Wednesday, May 29, 2024
HomeEU affairsThe 'energy efficiency first' principle is given legal strength for the first time

The ‘energy efficiency first’ principle is given legal strength for the first time

The European Parliament and the Council reached a provisional agreement to reform and strengthen the EU Energy Efficiency Directive. This deal marks a further step in the completion of the Fit for 55 package to deliver the European Green Deal and the REPowerEU Plan. It shows once again the EU’s determination to become climate neutral by 2050.

For the first time, the energy efficiency first principle is given legal strength with a clear requirement for EU countries to take energy efficiency into consideration in policy, planning and major investment decisions in the energy sector and beyond.

The agreement establishes an EU energy efficiency target of 11.7 per cent for 2030, exceeding the Commission’s original Fit for 55 proposal. It requires EU Member States to collectively ensure an additional reduction of final and primary energy consumption, compared with energy consumption forecasts made in 2020.

Under the provisional deal, the annual energy savings obligation nearly doubles to ensure continual progress. EU countries will be required to achieve new savings each year of 1.49 per cent of final energy consumption on average, from 2024 to 2030, up from the current level of 0.8 per cent. They will gradually have to reach 1.9 per cent by the end of 2030. This is an important instrument to drive energy savings in end-use sectors such as buildings, industry and transport.

The revised rules also give a greater responsibility to the public sector to increase energy efficiency. Public bodies will need to systematically take into account energy efficiency requirements in their public procurement of products, services, buildings and works. A new annual energy consumption reduction target of 1.9 per cent is introduced for the public sector. EU countries’ obligation to renovate each year at least 3 per cent of the total floor area of buildings owned by the public administration now also covers the regional and local levels.

Companies will be encouraged to be more energy-efficient under the revised Directive. First, energy management systems will become a default obligation for large energy consumers. All enterprises, including SMEs that exceed 85 TJ of annual energy consumption, will have to implement an energy management system. Otherwise, they will be subject to an energy audit (if their annual consumption exceeds 10 TJ). For the first time, a reporting scheme for the energy performance of large data centres is also introduced.

Under the agreed rules, EU countries will also have to promote local heating and cooling plans in large municipalities having populations above 45,000. Also, with the revised definition of efficient district heating and cooling, minimum requirements will be gradually changed to ensure a fully decarbonised district heating and cooling supply by 2050.

The deal further strengthens provisions on energy efficiency financing to facilitate the mobilisation of investments. Under the new provisions, EU countries will be required to promote innovative financing schemes and green lending products for energy efficiency, by ensuring their wide and non-discriminatory offer by financial institutions. EU countries will have to report on the volume of energy efficiency investments.

The agreement includes the first-ever EU definition of energy poverty. Member States will now have to implement energy efficiency improvement measures as a priority among people affected by energy poverty, vulnerable customers, low-income households and where applicable, people living in social housing. The revised rules put a stronger focus on alleviating energy poverty and empowering consumers, including the creation of one-stop shops for, technical and financial assistance and out-of-court mechanisms for the settlement of disputes.

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