EU Policies and Regulation on CO2, Renewables and Energy Efficiency: A Critical Assessment of Recent Experiences - Green Energy and Efficiency: An Economic Perspective - page 52

ciency measures. 25 Therefore, before setting up a scheme of obligations on
suppliers, it is necessary to analyse the regulatory framework for energy ef

ef

ciency
as a whole and determine whether the prices of the various energy products re

ect

the production costs in each particular time period, 26

including any negative

external issues that they may cause.
In order to reinforce the price signal for the various energy products and include
the necessary external issues, it is necessary to carry out a reform of environmental
taxation as follows:

A reform in which rates are set according to the environmental damage gen-
erated by each energy source, thus allowing the costs generated by the energy
consumption to be internalised in the price signal. This will help to make many
energy ef

￿

ciency measures more pro table.

A reform that takes the role being played by each energy sector in funding
energy and environmental policies into account, focussing accordingly on the
transport sector (which accounts for 40 % of

￿

nal energy consumption) so that
its economic contribution towards the funding of policies in this eld is

increased (e.g. renewable energies).

A well-designed framework for environmental taxation would achieve the fol-
lowing aims: on the one hand, it would be a useful tool in achieving structural
improvements in energy efciency with a positive impact on competitiveness, and
on the other it would set up a solid revenue basis with the possibility of raising
resources to fund policies geared towards ensuring the economic and environmental
sustainability of the energy model.
Together with a suitable framework for taxation, empirical evidence gathered in
countries that have achieved signi

ciency points
towards the appropriateness of using a combination of additional measures progress
towards energy ef

cant improvements in energy ef

ciency is hindered not by price but by problems linked to
information. This could be the case of the residential sector, where labelling,
standards, information and awareness campaigns, are widely used measures which
have proven in the past to be effective in achieving savings.
Among the alternatives to a framework of obligations on suppliers or distribu-
tors, the promotion of co-generation (which could receive resources from funds
obtained from CO 2 auctions) also plays a signi cant role. In this eld, care should

be taken to ensure the ef ciency of investments and that costs are allocated to those

that bene t from the savings.

25 See, for example, World Energy Council (2010): Energy Ef ciency: A Recipe for Success , and
World Energy Council (2008): Energy Ef ciency Policies around the World: Review and
Evaluation .
26 In other words, it is not just that the price of energy products should cover all costs incurred,
including environmental costs, but also that the price system needs to be suf ciently advanced to
allow for price signals that can be differentiated in time, taking into account the situation of themarket.