Programme for Improving Energy Efficiency in Energy-Intensive Industries (PFE)

Last updated: 5 November 2017
Following the Energy Taxation Directive (2003/96/EC), a tax on the electricity was introduced in 2004. As a consequence, where manufacturing industry previously paid a zero tax rate on electricity, it was required to pay an electricity tax of SEK 0.005 per kWh. However, the Directive also allows energy-intensive companies in the manufacturing sector the opportunity to be exempt from the tax if they take action to improve their energy efficiency. This interpretation laid behind the decision to set up a voluntary programme in 2004 for energy-intensive companies to participate. Companies participating in the programme receive a full rebate of the energy tax on electricity.
In return, they undertake to introduce an energy management system and continuously to perform energy audits in order to determine their potentials for improving the efficiency of their energy use. A condition for continued participation in the programme is that, over a five year cycle, companies must apply all the energy efficiency improvement measures that have been identified, and which have a payback time of less than three years. Another requirement for participation in the programme is that the company must be an energy-intensive company, as defined in the Energy Taxation Directive.
This means that it must fulfil one of the following criteria: a) its energy products expenditure amounts to at least 3% of its production value; b) the total energy and carbon dioxide tax for the company amounts to at least 0.5% of its added value. Through the energy management systems and energy audits that make up the programme, companies will improve their awareness of their potentials for cost-efficient energy efficiency improvements. The underlying intention is that companies should improve their efficiency of electricity use without being subjected to the pressure of taxation that could have an adverse effect on their international competitiveness. The electricity efficiency improvement measures taken as a result of the programme are expected to give more or less the same effect as that of an energy tax of SEK 0.005 per kWh.
The Programme for Improving Energy Efficiency in Energy Intensive Industries (Swedish abbreviation: PFE) is currently in its 3rd last five-year-period. Applications could be submitted during 2012, and the entire programme will be wound down by the end of 2017. The main resone for the closure of the programme is the decision by the European Commission that the present structure is in breach with EU state subsidy rules. Total efficiency gains reach an estimated 1.45 TWh annually, but these estimates have recently been questioned by the Swedish National Audit Office. Participating companies themselves claim that energy efficiency issues have leaped to the forefront in management as a result of the programme.

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