1. Energy Efficiency in the Power sector Mariangiola Fabbri WWF EPO - Climate and energy unit Ad Hoc Group on Energy Efficiency, 27th March 2006

2. Electric Power Sector Electric power industry emits 1/3 of total CO2 emissions in EU25 (37% of CO2 emissions globally ) Most rapidly growing source of CO2 emissions few power companies are moving away from fossil fuels ‘WWF Ranking Power’ (2004) 72 large power companies (65% electricity in OECD & Russia, 2/3 of the companies less than 1/10, 90% ranked less than 3) only 20% of European power companies used more than 2% RES 2 degrees and avoid disastrous climate changeneed to change investment patterns in order to stay below 2 degrees and avoid disastrous climate change

3. Strategy elements for power generation Target 2020: Policies and measures to reduce GHG emissions in the EU (WWF, 2005) increase 0.8% and 1.4%/y2000-2020 Energy demand for final use will increase btw 0.8% and 1.4%/y current electricity generation from fossil fuels will wipe out emissions reductions more efficient and less carbon intensive systemmore efficient and less carbon intensive system needed strong support for CHP + decentralised generationincreased power generation by RES +strong support for CHP + decentralised generation investmentsgrid systeminvestments to improve efficiency in grid system

4. Strategy elements for power generation (2) 17% electricity saving vs. BAU Increasing power generation by RES (share up to 38%) support for CHPIncreasing support for CHP (share from 14% to 23.5%) Improved efficiencyImproved efficiency of new-built fossil power plants (switch to gas-fired CCGT with high electric efficiency, preference to BAT, R&D) fuel switch to low-carbon fuelsfuel switch to low-carbon fuels > more CCGT, decrease of hard coal and lignite-fired power plants retrofitting existing old power plants

5. CHP Considerable fuel savings and reduction in CO2 emissions, reduced distribution losses + higher efficiency support efficient cogeneration plant (fixed tariffs for electricity, bonus system or feed-in tariffs, quotas or subsidy schemes, clear regulation on conditions for purchasing CHP electricity by grid companies) privileged access to the market avoided losses to be accounted for comparison to centralised production level playing field, no discrimination (i.e. high connection charges)

6. Transmission & distribution Losses up to 10% of electricity produced Cost-effective measures to reduce losses not taken up Remove disincentives to energy efficiency activitiesRemove disincentives to energy efficiency activities Allow distribution company to recover costs for investments made on energy end-use side (Energy end-use efficiency and energy services directive) costs to be recovered via energy prices, tariffs of regulated part of business or general taxation central authorities or regulators could grant incentives for operators performing above minimum performance levels for energy generation

7. Transmission & distribution (2) standards for distribution transformersMinimum energy performance standards for distribution transformers (saving potential > 20 TWh/a in EU) Increase investments to reduce grid lossesIncrease investments to reduce grid losses energy efficiency obligationIntroduce energy efficiency obligation on distribution system operators Benefits of cost recovery: increased system reliability, cost- reduction, reduced demand and reduced emissions Internalise external environmental costs of energy use

8. Energy End-use Efficiency and Energy Services Directive Structural change of EU energy market neededStructural change of EU energy market needed to shift from offering energy to energy services directive potential cornerstone in transformation of the electricity market unsatisfactory text, but opportunity to develop energy efficiency plans at national level: suppliers should be obliged to carry out energy efficiency activities (from pure end-use energy suppliers to ESCOs offering energy efficient solutions to customers) - Incentives? Energy efficiency programmes for transmission and distribution

9. Conclusion Energy efficiency in power sector could improve significantly: RES and Cogeneration Decentralisation Investment in efficiency of the grid EE&ES directive to improve energy efficiency in supply, transmission and distribution(specific energy efficiency programmes and activities)

10. THANK YOU FOR YOUR ATTENTION www.panda.org/epo Mfabbri@wwfepo.org