The “energy efficiency first principle” means taking utmost account of cost-efficient energy efficiency measures in shaping energy policy and making relevant investment decisions. It is a far-reaching guiding principle that can complement other EU objectives, in particular in the sustainability, climate neutrality and green growth areas.
Energy efficiency is one of the key pillars not only to meet EU's climate objectives but also to reduce dependence on fossil fuels from abroad and increase security of supply and the use of renewable energy. However, it is often underestimated in existing planning and investment programmes in the EU and beyond. To tackle this issue, the Commission responded by proposing a clearer priority for the “energy efficiency first principle” in the recast Energy Efficiency Directive, adopted in July 2021, accompanied by a formal recommendation to EU countries on the issue and detailed guidelines on its application, adopted in September 2021.
While taking full account of security of supply and market integration, this principle should also ensure that
- only the energy really needed is produced
- investments in stranded assets are avoided
- demand for energy is reduced and managed in a cost-effective way
Objective
The principle aims to treat energy efficiency as a source of energy in its own right in which the public and the private sector can invest ahead of other more complex or costly energy sources. This includes giving priority to demand-side solutions whenever they are more cost-effective than investments in energy infrastructure to meet policy objectives.
Beyond contributing to reducing fossil fuels consumption and increasing independence and security of supply, this principle also emphasises the importance of reducing energy production. Reduced energy demand can help control the level of investment needed for the transition towards renewables. Moreover, it supports a more sustainable approach to the use of limited resources and increases the resilience of the EU's energy system.
Anchored in EU legislation
Energy efficiency is a pillar of the EU energy union. The energy efficiency first principle is embedded in the Regulation on Governance of the Energy Union and Climate Action (2018/1999) and in the Energy Efficiency Directive (2018/2002). With the on-going recast of the directive, proposed in the European Green Deal package in July 2021, the Commission intends to provide a stronger and wider legal basis for the application of the principle.
Article 3 of the Commission's recast proposal sets an obligation for EU countries to ensure that energy efficiency solutions are considered in energy system and non-energy sectors planning, policy and investment decisions. This obligation is coupled with requirements for EU countries to
- develop and ensure application of cost-benefit assessment methodologies that allow proper assessment of wider benefits of energy efficiency solutions from the societal perspective
- identify an entity responsible for monitoring of the application of the principle
- report to the Commission on how it is applied
The implementation of the energy efficiency first principle is supported by the Commission Recommendation (EU) 2021/1749, which identifies specific actions to be taken by EU countries to ensure its proper application. It includes detailed guidelines and provides further explanations, tools and examples to help decision-makers understand and apply the principle in various contexts. The recommendation and the guidelines were explained to stakeholders in an online event on 28 September 2021.
Documents
- Commission Recommendation on energy efficiency first: from principles to practice (C/2021/7014)
- Regulation on Governance of the Energy Union and Climate Action 2018/1999
- Energy Efficiency Directive 2018/2002