The European Commission published today a proposal for recasting the EU Directive on Energy Efficiency, aimed at further stimulating EU efforts to promote energy efficiency and achieve energy savings in the fight against climate change. This initiative forms part of the Commission package of proposals “Delivering on the European Green Deal”, with a view to reducing net greenhouse gas emissions by at least 55% by 2030 and the ultimate objective of becoming climate neutral by 2050. It interlinks with a number of today’s other proposals, notably the revised Renewable Energy Directive, the Emission Trading Scheme (ETS) and the new Social Climate Fund, and the revision of the Effort Sharing Regulation.
Following the partial revision of the 2012 Directive (2012/27/EC) in 2018 through the amending Directive 2018/2002/EU, today’s proposal recasts the whole directive. It seeks to introduce a higher target for reducing primary (39%) and final (36%) energy consumption by 2030 now binding at EU level, in line with the Climate Target Plan, up from the current target of 32.5% (for both primary and final consumption). It introduces a benchmarking system for Member States to set their national indicative contributions to the binding EU target. The new directive also proposes to nearly double Member State annual energy savings obligations in end use. In stimulating this acceleration, the proposal focuses on sectors with high energy-savings potential – notably heating and cooling, industry and energy services – and puts additional emphasis on the public sector for the example that it can serve in leading the transition. Taking up a number of elements outlined in last year’s Renovation Wave strategy, the proposal includes measures to boost renovation in a way that also benefits society in terms of addressing energy poverty and strengthening consumer empowerment. Given the potential for renovation to act as a springboard for economic recovery following the Covid-19 pandemic and the emphasis given to the building sector in the EU’s Recovery and Resilience Facility – the proposal also outlines a range of changes that should increase the uptake of energy efficiency investments.
Presenting the proposal today, EU Commissioner for Energy Kadri Simon said:
Energy efficiency is a key concept in the fight against climate change. Being more efficient will immediately cut our emissions, ease the pressure on the environment and reduce the need for energy and other resources to support our way of life. Saving energy also decreases our energy bills, benefitting all customers. Our proposal looks to accelerate the progress we are making – using policy tools to stimulate more investment. For example, we are looking to do more in the transport sector and in the buildings sector.
Today’s initiative signals a number of concrete steps in launching a wave of renovation across this continent. Change on this scale is never easy. The proposals will require serious efforts from all Member States, from our businesses and societies. Building renovation is a key element in Member States’ Recovery and Resilience Plans to stimulate the economy following the pandemic. We are also taking this opportunity to address energy poverty head-on, seeking to prioritise the vulnerable and social housing in taking this renovation wave forward.
New energy efficiency target for 2030, and annual savings requirement raised to 1.5%
Under the 2018 directive, the EU set an energy efficiency target for reducing energy consumption in 2030 by at least 32.5% compared to 2007 consumption projections for 2030. Each Member State was then required to outline how it intended to achieve this and other targets in its National Energy and Climate Plans (NECP), submitted last year. The Commission’s 2020 assessment of the cumulative impact of these 27 NECPs shows that they fall short of the 32.5% target, generating reductions of 29.4% for final energy consumption and 29.7% for primary energy consumption. Following the assessments done in preparation of the Climate Target Plan last autumn, the Commission estimates that, in order to reach a 55% emissions reduction by 2030, the new targets should aim to reduce primary energy consumption to 1 023 million tonnes of oil equivalent (mtoe) in 2030 and final energy consumption to 787 mtoe. Relative to the 2007 consumption projections on which the 32.5% target is based, this is equivalent to new targets of 39% and 36% respectively in line with the Climate Target Plan. However, the Commission has compared these figures to updated 2020 Reference Scenario projections of energy consumption for 2030. Therefore, the new targets are expressed in the proposal as a 9% reduction in energy consumption by 2030 compared to this new reference.
The proposal requires each Member State to determine their indicative national contribution based on a formula of objective criteria and benchmarks, which reflect national circumstances. These would then be assessed by the Commission, with solutions suggested to address any shortfall in the EU target.
In addition to raising the EU target for 2030, the proposal increases one of the key elements for driving energy efficiency improvements – the obligation on Member States to achieve annual energy savings in end-use consumption. At present, the obligation is set at 0.8% per year, but the proposal seeks to raise this figure to 1.5% as of 2024, through to 2030. As this targets energy end-use, it is expected to encourage greater efforts in key sectors such as buildings, industry and transport via the energy efficiency obligation schemes and the alternative policy measures.
Targeting energy-intensive sectors
While the potential for energy savings remains large in all sectors, there is a particular challenge related to transport (responsible for 30% of final energy consumption) and to buildings (responsible for 40% of energy use, and where 75% of the EU building stock has a poor energy performance). Part of this challenge is addressed by today’s proposal to include these two sectors in the future Emissions Trading System, but there is also a drive in the EED proposal to make these sectors more energy efficient.
The EED proposal looks to set a new framework for heating and cooling, which accounts for 80% of energy use in buildings, aimed at cutting emissions in buildings. Existing requirements to ensure higher efficiency in heat generation should be extended to smaller energy supply installations and to service facilities and data centres with significant energy consumption. These requirements are likely to stimulate the use of waste heat and renewable energy in this sector, necessary for decarbonising heating and cooling. In district heating and cooling, the definition of “efficient” systems will gradually be tightened to move away from fossil fuel-based systems. In cogeneration, the aim is to introduce additional criteria for specific emissions in high-efficiency cogeneration (270 gCO2/kWh). These proposed measures in the recast EED should be seen alongside the new targets proposed in the revised Renewable Energy proposal for including renewables in heating and cooling (1.1%) and for district heating and cooling (1.4%), which will ensure wider use of renewables and waste heat in such systems.
For businesses, the proposal aims to strengthen the requirements in a focused manner. For a start, the largest energy users (using more than 100 TJ per year) that do not yet have energy management systems in place will need to do so in future. For other businesses, the obligation to have a four-yearly audit will in future only apply to those using more than 10 TJ of energy per year. This will reduce the burden on smaller, less energy-using businesses. In addition, there would be an obligation for the management of businesses to see the audit recommendations. This will ensure that they are well aware of the cost-saving energy efficiency potential available for their business.
The public sector can set a good example
Commission estimates indicate that public sector activities – education, health and social services, public transport, water supply and treatment, and street lighting – together use about 50 mtoe annually across the EU, which is 5% of EU final energy consumption. The public domain can therefore set an example for wider society in turning to energy saving measures. This is why the recast directive introduces specific energy saving measures for the public sector. These include the new obligation for the public sector to reduce annual energy consumption by 1.7% every year, the enhanced obligation for renovation of 3% of public building floor area, and the requirement to include more systematically energy efficiency requirements in public procurement procedures.
Empowering and protecting consumers
The proposal introduces a new requirement on Member States to take measures to implement energy efficiency improvements for people affected by or in risk of energy poverty, vulnerable customers including, where appropriate, people living in social housing. Parts of these measures are expected to be financed via revenues from ETS allowances on building and transport or from the new Social Climate Fund. This Fund will encourage Member States to make best possible use of revenues from emissions trading and to strategically invest them into energy efficiency improvement measures to alleviate energy poverty and to support vulnerable customers.
Among the other elements in the proposal aimed at tackling current barriers to investment, Member States will be required to address the split incentives between owners and tenants over renovation. In order to address the reported lack of information and the perceived high administrative burden for building renovation, Member States will be required to establish one-stop shops providing technical administrative and financial advice, also for the purposes of facilitating the uptake the energy performance contracting and energy services markets.
Another important step is the move to set a legal basis for the application of the “energy efficiency first” principle, to ensure its practical implementation and systematically assessing possible energy efficiency solutions in policy and investment decisions.
A number of further elements linked to building renovation and decarbonising the building sector will be covered by a proposal for revision of the Energy Performance of Buildings Directive (EPBD), due for publication before the end of the year.
Together with the rest of today’s package – which includes revisions to EU rules on renewable energy, energy taxation, emissions trading, transport – the proposal now passes to the Council and the European Parliament to kick-start the EU decision-making process.
- Proposal to recast the Energy Efficiency Directive
- Memo Q&A – Making our energy systems fit for our climate targets
- European Green Deal: Commission proposes transformation of EU economy and society to meet climate ambitions (press release 14/7/2021)
- Energy systems factsheet
- Buildings factsheet
- Hydrogen factsheet
- European Green Deal
- EC video stock shots on energy themes
14 July 2021