Financial Sustainability and Cost Effectiveness of Policies in the Context of Article 7 EED – Article 7 and MRV – Requirements and Best Practice

All policies under Art. 7 require some resources of different manner to deliver results that can be reported under the Art. 7 target. The monitoring, reporting and verification costs occur in all policies. Providing financing and cost effectiveness by design are key to the financial sustainability of Art. 7 policies.

Availability of funding is crucial for many policies to deliver results. Various funding options could be considered and many of them depend on political support and priorities.

The choice of source could also impact the scope and duration of the programme. Some of the funding options are available only in specific regions or dedicated to chosen target areas.

Designing a mix of policies (Alternative Measures and Obligation Schemes) that take advantage of multiple available funding options could support reaching their targets. Proper use of multiple funding options could decrease the risks and uncertainties connected with each source of financing.

Cost effectiveness of policies can be evaluated from various perspectives. For the purpose of this report, cost effectiveness is evaluated from the broad perspective accounting for the benefits and costs of all stakeholders involved as well as the impact on the public budget.

When analysing cost effectiveness of Art. 7 EEOS or AM, it is important to distinguish between different types of costs as each type can be addressed in a different manner. Typically, the cost structure can be split into: programme costs (also support costs), societal costs (also investment costs) and administrative costs (also running administrative costs).

Topics described in this report were chosen based on gaps and needs analyses conducted under the ENSMOV project through survey and desk research. This report focuses on financial topics from the perspective of policy design/redesign ranked very high in terms of their priority by the stakeholders, such as Ensuring the sustainability of the EEO scheme/alternative measure(s) in terms of re-financing (e.g., through cost recovery for obligated parties), Designing the policies in order to minimise the costs for all parties involved and more.

The suggestions and comments included in the survey were also considered to prepare the report. Those included the need for information about:

• Green finance instruments to leverage energy efficiency investments

• Mobilisation of new financial instruments through funds and re-financing tools

• Examples in relation to accessing and managing EU funding

• Cost paid by the citizen (price of energy)

• Cost effectiveness of alternative measures

• In-depth analysis on design and structural elements of policies (in the context of financial aspects)

Access the report

Authors: Wojciech Stańczyk, Arkadiusz Węglarz, Justyna Ślusarczyk, Krajowa Agencja Poszanowania Energii (KAPE)

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