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The Energy Charter and Energy Efficiency. Dario Chello Director, Energy Efficiency and Investment Energy Charter Secretariat dario.chello 29 October 2008. What is the Energy Charter Process?. Energy Charter Treaty Strengthen rule-of-law on energy issues

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the energy charter and energy efficiency

The Energy Charter and Energy Efficiency

Dario Chello

Director, Energy Efficiency and Investment

Energy Charter Secretariat

29 October 2008


What is the Energy Charter Process?

  • Energy Charter Treaty
    • Strengthen rule-of-law on energy issues
    • Reduce risk for energy investments and trade
    • Promote energy efficiency
  • Forum
    • Government, industry, other stakeholders across Eurasia
    • Discuss policies and instruments that can provide a constructive framework for international energy cooperation and enhanced energy security
  • Series of Activities
    • To implement principles of the Energy Charter Treaty
    • Developed by Secretariat in cooperation with subsidiary working groups of the Energy Charter Conference and with the help of the Industry Advisory Panel

Four Pillars of the Energy Charter Treaty

  • Investment Protection
    • Creates a stable and supportive business and political climate for cross-border investments across its constituency
  • Trade
    • Promotes a well functioning energy market across borders through guidelines on cross-border trade
  • Transit
    • Facilitates discussion among members of the Charter constituency on promoting and securing cross-border energy flows based on the Energy Charter Treaty
  • Energy Efficiency
    • Encourage international cooperation in developing and implementing energy efficiency strategies and policies

Energy Charter Process

  • Energy Charter Conference - the governing and decision-making body for the Energy Charter Process
  • 51 Signatory Countries represent:
    • Around 40% of global GDP
    • Around 40% of global gas production
    • Around 25% of global oil production
protocol on energy efficiency and related environmental aspects peerea
Protocol on Energy Efficiency and Related Environmental Aspects (PEEREA)
  • Formulate and implement EE strategies and policies
  • Create appropriate legal, regulatory and institutional frameworks
  • Develop, implement, and update EE programmes
  • Encourage new approaches of financing EE
  • Co-operate internationally and assist each other
peerea activities
PEEREA Activities
  • Review Progress in Member Countries
    • In-depth reviews (18 since 1999)
    • Regular reviews (60 since 1999)
    • Follow-up reviews (6 since 2004)
    • Regular updates from Members
  • « Horizontal » Studies
    • 20 reports since 1999
  • Events, information sharing, cooperation
peerea activities monitoring and supporting achievement of commitments
PEEREA Activities – monitoring and supporting achievement of commitments
  • Regular reviews

Albania 2007, Russian Federation 2007, Bosnia & Herzegovina 2008, Italy 2008, Ukraine 2008

  • In-depth (peer) reviews

Latvia (2007), FYR Macedonia (2007), Bulgaria (2008), Slovak Republic (2008)

  • Progress report to the Environment for Europe process – for Kiev 2003 and Belgrade 2007
delivering energy efficiency
Progress and Challenges:

Institutional and Policy Framework

EE in Buildings

EE in Appliances

District Heating and Cogeneration



Using KP Mechanisms


Integrating EE and RE

Delivering Energy Efficiency
peerea support activities
PEEREA Support Activities
  • Advice support to governments (in-depth review recommendations)
  • Analytical reports and policy papers
  • Discussions and exchange of experience in the PEEREA Working Group (panel discussions, round table, good practices dissemination)
  • Invited presentations by relevant institutions (EU Commission, IEA, UNFCCC, EBRD, UNECE …)
  • Dissemination of information
how much investment is needed
How much investment is needed?
  • UNFCCC “Investment and Financial Flows to Address Climate Change”, 2007

To return to current emissions levels by 2030, annual investment of $150 billion in 2030 in EE

    • Of this, $60 billion in developing/transition countries
    • On top of $400 billion p/y in clean energy supply
  • IEA “Energy Technology Perspectives 2008”
    • To halve emissions by 2050 (Blue Scenario)
    • $45 trillion in investment to 2050
    • 36% of savings from end-use efficiency
where will investment come from
Where will investment come from?

“When considering means to enhance investment and financial flows to address climate change in the future, it is important to focus on the role of private-sector investment as they constitute the largest share of investment and financial flows (86%)”


why is demand side ee different
Why is Demand-side EE different?
  • Business Framework
    • Split incentives
    • Not “core business” (e.g. industrial or commercial operations are not EE businesses)
  • Nature of investments
    • Often small and scattered
    • No obvious revenue stream – baseline problem
what is needed
What is needed?
  • Underlying investment framework
  • Energy Efficiency Institutional Framework
  • Well-targeted Programs
  • Enhanced International Cooperation
strong underlying investment framework
Strong underlying investment framework
  • EE investments still investments
  • Financial situation means less “easy money”
  • Pricing
  • Energy Charter Framework exists and is working
  • Energy Charter Treaty contains comprehensive dispute settlement mechanisms
strong ee institutional framework
Strong EE Institutional Framework
  • Government EE Organisations
    • Dedicated, stable
    • Links with other government agencies (incl. transport)
    • Active cooperation with industry
    • Links with regions
  • Strategy and Action plans
    • Targets and timelines
    • Short- and long-term
    • Realistic funding (maybe dedicated funding)
    • Clear roles for EE and RE
  • Legislation
    • Priority for EE clearly stated
    • Responsibilities clear and effective
  • Monitoring and review
    • Accurate and transparent assessment
    • Balance precision with stability
well targeted programs
Well-targeted programs
  • Commercial and Residential sectors dominated by mass produced items, so regulation supported
  • Industry sector can be more diverse – need more specific approaches
  • Transport is often difficult – need a systems approach
  • Role for broad measures (e.g. white certificates, information)
  • EE on supply side important
enhanced international cooperation
Enhanced International Cooperation
  • Sharing of Information and Experience

Examples: IEA, PEEREA

  • Joint projects

Examples: APEC-ESIS

  • Global frameworks

Examples: UNFCCC, Energy Charter

  • International Finance

Examples: Development Banks, EE21

the future of peerea
The future of PEEREA

PEEREA has supported effective action….

  • Improved understanding and sharing among members
  • Rapid institutional and policy progress in many transition countries

…but more needs to be done

  • Coverage
  • Certainty
  • Speed
promoting investment in ee
Promoting Investment in EE



EE Institutions





Thank You!

Energy Charter Secretariat