European Commission Energy Efficiency Policy Explained
Robert Nuij of the European Commission discusses the EU’s energy efficiency goals and how they’re being achieved.
How do you see the role of energy efficiency in achieving climate goals and ensuring long-term energy security and affordability, both at the EU and national level?
I believe that energy efficiency is an absolute necessity for achieving our climate goals. By using less energy, we emit fewer emissions. Additionally, the energy we don’t use is the cheapest. It’s the energy we don’t have to import, thereby reducing our need to import fossil fuels.
The energy we don’t use is the cheapest.
It contributes to energy security and, at the same time, helps companies and consumers reduce their energy bills, therefore contributing directly to affordability and reducing energy poverty. For example, if you think about insulating buildings or using heat pumps, this reduces our energy consumption on a day-to-day basis.
The EU aims for an additional 11.7% reduction in energy consumption by 2030. Compared to the previous targets, the increased targets aim to reduce Europe’s 2030 energy use by roughly the equivalent of Spain’s current annual energy consumption. How does the Energy Efficiency Directive (EED) guide national governments and individual consumers in achieving this target?
The EED can be seen as a roadmap for achieving our 11.7% energy efficiency target by 2030. It includes a wide range of incentives, tools, and legislative instruments that Member States can use to support businesses and consumers to reduce their energy consumption. We have the energy efficiency target itself. We have annual savings obligations of about 1.5% average per year towards 2030. There are requirements for the public sector, for example, to renovate public buildings and procure energy-efficient products and services.
The Energy Efficiency Directive can be seen as a roadmap for achieving our 11.7% energy efficiency target by 2030.
We have requirements for industry energy audits and the implementation of energy management systems. And more broadly, the EED supports the ecosystem around energy efficiency. Here, you must think about financial incentives, but also need to have the right skills in the market to support building renovation or energy services in companies.
With the EED expanding energy audit obligations to include companies of all sizes above certain consumption thresholds, what practical challenges and opportunities does this present for SMEs, and how can they identify and capitalise on significant energy saving potential?
The revised energy efficiency directive changes the scope of the energy audit and energy management system requirements slightly. Where, in the past, it was based on the type of company, thereby excluding SMEs, we have now moved towards an energy consumption-based approach. So, between 10 terajoules and 85 terajoules per year, companies must undertake energy audits. Above 85 terajoules, companies must implement an energy management system.
That means, in practice, fewer companies fall under these obligations. However, at the same time, SMEs may be subject to these obligations when they consume more energy. This might initially mean a slightly higher administrative and financial burden, which can indeed be complicated for SMEs. Also, they often lack dedicated energy managers, meaning they may not have the necessary expertise. However, by implementing the recommendations from energy audits, companies can better innovate, become more competitive, and drive sustainability within their businesses, while at the same time reducing operational costs.
Are there certain countries around Europe that are more advanced?
Several countries have put dedicated support systems in place, whether that’s subsidies or advice services, or even networks of SMEs that help each other in implementing these requirements. A good example is the Netherlands, which has gone one step further. The Netherlands requires companies that must conduct energy audits to implement recommendations with a short payback period. This drives real energy efficiency measures in practice.
Could you comment on Article 11 and how it’s helping to advance the inclusion of SMEs?
The first step has been to change the scope of the requirement from the type and size of the company to focus on the actual energy consumption. Secondly, it also pushes Member States to support SMEs more structurally. So, instead of saying, ‘here’s the requirement; go ahead and do whatever you want,’ Member States are obliged to help SMEs and micro-enterprises implement those energy audits, whether that’s through subsidies or other support schemes. We believe that as a result, more SMEs will benefit from energy audits and implementing the recommendations generated by those audits.
How do you apply this principle in your work to ensure that energy truly needed is produced, and that investments and stranded assets are avoided?
The Energy Efficiency First Principle is about changing one’s perspective slightly. Instead of asking how to meet this growing energy demand, the question is whether we can reduce that demand before we start investing in, for example, energy infrastructure.
For the first time, the Directive obliges Member States to make sure that when there are major investments, policy, or planning decisions, whether that’s in the transport, energy, or other sectors with a major impact on energy consumption, the Energy Efficiency First Principle has to be implemented. Companies and policy–makers must look at how to reduce energy demand through energy efficiency measures, before investing in possibly expensive infrastructure. The aim is to avoid stranded assets when, for example, power plants or transmission lines are no longer used because of changing energy demand or policy objectives. Therefore, we believe that this is a central principle as it infuses major investments and policy-making decisions with energy efficiency.