EU Boosts Energy Efficiency Goals with Revised Directive

Thursday, 27 July 2023

The European Union (EU) has officially approved a revised Energy Efficiency Directive, which significantly increases mandatory annual energy savings to 1.5%. This directive is a key component of the 'Fit for 55' package, an initiative aimed at reducing greenhouse gas emissions in the EU by 55% by 2030. This package is central to the European Green Deal and REPowerEU, Europe's climate and energy policy response to the geopolitical situation in Ukraine.

The updated directive sets an energy efficiency target of 11.7% for the EU by 2030, based on energy consumption forecasts made in 2020. This means that EU countries will be required to achieve an average annual energy savings rate of 1.5% from 2024 to 2030, nearly doubling the current requirement of 0.8%. By 2030, the annual savings requirement will increase to 1.9%. This is expected to drive energy end-use savings across various sectors, including buildings, industry, and transport.

EU Commissioner for Energy, Kadri Simson, hailed the directive's adoption as a significant step towards achieving the Fit For 55 objectives. The directive will legally require EU countries to prioritize energy efficiency in policymaking, planning, and major investments, including public procurement.

The directive also imposes new requirements on companies, including SMEs, that exceed 85 terajoules (TJ) of annual energy consumption. Such companies will need to implement an energy management system or undergo an energy audit if their annual consumption exceeds 10TJ. For the first time, the EU is introducing a reporting scheme for the energy performance of large data centres.

The legislation also includes the EU's first definition of energy poverty and mandates member states to prioritize energy efficiency improvements for vulnerable customers, low-income households, and individuals in social housing. Energy poverty is defined as a situation where households must reduce their energy consumption to a point where it negatively impacts their health and well-being due to high costs.

Last month, the International Energy Agency (IEA) held its 8th Global Conference on Energy Efficiency, where governments endorsed the goal of doubling the average global rate of energy efficiency improvements by the end of the decade. According to the IEA, energy efficiency progress must increase from 2.2% today to more than 4% annually by 2030 in a net-zero emissions scenario.

In the UK, the government has announced a ￡8.85m ($11.4m) funding package for education providers to train people in making homes more energy efficient. The UK has the most energy-inefficient homes in Europe, according to a 2022 report by the UK-based think tank, the Institute for Government. The report found that a UK home with an indoor temperature of 20°C and an outside temperature of 0°C lost an average of 3°C after five hours, up to three times as much as homes in European countries such as Germany.