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Energy efficiency targets

by Sensix Team

The EU has set ambitious energy efficiency targets for 2020 and 2030 in order to reduce primary and final energy consumption, as part of its 2050 decarbonisation objectives and 2012 directive.

By using energy more efficiently, and thereby consuming less, Europeans can lower their energy bills, help protect the environment, mitigate climate change, improve their quality of life, reduce the EU’s reliance on external suppliers of oil and gas and support the sustainable growth of the EU economy. To achieve these benefits, energy efficiency needs to be improved throughout the full energy chain, from production to final consumption.

One important aspect that already influences the EU’s energy efficiency targets is the war from Ukraine, a war that just started this year. The European Commission is revising the economic assumptions behind its energy and climate laws package presented last year, saying sky-high gas prices fuelled by the war in Ukraine have strengthened the case for more ambitious energy efficiency goals.

The 2020 targets

Let’s have a positive one. Because we are human beings and also because our creed is to take care of/In 2007, the EU leaders set the 3 key targets for 2020:

  • 20% cut in greenhouse gas emissions (from 1990 levels);
  • 20% of EU energy from renewables;
  • 20% improvement in energy efficiency.

The COVID-19 crisis significantly affected the EU economy and led to a decrease in energy consumption in 2020. According to the latest Eurostat data for 2020, the EU’s primary energy consumption dropped to 1 236 Mtoe (million or mega tonnes of oil equivalent), and final energy consumption to 907 Mtoe (which is respectively 5.8% and 5.4% below the EU 2020 target level).

The implementation

1. Energy companies lead future energy savings.

Each Member State must develop an Energy Efficiency Obligation (EEO) scheme, in order to achieve cumulative energy saving targets. The sales of energy, by volume used in transport may be partially or fully excluded from this calculation.*

Energy distributors and/or retail energy sales companies are obligated parties under the EEO, which are due to achieve the energy savings through the implementation of energy efficiency measures. In order to comply with the EED, obligated parties must demonstrate that all measures are material to the achievement of energy efficiency, and additional to business as usual.*

*According to Article 7 of the EED.

2. Energy Efficiency Obligations (EEO): the cornerstone of the EED (Energy Efficiency Directive).

An EEO is “a regulatory mechanism that requires obligated parties to meet quantitative energy saving targets by delivering or procuring eligible energy savings produced by implementing approved end-use energy efficiency measures”.

Obligated parties are usually defined as providers of networked energy such as electricity and natural gas distributors or standalone retail suppliers. However, they can also be placed on providers of other energy forms such as heating oil, transport fuels and district heating. If these obliged companies fail to meet their targets, they are faced with paying a financial penalty.

3. Existing EEO schemes are cost-effective in energy savings.

There are several market mechanisms that can explain this. As more energy efficient products penetrate the market, their costs decrease due to economies of scale. Through learning-by-doing, the energy companies also become more skilled in implementing the energy saving measures. In addition, EEOs save public money, as governments typically do not finance the measures. This clearly benefits those Member States that are facing a debt crisis.

4. Various EEO scheme designs make harmonization across Europe difficult.

Harmonizing EEO schemes throughout the EU will be difficult considering the different designs that the present systems have. The countries that had an EEO system in place have these important differences:

  • Different measurements of final energy targets, for example primary energy in Italy and Flanders vs. final energy in France and Denmark, while the UK has a target in amount of carbon dioxide saved;
  • Fuel coverage where Flanders covers only electricity while France on the other end includes all fuels (including district heating and cooling, and transport fuels). Consequently the obliged parties also vary widely;
  • Time frame in which the targets are set, where some are defined yearly and others have cumulative targets;
  • Trading of energy savings are only active in Italy and France, while in other countries this is not possible.

    5. Alternative measures counterweight market-based mechanisms.

  • Minimum energy performance requirements;
  • Energy performance certificates;
  • Inspection schemes for heating and air-conditioning;
  • Nearly zero-energy buildings;
  • Financial instruments;
  • Energy performance contracting (EPC).

6. Member States respond to the EED through national action plans.

Whichever policies the EU Member States have chosen to implement, they are obliged to inform the European Commission about their plans through submitting National Energy Efficiency Action Plans (NEEAP) every three years. Analyzing the credibility of these plans can tell us in advance if a Member States is likely to reach its energy savings target.

Find out more about the implementation of the EU’s 2020 energy efficiency targets right here.

The 2030 targets

In December 2018, the amended Energy Efficiency Directive ((EU) 2018/2002) entered into force, updating some specific provisions from the 2012 directive and introducing various new elements. Above all, it established a headline EU energy efficiency target for 2030 of at least 32.5% (compared to projections of the expected energy use in 2030), with a clause for a possible upwards revision by 2023. The 32.5% target translates into a final energy consumption of 956 Mtoe and/or primary energy consumption of 1 273 Mtoe in the EU by 2030.

Under the Regulation on the Governance of the Energy Union and Climate Action ((EU)2018/1999), each EU country is required to establish a 10-year integrated national energy and climate plan (NECP) for 2021-2030, outlining how it intends to contribute to the 2030 targets for energy efficiency, renewable energy and greenhouse gas emissions.

In July 2021, the Commission adopted its proposal for a recast of the Energy Efficiency Directive as part of the European Green Deal package, which contains legislative proposals to meet the EU objective of at least 55% reduction in greenhouse gas emissions by 2030.

We know that being energy efficient can be a complex process but we are here to help you. Find out new tips on how to save energy on our blog post or contact us right here.

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