Features.(European Commission targets on energy efficiency and reducing greenhouse gas emissions)

Faced with a likely investment of [euro]25 billion in generation capacity over the next 25 years, the "overriding priority" in giving investment signals is a properly functioning market, the European Commission says. But simply directing investment in the most efficient way is not enough: the Commission also has ambitious targets on energy efficiency and reducing greenhouse gas emissions.

Action plans on renewable energy, written at country level and scrutinised by the Commission for "coherence", should direct investment towards renewables. Energy efficiency should improve as new regulations on buildings, appliances and energy use (reaffirmed in a new commitment on energy efficiency adopted late last year) start to bite. The effects of such measures have traditionally been hard to measure and difficult to prove, but monitoring and reporting will be essential to ensure investment supports the Commission's low-carbon strategy.

The Commission's solution is an Office of Energy Observatory, to be legally established this year - a single clearing house for data on energy supply and demand. The observatory would also collect data on market prices for comparison across Europe. Colette Lewiner, energy utilities and chemicals global leader at Capgemini, says she is in favour. "There are big differences in distribution prices, for example, but if they are well publicised there will be an incentive to be on the right side of the graph."

The step change in renewables that will be required to meet the new targets is still not enough for environmental groups, but Eurelectric says it "questions the wisdom" of the hike ...