Energy Efficiency Legislation

Brussels,

Energy Efficiency Legislation

Energy efficiency is a cumulative implementation of specific measures promoting energy efficiency in different fields. The proportion between the final and the primary energy consumption is just one aspect that reflects the efficiency of an energy system. By 2050, the objectives include significantly reducing greenhouse gas emissions, with an emphasis on achieving a climate-neutral economy. This involves not only the reduction of emissions through increased energy efficiency but also through the integration of renewable energy sources into the grid, enhancing the sustainability of the energy sector.

Energy efficiency measures are expected to be implemented across various sectors, including industrial, residential, transportation, and public services. These measures may involve the adoption of more efficient technologies, improvements in building insulation, the promotion of electric vehicles, and the optimization of energy use in industrial processes.

The goal is to create a balance where the final energy consumption reflects a high level of efficiency, indicating that a substantial portion of the energy used is directly contributing to economic output with minimal losses. The relationship between final and primary energy consumption will become increasingly important as it indicates the effectiveness of the energy system in converting and delivering energy to end-users in a form that they can directly utilize.

By focusing on energy efficiency as a key part of the strategy for 2050, the aim is to not only reduce the overall demand for energy but to do so in a way that supports economic growth, enhances energy security, and contributes to the global effort to mitigate climate change. Achieving these objectives will require concerted effort from governments, industries, and individuals to embrace energy-saving measures and invest in cleaner, more efficient technologies.

Current legislation of the efficiency of the EU energy system

On 13 September 2023, the EU published the new Directive on Energy Efficiency. EU asks Member States to reduce final energy consumption to 763 million tonnes of oil equivalent and to 993 million tonnes of oil equivalent for primary consumption. Poland, Hungary and Finland voted against. Abstention from Belgium, Latvia, Portugal and Slovakia.

Compared to 2005 levels, it means that final energy consumption in the Union should be reduced by approximately 25 % and primary energy consumption should be reduced by approximately 34 %.

There are no binding targets at Member State level in the 2020 and 2030 perspectives, and Member States should establish their contributions to the achievement of the Union’s energy efficiency target taking into account the formula provided for in this Directive.

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Key aspects of these regulations include:

Headline Target: The collective goal for EU member states is to ensure a reduction in final energy consumption of at least 11.7% by 2030. This target is crucial for addressing climate change and moving towards a more sustainable energy system.
National Contributions and Gap-filling: Each member state is required to contribute towards achieving this overall EU target by setting indicative national contributions and trajectories in their integrated national energy and climate plans (NECPs). The European Commission will oversee the contributions to ensure they collectively meet the EU target, employing a gap-filling mechanism if necessary.
Energy Savings: From 2024 to 2030, there will be an annual increase in the energy savings target for final energy consumption, with member states expected to achieve new annual savings of 1.49% on average, reaching up to 1.9% by the end of 2030. These savings can be realized through various policy measures, including those under the revised energy performance of buildings directive and the EU emissions trading system.
Public Sector Leadership: The regulations also set specific obligations for the public sector to reduce energy consumption annually by 1.9% (excluding public transport and armed forces) and mandate the renovation of at least 3% of the total floor area of buildings owned by public bodies each year.

This legislative move is part of the EU's broader strategy to enhance energy efficiency, reduce greenhouse gas emissions, and meet its climate and energy goals for 2030 and beyond. By setting both collective and individual targets, the EU aims to foster a cooperative approach among member states, ensuring flexibility in how each country contributes towards the common goal while accounting for national circumstances and capabilities.

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On 25 July 2023, the Council of the EU adopted new rules to reduce final energy consumption at EU level by 42.5% in 2030 compared to the projections of the 2007 Reference Scenario so that the Union’s final energy consumption amounts to no more than 740 Mtoe and the Union’s primary energy consumption amounts to no more than 960 Mtoe in 2030.

This new Directive revises the 2012 Energy Efficiency Directive, in order to tackle the energy aspects of the EU’s climate transition under the 2021 ‘Fit for 55’ package, which set the objective of climate neutrality by 2050 (zero CO2 emission balance)

Headline Target: EU Aims for Significant Reduction in Energy Consumption by 2030

Member states are committed to achieving a collective reduction of at least 11.7% in final energy consumption by 2030, compared to the energy consumption forecasts made in 2020. This equates to an upper limit of 740 million tonnes of oil equivalent for EU's final energy consumption and 960 million tonnes of oil equivalent for primary consumption.

National Contributions and Gap-Filling Mechanism

Each member state will contribute to reaching the overall EU target by setting indicative national contributions and trajectories in their integrated national energy and climate plans (NECPs). The formula for calculating these contributions will be indicative, with a slight deviation allowance of 2.5%.

The European Commission will assess whether the collective contributions reach the 11.7% target, and if not, adjustments will be made to the national contributions using a gap-filling mechanism.

Energy Savings Targets

To encourage energy efficiency, annual energy savings targets for final energy consumption will progressively increase from 2024 to 2030.

Member States are required to achieve cumulative end-use energy savings for the entire obligation period up to 2030, equivalent to new annual savings of at least (excluding Cyprus and Malta, having different values):

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0,8% of final energy consumption up to 31 December 2023
1,3% from 1 January 2024,
1,5 % from 1 January 2026
1,9 % from 1 January 2028

Inclusion of Energy Savings Measures

Member states can incorporate various energy-saving measures in their calculations, including policy actions related to the energy performance of buildings directive, measures from the EU emissions trading system, and emergency energy measures.

Public Sector Leading the Way

The public sector is responsible for approximately 5 %to 10 % of the Union’s total final energy consumption. The new rules place a specific obligation on the public sector to achieve an annual energy consumption reduction of 1.9%, with the exception of public transport and armed forces.

Additionally, member states are required to renovate a minimum of 3% of the total floor area of buildings owned by public bodies each year. Buildings and transport, alongside industry, are the main energy users and main source of emissions. Buildings are responsible for about 40 % of the Union’s total energy consumption and for 36% of its GHG from energy. For this reason, EU beleves appropriate to set an annual rate of renovation of buildings that are owned by public bodies on the territory of a Member State to upgrade their energy performance and be transformed into at least nearly zero-energy buildings or zero-emission buildings.

Why the revision?

The European Green Deal is a set of political initiatives proposed by the European Commission with the overall goal of achieving climate neutrality in Europe by 2050.

The ambitious goal was confirmed by the European Council in December 2019, with a non-accession clause of Poland and voted by the European Parliament in January 2020.

With the European Green Deal, the EU aims to become the first climate-neutral continent by 2050.

In 2020 a process of revision of the existing legislation is therefore started to achieve the set target of greenhouse gas emissions and those decided with the Energy Efficiency Directive (see above).

With the latest decisions of December 2020, there is the new target of reducing greenhouse gas emissions by at least 55% net compared to 1990. For this reason, EU approved the new energy efficiency Directive.

2. The previous Directive and the revisions in 2018 and 2019

This past directive was revised by Directive (EU) 2018/2002, along with the revised Renewable Energy directive (EU) 2018/2001 and a new Governance Regulation Regulation (EU) 2018/1999. All are part of the Clean Energy for All Europeans package.Some of the new targets of the modified Directive

meeting a 32.5% energy efficiency target by 2030 and anticipating further improvements after that;
removing barriers in the energy market that obstruct efficiency in the supply and use of energy;
EU countries to set their own national contributions for 2020 and 2030;
from 2020, EU countries will require utility companies to help their consumers use 0.8% less energy each year (for Malta and Cyprus 0.24%), which will attract private investment and support new competitors in the market;
clearer rules on energy metering and billing, strengthening consumer rights, in particular for people living in multi-apartment buildings;
EU countries must have transparent, publicly available national rules on the allocation of the cost of heating, cooling and hot water services in multi-apartment and multi-purpose buildings where these services are shared;
strengthening social aspects of energy efficiency by taking energy poverty into account in designing energy efficiency schemes and alternative measures
Concerning the consumption target for 2030 and taking account the withdrawal of the UK, the Commission has taken a decision that the equivalent target after the UK no longer applies EU law should be no more than 1128 Mtoe/y of primary energy and no more than 846 Mtoe/y of final energy. A revision could take place in 2023 in case of substantial cost reductions due to economic or technological developments.

Deadlines

Directive 2012/27/EU has applied since 4 December 2012 and had to become law in the EU countries by 5 June 2014.
Directive (EU) 2018/2002 has applied since 24 December 2018 and mostly has to become law in the EU countries by 25 June 2020.

This is the case except for certain amended rules for which the deadline is 25 October 2020. These concern:

metering for gas and electricity;
metering for heating, cooling and domestic hot water;
sub-metering and cost allocation for heating, cooling and domestic hot water;
remote reading requirement;
billing information for gas and electricity;
billing and consumption information for heating, cooling and domestic hot water;
costs of access to metering and billing information for electricity and gas;
cost of access to metering and billing and consumption information for heating, cooling and domestic hot water;
minimum requirements for billing and billing information based on actual consumption of electricity and gas (in Annex VII); and
new Annex VIIa on minimum requirements for billing and consumption information for heating, cooling and domestic hot water.

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

Before, the Commission published the Impact Assessment Roadmap on 3 August 2020. In the period September-November 2020, a series of workshops dedicated to stakeholders took place to collect their assessments on the existing directive and to indicate potential legislative solutions to achieve the new objectives. Then, a public consultation was open from 17 November 2020 to 9 February 2021.

EU Council and European Parliament have to still negotiate a common position for a definitive recast of the Energy Efficiency Directive (July 2023)

Other documents:

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Fact sheet on revised Directive 2018

2020 National Energy Efficiency