The Energy Efficiency Directive
Article 7 EED
The Energy Efficiency Directive (EED) (2012/27/EU) was adopted on 25 October 2012 and entered into force on 5 December 2012. In 2018, as part of the ‘Clean energy for all Europeans package‘, the new amending Directive on Energy Efficiency (2018/2002) was agreed to update the policy framework to 2030 and beyond. European targets regarding greenhouse gas emissions have changed with the European Green Deal towards 55% to 2030. Therefore, related legislative framework needs to be reviewed and possible revised. One of those is the Energy Efficiency Directive (2012/27/EU and 2018/2002/EU).
The Energy Efficiency Directive (2012/27/EU)
The 2012 Energy Efficiency Directive established a set of binding measures to help the EU reach its 20% energy efficiency target by 2020. Under the directive, all EU countries are required to use energy more efficiently at all stages of the energy chain, including energy generation, transmission, distribution and end-use consumption.
In the context of the 2012 directive, a number of important measures have been adopted throughout the EU to improve energy efficiency in Europe, including:
- an annual reduction of 1.5% in national energy sales
- EU countries making energy efficient renovations to at least 3% per year of buildings owned and occupied by central governments
- national long-term renovation strategies for the building stock in each EU country
- mandatory energy efficiency certificates accompanying the sale and rental of buildings
- the preparation of national energy efficiency action plans (NEEAPs) every three years
- minimum energy efficiency standards and labelling for a variety of products such as boilers, household appliances, lighting and televisions (energy label and ecodesign)
- the planned rollout of close to 200 million smart meters for electricity and 45 million for gas by 2020
- obligation schemes for energy companies to achieve yearly energy savings of 1.5% of annual sales to final consumers
- large companies conducting energy audits at least every four years
- protecting the rights of consumers to receive easy and free access to data on real-time and historical energy consumption
The Commission also published guidelines on good practice in the field of energy efficiency.
The amending directive (2018/2002)
In 2018, as part of the ‘Clean energy for all Europeans package‘, the new amending Directive on Energy Efficiency (2018/2002) was agreed to update the policy framework to 2030 and beyond.
The key element of the amended directive is a headline energy efficiency target for 2030 of at least 32.5%. The binding target, to be achieved collectively across the EU, is set relative to the 2007 modelling projections for 2030.
The directive allows for a possible upward revision in the target in 2023, in case of substantial cost reductions due to economic or technological developments. It also includes an extension to the energy savings obligation in end use, introduced in the 2012 directive. Under the amending directive, EU countries will have to achieve new energy savings of 0.8% each year of final energy consumption for the 2021-2030 period.
Taking account the withdrawal of the UK, the Commission has taken a decision that the equivalent target after the UK no longer applies EU law should be no more than 1128 Mtoe of primary energy and no more than 846 Mtoe of final energy.
Although the deadline for transposition into national law by Member States had a deadline of by 25 June 2020, by 31 August 2020, the Commission received notifications from only thirteen Member States (Austria, Croatia, Czechia, Denmark, France, Germany, Italy, Latvia, Lithuania, the Netherlands, Poland, Spain and Sweden) and the United Kingdom. In addition, most of these notifications are partial, meaning that some provisions of the Directive have not yet been transposed or notified. Under the Governance Regulation 2018/1999, Member States are required to draw up integrated 10-year national energy & climate plans (NECPs) outlining how they intend to meet the energy efficiency and other targets for 2030.
A potential revision of the EU energy efficiency directive (EED)
For the efficient use of energy is key to achieving EGD targets, the review aims to provide insights into how the EED could be revised to: achieve a higher level of greenhouse gas reduction by 2030 and to contribute to other European Green Deal initiatives. On 17 November 2020 the Commission launched a public consultation on revision of the EED, which will run until 9 February 2021.
Based on Impact assessment, there are three options that can be decided upon: No policy change, non-regulatory measures or revision of the EED. The latter means addressing of gaps and contribution to higher achievements.
Article 7 EED
To support the achievement of EED goals, Article 7 EED requires Member States to achieve yearly energy savings through an energy efficiency obligation scheme (EEOS) or alternative measures.
Article 7 of the 2012 EED (2012/27/EU) required each Member State to achieve an annual reduction of 1.5% in national energy sales in each of the years from 2014 to 2020 inclusive. Directive (2018/2002/EU) amends this goal with new savings each year from 2021 to 2030 of 0,8 % of annual final energy consumption (Cyprus and Malta 0,24 %).
Annex V of the EED sets out methodological options for the calculation of energy savings; principles to apply to the calculation of additionality to European Union law and the materiality of the activities of obligated, participating or entrusted parties; a requirement to ensure that quality standards for energy efficiency measures are introduced and maintained; and a methodology for the notification of energy efficiency measures to the European Commission.
In order to reach this target, obliged energy companies have to carry out measures which help final consumers improve energy efficiency. This may include improving the heating system in consumers’ homes, installing energy management systems, or better insulating roofs to reduce energy consumption.
EU countries may also implement alternative policy measures which reduce final energy consumption. These measures could include:
- Energy or CO2 taxes
- Financial incentives that lead to an increased use of energy efficient technology
- Regulations or voluntary agreements that lead to the increased use of energy efficient technology
- Energy labelling schemes beyond those that are already mandatory under EU law
- Training and education, including energy advisory programmes
Member States choose EEOS, Alternative measures or a combination of both, more information is available: (link to countries)
Recommendation and Guidance on Article 7 EED
The European Commission published an Annex to Commission Recommendation on transposing the energy savings obligations under the Energy Efficiency Directive on Article 7 EED. It outlines the steps Member States need to take when implementing Article 7 and provides guidance on:
- Calculation of cumulative energy savings in second EED period
- Choice of policy measures to achieve required amounts trough EEOS and alternative policy measures
- Impact of the first period
- Measurement, monitoring, verification and other relevant subjects.
Although the European Commission published comprehensive Guidance and Recommendation, the survey conducted in ENSMOV project shows that there are still some gaps in knowledge, for the policy implementation of Article 7 EED, from the perspective of policymakers, ministries, implementing bodies and all other stakeholders (such as obligated parties, market actors, persons involved in energy efficiency) the following topics are highly relevant, where knowledge exchange among Member States is required:
- ensuring the sustainability of the EEO scheme/alternative measure(s) in terms of refinancing (e.g. through cost recovery for obligated parties),
- designing the policies in order to minimise the costs for all parties involved
- raising awareness about the opportunities deriving from energy efficiency,
- assessing the side effects of EEO schemes and or alternative measure(s),
- ensuring additionality and materiality of the energy savings,
In terms of monitoring, reporting and verification procedures for Article 7 EED, further knowledge sharing among Member States in the following areas is required:
- tools for monitoring, reporting and verification schemes (e.g. web applications, calculation guidelines, etc.)
- assistance on how to define the sample size and the parameters for monitoring,
- reporting and verification
- clear and specified guidelines for monitoring, reporting and verification
- guidelines for the verification requirements (e.g. energy consumption before and after
- energy saving measure was carried out)
- cost-efficient provision of monitoring, reporting and verification for Article 7 EED
Member States are progressing at different pace in implementing the Article 7 EED requirements, and therefore the demand for the exchange of knowledge varies among them.