Energy Efficiency First principle

Energy Efficiency First is a far-reaching guiding principle that complements other EU objectives, particularly in the areas of sustainability, climate neutrality and green growth.

While taking full account of security of supply and market integration, the Energy Efficiency First principle aims to 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

Benefits

This principle emphasises not only the need to reduce fossil fuel consumption, but also the importance of reducing energy production.

Reducing 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.

Both the public and the private sector are therefore encouraged to invest in energy efficient production, ahead of other, more complex or costly solutions to the energy transition.

Anchored in EU legislation

While the Energy Efficiency First principle was already embedded in the Regulation on Governance of the Energy Union and Climate Action (EU/2018/1999) and in the Energy Efficiency Directive (EU/2018/2002), the revised directive (EU/2023/1791), published in the Official Journal on 20 September 2023, provides a stronger and wider legal basis for the application of the principle.

Article 3 sets an obligation for EU countries to ensure that energy efficiency solutions are considered in planning, policy and investment decisions in both the energy and non-energy sectors. This obligation is coupled with requirements for EU countries to

• develop and ensure the application of cost-benefit assessment methodologies that include proper assessment of the wider benefits of energy efficiency solutions from the societal perspective
• identify an entity responsible for monitoring the application of the principle
• report to the Commission on how the principle is applied

Implementation and guidance

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. In its annex, it provides detailed guidelines including further explanations, tools and examples to help decision-makers understand and apply the principle in various contexts.

In 2022-2023, the Energy Efficiency Financing Group (EEFIG) led a working group on how to apply the principle in sustainable finance. The working group report was published in November 2023.