In focus: Energy efficiency – a driver for lower energy bills
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With energy prices at all-time highs, and Russia’s war against Ukraine contributing to market uncertainty, EU countries are taking action to alleviate the situation for citizens and businesses. Financial support to those most affected can make a difference in the short term, but support mechanisms need to be underpinned by demand reduction and efficiency measures for lasting effects. Better managing the demand side by using energy in a more conscious and 'smart' way also contributes to reducing our energy consumption and bills.
The EU has a set of instruments to support an efficient use of energy, covering from the appliances we use to the buildings we live and work in. Broadly defined as ‘using less energy to perform the same task or produce the same result’, energy efficiency is a key element in the EU’s energy policy. Particularly in the current geopolitical and energy market realities, structural energy efficiency measures are one of the easiest and most cost-effective ways to permanently reduce the EU’s overall energy consumption, enhance its energy security and decarbonise its energy system.
Coordinated efforts at local, national and EU level and the active participation of citizens are equally necessary to ensure a quick and effective deployment of energy efficiency measures, which are often coupled with energy saving actions to maximise their beneficial impact.
Energy efficiency framework
Over the last two decades, the EU has developed an extensive regulatory framework that sets requirements for energy efficiency across a wide range of sectors through the Energy Efficiency Directive, the Energy Performance of Buildings Directive, the Ecodesign Directive and the Energy Labelling Regulation, as well as related secondary legislation. Under the Energy Efficiency Directive, EU countries must put in place measures to achieve national energy efficiency targets, which contribute to the overall EU target for energy efficiency (currently set at 32.5% by 2030).
In 2021, the Commission proposed a revision of the Energy Efficiency Directive to align it with the EU’s new climate ambition of reducing its greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels, and becoming climate-neutral by 2050. The proposal includes an increased energy efficiency target of 9% by 2030 (compared to the 2020 reference scenario), which was further increased to 13% in the REPowerEU plan, published in May 2022. It also highlights the role of the ‘energy efficiency first’ principle in shifting from the traditional fossil-fuel based model of energy production and consumption towards a more flexible system that incorporates renewable technologies and focuses on actively engaged energy consumers.
Boosting the energy performance of buildings
Buildings are responsible for approximately 40% of EU’s total energy consumption and 36% of energy-related direct and indirect greenhouse gas emissions. Addressing energy efficiency and rolling out renewable energy in buildings will not only increase their energy performance, but can also contribute to tackling energy poverty and reducing energy costs for the occupants (according to Eurostat figures, heating alone accounted for 62.8% of final energy consumption in EU households in 2020).
The Energy Performance of Buildings Directive (EPBD), which entered into force in 2010, sets mandatory energy performance standards for all new buildings and for major renovations in existing ones. Following the introduction of energy performance rules in national building codes, buildings in the EU consume only half as much today compared to typical buildings from the 1980s. In 2021, the Commission proposed the revision of the directive to deliver on the 2030 and 2050 energy efficiency and decarbonisation objectives. This revision includes measures to further modernise the EU’s building stock and increase the rate of renovation, particularly for the worst-performing buildings, as well as a requirement for all new buildings (as of 1 January 2030) to be zero-emission buildings, characterised by a high energy performance and very low energy needs, which must be fully covered by energy from renewable sources.
The proposal for a revised EPBD includes obligations on solar energy in buildings, introduced by the REPowerEU plan, adopted in May 2022. Accordingly, the design of new buildings will optimise their solar energy generation potential, and solar installations will be deployed on new and existing commercial and public buildings above a certain size by 2027, and later on all new residential buildings by 2029. The EU Solar Energy Strategy, and in particular the Solar Rooftops Initiative, will also contribute to increasing the energy performance of the EU’s building stock.
Energy efficiency in industry
National and EU energy efficiency policies and technological developments have contributed to significantly reducing the energy consumption in the EU industry (in 2019, the EU’s industry energy consumption was around 13% lower than in 2000). Energy efficiency measures remain essential to further support decarbonisation efforts and reduce energy use, especially in energy-intensive industries, such as iron and steel, refineries, cement and petrochemicals.
Energy audits are an important tool for companies to address their energy consumption. By obtaining a detailed overview of their energy consumption and through recommendations on how to reduce it, companies can invest in cost-effective measures that often have payback times of less than 3 years.
Driving energy-efficient products and systems for citizens and businesses
EU ecodesign and energy labelling rules have been a key driver to increase the number of energy-efficient products on the EU market. They have also significantly contributed to reducing the EU’s energy demand while saving costs for consumers. It is estimated that these rules will bring energy savings of approximately 230 million tonnes of oil equivalent by 2030 and an average saving for consumers of up to €285 per year on household energy bills.
The EU energy label in particular has become a point of reference to help consumers choose among the most energy-efficient products. It is recognized by 93% of consumers and influences 79% of their purchasing decisions when buying energy efficient products.
Manufacturers must register all products covered by the energy labelling rules in the European Product Registry for Energy Labelling (EPREL). Citizens, businesses and public authorities can consult EPREL to obtain information and compare the energy efficiency and other details about a wide range of products.
Unlocking financing and capacity building
Energy efficiency investments in buildings, industry, cogeneration of heat and power and lighting can significantly contribute to meeting the EU’s climate and energy goals. The Commission’s multi-annual financial framework 2021-2027 and the NextGenerationEU instrument will directly co-finance energy efficiency investments in the EU through 3 different funds: the Recovery and Resilience Facility, Cohesion Policy funds and the Modernisation Fund. Under the national recovery and resilience plans, more than €67 billion have already been put forward to finance energy efficiency and building renovations.
In cooperation with EU countries, the Commission continues to strengthen the work of the Energy Efficiency Financial Institutions Group (EEFIG) and is examining additional ways to trigger further private investments to support energy efficiency projects. Another crucial aspect to increase investments on energy efficiency is to build the capacity of stakeholders across the value chain. EU funding programmes, such as Horizon Europe, will continue to provide funding and support to research and innovation projects to promote industrial competitiveness and optimise investments on key energy areas.
Energy savings
Saving energy lowers bills and diminishes exposure to supply shortages. Using less energy also facilitates storage requirements and reduces the EU’s reliance on fossil fuels, which contributes to supporting security of supply. Coupled with energy efficiency measures, energy savings through behavioural changes can help reduce in the short term around 13 billion cubic metres and around 16 million tonnes of oil equivalent in the EU’s demand for gas and oil, respectively.
In cooperation with EU countries and international organisations, the Commission helps promoting the most effective energy actions and measures to help citizens and companies save energy. In addition to the “Toolbox for action and support” published in October 2021, the Commission published in May 2022 the EU ‘Save Energy’ plan as part of the REPowerEU plan. It lists mid- to long-term energy efficiency measures in key sectors, such as households, services, transport and mobility, that EU countries can take to boost energy savings.
In support of these efforts, the joint Commission-IEA 'Playing my part' campaign provides some key steps that individuals and companies can take to reduce their energy consumption. Recently, the Commission has also proposed new rules to help reducing consumers and businesses’ energy bills. Among others, the proposal suggests that all EU countries reduce their overall electricity demand by 10% until end of March 2023, especially during peak hours, when price is at its highest. Increasing energy efficiency will be key to reach these objectives.