June 2005 Agreement on Energy Saving Initiatives

June 10^th 2005 the Danish Government (the Liberal Party and the Conservative People's Party) made an agreement with the Social Democrats, the Danish People's Party, the Social Liberal Party and the Socialist People's Party on future energy-saving initiatives.

This agreement is a follow-up on the March 29^th 2004 political agreement to ensure a reliable energy infrastructure for the future and the draft Action Plan for renewed energy conservation which the Danish Government presented on December 29^th 2004.

The 2005 agreement sets a framework for energy saving initiatives as well as the main elements included in these within the next years. The agreement establishes a solid framework for increased cost effective and market oriented energy saving initiatives, which focus on achieving viable savings to the benefit of consumers, enterprises and Danish society.

There is a need for ambitious and dynamic energy saving initiatives. Savings in energy consumption by increasing the efficiency of energy use contribute to growth and business development, to the maintenance of a high degree of security of supply, and to addressing global environmental problems in particular climate changes. The agreement is therefore a central element in an energy strategy which takes the long-term challenges seriously.

The Parties agree on the objective that the overall energy consumption (not including transport) must be reduced. The agreed target concerning energy-saving initiatives is ambitious and has been set with an energy efficiency objective in mind. It is expected that energy saving initiatives will more than counterbalance the increase in energy consumption (not including transport), which has been indicated by economic growth and by the Danish Energy Authority's projections. The Parties agree that the development in energy consumption should be monitored closely. If, in a few years time, energy consumption (not including transport) does not progress as expected, or if the premises for entering into this agreement change significantly, the Parties will discuss the situation with the aim of finding a solution. If no agreement can be reached the Parties will have to deal with this new situation.

Viewed in the light of these facts, the Parties agreed on the following additions to the Government's draft action plan for renewed energy conservation.

1. Initiatives will be taken to achieve concrete energy savings, which can be documented, corresponding to an annual average of 7.5 PJ during the period of 2006-2013. The saving target set with this agreement is approx. 3 times higher than the current annual amount of energy savings. Conditioned that the macroeconomic assumptions for the forecast of energy consumption remain valid, the result will be total energy consumption (not including transport) of 430 PJ in 2013.
   The parties agree to monitor the development in energy savings achieved with a view to ensuring a continued focus on these initiatives among all parties involved. In December 2008, a comprehensive review was made of the initiatives and the results achieved with a view on ensuring that the instruments are sufficient and that the initiatives have been efficiently organised relative to the agreed target.
2. The increased savings should to a large extent be achieved by means of greater savings delivered by the grid and distribution companies in the electricity, natural gas, district heating and oil sectors. The savings must be achieved within the existing economic framework. Target management is introduced and the grid and distribution companies are given a high degree of freedom in regards to applied methods.
   In the autumn 2005 these initiatives were implemented through an agreement with the electricity grid, natural gas, district heating and oil companies. The agreement sets the general framework for the initiatives and the methods of calculating the effects.
   In relation to commercial enterprises a part of the activities must be completed through the use of tenders. The Coordina¬tion Committee (cf. point 3) will prepare the basis for a model for the calls for tender. The model will be submitted to the Parties of this agreement.
3. A Coordination Committee is established to ensure that the saving initiatives are cost effective. The committee should ensure better joint prioritisation and increased co operation and coordination among all actors involved. The committee should also ensure that more focus is placed on heat savings.
4. Well-designed, effective energy labelling for buildings - with concrete suggestions for viable savings projects - shall be the point of departure for increased heat savings. The labels should also include financing proposals.
5. In order to promote realisation of heat savings, the Government must in connection with the implementation of L 136 on energy savings in buildings:
   • set the frequency of regular labelling of large buildings at a maximum of 5 years; 
   • set the validity of energy labels for small buildings at a maximum of 5 years; 
   • ensure regular labelling of all public buildings regardless of size; and 
   • after 3 years, consider whether, on the basis of the experience gained, all buildings shall be regularly labelled. 
6. Furthermore, grid and distribution companies must prioritise heat savings. As a part of these initiatives the companies must enter into agreements with the building sector on package and standard solutions. Arrangements must be made for citizens to have a point of contact to receive advice on realisation including advice on financing.
7. The Minister of Transport and Energy will initiate negotiations with municipalities and regions with a view for them to comply with the same requirements for energy effective purchase and energy savings, with up to 5 years payback time, as state institutions.
8. On an EU level pressure must be applied so that the Eco-design directive, specifying standards for a range of products particularly for standby consumption, is implemented as soon as possible.

Other elements in the Government's draft action plan, which are not affected by the above changes, are implemented as described in the draft.

In continuation of this agreement, the Government has submitted the final Action Plan for renewed energy conservation.

In November 2005, the Government submitted a status on the implementation of the elements in this agreement and of the other elements in the Action Plan to the Parties of this agreement. The status reported on the agreement made with the electricity grid, natural gas, district heating and oil companies as well as on the ways that the energy saving target will be achieved.

A status of the energy saving initiatives is given in the annual energy saving reports, starting in the autumn of 2006.