Union sets stricter rules to boost energy efficiency



The European Commission announces that it has reached an agreement with the European Parliament and the Council to reform and strengthen the EU Energy Efficiency Directive. The agreement represents another step toward completing the "Fit for 55" package to implement the European Green Deal and the REPowerEU plan. It once again demonstrates the EU's determination to achieve climate neutrality by 2050.

For the first time, the principle of "energy efficiency first" is given legal force through an explicit commitment by EU countries to take energy efficiency into account when making decisions on policy, planning and major investments in the energy sector and beyond.

The agreement sets an EU energy efficiency target of 11.7 percent for 2030, which goes beyond the Commission's original proposal for the "Fit for 55" package. It also commits EU member states to collectively ensure additional reductions in final and primary energy consumption compared to energy consumption projections made in 2020.

- Saving energy is a key step to saving our planet. In recent months, Europeans have shown that they are ready and able to meet this challenge, and our industry has proven that it can optimize its energy consumption and production processes. We all need energy efficiency now, in order to become an even more systemic part of our society, and this revised directive helps us achieve that - said Frans Timmermans, executive vice president for the European Green Deal.

Doubled savings

As part of the initial agreement, the annual energy savings obligation nearly doubled to ensure continued progress. Between 2024 and 2030, EU countries will have to achieve new savings averaging 1.49 percent of end-use energy consumption each year, compared to the current level of 0.8 percent. By the end of 2030, these savings will have to gradually reach 1.9 percent. This is an important instrument for stimulating energy savings in end-use sectors such as buildings, industry and transportation.

The revised regulations also place greater responsibility on the public sector to increase energy efficiency. Public institutions will have to systematically take energy efficiency requirements into account when awarding public contracts for products, services, buildings and works. A new annual energy reduction target of 1.9 percent is being introduced for the public sector. The EU countries' obligation to renovate at least 3 percent of the total area of buildings owned by public administrations each year now extends to the regional and local levels as well.

Under the revised directive, businesses will be encouraged to become more energy efficient. First, energy management systems will become a default obligation for large energy consumers. All enterprises, including SMEs, whose annual energy consumption exceeds 85 TJ will have to implement an energy management system. Otherwise, they will be subject to an energy audit (if their annual consumption exceeds 10 TJ). A reporting system on the energy performance of large data centers has also been introduced for the first time.

According to the agreed regulations, EU countries will also have to promote district heating and cooling plans in large municipalities with a population of more than 45,000. In addition, with the revised definition of efficient heating and cooling systems, the minimum requirements will be gradually revised to ensure the full decarbonization of heating and cooling systems by 2050. Support for new high-efficiency cogeneration units using natural gas and connected to district heating systems in efficient heating and cooling systems will only be possible until 2030, while any other use of fossil fuels will be prohibited for new heat generation capacity in such systems.

The agreement in question further strengthens energy efficiency financing provisions to facilitate investment mobilization. Under the new rules, EU countries will be required to promote innovative financing and so-called green loan products for energy efficiency by ensuring that they are widely and non-discriminatorily offered by financial institutions. EU countries will have to report on the amount of investment in energy efficiency.

Reducing energy poverty

The agreement includes the first-ever EU definition of energy poverty. Member states will now have to implement measures to improve energy efficiency, primarily among those in energy poverty, vulnerable consumers, low-income households and, where applicable, those occupying social housing. The revised legislation places greater emphasis on reducing energy poverty and empowering consumers, including the establishment of one-stop shops for technical and financial assistance and out-of-court dispute resolution mechanisms.

The preliminary agreement now requires formal adoption by the European Parliament and the Council. Once this procedure is complete, the new rules will be published in the EU Official Journal and enter into force.

Key efficiency

Energy efficiency is a key pillar of the REPowerEU plan, which is the EU's strategy to eliminate Russian fossil fuel imports as soon as possible. In May 2022. The Commission proposed - as part of the REPowerEU plan - to strengthen long-term energy efficiency measures, including an increase in the binding energy efficiency target set in the "Fit for 55" package that is part of the European Green Deal.

- Energy efficiency is key to achieving full decarbonization of the EU economy and independence from Russian fossil fuels. A strengthened EU framework for energy efficiency will help us stay on track to meet our 2030 energy and climate targets. It can also be an important driver of competitiveness and enhance security of supply. New rules on consumer empowerment and energy poverty will ensure that everyone, including the most vulnerable, participates in our transition to clean energy - concluded Kadri Simson, Commissioner for Energy.