Policies and measures of energy efficiency in Bulgaria ODYSSEE- MURE Monitoring energy efficiency targets of the EU and Bulgaria

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1 Policies and measures of energy efficiency in Bulgaria ODYSSEE- MURE 2010 Monitoring energy efficiency targets of the EU and Bulgaria Sustainable Energy Development Agency Sofia, September

2 Contacts: Lyudmil Kostadinov Sustainable Energy Development Agency 1000 Sofia, 37 Ekzarh Jossif str. Tel.: (+359 2) / Fax: (+359 2) LKostadinov@seea.government.bg 2

3 Content Page 1 Executive summary 6 2 Main Messages 6 3 Preconditions of energy efficiency General economic conditions Energy consumption trends: by fuel and by sector Political preconditions for the development of energy efficiency 12 4 Summary evaluation of the development of energy efficiency Summary evaluation of energy intensity (final, primary, explanation of the difference) Industry Households Services Transport Assessment of energy efficiency/energy savings through ODEX: global and by sector CO2 emissions 32 5 Energy efficiency measures Recent energy efficiency measures Patterns and Dynamics of Energy Efficiency Measures Innovative Energy Efficiency Measures Energy efficiency measure evaluations 40 6 National Developments under the EU Energy Efficiency Directive and the 20% Energy Efficiency Target of the EU 44 Annex 1 Energy Efficiency Measure Summary 45 Annex 2: Energy Efficiency Profile of Bulgaria 49 3

4 Index of Figures Page Figure 3.1.1: Economic Development of Bulgaria - GDP and macro sectors, Figure 3.1.2: Average growth rate of GDP in Bulgaria 8 Figure 3.1.3: Shares of macro-sectors in GDP of Bulgaria 9 Final energy consumpiton by fuel and energy, ktoe liquid fuels natural gas charcoals electricity heat biomass total Figure 3.2.1: Final energy consumption in Bulgaria 9 Figure 3.2.2: Shares of energy and fuel in FEC of Bulgaria, Figure 3.2.3: Shares of energy consumption in FEC sectors in Bulgaria, Figure 3.2.4: PEC by fuel and energy, Figure 3.2.5: Shares of fuel and energy in PEC, Figure : Individual targets of obligated persons 13 4

5 Figure 4.1.1: GDP, PEC and PEI, ,8 Gross domestic prouct (GDP), Final energy consumption (FEC), Final energy intensity (FEI): 2000 =1,0 1,6 GDP 1,4 1,2 FEC 1,0 0,8 FEI 0, Figure 4.1.2: GDP, FEC and FEI, Figure 4.2.1: Value added, energy consumption and intensity of industry, Figure 4.2.2: Consumption of energy and fuel industry, Figure 4.2.3: Shares of energy and fuel energy consumption in industry, Figure 4.2.4: Shares of sectors in value added in industry, Figure 4.2.5: VA, energy consumption and energy intensity of manufacturing, Figure 4.2.6: Value added by branches of manufacturing, Figure 4.3.1: Energy consumption, private consumption and energy intensity of households in Bulgaria, Figure 4.3.2: Shares of fuel and energy in energy consumption of households, ( ) 20 Figure 4.3.3: Fuel and energy consumption in Bulgarian households, Figure 4.3.4: Change in the energy mix of Bulgarian households in Figure 4.3.5: Impact of the energy mix change on the useful energy in households 21 Figure 4.3.6: The ratio of the cost of purchasing energy to the Bulgarian household incomes, Figure 4.4.1: VA, energy consumption and intensity and electricity intensity, Figure 4.4.2: Consumption of fuel and energy in services, Figure 4.4.3: Shares of energy and fuel in energy consumption of services, Figure 4.4.4: Relative change in energy consumption in services, Figure 4.5.1: GDP, energy consumption and energy intensity of transport, Figure 4.5.2: Share of energy consumption of rail transport in total energy consumption in transport,

6 Mpkm cars rail buses Figure 4.5.3: Passenger transport performance by mode of transport (cars, buses and railway transport). 26 Figure: 4.5.4: Freight transport performance by type of transport (road and rail), Figure 4.5.5: Unit consumption of road transport per equivalent car, Figure 4.5.6: The ratio of fuel prices to average income per capita 28 Figure 4.5.7: Case of new cars in Bulgaria, Figure 4.6.1: Comparison of the global index ODEX - EU27 and Bulgaria. 29 Figure 4.6.2: ODEX index of industry and some energy intensive branches of manufacturing industry (ferrous metals, chemicals, paper and pulp) 30 Figure 4.6.3: Transport ODEX 30 Figure 4.6.4: Households ODEX 31 Figure 4.7.1: Status and development of GHG emissions in Bulgaria at PEC, Figure Status and development of GHG emissions in Bulgaria at FEC, Figure 4.7.3: CO2 emissions in the Energy sector, Figure 4.7.4: CO2 emissions in Sectors-final energy consumers, Figure 4.7.5: CO2 emissions in Household sector 34 6

7 Abbreviations CM CMD EC ЕЕ EEA EEL EI EL EU ESD FEC FEI FNAPEE GDP GVA IS KIDSF NAPEE NSEE NSI MEET MF MRRB VA PEC PEI PPP RES RES (el) RES (th) RW SEDA SME SNAPEE Council of Ministers Council of Ministers Decree European Commission Energy efficiency Energy Efficiency Agency Energy Efficiency Law Energy intensity Energy Law European Union Directive 32/2006/EU for Energy Services Final energy consumption Final energy intensity First National Action Plan for Energy Efficiency Gross domestic product Gross value added Industrial systems Kozloduy International Decommissioning Support Fund National action plan for energy efficiency National strategy for energy efficiency National Statistical Institute Ministry of Economy, Energy and Tourism Ministry of Finance Ministry of Regional Development and Public Works Value added Primary energy consumption Primary energy intensity Pecuniary purchasing parity Renewable energy sources Renewable sources for producing electricity Renewable sources for producing thermal energy Railway Sustainable Energy Development Agency Small and medium size enterprises Second National Action Plan for Energy Efficiency koe Kilogram of oil equivalent ktoe Thousand tonnes of oil equivalent pkm passenger-kilometres tkm ton-kilometres 00p Euro value at basic prices in 2000, adjusted to PPP 05p Euro value at basic prices in 2005, adjusted to PPP 7

8 1. Executive summary After a sharp decline in GDP of Bulgaria in 2009, consequently in 2010 and in 2011 a gradual recovery is observed. In 2010 VA in industry is most increased. If there are no new arising factors which can worse condition of export, the expectation is the country to begin slowly to emerge from the economic crisis. The strongest influence on FEC and PEC of Bulgaria has the consumption of liquid fuels. In the domestic consumption of liquid fuels decreased by 10,5% and the proportion of oil was reduced by 2,5%, nevertheless FEC and PEC starts increasing. The country traditionally exports significant quantities of liquid fuels and electricity. It influences strongly on the volume and structure of PEC. In 2010 Bulgaria has imported over 99% of its petrol and 100% of its nuclear to satisfy all needs. At the same time Bulgaria has exported 35% of the produced liquid fuels and 21% of electricity. The export of electricity in 2010 compared to 2009 has increased by 67% in absolute terms. For the same period the share of renewable electricity production has increased by 0,8% at the expense of nuclear energy. Rather typical for 2010 are the increased use of solid fuel (firewood and coal) because of the relatively low cost and the impact of economic crisis on revenues. For the first time in the period of , in 2010 the trend of the Bulgarian economy of decreasing FEI and PEI turns and begin to grow. Perhaps this increase is due to the economic crisis, as well the accompanying structural changes (about 20% - due to the increase in the share of industry in GDP). In 2010 starts the process of integrating the policies of energy efficiency and renewable sources of energy. The first step is restructuring the existing Energy Efficiency Agency into Sustainable Energy Development Agency. The new agency combines the implementation of activities of conducting the state policy for increasing energy efficiency in final energy consumption and providing energy services, as well as state policy to encourage the production and consumption of electricity, thermal energy and cooling from renewable sources, gas production and consumption from renewable sources, and the production and consumption of bio fuels and renewable energy in transport. 8

9 2. Main Messages Until now, the level of energy efficiency of the Bulgarian economy depended mostly on the level of energy efficiency in the industry. Over the last decade, including in 2010, we have seen a continuous increase in the share of services in FEC. In 2010 the proportion of households and services in FEC reached 37,4%. Since most of the energy in these two sectors is spent on heating, the influence of the characteristics of the buildings in Bulgaria on the level of energy efficiency also increases. In future, this impact will be commensurable with the impact of the energy intensive industry. Bulgarian households fail to reduce significantly their energy consumption, despite rising energy prices and slowing growth in their income. They continue to improve their energy comfort at the expense to satisfy other necessities. If the trend of faster growth in energy prices compared to the income of households remains the same and if they do not receive any external support to improve the characteristics of buildings and appliances, can be expected the energy comfort of Bulgarian household to decline in conditions of the already reduced expenses to meet other needs. Reduced consumption of liquid fuels is caused by reduced use of private cars, due to the rapid increase in oil prices. Practically, this means fewer opportunities to travel and necessity to be considered practical alternatives to preserve the mobility of Bulgarian citizens. Based on the above statements can be defined the following key messages (in conditions of ongoing economic crisis and limited growth of household incomes): Additional incentives should focus on households, especially for improving the energy performance of buildings. Increasing energy prices through existing regulatory mechanisms will cause a further increase in the use of solid fuels, and if is not combined with other measures (stimulus), this inevitably will lead to a reduction of energy comfort. It needs to be developed schemes for alternative transport to meet all kinds of needs (urban and intercity) and to take measures to adapt existing infrastructure to the characteristics of alternative transport. 9

10 3. Preconditions of energy efficiency 3.1. General economic conditions During the period average GDP growth was 5, 8% (Figure 3.1.1). In 2009 there was a sharp decrease, and in 2010 GDP growth is symbolic (0, 2%). In 2006 the relation between individual expenses and GDP was 76%. After that it starts decreasing and reaches up to 71% of GDP in 2009 and In 2011 compared to 2010, GDP is growing by 1, 8%, according to preliminary data from National Statistical Institute. The increase was most pronounced in manufacturing (9.1%). Figure 3.1.1: Economic Development of Bulgaria - GDP and macro sectors, Unlike the period in the period , Bulgaria cannot maintain a high index of GDP growth. Figure 3.1.2: Average growth rate of GDP in Bulgaria In the period there have been significant changes in the structures of GDP (Figure 3.1.3). Of special interest are the changes in the period While the shares of agriculture and custom duties are almost unchanged, the share of services has increased (+1,7%) and the share of industry decreased significantly (-1,6%). These changes in the structure of GDP have an influence on reduction of energy intensity. 10

11 Besides the above circumstances, impact on energy intensity has also the share of ''gray'' economy in the country which continues to be very significant (20 to 30%). Figure 3.1.3: Shares of macro-sectors in GDP of Bulgaria 3.2. Energy consumption trends: by fuel and by sector The strongest influence on FEC of Bulgaria has the consumption of liquid fuels (Figure 3.2.1). In the consumption of liquid fuels are highlighted two trends. The first is growth in the period , and the second is a reduction in the period FEC follow these trends with minor variations influenced mostly by the consumption of electricity. The trend in electricity consumption follows the trend of liquid fuels with a delay of 2 years. The most probable reason is the regulated electricity prices in Bulgaria, which are set to the energy market with some delay. It has to be taken into account that 2005 is the key year for legislation regarding the energy efficiency in Bulgaria. Then the first Law on Energy Efficiency was accepted, which introduced mandatory audits and mandatory application of energy efficiency measures in buildings and businesses-large energy consumers. Final energy consumpiton by fuel and energy, ktoe liquid fuels natural gas charcoals electricity heat biomass total Figure 3.2.1: Final energy consumption in Bulgaria In the period the share of liquid fuels decreases, while the shares of gas, heat and biomass increased. Bulgarian economy reduces consumption of liquid fuels under the pressure of quickly rising prices and the upcoming economic crisis. Parts of the liquid fuels used for heating, were replaced by coal and natural gas. 11

12 In 2010 the share of fuels and energies, which are used primarily for heating (thermal, biomass, coal and natural gas), has increased (Figure 3.2.2). Shares of energy and fuel in FEC liquid fuels 38,6 36,1 natural gas 27,2 26,8 11,1 9,3 9,7 11,0 10,8 9,3 4,6 5,6 charcoals electricity heat biomass Figure 3.2.2: Shares of energy and fuel in FEC of Bulgaria, Figure shows that in the period 2009 to 2010 the reduced share of liquid fuels is caused by the reduction in the share of transport in FEC, which is a direct consequence of the small increase in GDP. Industry, custom and services increase the consumption and also shares in FEC. Shares of sectors in FEC % ,1 28,6 32,7 31,4 26,0 25, ,1 11,4 5 2,2 2,1 0 industry trasnport lifestyle services agriculture Figure 3.2.3: Shares of energy consumption in FEC sectors in Bulgaria, It can be assumed that in the period PEC of Bulgaria is almost stabilized around 19,000 ktoe, although in the period appears a decreasing trend (Figure 3.2.4). Assuming that the period is a crisis for the economy of Bulgaria, the figure shows that in 2010 PEC begins to grow, which is a symptom for the beginning of recovery. The change of PEC in Bulgaria is difficult to analyze because the country traditionally exports significant amounts of liquid fuels and electricity. This circumstance affects both volume and structure of PEC, for example: Oil consumption. Bulgaria imports over 99% of its oil and in 2010 exported 35% of its liquid fuels; 12

13 Nuclear energy consumption. Bulgaria imports 100% of its nuclear energy and in 2010 exported 21% of the produced electricity). Figure 3.2.4: PEC by fuel and energy, In the period the most significant change in the structure of PEC is the result of reduced consumption of liquid fuels, which has led to a reduction in the share of oil in PEC by 2,5%. This decrease is primarily due to the reduced consumption of liquid fuels in transport. During the above mentioned period, the export of liquid fuels has not changed significantly, while domestic consumption of liquid fuels fell by 10.5%. Another feature of 2010 is that RES (el.) and RES (t.) have significantly increased their shares: a total of 1,9% compared to 2009, indicating the potential of the country to produce energy from RES. Figure shows the substitution of nuclear energy with RES (el). Bulgaria exports significant amounts of electricity. In 2009 this export was 13%, in % of the produced electricity. In absolute value the export of electricity has increased by 67 %. However, the increased share of coal is not due to an increased amount used for conversion into electricity, but for final consumption. The increased consumption in natural gas is shared almost equally between the energy sector, the final nonenergy consumption and FEC. Figure 3.2.5: Shares of fuel and energy in PEC,

14 3.3. Political preconditions for the development of energy efficiency Energy strategy of Bulgaria till 2020 Bulgaria aims to reduce energy intensity of GDP with 50% by 2020, reaching the value of this indicator 0,233 koe/ 05 from its level in 2005 of 0,466 koe/ 05. The implementation of the Energy strategy of Bulgaria 2020, regarding the improvement of energy efficiency, will lead to saving more than ktoe primary energy, compared to the baseline scenario for development in National energy efficiency strategy (draft) NSEE is prepared in accordance with the requirements of Article 3 (2) and Art 7 of Energy Efficiency Law. The strategy formulates the purposes, basic principles, relevant instruments, sector policies, the expected results and the necessary funding for their achievement. This is the first Energy Efficiency Strategy of the Republic of Bulgaria. It is aimed at the development and implementation of a comprehensive national policy for energy efficiency. This strategy is based on the EU (Green Paper on Energy Efficiency and Action on Energy Efficiency, published in ), the Strategy for Economic Development of Bulgaria, the National Strategic Reference Framework and Energy Strategy National action plan for energy efficiency NAPEE was developed on the basis of Directive 2006/32/EC on energy efficiency in final consumption and energy services (The Directive). It determines a national target for energy savings in 2016 not less than 9% of final energy consumption (determined by the method of the Directive), or an average of 1% per year, which means that the country should achieve energy savings of the total amount of 627 ktoe or GWh. The national plan is divided into three periods: First National Action Plan for Energy Efficiency NAPEE covered the period The transitional objective, formulated in it, amounts to 209 ktoe saved energy by the end of 2010, representing 1/3 of the general purpose. On was adopted a summary report on the implementation of FNAPEE by the Council of Ministers. The report contains an analysis of the energy efficiency in the period and assessment for the results attained, using the "top-down" method and using the "bottom-up" method till Chart: Summarized indicators of the implementation of FNAPEE Interim target of FNAPEE GWh/ Per year ktoe / per year Implementation of FNAPEE GWh / per year ktoe / per year Percentage of attainment of the interim target Percentage of attainment of the final national target % % Economic effect mln. / per year Ecological effect mln. t СО 2 / per year Social effect Number of new jobs , ,7 284,3 2,

15 Second National Action Plan for Energy Efficiency SNAPEE was adopted by the Council of Ministers on and includes the period from 2011 to Currently the plan is the only strategy in energy efficiency in the country. The plan determines an interim target for the period equal of 2/3 of the national target by 2016 i.e. 418 ktoe / year or 4,860 GWh. For this period a total of 58 measures are planned to be implemented in all sectors - final energy consumers, as well as horizontal measures. For each measure are listed responsibles for its implementation and monitoring institutions, funding sources, expected savings from its implementation and more. The plan contains an analysis of the public sector and the market for energy services and preparation of plan for buildings with near zero energy consumption. Report on the implementation of SNAPEE during its first year was prepared and is expected to be adopted by the Council of Ministers. Chart: Summarized indicators of the implementation of SNAPEE Target for 2011 Expected savings Over fulfilment GWh/per year GWh/per year GWh/per year % Individual targets for energy savings In accordance to Art. 10 of the EEL, the national target for energy savings is distributed as individual targets for energy savings between three groups of obligated persons, namely: Energy traders Owners of buildings - state and/or municipal property, in exploitation with the floor area over 1000 square meters. Owners of industrial systems (IS) with an annual energy consumption over MWh. At this moment the total number of obligated persons is 649, of whom : Energy traders - 52 Owners of buildings Owners of industrial systems The target which the obligated persons have to reach is 5, 984 GWh (516 ktoe) and it represents 82% of the total national target for energy savings (Figure ). The remaining 18% will be met by non-obligated persons - final energy consumers. Obligatory energy savings in GWh Industrial systems Buildings Traders 4644 Figure : Individual targets of obligated persons 15

16 The list with the obligated persons and the defined individual targets for energy savings is included as annex to the NEEAP and is approved by the council of ministers. The list is published on the website of SEDA: index.php?option=com_content&view=article&id=9250&itemid=227&lang=bg Integrating the policies for Energy Efficiency and Renewable Energy Sources EEA is restructured in SEDA. Thus, the Agency shall perform the activities of implementing the state policy on improving energy efficiency in final energy consumption and providing energy services, as well as the state policy to encourage the production and consumption of electricity, heat and cooling from renewable energy, production and consumption of gas from renewable sources, and the production and consumption of bio fuels and energy from renewable sources in transport Funding sources of measures to improve energy efficiency Fund "Energy Efficiency and Renewable Energy" - Operational Program "Development of the Competitiveness of the Bulgarian Economy " - Operational Program "Regional Development " - European Agricultural Fund for Rural Development through the Rural Development Program Kozloduy International Decommissioning Support Fund Contracts with guaranteed results (ESCO) Credit lines - Credit program of energy efficiency in the home REECL Credit line for energy efficiency and renewable energy (BEERCLE) Summary evaluation of the development of energy efficiency 4.1. Summary evaluation of energy intensity (final, primary, explanation of the difference) Primary energy consumption (PEC) and primary energy intensity (PEI) Despite the rapid GDP growth, in the period PEC is almost constant (Figure ). For the same period PEI showed permanent tendency of decrease, except for the last The increase in PEI during 2010 is 2,2%. Perhaps this increase is due to the economic crisis, but also the accompanying structural changes. 16

17 Gross domestic product (GDP), Primary energy consumption (PEC), Primary energy intensity (PEI). 2000=1.0 1,8 1,6 GDP 1,4 1,2 PEI 1,0 0,8 PEC 0,6 0, Figure 4.1.1: GDP, PEC and PEI, Since in 2010, the exported electricity from the country is 67%, more than in 2009 and taking into account that for every unit of produced electricity are needed three units of energy sources and this fact was not considered when determining PEC. It may be assumed that there are conditions typical for the used model, leading to an increase of PEI in Bulgaria. For the purposes of the comparison with other countries the values of PEI in Bulgaria with the climatic corrections and without corrections for purchasing power parity is 0, 866 koe/ Final energy consumption (FEC) and Final energy intensity (FEI) In the period , influenced by the rapid GDP growth, FEC shows slight trend of increase. After 2008 FEC decreased sharply and during the period was almost equal to that in Both PEI and FEI shows permanent tendency of decrease except for 2010, when FEI began to grow with 3.3% annually. Here also should be sought the influence of the occurred structural changes. For the purposes of comparison with other countries FEI of Bulgaria for 2010 with the climatic and without purchasing power parity corrections is 0,430 koe/ ,8 Gross domestic prouct (GDP), Final energy consumption (FEC), Final energy intensity (FEI): 2000 =1,0 1,6 GDP 1,4 1,2 FEC 1,0 0,8 FEI 0, Figure 4.1.2: GDP, FEC and FEI,

18 The comparison between PEI and FEI of different countries would not be correct, if not taken into account the shares of the "gray" economy, which added values are not included in GDP and the impact of the export of electricity. Recognizing the added value of the "gray" economy of Bulgaria (30%) would significantly reduce FEI of Bulgaria and would make it much closer to the average for the EU Industry Industry is the sector with higher impact on the Bulgarian FEI is the first year, in the period , with growth of the energy intensity (Figure 4.2.1). While in , average annual reduction in energy intensity of industry was 5, 5%, in 2010 compared to 2009, we found increase of 11%. An increase of energy intensity happened also in 2003 (2,4 %), when it was due to the increased energy consumption in the metal industry. Figure shows that the increase in the energy intensity of the industry in 2010 was preceded by a collapse in the energy consumption of the sector by about 30 % during the previous year Figure 4.2.1: Value added, energy consumption and intensity of industry, The increase in the energy consumption of the industry was caused by the increased consumption of natural gas, heat, coals and biomass. The greatest is the increase in fossil fuels, respectively the biomass with 114% and coals with 30% (Figure ). These are the fuels with low final consumption efficiency and their growth, combined with reduced consumption of electricity, is one of the reasons for the increase in the energy intensity of the sector. Figure 4.2.2: Consumption of energy and fuel industry,

19 During the period (Figure ) the shares of: heat and natural gas are changing symbolically; biomass and coal increased; electricity and liquid fuels decreased. The growth of the energy consumption in the industry is due to the increased consumption of coal and biomass. Figure 4.2.3: Shares of energy and fuel energy consumption in industry, When looking for the causes for the increase in the energy intensity of the industry we should analyze the situation in the manufacturing industry. Between 2000 and 2010 the VA of manufacturing exceeded the sum of the VA of all other subsectors of the industry. By taking into account, that in the period the impact of the structural changes is in the direction of energy intensity reduction becomes clear, that the reason for the energy intensity deterioration in industry is in the increased energy intensity of manufacturing. Figure 4.2.4: Shares of sectors in value added in industry, Figure shows that during the energy intensity of manufacturing increased. 19

20 While in is observed gradual reduction of the energy intensity of manufacturing (at constant structure) with 5, 5 % annual rate, in 2010 the trend is reverse with 4, 2 % annual increase. At the same time the real increase of the energy intensity of manufacturing is 9, 8 %, indicating increased shares of value added of energy intensive branches in Figure 4.2.5: VA, energy consumption and energy intensity of manufacturing, Figure shows that shares of energy intensive branches (basic metals, non-metallic mineral products, pulp and paper and chemicals) increased in the value added of manufacturing. More than half (57 %) of the energy intensity of manufacturing is due to structural changes of the value added. Figure 4.2.6: Value added by branches of manufacturing, Decisive for the increased energy intensity of manufacturing in 2010 compared to 2009 was the increase of the energy intensity in the following branches: food, beverages and tobacco with 15 %; manufacture of machinery with 9 %; non-metallic mineral products with 18 %; pulp and paper with 100 %. For the first two branches is observed substantial reduction of the value added, which indicates shrinking market and greater impact of the economic crisis. 20

21 The doubling of the energy intensity of Pulp and paper is due mainly to the consumption in 2010 of 6, 4 times more wood and wastes, fuels with low efficiency of utilization. For international comparisons the energy intensity of the manufacturing in Bulgaria in 2010 at constant structure is 0, 86 koe/ Households Figure shows that in the period , the energy consumption of Bulgarian households is almost constant. Here it should be mentioned that the energy consumption of Bulgarian households is about two times twice less than the average for EU 27. During , despite the reduction of the private consumption, the energy consumption of households starts to increase. Since 2008, in conditions of economic crisis, the intensity of the households private consumption start to grow. Figure 4.3.1: Energy consumption, private consumption and energy intensity of households in Bulgaria, The features of the energy consumption of Bulgarian households are shown on Figure : Large share of electricity (40%), as result of its low cost and low level of household gasification; Large and increasing share of biomass (32%), because the wide availability and low price of firewood; Low share of natural gas (2%), although in the period the consumption of natural gas has increased 49 times; Relatively low and declining share of district heating (16%). 21

22 Shares of energy and fuel energy consumption of households 0,50 0,40 0,39 0,30 0,20 0,14 0,09 0,10 0,01 0,01 0,02 0,00 0,00 Liquid fuels Gas Charcoals Electricity 0,40 0,32 0,23 0,23 0,16 Heat Wood Figure 4.3.2: Shares of fuel and energy in energy consumption of households, ( ) Figure shows that the increase in household energy consumption is due to increased electricity and especially solid fuels consumption (74% of the total increase). This process is accompanied by an increase in purchases of more efficient air conditioners and boilers for burning solid fuels. During the crisis, households are focusing on cheaper fuels and energy Fuel and energy consumption of households in Bulgaria , ktoe Liquid fuels Gas Charcoals Electricity Thermal energy Biomass Figure 4.3.3: Fuel and energy consumption in Bulgarian households,

23 The conclusions from the previous figure are confirmed also by Figure 4.3.4, which shows the change in the energy mix of Bulgarian households in the period The growth of the space heating energy is greater than the increase in total energy consumption. The effect of the heightened norms of the new construction and the ongoing process of renovation of existing buildings is not apparent enough yet. The achieved energy savings in households by reducing heat losses of buildings, acquisition of more efficient appliances etc. is used to increase the energy comfort. Figure 4.3.4: Change in the energy mix of Bulgarian households in Figure shows the effect of substitution of more efficient with less efficient energies and fuels. In the period , despite of the increasing in energy consumption (0,5%), the households practically did not improve their energy comfort a result of the use of less efficient fuels. During , this substitution reduced the effect from the increased energy consumption of households on the useful energy by 1,4% i.e. from 5, 3% to 3, 8%. Figure 4.3.5: Impact of the energy mix change on the useful energy in households 23

24 In the period the ratio of household expenditure on energy to their income, increases (Figure 4.3.6). Bulgarian households do not significantly reduce energy consumption, despite rising energy prices and lagging growth in their incomes. During households have improved their energy comfort on the behalf of their expenses to meet other needs. If this trend continues, especially if the increase in energy prices exceeds the increase in the incomes of households and this is combined with delayed improvement of energy efficiency, decline of the energy comfort in Bulgarian households can be expected in the near future. Figure 4.3.6: The ratio of the cost of purchasing energy to the Bulgarian household incomes, Services In the period , GVA of services has remained almost constant, while energy consumption (with climatic correction) increases with 7, 8% per year (Figure 4.4.1). After a period of hesitation till 2005, the energy intensity of the sector has started permanently increasing. By 2009 the trend towards energy intensity growth followed closely the growth of the electric intensity. During the electric intensity has been rising more rapidly than energy intensity. Figure 4.4.1: VA, energy consumption and intensity and electricity intensity, The Services sector is determined with extremely high level of electrification (Figure 4.4.2). 24

25 Electricity consumption of the sector has been growing steadily over the period (excluding 2004), with 6 %/year average rate. In the period it has been growing even faster, with 7 %/year average rate, after the period of standstill ( ). According to that estimation it can be concluded that the main reason for the growth of energy consumption and energy intensity in the Services sector during has been due to the increase in electricity consumption. Figure 4.4.2: Consumption of fuel and energy in services, In the period the share of electricity increased from 0, 68 to 0, 71 (Figure 4.4.3). The consumption of liquid fuels and coals has been replaced by the consumption of electricity and natural gas. This substitution has a positive impact on the environment and is economically profitable since the prices of electricity and gas are regulated at the lowest possible level, while the liquid fuel prices are determined by the market and are relatively higher. Respectively boilers for solid and liquid fuels have been replaced by boilers for gas and air conditioning systems. Share of fuel ana energy in energy consumption of sector "Services" 0,8 0,68 0,71 0,6 0, ,2 0,07 0,08 0,12 0,12 0,04 0,07 0,05 0,01 0,05 0,00 0,0 Liquid fuels Nature gas Coals Electricity Thermal Wood Figure 4.4.3: Shares of energy and fuel in energy consumption of services,

26 Fuel Nature gas Coals Electricity Thermal Biomass Total, without climatic correction The expectations for reduction in consumption of heat energy have not come true, despite the continuously improvement of energy performance of buildings-owned by states and municipalities (Figure 4.4.4). This effect is observed regardless of the implementation of energy efficiency measures for buildings-owned by states and municipalities and the establishment of higher standards for new constructions of public buildings-hotels, banks, etc. One reason for the above is that the implemented measures do not lead to physical energy savings because the worsen energy comfort has been restored by them Relative change in energy consumption 2010/2009, % Figure 4.4.4: Relative change in energy consumption in services, Transport Before stabilizing ( ), energy consumption of the Transport sector has been growing steadily in the period Energy intensity has had constant rates during the period and the value in 2010 was close to that in During the share of Transport sector in FEC increased steadily from 21, 8 to 32,7 %, excluding 2010, where it was equal to 31,4 % of FEC (Figure 3.2.2). Energy intensity in the sector has decreased with 1,9 % over the period

27 GDP, energy consumption and energy intensity of transport in Bulgaria, 2000=1,0 1,8 1,6 1,4 1,2 1, ,8 GDP Energy consumption Energy intensity Figure 4.5.1: GDP, energy consumption and energy intensity of transport, Impact on switching from one type of transport to another The strong modal shift from rail to road transport has a huge impact on the growth of energy intensity in the sector. During the share of rail transport has decreased steadily and in 2010 it reached 1, 5 % of total energy consumption in the sector (Figure 4.5.2). The share of road transport increased from 90,6 % in 2000 to 91,6 % in 2010 during that years. Share of energy consumption of rail transport in total consmption of transport 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% Figure 4.5.2: Share of energy consumption of rail transport in total energy consumption in transport, The road transport (it has the biggest share in the sector) has a leading role in energy consumption and energy intensity in the sector. In 2010, 84 % of the final consumption of liquid fuels was used by the Transport sector. That is why the energy efficiency measures have to be implemented in it. Other significant drivers of the deterioration of energy efficiency in the Transport during have been: 27

28 Mtkm Mpkm The strong modal shift from one type of road transport to another During the rail transport has been replaced by road transport, respectively by passenger (figure 4.5.3) and freight (figure 4.5.4) transport. The passenger traffic of cars increased from million pkm in 2000 to million pkm in 2010 with an average annual increase of 7, 9% annually (evaluation by Eurostat). Buses decreased with 2, 7 %/year (from to million pkm, and rail transport decreased by 3,9 %/year ( from to million pkm in cars rail buses Figure 4.5.3: Passenger transport performance by mode of transport (cars, buses and railway transport). The work done by freight transport has increased from 6,404 million tkm in 2000 to 19,454 million ton-kilometres in 2010 with an average rate of 20% annually. The work, which was done by the rail transport, registered a decrease by 8, 1% per year (from 5,538 to 3,064 million tkm for the same period. Freight transport performance by mode of transport road rail Figure: 4.5.4: Freight transport performance by type of transport (road and rail),

29 тoe/equiv. car. Influence of the congestions in cities and the high average age of vehicles in Bulgaria (cars, light duty vehicles, buses, trucks). Statistical data for the energy consumption by passenger transport (cars and buses) and freight transport, are not available. The stock of passenger cars increased from 1, 6 millions in 2000 to 2, 6 millions in The car ownership, despite its growth from the previous estimated period, has been around 350 cars per 1000 inhabitants, still well below the EU 15 average of more than 500. The age of more than 87 % of the passenger cars are over 10 years. On the other hand, the renovation of the fleet does not give the expected result, since more new cars are bigger, with more powerful engines more luxurious and are not used effectively. The statistical data for the energy consumption separately for cars, buses and freight road transport are not available and the unit consumption per pkm and tkm has not been calculated. Only the unit consumption per equivalent car is available and shown in Figure During the period the unit consumption per equivalent car increased from 0, 57 toe in 2000 to 0, 6 toe in 2010, with only 0, 4 %/year average rate. There are two periods from 2000 to 2006 (the period of rising) and from 2006 to 2010 (the period of drop) which can be seen in the Figure The rapid drop from 2006 is probably caused by reduction of car usage because of economic crisis. Another possible reason for that decrease is the improvement of infrastructure and development of the subway in the capital where most cars are used. equivalent car 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0, Figure 4.5.5: Unit consumption of road transport per equivalent car, Energy consumption per capita in Bulgaria is lower than the average consumption in Member states (MS), mainly because Bulgarian habitants are not as mobile as MS and the usage of road and air transport in these countries are wider than in Bulgaria. The economic development of the country will increase the level of mobility and energy consumption and that is why more energy efficiency measures will be needed in this sector. In the period the ratio of liquid fuel prices to average income per capita has been stable because of the fact that the rise of incomes has been able to offset the increase in fuel prices. The increase in that ratio has been observed after 2008 due to economic crisis which started at that time. The rapid rising of liquid fuel prices and the slow rate of income increase were typical for that period. In 2010, this effect is expressed especially strong. 29

30 amount of new cars 1,4 1,2 1 0,8 0,6 0,4 0, growth index Figure 4.5.6: The ratio of fuel prices to average income per capita The amount of new cars which have been bought during the years , increased from in 2000 to in 2010, with 2 % per year average rate. This rising has been bigger between years , with 22 %/ year average rate, due to economic growth and the income increase of the habitants in the country. The drop of the sales of new cars after 2008 is due to the economic crisis new cars Figure 4.5.7: Case of new cars in Bulgaria,

31 Assessment of energy efficiency/energy savings through ODEX: global and by sector During the period , energy efficiency improved by 38 % in Bulgaria compared to 17 % for the EU as a whole (as measured by the decrease of the overall energy efficiency index, ODEX). This fast rate in Bulgaria is mainly due to the improvement in the industrial sector. The impact of the economic crisis was a 2 % increase of the ODEX in 2009, followed by 3 % reduction in This shows that in 2010 despite the increase in energy intensity the energy efficiency improved and additional energy savings are achieved. 120 All sectors Bulgaria EU27 70 Figure 4.6.1: Comparison of the global index ODEX - EU27 and Bulgaria. In the industrial sector, the energy efficiency index has decreased by 72 % over the period Under the influence of the economic crisis in 2010 the ODEX of the Bulgarian industry remained virtually unchanged (down 0.3%). The most significant reductions of ODEX are in the energy intensive branches: 80% in chemicals, 57% in steel industry. This fast rate of energy efficiency improvement in industry is due to the low initial level of efficiency in this sector at the beginning of the period but also very important drivers are rapidly rising prices of fuels and energies during the period. 31

32 Industry chemicals steel paper total 30 Figure 4.6.2: ODEX index of industry and some energy intensive branches of manufacturing industry (ferrous metals, chemicals, paper and pulp) During the period , the energy efficiency index in the transport sector increased by 24 %, which indicates a significant deterioration of energy efficiency. The most significant causes of this deterioration have been the shift from rail to road transport, the city congestions and the high average age of the Bulgarian vehicles. Since 2006, energy efficiency improved by 27 %, due to improvements in the energy efficiency of road transport (as measured from the decrease of the unit energy consumption, per in car-equivalent). The main reasons for this improvement are rapidly rising motor fuel prices and the re-registration of vehicles at the end of 2005, which led to the removal of a significant proportion of cars in bad technical condition. The improvement of the energy efficiency in transport is one of the main reasons for the improvement of the global ODEX after In the 2010 the ODEX of the transport decreased significantly (5.1%). This decrease coincides with reduced energy consumption and reduced energy intensity in the sector (1.9%). 140 Transport road total 80 Figure 4.6.3: Transport ODEX 32

33 Between 1996 and 2002, energy efficiency improved by 20 % in households. This happened in a situation of considerable growth of private household s consumption. After 2002 ODEX of Bulgarian households remained virtually unchanged, although since 2004 there is a slight downward trend implying insignificant energy efficiency improvements. In 2010 the ODEX decrease was 1%, while the index for space heating remains constant. There are no significant energy savings in 2010 compared to Households space heating total 60 Figure 4.6.4: Households ODEX 33

34 4.7. CO2 emissions As can be seen from the Figure 4.7.1, the trends in total CO2 emissions have been followed by trends in PEC over the period Over the years total CO2 has increased more rapidly than PEC. During the years total CO2 emissions have decreased. In 2010 the level of 2000 was reached, despite the significantly decrease of PEC in the same year. The differences between these two curves have appeared after 2007 due to deterioration in the energy mix of primary energy. During , the increase of the emission index was bigger than the increase in the index of PEC which has indicated further deterioration in the mix. Figure 4.7.1: Status and development of GHG emissions in Bulgaria at PEC, As shown in the Figure 4.7.2, there has been substantial energy saving over the period , achieved by the final consumers but these savings have not lead to proportional reduction of CO2 emissions. Fuels with low emission factors have been substituted by fuels with higher ones. Radical improvement of the energy mix (in terms of emissions) was observed in 2009 which has reflected on the reduction of CO2 emissions of the final consumers. In 2010 the FEC increased but CO2 emissions continued decreasing in comparison with 2009, due to more frequent use of wood and natural gas in the households. 34

35 Figure Status and development of GHG emissions in Bulgaria at FEC, Energy sector Energy sector is the biggest source for production of GHG emissions in Bulgaria. In 2010 it contributed with 51% of CO2 emissions, generated by fuels combustion in the country. During the period CO2 emissions have been generated at a constant rate. In 2007 their production increased rapidly due to the decommissioning of some nuclear energy units in Bulgaria. In the period the production of CO2 emissions have decreased, followed by the drop of energy consumption in the Energy sector. In 2010 the increase of CO2 emissions was more rapid than the increase in energy consumption because of the deterioration in the energy mix which led to bigger use of coals. Figure 4.7.3: CO2 emissions in the Energy sector,

36 Sectors-final energy consumers Transport and Industry are the sectors with most significant contribution to CO2 emissions in Bulgaria over the period It is shown in the Figure 4.7.4, that transport increased and industry decreased during the same period, regarding CO2 emissions. In % of total CO2 emissions were generated by these two sectors, regardless of the Household sector, where were generated only 5 % of total CO2 emissions. Energy consumption of Industry had a considerable growth during but the generation of CO2 emissions in the sector has remained almost the same. For the first time during the years there has been reduction of CO2 emissions in transport, which was due to the reduction of energy consumption in the sector. Figure 4.7.4: CO2 emissions in Sectors-final energy consumers, The most significant savings of CO2 emissions are made by the Bulgarian households. This reduction of the CO2 emissions has occurred in relatively constant energy consumption. The main reasons for that drop are the reduction in shares of coals and fuels and the increase in shares of natural gas and biomass (wood). In 2010 the production of CO2 emissions of households increased due to deterioration in the energy mix: increased use of coals and electricity. Figure 4.7.5: CO2 emissions in Household sector 36