The European Commission needs to bring in legally-binding energy efficiency targets to support building renovation and give member states the support they need to reach them, write Kamila Waciega and Ville Niinistö.
Kamila Waciega is Public Affairs Director for Energy at Veolia, a French utility company focused on water and waste management as well as energy services. Ville Niinistö is a Finnish Member of the European Parliament and coordinator for the Greens/EFA political group in the assembly’s committee on Industry, Research and Energy (ITRE).
In its recent communication on the European Union climate target for 2030, the EU Commission described energy efficiency legislation and policies as essential instruments contributing to the achievement of the new 2030 greenhouse gas reduction.
However, according to the accompanying impact assessment and the evaluation of National Energy and Climate Plans, the EU will surpass its current target for renewable energy by 1.7%, while it will still fail to meet its current 2030 efficiency target by 3%.
A similar result is expected for the energy efficiency target for 2020.
As the Commission is in the process of revising the Energy Efficiency Directive (EED), it is crucial to seize this opportunity to address the reasons for such an outcome of current energy efficiency policies.
One clear issue is the fact that the renewable energy target is binding at EU level, while the energy efficiency one still is not.
In the current context of dire health, economic and environmental crisis, we cannot afford this discrepancy. We need both higher and nationally binding energy efficiency targets, given all the benefits that investments in this segment can reap.
Following the position of the European Parliament, which asked for 60% emissions reduction by 2030, and taking into account the abovementioned impact assessment, the existing target for energy efficiency needs to be increased to 45% to untap the energy efficiency potential.
To ensure delivery, the EU level target should be made binding.
However, setting a better target is not enough. The most arduous element is providing means to achieve it.
Those are regulatory and financial, and both can be ensured through the EED, which is currently planned for revision by June 2021.
The updated directive should enshrine energy efficiency first as a guiding principle not only applied to it, but also to all other EU energy and climate pieces of legislation.
In addition, the EU and national targets must be set and achieved both in primary and final energy. This allows the delivery of reduced energy consumption both on the supply and demand side.
As the EU is steering its energy systems towards more integrated structures, this directive must promote energy efficiency across the entire system: from the production/generation, transformation, distribution/transmission to consumption of heat and electricity.
We simply cannot afford any more losses of primary energy, nor can we accept inefficient and disintegrated energy infrastructures that cause them.
This will also necessitate reviewing the ambition level of article 7, as well as article 14, to allow better accounting for energy efficiency measures on the supply side.
By doing so, we can actively incentivise making heat delivery more efficient by promoting a transition of heat networks towards highly efficient ones – in some countries, like Poland, nearly 80% of existing district heat networks are inefficient according to the EED definition from 2012 – and supporting waste heat recovery.
The last piece of the puzzle is ensuring adequate financial means to assist Member States, companies, public sector, and citizens in achieving new binding targets for energy efficiency.
The EU Recovery Plan and its Recovery and Resilience Facility, as well as other instruments resulting from the reformed EU emissions trading scheme in 2021, and revised Energy Taxation Directive should be channelled towards investments in energy efficiency measures.
Moreover, efficiency investments should always be prioritised over increasing energy production capacities.
As rightly pointed out by the International Energy Agency, “Energy efficiency is the first fuel – the fuel you do not have to use – and in terms of supply, it is abundantly available and cheap to extract. But demand for the first fuel needs to grow, and that’s where policy action matters the most.”
It is where the financial flows need to be channelled.
We are at a crucial moment in history when our policy choices must be driven by the most cost-effective and benefit maximising factors. Investing in energy efficiency is a no-regret and win-win choice, as it benefits both the economy and the planet in the short and long term.
Revising the Energy Efficiency Directive with higher, better, binding targets and supporting measures is crucial for the EU to achieve its efficiency goals and stay on the path to climate neutrality.