Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

POLICY AND LEGISLATIVE FRAMEWORKEnergy and RES framework- Directive to limit carbon dioxide emissions by improving energy efficiency (SAVE) (Council Directive 1993/76/EC)- Directive establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive1996/61/EC (European Parliament and Council Directive 2003/87/EC)- White Paper on Energy Policy – COM(95)682 Final (January 1996)- White Paper on Renewable Energies – COM(97)599 Final (November 1997)- Communication from the Commission on the implementation of the Community Strategy and Action Plan - COM(2001)69(01)- Directive restructuring the Community framework for the taxation of energy products and electricity (Council Directive 2003/96/EC)Electricity from RES- Directive on the promotion of the electricity produced from renewable energy sources in the internal electricity market (EuropeanParliament and Council Directive 2001/77/EC), as amended by the European Parliament and Council Directive 2006/108/EC (accession ofBulgaria and Romania) and by the Treaty of accession of ten new Member States (Annex II, Chapter 12(A) 8)Other renewable energy sources- Directive on the energy performance of buildings (European Parliament and Council Directive 2002/91/EC)- Directive on the promotion of the use of biofuels and other renewable fuels for transport (European Parliament and Council Directive2003/30/EC)- Directive on the promotion of cogeneration based on a useful heat demand in the internal energy market (European Parliament and CouncilDirective 2004/8/EC)- The Green Paper ‘A European Strategy for Sustainable, Competitive and Secure Energy’ – COM(2006) 105 final- Directive on energy end-use efficiency and energy services (European Parliament and Council Directive 2006/32/EC)Under certain constraints the ERDF supports energy projects under both the Convergence objective 46and the regional Competitiveness and employment objective 47. Similar principles are adopted for theCohesion Fund.In all cases, several alternative financing forms have to be considered, not only the grant based scheme,and the most appropriate have to be identified for the specific project in question. The project could bealternatively financed by loan funds, interest rate subsidies, or guarantee schemes, or by creating revolvingfunds with public money, or by other schemes. For example, in the case of projects dealing with energyefficientbuildings with a longer pay back period, by providing investment capital from the fund at lowerthan market interest rates, a capital mix can be reached for those projects that reduce pay back periods toacceptable levels in order to stipulate good energy service contracts with Energy Service Companies(ESCO) existing in the market 48.3.3.3.2 Project identificationWhen defining the functions of the project, it is advisable to:- specify the site and location of the potential area served (e.g. research and drilling of a new well fieldmay have as its objective the supply of energy for more than one country, a new power station mayserve an entire region, and so on);- describe the projected positioning of the product on the market;- describe the institutional context and the legal framework into which the project fits, at UE and Statelevel; specifically describe the sale tariff regimes for energy production and any incentives, orcontributions, or minimum prices, or tax exemptions, etc., for the production of energy, (for example,from renewable sources);- state the phases of the investment; e.g. for a well field the prospecting and research within the targetarea, initial test drilling, mining and commercial exploitation, closure, site clearance and46Regulation(EC) No 1080/2006, Art. 4-9 ‘energy investments, including in improvements to trans-European networks which contribute toimproving security of supply, the integration of environmental considerations, the improvement of energy efficiency and the development ofrenewable energies; 10. education investments, including in vocational training, which contribute to increasing attractiveness and quality of life’.47Regulation(EC) No 1080/2006, Art. 5-2(c) ‘stimulating energy efficiency and renewable energy production and the development of efficientenergy management systems’.48In some of the Member states Energy Service Companies (ESCO) successfully offer energy service contracts. The basic idea is that thecompany undertakes the necessary energy upgrading investments and runs the heating and cooling systems. The service package offered by thecompany is paid out of the energy saved.112