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This paper presents a survey of the economic literature on the policy challenges and options available to improve energy efficiency. We emphasize energy efficiency in buildings since this has the largest potential impact on the demand side in terms of emissions reduction and since this impact is too often underestimated. The paper then discusses the relevance of the lessons learned from the survey for Belgium. The resulting picture is not encouraging. The Belgian energy efficiency gap is shown to be one of the widest among European countries, particularly as regards buildings. Although Flanders is ahead of the curve in cashing in on the potential benefits of improved energy efficiency in buildings, the scope for action remains substantial across all communities.