Energy Efficiency

On June 19th, 2018, the European Parliament, Commission and Council with their negotiators signed off on new energy efficiency targets, including the final agreement on the continuation of the Energy Efficiency Directive (EED).

Key outcomes of the new regulation include agreements to:

• Change the 2030 European Union (EU) total energy savings target to 32.5 percent (compared to 2007 projections)
• Revise that target in 2023 to align with the Paris Agreement commitments
• Adjust the country-specific energy savings targets under Article 7 of the EED to 0.8 percent per year

The EED was designed in 2012 to establish a common framework of measures for the promotion of energy efficiency within the EU. It aimed to ensure the EU’s 2020 target of 20 percent total energy savings is achieved. Member States had until 2014 to transpose the obligations of EED and determine how it would be implemented in their local geography. This included many different measures, such as the introduction of energy saving obligation schemes, smart meter roll-out, and the obligation for larger companies to conduct energy audits.

In 2016, the European Commission (EC) conducted the impact assessment on EED implementation and concluded that with the existing energy efficiency targets, only 18.4 percent reduction of primary energy consumption could be achieved by 2020 (hence missing the 2020 target). In order to tackle this issue, in November 2016, the EC presented a new package of measures to facilitate the clean energy transition. This package was not only triggered by the growing gap to achieve 2020 efficiency targets, but also to align EU ambitions following the Paris Agreement. The package was supported by a large share of industries and organizations, including Schneider Electric, which joined 75 other companies and associations to call upon Member States to work together on an ambitious path towards energy efficiency.

Some watchdogs are already raising concerns that the new 2030 energy efficiency targets still don’t go far enough. Considering the originally proposed energy efficiency targets of 40 percent total and 1.5 percent annual savings, businesses should be aware that many exemptions were eliminated in the newly passed phase. This means the lower approved 0.8 percent annual savings target, without the old exemptions, will double the effective savings proposed by the Member States last June. Businesses should keep a close eye on country-level implementation requirements to determine the impact on their organizations; changes will likely require a portfolio-wide efficiency strategy to drive these ambitious savings targets.

What should businesses do?

Work towards the implementation of a low-carbon economy strategy for 2050 will begin soon. With increased saving targets in place, Member States will be looking at enhancement of current energy efficiency regulation, bringing additional opportunities for energy efficiency.

Watch for these key trends to take place in the EU:

• Development and expansion of energy obligation schemes, such as White Certificates, to deliver on annual savings set by Article 7. This trend may bring additional support from energy suppliers investing in end users’ energy efficiency projects to deliver on energy saving targets.
• Enhanced enforcement of obligations for energy users, including energy performance requirements for residential and commercial buildings, and further enforcement of Article 8, imposing mandatory energy audits for large industries.
• Robust and transparent governance compliant with the “energy efficiency first” principle to drive business decisions and guarantee adequate implementation of the EU energy efficiency legislation.

Considering these trends, there is a significant opportunity for businesses to accelerate their energy and sustainability strategies and maximize benefits from these actions and investments.

What happens next?

The new directive will be formally approved by the European Parliament and the Council in the coming months. It will then be published in the Official Journal of the Union and will take effect 20 days after publication. Member States will have to transpose the new energy efficiency targets of the directive into their national law within 18 months after that publication date. Based on experiences from the last EED legislation rollout, delays in national transposition are likely.

Businesses that start preparing early for a transition to the low-carbon economy will avoid a late rush on legal obligations and unlock efficiency potentials, thus saving money well into the future.

Learn more about the current EED energy audit obligation, and how you can transform your findings into savings, in our EED 2018 eBook.

Contributed By: Irina Gilfanova, Senior Sustainability Consultant, Schneider Electric Energy & Sustainability Services