The Critical Role Of Energy Efficiency Policy In Achieving Net-zero Emissions

Illustration of a clipboard with a lightning bolt on it, linking via a dashed line to a cloud of carbon dioxide

Every week EnergyElephant hears from users on how energy efficiency is becoming more and more a priority for their organisation due to new legislation, policy changes, energy volatility and drivers for general cost reductions.

As energy markets become increasingly volatile and unstable, everyone from the top down is in search of solutions to reduce this market instability. These solutions come in many forms, such as a switch from finite to more renewable sources of energy or the increasing decentralisation of national energy grids. However, one major solution that the EU (European Union) and other countries have adopted is a combination of various ideas - energy efficiency. This involves reducing final energy consumption as a whole, whilst still maintaining a stable grid. Policy is playing a key role in implementing this strategy on a local and global scale.

The EU Energy Efficiency Directive, was proposed in 2012 and amended as part of the “Clean Energy Package” in 2018. This Directive is a major player in ensuring that EU Member States meet their energy reduction targets and thus also meet their greenhouse gas reduction targets. The directive aims to empower customers and alleviate energy poverty across the EU by encouraging a switch to more efficient energy sources. As the EU changes its greenhouse gas reduction targets based on modelling projections, it in turn updates its directives in order to legislate that these targets are met. The EU has stated it intends to become the first climate-neutral continent by 2050 and views energy efficiency as a vital component in this.

The Directive promotes energy efficiency within the European Union through a common framework of measures, to ensure that the Union’s headline targets on energy efficiency are met and to pave the way for further energy efficiency improvements beyond these initial targets. These targets relate to the distribution and transmission of energy as well as energy supply and resources. These measures impact a wide variety of industries and businesses, including many of EnergyElephant’s own customers.

One of the main aims of the Directive is to help reduce the EU’s dependence on imports, as energy sources are becoming increasingly scarce. Measures such as energy market transparency, and the use of broader sources of energy including renewable energy sources play a pivotal part in reducing the EU’s dependence on finite sources. The Union stated that by focusing on energy efficiency as a way of moderating energy demand, that this would in turn aid in delivering on a wide range of objectives, including; security of supply, competitiveness, cost-savings and sustainability. Energy efficiency measures aim to help industries by viewing the dependence issue as a whole and providing long-term solutions.

National Energy Efficiency Action Plans (NEEAPs), were required by Member States under the Directive, to show a long term commitment to energy efficiency measures. In their NEEAP’s, EU Member States were required to show how they intended to reach a reduction in final energy use of 1.5% per year. This could be done by implementing Energy Efficiency Obligation Schemes (EEOS), alternative policy instruments or a combination of both. Energy Efficiency Obligation Schemes are a legal requirement on energy suppliers and distributors ('obligated parties') to help energy users save energy.

Ireland implemented an EEOS, which is run by the SEAI (Sustainable Energy Authority of Ireland). It states that “companies who sell large amounts of energy are known as obligated parties and they have targets under the scheme.” Obligated parties must offer supports to make customers' homes or businesses more energy efficient. For every unit of energy saved through these projects, they achieve energy credits towards their targets. This will in turn help Ireland to reach national and European energy saving targets.

Each country was required to set a national energy efficiency target, and disclose this to the European Commission. These targets could be based on either primary or final energy consumption, or primary or final energy savings, or, energy intensity. The calculations for these targets were also to be disclosed for comparison and clarity purposes. The Commission could then project whether the targets of the Union, which were “energy consumption of no more than 1,474 Mtoe of primary energy and/or no more than 1,078 Mtoe of final energy” would be met.

As mentioned, the obligation of each Member State was to achieve an energy reduction of 1.5% per year. This could be more at first and less in later years, as the target is stated as being cumulative not on an individual yearly basis. For example, one country - The Netherlands calculated their savings obligations to be equal to the target of at least 482 PJ savings on final energy consumption. PJ (petajoule) is a unit of energy. For context, one petajoule is equal to roughly 278 million kilowatt hours of electricity.

Energy Efficiency Obligations Schemes along with some other measures are primarily aimed at tackling energy efficiency in relation to industry. These measures include changes to tax such as the sustainable energy surcharge and the energy investment allowance. These measures aim to encourage the use of renewable sources. Several reporting requirements were also implemented in industry requiring more information from industries on their energy efficiency measures. Energy efficiency is key in this sector as many big industries require huge amounts of energy to run production. Even a slight reduction in their energy use could have a major impact on overall reduction of greenhouse gases.

Other alternative measures consist of regulatory, education and voluntary campaigns. These are aimed at the general population, to allow them to play their own individual role in reducing their energy consumption and thus contributing to overall national targets. For example, Ireland introduced regulations for energy efficiency of space heaters, and launched an informational campaign regarding behavioural change. Several countries also adopted voluntary agreements in order to meet their proposed targets, the aim of these voluntary agreements is to allow for increased competitiveness in the energy industry. Increased competitiveness is pivotal in ensuring energy poverty is addressed and alleviated, energy efficiency measures have benefits for all.

Furthermore, energy efficiency policies are being implemented successfully on a worldwide scale, not just in the EU - the average heating and cooling demand per square metre of new buildings decreased by 40% or more in the United States, Europe and China between 2000 and today. The International Energy Agency (IEA) works on a global scale with policy makers and stakeholders to scale up action on energy efficiency to mitigate climate change, improve energy security and grow economies while delivering environmental and social benefits. Mr Birol, the IEA Executive Director states that the IEA; “consider energy efficiency to be the ‘first fuel’ as it still represents the cleanest and, in most cases, the cheapest way to meet our energy needs."

Improving energy efficiency is a critical element of a pathway that both meets the needs of a growing and increasingly wealthy global population, and achieves net-zero emissions by 2050. By reducing overall consumption and ensuring that each unit of energy goes further – energy efficiency will make certain that a more sustainable and reliable energy scenario can be achieved on both a local and a global scale. This will help aid alleviate energy poverty and provide a foundation for successful energy security. These measures act as a starting point in tackling the wider issue of how we obtain and use energy. A switch to renewable sources will help mitigate the issue, but it is not the sole solution to the energy crisis. Reducing consumption is key to safeguarding ourselves and our planet.

Take the first step today - reduce consumption where you can and ensure your energy goes further for less.