Energy Efficiency Directive (EED)
Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency (Energy Efficiency Directive - EED) was published in the Official Journal of the European Union on 14 November 2012.
The deadline for the Directive's transposition into the EU Member States' national laws was 5 June 2014. EED imposed on the EU Member States the requirement to set indicative national energy efficiency targets ensuring that the EU reaches its target of saving 20 % of primary and final energy consumption by 2020 compared to business-as-usual projections. It also introduced a set of binding measures to help Member States achieve this target.
The EED was part of the EU’s 2020 climate and energy package, which, besides the energy efficiency, set the following goals to be achieved by 2020:
- a 20 per cent reduction below 1990 levels, in GHG emissions (the respective framework governed by the EU ETS Directive);
- a 20 per cent share of renewable energy in the bloc’s energy mix (the respective framework governed by the Renewable Energy Directive (RED)).
The main instruments of the Energy Efficiency Directive are energy efficiency obligation schemes (EEOS), requiring obligated parties determined by Member States – energy distributors and/or retail energy sales companies – to reduce the volume of energy sales to final customers by 1.5 % annually. This has to go beyond the existing energy efficiency standards regulated by other EU legislation.
Energy efficiency obligation schemes
Energy sales in the transport sector can be excluded from the calculation. Gradual phase-in is allowed, as are some exemptions (for instance, the calculation can exclude energy for industrial activities), provided that the exemptions do not add up to more than 25 % of required savings. Member States can decide to achieve the same savings by alternative measures, such as CO2 taxes, financing schemes, fiscal incentives, training and education, energy efficiency standards, norms and labelling that goes beyond those mandated by EU law. Finally, Member States are free to choose how they will achieve the savings, according to the European Parliament data, in 2017 there were 477 diferent measures in use.
Metering and billing information
The directive contains a number of provisions on metering and billing for electricity, natural gas, district heating and cooling, and domestic hot water. It requires that individual meters for final customers’ consumption of electricity, natural gas, district heating, cooling, and domestic hot water are introduced whenever a new connection in a new building is made or when the meter is replaced, provided this is technically possible and cost-effective. The deadline for introducing individual meters for heating and cooling in all multi-apartment/multi-purpose buildings was 31 December 2016 (unless technically impossible or not cost-efficient). Alternatively, individual heat-cost allocators can be used, unless this would also not be cost-efficient.
The EED sets requirements for the billing information available to customers with smart and regular electricity and gas meters, and requires that this information be accessible free of charge.
The EED requires the EU Member States’ central governments to purchase only highly energy efficient products, services and buildings, and to encourage local and regional authorities to do the same. Public bodies are required to do so, provided it is cost-effective and economically feasible.
Central governments are required to lead by example in the feld of buildings and to renovate 3 % of the total floor area of buildings occupied or owned by central government each year from 2014 onwards. The EU Member States can choose to achieve the same savings by alternative measures. The EED requires the EU Member States to establish long-term strategies for mobilising investment in energy-efficient renovation of national public and private building stock (under the Winter Energy Package these provisions were intended to be moved to the revised Energy Performance of Buildings Directive).
The Energy Efficiency Directive also requires the EU Member States:
- to introduce mandatory energy audits of companies, excluding small and medium-sized enterprises;
- to monitor the efficiency of new energy generation capacity;
- to assess and use the potential for high-efficiency cogeneration (combined heat and power, CHP) and efficient district heating and cooling;
- to ensure priority access and dispatch of CHP electricity (under the Winter Energy Package these provisions were intended to be moved to the new proposals on electricity market legislation);
- to encourage and promote demand response (under the Winter Energy Package these provisions were intended to be moved to the new proposals on electricity market legislation);
- to support a market for energy services; and
- to ensure training, accreditation and certifcation of people working in the new energy market.
EED’s state of transposition as of 2017
Report of 23 November 2017 from the Commission to the European Parliament and the Council (2017 assessment of the progress made by Member States towards the national energy efficiency targets for 2020 and towards the implementation of the Energy Efficiency Directive) referd to the following facts as regards EED’s state of transposition (as of 2017):
- the EED was fully transposed in all Member States, although there were delays in implementing some of the measures or the measures were subject to checks to ensure their conformity;
- the European Commission closed all the infringement proceedings for missing or partial notification;
- under EED Article 7, the EU Member States reported their savings for 2015 which across the EU had amounted to 28.5 Mtoe in cumulative terms;
- this was 15% more overall than the estimated amount of savings for 2015, assuming a linear delivery of the savings requirements to be achieved by the end of 2020;
- Energy Efficiency Obligation Schemes were introduced in 15 EU Member States and were responsible for the highest share of energy savings (35%);
- while the majority of the policy measures targeted the buildings sector, other end-use sectors (e.g. transport, industry) were also targeted.
Implemented via dedicated obligation schemes and alternative measures, the EED is a key element of the EU energy efficiency framework, although not alone. Complementary legislative pieces are directives that set efficiency standards for products and buildings:
- Ecodesign Directive (Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for the setting of ecodesign requirements for energy-related products),
- Energy Efficiency Labelling Directive (Directive 2010/30/EU of the European Parliament and of the Council of 19 May 2010 on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products), and
- Energy Performance of Buildings Directive (Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings).
Energy savings obligation according to the Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency, 30.11.2016, COM(2016) 761 final 2016/0376 (COD)
the 1.5% annual energy savings obligation is extended from 2020 to 2030 and possibly beyond
the EU Member States can achieve the savings obligation by introducing energy savings obligation schemes, alternative measures or a combination of the two
energy sales in transport can still be excluded from the calculation, but the revised directive allows the EU Member States also to exclude the energy installation of new renewable energy generation on or in buildings for own use
all other exemptions are retained
calculation of energy savings stipulated in the Annex V has been modifed to clarify which savings are eligible
savings from renovation of existing buildings can now be claimed in full
while previously Member States could choose to include social requirements in savings obligation schemes, including the one foreseeing that a share of energy savings obligation schemes be implemented in energy poor households or in social housing, now they have an obligation to include such requirements
the EU Member States also need to take into account the efect of alternative policy measures on energy-poor households
The EU legal framework for energy efficiency required to be adapted to a 2030 perspective due to existing shortcomings:
- the absence in the EED of a defined level of energy efficiency ambition for 2030,
- the need to specify the nature of the level of energy efficiency ambition for 2030 (binding or indicative),
- the fact that under the existing framework of Article 7 (energy savings obligations) and Articles 9-11 (metering and billing) a substantial amount of economically viable energy savings will not be taken up,
- the expiry of Article 7 after 2020, and
- the need to reflect technical progress in metering and billing to the benefit of energy consumers.
On 30 November 2016, the European Commission presented a proposal for a revised Energy Efficiency Directive (European Commission's Proposal of 30 November 2016 for a Directive of the European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency (COM(2016) 761 final 2016/0376 (COD)), as part of the Winter Energy Package. The said EED revision focused on those parts that needed to be brought into line with the 2030 energy and climate targets and those whose evaluation was mandated by the current directive. In particular, the European Commission proposed a 30 % binding EU energy efficiency target for 2030, to be achieved by means of indicative national targets.
Although more demanding than the 27 % efficiency target approved by the European Council in 2014, it is less ambitious than the 40 % target called for by the European Parliament. The 30% target means that in 2030 EU energy consumption must be no more than 1 321 Mtoe of primary energy and no more than 987 Mtoe of final energy. The European Commission can propose additional measures, should its assessment of the Member States’ progress in implementing their plans show that the EU is not on track to achieve the 2030 target. The revised directive proposed to extend beyond 2020 the application of the energy savings obligation scheme, which required utility companies to help their consumers use 1.5 % less energy each year. The possibility to use both energy efficiency obligation schemes and alternative measures was retained. The European Commission Proposal also aimed to make the rules on energy metering and billing clearer.
Metering and billing information according to the Proposal for a Directive of the European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency, 30.11.2016, COM(2016) 761 final 2016/0376 (COD)
✅ provisions on metering and billing have been amended to exclude electricity (which have been moved to the new electricity market legislation)
✅ new provisions refer mainly to district heating, cooling and domestic hot water
✅ as of 1 January 2020, all newly installed district heating and cooling meters and domestic hot water meters, as well as cost allocators at individual radiators, have to be remotely readable
✅ old meters and allocators will have to add such capabilities or be replaced by 1 January 2027, unless a Member State shows this would not be cost-efficient
✅ while previously the EU Member States were free (but not obliged) to introduce transparent rules on the allocation of heating and cooling costs in multi-apartment and multi-purpose buildings, now such rules are a requirement
✅ the wording of the provisions for billing and consumption information has been changed, with a distinction now being made between ‘final consumers’ and ‘final users’
✅ the right to accurate information on actual consumption in the proposal refers to all ‘final users’, while previously it referred to the ‘final consumers’, potentially excluding sub-metered consumers
The modified framework envisioned, moreover:
- the extension of Article 7 to 2030; simplifying and updating this Article (e.g. on what savings can be counted and on-building renewable energy production);
- clarification and updating of the provisions of Articles 9-11, including consolidation of the provisions on electricity and gas with the internal energy market legislation to ensure coherence.
Trilogue negotiations started in February 2018 and resulted in a provisional agreement among the EU Institutions on 19 June 2018. The final text was formally adopted by the European Parliament (on 13 November 2018) and Council (on 4 December 2018). Provisional Agreement published on 17 July 2018 of the European Parliament (Committee on Industry, Research and Energy) resulting from Interinstitutional Negotiations on the Proposal for a directive European Parliament and of the Council amending Directive 2012/27/EU on energy efficiency (COM(2016)0761 – C8-0498/2016 – 2016/0376(COD)) sets:
- a headline EU target of at least 32.5 % efficiency improvements by 2030, a non-binding goal to be achieved through indicative national contributions reflecting final and/ or primary energy consumption (this is consistent with a maximum limit of 1 273 Mtoe of EU primary energy consumption or 956 Mtoe of EU final energy consumption by 2030, however, in case of substantial cost reductions or to meet international commitments, the headline target may be revised upwards (but not lowered), on the basis of a new European Commission proposal);
- energy savings obligations of 0.8 % per annum between 2021 and 2030, to be calculated in terms of final energy consumption.
Obligations may include policy measures enacted before 2020 that impact on energy savings in the 2021-2030 period. More sectors would be covered by energy-savings obligations than under the existing EED, although the EU Member States could still choose to exclude transport, certain industrial activities and some energy use in buildings. Efficiency measures that address energy poverty would be included in the integrated national energy and climate plans (under the Governance of the Energy Union Regulation). The provisional agreement introduces a new remote reading requirement that would apply to all new meters installed after the date of transposition of the revised EED, as well as all other meters by 1 January 2027 (unless Member States can show this is not cost-effective). On 21 December 2018 the Directive (EU) 2018/2002 of the European Parliament and of the Council of 11 December 2018 amending Directive 2012/27/EU on energy efficiency has been published in the Official Journal of the European Union. It has entered into force three days later. The revised EED is to be transposed into national legislation within 18 months of its entry into force i.e. by 25 June 2020, although the provisions on metering and billing can be transposed by 25 October 2020. The European Commission is required to evaluate the functioning of the revised EED by 2023, and could accompany this review with a legislative proposal that raises the headline target.
Three general but extremely important guiding principles are expressed in Recital 2 of EED:
- energy efficiency is to be treated as an energy source in its own right,
- the energy efficiency first principle should be taken into account when setting new rules for the supply side and other policy areas,
- it needs to be ensured that energy efficiency and demand-side response can compete on equal terms with generation capacity.
Energy efficiency policies under the European Green Deal - Fit for 55 package
According to the European Commission Communication of 17 September 2020 (Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit of our people, COM/2020/562 final) a rigorous enforcement of existing legislation on energy efficiency is necessary but insufficient to reach the increased climate target - energy efficiency improvements will need to be significantly stepped up to around 36% in terms of final energy consumption. Most savings would need to come from buildings - see the Energy Performance of Buildings Directive, over and beyond the contribution from the building sector, other efforts will be needed to achieve a more ambitious energy efficiency target. The existing energy efficiency requirements and product standards are planned to be reviewed. In addition, the forthcoming Sustainable Product Legislative initiative announced in the Circular Economy Action 27 Plan will look into widening the Ecodesign approach to other product categories. The higher ambition level will also require to better promote energy efficiency wherever cost-effective in all areas of the entire energy system as well as in all relevant sectors where activity affects demand for energy, such as transport and the agriculture sector, in this context, the Commission will present dedicated guidelines.
On 14 July 2021 the European Commission proposed a new Energy Efficiency Directive (Proposal for a Directive of the European Parliament and of the Council on energy efficiency (recast, COM(2021) 558 final). 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). 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 is intended to 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. The draft 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.
On 20 September 2023 Directive (EU) 2023/1791 of the European Parliament and of the Council of 13 September 2023 on energy efficiency and amending Regulation (EU) 2023/955 (recast) has been published In the EU Official Journal.