The Energy Efficiency Directive was adopted: The Directive establishes the principle of "energy efficiency first" as a fundamental principle of the EU's energy policy.

The Energy Efficiency Directive, which was officially adopted on 24 July 2023, reflects the great importance that the EU attaches to energy efficiency. The Directive establishes the principle of "energy efficiency first" as a fundamental principle of the EU's energy policy, emphasizing its vital role in implementing energy policies and investment decisions.

As a crucial part of the European Green Deal, the Directive was approved as a recast of the Energy Efficiency Directive proposed by the European Commission in July 2021.

The Directive sets a target of an 11.7% reduction in final energy consumption by 2030 compared to the reference year of 2020, while introducing a range of measures to accelerate energy efficiency applications.

The most significant change is the inclusion of a legal basis for the "energy efficiency first" principle. EU countries are now legally obliged to prioritize "energy efficiency" in policy-making, planning, and significant investments.

Moreover, EU countries have agreed to nearly double their annual energy savings obligations in the coming years. According to the recast Directive, they must increase their average annual energy savings rate from the current 0.8% to 1.49% from 2024 to 2030. This includes targeting increased energy savings in critical sectors such as buildings, industry, and transportation.

For the first time, the legislation includes a definition of energy poverty, making EU countries responsible for prioritizing energy efficiency improvements for vulnerable customers, low-income households, and individuals living in social housing, and this has been included as part of the energy savings obligation.

The recast Directive strengthens the exemplary role of the public sector in developing energy efficiency practices. An important development is the introduction of a 1.9% reduction target in annual energy consumption across the entire public sector. Public authorities are now required to renovate 3% of their buildings per year, based on their floor area. This requirement has been extended to local and regional public authorities as well.

The public sector will also play a driving role in the development of the energy services market. Energy Performance Contracts will be prioritized as much as possible in the implementation of energy efficiency projects in the public sector. Public authorities will continue to consider energy efficiency requirements in their decisions regarding the purchase of products, buildings, and services, encouraging systematic improvements.

The Directive also imposes obligations on private sector organizations operating in the EU. As such, all businesses, including SMEs with annual energy consumption exceeding 85 terajoules (TJ), will be required to implement an energy management system. Companies that do not implement an energy management system and have annual energy consumption exceeding 10 TJ will be subject to energy audits.

Considering the importance of digitalization and data centers, the recast Directive introduces an obligation to monitor the energy performance of data centers. With an EU-level database, data centers with significant energy consumption will have their energy performance and water footprint data collected and published.

The new legislation also encourages the development of local heating and cooling plans in large municipalities. Additionally, based on the definition of efficient district heating and cooling included in the Directive, minimum requirements will be progressively tightened in the coming years to achieve completely carbon-neutral district heating and cooling supplies.

Recognizing the importance of equipping the workforce with relevant skills to achieve the improved targets, the Directive mandates EU countries to ensure certification and qualification opportunities for energy efficiency-related professions.

Finally, energy efficiency financing arrangements to facilitate investments, including those in the private sector, are supported under the Directive. In this context, EU countries are tasked with promoting innovative financing plans and green credit products.

The Directive will be published in the EU’s Official Journal and enter into force 20 days later.

For more information:

The European Commission press release:

https://energy.ec.europa.eu/news/european-green-deal-energy-efficiency-directive-adopted-helping-make-eu-fit-55-2023-07-25_en