of energy products and electricity Directive 2000/55/EC: on energy efficiency requirements for ballasts for fluorescent lighting Regulation (EC) No 2422/2001: on Community energy efficiency labelling programme for office equipment Proposed Directive: Energy end-use efficiency and energy services (published 10 December 2003) Proposed Directive: 2003 on Eco design requirements for energy using products To be transposed by member states by 27 October 2003 31 December 2004 21 February 2006 4 January 2006 1 January 2003 1 January 2003 30 June 2004 31 October 2003 1 November 2000 15 December 2001 1 June 2006 31 December 2005
2.2
Enlargement and sustainable development
2.2.1
Enlargement and new member states priorities
The key driver for the new member states is to meet the commitments that they gave to the EU in their accession negotiations, or which they have signed up to through international agreements. While all legislation was expected to be in place by the date of accession,
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implementation is not always complete (generally where transition periods have been granted for investment-heavy or institutionally complex legislation). In relation to the Energy Chapter (14), this relates mainly to energy supply and competitiveness: opening up energy markets, with implications, for example, for the coal industry. Unfortunately, opening up energy markets has too often been seen as an opportunity to 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 through the Large Combustion Plants (LCP)11 and Integrated Pollution Prevention & Control (IPPC)12 Directives. The LCP Directive impacts mainly on the supply side (large power plants), while the IPPC directive has an impact on the demand side, because energy efficiency is a component 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 and housing. As far as international agreements are concerned, Kyoto is the main issue, but in general the decline in industry in the Central and Eastern European new member states over the 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 the new member states, but longer timescales. The opportunities beyond 2006 are therefore even greater than in the new member states from the perspective of the EIE-II programme. Turkey and 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 legislative developments that will give energy efficiency and renewable energy a higher profile and priority. The progress towards renewable energy and higher levels of energy efficiency is closely linked with new member states progress in implementing key environmental legislation. Nearly 100% of the environmental acquis has been transposed into national law by the new member states. Administrative capacity has also been reinforced to contribute to improving their ability to implement legislation. Nevertheless, the Commission recognises13 that there is still 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 have negotiated agreed transition periods. The new member states have already achieved some significant environmental improvements. Despite this progress, the environment is one of the areas where the new member states still have to catch up with EU standards: emissions are on average higher per capita 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 environment must continue to be raised. In order to achieve full implementation it is estimated that the
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Directive 2001/80/EC Directive 96/61/EC Enlarging the European Union - achievements and challenges. Report of Wim Kok, 26 March 2003. 11 ECOTEC Research and Consulting Limited
new member states will have to spend on average 2-3% of GDP on the environment. Current expenditure is generally well below this target. National funding, particularly investment, is severely stretched by accession commitments in most 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 from 2007, as budget and programme planning are still under development. Current CF only applies to the poorest regions with the lowest GDP/capita, and are focused on larger public infrastructure projects transport such as Trans European Networks, airports and roads, and environment 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 and Cohesion funds will increase threefold to a total of 21.7 billion. Of this, 6bn is for the Cohesion Fund, with 3bn specifically earmarked for environment. Environmental actions are also included in all of the future SF programmes, each as separate earmarked sections or as cross-cutting themes. The Commission recognises the importance of expenditure on the environment, and has identified 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 in particular are seen as areas for concern that should be integrated into national climate change policies. Transport - rapidly rising, hence it is essential that priorities for sustainable transport projects should be implemented. Energy - energy intensity is still far poorer than the EU-15 and needs to be improved. The new member states have adopted targets in the framework of the Directive on electricity from RES, but like the EU-15 there is a large challenge for most of the new member states in order to achieve the target.
Current SF focus depends on Operating Programmes (OPs) prepared by new member states and approved by the European Commission. Some countries have Environment OPs which could 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 energy efficiency projects. Many projects are not funded by the Commission at the maximum intervention level, so there may be scope for links with EIE-II. Several International Financial Institutions (IFIs) and bilateral funding agencies have programmes focused on environment or even energy specifically. Private match-funding, which includes most energy supply investments, should be less of a problem than public funds, but there are still constraints of affordability.
In general, technical standards such as engineering are good, but related commercial and financial skills are much more difficult to find in country. The capacity to implement legislation through inspectorates etc. is still limited in many countries - this mainly applies to the environment sector, but energy will also be a problem. Capacity to prepare projects properly for funding is particularly limited: institutional strengthening is still needed at regional 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 for all three of these groups. Implementation of projects depends on the extent of market liberalisation, 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 is only very limited expertise and experience in this field. Candidate countries: For Bulgaria and Romania the situation is similar to that in the new member states, but the capacity for effective implementation is even more limited and there is much more still to be achieved. Croatia is further behind than Romania and Bulgaria. Turkey has good technical skills, but is stronger than new member states commercially, as it has been a 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 acquis
The challenge of meeting EU objectives on sustainable energy is particularly high for the new member states and lags behind the implementation of environmental legislation. The energy acquis places requirements on the new member states not only to implement adequate legislation but also to develop appropriate related institutions. Some new member states have made considerable progress over the past years, however more action is necessary and this will require large amounts of investment funding. Although the EU has provided considerable funding through pre-accession support, it is recognised that the bulk of finance will 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 energy Other requirements relating to energy investments include measures to prepare for crisis situations (particularly oil stocks); addressing the social, regional and environmental consequences of the restructuring of mines; and ensuring safety of nuclear power plants and nuclear waste handling.
2.2.3
Renewable Energy
Renewable 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% for the 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 from hydro, particularly in Slovakia, Slovenia, the Czech Republic, Latvia and Poland. In the framework 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 target average is 21% by 2010. Clearly this is a much more ambitious increase than that set for the EU-15 (from 15.4% in 2001 to 22% in 2010). For the future accession countries, the setting up of targets is part of the agenda of negotiations for accession. The renewables-electricity share per member state is presented in the chart below, comparing the situation observed in 1997 and 2002 with the indicative national targets for 2010.
90
80 RES-E share in % of gross electricity consumption
70
60
50
RES-E % in 1997 RES-E % in 2002 RES-E % 2010
40
30
20
10
0
iu m en m ar k Fi nl an d Fr an ce G er m an y G re ec e Ir e la nd Ita l em y bo ur N et g he rl a nd s Po r tu ga l Sp ai n Sw ed en yp ru s R ep ub li c Es to ni a H un ga ry La tv ia Li th ua ni a M al ta Po la nd Sl ov ak ia Sl ov en ia ze ch C tr i a Be lg Au s U K
Source: European Commission, DG TREN, June 2004
Complying with EU standards can provide incentives to the new member states and accession countries 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 have been set. While the adoption of the acquis in the field of energy will help the new member states to create a transparent and liberalised national energy market, serious concerns remain over their administrative capacity to implement the acquis. Financial assistance delivered mainly through the PHARE programme has aimed to address this issue through institution building activities within public administrations and organisations that have responsibility in
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EUROSTAT. Data for 2001 not yet available for new member states. 14 ECOTEC Research and Consulting Limited
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implementing and enforcing EU legislation. The PHARE programme has also funded the participation of Candidate Countries in Community Programmes such as SAVE and ALTENER. Despite this assistance, a considerable increase in resources as well as further Community support remains essential to ensure that future member states reach the required standards as regards sustainable energy.
2.3
The implications of post-2007 budget planning
2.3.1
Sustainability: also a budget issue
After 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 the enlarged Union, two of which are relevant for this evaluation: Sustainable development - higher sustained growth, more and better jobs, particularly in innovation 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 to the following appropriations: 1. Sustainable development 1a. Competitiveness for growth and employment 1b. Cohesion for growth and employment 2. Sustainable management and protection of natural resources 3. European Citizenship 3a. Freedom, security and justice 3b. Access to basic goods and services 3c. European culture and diversity 4. The EU as a global partner 4a. Neighbourhood Policy 4b. Sustainable Development 4c. Global player 4d. Policy mix 5. Administration This new financial framework would contribute to achieving the EUs sustainability objectives by permitting:
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Complete phasing-in of new member states for agriculture, fisheries and management of other environmental resources and the implementation of CAP and CFP reform Boosting competitiveness for growth and employment, covering research, education and training, and EU networks and technologies to promote innovative and sustainable energy solutions, 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. Budget planning for energy programmes will need to be incorporated into the financial commitments accordingly.
2.3.2
Delivering the EUs sustainability policies: principles and instruments
Efficient delivery instruments and sound economic governance are fundamental to achieving successful policy delivery. Community resources need to be allocated wisely. The Commissions 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, instruments and 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 that have been developed to measure progress towards the goals. The Communication on the future financial perspectives of the enlarged Union also discusses the various elements of delivery instruments in detail. Options available include regulation, co-ordination and budgetary support. Whichever option is chosen, it is essential to ensure consistency and prevent duplication, and to ensure that the delivery chosen represents value for 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 existence today, including a single instrument focused on economic co-operation and development. Programme management is also considered, including alternatives to in-house direct management. The Commission recognises that its core administration should in future focus on the development and monitoring of policies. The follow-up of the programmes and other executive activities at a European level will where appropriate be delegated to other bodies. Different ways of delivering programmes already exist, including shared management with links with regional and national programmes, or delegated administrative offices. At armslength, there are also a number of agencies in operation or planned, these cover a wide range
of functions. Of relevance to EIE-II is the role of executive agencies, which are under the direct control of the Commission. These were first established as means for programme delivery through a Council regulation in 200216. Tasks from programmes of an executive nature, with a specific duration in time, can be delegated to executive agencies, although the Commission retains control of the delivery mechanism.
2.4
Global policy challenges
2.4.1
The EU as regional leader and global player on sustainability
In its Communication A sustainable Europe for a better world: A European Strategy for Sustainable Development17 the Commission proposes a long-term strategy for sustainable development 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 of which is limiting climate change and increasing the use of renewable energy. Under this theme, the headline objective is to meet the EUs Kyoto commitment and help other countries to comply. The Commission also stressed that the global dimension of sustainable development was to be taken into account and that it should look beyond its borders through co-operation with countries and international organisations such as the OECD, WTO, World Bank, and UNEP. The Communication Towards a global partnership for sustainable development 18 builds on the 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 and intermediate objectives in some key sectors water, land and soil, energy and biodiversity. The importance of climate change is recognised and linked to energy production and consumption. The point is made that, as developing countries invest in energy and transport infrastructure, renewable energy resources, as well as energy savings and improved energy efficiency have an important potential in terms of sustainable development and in decoupling 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 energy services (see Box 1). Energy is among the five WEHAB imperatives for sustainable development 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 irrigation
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Biodiversity: elimination of habitat destruction, such as energy poverty induced deforestation practices, or water depletion and contamination in fossil/nuclear power generation.
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 an ongoing challenge for countries around the world. One of the most difficult elements of this dilemma is managing energy. Furthermore, the growing number of people without access to very basic energy supply predicates a rapid growth in demand in the coming years. The challenge lies in finding a way to reconcile the necessity and demand for energy supply with its impact on the natural resource base in order to ensure a sustainable path of development. This complex challenge was highlighted at the United Nations Conference on Environment and Development held in Rio de Janeiro in 1992 and is discussed throughout Agenda 21. Energy was further one of the major themes of the Ninth Session of the Commission on Sustainable Development (CSD-9) and was again an important 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 demand continues to increase. It stresses the importance of using energy resources in a way that is consistent with the aims 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 have access to modern energy services. The Declaration and Plan of Implementation (PoI) that followed the WSSD highlighted the issues of poverty reduction and environmental protection, and strengthened in this regard the areas of sustainable production and consumption, water and energy. Energy is one of the ten key commitments referred 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 sources allocated 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 raise awareness among developing countries policy makers that energy is a sine qua non for sustainable development. Through the EUEI, the EU proposes to work with developing countries towards creating the necessary conditions in the energy sector to achieve their national economic, social and environmental objectives, in particular by maximising energy efficiency, including more efficient use of fossil fuels and traditional biomass, and increasing the use of renewable energy.
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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 cooking and 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 poverty reduction and sustainable development, current market and aid mechanisms will not bring modern energy services to the poor in the foreseeable future. In order to respond to unmet needs for energy services, the European 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, periurban 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. To prevent the emergence of new dividing lines between the enlarged EU and its neighbours, the Commission has recently developed a European Neighbourhood Policy (ENP). A major element of the ENP will be the enhancement of the strategic energy partnership with the neighbouring countries. Since many neighbouring countries seek an improved access to the EUs 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 regulatory convergence, is based on strong mutual interests. The Commission intends to enforce its ENP through the introduction in 2007 of the new European Neighbourhood Instrument. In addition to the areas addressed by existing instruments (e.g. MEDA, Tacis) or their successors, the ENI will address specific areas of cooperation, and in particular cross-border co-operation. Enlargement places even greater responsibilities on the EU as both a regional leader in dealing with its immediate neighbours and as a global partner. There is heightened awareness of the need to strengthen its capacity to promote human rights, democracy and the rule of law, as well as its role in the fight against poverty. For its immediate neighbours, the EU also plays a crucial role in contributing to sustainability and stability. Environmental and nuclear safety and energy security are major issues for the EU in its dealings with its neighbours. As a global economic player, the EU can and should make a strong and coherent contribution to progress towards reaching the Millennium Development Goals, set at the 2000 UN General Assembly. Provision of clean and safe energy is a core requirement in achieving these goals. Funding from the EU can link with other financial assistance programmes such as from World Bank or IMF, to generate strong leverage and improve the value for money of expenditure programmes.
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2.4.2
EU energy policy and developing countries
Community development co-operation is geared to the central aim of eradicating poverty and coincides with the Millennium Development Goal of halving extreme poverty by 2010. The EC development policy has six sectoral priorities: (i) the link between trade and development, (ii) support for regional co-operation and integration, (iii) support for macroeconomic policies, (iv) transport, (v) food security and sustainable rural development, and (vi) institutional capacity building, good governance and the rule of law. Energy is not a sectoral priority of Community development policy. Throughout the 1990s the predominant idea was that the private sector would invest in (renewable) energy projects, and that there would be a limited role to play by development aid organisations. According to a recent estimation made by the Commissions services, the energy share in Official Development Assistance (ODA) from the EC dropped from 5.8 percent in 1992 to 0.18 percent in 2001. Nevertheless, it is evident that energy is essential for each of the six sectoral priorities. At the same time, the EUs security of supply is closely linked to that of the developing countries. Considering the forecast increase in global energy demand and the associated aggravation of environmental problems, the energy interests of the EU and developing countries will further integrate (see Figure 2, page 7). In its Communication Energy co-operation with the developing countries22, the Commission proposes a framework for discussion to integrate energy more effectively into the sustainable development concept. Energy clearly is a sector where the three major issues of poverty reduction, security of supply, and environmental protection coincide. The Commission recommends to the Council and Parliament to integrate energy into the existing EU co-operation instruments, i.e. development policy, environment policy and research policy. The EU Energy Initiative (Box 2, page 19) is at the heart of this concrete recommendation.
2.4.3
EU energy policy and neighbouring countries
The new Neighbourhood Strategy Paper elaborates on the strategic energy partnerships foreseen with neighbouring countries after the recent enlargement. Based on the current importance of energy imports and the presence of the worlds most important reserves of oil and natural gas in Russia, the Caspian basin, the Middle East and North Africa, neighbouring countries are forecast to play a vital role in the security of the EUs energy supply in the medium term. At present, many countries seek improved access to the EU energy market, either as current or future suppliers (for instance, Russia, Algeria, Egypt, Libya) or as transit countries (Ukraine, Belarus, Morocco, Tunisia). Reinforcing networks and interconnections will be necessary for ensuring the security and safety of energy supplies and for extending the internal energy market to partner countries. The Commission intends to establish Action Plans with its neighbouring countries to foster energy connections and legal and regulatory
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convergence. The ENP Strategy Paper also intends to explore possibilities for partners to participate in the Intelligent Energy Programme. In its publication On the development of energy policy for the enlarged European Union, its neighbours and partner countries23, the Commission sets out its policy objectives: Enhance the security of energy supplies of the European continent; Strengthen the Internal Energy Market of the enlarged European Union; Support the modernisation of energy systems in our partner countries; and Facilitate the realisation of major new energy infrastructure projects. According to this publication, co-operation with the neighbouring countries and other partners is necessary to face the challenges of growing external energy dependence, the need to address infrastructure issues on a regional level, to diversify sources of energy, geographically and technologically, and to broaden the basis for energy trade in the European continent and its adjoining continents.
2.4.4
Current energy programmes in the partner countries
On a policy level, energy co-operation with the developing countries concentrates around the EU Energy Initiative and the Communication Energy co-operation with the developing countries. On a bilateral level, energy co-operation has been limited to the few countries that have identified energy as one of their sectoral priorities. Programming of co-operation with the neighbouring countries has been carried out by DG External Relations and implemented by EuropeAid. Co-operation with Russia and the other New Independent States (NIS) takes place within the framework of Partnership and Cooperation Agreements. Policies have been implemented through the Tacis programme. Details have not been provided so far, but on a programming level energy policy has focused on the environmental aspects of energy, security of supply, competitiveness and liberalisation, nuclear safety, and reinforcing international co-operation. Programmes with Mediterranean countries have been implemented through the MEDA programme. First of all, this concerns the bilateral programmes with each of these countries, following the adoption of their National Indicative Programmes. Secondly, the MEDA regional programme was designed to implement actions and projects which involves all the ten Mediterranean countries. The EU Energy Initiative is an important reference for these programmes. The Euro-Mediterranean Energy Ministers decided to include energy as one of the programmes to be approved and developed under the Regional Indicative Programme 20052006 during the last conference in Rome in December 2003. Electricity consumption in MEDA countries has more than tripled over the past three decades and is expected to increase further. Cooperation programmes should be adapted from a focus on production and
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distribution of energy to more proactive implementation policies towards demand-side management and the diversification of energy sources. The current programmes with Asia are: EC-ASEAN Cogen Programme Phase III EC-ASEAN Energy Facility Energy/Environment (China) EU-Asia Pro Eco Renewable Energy Project (Nepal). 2.5 Why is public intervention needed?
Despite a strong framework of legislation, the most recent estimates from the Commission indicate that the targets set for renewable energy and energy efficiency are unlikely to be achieved without enhanced actions at both Community level and by individual member states. A number of problems are inhibiting achievement of these targets. These were investigated by the evaluators and summarised in the form of a problem tree (see Figure 3). This is a framework that provides strong justification for the proposed programme. The problem tree aims to establish the key linkages and cause-effect relationships between the main problems leading to the slow uptake of sustainable energy technologies. It ultimately enables the identification of key areas of concern and the setting of objectives for future interventions. Much of this problem tree analysis will also be directly applicable to the current (2003-6) EIE programme. The short time that has elapsed since the start of the current EIE programme means that the conditions upon which justification was based may not have changed significantly. The priority is therefore to focus on changes and likely development to 2007 compared with the current EIE programme.
Figure 3: Problem tree developed for the proposed intervention

PROBLEM ANALYSIS - Intelligent Energy Europe - II
Millennium Development goals will not be met CO2 emissions levels reductions will not meet agreed targets Energy demand is rising Increasing dependence on nonEU countries for energy rising above 50%
Sustainable energy contribution to sustainable devt is minimal worldwide
EU targets for sustainable energy will not be met
Slow uptake of sustainable energy technologies
Institutional barriers (grid, administration, taxation, etc) deter implementation of sustainable energy technologies
Low levels of investment
Low demand for sustainable energy
Insufficient actions being taken to implement regulations
Low energy prices have given low incentives for sustainable energy investments Quality standards not developed
Low interest to manufacture and install sustainable energy products
Lack of awareness of benefits from sustainable energy
Poor understanding of benefits presented by an increased use of sustainable energy (low admin capacity at local and regional levels)
Lack of confidence in sustainable energy technologies
Dissemination and promotion of sustainable energy is still at low level
2.5.1
The overarching problem - the problem analysis
The EUs energy policy has been developed to address three main issues: the increase in demand for energy and security of supply issues arising from the EUs increasing dependence on energy supplied from non-EU countries because of the inability of indigenous production to keep up with demand; the environmental damage caused by the energy supply system in particular its contribution to CO2 emissions; and helping the competitiveness of European industry. Recent assessments have concluded that goals of the EU strategy for sustainable energy are unlikely to be achieved. In particular there is clear evidence that under current policies the targets established for renewable energy contribution by 2010 will not be attained. The central focus of the EIE programme lies in addressing the fact that there is a slow uptake of sustainable energy technologies that is insufficient to meet these targets. Barriers remain, in terms of both supply and demand. The problem tree identifies three core issues. Institutional barriers (grid access, administration etc.) still hamper the widespread implementation of sustainable energy technologies, and current actions to implement regulations and other initiatives to overcome these barriers are insufficient. There are low
levels of investment because these barriers render the sustainable energy market less attractive to potential investors and entrepreneurs. As a result, there is limited interest from manufacturers in developing and installing sustainable energy products. Until very recently, low energy prices have provided few incentives for sustainable energy investments, and there has been low demand for sustainable energy solutions because competition from more traditional energy sources such as fossil fuels affects entry into the market and negatively impacts upon demand. Limited levels of dissemination and promotion are also responsible for the lack of awareness of the benefits of sustainable energy amongst potential service users and providers. Dissemination and promotion of sustainable energy benefits are still at a low level. In order for key stakeholders to be confident in sustainable energy technologies, they must have access to quality information which clearly indicates the economic and environmental benefits of investing and using such products. Dissemination products are an essential component to provide EU-wide promotion and help to share best practice. Although a legal framework for sustainable energy is now in place, there remains a poor understanding amongst public institutions of the economic and environmental benefits and technical opportunities that derive from its use. Policy support studies are vital to implement new directives, but the level of experience and expertise in implementing these policies is often very limited, especially in new member states. Dissemination and promotion activities and the availability of studies and findings relating to clean energy may still be limited. The consequence has been a lack of initiatives both at national and regional level to actively implement the regulations which have been adopted. Initiatives aiming to reduce administrative and grid access barriers, for instance, are essential to create a level playing field in which the implementation of sustainable energy technologies is encouraged. The limited availability of quality standards has also done little to promote interest in the manufacturing and installing of sustainable energy products. This coupled with low energy prices has resulted in low levels of investment and low demand. The problem analysis clearly demonstrates that there remains considerable scope for further assistance to reduce the non-technological barriers and accelerate the uptake of sustainable energy technologies. Although issues regarding energy prices are largely outside of the scope of the EIE-II programme, additional assistance for policy support and institutional capacity building, dissemination and promotional activities would be beneficial in order to raise the profile of sustainable energy technologies. Similarly, funding support could be provided to sustainable energy projects which are on the verge of entering the market, to help to improve confidence in these technologies. It is clear that there is a need for specific support to assist developers in the final stages of the implementation of new technologies. Without specific pump priming support, there would be significant delays to uptake. The analysis developed by the evaluators is endorsed by the conclusions from a conference held in January 2004 in Berlin (see Box 3), which analysed the situation for renewable energy in Europe and evaluated the impact of the political measures implemented to date at Community, national and local level to support renewables. The conference identified that partnerships and institutional capacity building are needed to ensure concrete results. A key
conclusion from the conference was that lack of awareness and information is a central barrier to developing renewable energy sources. Communication and information policies are essential for increasing public awareness and securing public and private support. Box 3: Conclusions from the Renewable Energy Conference in Berlin
The European Conference for Renewable Energy Intelligent Policy Options was held in Berlin from 19-21 January 2004. The conference brought together more than 650 key players from the public and private sector, at international, national, regional and local level, representing 45 countries. They included representatives from government, networks, project developers, the energy industry, financiers and research sectors, with responsibility for developing renewable energy. The conference analysed the situation for renewable energies in Europe, and evaluated the experiences made including the impact of the political measures implemented to date at Community, national and local level, which aim to increase the share of renewable energies. The Conference discussed the role of renewables in the broader context of sustainable development and outlined the positive impacts on the security of energy supplies, economic development, job creation, CO2 reduction and poverty eradication. Key conclusions from the Conference include: A European Campaign is an effective tool to raise awareness, to showcase pioneer programmes and initiatives and to stimulate replication. The EU should continue to strengthen its policies and regulatory frameworks, and put renewed efforts on implementation at national and local levels. The external benefits of using RES such as the mitigation of climate change, protection of environment and human health, avoidance of fuel imports, job creation and rural development are important and should be emphasised. Partnerships that lead to action at the national, sub-regional or regional levels with a focus on institutional capacity building and technical assistance are needed to ensure concrete results. It is important to strengthen the policy and technology transfer between Europe and the rest of the world. Increased efforts should be made to assist developing countries in establishing energy strategies for sustainable development that appropriately address poverty eradication (e.g. COOPENER). Target setting is an important policy instrument. Medium term targets are essential to elaborate measures while long-term targets are essential to develop strategies. Targets set by policy makers give clear signals to private sector and investors. More research is needed to further develop RES technologies. RES-budgets in EU research programmes should be increased, and administrative barriers and grid deficits should be identified and removed. Lack of awareness and information is a key barrier to developing RES. Communication and information policies are essential for increasing public awareness and securing public and private support.
Energy is a prerequisite in crucial determinants of development health, (domestic) heating and lighting, refrigeration of food, agriculture, transport, industrial production and communication. Access to basic energy services that are reliable and of high quality is essential for development, both for those currently without access, and for the future increases in productivity and economic development needed to accommodate the forecast population growth and urbanisation. Where access to energy is lacking, poverty develops and an energy-poverty vicious circle may come into being. Climate change, the current reliance on and future availability of fossil supply, as well as the concomitant economic, environmental and regional security risks are generally acknowledged as immediate threats to the international community. Improving access to basic energy in developing countries cannot be enforced in isolation. It should be intertwined with an acceleration of the uptake of sustainable energy supply and with improving energy efficiency. The energy sector investment needs in developing countries are tremendous. According to the World Energy Investment Outlook, total investments of US$665 billion are needed to provide
access to basic energy services for 1.5 billion people. Current market conditions and available public and private funds to finance these investments are unlikely to close the gap. An effective legal structure, renewable energy certificate trading, feeder laws and other uptake assurances are required to underpin the necessary investments and to accelerate market development. The Communitys relation with developing countries is based on dialogue and ownership by the local authorities of their development strategies. Local authorities prepare their own development strategies, such as national Poverty Reduction Strategy Plan (PRSP), Country Strategy Papers (CSP), Regional Strategy Papers, and National Indicative Programmes (NIP), in close consultation with the local EC Delegation. Community allocation of development aid is based on the NIP. Since energy is not a sectoral priority of Community development policy, there are only a few countries that have identified energy is a sectoral priority in their development plans. Only when high-level decision makers and local or regional authorities are aware of the important role renewable energy can play in poverty reduction, energy will be put forward in future development strategies as a priority area. And only then downstream energy activities will be implemented with EU development aid and the uptake of sustainable energy can be accelerated. The development profiles of rural and urban communities vary greatly within developing countries and among developing countries and EU neighbouring countries. Therefore, sustainable energy needs will vary greatly as well. Neighbouring countries of the EU are generally more developed than the other target countries of the proposed extended COOPENER strand of the EIE-II programme, avail of an existing energy infrastructure and a more advanced and developed legal and regulatory framework, and energy poverty is often concentrated in isolated rural communities. However, similar to developing countries, the potential for an uptake of sustainable energy is huge, especially when the high reliance on fossil energy sources, the dilapidated (heavy) industry sectors, and available (wind, photovoltaic, and hydro) renewable energy sources are taken into account. On top of this, neighbouring countries are confronted with the negative spill over effects of economic development: accelerating urban economies, increasing energy consumption, and massive greenhouse gas emissions. The abundant availability of fossil energy resources in neighbouring countries provide a challenge for policy makers and energy planners to factor the environmental costs of using fossil fuels into real energy prices and to phase out (implicit) subsidies and other market distortions related to the production and distribution of fossil fuels. Sustainable energy strategies, energy planning, and appropriate market incentives should be put in place to allow the uptake of renewable energy in these markets. Cross border, bilateral, and regional cooperation in energy are an important factor in security of supply issues. Apart from the political dimension of energy, public awareness of the economic, social, and environmental benefits of the use of sustainable energy is small. Transfer of knowledge to
private consumers continues to be needed with regard to energy efficiency and the adverse environmental, social, and economic impacts of fossil compared to sustainable energy. This knowledge transfer encompasses the role of sustainable energy in terms of reducing environmental degradation, its contribution to mitigating climate change, improving in-house air pollution levels and health, contributing to gender equality through providing greater access to reliable and non-polluting energy supplies, improving quality of life for citizens, and international security of supply. Environmental pollution, climate change, and security of supply are global problems. Global problems need a global agenda.
2.6
What is the target group and what are its needs?
The previous Energy Framework Programme had several market sectors as target groups. The main target groups in both the ALTENER and the SAVE programmes included local authorities and other policy and decision makers, the energy sector and the buildings sector. SAVE also supported the development of energy agencies. The current EIE programme aims to broaden its sphere of influence and target more sectors. The proposed EIE-II programme builds on the work programme of the current EIE programme, and addresses the needs of a similar range of target groups, with similar needs. The current EIE programme is broadly relevant to a large number of players from a range of sectors and industries. However, as the current programme is only in its early stages, there are as yet no details about the numbers or types of applicant submitting proposals to each of the four areas. Instead, using information about the beneficiaries and participants from the earlier EFP programme, the evaluation has carried out a needs analysis that identified a very wide range of actors who influence, or who are influenced by, progress towards the uptake of sustainable energy technologies. The main actors who can influence progress towards greater uptake of sustainable energy technologies and sustainable energy developments are the European Union institutions, national, regional and local government, education and training providers, the publicity and dissemination sector. These same target groups are also relevant for international energy developments, particularly those policy makers at all levels who are involved in taking forward policy and dissemination activities. The proposed programme would aim to influence a number of sectors, including the buildings, transport, manufacturing and energy sectors, as well as financial institutions. The programme would be also relevant to European businesses, citizens and users, as it would promote the accelerated uptake of sustainable energy technologies, and hence contribute to meeting EU sustainable energy targets. Ultimately it would increase the availability of sustainable energy technologies for the target groups. However, the relevance of the programme differs for the various parties involved.
Box 4 summarises they main target groups already closely involved with the current EIE programme. Box 4: Target groups and their needs
European Union institutions Responsible for setting Directives and targets relating to sustainable energy, however these targets are unlikely to be met under current trends. Needs to raise awareness and stimulate national governments to comply with standards and regulations. Public sector (national, regional and local government) Varied levels of knowledge and experience. Insufficient actions being taken to implement regulations. Need to build up capacity at regional level to establish frameworks for energy efficiency and to mainstream renewable energy. Private sector (e.g. financing institutions, energy equipment manufacturers and installers, buildings and property sector) Low incentives for sustainable energy investments due to low energy prices. Varied levels of confidence and knowledge of sustainable energy technologies, therefore, limited levels of investment and uptake. Needs include awareness raising, training and implementing quality standards. Energy sector (energy distribution, generation and selling companies) Ultimately aim to ensure safe, efficient generation and distribution of energy. Energy demand is rising, and low energy prices give low incentives for sustainable energy investments. Recent oil price rises may change this if prices remain at elevated levels. Major energy users (e.g. public sector estates, transport, manufacturing, agriculture) Strongly influenced by regulations/ legislation. Low energy prices give low incentives for sustainable energy investments. Lack of awareness of benefits from sustainable energy. Needs include awareness raising, training, quality standards. General public (consumers and households) Have very little awareness of their own impact on the energy sector, and of sustainable energy options available to them. Varied levels of confidence and knowledge of sustainable energy technologies, therefore, limited levels of investment and uptake. Education and training institutions (e.g. energy agencies, schools, universities, research institutions, training providers, scientists, non-governmental organisations, user/ consumer associations) Can be used to train and raise awareness in a wide range of groups, and build on the good work already done, however, some may be new to the energy sector. Dissemination and promotion of sustainable energy is still at low levels; these institutions could be used to raise awareness of benefits and options available.
2.7
SWOT analysis
Figure 4 below shows the strengths, weaknesses, opportunities and threats of additional Community action to encourage the uptake of sustainable energy in the form of a renewal of the EIE programme. It shows that while the proposed EIE-II would have some weaknesses and delivery may even be affected by some threats, there would be significant strengths and opportunities attached to the delivery of the programme. The strengths of the EIE-II programme focus on its role in providing co-ordinated support for non-technological activities in sustainable energy at the Community level, which is not available through other routes. The approach has been developed over more than ten years, and this strong foundation provides excellent opportunities to continue to develop and strengthen the programmes role in increasing the demand for sustainable energy at both EU and global levels.
As a non-technological programme, EIE-IIs scope to influence directly the removal of administrative or regulatory barriers is limited. There may also be limited resources or limited numbers of high quality project concepts available, particularly in new member states, to implement the proposed activities successfully. The design and implementation of the new programme therefore needs to take account of the weaknesses and potential threats identified, to minimise negative impacts. Strong monitoring and evaluation from an early stage of the development of the programme are core requirements to achieving the potential opportunities from the programme. Figure 4: SWOT analysis for the proposed intervention
STRENGTHS Increases public and private sector awareness as to the benefits of sustainable energy Provides critical support to best performing technologies Provides co-ordinated action at Community level Complimentarity with other on-going programmes e.g. FP7 and other Community programmes Transfer of know-how and best practice between participant countries Attracts further investors in the field of sustainable energy Builds on more than 10 years delivery of energy programmes Is a high profile programme throughout the EU for both public and private sector actors involved in bringing forward sustainable energy developments Most underpinning directives are now in place Global problems like climate change and pollution are countered globally Pays attention to the international dimension of security of supply Puts EU money where its mouth is in international commitments related to poverty eradication, millennium development goals, and WEHAB imperatives of sustainable development WEAKNESES Relatively small budget given the size of the task Limited ability to affect regulatory barriers May not take into account the diversity of national or regional environments and conditions (within the European Union) Difficult to measure the contribution of soft actions It is difficult to differentiate from deadweight improvements Current programme lacks performance indicators where the future programme can build upon Does not take into account the great variety in (sustainable) energy needs among developing viz-a-viz neighbouring countries
OPPORTUNITIES Improvements in sustainable energy technology Accelerated market penetration of strategic, just-proven technologies
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THREATS Historic low energy prices have provided poor incentives for investment (strong competition from conventional energy sources) Persistent administrative and grid access
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Build on results of RTD / demonstration programmes to realise the value of previous Community investments Favourable regulatory changes in the field of sustainable energy e.g. taxation incentives, grid access incentives, removal of administrative barriers Increasing demand for sustainable energy Stronger involvement at local and regional levels Helps the EU to fulfil its climate change targets A higher budget can achieve more Opportunity for active engagement from industry due to greater financial stability and other incentives for sustainable energy Larger potential global market for best practice technologies provides incentives to speed up R&D Uptake of sustainable energy may remove the energy-poverty vicious circle and enhance international trade and investment flows Influence larger-scale downstream funding
barriers High labour turnover (especially in new member states, neighbouring, and developing countries) could cause institutional memory gaps Insufficient national resources may be allocated to the development of sustainable energy The budget is spread thinly across the 27 member states and the international dimension and may have almost no discernible impact Need to ensure that there are sufficient high quality project concepts available that can meet the increased funds available Replication project concept could overlap with FP7 support for technology demonstration Lack of strong monitoring may hinder ability to gauge programme progress and impact Abundant availability of oil and natural gas in neighbouring countries Financial support is sensitive to corruption Lack of financial resources may hamper cooperation from partner countries
3.0 WHAT ARE THE OBJECTIVES, EXPECTED RESULTS AND INDICATORS FOR THE PROGRAMME? The nature and dimension of actions to be financed by the proposed programme mean that this will often constitute a first Community support to be followed by, and prepare the ground for, further larger scale, complementary Community intervention that is generally of a downstream nature. This is particularly the case for the international actions, which may be complemented by activities supported by development co-operation or other external relations instruments on a demand led basis. In this section we will thus focus on three issues: The establishment of a baseline for the programme on the basis of which its success can be judged The establishment of objectives and expected results for EIE-II with the help of an objective tree The development of a set of core indicators to be used to measure the achievements of the programme. This section follows the structure of the logical framework produced for the planned EIE-II programme as part of this ex ante evaluation. This logical framework is included as Table 6 at the end of this section and demonstrates how these issues link together within the proposed EIE-II programme.
3.1
Establishing the baseline
The EIE programme aims to support sustainable development in the energy context, making a balanced contribution to the achievement of the following general objectives: security of energy supply, competitiveness, and environmental protection24 Due to the early stage in the implementation of the current (2003-6) programme, it is difficult to establish a comprehensive baseline for the proposed EIE-II programme on how far these objectives have been achieved. Rather, the baseline needs to establish the targets to be reached, i.e. where we are planning to go. The Community has set itself clear quantitative targets for the uptake of sustainable energy to be achieved by 2010. These include: doubling the share of renewable energy sources in EU energy consumption to reach 12% (by 2001, the EU-15 had achieved a share of 6.2%), increasing to 22% the share of electricity generated by renewable sources (by 2001 the EU-15 had achieved a level of 15.4%) increasing up to 5.75% the share of bio-fuels in all petrol and diesel used for transport (ethanol and biodiesel provided 0.2% and 0.4% of market share respectively in 2001) rationalising and stabilising energy consumption to reduce energy intensity, aiming to save at least 1% more energy each year (a range of indicators can be used to identify
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progress towards this target, including energy intensity, and levels of final energy consumption. Although energy intensity has improved over the past decade, final energy consumption particularly in households and transport has risen over the same period) Other objectives that are also part of the programme include increased sales of energy efficient products, reduced energy consumption of energy-using products and number of products complying to eco-design requirements. Table 4 below draws together the main key objectives of relevance to the EUs sustainable energy policy, and demonstrates the source of key baseline indicators that form the basis of the overall programme objectives. Table 4: Baseline and indicators for overall programme objectives
Objectives To provide 22% of electricity from renewable sources in EU-15 (21% in EU-25) To have 5.75% of biofuels in all petrol and diesel used for transport by 2010 Rationalise and stabilise energy consumption to reduce energy intensity, aiming at saving at least 1% more energy each year. Key baseline indicators Contribution of renewable energy sources to total electricity generation. (Eurostat data). Biofuels production (contribution to total petrol and diesel market). Hectares growing biomass for biofuel production. (Eurostat data) Electricity generated by CHP plant (Eurostat data) Other indicators can also be used to indirectly measure the impact of a number of energy savings Directives. They can be used to measure impacts in terms of CO2 emissions, energy intensity and energy and electricity consumption: CO2 emissions per capita Energy intensity Final energy consumption Final household energy consumption by fuel Baseline indicators could include data on the average energy efficiency of appliances sold, the improvements in energy efficiency of appliances (rating A to G, now to be A++) For eco-design, could cover a wide range of products, including heating and water heating equipment, electric motor systems, lighting, domestic appliances, office equipment, consumer electronics and air conditioning systems. Justification / source 2001/77/EC: The Promotion of Electricity from renewable energy sources in the internal energy market 2003/30/EC. Promotion of the use of biofuels or other renewable fuels for transport 2004/08/EC: Promotion of cogeneration based on useful heat demand. 2002/91/EC. Directive on the Energy Performance of Buildings COM(2003) 739: Proposal for a Directive on energy end use efficiency and energy services.
(Voluntary initiatives) Energy efficiency labelling to contribute towards reducing energy consumption
Energy labelling Directives: 95/12/EC Household washing machines 95/13/EC Household electric tumble driers 96/60/EC Household combined washers-driers 97/17/EC Household dishwashers 98/11/EC Household lamps 2002/40/EC -Household electric ovens 2002/31/EC - Household airconditioners 2003/66/EC - household
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) electric refrigerators, freezers and their combinations Minimum energy efficiency requirements for energy using products: 92/42/EC Hot water boilers 96/57/EC Household electric refrigerators, freezers and combinations 2000/55/EC Ballasts for fluorescent lighting Regulation (EC) No 2422/2001 energy efficiency labelling programme for office equipment (Energy Star) COM(2003)453: Proposal for a Directive on establishing a framework for the setting of Ecodesign requirements for energy using products Establishing the internal energy market Degree of openness for gas and electricity markets (Eurostat data) Electricity and Gas Directives on establishing the internal energy market (Directives 96/92/EC and 98/30/EC respectively)
Quantitative indicators are already available and being used to track progress against the key objectives (e.g. electricity from renewable energy sources). For more qualitative indicators, particularly those associated with voluntary agreements (such as labelling initiatives) there are as yet no agreed values that have been identified that can be used readily. The headline indicators listed (such as CO2 emissions, energy intensity) can provide some measure of progress, but they are not able to differentiate between the contributions from individual energy efficiency initiatives. Internationally, EIE aims at the upstream incorporation into the field of development of energy sector measures contributing to sustainable development. Since the current EIE programme has only started recently we cannot determine to what extent the COOPENER programme is successful in incorporating energy measures in upstream Community action. This greatly limits the development of a baseline. In its Communication proposing to adopt the current EIE programme, the Commission seeks to ensure with the COOPENER programme, the upstream incorporation, in the context of Community action in the field of development, of energy sector measures contributing to sustainable development. COOPENER action complements EU intervention under the cooperation programmes. The activities to be funded will focus on analyses of the potential for replication in developing countries of measures and techniques developed within the EU, and on promoting EU know-how and technology transfers to those countries.25
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For the extended COOPENER programme to be successful, it should target its activities to the early phases of the programming cycle of co-operation. When the dialogue with policy makers is successful in raising awareness of the importance of energy, local policy makers may decide to focus on energy as one of the sectoral priorities in their Country and Regional Strategy Papers. When these CSPs indicate an energy focus, the Community will be able to allocate funding in subsequent steps of the cycle. Funds will be made available to support establishment of a legal and regulatory framework conducive to the investments necessary for development. Only then EU best practices and hardware technologies will find a market in these countries. Only then will decision makers be prepared to invest in raising awareness among the public of the importance of energy in breaking the energy-poverty vicious circle. Merely focusing on the replication of techniques and promoting EU know-how fails to incorporate the developing countries perspective and fails to recognise the importance of sustainable development and the international dimension of security of supply.
3.2
The objectives for the programme
Recent analysis by the Commission of progress towards achieving these targets (particularly progress with renewable energy) indicates that the EU will not reach them unless additional activities are taken. The proposed EIE-II programme of activities would be a key EU initiative that provides accelerated support towards achieving these targets. It would provide an enhanced level of support for non-technological activities and additional funding to support investment in replication initiatives. In addition, as its timeframe would extend beyond 2010 (to 2013), it would be an important early contributor to providing support to reach targets for the medium to long term (2020). It is therefore necessary to establish clear objectives for EIE-II in order to ensure that it is able to make a contribution to EU sustainable energy policy. The problem analysis carried out in the previous chapter shows that lack of understanding, awareness and dissemination of sustainable technologies constitute a hurdle towards achieving these. Thus, making a contribution to achieving the EUs sustainable energy targets must be the overall objective for the EU-focused activities of the programme. Facilitating the contribution of sustainable energy to sustainable development worldwide needs to be another objective of the programme. An objective tree has been developed (see Figure 5), which translates the problems faced by EU sustainable energy policy into objectives, shows the objectives for EIE-II and how they need to be translated into action. The dotted line indicates the scope of the programme, showing the extent to which the activities listed are covered within the programme or are outside of the programmes activities. As the objective tree shows, the programme must succeed in accelerating the knowledge and uptake of renewable energy and energy efficiency through non-technological support (operational programme objectives) for these overall aims to become possible.
Figure 5: The objective tree for the proposed intervention

Objective Tree - Intelligent Energy Europe - II
Facilitation towards the development of the Millennium Devt goals CO2 emissions levels reductions achieve agreed targets Energy demand stabilised and increased diversification Improved competitiveness Dependence on non-EU countries for energy limited
Overall Objectives
Sustainable energy contribution to sustainable devt is significant worldwide
EU targets for sustainable energy achieved Accelerated uptake of sustainable energy technologies
Operational Objectives
Contribute to achieving level playing field to encourage implementation of sustainable energy technologies
Increased levels of investment
Increased demand for sustainable energy
Results
Obligations as regards implementation of regulations are being met
Energy prices favour sustainable energy investments
mme Progra scope
OUT
High interest to manufacture and install sustainable energy products
Increased awareness of benefits from sustainable energy
IN
Quality standards developed Increased confidence in sustainable energy technologies Dissemination and promotion of sustainable energy expanded
Improved understanding of benefits presented by an increased use of sustainable energy (improved admin capacity at local and regional levels)
The objective tree demonstrates the links between the proposed fields of action and types of instrument to be used in EIE-II and the results anticipated. Some of the strongest links can be briefly summarised in Table 5.
Table 5: Main links between proposed instruments for EIE-II and anticipated results
Replication projects
Proposed instruments: Studies, strategies
Anticipated results: Increased interest from manufacturers Quality standards developed Increased confidence in sustainable energy technologies Improved admin capacity at local and regional levels re. sustainable energy Increased awareness of benefits from sustainable energy Dissemination and promotion of sustainable energy expanded
Against this background, the overall programme objectives for EIE-II should be twofold: contributing to achieving EU targets for sustainable energy and facilitating the achievement of the Millennium Development goals. Within the EU, the objectives focus on reducing CO2 emissions levels, stabilising energy demand and improving security of supply, whilst also ensuring competitiveness. EIE-II activities need to clearly contribute to these objectives, through accelerating the uptake of sustainable energy technologies. Operational programme objectives concentrate on increasing the level of investment in sustainable energy technologies and increasing the demand for sustainable energy. Administrative capacity also needs to be strengthened to develop strategies and policies to implement existing regulations or incentives (such as in taxation) relating to sustainable energy. This will contribute to raising the awareness and increasing the knowledge among key actors in the EU which is required to facilitate the take-up of sustainable energies. Particular emphasis needs to be paid to administrative capacities and policy development in the new member states to address the obstacles of staff capacity and capabilities, and the competing policy priorities focusing on mainstream institutional strengthening that may dominate over energy priorities. The logical framework matrix (Table 6, page 42) lists examples of some of the activities that need to be funded by the EIE-II programme to achieve these results. They are: Soft measures to strengthen administrative capacity such as the development of networks, twinning initiatives, training courses, or setting up and developing management bodies.
Information, education and training
Promotion of sustainable energy systems and equipment
Local and regional planning
The knowledge gained by individuals through these measures should then lead to improved energy strategies and the implementation of existing regulations. Mix of hard and soft measures to encourage increased levels of investment into sustainable technologies. Hard measures to be funded by EIE-II should include the stimulation of market replication of just proven technologies, the development of standards as well as certification and labelling. Soft measures must involve dissemination, voluntary commitments and encouraging fora for exchange of know-how and raising awareness. Promotion, dissemination, studies as well as the development of information, education and training structures in order to increase demand for sustainable technologies
Internationally, the extended COOPENER activities should target the early phases of the programming cycle of co-operation. If the dialogue with policy makers is successful in raising awareness of the importance of energy, local policy makers may decide to focus on energy as one of the sectoral priorities in their Country and Regional Strategy Papers. When these CSPs indicate an energy focus, the Community will be able to allocate funding in subsequent steps of the cycle. Funds can be made available to support establishment of a legal and regulatory framework conducive to the investments necessary for development. Only then will EU best practices and hardware technologies find a market in these countries, and decision makers be prepared to invest in raising awareness among the public of the importance of energy in breaking the energy-poverty vicious circle. Merely focusing on the replication of techniques and promoting EU know-how fails to incorporate the developing countries perspective and fails to recognise the importance of sustainable development and the international dimension of security of supply. In the past, support to developing countries was often in the form of inappropriate heavy infrastructure investments. What is needed is transitional support, both to create efficient market structures and to enhance credibility of the sector. COOPENER should prepare the ground for these investments by creating an enabling environment and by bringing about a critical mass of knowledge. Compared to the ongoing COOPENER programme, the scope should be extended to neighbouring countries, in line with the orientations provided by the Commission in its recent strategy paper on European Neighbourhood Policy. There is a clear political need to draw attention to the energy situation in this region. The EU has a clear interest to maintain a stable political and economic relationship with its new neighbours, and the increasing EU dependence on its neighbours for the supply and transmission of energy urge for enhanced co-operation with these countries. However, based on information currently available, existing legal and regulatory frameworks and well-educated engineers make it unclear how upstream activities comparable to the ones for developing countries should lead to an accelerated uptake of sustainable energy in these countries. Overall, the differences in present quality of energy services and development between the EU and neighbouring countries are less significant than the gap that exist between neighbouring and developing countries. It may well be that the impediments of the slow uptake of sustainable energy in these countries are quite similar to the impediments in the EU. According to one of the stakeholders interviewed, the success of the programme by 2014 should be valued by a few success stories in developing countries, where both the
government and public have become aware of the potential benefits of sustainable energy. In neighbouring countries, the success of the project should be measured against an impact in terms of a higher percentage share of sustainable energy in total energy supply, as well as a verifiable increase in energy efficiency. Should the international component of the programme COOPENER share a common legal basis with the mainstream EC external cooperation instruments26, effective co-ordination mechanisms will have to be put in place in order to ensure coherence, complementarity and synergies between the internal EIE II strands and COOPENER.
3.3
Laying the ground for programme monitoring and evaluation: definition of indicators
A strong set of indicators is necessary in order to form the framework for efficient and effective monitoring and evaluation of the proposed EIE-II programme. Given that no results are yet available from the current EIE programme, the proposed duration of EIE-II covers seven years and the funds proposed will increase significantly, it is important to develop a clear indicator and monitoring system at output, result and impact level. Before the start of the successor programme EIE-II, it is therefore necessary to put in place a core set of output, result and impact indicators that constitute a framework for monitoring the success of the programme. These must be SMART (specific, measurable, achievable, relevant and time-bound) and link in from one level to another in order to ensure that coherent measuring is possible. They must also reflect the different activities carried out under the proposed programme, in particular the differences between those focusing on EU member states and those targeting neighbouring and developing countries. The indicator system of the current EIE programme at this stage of development is restricted to the project level, where proposers are required to suggest indicators against which their projects progress can be measured. However, there are no means of harmonising these indicators at the programme level. Consultations have revealed concern about this system. It is potentially confusing and prevents a meaningful impact monitoring as it encourages projects to measure different outputs, results and impacts. Under this arrangement it will be very difficult for any evaluation to measure the impact, and thus draw conclusions, on the success of the programme. The overarching framework within which the EIE-II programme will operate is represented by the highest level objectives for EU energy policy. Within this framework, the success of the proposed EIE-II programme will be judged on the extent to which it accelerates the knowledge of and awareness of renewable energy and energy efficiency, and accelerates its uptake.
26
By the time this final report was printed, this option was still pending. 38 ECOTEC Research and Consulting Limited
The logical framework (see Table 6) developed as part of this ex ante evaluation is an initial framework that can be used during the subsequent development of the work programme for the intervention. This framework should be used, developed and modified throughout the lifetime of the programme to reflect changing priorities whilst ensuring that the operational programme objectives are still the main focus for the intervention. The logical framework contains a mix of soft and hard indicators, relating to the types of activities proposed. These are not definitive, and are likely to be modified and expanded as the work programme develops. Those proposed are based on our understanding of the activities likely to be supported through the current EIE programme and the objectives of the proposed EIE-II programme. The main measures of success for the EU focused activities of the proposed programme are the accelerated knowledge of and uptake of renewable energy and energy efficiency. At impact level, indicators include, for example: the increase in the market penetration of new and best performing technology the increase in the purchase and use of sustainable energy the development of sustainable energy planning initiatives the extent to which legislation on sustainable energy is adopted in national plans (for COOPENER) At result level, activities may generate both soft and hard results, as the intervention focuses on policy support and awareness raising, as well as on investment in sustainable energy technologies (replication projects). Results can be measured through indicators such as publicity campaigns and their consequences the extent to which energy networks include members from priority target sectors the follow-up results from seminars or training to demonstrate the extent to which attendees have used their attendance to incorporate sustainable energy within their remit increase in private sector investment into sustainable technologies numbers of patents arising level of private sector investment achieved (particularly as a consequence of the replication projects) Output indicators developed at project level will measure, for instance: publications produced publicity campaigns launched people in networks people trained A framework of indicators should be developed by programme managers at the programme level. Within this framework, individual project applications will be able to propose appropriate, more specific, output and results indicators with which their individual work programme can be monitored. Indicators are of particular importance for the replication projects, where clearly defined routes to successful implementation are essential.
Indirect impacts should also be identified where possible, both by programme managers and by individual project applicants. These can include local economic benefits, employment opportunities, environmental improvements and contributions to industry competitiveness. The Commission stakeholders consulted in this evaluation indicated that for the current COOPENER programme indicators to monitor the effectiveness of the programme have not been developed yet. Clear objectives for activities at project and programme level are important. Although these may be difficult to be established because individual activities are generally soft (conferences, training etc.), nevertheless they are important to be able to verify the success of the overall programme, even if verifying the level of success of individual activities is more challenging. By 2014, an important indicator for the success of the extended COOPENER programme will be the number of developing countries and/or regions where energy has been identified as a target area of development. The decentralised way of development co-operation prevents the Commission from unilaterally deciding a refocusing on energy and the accelerated uptake of sustainable energy. Indicators to measure the success of the programme could be Strategy Papers taking account of the importance of energy for development at result level or Inclusion of energy in the sector strategy of the identified focus sectors at project output level. Considering the small budget of the programme compared to the investments required, the impact of the programme should be valued in terms of favourable change in circumstances as a result of the projects. This calls for indicators such as Conducive reform of the public sector or Changed legislation. The activities of the COOPENER proposed within neighbouring countries will focus on activities relating to improving security of supply and internal markets, and on measures to improve the quality of energy systems and infrastructure, as well as on supporting sustainable energy developments. Indicators for the success of the programme within these countries may therefore include measures to identify the level of integration of sustainable energy into regulatory frameworks, and measures of support towards developing regulatory convergence with the EU. The five-yearly programme cycle of Country Strategy Papers, however, complicates applying this indicator. The current programme cycle lasts until 2006, and the strategies for 2007-2011 will be developed prior to the start of the programme. This means that this indicator can only be applied for the CSPs adopted for 2012-2016. It is recognised that the development of indicators is difficult, especially for non-technical programmes such as EIE which favour soft measures and impacts. Difficulties to define SMART indicators on outcome and impact of programmes that involve knowledge sharing and awareness creation are not unique for this programme. Nevertheless, they are essential in order to measure the effectiveness of the programme, and the development of a robust set of programme level indicators should be an early priority in the development of the work programme for the new EIE-II. It is also recommended to review and eventually revise any indicators throughout the course of the programme delivery, particularly through mid-term reviews. The evaluators also recommend linking with external research or study initiatives
on monitoring and evaluation that aim to consider the impacts of these kind of soft impact programmes, with the purpose of identifying and defining methodologies and common indicators.27
3.4
Assumptions
The logical framework included in the section below (Table 6) shows that the achievements of the objectives of the proposed EIE-II programme rests on a number of assumptions. They are as follows: The acceleration of knowledge and uptake of renewable energy relies on the successful implementation of the relevant legal framework. While there is a possibility that this assumption may in fact only partly be realised, in particular given the fact that the policy priorities in the new member states lie on the environmental rather than energy side, the evaluators are confident that this would not in fact challenge the validity or structure of EIE-II. In fact, with its awareness raising and dissemination focus, the programme is intended to contribute to a faster implementation of existing legislation. The achievements of the three programme results outlined above relies on appropriate human resource strategies, the training of the right people and the appropriate allocation of resources. Furthermore, efforts to reduce administrative and grid access barriers need to be made and energy prices need to become more competitive for sustainable energy.28 Finally, the successful completion of activities relies on the submission of high-quality proposals that comply to the specifications, the sufficient allocation of resources to project management and administration, and prompt financial disbursements. These are essentially assumptions on good monitoring at project level which are justified considering the recommendations of the ex ante evaluation and the availability of information, before the start of EIE-II, of the interim evaluation of the EIE programme. This will result in a continuing development and improvement of project monitoring activities where necessary.
27
Other organisations involved with similar programmes are faced with the same challenge. For example, the EU Energy Initiative, together with the Global Village Energy Partnership (World Bank and UNDP) and lectricit de France have recently established a working group Monitoring & Evaluation with the purpose to define common indicators to measure the success of their interventions. The evaluators recommend following the progress in this or other working groups and the methodology and indicators that will be defined. 28 Recent oil price increases may have an important impact. 41 ECOTEC Research and Consulting Limited
Table 6: Logical framework for the proposed intervention Note - this logical framework provides an approach that could be used as the basis for further development throughout the course of the intervention. The table presents activities at programme level, together with examples of results and activities at project level, which can be expanded as the work programme is developed in more detail.
Objective hierarchy Overall programme objectives Intervention logic EU energy policy - Achieving EU targets for renewable energy and energy efficiency; Facilitating the achievements of the Millennium Development goals. Objectively verifiable indicators (examples) 12% renewable energy sources in EU by 2010. 22% renewable sources in electricity generated by 2010 Up to 5.75% renewable sources in the share of biofuels in all petrol and diesel used for transport by 2010. An annual reduction in energy intensity by, approximately, an additional 1% per year above the business as usual scenario. Increase in the market penetration of new and best performing technology Increase in purchase and use of sustainable energy products Reduction of subsidies needed by new technologies Number of innovative activities funded Number of projects supported which are still 42 ECOTEC Research and Consulting Limited Sources of Verification (examples) Member State and Commission reports (regularity specified in directives) Assumptions
Operational programme objectives
Accelerate action in relation to the agreed Community strategy and targets in the fields of energy efficiency, renewable energy sources and energy diversification.
Eurostat data Market research statistics European scoreboard indicators (e.g. innovation) Company registrations
Successful implementation of the legal framework established to facilitate the uptake of energy efficiency and renewable energy, that will be influenced by the programme action
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) Objective hierarchy Intervention logic Objectively verifiable indicators (examples) operational after 5 years Country Strategy Papers mentioning sustainable energy (COOPENER) Legislation adopted in sustainable energy (COOPENER) Energy plans developed Network members who belong to a priority public (e.g. regional or local energy agency/ government department). Network members and seminar attendees still working on sustainable energy issues 12 months after the intervention Level of private sector investment achieved Increase investment into new and best performing technologies Number of patents achieved Increase in number of publications relating to sustainable energy Increase in number of publicity campaigns and dissemination activities directed at target audience Number of / increase in enquiries about sustainable energy Sources of Verification (examples) Assumptions
Results (examples)
1.
Strengthened administrative capacity to develop strategies and policies as well as to implement existing regulations relating to energy efficiency and renewable energy. Increased levels of investment in energy efficiency and renewable energy technologies. Increased demand for sustainable energy
2.
3.
Monitoring reports from training sessions Project monitoring reports Follow up questionnaire to be completed 12 months after the intervention Data to be provided through Member State monitoring reports To be monitored at local level
That appropriate human resource strategies are in place and appropriate resources are allocated. That labour turnover is minimised. That the appropriate people to be trained are selected That efforts to reduce administrative and grid access barriers are made That prices for sustainable energy become more competitive
Objective hierarchy Activities (examples)
Intervention logic 1.1 Developing networks, twinning initiatives and other for a for the exchange of knowhow between policy makers 1.2 Dissemination of activities, experience and know-how: seminars, workshops, conferences, scientific articles, media coverage 1.3 Stimulate energy planning and management at local and regional level 1.4 Setting up and developing management bodies at local and regional level 1.5 Drawing up and execution of an adequate regulatory framework including quality standards at the regional or national level of government 1.6 Setting up monitoring and evaluation systems 1.7 Running training and education programmes for policy-makers, regulators and planners Stimulating market replication of just proven technologies, in particular innovative approaches to promote the uptake of these technologies Disseminating new cross-cutting technologies and best practice Setting up fora for exchange of know-how, networking and training of energy professionals Increasing voluntary commitments with industry and other stakeholders Raising awareness about opportunities and obligations of existing legislation Developing standards, certification and labelling
Inputs (examples) Means for all sets of activities: EU level: Programme managers Physical infrastructure for External Agency Resources to fund and evaluate EIE-II National level: Sustainable energy experts Investment in HR , research, monitoring and financial products
Sources of Verification (examples)
Assumptions That sufficient resources are allocated to programme management and administration. That disbursements are made on time. That proposals submitted are of sufficient quality and comply with the requested specifications.
Activities (continued)
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) Objective hierarchy Intervention logic Activities (continued) Developing financial products and market instruments Monitoring the development of energy markets and trends Promoting know-how and best practices among consumers and businesses Disseminating results, actions, projects and co-operation between member states Developing information, education and training structures at local and regional level to promote the use of sustainable energy Preparing studies Inputs (examples) Sources of Verification (examples) Assumptions
4.0 WHAT ALTERNATIVE APPROACHES WERE CONSIDERED AND WHY HAS THIS ONE BEEN SELECTED? The new programme proposed is the outcome from steady developments over a number of years, from the Energy Framework Programme (EFP) 1998-2002, followed by the current Intelligent Energy - Europe programme (EIE) 2003-2006. This proposal for a follow-on programme for seven years to 2013 therefore represents the second half of a period of support to the energy sector lasting 15 years or more. During this time there have been major changes in the energy sector, as discussed in the earlier section, in areas including legislation, environment, technology etc. Central to the options selection is the question of whether a separate support programme for non-technological action in the field of energy should continue in this form. There may be alternative ways of supporting energy activities that can be achieved without having a separate programme. These have been developed and are described in detail below. The option of no-action has also been considered.
4.1
Alternative delivery options
The overall aim of the proposed programme is to accelerate action in the field of renewable energy and energy efficiency including in the transport sector. It builds on the range of directives and other support mechanisms already in place through EU and national policies that have been established to reach Community targets in energy. We have considered four main variables with associated delivery options, together with a fifth variable on geographical coverage. These options have been discussed with a number of stakeholders to get view and comments. What are the options available to deliver the given objectives? The overall aim of the proposed programme is to accelerate action in the field of renewable energy and energy efficiency including in the transport sector, building on the range of directives and other support mechanisms already in place through EU and national policies that have been established to reach Community targets in energy. We have considered four main variables with associated delivery options, and a fifth option relating to the geographical scope of the intervention:
Variable A. The channels of intervention - three main options have been assessed: Delivery Options As a Commission-led programme Funds allocated to individual member states for them to deliver Delivered through the main beneficiaries to the programme, or to intermediaries e.g. NGOs As a separate, independent support programme Integrated as a component within existing programmes
B. The delivery approach - two approaches have been considered:
C. The financial approach - two different options for the way that the programme funds are allocated to project applicants D. The level of support
As grants As subsidies or loans Narrow - providing large amounts of support to a small number of projects / beneficiaries Wide - providing a smaller amount of support to a larger number of projects / beneficiaries
E Geographical coverage
This variable should also take account of the extent to which the activity is closely aligned with the overall objectives of the programme, i.e. its fit. To include some or all of: EU-2529 Neighbouring countries Developing countries Other countries
In the following tables, we have applied these delivery options to the three main intervention approaches, namely: i) Support policy development and implementation To help the Commission and member states in policy development and reinforcement of the implementation of the acquis communautaire, improve its monitoring and evaluation, including as regards the functioning the internal market, as well as promoting in the market the opportunities and obligations brought by the existing regulatory framework. ii) Boost investment in new and best performing technologies To bridge the gap that exists between the successful demonstration of innovative technologies and their effective entrance into the market. There is a growing need to seek ways of increasing the impact and appeal of new technologies in the fields of energy efficiency, renewable energy sources and energy diversification, including transport. This could be the new and main component of the future programme. Support would be provided to a first market replication of just-proven technologies of European level interest, as a contribution to the risk-investment in the valorisation of the RTD results. This support would improve confidence in new market technologies that can be developed even if there are still uncertainties about energy prices. This support would be of a catalyst nature: it would be used to promote key strategic technologies, leverage public/private sector investment, bring down costs, increase market experience and contribute to reduce the finance risks and other perceived risks and barriers that can hinder this type of investment. iii) Remove non-technological barriers to sustainable energy To strengthen support to action at local and regional level in order to promote informed decision making for citizens and companies in their energy choices. The increased use of renewable energy, improved efficiency in the energy use and recourse to cleaner and more
29
Note that by 2007 the EU is set to have two new members, so in this options assessment the use of the term EU-25 is likely in fact to relate to EU-27. 47 ECOTEC Research and Consulting Limited
energy-efficient transports, does not just require an adequate regulatory framework. It also needs strong institutional capacity together with enhanced public awareness, available technology at affordable prices, well-trained specialists and effective mechanisms for the exchange of know-how, spread of best-practices. These have to be coupled with an improved co-ordination between the action undertaken at Community and national level. In this context, an increased attention will be paid to the sharing of our experience and technologies with third countries, in particular developing countries, but also looking at neighbouring countries, including the Balkans, Russia, and the Mediterranean. We then summarised the rationale behind supporting or rejecting each of the delivery options listed, to identify and justify the most appropriate delivery course.
4.2
Intelligent Energy Europe II: Detailed assessment of delivery options
Below we describe the three types of intervention identified, and assess the options for the different delivery mechanisms. Intervention i) Support policy development and implementation
Justification Energy markets are EU-wide so delivery at EU level can be most appropriate to meet needs of EU-25/27 Subsidiarity different member states may have different energy priorities because of e.g. different energy resources, markets etc. Could stimulate higher levels of innovation if main actors (e.g. trade associations, NGOs, energy agencies) were contracted directly. But there would be less ability to specify exactly what is needed, and results may have inherent bias depending on lead authors. (a direct approach could be similar to public finance initiatives where outcomes rather than methods are specified) Energy becomes an integral component in other delivery programmes and fields of work, rather than as a separate and potentially isolated activity. But experience shows that this approach can result in the main area (energy) losing its focus, and being implemented at lower priority and with lower budget. Generally it can lose out to other areas that can claim higher priority, e.g. health. Better results can be achieved if energy is kept as the most important component in a programme. But it is important also to identify ways in which energy issues can be included into other programmes i.e. the policies and programmes need to be energy proofed to ensure they include energy-relevant actions wherever possible. Recommendation Commission-led delivery
Delivery Options Channels of intervention: Commission / Member State level / direct to main beneficiaries
Delivery approach: Integrated / separated
Separate programme Also ensure that energy issues are incorporated into other programmes (especially e.g. Structural Funds, Economic and Development Cooperation, RTD, Enterprise and Innovation) and ensure that complementary efforts are coordinated and synergies maximized with these related
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) programmes Grants generally fully-funded or majority funded by the Community
Financial approach, level of support: Grant / subsidy / loan
The only option here is to provide grants. Strategic studies are to be specified by the Commission, so to maintain the independence of the contractor in carrying out the work should be fully or majority funded by the grant. Other interested parties could express an interest in carrying out jointly funded studies (e.g. trade assoc), but this could expose vested interests. The three main objectives of the proposed EIE programme are environmental protection, security of supply, and competitiveness. The international dimensions of the first two objectives clearly justify an EU-25+ approach. EU political commitment to Millennium Development Goals and to friendly and stable relationships with its neighbours justifies an EU25+ approach. Industrialised OECD members avail of their own means to encourage clean energy uptake.
Geographical coverage
EU-25 (EU-27) plus developing and neighbouring countries
Intervention ii) Boost large investment in new and best performing technologies
Justification Commission delivery can ensure a European perspective to the projects. At Member State level there could be confusion about how the funds may differ from specific member states funds. It could be difficult for member states to differentiate funds meant for national projects and those for which there should be a EU-wide focus. Any match funding between EU and member states funds could be confusing. Direct delivery of projects would lose the EU focus still further. However, one area where local input could be very valuable is in their local / regional knowledge. It could be beneficial to get input / feedback at local level on the quality and relevance of project proposals. The obvious place where these types of project could be integrated at EU level is within the EC Seventh Framework Programme of RTD (FP7). Management costs could be lower than for a separate programme. Projects could be able to be linked specifically within FP7 to research areas. However, it is felt that these replication projects could get lost in FP7, especially if they are proposed as smaller value projects. Project design may also be required to be modified / adapted to meet FP7 aims, rather than those of EIE. Having a separate programme would make it much clearer it would also highlight the non-technological status of the projects as they are to be considered as almost at the commercial stage (rather than still research). The primary objective of these projects is to boost investment in new and best performing technologies, in order to stimulate their increased market uptake. A separate programme delivered through EIE would ensure high visibility for the projects, and would also enable them to be closely linked with other activities underway within the EIE programme (dissemination etc.). Grant unique international grant scheme for good postdemonstration projects. Simple, straightforward management. Can vary intervention according to project needs, and according 49 ECOTEC Research and Consulting Limited Recommendation Commission delivery Identify and incorporate input / feedback from local/regional level to ensure project relevance
Delivery approach: Integrated / separated
Financial approach: Grant / subsidy /
Separate funding programme but also ensure that energy issues are incorporated into other programmes (especially e.g. Structural Funds, Economic and Development Cooperation, RTD, Enterprise and Innovation) and ensure that complementary efforts are coordinated and synergies maximised with these related programmes No clear choice further discussion required.
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) loan to market aspects, particularly changing energy prices. Subsidy / loan unique mechanism for funding for good projects that cannot find a loan. But may be low levels of uptake. Concept could compete with carbon trading or Joint Implementation etc so could lose its clarity. Management issues how to recoup loans, also IPR issues. NB 1) whichever option is chosen, it is essential that projects chosen are potentially successful ones i.e. to demonstrate that this is a difficult period for a technologys development, and there is an urgent need for good understanding of the technology and of barriers etc to its uptake. NB 2) in providing funds for near-market support, it is important that funds can be accessed relatively quickly and efficiently since the private sector is likely to be involved. Need to have short time from proposal to contract. Also IPR (if the project had a loan should / could this be paid back as a share of IPR value?). This intervention is essentially gap funding, following on from a previous demonstration project where a higher level of support may have been given. This action is to demonstrate confidence in the technology and its manager, as being close to a costeffective venture. Subsidies provided should therefore be the minimum needed to make the project financially viable. This lower level could therefore support a larger number of projects. But there are likely to be exceptions, where the project is excellent concept but it requires larger subsidy levels. Thus some discretion required. The main consideration is to focus on ensuring that appropriate projects are selected, to ensure that they are targeted to meet the needs of the programme. In the past, support to developing countries was often in the form of inappropriate heavy infrastructure investments. What is needed is transitional support for capacity building, which can form the basis for investment opportunities in the long term. There is therefore no basis for providing capital investments in new innovative technology projects at this stage to developing countries. In the longer term, the programme activities can provide support to mobilising other funding sources for capital investments.
Effective management of the chosen option essential to ensure fast and efficient access to funds (especially for private sector developers)
Level of support: Narrow / wide
Generally low funding levels are required, but some discretion needed to ensure that good project concepts are not excluded.
EU-25 (EU-27) only
Intervention iii) Remove non-technological barriers to sustainable energy

Justification Essential to be able to focus on Community priorities and drivers. Therefore need a clear work programme with relevant targets and programme priorities where people can submit appropriate project proposals. Delivery at EU level will help a more rapid take-up of technologies in new member states through best practice sharing etc. At Member State level delivery, it would be difficult to differentiate member states and EU priorities. But Member State delivery could avoid duplication, encourage additionality, especially in terms of activities such as conferences. Direct delivery impact could be less relevant to the EU as a whole. 50 ECOTEC Research and Consulting Limited Recommendation Commission-led work programme development. Consider a role for energy agencies to accelerate uptake of best practice.
Ex ante evaluation of a renewed multiannual Community programme in the field of energy (2007-2013) But is there a role here for energy agencies to provide some input / co-ordination? E.g. could develop a smaller number of beacon agencies to lead on delivery. Energy agencies are well placed to do dissemination activities, and this approach could be one way to identify which are the best of the many agencies. Delivery approach: Integrated / separated It would be very difficult to integrate energy-relevant dissemination projects into any other programmes. It is essential to ensure a clear focus for sustainable energy dissemination activities, ensure its direct relevance and link to sustainable energy policy and technology developments and a dedicated programme is the most appropriate approach. This approach would ensure that the range of activities supported are complementary, and any gaps in provision can be identified. Separate programme but also ensure that energy issues are incorporated into other programmes (especially e.g. Structural Funds, Economic and Development Cooperation, RTD, Enterprise and Innovation) and ensure that complementary efforts are coordinated and synergies maximised with these related programmes Grants
Financial approach: Grant / subsidy / loan Level of support: Narrow / wide
Activities proposed are not usually income generators, so a grant is probably the most appropriate intervention approach. Would need to have a reasonable input to justify intervention and ensure that EU priorities are incorporated into the activity. Ensure that projects selected are clearly focused on the objectives of the programme. Similar justification to intervention (i). Forecast increase in energy demand concentrates in developing countries and should be accommodated by renewable energy sources. Public awareness of the importance of energy efficiency and the potential social, economic, and environmental benefits of renewable energy is minimal, both in developing and neighbouring countries.
Community should in most cases be the major fundor of projects. EU-25 (EU-27) plus developing and neighbouring countries
4.3
Consideration of no-action
As part of the options analysis we have also considered the option of not continuing with EIE at all, i.e. EIE-II would not be implemented, nor would the funding identified be allocated through any other channels. The impact of this withdrawal from funding the types of activities supported through EIE can be considered at a number of levels: Even if EIE-II were not to go ahead, projects and other activities underway through the current EIE programme would still be supported throughout their project period. However, without EIE-II, there would be no support for any follow-on activity after these projects had finished. The withdrawal of funding for further activities under EIE would cause concern
amongst project teams, particularly because of the reduced profile of EIE and the reduction in the numbers of projects carrying out similar activities. If EIE-II were not implemented, the proposed activities for the new programme would not be carried out. However, our consultations have demonstrated that there is a clear need for these types of activities because they are unlikely to be implemented through other funding means. The impact of not implementing EIE-II could therefore be very widespread: No action would have the strongest negative impact on the new member states. The eastern European countries have a legacy of inefficient and polluted energy industries but they also have immense potential for exploiting their indigenous renewable energy resources and for improving energy intensity whilst raising their economic performance. However, they have limited institutional resources. The potential from the proposed EIEII programme for capacity building and policy support, for sharing best practice with other EU members, and to actively engage into the wider EU energy policy debate, would be lost if no action was taken. Policy support studies provide vital assistance at national, regional and local level to implement new directives in the most appropriate way for the local conditions. Many regions, including in new member states, still have little or no experience in preparing these types of policy support actions. They also do not have domestic programmes that can provide them with the same level of expertise and support. By collaborating with another member state that already has expertise, regions are able to develop energy related initiatives more quickly and more efficiently. These benefits would be lost if the funding were dropped. Dissemination (soft) products have been one of the greatest successes of earlier EFP and EIE programmes. EU-wide promotion projects, including conferences, seminars, study tours, workshops etc., have helped to share best practice between the leading EU member states and those member states that have less expertise. It is highly unlikely that individual member states would be able to develop similar initiatives with such success. Even though there are a number of bi- or multi-lateral agreements between member states that provide political justification for collaboration, it is the catalytic impact of funding from the EIE programme that provides the impetus for real action to take place. The new programme proposes to provide support for replication projects. We have received strong endorsement from consultees for this because it is now clearly recognised that the large-scale uptake of high quality technologies is struggling to get accepted without some form of additional pump priming support. Uncertainties over energy prices are still a major deterrent to investment in new technologies. Despite the likely increase in energy prices in the future, investors are still wary. Stakeholders acknowledge that if the funding were not provided, some of the proposed project concepts could take place, but this would be at a lower level and over a longer timescale. There could also be far less promotion of the results and any successful uptake would more likely remain within the host country. If the EIE-II programme were to be withdrawn, developers could find it difficult to obtain funding support for the final stages in the implementation of their technology. In particular the promotion of their results widely on the market could be difficult, as this is not covered by the research and demonstration projects supported through the Framework
research Programmes. This would significantly delay the accelerated uptake of a new technology or activity, hence impacting on the EUs competitive advantage as well as its prospects for achieving its 2010 targets for sustainable energy. The consultations endorsed the fact that there are very few sources of funding available for these types of projects, especially for those that would like to operate at EU/global level. Funding only from a national sponsor would not be able to provide the same level of promotion that EU support provides. Actions (analysis, studies, stakeholders consultations) supported under the EFP and EIE were essential for the preparation of existing and forthcoming legislation in the field of sustainable development. They constitute important tools to promote the adequate implementation of legislation and to monitor its impact. Absence of this kind of instrument would have major consequences to the European Commissions work in this area.
4.4
The favoured delivery option
Based on the criteria of Community value added, finances and delivery approach, the favoured delivery option for EIE-II is summarised in Box 5 below: Box 5: Summary of favoured delivery option Our analysis and the feedback from consultations suggests that the following approach may be the most appropriate delivery option for the proposed Intelligent Energy - Europe II programme: Community-led delivery - but with strong regional/local inputs to both the design of the programme and to the selection of individual projects. Separate delivery from other programmes (but ensure that energy issues are also incorporated within other mainstream programmes wherever possible, and to ensure coordinated effort with complementary programmes in order to maximise synergies). Main financial delivery through grants, but there may be some flexibility about whether support for replication projects is through grants, subsidies or loans. Also discretion about whether it is narrow or wide focus - depends on how close to market the technology is. Main priority is to ensure that projects selected are directly relevant to the objectives of the programme. Geographical coverage to include EU-25/27, neighbouring and developing countries for all non-technological activities. Replication projects to be within EU-25/27 only. Energy agencies have a clear role to play in the delivery of some of the actions. They can also provide a strategic role in the planning of the programme and its priorities. Maximise industry participation and increase private sector investment through providing funds for support for near-market technologies.
4.5
Risk assessment of the favoured delivery option
It is the opinion of the evaluators that the delivery option presented above is the best option to deliver EIE-II. However, there are a number of potential risks that this option might face. They include: Failure of member states to transpose relevant EU legislation, thus removing a key driver for change. Lack of integration with mainstream funding, in particular Structural Funds, and failure to exploit synergies. Lack of interest in the programme by applicants, leading to failure to disburse the funds allocated to the programme. Lack of institutional capacity in the new member states Unclear definition of replication projects and the consequent inability to select the right projects Fraud and mismanagement
The incidence and magnitude of these risks is limited, as explained below.
4.5.1
Failure to transpose EU directives
Recent Community legislation sets ambitious targets for achieving sustainable energy policies and give deadlines for transposition (see chapters 2 and 3 above). However, transposition of EU Directives can be inconsistent across member states. The issue is not only one of transposition however, but one of how well Directives are transposed into national legislation. This, together with enforcement, determines effectiveness in meeting the objectives of the original Directive. Transposition alone is therefore no guarantee of effectiveness. It is, however, unlikely that the degree and scope of delay or poor implementation would have a significant impact on the EIE-II programme in the proposed delivery option. The programme itself has a significant role to play in raising awareness of both the requirement to transpose legislation relating to energy and in promoting actions to implement it, and is not dependent on legislative drivers alone.
4.5.2
Lack of integration with mainstream funding
Chapter 6.0 concerning added value presents an assessment of how the proposed new programme should interact with other Community programmes. No strong evidence is found to suggest duplication or negative outcomes in terms of interactions with these programmes so this risk is excluded. There remains a moderate risk that potential synergies between programmes may not be fully realised. This is particularly the case with mainstream delivery programmes such as Structural Funds. The risk here arises mainly from the prioritisation of other themes above new energy technologies and services. This may be a particular risk in the new member states, where a range of other priorities demands attention. A number of aspects of the programme need to be seen in the light of these concerns, including:
Integration into the application/evaluation process of a requirement for evidence of strong connections with appropriate complementary measures. Heightened awareness amongst programme managers and evaluators of the need for integration with other funding programmes, particularly in new member states. Strong inter-DG and inter-programme co-operation and co-ordination. Establishment of a mechanism for feeding information about circumstances in individual member states into the evaluation, management and monitoring processes. Emphasis on integration of activities with other programmes during information events etc.
4.5.3
Lack of interest in the programme
Risks associated with a lack of projects coming forward for funding via the new programme, resulting in failure to disburse the total funding set aside, are unlikely in our view, given the opinions expressed by stakeholders. There is a continuing need and demand for support in this field. As far as future demand from new member states is concerned, an indication of the likely response is given by the results of the Call for Proposals launched in December 2003 which closed on 30 April 2004. The following information and Table 7 is recently available about the results of the call: 256 proposals received, of which 241 eligible for evaluation that request approx. 132 million funding from EU some 43 million available, more than 3 times more funds requested than available good response to COOPENER (29 proposals, more than expected with the observed reluctance of MS to co-fund COOPENER projects) over 70 proposals for buildings of which many in relation to promotion of buildings directive the 241 proposals involve about 1,800 proposers; on average more than 7 per proposal, and 59% of these are organisations of less than, or equal to, 100 employees.
Table 7: Distribution of proposals by field (classified by the first Key Action KA mentioned): Field Number of proposals received Requeste d funding of received proposals 55 46 3 13 11 4 132 Number of proposals recomme nded for funding 32 30 3 15 8 3 91 Recomme nded funding (including reserve list) 17 17 2 7 4 3 50 % of received proposals/ recomme nded proposals 34% 37% 33.3% 51.7% 38.1% 42.9% 37.8%
SAVE (2 KA open) ALTENER (2 KA open) STEER (only 1 KA open) COOPENER Horizontal KA Creation of Agencies Total eligible proposals
94 81 9 29 21 7 241
The 91 proposals recommended for funding (including reserve list ones) involve about 750 proposers; on average more than 8 proposers per proposal, and 57% of these participants are organisations of less than, or equal to, 100 employees. In terms of geographical participation, we observe that all but 1 member states30 (Luxemburg) participate in the proposals recommended for funding. Organisations from all the three candidate countries that decided to participate in the 2003 programme call are partners in the proposals recommended for funding.
This point is also linked to the one made above about integration so again there is a need to ensure that information about opportunities under EIE-II are disseminated widely and effectively. There is a particular issue concerning institutional capacity in new member states, which is discussed in more detail below. For the programme to be successful, beneficiaries must be widened to include industry and regional as well as local beneficiaries. The programme aims to achieve a step change in takeup of energy efficient and renewable energy products and services. For this to be successful, there needs to be a strengthening of demand-side pull, which requires the active engagement of industry and tertiary sectors, particularly SMEs, as well as including the financial sector. The stakeholder consultation can help to suggest ways in which the programme can engage with industry most effectively. Moreover, the unique benefits of the EIE programme lie in its ability to engage successfully with actors at regional and local level. Much of this is due to the smaller size and tight focus of the projects supported - as evidenced in evaluation reports on the success of previous Altener programmes. We would wish this to
30
This call refers to the 2003 programme budget, i.e. in 2003 the programme was open to the participation of EU-15, EFTA/AELE and only 3 candidate countries (Bulgaria, Lithuania, Slovenia) 56 ECOTEC Research and Consulting Limited
continue into the new programme, so the size and definition of projects should be clearly defined to maximise the likely take-up and participation by regional and local beneficiaries. There is, however, a risk that the audience for EIE-II programme will not be widened so that the programme would continue with the same organisations rather than broadening its appeal.
4.5.4
Institutional capacity / receptiveness
We must consider the risk that the capacity of new member states, candidate countries, EFTA/EEA countries and international partners to participate in the programme will not be adequate. The ten new countries that joined the EU in May 2004 will be active participants in EIE-II. The same will most likely occur with Romania and Bulgaria, expected to become members of the Union in 2007. The programme has the opportunity to be especially beneficial for information sharing and best practice between new members of the Union and the EU-15 countries, as well as to help them implement the relevant EU directives. However, it is recognised that the new member states demonstrate a number of significant problems that may limit their ability to deliver the programme efficiently and successfully. The countries have serious energy-related problems (such as the environmental impacts of using oil shale), but there are still only very low levels of awareness of the environmental impacts of energy. They also have only low capacity to deliver projects, and have limited institutional experience of delivering such projects. To maximise the potential benefits from EIE-II, we expect that the programme needs to link directly with ongoing and proposed mechanisms for providing mainstream funding in these countries. The main funding source is likely to be the Structural and Cohesion Funds, for which energy and environment are already planned as components in the new programmes.
4.5.5
Replication projects
The definition of a replication project is given as follows: The first market replication of just-proven technologies of European relevance, designed to promote, with a view to their broader utilisation within the European Union Member States, either under different economic or geographical conditions or with technical modifications, innovatory techniques processes or products which have already been technically demonstrated with success but, owing to residual risk, have not yet penetrated the market, so that the Union shares the risk that is involved in the economic exploitation of the results of research, technological development and demonstration activities. It is important that potential applicants should have a clear understanding of the concept and scope of these types of projects. The detailed work programme should include preparatory work to identify priority areas for selecting replication projects. The definition and selection of replication projects should be very clearly defined so that applicants know whether their project concept may be eligible and for the project selection process to select the best proposals. Replication projects will be a major route to market for new technologies which are close to being cost-competitive as a commercial investment. Changing energy prices will play a key
role in determining how much support may be needed to projects to make them economically viable. Energy prices are likely to continue to increase in the short to medium term, which will have a significant impact on the amount of support that individual technologies may need. Those that are already very close to competitiveness should need less support, while it may also open up opportunities for a greater range of technologies to be able to benefit from funding support and access the competitive market.
4.5.6
Mismanagement, fraud
There is also a danger that mismanagement and fraud will impair the functioning of the proposed EIE-II programme. The misallocation of resources by national, regional and local governments or projects managers will reduce the overall impact of the proposed measures and endanger the achievement of the set objectives. This risk can be minimised, however, with the help of careful project monitoring involving the writing of interim and final reports as well as the submission of project accounts. The issue of monitoring is discussed further in section 7 of this report.
5.0 WHAT LESSONS CAN BE LEARNED FROM THE PAST?
5.1
Introduction
This chapter sums up the lessons that can be learned from previous programmes and gives recommendations where improvements to the current programme proposal can be made. The ex ante evaluation has drawn on a number of previous evaluations and other studies that can provide lessons that can be learned and assist in developing recommendations where improvements to the current programme proposal can be made. The main evaluations of Community programmes accessed were the mid-term evaluation of the Energy Framework Programme 1998-2002 (including SAVE, ALTENER, SYNERGY, CARNOT, SURE and ETAP initiatives), and some initial findings of the ongoing ex post evaluation of the ALTENER programme (1998-2002), that were reported to us by DG TREN responsible services. An ex-post evaluation of the energy management agencies supported under the SAVE programme is about to be launched. No other ex post evaluations of EFP activities are yet available. No evaluation is available about the progress of the current Intelligent Energy Europe programme (2003-2006), because it has only just commenced. The ex ante evaluation of the EIE-II programme is therefore limited to information provided from the earlier evaluations, and publicly available documents, combined with inputs received from consultations.
5.2
Descriptions and evaluation of current and previous programmes and initiatives
5.2.1
Energy Framework Programme (EFP) (1998-2002)
The Energy Framework Programme (EFP) was established to give unity to and to co-ordinate six specific programmes that had already existed for some time: SAVE, ALTENER, SYNERGY, CARNOT and ETAP. The Energy Intelligence Europe programme is its successor. The rational behind combining these six different programmes was to create economies of scale and increase co-ordination. However, no additional funding was supplied to bring the programmes together and create synergies between them. The specific programmes differed in size and management. The mid-term evaluators concluded that there was a real need for an energy programme to be established to follow on from the EFP when it finished. However, this should be run in a more unified way, and should focus on the key success factors of SAVE, ALTENER and SYNERGY. It should be a single programme with a number of work areas, rather than a framework programme composed of separate specific programmes. This would reinforce the potential synergies and collaborations between the work areas. The mid-term evaluation found that the programme has met the majority of its objectives. Some target areas might have needed to be focussed and adjusted if the programme was to
continue. It contributed to the key energy issues for the European Union, including security of supply, climate change, and sustainability. In April 2001, the Council decided to re-structure the SYNERGY programme, concentrating the scope of the programme to focus on a smaller number of priority subjects and geographical areas to make better use of the programmes small budget. This was found to be effective. This success is being continued through COOPENER in the current and proposed programme. In 2001 a new structure was introduced for ALTENER and SAVE programmes, which led to much confusion for people, both internal and external. This reduced the effectiveness of the overall programme. However, there have been considerable improvements in Calls for proposals and time taken to deal with them. This experience shows that care must be taken when the programme is restructured or re-organised. Any changes must be smooth, limit confusion, and ensure the transfer of knowledge between staff. The programmes collaborated well with other Community programmes, and this should be enhanced in the current programme. The projects covered a variety of project types, which should also continue. Proposers are asked to ensure all links with other programmes and policies at all levels are mentioned in the proposal. This can be used to make sure that projects with good linkages and that build on best practice are given funding.
5.2.2
Intelligent Energy Europe (EIE) (2003-2006)
The EIE programme is designed as the main Community instrument for non-technological support in the field of energy. The programme will contribute to the security of energy supply, competitiveness and the EUs strategy for sustainable development. The programme is implemented by means of targeted initiatives, known as Key Actions, relating to one or more specific fields of action. The programme combines all activities in the energy sectors contributing to the accomplishment of the main aims of Community energy and transport strategies in terms of energy aspects and the Sustainable Development Strategy. The current EIE programme follows on successfully from the Energy Framework Programme. EIE provides continuity for the actions under the ALTENER, SAVE and, to a certain extent, SYNERGY programmes and combines all activities in the energy sectors contributing to the accomplishment of the main aims of Community energy and transport strategies in terms of energy aspects and also the sustainable development strategy. The proposed follow-on programme can build on all the successes of the previous programmes, and take their recommendations into account. The ongoing Final Market Impact Assessment of ALTENER recommends that more focus on specific products and target sectors should be given through the Calls for proposals. The current EIE programme has been split into vertical and horizontal key actions, related to the four key areas (SAVE, ALTENER, STEER, and COOPENER). Not every Key Action will be open for submission of proposals in each Call for proposals, but every Key Action will be
subject to a Call for proposal at least once. The concrete annual priorities are fixed each year and adopted in an annual work programme.
5.2.3
Energy Agencies
The ManageEnergy network is now the main focus of energy agency activity across the EU. Its remit is to promote co-operation between local and regional energy actors in Europe through workshops, study tours and online events on energy efficiency, renewable energy and sustainable transport. The website features details of around 380 energy agencies. These include Local Energy Agencies, National Energy Agencies (between one and four per country), Regional Energy Agencies, SAVE Agencies and Transnational Energy Agencies. Most agencies are still to be found in the old EU-15 countries, but increasingly in the new member states as well. The agencies are unique to their area and need to contain at least two or more regional or local governments from different countries grouped together in a consortium. Besides public organisations, private companies, utilities, universities and other interested parties can be stakeholders in the agency. Their main tasks are to support the introduction of good energy management practices; support the concept of sustainability; provide information and guidance; and offer a number of other services based on specific local needs. The SAVE II initiative in particular incorporated community action on regional and urban energy management. The aim was to stimulate a 'bottom up' approach to energy management by encouraging local and regional action for energy efficiency, the use of local energy resources and the creation of optimum energy-supply conditions at the local level. To achieve this aim, SAVE II part-funded the collaborative creation of autonomous Energy Management Agencies at the local and regional level, establishing networks to disseminate to local and regional authorities throughout with the help of FEDARENE (Network for Regions), ENERGIE-CITE (Network for Cities) and ISLENET (Network for Islands). Under the EIE programme, the Think Globally, Act Locally action focuses on community awareness, including support for local energy agencies. It does this by providing support to existing local and regional agencies by activities such as training, exchange of experiences and good practice, development of joint actions, benchmarking, operation of thematic networks of agencies, etc. The focus is to increase the number of Energy Agencies in the new member states and candidate countries that have signed a Memorandum of Understanding with the EU. This is reflected by making it the priority for the 2003 EIE Call and also is mentioned by consultation documents coming from the Reflection Group of regional and local market actors that was set up under the framework of the ManagEnergy network. The rationale is that there is a lack of institutional capacity for effective energy policy making in these countries that can be addressed by establishing energy agencies that are able to support policy developments.
Priorities for energy agency activities include: Raising awareness of the needs of energy efficiency and renewable energies Promotion of legislation Day-to-day co-operation with stakeholders Dissemination and communication Technology transfer and promotion of local businesses Mobilisation of investments Provision of advice and consultancy services Participation in public programmes Networking with other agencies and institutions Giving and receiving training and education This list gives a very useful profile of the types of energy agencies that DG TREN is seeking to support. It is important to note that Dissemination and communication, where the emphasis lay when the first agencies were established is now only one of a range of activities, which point to a much more dynamic and participatory role, co-ordinating, co-ordinating, facilitating and initiating activities and projects. Self-sufficiency based on public-private partnership is to be favoured, with income derived from fee-paying work. In places, a healthy degree of competition between the agencies and with other organisations raises quality. An example is Germany, where the Berlin Energy Agency is a significant player in its own right and operates as a limited company, with public and private shareholders. It is clear that energy agencies have a continuing role to play in the wider field of the deployment of renewable energy capacity and energy efficiency and in the EIE-II programme specifically. The best of these agencies in the EU-15 have moved to a more mature modus operandi, based on a mixture of private and public (regional/national) funding, without the need for direct Community funding. At the other end of the scale, others may have failed to move away from a less sophisticated dissemination model. Certainly in new member states the need for energy agencies is clear to help develop policies, raise awareness, encourage applications to IE II and establish projects. These new agencies will follow the same evolution as those in the EU-15, so that initial Community funding is no longer required after two or three years, as the added value of an agencys activities is demonstrated and other public/private sources of funding is secured regionally or locally. They will have a particularly important role to play in the new member states given the need to raise awareness of EIE-II and other programmes, assist policy development by public administrations, ensure integration with Structural Funds and generally push renewables and energy efficiency up the list of priorities. It will be particularly important to mobilise on the expertise and experience of existing, high quality energy agencies in the EU15 to assist the new agencies. The ManageEnergy network appears to be the most appropriate way to do this, as it is generally well regarded and a central pillar of Commission activity in the field.
5.2.4
The THERMIE programmes
These programmes were used between 1990 and 1998 to bring energy-related technologies nearer to market. The focus was on the demonstration of new technologies to assist their market penetration. Given the proposed introduction of a new, replication element to the EIEII programme, this section reviews the experience of THERMIE, to see if there are any lessons to be learned from it, in particular as it operated in the near-market space. The THERMIE programme ran from 1990-1994 as an independent programme and again from 1995-1998 as part of the joint THERMIE-JOULE programme. THERMIEs aims were to: ensure lasting and reliable energy services at affordable costs and conditions; reduce energy consumption; reduce the environmental impact of the production and use of energy, in particular CO2 emissions; and, strengthen the technological basis of the energy industry. Two different types of actions were supported: Action A (attracting funding up to 40%) - Support for demonstration projects implementing innovative energy innovative energy technologies in the three following sectors: Rational Use of Energy (RUE), Renewable Energy Sources (RES) and Fossil Fuels (FF) Action B (attracting funding up to 100%) - Support for other activities (pre-feasibility or market studies, workshops, conferences, training, etc.) A cost-benefit analysis of the programme included in the THERMIE Annual Report 1998 suggested that many THERMIE projects had, at that time, excellent prospects of being turned into commercial successes. It anticipated an increase of 2,065 million ECU in EU Gross Domestic Product (GDP) as a result of the programme, with investment by EU enterprises in these technologies reaching a total of over 6 million ECU. Subsequently, under the Fifth and Sixth Framework programmes for RTD (FP5 and FP6), R&D and demonstration projects are funded under a single priority, although similar distinctions are made, this time using the terms short, medium and longer term research (see also Chapter 6). Part of the challenge in attempting to draw lessons from THERMIE is that, for the period it operated as a separate programme, cost benefit analysis suggests a significant impact in terms of investment. However, after it was joined with and later became subsumed into wider programmes, it obviously became more difficult to identify the specific impacts of the demonstration/near market component. Of particular interest are the THERMIE targeted projects, summarised in Box 6 below. These projects have several characteristics that can be viewed as close to the nature of replication. Many were large-scale demonstration project in which common procurement and bulk purchasing led to economies of scale therefore making market access of new technologies easier. They were able to demonstrate on a wider scale the benefits from investing in new technologies. The proposed EIE-II programme anticipates supporting
replication projects, to encourage the expansion of investment in new and best performing technologies, along the lines of projects supported through the THERMIE programme. The THERMIE projects successfully demonstrated a number of new technologies in locations throughout Europe. However, our evaluation has identified that there is a clear and continued need for support to bridge the gap between successful demonstration and full-scale market uptake of new and best performing technologies. For this reason, the proposed replication projects present an excellent opportunity to build on the success of THERMIE, particularly its support for demonstration projects. Box 6: THERMIE support for replication: Targeted projects
In 1996-97 THERMIE supported a number of targeted projects in the transport and buildings sectors. These were large-scale, collaborative, multi-city projects, designed to bring together several projects for demonstration on a city-wide scale. There are some clear similarities between these projects and the proposed new replication instrument in EIE II. The key characteristic of these projects was their scale for example in one transport project, some 1,200 low or zero-emission electric vehicles were used31. Projects such as CENTAUR, ZEUS, SAGITTAIRE and JUPITER featured consortia of major cities performing large-scale demonstration of sustainable urban transport systems, including the introduction of innovative vehicles powered by alternative fuels. Each project combined state-of-the-art technologies with transport initiatives that were innovative in the national, regional and/or local context. The scale of the projects did achieve high visibility with members of the public. Common procurement strategies and bulk-purchasing of alternatively-fuelled vehicles provided economies of scale. There was also a strong focus on learning lessons from deployment in terms of overcoming barriers to implementation.
The positive benefits from Community level funding are further endorsed by the results of an impact assessment carried out in 2003 of the actions completed under FP3 and FP432. Nearly all respondents to the study survey (91%) believed that they had achieved their research objectives. The evidence indicated that Framework funding provided European added value through its role in leveraging new research activities, supporting new research networks and acting as catalyst for the development of new ones. Almost half (49%) of respondents indicated that they would support their research with their own resources after the end of their project. Dissemination and knowledge transfer, including training, was rated as positive or very positive by 72% of respondents. Users of the research results were primarily the higher education communities, but 49% of respondents indicated that the manufacturing sector could be a beneficiary.
5.2.5
The CIVITAS and CONCERTO initiatives
Launched in 2000 under the ENERGIE component of the EU Fifth Framework Programme of Research and Technological Development (FP5), CIVITAS is the successor programme to the THERMIE activities, and projects include the introduction of alternatively-fuelled vehicle fleets combined with integrated strategies for sustainable urban transport. Today it is supported under the Sixth Framework Programme of Research and Technological Development (FP6).
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ZEUS Project (THERMIE Activity Report 1998, DG XVII) europa.eu.int/comm/energy/en/thermie/zeus.htm Assessment of the impact of the actions completed under the 3rd and 4th Community Framework Programmes for Research; survey for the Five-year assessment of Community research activities (1999-2003). Decisia HLP Developpement - Euroquality. DG Research. 64 ECOTEC Research and Consulting Limited
The results of CIVITAS indicate that several barriers to large-scale adoption remain. For example at a meeting of the Policy Advisory Committee of the CIVITAS Initiative in March 200433 it was highlighted that the market is still too protected and fragmented and critical mass had still not been achieved. Among remaining non-technical barriers cited were common definitions of clean vehicles, and lack of a legislative support for municipalities. Joint procurement is seen as an important factor in stimulating industry to produce the appropriate vehicles. This experience suggests that traditional demonstration activities still do not necessarily catalyse full market penetration and that the types of non-technical barriers that appear to persist could be tackled by the replication element of the EIE-II programme. Another initiative falling under FP6 is CONCERTO. It provides support to local communities developing initiatives that are sustainable and increase efficient use of energy. It is sub-titled large-scale integration of renewable energy with demand management. Communities must be working towards a completely integrated energy policy, including a substantial use of renewable energy sources with innovative technologies and equipment to minimise energy consumption and improve quality of life. Funding is typically up to 35% of eligible costs. The initiative supports integrated demonstration and dissemination, including 20% for the shortterm (demonstration) element. Projects supported will therefore represent real-scale application of new renewable and energy efficient technologies. Again, the proposed replication component of EIE-II would appear to fit well with CONCERTO, ensuring that progress made can be carried through to replication through removal of any non-technical barriers that remain after the projects have been completed.
5.3
US and Japanese experiences
Experiences from other countries in developing large scale support programmes for nontechnological development of sustainable energy were also investigated, notably from the US and Japan. The USs Energy Efficiency and Renewable Energy initiative (EERE) looks at developing efficient technologies for buildings, homes, transportation, power systems and industry. The EERE programme builds partnerships with the private sector, emerging industries and universities, to develop and manage cost-shared projects that transfer technologies to the marketplace. The US EERE programme is much more focussed on R&D than the EIE programme, though there are some demonstration and publicity activities carried out within the overall programme. This makes direct comparison with EIE impossible as many of the activities carried out by the EERE programme are similar to those carried out by member states and/or the EU FP6. The percentage of project costs that are met by public funds varies according to the stage of development, with industry share expected to increase nearer to the market: Basic research - up to 30% Applied research - 25-50% Technology development - 50-75% Demonstration - 60-100%
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Overall EERE estimates that its financial assistance leverages approximately a 40% nonfederal cost share. A Strategic Review of the US program in 2002 quoted a 2001 review of the benefits of the EERE energy efficiency R&D program. This study examined about $1.6 billion of the $7.2 billion spent between 1978 and 2000 and found a net realised economic benefit on this $1.6 billion of $30 billion, indicating a return of approximately 20 to 1. Programme management and administration costs are between 7.4 to 8.5%, which is in line with the proposed levels for EIE-II (see section 8.1). In Japan there is a strong commitment to develop and promote the usage of renewable energies. The government policy is to encourage central government to take the lead in the implementation of these new technologies. International co-operation is regarded as a priority. Through co-operation with developing countries, Japan engages in demonstration trials and research for the introduction and spread of new energy and energy conservation technologies as well as research and model projects for the diffusion of environment-friendly technologies. There are clearly similar objectives between the US and Japanese programmes and those of the EIE by the Community. It is important that linkages are identified and developed wherever possible, to maximise synergies and ensure that the EIE programme can learn from the other programmes. Co-operation initiatives such as the International Energy Agencys implementation agreements provide a mechanism for exchange of experience between these international programmes in a cost-effective way and should be supported wherever practicable.
5.4
International energy programmes
For international activities, the EIE-II programme should also identify opportunities for cooperation and co-ordination with other international energy programmes. Some of these are briefly reviewed below. The Asian Development Banks energy policy reflects the fact that vigorous economic growth in the developing member countries in the Asian and Pacific region has resulted in a huge and rapidly growing demand for energy from industry and commerce. The overall strategic thrust is to encourage development of appropriate market structures and encourage greater competition in the energy sector. ADB recognises renewable energy technologies as an important source of energy, particularly for some isolated rural and island communities. In 2002, the ADB established the Renewable Energy, Energy Efficiency, and Climate Change Programme (REACH) to assists in combating and adapting to the impacts of climate change and enabling the poor to access clean energy. The activities of the European Bank for Reconstruction and Development (EBRD) are concentrated in countries in central and Eastern Europe and the Former Soviet Union. EBRDs energy policy emphasises the importance of promoting the efficient use of energy produced and imported in the countries of operation. Since the production, transport and utilisation of energy in the former Eastern Block historically created high
levels of pollution, investment in modern high-efficiency and clean technology is a major issue for EBRD. A dedicated team develops energy efficiency investment mechanisms and credit lines and to identify and implement industrial energy efficiency opportunities. Furthermore it develops opportunities to monetise carbon credits from emission-reduction projects and promotes and develops renewable energy projects. The European Investment Banks energy sector strategy provides for financing R&D projects on innovative technologies for renewable energies; upstream financing of industrial equipment required for renewable energy projects; increasing renewable energy financing in the 10 new EU countries; and co-ordination with the EC to enhance synergy between EC budgetary resources and EIB loans. Energy is a priority area for the Inter-American Development Bank. Activities in the energy sector aim to efficiently meet the energy requirements of its member countries, to accelerate growth and diversification of the energy supply, and to foster energy conservation. The core programmes of the United Nations Development Programme focus on the regions where 90% of the worlds poor are living. This includes regions of Africa, Latin America and the Caribbean, Asia and the Pacific. The UNDP focuses on four priority areas: strengthening national policy frameworks; promoting rural energy services; promoting clean energy technology; and increasing access to financing for energy. The United Nations Environment Programme (UNEP) is the environmental voice of the UN. It has a dedicated Energy Section, which co-ordinates activities and acts as a point of contact. Programmes are co-ordinated in those countries that are identified as less developed, with low incomes. These regions include Africa, Asia and the Pacific, Latin America and the Caribbean and North Africa and the Middle East. Projects also exist in Central Europe and Russia. The World Bank Group is the worlds largest source of development assistance. It provides funding for a number of programmes focusing on energy and alternative energy. The Bank has a set of broad energy development goals linked to the reduction of poverty through the promotion of energy efficiency and renewable energy.
With the exception of the EBRD, which concentrates its activities in central and eastern Europe and the Former Soviet Union, all multilateral organisations reviewed address themselves to the problems of developing countries in Asia, Latin America and Africa relating to energy. Common features of their energy related programmes are the promotion of renewable energy and energy efficiency through loans and/or grants, thereby focussing on improving the livelihoods of the poor and protecting the global environment. In short, these programmes aim at the same goals as the COOPENER programme of the EU. All programmes have much in common in as far as the energy situation in developing countries is concerned. Co-ordination of activities with these programmes both avoids duplication and might lead to synergetic effects of co-operation. This should be considered in the work programme preparation.
5.5
Critical factors affecting the implementation of a programme
A number of critical factors for effective implementation of the Energy Framework Programme were identified in its evaluation. It made a number of recommendations for the continuous successful development of the programme that are considered critical for EIE-II.
It revealed that there was a long time between close of a Call for proposals and signing the first contracts. As yet we do not know if this has improved for the current Call for proposals as it has only just closed. However, it is hoped that with the setting up of the Executive Agency, and the adoption of more efficient practices that this lead-time would reduce. The mid-term evaluation placed great emphasis on the importance of the dissemination of results. Strategies for targeted dissemination of project outputs should be developed and implemented for all the specific programmes. This is tackled in the current Call for proposals for the EIE programme, as it requires one of the work packages proposed to be on tailored dissemination activities. The dissemination should be active for the whole duration of the project, and a project website must be set up and be maintained for at least two years after the end of the project. An impact assessment should also be carried out on all projects at the end and during the project lifetime. This is being tackled in the current Call for proposals as proposers are asked to state the expected impacts of the project and its direct outcomes. Proposers are asked to provide a set of criteria and performance indicators against which the success of the project will be judged. Monitoring is also an essential element of the programme. Because the current Call for proposals has only just closed, it is difficult to establish what monitoring will take place. It recommended that more links should be made with other programmes and existing policies. This is being tackled in the current Call for proposals as proposers are asked to explain how the objectives of the proposed action support current Community policy initiatives (incl. legislation) and how they are linked to related national activities that are already underway, or are planned. This will help avoid duplication and will mean that the best possible actions are given priority. The mid-term evaluation recommended that a Guide for the Self-Evaluation of Proposals should be made available to proposers. In the EIE proposers are encouraged to visit the EIE Call for Proposals website and consult all documents on the website related to the EIE programme and current EU policy on renewables and energy efficiency. A variety of instructions are given to proposers on the website, and in a number of documents. However, the volume of information provided may be too over-powering, and may confuse some proposers and emphasis should be put on a clear representation.
6.0 THE ADDED VALUE OF COMMUNITY INVOLVEMENT
6.1
Introduction
This section examines the added value implications of the chosen delivery mechanism. The Commissions guide to ex-ante evaluation defines European Added Value (EAV) as the value resulting from an EU intervention that is additional to the value that would have resulted from intervention at national or regional level by public authorities and/or the private sector. In analysing the added value of EIE-II the proposed new programme needs to demonstrate that there is a rationale for taking action at the EU level and that the instruments used add value to what is already being done somewhere else, in particular at national and regional level. The focus is therefore not on the achievement of programme objectives (this is discussed elsewhere in this report), but on the particular role that the intervention by the EU plays. A basic condition for creating added value is that the intervention is complementary to and coherent with other interventions, so that it can generate synergy effects. Within a particular EU action, a series of different types of added value can be considered, including financial, economic, social and environmental, institutional, or cross-border/transnational co-operation and networking. Analysis of added value need not be applied to Community Policies, since, by definition, these are appropriate to the EU level. So, for example, taking the major policy of relevance to EIE-II, it is clear that the Kyoto targets represent appropriate action at EU level. In the case of the specific instruments used to put such polices into practice however, it is vital to analyse these in terms of their added value. 6.2 The added value of the EU energy-related actions
It is clear from the policy review in Section 2.0 that the take-up of eco-efficient technologies is a key priority for the European Union. This section examines the rationale for intervention to address these barriers at Community level, rather than at national, regional and local levels. In the fields of renewable energy and energy efficiency, the need to ensure the Kyoto Protocol targets are met for reductions in greenhouse gas emissions means that new energy technologies must be developed and applied. Clearly therefore, there is no need to analyse the added value in taking action on Kyoto at EU level, since this is defined as a Community Policy. However, the responses required to meet the targets must take place on the ground at national, regional and local level. Having agreed and set the targets for increased use of renewables and energy efficiency measures at European level, the EU must provide support
to national, regional and local actors to meet them. There the instruments deployed must be subjected to a test of European Added Value. This analysis needs to include: an investigation of measures in place in the energy field in member states, regions and within the Commission; and, a comparison between these activities and the proposed EIE-II programme, to establish the extent to which the proposed intervention is complementary to and coherent with existing ones and the nature of any synergies generated. The strengths of carrying out activities at EU level focus on the ability to provide joint and co-ordinated action between all the member states and the Community. This provides increased efficiency, especially to focus on co-ordinating towards medium and longer term objectives, including international agreements, that may not be of such high relevance to all individual member states. By acting at the EU level, there is also a follow-on benefit provided to activities at member state, regional and local level. The proposed EIE-II programme will comprise three types of activities. Two are continued in line with actions under the existing programme (support for policy development and implementation, and support to actions at local and regional level to promote informed decision-making in energy choices) and a new strand concerning support to first-market replication of just-proven technologies of European-level interest. Insofar as the first two types of activity can be viewed as a continuation of existing activities, we can take account of the rationale for added value for these, as expressed via the current programme and by reference to the results of the stakeholder consultations completed as part of this ex-ante evaluation. In particular, the following activities can be considered as added value to energy-related actions to complement actions at member state level: Implementation of new EU legislation, through collaborative action and exchange of experience between member states - provides a means by which key policy personnel can take implement new legislation, as well as provide feedback into the definition and development of Community policy. Ensure close co-operation between key actors in the development of standards, labelling and certification systems, to establish and implement co-ordinated actions within the energy market. Participation in promotion campaigns and the exchange of experience can best proceed through close co-operation, networking and knowledge transfer between all of the key actors throughout the EU. Economies of scale are also much more achievable through carrying out joint and coordinated activities, sharing expertise and infrastructure as appropriate. Large scale penetration of developing technologies can benefit substantially through enhanced technology transfer, leveraging funds and capabilities at a scale beyond that generally achievable in a single country. Non-EU countries can also access Community expertise more readily through transnational initiatives rather than via individual EU countries.
The Call for Proposals document for the current EIE programme (2003-2006)34 includes the following passage concerning added value: grants are intended as incentives for carrying out of an operation which could not be executed without Community financial supportThe Commission therefore plans to grant only funds complementary and subsidiary to contributions made by the beneficiary, the national, regional or local authorities and other bodies. In the same document, it is stipulated that to ensure community added value, projects should contain benefits from carrying out the project at EU level; have a EU dimension of the issues (including market barriers) to be tackled, and of the actions to be carried out have an appropriate geographical coverage of the project team ensure transferability of the solutions developed to other parts of the EU.

These four aspects provide a benchmark against which to assess the justification for the proposed follow-on programme in terms of added value. In essence, these four factors are unlikely to exist separately and are in fact largely inter-dependent. For example, the benefits will include transferable solutions to tackling an EU-wide barrier and will of necessity have to include a team from countries with the expertise required, as defined by the issue. Chapter 4 earlier identified a number of benefits to member states of a Community-led intervention. Consultations have emphasised how the EIE programme provides a complementary route to funding for sustainable energy initiatives in individual member states. Most member states have their own funding programmes, while the involvement of the European level EIE programme helps to ensure high visibility, to provide access to transnational co-operation projects and external expertise, technology and infrastructure, and to emphasise the importance of this funding stream. For new member states in particular, a dedicated source of funds for sustainable energy is very valuable, as there is strong competition for funding priorities at the level of national budgets. Member states can influence the direction of the EIE work programme through the programme planning process, development of priority areas and in the selection of projects at the application stage. This therefore provides them with a conduit for influencing the extent to which the programmes activities are appropriate to their needs. Many of the arguments presented in favour of the added value of Community involvement are relevant for international co-operation as well. For example, a Community programme guarantees that international best practices and international experience is shared, based on existing databases of available technology and EU-wide networks. Benefits at member state level tend to be more focused towards domestic interests, while budgetary competition means that although energy departments are keen to implement similar programmes, they may be constrained. Participating at Community level also enables smaller member states to benefit fully.
34
Call for Proposals TREN/DIR D/SUB/04-2003 71 ECOTEC Research and Consulting Limited
Internationally, the EC has a greater political weight and stronger political mandate to influence local policy makers. The visibility of the EU is larger than that of individual member states. This means that the projects should be implemented under Community heading, not under the heading of DG TREN or DG Development. The EC programming machine is efficient and well structured. The EC promotes an integrated and multi-sector approach and counterparts in these countries benefit from this integrated approach. The Community as an entity has a leadership role, both technically and politically, in renewable energy and coherence of development co-operation. The proposed new funding intervention for replication projects will take up a major part of the budget allocated to EIE-II. In summary, the need for such action is evidenced by the gap that persists between the successful demonstration of innovative technologies and their effective entrance into the market. Using this mechanism support would be provided to firstmarket replication of just-proven technologies that are of a European level of interest. This support would take the form of a contribution to risk-investment in the validation of the RTD results. Specifically, this new form of support is designed to be of a catalyst nature, and would be used to promote key strategic technologies, leverage public/private investment, bring down costs, increase market experience and contribute to finance risks and other perceived barriers to investment. Operating as it will between technology demonstration and commercialisation, it is clearly important to carry out assessment of the interaction between this new action and the EUs Research and Technological Development (RTD) actions, in particular the Framework programmes. To a significant extent the conclusions of this assessment will depend on the definition of terms used, including for example demonstration, commercially viable, replication, just-proven technology and of European level interest. In particular, we need to examine where the boundaries between the competencies of Framework Programme (FP) RTD and EIE-II lie. It is all the more important to examine this aspect given the emphasis placed by the Commission on realising the benefits of technologies supported previously by EU and Member State funding that what has been spent so far on research and demonstration of technologies will have an impact on the market. The rationale here would appear to be that technologies that have received support via FPs are in theory commercially viable but are not successfully commercialised because of some non-technical issue. A key aspect here will therefore be which projects to support and how to make judgements on which ones are most likely to benefit from funding.
6.3
EU RTD programmes
In terms of research, the rationale for intervention at EU level is based on the need to counteract the fragmentation of European research efforts and to increase the proportion of GDP devoted to R&D in Europe. Chapter 4.0 established the validity of choosing to retain EIE-II outside FP RTD, based on the argument that the non-technological, demand side of the alternative energy field is significantly different and differentiated from FP objectives and
activities to warrant a discrete focus. The emphasis in EIE-II must be on commercial or nearcommercial technologies rather than on research. Within the Fifth Framework Programme (1998-2002), the energy sub-theme aimed to develop sustainable energy systems and service for Europe. Projects that applied for funding under the Energy theme could receive funding for either technologies and solutions to problems that have effect on the medium to long-term (>5 years) and short to medium-term (<5 years). Short term projects had to deliver results that could be exploited commercially or otherwise in less than five years and be close to energy policy objectives or/and could induce improvements in energy related legislation. They were mainly demonstration actions or energy technology take-up, diffusion and transfer activities. Long Term projects had to deliver results that would be exploited commercially or otherwise in more than five years. The main focus of the Sixth Framework Programme (2003-2006) is to create the European Research Area (ERA). Compared with FP5 there are three additional horizontal targets: Concentrating and integrating EU research Structuring the European Research Area Strengthening its foundation Two new instruments were introduced by FP6 - integrated projects and networks of excellence. Both can, in addition to traditional RTD, support other objectives including activities that relate to dissemination and exploitation of knowledge and, where relevant, to ensure transfer of technology and facilitate exploitation of results.35 Most if not all energy-related projects funded under FP5 should be completed by the time the EIE-II programme is introduced in 2007. At this same time, many FP6 projects should be nearing completion, in particular those funded as a result of the second Call for Proposals in 2004 (assuming a three-year duration as the norm). In FP6 two additional instruments are included to further dissemination and exploitation of knowledge and, where relevant, to ensure transfer of technology and facilitate exploitation of results. This is clearly taking the Community wish a step further from FP5, as it seems to indicate that projects are specifically supported when exploiting their research. The EIE-II programme seems to subscribe to this aim as well, because their replication efforts are specifically aimed at bridging the gap that exists between the successful demonstration of innovative technologies an their effective entrance into the market. However, as far as replication is concerned, the definition seems to be clear. However the exact meaning of exploitation as defined in FP6 is not. When looking at the FP6 component most relevant to energy sustainable energy systems -, it seems to be relevant to short to medium-term projects, which have as their goal to bring innovative and cost competitive technological solutions to the market as quickly as possible through demonstration and other research actions aiming at the market, which involve consumers/users in pilot environments, and
35
Council Decision of 30 September 2002, adopting a specific programme for research, technological development and demonstration: Integrating and strengthening the European research Area (2002-2006) (2002/834/EC) 73 ECOTEC Research and Consulting Limited
which address not only technical but also organisational, institutional financial and social issues.36 From this, it is clear that, at least when it comes to energy, it implies specifically to pilot environments and not to natural market conditions. With their replication activities, the EIEII programme is designed to specifically address activities that are taking place in natural market conditions: it will be used to promote key strategic technologies, leverage public/private sector investment, bring down costs, increase market experience and contribute to reduce the finance-risks and other perceived risks or barriers that hinder this type of investment. Obviously, the real question will be what this means in practice. The definitions above can apply to several types of projects and much is dependent on what translation of the above definition is applied in each different case. There therefore seems to be a potential overlap between the extreme end of the FP6 Programme and EIE-II first-market replication, where much depends on how the definition of replication and exploitation are applied. However, this risk is not present since EIE-II will start in 2007 and FP6 ends in 2006. It may apply with respect to FP7. The upcoming ex ante evaluation of FP7 by DG Energy and Transport is supposed to contribute to the assessment of this concern. The Seventh Framework Programme will run from 2006 to 2010 and therefore overlaps the period in which the EIE-II programme runs. Within the EU budget for 2007 to 2013, a clear commitment to research has been made. The aim is to focus on realising the European research area, increase the total EU spending on research to 3% of total GDP - 1% coming from public sources and support and strengthen research throughout Europe. A key innovation is the proposal to introduce a new instrument, European Technology Platforms (TPs). These are seen as a means of providing effective private partnerships between the research community, industry and policy makers. One of the specific aims of TPs is to facilitate/accelerate market penetration of new technologies, with technology demonstration acting as an element to facilitate the removal of obstacles. To ensure that the EIE programme produces added value, this grey area must be kept as small as possible, in which case the two programmes will complement each other in a very positive way, forming a continuum of EU support for technologies of strategic importance. If this happens, there is a real opportunity to ensure those energy projects receiving funding under the FP6 have - by carrying them forward in the EIE programme - an increasing chance of becoming commercially viable.
36
Council Decision of 30 September adopting a specific programme for research, technological development and demonstration: Integrating and strengthening the European Research Area (2002-2006) 74 ECOTEC Research and Consulting Limited
6.4
Structural and Cohesion Funding
The Structural Funds allow the European Union to grant financial assistance to resolve structural, economic and social problems. It is important that assistance provided through the EIE-II Programme is complementary and additional to that provided through these funds. Significant investment in energy efficiency and renewable energy is provided through the European Regional Development Funds (ERDF) and the European Agricultural Guidance and Guarantee Fund (EAGGF). Assistance is mainly directed towards projects in the private sector that have favourable commercial prospects e.g. energy crops for bio-fuels, wind farms etc. Given the smaller budget of the EIE-II programme and its specific focus, there is not anticipated to be any duplication of activities in this respect. There could however be scope for complementary action in cases where ERDF projects require further financial investment to make the final step into the market place. Close co-ordination of activities should be ensured to maximise synergies wherever possible. The fields of application for the European Social Fund (ESF) include the improvement of education and training systems, the promotion of a skilled workforce and boosting human potential in the field of research and development. While the ESF is primarily focused on the prevention and combat of unemployment, the EIE-II programme is more concerned with the promotion of capacity building activities for professionals working in the field of sustainable energy. Duplication of activities is therefore not foreseen here. Proposed legal bases for Structural Funds, Cohesion Funds, Trans-European Networks and rural development for post-2007 were adopted by the Commission in July 200437. These proposals indicate that renewable energy, energy efficiency and clean transport are ranked high in the priority areas of action. The Structural Funds include provision of assistance in the area of energy, including integration of environmental considerations, improvement of energy efficiency and the development of renewable energies. Trans-European networks support proposals recognise the importance of developing appropriate infrastructure to incorporate renewable energy generation safely and economically. Energy efficiency and renewable energy production are also recognised as priorities in view of their contribution to regional competitiveness and employment. The Cohesion Funds can finance actions in support of sustainable development where these have a clear environmental dimension, such as energy efficiency or renewable energy, plus assistance towards clean urban transport. Rural development support through EAFRD specifically identifies the contribution that biomass, including forestry, can play in rural development and competitiveness as well as climate change and greenhouse gas reductions. One of the focuses of the EIE-II programme would be the building of European networks facilitating the exchange of knowledge and best practice between participating countries. The
37
Proposal for a regulation of the European Parliament and of the council on the European Regional Development Fund. COM(2004) 495, 14.7.2004 Proposal for a Council Regulation establishing a Cohesion Fund. COM(2004) 494, 14.7.2004 Proposal for a Council Regulation on support for rural development by the European Agricultural Fund for Rural Development (EAFRD). COM(2004) 490, 14.7.2004. 75 ECOTEC Research and Consulting Limited
aim is to assist the development of policies and strategies at local and regional level and ultimately to ensure the wide dissemination of the results. Knowledge gained through dissemination activities such as seminars and conferences could prove to be extremely beneficial in the development of new projects potentially funded through the Structural Funds. Networking will be of particular relevance to new member states, future candidate countries and third countries participating in the programme. It should be considered that when the EIE-II Programme commences in 2007, the ten new member states will be fully eligible for Structural Funds and Bulgaria and Romania are due to accede to the Union. Capacity building activities will be critical to the new member states in helping to develop cultural change within energy institutions and highlighting the advantages to be gained through the use of sustainable energy. These kind of capacity building activities are currently on going through pre-accession programmes such as PHARE, ISPA and SAPARD and where possible, the EIE-II programme should aim to follow on from these and benefit from any existing structures that are in place. This is a period of great change for the new member states, which means that many opportunities are there to be grasped. It will be difficult to ensure these countries prioritise investment in energy efficiency, renewables and clean technologies because in many of them there are poorer regions (in terms of per capita GDP) and what capital they have is often allocated to non-discretionary expenditure such as accession commitments. There is an urgent need to support institutional strengthening as well as investment projects, particularly relating to programme implementation and project preparation. In both new member states and candidate countries there are often major investment programmes linked to implementation of Directives for pollution control for industrial installations38, which create one-off opportunities for energy efficiency-related investments that could be linked to EIE-II. Many of these countries are facing reduced contributions to electricity generation from fossil fuels such as lignite and from nuclear power, which opens up the potential for renewables in general and renewable sources for power generation in particular. New member states and candidate countries already have established energy efficiency and renewable energy programmes (although small), and it is important to work with and through these wherever possible. The programme will be less effective unless it is complemented by other measures, particularly mandatory targets for renewables and energy efficiency. The programme needs to link closely with other Community initiatives, particularly Structural/Cohesion Funds and those relating to climate change (Joint Implementation/CDM). The clean transport component is likely to be particularly problematic, not least because transport is rarely the responsibility of the same ministries/agencies as renewable energy and energy efficiency.
38
Particularly the Large Combustion Plant Directive (Directive 2001/80/EC on the limitation of emissions of certain pollutants into the air from large combustion plants) and the IPPC Directive (Directive 96/61/EC 24.9.1996 concerning integrated pollution prevention and control) 76 ECOTEC Research and Consulting Limited
6.5
Other Community initiatives
The Environmental Technologies Action Plan (ETAP)39 aims to make an important contribution towards the EUs sustainable development objectives. It was developed within the wider EU policy framework of the Gteborg European Council and the EUs Sixth Environment Action Programme (6EAP)40, focusing on de-coupling economic growth from environmental degradation. ETAPs fields of action focus on a series of mobilising activities, drawing together initiatives and support activities already underway through different channels in the EU, to present a co-ordinated and integrated approach to supporting environmental technologies. ETAP has three main action areas: Getting from research to markets Improving market conditions Acting globally - promoting the uptake of environmental technologies globally
The definition for environmentally sound technologies states that they protect the environment, are less polluting, use all resources in a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in a more acceptable manner than the technologies for which they are substitutes. Renewable energy and energy efficiency technologies fall within the definition. They offer reduced consumption of raw materials or natural resources, create fewer emissions and less waste, and often offer lower costs and greater efficiency and competitiveness.
It is clear that there are links between the action areas and goals of ETAP and those of EIE-II. Many of the key activities proposed under ETAP are directly relevant to those within EIE, e.g. increase and focus research, demonstration and dissemination (helping the energy sector to benefit from new energy efficient technologies and greater uptake of renewable energy sources); shaping a common vision through technology platforms - including leveraging private sector finance, improving technology transfer to developing countries, in particular to least developed countries, developing strategies for Europe-wide education and training programmes, and establishing demonstration and dissemination projects; and, identifying how cohesion policy and funding (structural and cohesion funds) can be mobilised to promote environmental technologies, in particular in the new member states in the programming period post-2006. The ETAP work programme is only recently underway, with early establishment of technology platforms for hydrogen and for photovoltaics. There are also a number of relevant activities proposed in areas such as awareness raising and training, which may be of direct relevance to EIE. Sustainable energy technologies can clearly benefit from the outcome of these reviews. The proposed EIE-II programme will be able to contribute to achieving the aims of ETAP to support sustainable energy technologies.
39
Stimulating Technologies for Sustainable Development: An Environmental Technologies Action Plan for the European Union. COM(2004)38 final 28.1.2004 40 Decision 1600/2002/EC of the European Parliament and the Council of 22.7.2002 laying down the Sixth Community Environment Action Programme 77 ECOTEC Research and Consulting Limited
ETAPs delivery is supported by the wide range of research and innovation initiatives already underway throughout the EU. These include the implementation of the European Research Area (ERA), and the Seventh Framework Programme for RTD (2006-2010). ETAP also highlights the role that financing institutions in the EU can provide, particularly the European Investment Bank. The legislative framework around which ETAP is built provides a firm base. In particular, policies to develop high environmental standards impact on energy as well as environmental technologies - particularly the Directive on Integrated Pollution Prevention and Control (IPPC), which is progressively implemented throughout the EU-15 and now the EU-25. Other initiatives such as emissions trading schemes and voluntary instruments such as ecolabelling also contribute strong drivers to industry to improve environmental standards. Delivery of the ETAP is foreseen will go through a wide range of stakeholders, including member states, the Commission, international institutions and the private sector. The European Panel on Environmental Technologies brings together a wide range of these stakeholders to improve information flows and help to implement and further develop the ETAP. The evaluators recommend that EIE is represented through DG TREN on this Panel. Established in 2000, the European Climate Change Programme (ECCP)41 plays a central role in supporting and monitoring the EUs obligations under the Kyoto Protocol. Its aim is to identify and develop the most environmentally beneficial and cost-effective measures to help the EU to meet its target, complementing the national efforts of member states. The ECCP is a framework programme of actions that integrates all EU action, including existing policy initiatives and programmes on sustainable energy (including EIE), and complements the Sixth Environmental Action Programme. There are clear synergies between the various initiatives that integrate the ECCP and energy policy, and efforts to promote renewable energy and demand management have an important role to play in supporting the achievement of the Programmes goals.
41
COM(2000) 88 78 ECOTEC Research and Consulting Limited
7.0 WHAT MONITORING AND EVALUATION IS PLANNED?
7.1
Monitoring and evaluation in previous programmes (EFP)
The ex ante evaluation has looked at monitoring and evaluation carried out under previous energy programmes, in particular the EFP. The mid-term evaluation of the Energy Framework Programme (1998-2002) found little or no work in terms of monitoring, evaluation and assessment of the impacts and cost-effectiveness of actions and measures implemented. The ongoing Final Market Impact Assessment of ALTENER has tried to overcome this lack of monitoring by adopting an impact assessment methodology. This approach will also be used in the forthcoming assessment of SAVE energy Management Agencies. The ALTENER assessment used this approach on a selection of ALTENER projects contracted in the years 1996-2002. Because no specific measures were introduced at the start of the programme the impact assessment is based on interviews with decision-makers, stakeholders, and project contractors. The Impact Assessment measures the distribution of projects over technologies and countries, dissemination products and their effectiveness, types of impacts, and key success factors.
7.2
The current EIE programme
As a result of the experiences from the EFP, the current EIE programme recognised the importance of designing methods of assessing impacts from the beginning of a project, so they can be monitored throughout the project duration. Clear and measurable indicators are required, both at programme and individual project level. The arrangements for the current EIE cover both programme and project monitoring and evaluation and involve the following activities. At programme level, the Decision42 states that the following should take place: An annual examination of the progress made on this programme and the actions carried out in the 4 specific fields and the key actions. The submission of a report on these issues to the EP, the Council and the European Economic and Social Committee and the Committee of the Regions A mid-term evaluation at the end of the second year, carried out externally, on the overall implementation of the Community actions under the programme In addition, the Executive Agency that is being set up to run EIE will have a key role in management and monitoring at project level. Tasks will include, for instance: Assessment of proposals Contractual arrangements, payments and financial checks
42
Decision adopting a multiannual programme for action in the field of energy: Intelligent Energy - Europe (2003-2006) 1230/2003/EC 79 ECOTEC Research and Consulting Limited
The setting of outputs and indicators for measuring the Agencys performance The establishment of control systems for the Agencys operations The setting of quality standards for the Agencys operation Production of annual reports on the Agencys activity and performance.
In the EIE first Call for proposals, which closed in April 2004, proposers were asked to estimate and quantify the expected results and impacts of their proposed actions in terms of direct outcomes, products, benefits and results, and potential impacts of the action. These benefits should include an estimation of expected energy savings and reflect other important benefits such as related cost savings, improvements of energy service quality, improvements for the environment, and decreasing energy supply dependency, etc. Proposers were asked to provide a set of criteria and performance indicators against which the success of the project will be judged. The participants should use these indicators for selfassessment. They will also be used by the Commission to assess performance and degree of fulfilment of the project objectives at the end of the contract period. The Executive Agency is responsible for carrying out data collection and monitoring. At the programme level, the tasks of the Executive Agency should include43: data input for the global monitoring and overview monitoring the concrete impacts of measures on the market implementation of programme assessment activities While these put in place a system that will in principle permit monitoring and evaluation, it has deficits that may impair their effectiveness. Most notably, the opportunity has been missed to define, for each area of activity, a set of performance and impact indicators that all projects need to measure. Instead, the small number of suggested areas to measure that is included in the first call leaves much scope for each project to measure different impacts, without an over-arching framework set against programme indicators.
7.3
The proposed EIE-II programme
There is an opportunity to improve the monitoring arrangements with the current EIE programme, and the lessons learned can be carried forward to the proposed EIE-II programme. The evaluators recommend considering the following factors. Monitoring at Programme level: Central setting of key indicators to measure impact and dissemination activities Timetables for the delivery of reports Standard formats for the presentation of financial data
Memorandum to the Commission Subject: Draft Commission Decision setting up an executive agency, the Intelligent Energy Executive Agency, to manage Community action in the field of energy in application of Council Regulation (EC) No 58/2003 80 ECOTEC Research and Consulting Limited
43
Monitoring and evaluation at programme level will be key to measuring the overall performance of the programme, in terms of both effectiveness and efficiency. Indicators should be defined to be able to provide evaluators with the means whereby they are also able to assess the extent to which the programme is moving forward and progressing towards specified targets. These indicators can then be used to provide project proposers with a framework against which their project can be designed. At programme level, setting a core set of indicators will be key to measure the overall performance of EIE-II. However, it is also recognised that this may be difficult as issues such as energy efficiency and increased awareness are difficult to measure. It will therefore be important to formulate these carefully. Monitoring at project level: Consider the introduction of a pre-proposal service where applicants can submit their proposal at concept stage to receive advice and recommendations for improvements to improve the quality of their final project submission. Setting up a common system for proposal, contract and project management Adequate information technology (IT) systems to capture and process the (project, output, impact) data collected ensuring their compatibility with existing systems in the EU and the member states Ensuring that monitoring data are kept up to date At project level, project work programmes should clearly define objectives and targets, based on a clear structure from outputs, results and impacts. The ex ante evaluation has received feedback from programme clients that the programme management team should design and specify project indicators more clearly than at present. Projects need to have guidance and clear definitions from the start of the programme, particularly to specify what data needs to be collected during the project lifetime. It is recommended that this deficit should be addressed before the start of the EIE-II programme at the level of the work programme, by preparing a framework of monitoring criteria related to indicators based on recommendations made elsewhere in this evaluation (see section 3.0). Project work programmes should include central setting of key programme level indicators to measure impact and dissemination activities, specification of timetables for the delivery of reports, and preparation of standard formats for the presentation of financial data.
7.4
The application process
In the consultations carried out as part of the ex ante assessment, the evaluators consistently received feedback about delays between submission of proposals and award of contract during the EFP. These delays were improved somewhat for the later Calls. The current EIE call anticipates that contracts may be signed six months after the Call closes (i.e. from November 2004), but it is not known yet if this timetable will be achieved. Delays could be worse for the proposed EIE-II because it has a larger budget and therefore anticipates more proposals. Long delays would give a poor image for the new programme, particularly to
SMEs and industry. The application process should therefore be designed so that is robust from the start of the programme: Adequate staff resources should be available to process applications quickly The application timetable should be adhered to rigorously There should be clear rules and straightforward administration requirements. Member states should continue to be fully involved in the development of the work programme, the call for proposals and the evaluation process (as happens in the current EIE programme) National assistance can also be provided through in-country help desks, to provide advice to proposers as well as stimulating participation. Consider the introduction of a pre-proposal checking stage where proposal outlines are submitted and recommendations for improvements are made to improve the quality of the project. Projects should demonstrate clear fit with market needs - perhaps through a users assessment to demonstrate that the project concept is demand-led. There should be a common system for proposal, contract and project management. Adequate IT systems are needed to capture and process the data collected, ensuring their compatibility with existing systems in the EU and member states. Ensuring that monitoring data are kept up to date.
The proposal evaluation process is also an area where improvements can be achieved. Some evaluators have commented on the process whereby the evaluation sheets used are based on those issued by DG Research for the Framework Programmes of RTD, designed around a research-type application. These are not often well suited to proposals for dissemination or policy-type activities. The process will become more challenging with the advent of replication projects, where the evaluators will need to take account of a very wide range of considerations, to help them to choose appropriate proposal concepts for funding. There are two databases used within the Commission as part of monitoring tools. The first Evaluation Tool (ET) - is a database used at the evaluation stage, in which data on all proposals, evaluations and proposal outcomes are kept. The second - Programme Management System (PMS) - is a database used for setting contractual arrangements and managing the projects from an administrative and financial point of view. Data on projects to be funded is imported from the proposals database, and the PMS is used to set up the contract and to follow up the contracts performance. However, neither of these databases contains details of monitoring data that could be used as part of a wider evaluation process. The evaluators do not have detailed information about these systems, or on any arrangements that are prepared for the EIE programme. The evaluators are therefore unable to comment on whether there are already effective monitoring arrangements in place at programme and project level that are appropriate to the needs of the EIE programme. According to DG TREN, all relevant systems and structures that are in place will be shared with the Executive Agency.
Compared with the current EIE programme, the proposed EIE-II programme will be much larger in size and value, with a larger number of projects. Project applicants may come from 27 different member states, candidate and EFTA/EEA countries and there will also be participation (as sub-contractors) from neighbouring countries and from developing countries. We do not know the extent to which project applicants from these new participating countries have the capacity and capability to provide data where required. In addition, the proposed replication projects may require a different set of monitoring arrangements, including pre-contract assessments, rigorous project visits, etc. For this reason, it is recommended that an assessment should be carried out before the start of EIE-II to identify any shortcomings in ET and PMS that should be improved.
7.5
Evaluation
Evaluation of the programme is essential and is a legal requirement. This ex ante evaluation of EIE-II has proposed a framework for developing clear objectives and indicators (see section 3), against which future progress of the programme can be evaluated. There are three evaluation activities required: of the programme, of the Executive Agency, and of the individual projects.
7.5.1
Programme evaluation
Annual evaluations of the EIE-II programme should be undertaken to assess the progress made on the programme and the actions carried out in the four specific fields and the key actions. The annual report should be submitted to the European Parliament, the Council and the European Economic and Social Committee and the Committee of the Regions. A mid-term evaluation of the current EIE programme will be carried out by independent experts, at the end of the second year. This should be replicated for the successor programme in order to provide an opportunity to make any adjustments necessary on the monitoring and project selection procedures already established. A mid-term evaluation should in particular pay attention to: Review the indicator system developed to monitor programme impact due to the above mentioned difficulties with identifying appropriate indicators for this programme Review the baseline and, if necessary, adjust programme delivery accordingly Review the project selection in view of (among others): number and relevance of projects selected for the programme, size of the projects, type of proposers Type of projects selected, in particular those defined as replication projects Quality of projects selected, progress with project implementation. Programme structure and delivery
It is important to consider the timing of carrying out interim evaluations for the proposed EIE-II programme. The programme runs for a period of seven years, compared with the four years for the current EIE programme. It may be appropriate to carry out more than one
evaluation during the lifetime of the programme. This would enable the Commission and the Executive Agency to monitor the programmes progress more closely, to see how the programme develops over two or more evaluations. An early evaluation after perhaps two years would also give the opportunity to make adjustments to the programme design and delivery while the programme is still at an early stage of delivery. Programme performance measures should be established that allow the evaluator to identify whether the programme is generating the results anticipated, or whether the programme focus should be amended to strengthen progress towards targets. An ex-post evaluation of EIE-II should be carried out by external evaluators after the completion of the programme in 2013. This evaluation should focus on assessing the overall performance and impact of the programme and examine in particular: the impact of the programme activities on reaching its objectives the cost-effectiveness of the programme Community added value.
7.5.2
Executive Agency evaluation
An evaluation by an independent body is to be carried out of the Executive Agency after one year of operation. The results from this evaluation can then be used to identify and justify any changes to the Agency required for the current EIE programme. They will also be able to feed into the planning for the management of the EIE-II programme, including the monitoring at project level. The legal requirement specified in Article 25 of the Council regulation laying down the statute of the Executive Agencies44 states that an external evaluation report should be provided on the Agencys first three years of operation, including a cost-benefit analysis. The evaluation should be submitted to the Agency steering committee, the European Parliament, the Council and the Court of Auditors. This evaluation should be repeated at three year intervals. The Executive Agency should be subject to monitoring of its performance in delivering the programme objectives, and of its overall management and performance. The agency could be monitored, for example, against the numbers of project applications received that are of high enough quality to warrant funding. This gives an indication of the level of publicity and awareness raising carried out throughout the EU and the quality of the information and assistance provided to potential applicants. Geographical split of successful applications would also indicate how successful the agency has been in attracting interest in the programme. The agencys management should also be subject to monitoring and appraisal, for example in its ability to process applications, award contracts, monitor projects, etc.
44
Council regulation (EC) No 58/2003 of 19 December 2002 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes. 84 ECOTEC Research and Consulting Limited
Client (project managers, national contacts, etc.) satisfaction surveys could be used to identify the level of approval of the way that the agency operates the programme.
7.5.3
Project evaluation
With the proposed large increase in the numbers of projects likely to be supported through the new EIE-II programme, efficient and effective monitoring is essential. A number of consultees have suggested that projects should be subject to evaluation, both as critical ongoing assessments during the projects lifetime, and once the project is completed. This is of particular importance for any large scale capital projects funded as replication projects. Evaluation of individual projects should closely link with and feed into any evaluation (midterm, ex post) of the overall programme. It is therefore very important that projects are designed in such a way that they collect appropriate information through their lifetime, that can subsequently be used for monitoring purposes both by the project and for the programme evaluation. These evaluations should address not only the technological aspects of the project but also issues including economics, costs, as well as a stringent appraisal of the overall impacts from any dissemination activities carried out. The evaluations will require clear indicators to be developed that allow the evaluators to measure real results and effectiveness of the projects (rather than for example just numbers - such as numbers of conference attendees, or numbers of energy agencies established). It is also very important that projects are able to prepare and work to a strong business plan, and wherever possible should demonstrate that business expertise (rather than just research) is evident within the project team. The current COOPENER programme has obliged project managers to design a solid project logical framework prior to commencement of the project. This allows monitoring of progress on outputs and outcomes based on progress reports prepared by the contractor. The EC Delegation established in the beneficiary country is required to follow this. The international component of the programme requires a specific type of management expertise. Close co-ordination with the relevant EC Delegations is required, and responsible task managers should be prepared to visit the project locations regularly. Thus it is recommended that in the management budget for the Executive Agency, there should be a separate budget line for monitoring and evaluating the project in the field.
8.0 WHAT IS THE COST-EFFECTIVENESS OF THE PROPOSED OPTION?
8.1
Cost effectiveness
It is recognised that knowledge transfer and awareness raising programmes such as EIE and EIE-II are difficult to quantify in their impacts and results. Funds to influence upstream policy developments, to create an enabling environment and to raise awareness among the public are heavily dependent on external factors. For EIE-II, these include legal, economic, regulatory drivers, and the availability of domestic energy resources. For developing countries in particular, issues such as urbanisation and the countrys population are important determinants. To make a judgement of the cost-effectiveness of the programme, it is therefore necessary to set the activities proposed under EIE-II within the wider framework of EU policy objectives and targets. The programmes activities and budget need to be set at an appropriate level to ensure the programmes effectiveness. This can be judged through taking account of the level of activity under the current EIE programme and the likely expansion of geographical areas and priorities under the new programme. The role of EIE, and its proposed successor EIE-II, is to accelerate actions in the field of renewable energy and energy efficiency in order to contribute towards EU and national targets in energy, and to facilitate the achievement of Millennium Development goals. The proposed programme is therefore designed to make a substantive contribution towards achieving agreed EU policy targets, in particular international Kyoto commitments. The programme budget has been developed from the budget levels for the current EIE programme, which is 250 million over four years. This provides support for a range of policy and dissemination projects within 15 countries (first 2003 call) and now 25 countries. Pro-rata this would amount to 438 million over the seven year period proposed for EIE-II for a EU-25. However, the earlier justification for the programme has established that a substantially higher level of support is needed in order to accelerate progress towards targets. In addition, the new programme is required to accommodate the impact of enlargement for the ALTENER, SAVE and STEER commitments, and to provide greater resources towards COOPENER both for developing countries and to include neighbouring countries. Total budget proposed for this expanded support amounts to 743 million. This increase (from 438 million) is entirely reasonable given the additional areas of activities identified. Finally, the proposed new action of replication projects proposes to support about 25 projects per year (5 million / project) to the total value of 896 million. Taken together, these amount to a total budget of 1.639 billion over seven years. The current EIE programme has a budget of 250 million. Over its four year period, approximately 1,000 contracts are expected to be awarded, with an average cost per contract of 0.25 million. Table 8 provides an overview of the budgetary split, together with the anticipated level of match funding to be accessed.
Table 8: Budgetary implications for the current EIE programme (2003-6)

Type of action Approx % of total budget EIE aid m Maximum EIE contribution (%) Match funding of eligible costs required m 0 Total funding m
Policy development 13% 32.5 100% 32.5 + implementation Strategic policy related Concerted actions Remove non80% 200 50% 200 400 technical barriers, incl support to events and to local energy agencies TOTAL 93%* 232.5 up to 100% 200 432.5 * Approx 7% of total budget is the subsidy to the Executive Agency to cover its operating costs
Previous evaluations of the activities funded through ALTENER and SAVE in particular have highlighted that these types of smaller initiatives have been very well received. The results, given the limited budgetary resources, have enabled major progress to be made in terms of legislation and promotion, for a wide range of beneficiaries and in all of the member states. It is also recognised that many of the target groups and beneficiaries to the programme (see Box 4, page 28) are generally those for which a smaller value contract, with a more modest budget, is more appropriate than involvement in larger and more complex types of contract awarded under programmes such as FP6. In particular, these target groups generally operate at regional or local level. The smaller contract values can achieve significant regional or local benefits and impacts, as well as leveraging useful match funding from other national or regional funding sources. EIE-II has a proposed budget of 1.639 billion. Table 9 provides a summary of the proposed budgetary allowance for EIE-II and the breakdown of this budget across the different fields and instruments. To estimate how many contracts will be awarded, the same average contract size as in the current EIE programme has been used. Over seven years the following 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, total value 1.639 billion
Table 9: Budgetary implications for the proposed EIE-II programme (2007-13)

(in million)
Type of Actions/projects and Specific Fields Support to actions: a), c), d), e) and f) type45,46 1) Improvement of energy efficiency and the rational use of energy (SAVE) 2) New and renewable energy sources and diversification of energy production (ALTENER) 3) Energy aspects of transport (STEER) 4) Promotion of renewable energy sources and energy efficiency at international level, particularly in the developing countries and in the neighbouring countries of the Enlarged Union (COOPENER) Sub-total Support to projects: b) type 1) Improvement of energy efficiency and the rational use of energy (SAVE) 2) New and renewable energy sources and diversification of energy production (ALTENER) 3) Energy aspects of transport (STEER) Sub-total Total Operational Appropriations Administrative assistance TOTAL 29.5 99.7 182 3 185 35.3 118.3 216 4 220 36.9 127.2 231 4 235 40 134.6 246 4 250 41.2 139 255 5 260 41.2 139 255 5 260 40.9 138.2 254 6 260 265 896 1,639 31 1,670 36.5 43 47.4 49.7 51.2 51.2 51 330 33.7 40 42.9 44.9 46.6 46.6 46.3 301 82.3 97.7 103.8 111.4 116 116 115.8 743 19.7 15.75 23.5 18.65 23.9 20.65 26.8 21.65 27.4 23.45 27.4 23.45 27.3 23.40 176 147 24.35 28.75 31.35 33.05 34.15 34.15 34.2 220 22.5 26.8 27.9 29.9 31 31 30.9 200 2007 2008 2009 2010 2011 2012 2013 Total
The gross investment cost for the EU to reach the 12% renewable energy target by 2010 is estimated to rise from 9.5 billion in 2001 to more than 17 billion by 2010, representing a total investment estimated at 132 billion over the ten years47. The proposed budget contribution from EIE-II towards renewable energy is estimated at 550 million over seven
45 46
Correspond to the measures indicated in Article 4 of the proposal for a Decision Continuation of the support to actions and projects as in the previous EIE programme 2003-2006. 47 Updating the impact of the Community Strategy and Action Plan for Renewable Energy Sources. An analysis funded by the EC Altener programme, February 2003. 88 ECOTEC Research and Consulting Limited
years (220 + 330 million). With an average total investment estimated to be 14-17 billion each year from 2007, this EIE-II contribution represents less than 0.8% of the total investment required to achieve the EU targets. A similar substantial investment is needed to achieve the improvements necessary in energy efficiency. The proposed budget for COOPENER represents a sevenfold increase compared with the current EIE (to 23 million in 2013). There are strong justifications for this expansion, particularly in terms of the demand for support for projects of this type. The mid-term evaluation of the EFP programme summarised the calls for tender under the SYNERGY programme. Calls were launched annually between 1998 and 2000, attracting 161, 202, and 124 proposals respectively. A little over 22 percent of the proposals submitted in 1998 and 1999 were financed. The Commission cancelled the 2000 call. In 2001, eight proposals were contracted. These figures reflect both the interest in the programme and the limited budget available and might justify a substantial budget increase. The most recent EIE call has attracted 31 submissions to COOPENER, which is encouraging given the difficulties reported of sourcing co-funding. The proposal budget for COOPENER provides for about 80 projects per year of 0.25 million. Since there are more than 80 countries in the target areas, (or if project values are higher than 0.25 million), it is not possible to provide substantial support to every country worldwide. This is not to say, however, that successfully implemented projects will not contribute to the accelerated uptake of clean energy. It will be important to develop means to prioritise project allocation, for example through selecting geographical priorities or by focusing on a smaller number of countries overall. The detailed work programme should ensure that the priorities are selected appropriately. An estimate of the amount of match funding of eligible costs can be made, using an estimate of the likely levels of aid to be provided to the different types of project. Using an estimate of 50% aid to non-replication projects (except for 10% of the aid which will be allocated at 100% funding), and 35% aid to replication projects, this indicates that a minimum of 3.2 billion of public or private funds will be mobilised to match the 1.6 billion from the EIE-II source (see Table 10).
Table 10: Estimates of match funding of eligible costs

Aspect EIE-II aid m Maximum EIE-II contribution (%) 35 100 Match funding of eligible costs required m 2,560 0 Total funding m
Replication projects Policy development + implementation Remove non technical barriers Strategic/policy related Policy development + implementation Concerted actions Remove non technical barriers Promotion dissemination TOTAL
896 75 (assumed 10% of the funding) 668 1,639
3,456 75
50
668 3,228
1,336 4,867
The overall Commission contribution will be a maximum of 34% of the total cost of all eligible expenditure.
8.2
Human Resources
Technical and administrative support is proposed at 31 million over the seven year period, i.e. 1.9% of the intervention budget. These costs are in line with the comparable costs for the current EIE (4.4 million out of 250 million). This budget line funds a range of activities including programme implementation studies (impact assessments, future studies etc.), experts meetings, publications, audio-visuals material and information events. A further 1.05 million is proposed for missions, meetings etc. The proportional increase in this budget is 8% (1.76 to 1.9%). This increase is necessary and can be justified for various reasons: Monitoring - to ensure that there is sufficient budget available to carry out the greater level of programme monitoring anticipated. This evaluation recommends comprehensive evaluations at interim and ex-post stages, as well as impact assessments; Dissemination - to strengthen the level of programme promotion and dissemination carried out, targeting as widely as possible from EU level through to local level; Expansion of participating countries - particularly for new member states which may require a higher level of help and support in the early stages of the programme; International - to meet the extended geographical scope of COOPENER that implies an increase in programme activities world-wide, including access to in-country Delegations, and a higher level of programme monitoring and evaluation to maximise the additionality of the programme. The administration of the new programme is proposed to follow on directly from the management just starting with the Executive Agency for EIE. Under this arrangement, there will be 22 officials within the Commission supported by staff within the Agency. At the start
of the Agency there will be 30 staff (22 by 2005), to be expanded to some 80 staff within the Agency with the start of the new EIE-II programme. Pro-rata this expansion is in line with the expansion of the budget some four-fold between EIE and EIE-II. As a result, staffing levels within the Commission can remain unchanged. The delivery of the proposed EIE-II programme is therefore expected to be in line with the efficiency levels agreed for the current EIE programme. Administrative management of the current round of proposals to EIE48 is currently being carried out in-house, but new staff will rapidly be recruited to the Agency to carry out the evaluations. It is anticipated that the smaller, more focused structure of the Agency will result in faster procedures and more efficient project management. It is important to recruit staff for the Agency who have appropriate skills and project management capabilities. The different types of project that will be supported will require different skills, e.g. to manage replication projects will require specific technical, economic and financial competencies. One of the advantages of Executive Agencies has been the increased flexibility in staff recruitment. Since May 2004, there has been administrative reform in the Commission and new staff regulations that have provided much more flexibility in recruitment policy, notably with the creation of a new type of personnel - the so-called contractual agents, specifically designed for entities like Agencies. It is easier to recruit staff for Agencies, under short-term contracts linked to the duration of the Agencys programme. The proposed EIE-II programme is eligible to be delivered in the same way as EIE-I. However the Executive Agency is not yet fully established, so it is not appropriate for this ex ante evaluation to make recommendations about the longer term continuation of the Agency into the EIE-II programme. Instead, the evaluators recommend that the performance of the Executive Agency should be evaluated after one year of operation. The results from this evaluation would then be used as the basis for identifying and justifying any changes to the Agency needed for the remaining period of the EIE-I programme. The results would then also feed into planning for the management of the EIE-II programme.
8.3
Progress with developing the EIE Executive Agency to date (May 2004)
The legal basis for the Executive Agency has been established. A nominee for the post of Director is still to be identified. This Director will have delegated powers, including financial ones to commit payments to projects. The Steering Committee members have been nominated, and their first meeting is in June 2004. At this meeting they will adopt rules and procedures and develop an organisation chart. Staff recruitment will also start. The Director (or acting Director if a permanent nominee has not been identified) will prepare the work programme for the Agency each year, including outputs and indicators, control systems and quality standards.
48
251 proposals were received for the first call, averaging 0.53 million, see Table 7 91 ECOTEC Research and Consulting Limited
The Agency will provide annual reports as required in its legal basis, and it will be evaluated after three years. Administrative management of the current round of proposals to EIE is currently being carried out in-house, but new staff will rapidly be recruited to the Agency to carry out the evaluations. It is anticipated that the smaller, more focused structure of the Agency will result in faster procedures and more efficient project management.
9.0 STAKEHOLDER CONSULTATIONS
9.1
The consultation process
During May 2004 a period of consultation was carried out with the aim of collecting the views of stakeholders and other consultees regarding the development of a successor to the current EIE programme. The ManagEnergy Reflection Group and the European Energy and Transport Forum were both consulted, and invited to submit a group response. Individual discussions involving other stakeholders with an interest in the programme were also carried out. Members of the team that carried out the previous mid-term evaluation of the EFP were also consulted. Meetings were arranged and held in Brussels and by telephone. Membership of these groups and details of other stakeholders consulted are listed as an annex to this section of the document. In addition, views about the programme from individuals at the European Commission were compiled, covering both its delivery within the Union and the international component of the programme. Representatives of the following Commission departments were interviewed: DG TREN DG Agriculture DG Environment DG Enlargement DG Research DG Development DG EuropeAid MEDA DG EuropeAid Asia DG External Relations EUROSTAT
9.1.1
Issues Covered
In order to facilitate a response from consultees, a discussion paper was prepared which provided some background information on the current programme and previous initiatives, then outlined the key features of the proposed successor programme. The paper ended by asking stakeholders to consider their views relating to: The overall aim of the programme. The programme structure. Beneficiaries. Delivery. Stimulating the demand-led approach. International co-operation.
Budget. Your experiences.
The research team then developed a series of topic guides, varying in emphasis according to the type of consultee, with questions based on the areas which the discussion paper had highlighted for consideration.
9.1.2
The ManagEnergy Reflection Group
The response of the ManagEnergy Reflection Group was compiled by Dr Gerry Wardell, the chairperson of the group. The group agree that non-technological support will have a role to play in the period 20072013, particularly as the main obstacles being faced are not technological ones. The programme aims and objectives are still appropriate although it is felt that more could be done to widen participation, perhaps national help desks to provide advice would help to stimulate participation. The response began by highlighting the changing nature of local and regional energy agencies in the former EU-15. Many of the agencies have evolved significantly since their set up and, although they maintain a shared ethos, a growing number are taking a more commercial approach in order to sustain themselves financially. This compares to their original public service role. This process of change has, in most cases, allowed the agencies to adapt effectively to their surroundings and become more effective in their operations. The group highlight the need for the creation of new energy agencies in the new member states with a focus on the provision of a public service, and which could later evolve into public-private partnership institutions. Agencies should play an intermediary role between policy and the market. In new member states, in the period up to 2013, capacity building, policy development and strategic planning, demonstration and replication, and hard investment actions will all be needed and the programme has a role to play. In terms of delivery, there is general agreement that that programme should remain community-led, although consideration should be given to the role of local energy agencies in terms of delivery and accelerating the uptake of best practice. It is also agreed that separate delivery should be maintained however, the design of the programme should be such as to maximise synergies with other policies and programmes. This would ensure that energy issues are incorporated into other programmes and also that EIE complements EU policy in other areas. The group suggested that the majority of funds allocated by the programme should be delivered by grants, especially in new member states. However, there may be potential for the
proven and market-successful uptake of technologies to be partly financed through loans and/or subsidies. There is strong support for the funding of a number of targeted energy-related replication projects which would help to bridge the gap between successful demonstration and market entry. It is suggested that international co-operation in the energy field might benefit from making linkages to international co-operation in other areas such as development or environmental programmes. The programme could consider supporting a mission of experts to visit third countries and help to prepare projects; also priority should be given to our neighbours in the Mediterranean countries and Eastern Europe. The indicative budget is thought to be realistic given the newly enlarged EU although it is recommended that this should be reviewed after an initial assessment of the current programme.
9.1.3
The European Energy and Transport Forum
The response of the European Energy and Transport Forum was compiled by Christiane Egger, who agreed to act as rapporteur. The forum agreed that community-led delivery is appropriate as it will allow the programme to maintain its trans-national approach, ensure coherent management and facilitate dissemination. This option also allows close links to be maintained with European policy development. It is also agreed that separate delivery is appropriate given the specific nature of the programme and its wide target group, Accelerated market uptake is essential to achieving EU policy targets in this area and will require the active involvement of actors at all levels. The programme reaches out to these actors and provides a link between European policy and local actions. There will still be a need for the programme post 2006 as there will still be a need to stimulate demand for sustainable energy. The programme helps to prepare the market for new technologies and as RTD efforts will continue to generate innovative technological solutions there will be a continuing need for support to facilitate their market uptake. The forum were of the opinion that no action would cause a fragmentation of sustainable energy efforts which would slow down market development. The forum suggested that the increased need for action requires a higher budget. Also, simplification of financial and contractual procedures would help to reduce barriers to participation, which especially affect SMEs.
9.1.4
International component
For the international component of the programme, consultations in Brussels were organised with the DGs Development, External Relations, and EuropeAid. Moreover, telephone conversations were held with other stakeholders. The overarching conclusion of these meetings was the necessity to pay attention to the global dimensions of at least two out of three of the EC energy policy objectives: security of supply and environmental protection. The forecast increase in energy demand will mainly come from countries like India, China, Brazil, and Indonesia. Questions were raised though as regards the limited budget available for this strand. One person suggested that in light of this it would seem sensible to specify a target region for each call. Another suggestion was that this strand of activity could assist the export activity of EU industry to third countries this role in facilitating the development of international markets is of strategic importance. Generally, all stakeholders recommended that the programme management team should meet regularly with the relevant DGs. The working group that was established in the run up to the design of EIE-I should be continued in this respect. It could also be consulted in the development and evaluation of each subsequent call for proposals. Management of the international component cannot be based in Brussels. Close co-ordination and co-operation with the Delegations in the capital cities of partner countries should be strived for. Monitoring of project progress, baseline development etc. could be organised together with the EC Delegation. A separate budget should be allocated by the Executive Agency to allow for regular field visits to the partner countries.
9.2
Result of the discussions with EC officials and other stakeholders
9.2.1
Problem Analysis and Needs Assessment
Discussions with consultees resulted in strong agreement that non-technological support for sustainable energy would still be required in the period 2007-2013 and that the EIE programme should be continued in this period. Several consultees mentioned that the need for this type of support was greater than ever, particularly given the recent enlargement of the EU and the associated increase in population. It is recognised that challenging policy targets have been set and that an acceleration of effort will be required in order to achieve them. There was also general agreement that the programme aims and objectives remain appropriate. Consultees highlighted that EIE is the only programme of its kind and without it there would be a gap in support. The programme is seen to be distinct from the Framework Programme due to its focus on non-technological aspects and activities closest to the market. EIE is thought to be of high value in terms of achieving co-operation and partnership working; the focus on local level intervention is very important and one consultee commented that this has the effect of bringing EU-level targets to local actors.
9.2.2
Barriers
The key barriers to the increased uptake of sustainable energy were identified as being institutional and financial. It was thought that a lack of awareness, understanding and information about the choices available creates a lack of demand, and a prevalence of traditional attitudes and technologies, and that this should be tackled as a first step. Discussions with an official from DG Agriculture suggest that the barriers preventing farmers from increasing the production of non-food crops are purely economic. If demand for nonfood crops increased farmers could and would respond to increase supply to meet this demand. Although technical problems may present a barrier in some areas, it is thought that there are no technical problems restricting the production of biofuels however, the major fuel companies remain unwilling to make the necessary investment. Recent tax exemptions for biofuels will provide a starting point for an increase in market demand for this type of fuel.
9.2.3
New member states
There was also some discussion about the participation of new member states. It was agreed that there is huge potential for relatively quick and low cost energy improvements in the new member states and that it is important that energy considerations are integrated into the process of making infrastructure improvements as there is the opportunity to replace old systems with new technology. energy issues may take a low priority relative to some other considerations however, it is important that new member states are encouraged to take a longterm perspective and EIE can support these efforts. Finance and capacity issues were highlighted as barriers which may limit the participation of new member states. They may also face language barriers. Most countries will have a relatively limited awareness and experience of EU programmes and so they will undergo a learning process as they build up experience in this area. One suggestion was that new member states should be encouraged to start with a small role, learn from this and build up capacity until they are ready to take a lead partner role. It is recognised that there is huge potential for energy improvements in the new member states and so a particular effort should be made to encourage their participation. This may require special incentives, such as specific measures, criteria to encourage the inclusion of new member states in partnerships, or possibly increased rates of funding.
9.2.4
Beneficiaries
It was generally thought that widening participation in the programme would be a good thing, for example it may be possible to try and make the programme more attractive to financial institutions in order to encourage their involvement. SMEs were thought to face a number of barriers which may prevent or discourage effective participation. Administrative arrangements can appear over-burdensome and are off-putting to potential SME applicants; the high costs of developing a project and the delay before payment is received were highlighted as particular problems. The European sustainable energy industry contains many SMEs; in general they are constrained in terms of staff resources and finance. A lack of capacity, or experience of European programmes, along with access to finance issues limits the participation of SMEs in the EIE programme. A possible solution suggested as a way to mitigate the prohibitive cost of application faced by SMEs would be to introduce a two-step application procedure which would contain a preproposal check which would provide feedback to potential applicants before committing to a full proposal.
9.2.5
Programme management
The current programme has an inter-service group which was designed to enable a two-way flow of information between DGs. At this point it seems that proper channels of communication have not been fully established yet, due to the recent start of the programme. The group has only had the opportunity to input its views and share information in the preparation of the Work Programme and priorities for the first programme call. It is hoped that the desired process of information exchange will be developed in the future, for example through more frequent meetings of the group. Another feature of the current programme is the establishment of an Executive Agency which, when operational, will take responsibility for the administrative delivery of the programme. The introduction of the agency was generally welcomed by consultees, although one reservation was that it could lead to increased fragmentation in the management and coordination of EIE and the Framework Programme. It was also emphasised that the agency will need clear guidelines from the EC to govern its operation. It is important to note that the agency will be managed by a director and a steering committee, both nominated by the Commission. The steering committee comprises five high-grade officials of the Commission, including three from Commission departments other than DG TREN (DG Development, DG Environment and DG Budget). This constitutes another tool for enhancing co-ordination and synergy between the programme and other relevant Community initiatives and programmes dealt by these departments. An advantage of the agency approach is that it will help with the resource shortages which have been a problem in previous programmes, leaving DG TREN to focus on the
development of policy and strategy. New staff will be employed to work within the agency and it was suggested that these should be people who know the market for sustainable energy (this is thought to be especially important for those who are dealing with the replication projects strand). One person suggested that the agency would benefit from the appointment of a strong leader who could act as a figurehead for the programme. Some of those who had been involved with, or had knowledge of, project applications suggested that the programme should be more responsive to needs, allowing the agency more flexibility to award and pay contracts. This is particularly relevant where the issues relating to a project may no longer be relevant if the contract has taken a long time to be awarded. Energy agencies exist throughout the EU at both national and regional/local level. It was widely acknowledged that there is a significant variation in the activities of these agencies although there should be efforts made to get agencies involved. Roles in dissemination, policy support and planning were all suggested as possible ways for energy agencies to be involved in the programme. The importance of agencies in helping to maintain a bottom-up approach and facilitating the success of EIE at the local level was recognised, including by consultees from within DG TREN. The ManagEnergy Initiative was set up to involve energy agencies in the Member States in EC initiatives and it was suggested that this role could be strengthened further particularly in relation to the new member states.
9.2.6
Replication Projects
There was general agreement that the introduction of funding for replication projects was a good idea and would help to meet a need, although there were some reservations relating to how this element would work in practice. Some people mentioned that the term would need to be clearly defined, for example would it apply only to new (i.e. just proven) technologies or would it include existing technologies which have the potential to have an important role in the market? The majority felt that overlap with existing programmes should be avoided and that the replication element would need to be defined in order to fill a gap. This implies support for maintaining the division between EIE (which has a market focus) and the Framework Programme (which is focused on technology).
9.2.7
International Co-operation
Several consultees highlighted that the limited budget available for this strand would limit what could be achieved. One person suggested that in light of this it would seem sensible to specify a target region for each call. Another suggestion was that this strand of activity could assist the export activity of EU industry to third countries this role in facilitating the development of international markets is of strategic importance.
9.2.8
Delivery Options
It is felt that community-led delivery is appropriate for the programme as it encourages cooperation and facilitates co-ordination between Member States. It was also commented that this centralised approach is good for encouraging bottom-up activity and local action. A number of consultees highlighted that within the centralised delivery framework there was scope to increase the involvement of Member States. One suggestion was for the overall framework to be set by the EC but for there to be scope to take account of national and regional priorities within this. This was echoed by another consultee who highlighted a need to find a way to involve regions more in the development and evaluation of proposals, this would ensure consideration of national circumstances. One interviewee commented that they would like to see more two-way communication with the member states as this would help to facilitate closer contact with end-users. Consideration could be given to actions with Member States aimed at widening participation amongst national associations and other intermediary bodies. Also, it is thought that grants are an appropriate mechanism for financial delivery especially for new member states. However, there may be scope to explore other more innovative financial instruments as this would increase flexibility although it would increase complexity. Setting up investment funds would require the involvement of financial institutions, it may also be used as a mechanism for encouraging investment in high risk projects and could also be set up in such a way that the money could be recycled into other projects over time.
9.2.9
Lessons from the Past and Improvements
The new programme should try to learn from and avoid the delays experienced by the current programme. Several of the consultees (non-EC officials) mentioned that the current procedures were offputting for applicants, particularly the long delays (e.g. between application and approval). The lack of flexibility in these procedures was also identified as a problem by some. Most consultees agreed that there was scope to raise awareness of the programme by increasing its profile or working to present a stronger image. There was also a view from some individuals that more emphasis on monitoring and evaluation would be beneficial. It is thought that there is still scope to improve the dissemination of project results, although some felt that this had improved in recent years. Some thought should be given to a mechanism to facilitate dissemination; several people suggested that this may involve energy agencies.
9.2.10 Added Value/Integration There was general agreement that there is high potential for the integration of energy issues into other mainstream programmes, particularly the Structural Funds. Interaction between EIE and the Structural Funds will help to ensure that sustainable energy issues are taken into account when capital investments are made EIE could provide support for this. It was suggested that attempts to increase the role of energy have been made at EU-level however, more effort will be needed at Member States level as this is where Structural Fund programme priorities are set.
Annex to Section 9.0: Consultees A) European Energy and Transport Forum (Full members only are listed)
OPERATORS COGEMA - Compagnie Gnrale des Matires Nuclaires UNESA - Asociacin Espaola de la Industria Elctrica IRU - International Road Transport Union ESCA - European Community Shipowners Associations SNCF - Socit Nationale des Chemins de Fer Franais Lufthansa German Airlines Transportation Systems - SIEMENS AG Fortum Corporation EWEA European Wind Energy Association FNTR Fdration Nationale des Transports Routiers Air Traffic Control the Netherlands RTE - Rseau de Transport dElectricit ANAS Ente Nazionale delle Strade ESPO European Sea Ports Organisation O. Energiesparverband Bureau Politique nergtique de lUNICE BDI Bundesverband der Deutschen Industrie e.V. PIAI Cristina, Dott. Ing. POLIS - European Cities and Regions Networking for New Transport Solutions Akzo Nobel Energy B.V. Foundation for the Automobile and Society AIT/FIA International Association of Classification Societies Ltd. (IACS) EUFORES Swedish Maritime Forum CEETA Centro de Estudos Economia Energia Transportes e Ambiente Stellv. Geschftsfhrer Technik TV Rheinland/Berlin/Brandenburg EPSILON Consulting ISUPE Initiative pour des Services d'Utilit Publique en Europe Confederacin de Cuadros Union of Service Communication Employees (SEKO) BTS : Bureau Technique Syndical Europen pour la Sant et la Scurit lETF European Transport Workers Federation IGBCE IG Bergbau, Chemie und Energie
INFRASTRUCTURE AND NETWORKS
USERS AND CONSUMERS
ENVIRONMENT PROTECTION AND SAFETY ACADEMIC EXPERTS AND THINK-TANKS TRADE UNIONS
B) ManagEnergy Reflection Group This group comprises representatives from organisations that are active on energy and transport issues at local and regional level. These organisations include mainly national associations of local and regional energy management agencies and relevant and relevant European networks and associations: Energy Agency associations (chair: Association of Irish Energy Agencies) Representative from the Candidate Countries European networks and associations:
CEMR Council of European Municipalities and Regions IDEA Improvement and Development Agency for Local Government Energie-Citis Association of European Local Authorities EnR European Energy Network FEDARENE European Federation of Regional Energy and Environment Agencies ISLEnet European Islands Network on Energy and Environment
C) Individual Consultees The following individuals were also consulted to provide their views and experiences of the EIE programme. Marc Timmer, EUFORES Heinz Kopetz, European Biomass Association Christiane Egger, O. Energiesparverband Andrew Warren, EuroACE Arthouros Zervos, European Wind Energy Association Gerry Wardell, City of Dublin Energy Management Agency Rod Janssen, Energy Consultant Judith Stammers, Consultant Rick Wilberforce, Pilkington Glass International Janet Sanders, Mid Wales Energy Agency Krzysztof Gierulski, EC Baltic Renewable Energy Centre Ralf Goldmann, Berlin Energy Agency Roman Doubrava, Energy Centre Bratislava Richard Davies, Marches Energy Agency Ricardo Gonzalez, EREN (Regional Energy Agency of Castilla and Leon Spain) Fernando Sanchez Sudon CIEMAT Spain Marisa Olano, Isabel Blanco, IDAE Spain Francesco Ciampa, ENEA (Italian National Energy Agency)

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

Objective Tree - Intelligent Energy Europe - II

Sustainable energy contribution to sustainable devt is significant worldwide

Increased levels of investment

Increased demand for sustainable energy

Obligations as regards implementation of regulations are being met

Energy prices favour sustainable energy investments

mme Progra ope sc

High interest to manufacture and install sustainable energy products

Increased awareness of benefits from sustainable energy

Contribution of proposed instruments to anticipated results:

896 75 (assumed 10% of the funding) 668 1,639

4.5 4.5.1 4.5.2 4.5.3 4.5.4 4.5.5 4.5.6

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

8.1 8.2 8.3

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

Commission Communication on Evaluation (SEC(2000)1051) 1 ECOTEC Research and Consulting Limited

mid-term evaluation EFP(2002)

Sustainable energy policy in the EU

6 ECOTEC Research and Consulting Limited

Progress towards achieving the strategic objectives

COM(2001) 0370 9 ECOTEC Research and Consulting Limited

Enlargement and sustainable development

Enlargement and new member states priorities

COM(2004) xxxx 10 ECOTEC Research and Consulting Limited

12 ECOTEC Research and Consulting Limited

Implementing the energy acquis

80 RES-E share in % of gross electricity consumption

RES-E % in 1997 RES-E % in 2002 RES-E % 2010

Source: European Commission, DG TREN, June 2004

The implications of post-2007 budget planning

Sustainability: also a budget issue

Delivering the EUs sustainability policies: principles and instruments

Global policy challenges

The EU as regional leader and global player on sustainability

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

Box 2: The EU Energy Initiative21

EU energy policy and developing countries

EU energy policy and neighbouring countries

COM(2002) 408 final 20 ECOTEC Research and Consulting Limited

Current energy programmes in the partner countries

COM(2003) 262 final 21 ECOTEC Research and Consulting Limited

22 ECOTEC Research and Consulting Limited

Figure 3: Problem tree developed for the proposed intervention

Sustainable energy contribution to sustainable devt is minimal worldwide

EU targets for sustainable energy will not be met

Slow uptake of sustainable energy technologies

Low levels of investment

Low demand for sustainable energy

Insufficient actions being taken to implement regulations

Low interest to manufacture and install sustainable energy products

Lack of awareness of benefits from sustainable energy

Lack of confidence in sustainable energy technologies

Dissemination and promotion of sustainable energy is still at low level

The overarching problem - the problem analysis

What is the target group and what are its needs?

ECOTEC Research and Consulting Limited

30 ECOTEC Research and Consulting Limited

Establishing the baseline

Decision No 1230/2003/EC 31 ECOTEC Research and Consulting Limited

32 ECOTEC Research and Consulting Limited

COM 2002(162) final/2 33 ECOTEC Research and Consulting Limited