Energy efficiency and reducing consumption [What is Europe doing for its citizens?]

Written by Alex Benjamin Wilson,

Greater energy efficiency can help to reduce the bills that consumers pay for their heating and electricity, and contributes to the fight against climate change because lower energy consumption leads to fewer greenhouse gas emissions. Energy efficiency can also foster greater energy security in the EU, by reducing the need for energy imports (mainly fossil fuels) from outside the bloc.

EU framework for energy efficiency

The EU and its Member States have committed to an improvement of at least 20 % in energy efficiency by 2020. The Energy Efficiency Directive (2012) sets an overall limit on EU energy consumption by 2020 (1 086 million tonnes of oil equivalent (Mtoe) in final energy; 1 483 Mtoe in primary energy) as well as national targets. The European Commission’s second report on the state of the energy union (2017) suggests the EU is on track to meet its goal – in 2014 final energy consumption was already 2.2 % below the 2020 limit. The Commission has proposed a binding 30 % improvement in energy efficiency by 2030. The Parliament has called for a more ambitious but still binding target of 40 % improvement by 2030.

Ecodesign and energy labelling

One of the ways in which the EU seeks to improve energy efficiency is by encouraging the manufacture and purchase of ever more efficient household appliances. Stringent ecodesign requirements ensure only the most efficient appliances are sold on the EU market, while compulsory energy labelling helps to inform consumers about the energy consumption of individual products. The Commission has prepared a 2016-2019 ecodesign work-plan, including a list of new product groups to be covered by EU legislation. In 2015 the Commission issued a legislative proposal to revise the framework for energy labelling, in order to improve consumer awareness and market monitoring of real energy consumption. On 21 March 2017, agreement was reached between the Council and the Parliament on this regulation, which should be adopted in the coming months.

Energy performance of buildings

There is great potential for buildings in the EU to become more energy efficient. This would reduce energy consumption and combat energy poverty, a social problem exacerbated by inefficient housing stock. Buildings absorb 40 % of final energy consumption in the EU, however 75 % of the existing building stock is energy inefficient and less than 1 % is renovated each year. The Energy Performance of Buildings Directive (2010) obliges Member States to ensure that from 2021, all new or heavily renovated buildings are nearly Zero Energy Buildings (nZEB). As part of its clean energy package, the Commission proposed several improvements to the Buildings Directive and has introduced a ‘smart finance for smart buildings initiative’, in order to better concentrate EU funding on building renovations that can improve energy efficiency and/or allow self-generation and consumption of renewable energy sources, making use of the latest technologies.

Competitive markets and smart metering

The EU single market in energy is designed to foster competition and ensure that national energy markets are better interconnected. The European Council has set minimum electricity interconnection targets for EU Member States (10 % by 2020, 15 % by 2030). The empowerment of consumers is crucial for a well-functioning market, and with this in mind EU legislation has enshrined several rights for energy consumers. Energy efficiency can be improved by smoothing out supply and demand over time, the reduction in ‘demand peaks’ also helps to lower the operating costs for the energy grid and the financial burden on consumers. Yet to be empowered, consumers must be aware of their consumption levels and benefit financially from adjusting their energy use to variable pricing (‘demand response’). EU legislation encourages Member States to deploy widely gas and electricity smart meters that provide accurate and (almost) real-time data on energy consumption.

This note has been prepared by EPRS for the European Parliament’s Open Days in May 2017.