Energy

Energy efficiency directive

With the European Green Deal, the EU is increasing its climate ambition and aims at becoming the first climate-neutral continent by 2050. The Commission has therefore revised the Energy Efficiency Directive, together with other EU energy and climate rules, to ensure that the new 2030 target of reducing greenhouse gas emission by at least 55% (compared to 1990) can be met.

Energy efficiency for climate

To meet the new EU 2030 climate target energy efficiency needs to be prioritised. To step up its efforts, the European Commission put forward, in July 2021, a proposal for a new directive on energy efficiency as part of the package “Delivering on the European Green Deal

The proposal for the revised directive promotes ‘energy efficiency first’ as an overall principle of EU energy policy, and mark its importance and relevance in both its practical applications in policy and investment decisions.

Energy consumption targets and savings

The proposal raises the level of ambition of the EU energy efficiency target and makes it binding. The revised directive also requires EU countries to collectively ensure an additional reduction of energy consumption of 9% by 2030 compared to the 2020 reference scenario projections. This 9% additional effort corresponds to the 39% and 36% energy efficiency targets for primary and final energy consumption outlined in the Climate Target Plan, and is simply measured against updated baseline projections made in 2020. This means that the overall EU energy consumption should be no more than 1023 million tonnes of oil equivalent Mtoe of primary energy and 787 Mtoe of final energy by 2030. 

EU countries can help achieve the EU target by setting indicative national contributions, using a combination of objective criteria, which reflect national circumstances (energy intensity, GDP per capita, energy savings potential and fixed energy consumption reduction). The proposal also introduces an enhanced “gap-filling mechanisms” that will be triggered if countries fall behind in delivering their national contributions.

The proposal nearly doubles the annual energy savings obligation (in Article 8), which is one of the key policy instruments of the Energy Efficiency Directive to meet the headline target. EU countries must achieve new savings each year of 1.5% of final energy consumption from 2024 to 2030, up from the current level of 0.8%. This is an important instrument to drive energy savings in end-use sectors such as buildings, industry and transport.

Another key element of the proposal is a specific requirement for the public sector to achieve an annual energy consumption reduction of 1.7% as part of the objective to enhance the exemplary role of public sector across wide range of activities like buildings, transport, water and street lighting. EU countries are also required to renovate each year at least 3% of the total floor area of buildings owned by all levels of public administration. Public bodies will also need to systematically take into account energy efficiency requirements in their public procurement of products, services, buildings and works.

 

Energy poverty and consumers

The proposal for the revised directive also puts stronger focus on alleviating energy poverty and empowering consumers, through strengthened requirements on awareness raising and information provision, including on creation of one-stop-shops, technical and financial advice or assistance, consumer protection via out-of-court mechanisms for the settlement of disputes are structures. Improved requirements to identify and lift barriers relevant to the split incentives between tenants and owners or among owners are also included in the Energy Efficiency Directive.

The proposal for a revised EED introduces an obligation for EU countries to implement energy efficiency improvement measures as a priority among vulnerable customers, people affected by energy poverty and, where applicable, people living in social housing, to alleviate energy poverty. The revenues from the EU Emissions Trading System (ETS) extension to buildings and transport will be used through the newly established Social Climate Fund to address possible negative distributional effects. Under the energy savings obligation (Article 8), each EU country will have an obligation to achieve a share of energy savings among vulnerable customers and people affected by energy poverty based on criteria that takes into account national context.

Audit obligations, technical competence requirements and other elements

Other elements of the proposal include a focus on implementation of an energy management system as a default obligation for large energy consumers, and changing the scope of application of energy audits obligation from small and medium-sized enterprise (SME) definition to energy consumption.

The proposal also outlines stricter planning and follow up of comprehensive assessments, including reach-out to local and regional level. Revised definitions of efficient district heating and cooling and efficient cogeneration to ensure fully decarbonised heat or cooling supply in efficient district heating or cooling systems by 2050.

In addition, clearer and stricter requirements to ensure the necessary technical competence for energy services providers, energy auditors, energy managers and installers (via regular assessment of the effectiveness of the schemes and ensuring that they correspond to the market needs). Improved interlinkage with Article 24 (on energy services) on ensuring quality of energy services.

Requirement for all large (above 1000m2) non-residential buildings subject to renovation to assess the feasibility to carry out renovation via energy performance contracts. Strengthening of the role of intermediaries (one-stop-shops and facilitators) to support the uptake of energy performance contracting.

Requirement for EU countries to report on energy efficiency investments including on energy performance contracts concluded (as part of Governance Regulation). EU countries will be required to set up project development assistance mechanisms at national, regional and local levels to promote energy efficiency investments to help reaching the higher energy efficiency targets.

 

The 2018 amending directive

In 2018, as part of the 'Clean energy for all Europeans package', the amending Directive on Energy Efficiency (2018/2002) was agreed to update the policy framework to 2030 and beyond. Its key element is a headline energy efficiency target for 2030 of at least 32.5%. The target, to be achieved collectively across the EU, is set relative to the 2007 modelling projections for 2030.

In absolute terms, this means that EU energy consumption should be no more than 1128 Mtoe (million tonnes of equivalent) of primary energy and/or no more than 846 Mtoe of final energy (following the withdrawal of the UK).

The amending directive also includes an extension to the energy savings obligation in end use, introduced in the 2012 directive. Under the amending directive, EU countries will have to achieve new energy savings of 0.8% each year of final energy consumption for the 2021-2030 period, except Cyprus and Malta that will have to achieve 0.24% each year instead.

The directive entered into force in December 2018 and had to be transposed into national law by Member States by 25 June 2020, except for metering and billing provisions which has a different deadline (25 October 2020). 

Under the Governance Regulation 2018/1999 , Member States are required to draw up integrated 10-year national energy and climate plans (NECPs) outlining how they intend to meet the energy efficiency and other targets for 2030. 

Other elements in the amended directive include:

  • stronger rules on metering and billing of thermal energy by giving consumers - especially those in multi-apartment building with collective heating systems – clearer rights to receive more frequent and more useful information on their energy consumption, also enabling them to better understand and control their heating bills
  • requiring EU countries to have in place transparent, publicly available national rules on the allocation of the cost of heating, cooling and hot water consumption in multi-apartment and multi-purpose buildings with collective systems for such services
  • monitoring efficiency levels in new energy generation capacities
  • updated primary energy factor (PEF) for electricity generation of 2.1 (down from the current 2.5)
  • a general review of the Energy Efficiency Directive (required by 2024)

Updated measures relating to national long-term renovation strategies are now covered under the amended Energy Performance of Buildings Directive (EU)2018/844.

The 2012 energy efficiency directive 

Directive 2012/27/EU established a set of binding measures to help the EU reach its 20% energy efficiency target by 2020. This means that overall EU energy consumption should be no more than 1483 million tonnes of oil equivalent (Mtoe) of primary energy or 1086 Mtoe of final energy. Under the directive, all EU countries are required to use energy more efficiently at all stages of the energy chain, including energy generation, transmission, distribution and end-use consumption.

In the context of the Energy Efficiency Directive, a number of important measures have been adopted throughout the EU to improve energy efficiency in Europe, including

  • policy measures to achieve energy savings equivalent to annual reduction of 1.5% in national energy sales
  • EU countries making energy efficient renovations to at least 3% per year of buildings owned and occupied by central governments
  • national long-term renovation strategies for the building stock in each EU country
  • mandatory energy efficiency certificates accompanying the sale and rental of buildings
  • the preparation of national energy efficiency action plans (NEEAPs) every three years 
  • minimum energy efficiency standards and labelling for a variety of products such as boilers, household appliances, lighting and televisions (energy label and ecodesign)
  • the planned rollout of close to 200 million smart meters for electricity and 45 million for gas by 2020
  • obligation schemes for energy companies to achieve yearly energy savings of 1.5% of annual sales to final consumers
  • large companies conducting energy audits at least every four years
  • protecting the rights of consumers to receive easy and free access to data on real-time and historical energy consumption

The Commission also published guidelines on good practice in energy efficiency.

Recommendations for EU countries

The European Commission has published guidance notes to help EU countries to transpose fully the different elements of the 2018 amending directive into national law

Guidance notes were also published to help EU countries to transpose fully the different elements of the 2012 directive into national law

Implementing the Energy Efficiency Directive 2012/27/EU – Commission Guidance [COM(2013) 762]

Library of Guidance Notes (CIRCABC)

More specific good practice guidance for Member States on the implementation of aspects of Articles 9-11 relating to collectively provided thermal energy in multi-apartment buildings has also been developed at the request of the Commission.

Brexit

Post-Brexit relations on energy falls under the EU-UK Trade Cooperation Agreement and the Euratom-UK Agreement. 

Documents

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