EU energy savings law falling far short of target-draft
* New text would deliver only 38 percent of Commission version
* EU presidency has made energy saving a priority
* Upfront spending major problem in current climate
SAMSO, Denmark, April 17 (Reuters) - Revised plans to improve the European Union's record on energy saving have drastically reduced the ambition of a proposed draft law, according to an assessment by the Commission, the EU's executive arm.
The analysis in a leaked paper, seen by Reuters, confirms reports from non-governmental organisations that objections from member states could derail the Commission's efforts to plug the gap between current performance and the EU's goal of a 20 percent increase in energy saving by 2020.
The European Commission paper concludes the version presented by the Danish EU presidency on behalf of the 27 member states would "represent 38 percent of the expected impact of the Commission's proposal".
Whereas its proposal would have cut primary energy use by 151.5 million tonnes of oil equivalent, the latest plans would deliver energy saving of only 58.1 million tonnes of oil equivalent.
Denmark, which has a strong domestic commitment to green growth and energy saving, has made getting a deal on the Energy Efficiency Directive a priority for its six months at the helm of the EU, but has admitted that it is an enormous challenge.
Its Energy Minister Martin Lidegaard told Reuters in an interview it might not be possible to close all of the gap between current performance, expected to deliver energy savings of around 10 percent, compared with projected levels, and the 20 percent target.
Talks last week to try to thrash out differences between the EU's three decision-making bodies - the Commission, the member states and the European Parliament, which had proposed a text more ambitious than the initial Commission proposal - were difficult, EU sources said.
Energy and environment ministers meeting informally in Horsens, Denmark, this week, will be given a progress report on the Energy Efficiency Directive.
Claude Turmes, Green Member of the European Parliament, who has led the parliamentary debate said the EU could not afford to lower its ambitions.
"The EU has a yearly 450 billion euro trade deficit due to oil and gas imports. The EU energy efficiency directive is the vehicle to replace large parts of this cash flow out of the EU economy programme into local jobs and added value," he said.
"We (the European Parliament) will accept flexibility on how member states should achieve results, but not on the ambition."
Denmark, with the backing of the Commission and environmental campaigners, has argued energy saving, through measures such as improved building insulation, is an obvious way to create jobs, cut bills and carbon emissions and spur the economy.
The Commission has published figures showing improved efficiency could create around half a million jobs and 34 billion euros ($44.68 billion) in Gross Domestic Product in 2020.
It has also put the cost to the energy companies at only one euro cent for every kilowatt hour of energy saved.
The biggest problem is finding any upfront funding in the current climate.
Business leaders have complained about prescriptive measures and the possible impact on growth, while green campaigners warn future costs will be much bigger if the EU does not change.
"The report confirms that the council's approach would be a disaster for Europe, failing to achieve energy savings commitments and locking us in to wasting billions of euros annually," Jason Anderson, head of climate and energy policy at WWF European Policy Office, said.
Changes to the Commission text, which have lowered its ambition include reducing the number of public buildings that would have to conform to efficiency requirements and adjustments to the way efficiency goals would be measured, meaning the impact would be diluted.
The Commission routinely declines to comment on leaked documents.
($1 = 0.7610 euros) (Editing by Marguerita Choy)