Development and Evaluation of a Market Based and Budget Independent Obligation Scheme for CO2-Reductions in the Heat Market

  • Project no.2278
  • Duration 11/2008 - 12/2013

The European Energy Efficiency Directive (2012/27/EU) requires that all Member States implement an Energy Saving Obligation scheme or alternative instruments that reduce end-use energy consumption by 1.5 % annually. Against this background, the German Federal Ministry of Finance commissioned Ecofys and the Wuppertal Institute to investigate various options for an introduction of an energy saving obligation scheme, following a technology-neutral approach towards incentivising GHG mitigation technologies (including energy efficiency measures, such as thermal insulation, as well as renewable energy based heating and cooling systems).

Based on this discussion, a suitable obligation scheme to address the German building sector was developed. The second part of this study provides a qualitative and quantitative analysis of this scheme. To be able to illustrate the effects for all relevant actors, a set of eight exemplary renewable energy and energy efficiency measures was defined and evaluated.

The following lessons and key messages can be derived from this analysis:

  • A market-based obligation scheme, which is independent from the state budget, can be a suitable instrument to mitigate CO2 emissions in the building sector in a cost-efficient and effective way.
  • The savings potential in the German building stock is sufficient to reach the Government’s energy and climate targets by 2050, mainly with economically attractive measures.
  • The performance of the scheme significantly depends on the system design. The challenge of an obligation scheme with large flexibility for obligated parties is to design the scheme so that the GHG emission mitigation potential in the building stock is tapped in the most cost-efficient way for society.
  • To increase the public acceptance it is (among others) important to maximise the benefits while minimising the strains and costs for final consumers (energy bill payers). Energy price increases are expected to be modest when introducing an obligation scheme. Moreover, increased energy bills are more than compensated through the savings reached by implementing efficiency measures. Therefore, political decision makers should pay attention to a broad participation of building owners and to enabling all consumer groups to benefit from savings.