INTRODUCTION

This proposal, building on the dual objectives of contributing both to security of energy supply and to climate change polices, arises from the need for reinforced efforts to promote high-efficiency cogeneration in the internal energy market.

In its Green Paper on security of energy supply, the Commission highlighted the following points:

• the European Union is extremely dependent on its external energy supplies, with imports currently accounting for 50% of requirements. This figure is projected to rise to 70% by 2030 if current trends persist.

• at present greenhouse gas emissions in the European Union are on the rise making it difficult to respond to the challenge of climate change and to meet the commitments under the Kyoto Protocol.

• the European Union has relatively limited scope to influence energy supply conditions. Efforts will have to focus on orienting the demand for energy in a way that respects the EU's Kyoto commitments and is mindful of security of supply.

These observations provide strong arguments for developing new Community policies and measures aimed at curbing energy demand and reducing greenhouse gas emissions. Even the level of greenhouse gas emissions in EU in 1999 was the same or just below the level of 1990, it is still a great challenge to meet the Kyoto target. Due to the efficient use of the fuel, the simultaneous production of heat and power can offer energy savings and avoided CO2 emissions compared with separate production of heat and power.