(1)

Directive 2012/27/EU of the European Parliament and of the Council (4) has been substantially amended several times (5). Since further amendments are to be made, that Directive should be recast in the interests of clarity.

(2)

In its communication of 17 September 2020 on ‘Stepping up Europe’s 2030 climate ambition – Investing in a climate-neutral future for the benefit of our people’ (the ‘Climate Target Plan’), the Commission proposed to raise the Union’s climate ambition by increasing the greenhouse gas (GHG) emissions target to at least 55 % below 1990 levels by 2030. That is a substantial increase compared to the existing 40 % reduction target. The proposal delivered on the commitment made in the communication of the Commission of 11 December 2019 on ‘The European Green Deal’ (the ‘European Green Deal’) to put forward a comprehensive plan to increase the Union’s target for 2030 towards 55 % in a responsible way. It is also in accordance with the objectives of the Paris Agreement adopted on 12 December 2015 under the United Nations Framework Convention on Climate Change (the ‘Paris Agreement’) to keep the global temperature increase to well below 2 °C and pursue efforts to keep it to 1,5 °C.

(3)

The conclusions of the European Council of 10-11 December 2020 endorsed the Union’s binding domestic reduction target for net GHG emissions of at least 55 % by 2030 compared to 1990. The European Council concluded that the climate ambition needed to be raised in a manner that would spur sustainable economic growth, create jobs, deliver health and environmental benefits for Union citizens, and contribute to the long-term global competitiveness of the Union’s economy by promoting innovation in green technologies.

(4)

To implement those objectives, the Commission, in its communication of 19 October 2020 on ‘Commission Work Programme 2021 – A Union of vitality in a world of fragility’, announced a legislative package to reduce GHG emissions by at least 55 % by 2030 (the ‘Fit for 55 package’), and to achieve a climate-neutral European Union by 2050. That package covers a range of policy areas including energy efficiency, renewable energy, land use, land change and forestry, energy taxation, effort sharing and emissions trading.

(5)

The purpose of the Fit for 55 package is to safeguard and create jobs in the Union and to enable the Union to become a world leader in the development and uptake of clean technologies in the global energy transition, including energy efficiency solutions.

(6)

Projections indicate that, with the full implementation of current policies, GHG emission reductions by 2030 would be around 45 % compared to 1990 levels, when excluding land use emissions and absorptions, and around 47 %, when including them. The Climate Target Plan therefore provides for a set of required actions across all sectors of the economy and revisions of the key legislative instruments to reach that increased climate ambition.

(7)

In its communication of 28 November 2018 on ‘A Clean Planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy’, the Commission stated that energy efficiency is a key area of action, without which the full decarbonisation of the Union’s economy cannot be achieved. The need to capture the cost-effective energy saving opportunities has led to the Union’s current energy efficiency policy. In December 2018, a new 2030 Union headline energy efficiency target of at least 32,5 %, compared to projected energy use in 2030, was included as part of the Clean Energy for All Europeans package, which aimed at putting energy efficiency first, achieving global leadership in renewable energies and providing a fair deal for consumers.

(8)

The impact assessment accompanying the Climate Target Plan demonstrated that, to achieve the increased climate ambition, energy efficiency improvements will need to be significantly raised from the current level of 32,5 %.

(9)

An increase in the Union’s 2030 energy efficiency target can reduce energy prices and be crucial in reducing GHG emissions, accompanied by an increase and uptake of electrification, hydrogen, e-fuels and other relevant technologies necessary for the green transition, including in the transport sector. Even with the rapid growth of renewable electricity generation, energy efficiency can reduce the need of new power generation capacity and the costs relating to storage, transmission and distribution. Increased energy efficiency is also particularly important for the security of the energy supply of the Union, by lowering the Union’s dependence on the import of fuels from third countries. Energy efficiency is one of the cleanest and most cost-efficient measures by which to address that dependence.

(10)

The sum of national contributions communicated by Member States in their national energy and climate plans falls short of the Union’s target of 32,5 %. The contributions would collectively lead to a reduction of 29,7 % for primary energy consumption and 29,4 % for final energy consumption compared to the projections from the Commission’s 2007 EU Reference Scenario for 2030. That would translate in a collective gap of 2,8 percentage points for primary energy consumption and 3,1 percentage points for final energy consumption for the EU-27.

(11)

A number of Member States presented ambitious national energy and climate plans, which were assessed by the Commission as ‘sufficient’, and which contained measures that allow those Member States to contribute to reaching the collective targets for energy efficiency with a ratio larger than the Union average. In addition, a number of Member States have documented ‘early efforts’ in achieving energy savings, namely energy savings above the Union average trajectories in the last years. Both cases are significant efforts that should be recognised and should be included in the Union’s future modelling projections and that can serve as good examples of how all Member States can work on their energy efficiency potential to deliver significant benefits to their economies and societies.

(12)

In some cases, the assumptions used by the Commission in its 2020 EU Reference Scenario and the assumptions used by some Member States for their reference scenarios underpinning their national energy and climate plans are different. This may lead to divergences as regards the calculation of primary energy consumption but both approaches are valid with regard to primary energy consumption.

(13)

While the energy savings potential remains large in all sectors, there is a particular challenge relating to transport, as it is responsible for more than 30 % of final energy consumption, and to buildings, since 75 % of the Union’s building stock has a poor energy performance. Another increasingly important sector is the information and communications technology (ICT) sector, which is responsible for 5 to 9 % of the world’s total electricity use and more than 2 % of global emissions. In 2018, data centres accounted for 2,7 % of the electricity demand in the EU-28. In that context, the Commission, in its communication of 19 February 2020 on ‘Shaping Europe's digital future’ (the ‘Union’s Digital Strategy’), highlighted the need for highly energy-efficient and sustainable data centres and transparency measures for telecoms operators as regards their environmental footprint. Furthermore, the possible increase in industry’s energy demand that may result from its decarbonisation, particularly for energy intensive processes, should also be taken into account.

(14)

The higher level of ambition requires a stronger promotion of cost-effective energy efficiency measures in all areas of the energy system and in all relevant sectors where activity affects energy demand, such as the transport, water and agriculture sectors. Improving energy efficiency throughout the full energy chain, including energy generation, transmission, distribution and end-use, will benefit the environment, improve air quality and public health, reduce GHG emissions, improve energy security by decreasing the need for energy imports, in particular of fossil fuels, cut energy costs for households and companies, help alleviate energy poverty, and lead to increased competitiveness, more jobs and increased economic activity throughout the economy. Improving energy efficiency would thus improve citizens’ quality of life, while contributing to the transformation of the Union’s energy relations with third-country partners towards achieving climate neutrality. That complies with the Union commitments made in the framework of the Energy Union and global climate agenda established by the Paris Agreement. Improving the energy performance of various sectors has the potential of fostering urban regeneration, including improvement of buildings, and changes in mobility and accessibility patterns, while promoting more efficient, sustainable and affordable options.

(15)

This Directive takes a step forward towards climate neutrality by 2050, under which energy efficiency is to be treated as an energy source in its own right. The energy efficiency first principle is an overarching principle that should be taken into account across all sectors, going beyond the energy system, at all levels, including in the financial sector. Energy efficiency solutions should be considered as the first option in policy, planning and investment decisions when setting new rules for the supply side and other policy areas. While the energy efficiency first principle should be applied without prejudice to other legal obligations, objectives and principles, such obligations, objectives and principles should not hamper its application or lead to exemptions from applying the principle. The Commission should ensure that energy efficiency and demand response can compete on equal terms with generation capacity. Energy efficiency improvements need to be made whenever they are more cost-effective than equivalent supply-side solutions. That should help exploit the multiple benefits of energy efficiency for the Union, in particular for citizens and businesses. Implementing energy efficiency improvement measures should also be a priority in alleviating energy poverty.

(16)

Energy efficiency should be recognised as a crucial element and a priority consideration in future investment decisions on the Union’s energy infrastructure. The energy efficiency first principle should be applied taking into consideration primarily the system efficiency approach and societal and health perspective, and paying attention to security of supply, energy system integration and the transition to climate neutrality. Consequently, the energy efficiency first principle should help increase the efficiency of individual end-use sectors and of the whole energy system. The application of the principle should also support investments in energy-efficient solutions contributing to the environmental objectives of Regulation (EU) 2020/852 of the European Parliament and of the Council (6).

(17)

The energy efficiency first principle is provided for in Regulation (EU) 2018/1999 of the European Parliament and of the Council (7) and is at the core of the EU Strategy for Energy System Integration established in the Commission’s communication of 8 July 2022. While the principle is based on cost-effectiveness, its application has wider implications from the societal perspective. Those implications can vary depending on the circumstances and should be carefully evaluated through robust cost-benefit analysis methodologies that take into account the multiple benefits of energy efficiency. The Commission has prepared dedicated guidelines for the operation and application of the principle, by proposing specific tools and examples of application in various sectors. The Commission has also issued a recommendation to Member States that builds on the requirements laid down in this Directive and calls for specific actions in relation to the application of the principle. Member States should take the utmost account of that recommendation and be guided by it in implementing the energy efficiency principle in practice.

(18)

The energy efficiency first principle implies adopting a holistic approach, which takes into account the overall efficiency of the integrated energy system, security of supply and cost effectiveness and promotes the most efficient solutions for climate neutrality across the whole value chain, from energy production, network transport to final energy consumption, so that efficiencies are achieved in both primary energy consumption and final energy consumption. That approach should look at the system performance and dynamic use of energy, where demand-side resources and system flexibility are considered to be energy efficiency solutions.

(19)

In order to have an impact, the energy efficiency first principle needs to be consistently applied by national, regional, local and sectoral decision makers in all relevant scenarios and policy, planning and major investment decisions – that is to say large-scale investments with a value of more than EUR 100 000 000 each or EUR 175 000 000 for transport infrastructure projects – affecting energy consumption or supply. The proper application of the principle requires using the right cost-benefit analysis methodology, setting enabling conditions for energy efficient solutions and proper monitoring. Cost-benefit analyses should be systematically developed and carried out, should be based on the most up-to-date information on energy prices and should include scenarios for rising prices, such as due to decreasing Union’s emission trading system (EU ETS) allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council (8), in order to provide an incentive to apply energy efficiency measures. Priority should be given to demand-side solutions where they are more cost-effective than investments in energy supply infrastructure in meeting policy objectives. Demand-side flexibility can bring wider economic, environmental and societal benefits to consumers and to society at large, including local communities, and can increase the efficiency of the energy system and decrease the energy costs, for example by reducing system operation costs resulting in lower tariffs for all consumers. Member States should take into account potential benefits from demand-side flexibility in applying the energy efficiency first principle and where relevant consider demand response at both centralised and decentralised level, energy storage, and smart solutions as part of their efforts to increase efficiency of the integrated energy system.

(20)

When assessing the values of projects for the purpose of the application of the energy efficiency first principle, the Commission, in its report to the European Parliament and to the Council, should assess, in particular, whether and in what manner the thresholds are effectively applied in each Member State.

(21)

The energy efficiency first principle should always be applied in a proportional way and the requirements laid down in this Directive should not entail overlapping or conflicting obligations on Member States, where the application of the principle is ensured directly by other legislation. This might be the case for the projects of common interest included in the Union list pursuant to Article 3 of Regulation (EU) 2022/869 of the European Parliament and of the Council (9), which introduces the requirements to consider the energy efficiency first principle in the development and assessment for those projects.

(22)

A fair transition towards a climate-neutral Union by 2050 is central to the European Green Deal. Energy poverty is a key concept in the Clean Energy for All Europeans package and designed to facilitate a just energy transition. Pursuant to Regulation (EU) 2018/1999 and Directive (EU) 2019/944 of the European Parliament and of the Council (10), the Commission, in its Recommendation (EU) 2020/1563 on energy poverty (11), provided indicative guidance on appropriate indicators for measuring energy poverty and defining a ‘significant number of households in energy poverty’. Directive 2009/73/EC of the European Parliament and of the Council (12) and Directive (EU) 2019/944 require Member States to take appropriate measures to address energy poverty wherever it is identified, including measures addressing the broader context of poverty. This is particularly relevant in a context of rising energy prices and inflationary pressure, where both short and long-term measures should be implemented to address systemic challenges to the Union’s energy system.

(23)

People facing or risking energy poverty, vulnerable customers, including final users, low- and medium-income households, and people living in social housing should benefit from the application of the energy efficiency first principle. Energy efficiency measures should be implemented as a priority to improve the situations of those individuals and households and to alleviate energy poverty, and should not encourage any disproportionate increase in housing, mobility or energy costs. A holistic approach in policy making and in implementing policies and measures requires Member States to ensure that other policies and measures have no adverse effect on those individuals and households.

(24)

This Directive is part of a broader policy framework of energy efficiency policies addressing energy efficiency potentials in specific policy areas, including buildings (Directive 2010/31/EU of the European Parliament and of the Council (13)), products (Directive 2009/125/EC of the European Parliament and of the Council (14) and Regulations (EU) 2017/1369 (15) and (EU) 2020/740 (16) of the European Parliament and of the Council), and governance (Regulation (EU) 2018/1999). Those policies play a very important role in delivering energy savings when products are replaced or buildings constructed or renovated.

(25)

Reaching an ambitious energy efficiency target requires barriers to be removed in order to facilitate investment in energy efficiency measures. The Clean Energy Transition sub-programme of the Union’s LIFE Programme, established by Regulation (EU) 2021/783 of the European Parliament and of the Council (17), will dedicate funding to support development of Union best practices in energy efficiency policy implementation, addressing behavioural, market, and regulatory barriers to energy efficiency.

(26)

The European Council, in its conclusion of 23 and 24 October 2014, supported a 27 % energy efficiency target for 2030 at Union level, to be reviewed by 2020 having in mind a Union-level target of 30 %. In its resolution of 15 December 2015 entitled ‘Towards a European Energy Union’, the European Parliament called on the Commission to assess, in addition, the viability of a 40 % energy efficiency target for the same timeframe.

(27)

In its communication of 28 November 2018 on ‘A Clean Planet for all – A European strategic long-term vision for a prosperous, modern, competitive and climate neutral economy’, the Commission projects that the 32,5 % Union’s energy efficiency target for 2030 and the other policy instruments of the existing framework would lead to a reduction in GHG emissions of about 45 % by 2030. For an increased climate ambition of a 55 % decrease of GHG emissions by 2030, the impact assessment of the Climate Target Plan assessed what level of efforts would be needed in the different policy areas. It concluded that, in relation to the baseline, achieving the GHG emissions target in a cost-optimal way meant that primary energy consumption and final energy consumption are to decrease by at least 39 to 41 % and 36 to 37 % respectively.

(28)

The Union’s energy efficiency target was initially set and calculated using the 2007 EU Reference Scenario projections for 2030 as a baseline. The change in the Eurostat energy balance calculation methodology and improvements in subsequent modelling projections call for a change of the baseline. Thus, using the same approach to define the target, namely by comparing it to the future baseline projections, the ambition of the Union’s 2030 energy efficiency target is set compared to the 2020 EU Reference Scenario projections for 2030 reflecting national contributions from the national energy and climate plans. With that updated baseline, the Union will need to further increase its energy efficiency ambition by at least 11,7 % in 2030 compared to the level of efforts under the 2020 EU Reference Scenario. The new way of expressing the level of ambition for the Union’s targets does not affect the actual level of efforts needed and corresponds to a reduction of 40,5 % for primary energy consumption and 38 % for final energy consumption when compared to the 2007 EU Reference Scenario projections for 2030.

(29)

The methodology for calculation of primary energy consumption and final energy consumption is aligned with the new Eurostat methodology, but the indicators used for the purpose of this Directive have a different scope, in that they exclude ambient energy and include energy consumption in international aviation for the targets in primary energy consumption and final energy consumption. The use of new indicators also implies that any changes in energy consumption of blast furnaces are now only reflected in primary energy consumption.

(30)

The need for the Union to improve its energy efficiency should be expressed in primary energy consumption and final energy consumption, to be achieved in 2030, indicating an additional level of efforts required when compared to the measures in place or planned measures in the national energy and climate plans. The 2020 EU Reference Scenario projects 864 Mtoe of final energy consumption and 1 124 Mtoe of primary energy consumption to be reached in 2030 (excluding ambient energy and including international aviation). An additional reduction of 11,7 % results in 763 Mtoe and 992,5 Mtoe in 2030. Compared to 2005 levels, it means that final energy consumption in the Union should be reduced by approximately 25 % and primary energy consumption should be reduced by approximately 34 %. There are no binding targets at Member State level in the 2020 and 2030 perspectives, and Member States should establish their contributions to the achievement of the Union’s energy efficiency target taking into account the formula provided for in this Directive. Member States should be free to set their national objectives based either on primary energy consumption or final energy consumption or primary energy savings or final energy savings, or on energy intensity. This Directive amends the way in which Member States should express their national contributions to the Union’s target. Member States’ contributions to the Union’s target should be expressed in primary energy consumption and final energy consumption to ensure consistency and monitoring of progress. A regular evaluation of progress towards the achievement of the Union’s 2030 targets is necessary and is provided for in Regulation (EU) 2018/1999.

(31)

By 30 November 2023, the Commission should update the 2020 EU Reference Scenario based on the latest Eurostat data. Member States wishing to use the updated reference scenario should notify their updated national contributions by 1 February 2024, as part of the iterative process provided for in Regulation (EU) 2018/1999.

(32)

It would be preferable for the energy efficiency targets to be achieved as a result of the cumulative implementation of specific Union and national measures promoting energy efficiency in different fields. Member States should be required to set national energy efficiency policies and measures. Those policies and measures and the individual efforts of each Member State should be evaluated by the Commission, alongside data on the progress made, to assess the likelihood of achieving the overall Union target and the extent to which the individual efforts are sufficient to meet the common goal.

(33)

The public sector is responsible for approximately 5 % to 10 % of the Union’s total final energy consumption. Public authorities spend approximately EUR 1 800 000 000 000 every year. This represents around 14 % of the Union’s gross domestic product. For that reason the public sector constitutes an important driver to stimulate market transformation towards more efficient products, buildings and services, as well as to trigger behavioural changes in energy consumption by citizens and enterprises. Furthermore, decreasing energy consumption through energy efficiency improvement measures can free up public resources for other purposes. Public bodies at national, regional and local level should fulfil an exemplary role as regards energy efficiency.

(34)

To lead by example, the public sector should set its own decarbonisation and energy efficiency goals. Energy efficiency improvements in the public sector should reflect the efforts required at Union level. To comply with the final energy consumption target, the Union should decrease its final energy consumption by 19 % by 2030 as compared to the average energy consumption in years 2017, 2018 and 2019. An obligation to achieve an annual reduction of the energy consumption in the public sector by at least 1,9 % should ensure that the public sector fulfils its exemplary role. Member States retain full flexibility regarding the choice of energy efficiency improvement measures to achieve a reduction of the final energy consumption. Requiring an annual reduction of final energy consumption has a lower administrative burden than establishing measurement methods for energy savings.

(35)

To fulfil their obligation, Member States should target the final energy consumption of all public services and installations of public bodies. To determine the scope of addressees, Member States should apply the definition of ‘public bodies’ provided for in this Directive, where ‘directly financed by those authorities’ means that those entities are mostly funded by public funds and ‘administered by those authorities’ means that a national, regional or local authority has a majority with regard to the choice of the entity’s management. The obligation can be fulfilled by the reduction of final energy consumption in any area of the public sector, including transport, public buildings, healthcare, spatial planning, water management and wastewater treatment, sewage and water purification, waste management, district heating and cooling, energy distribution, supply and storage, public lighting, infrastructure planning, education and social services. Member States may also include other types of services when transposing this Directive. To lower the administrative burden for public bodies, Member States should establish digital platforms or tools to collect the aggregated consumption data from public bodies, make them publicly available, and report the data to the Commission. Member States should provide planning and annual reporting on the consumption of public bodies in an aggregated form per sector.

(36)

Member States should promote energy efficient means of mobility, including in their public procurement practices, such as rail, cycling, walking or shared mobility, by renewing and decarbonising fleets, encouraging a modal shift and including those modes in urban mobility planning.

(37)

Member States should exercise an exemplary role by ensuring that all energy performance contracts, energy audits and energy management systems are carried out in the public sector in line with European or international standards, or that energy audits are used to a large extent in energy-intense parts of the public sector. Member States should provide guidance and should provide for procedures for the use of those instruments.

(38)

Public authorities are encouraged to obtain support from entities such as sustainable energy agencies established at regional or local level, where applicable. The organisation of those agencies usually reflects the individual needs of public authorities in a certain region or operating in a certain area of the public sector. Centralised agencies can serve the needs better and work more effectively in other respects, for example, in smaller or centralised Member States or regarding complex or cross-regional aspects such as district heating and cooling. Sustainable energy agencies can serve as one-stop shops. Those agencies are often responsible for developing local or regional decarbonisation plans, which may also include other decarbonisation measures, such as the exchange of fossil fuel boilers, and for supporting public authorities in the implementation of energy-related policies. Sustainable energy agencies or other entities to assist regional and local authorities may have clear competences, objectives and resources in the field of sustainable energy. Sustainable energy agencies could be encouraged to consider initiatives taken in the framework of the Covenant of Mayors, which brings together local governments voluntarily committed to implementing the Union’s climate and energy objectives, and other existing initiatives for that purpose. The decarbonisation plans should be linked to territorial development plans and take into account the comprehensive assessment which the Member States should carry out.

(39)

Member States should support public bodies in planning and the uptake of energy efficiency improvement measures, including at regional and local level, by providing guidelines promoting competence-building and training opportunities and encouraging cooperation amongst public bodies including amongst agencies. For that purpose, Member States could set up national competence centres on complex issues, such as advising local or regional energy agencies on district heating or cooling. The requirement to transform buildings into nearly zero-energy buildings does not exclude or prohibit a differentiation between nearly zero-energy building levels for new or renovated buildings. Nearly zero-energy buildings, including the cost-optimal level, are defined in Directive 2010/31/EU.

(40)

Until the end of 2026, Member States that renovate more than 3 % of the total floor area of their buildings in any given year should be given the possibility to count the surplus towards the annual renovation rate of any of the three following years. A Member State that renovates more than 3 % of the total floor area of its buildings from 1 January 2027 should be able to count the surplus towards the annual renovation rate of the following two years. That possibility should not be used for purposes that are not in line with the general objectives and the level of ambition of this Directive.

(41)

Member States should encourage public bodies to take into account the wider benefits beyond energy savings, such as the quality of the indoor environment as well as an improvement of people’s quality of life and the comfort of renovated public buildings, in particular schools, day care centres, nursing homes, sheltered housing, hospitals, and social housing.

(42)

Buildings and transport, alongside industry, are the main energy users and main source of emissions. Buildings are responsible for about 40 % of the Union’s total energy consumption and for 36 % of its GHG from energy. The Commission communication of 14 October 2020, entitled ‘Renovation Wave’ addresses the twin challenge of energy and resource efficiency and affordability in the building sector and aims to double the renovation rate. It focuses on the worst performing buildings, energy poverty and on public buildings. Moreover, buildings are crucial to achieving the Union objective of reaching climate neutrality by 2050. Buildings that are owned by public bodies account for a considerable share of the building stock and have high visibility in public life. It is therefore appropriate to set an annual rate of renovation of buildings that are owned by public bodies on the territory of a Member State to upgrade their energy performance and be transformed into at least nearly zero-energy buildings or zero-emission buildings. Member States are invited to set a higher renovation rate, where that is cost-effective in the framework of the renovation of their buildings stock in accordance with their long-term renovation strategies or national renovation programmes, or both. That renovation rate should be without prejudice to the obligations with regard to nearly zero-energy buildings set out in Directive 2010/31/EU. Member States should be able to apply less stringent requirements to some buildings, such as buildings with special architectural or historical merit. During the next review of Directive 2010/31/EU, the Commission should assess the progress Member States achieved regarding the renovation of public bodies’ buildings. The Commission should consider submitting a legislative proposal to revise the renovation rate, while taking into account the progress achieved by the Member States, substantial economic or technical developments, or where needed, the Union’s commitments for decarbonisation and zero pollution. The obligation to renovate public bodies’ buildings in this Directive complements that in Directive 2010/31/EU, which requires Member States to ensure that when existing buildings undergo major renovation their energy performance is upgraded so that they meet the requirements on nearly zero-energy buildings.

(43)

Building automation and control systems and other solutions to provide active energy management are important tools for public bodies to improve and maintain the energy performance of buildings, as well as ensuring the necessary indoor conditions in the buildings they own or occupy, in accordance with Directive 2010/31/EU.

(44)

Promoting green mobility is a key part of the European Green Deal. The provision of charging infrastructure is one of the necessary elements in the transition. Charging infrastructure in buildings is particularly important since electric vehicles park in buildings regularly and for long periods of time, thus making charging easier and more efficient. Public bodies should make best efforts to install charging infrastructure in buildings they own or occupy in accordance with Directive 2010/31/EU.

(45)

To set the rate of renovations, Member States need to have an overview of the buildings that do not reach the nearly zero-energy buildings level. Therefore, Member States should publish and keep updated an inventory of public buildings, including, where appropriate, social housing, as part of an overall database of energy performance certificates. That inventory should also enable private actors, including energy service companies (ESCOs), to propose renovation solutions, which can be aggregated by the EU Building Stock Observatory.

(46)

The inventory could integrate data from existing building stock inventories. Member States should take appropriate measures to facilitate data collection and make the inventory accessible to private actors, including ESCOs to enable their active role in renovation solutions. Available and publicly shared data about building stock characteristics, buildings renovation and energy performance may be aggregated by the EU Building Stock Observatory to ensure a better understanding of the energy performance of the building sector through comparable data.

(47)

In 2020, more than half of the world’s population lived in urban areas. That figure is expected to reach 68 % by 2050. In addition, half of the urban infrastructures by 2050 are still to be built. Cities and metropolitan areas are centres of economic activity, knowledge generation, innovation and new technologies. Cities influence the quality of life of the citizens who live or work in them. Member States should support municipalities technically and financially. A number of municipalities and other public bodies in the Member States have already put into place integrated approaches to energy saving and energy supply and sustainable mobility, for example via sustainable energy action plans or sustainable urban mobility plans, such as those developed under the Covenant of Mayors initiative, and integrated urban approaches which go beyond individual interventions in buildings or transport modes. Further efforts are needed in the area of improving the energy efficiency of urban mobility, for both passenger and freight transport, as it uses around 40 % of all road transport energy.

(48)

All the principles of Directives 2014/23/EU (18), 2014/24/EU (19) and 2014/25/EU (20) of the European Parliament and of the Council remain fully applicable within the framework of this Directive.

(49)

With regard to the purchase of certain products and services and the purchase and rent of buildings, contracting authorities and contracting entities which conclude public works, supply or service contracts should lead by example and make energy-efficient purchasing decisions and apply the energy efficiency first principle, including for those public contracts and concessions for which no specific requirements are provided for in this Directive. This should apply to contracting authorities and contracting entities falling within the scope of Directives 2014/23/EU, 2014/24/EU or 2014/25/EU. Member States should remove barriers to joint procurement within a Member State or across borders if this can reduce the costs and enhance the benefits of the internal market by creating business opportunities for suppliers and energy service providers.

(50)

All public entities investing public resources through procurement should lead by example when awarding contracts and concessions by choosing products, buildings, works and services with the highest energy efficiency performance, also in relation to those procurements that are not subject to specific requirements under Directive 2009/30/EC. In that context, all award procedures for public contracts and concessions with a value above the thresholds set out in Article 8 of Directive 2014/23/EU, Article 4 of Directive 2014/24/EU, and Article 15 of Directive 2014/25/EU need to take into account the energy efficiency performance of the products, buildings and services set by Union or national law, by considering as priority the energy efficiency first principle in their procurement procedures.

(51)

It is also important that Member States monitor how the energy efficiency requirements are taken into account by contracting authorities and contracting entities in the procurement of products, buildings, works and services by ensuring that information about the impact on the energy efficiency of those winning tenders above the thresholds referred to in the procurement directives are made publicly available. That would allow stakeholders and citizens to assess the role of the public sector in ensuring energy efficiency first in public procurement in a transparent manner.

(52)

The obligation for Member States to ensure that contracting authorities and entities purchase only products, buildings, works and services with high energy efficiency performance should not, however, prevent Member States from purchasing goods necessary to protect, and respond to, public security or public health emergencies.

(53)

The European Green Deal recognises the role of the circular economy in contributing to overall Union decarbonisation objectives. The public sector and, in particular, the transport sector, should contribute to those objectives by using their purchasing power to, where appropriate, choose environmentally friendly products, buildings, works and services via available tools for green public procurement, and thus making an important contribution to reduce energy consumption and environmental impacts.

(54)

It is important that Member States provide the necessary support to public bodies in the uptake of energy efficiency requirements in public procurement and, where appropriate, in the use of green public procurement by providing necessary guidelines and methodologies on carrying out the assessment of life-cycle costs and environment impacts and costs. Well-designed tools, in particular digital tools, are expected to facilitate the procurement procedures and reduce the administrative costs especially in smaller Member States that may not have sufficient capacity to prepare tenders. In this regard, Member States should actively promote the use of digital tools and cooperation amongst contracting authorities including across borders for the purpose of exchanging best practices.

(55)

Given that buildings are responsible for GHG emissions before and after their operational lifetime, Member States should also consider the whole life cycle of carbon emissions of buildings. That should take place in the context of efforts to increase the attention given to whole life-cycle performance, circular economy aspects and environmental impacts, as part of the exemplary role of the public sector. Public procurement can thus serve as an opportunity to address the embodied carbon in buildings over their life cycle. In this regard, contracting authorities are important actors that can take action as part of procurement procedures by purchasing new buildings that address global warming potential over the full life cycle.

(56)

The global warming potential over the full life cycle measures the GHG emissions associated with the building at different stages along its life cycle. It therefore measures the building’s overall contribution to emissions that lead to climate change. That is sometimes referred to as a carbon footprint assessment or the whole life carbon measurement. It brings together carbon emissions embodied in building materials with direct and indirect carbon emissions from use stage. Buildings are a significant material bank, being repositories for carbon intensive resources over many decades, and so it is important to explore designs that facilitate future reuse and recycling at the end of the operational life in line with the new circular economy action plan. Member States should promote circularity, durability, and adaptability of building materials, in order to address the sustainability performance of construction products.

(57)

The global warming potential is expressed as a numeric indicator in kgCO2eq/m2 (of useful internal floor area) for each life-cycle stage averaged for one year of a reference study period of 50 years. The data selection, scenario definition and calculations are carried out in accordance with standard EN 15978. The scope of building elements and technical equipment are set out in indicator 1,2 of the Level(s) common Union framework. Where a national calculation tool exists, or is required for making disclosures or for obtaining building permits, it should be possible to use that national tool to provide the required information. It should be possible to use other calculation tools, if they fulfil the minimum criteria laid down by the Level(s) common Union framework.

(58)

Directive 2010/75/EU of the European Parliament and of the Council (21) lays down rules on installations that contribute to energy production or use energy for production purposes, and provides that information on the energy used in or generated by the installation is to be included in applications for integrated permits in accordance with Article 12(1), point (b) of that Directive. Moreover, Article 11 of that Directive provides that efficient use of energy is one of the general principles governing the basic obligations of the operator and one of the criteria for determining best available techniques pursuant to Annex III to that Directive. The operational efficiency of energy systems at any given moment is influenced by the ability to feed power generated from different sources with different degrees of inertia and start-up times into the grid smoothly and flexibly. Improving efficiency will enable better use to be made of renewable energy.

(59)

Improvement in energy efficiency can contribute to higher economic output. Member States and the Union should aim to decrease energy consumption regardless of levels of economic growth.

(60)

The energy savings obligation established by this Directive should be increased and should also apply after 2030. That ensures stability for investors and thus encourages long-term investments and long-term energy efficiency measures, such as the deep renovation of buildings with the long-term objective of facilitating the cost effective transformation of existing buildings into nearly zero-energy buildings. The energy savings obligation plays an important role in the creation of local growth, jobs, competitiveness and alleviating energy poverty. It should ensure that the Union can achieve its energy and climate objectives by creating further opportunities and by breaking the link between energy consumption and growth. Cooperation with the private sector is important to assess the conditions on which private investment for energy efficiency projects can be unlocked and to develop new revenue models for innovation in the field of energy efficiency.

(61)

Energy efficiency improvement measures also have a positive impact on air quality, as more energy efficient buildings contribute to reducing the demand for heating fuels, including solid heating fuels. Energy efficiency measures therefore contribute to improving indoor and outdoor air quality and help achieve, in a cost-effective manner, the objectives of the Union’s air quality policy, as laid down in particular by Directive (EU) 2016/2284 of the European Parliament and of the Council (22).

(62)

With a view to ensuring a stable and predictable contribution towards achieving the Union’s energy and climate targets for 2030 and the climate neutrality objective for 2050, Member States are required to achieve cumulative end-use energy savings for the entire obligation period up to 2030, equivalent to new annual savings of at least 0,8 % of final energy consumption up to 31 December 2023 and of at least 1,3 % from 1 January 2024, 1,5 % from 1 January 2026 and 1,9 % from 1 January 2028. That requirement could be met by new policy measures that are adopted during the obligation period from 1 January 2021 to 31 December 2030 or by new individual actions as a result of policy measures adopted during or before the previous period, provided that the individual actions that trigger energy savings are introduced during the following period. To that end, Member States should be able to make use of an energy efficiency obligation scheme, alternative policy measures, or both.

(63)

For the period from 1 January 2021 to 31 December 2023, Cyprus and Malta should be required to achieve cumulative end-use energy savings equivalent to new savings of 0,24 % of annual final energy consumption averaged over the most recent three-year period preceding 1 January 2019. For the period from 1 January 2024 to 31 December 2030, Cyprus and Malta should be required to achieve cumulative end-use energy savings of 0,45 % of annual final energy consumption, averaged over the most recent three-year period preceding 1 January 2019.

(64)

Where using an obligation scheme, Member States should designate obligated parties among transmission system operators, distribution system operators, energy distributors, retail energy sales companies and transport fuel distributors or transport fuel retailers on the basis of objective and non-discriminatory criteria. The designation or exemption from designation of certain categories of such entities should not be understood to be incompatible with the principle of non-discrimination. Member States are therefore able to choose whether such entities or only certain categories thereof are designated as obligated parties. To empower and protect people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing, and to implement policy measures as a priority among those people, Member States can require obligated parties to achieve energy savings among those people. For that purpose, Member States can also establish energy cost reduction targets. Obligated parties could achieve those targets by promoting the installation of measures that lead to energy savings and financial savings on energy bills, such as the installation of insulation and heating measures, and by supporting energy savings initiatives by renewable energy communities and citizen energy communities.

(65)

When designing policy measures to fulfil the energy savings obligation, Member States should respect the climate and environmental standards and priorities of the Union and comply with the principle of ‘do no significant harm’ within the meaning of Regulation (EU) 2020/852. Member States should not promote activities that are not environmentally sustainable such as the use of fossil fuels. The energy savings obligation aims at strengthening the response to climate change by promoting incentives to Member States to implement a sustainable and clean policy mix, which is resilient, and mitigates climate change. Therefore, energy savings from policy measures regarding the use of direct fossil fuel combustion may be eligible energy savings under the energy savings obligation under certain conditions and for a transitional period following the transposition of this Directive in accordance with an annex to this Directive. It will allow aligning the energy savings obligation with the objectives of the European Green Deal, the Climate Target Plan, the Renovation Wave, and mirror the need for action identified by the International Energy Agency in its net zero report. The restriction aims at encouraging Member States to spend public money into future-proof, sustainable technologies only. It is important that Member States provide a clear policy framework and investment certainty to market actors. The implementation of the calculation methodology under the energy savings obligation should allow all market actors to adapt their technologies in a reasonable timeframe. Where Member States support the uptake of efficient fossil fuel technologies or early replacement of such technology, for example through subsidy schemes or energy efficiency obligation schemes, any resulting energy savings may no longer be eligible under the energy savings obligation. While energy savings resulting, for example, from the promotion of natural gas-based cogeneration would not be eligible under the energy savings obligation, the restriction would not apply for indirect fossil fuel usage, for example where the electricity production includes fossil fuel generation. Policy measures targeting behavioural changes to reduce the consumption of fossil fuels, for example through information campaigns and eco-driving, should remain eligible. Policy measures which target building renovations may include measures such as the replacement of fossil fuel heating systems together with building fabric improvements. Those measures should be limited to technologies that allow the required energy savings to be achieved in accordance with the national building codes established in a Member State. Nevertheless, Member States should promote upgrading heating systems as part of deep renovations in line with the long-term objective of carbon neutrality, namely reducing the heating demand and covering the remaining heating demand with a carbon-free energy source. When accounting for the savings needed to achieve a share of the energy savings obligation among people affected by energy poverty, Member States may take into account their climatic conditions.

(66)

Member States’ energy efficiency improvement measures in transport are eligible to be taken into account for achieving their end-use energy savings obligation. Such measures include policies that are, inter alia, dedicated to promoting more efficient vehicles, a modal shift to cycling, walking and collective transport, or mobility and urban planning that reduces demand for transport. In addition, schemes which accelerate the uptake of new, more efficient vehicles or policy measures which foster a shift to fuels with reduced levels of emissions, except schemes or policy measures regarding the use of direct fossil fuel combustion that reduce energy use per kilometre, are also capable of being eligible, subject to compliance with the rules on materiality and additionality set out in this Directive. Policy measures promoting the uptake of new fossil fuel vehicles should not qualify as eligible measures under the energy savings obligation.

(67)

Measures taken by Member States pursuant to Regulation (EU) 2018/842 of the European Parliament and of the Council (23) and which result in verifiable and measurable or estimable energy efficiency improvements can be considered to be a cost-effective way for Member States to fulfil their energy savings obligation under this Directive.

(68)

As an alternative to requiring obligated parties to achieve the amount of cumulative end-use energy savings required under the energy savings obligation laid down in this Directive, it should be possible for Member States, in their obligation schemes, to permit or require obligated parties to contribute to a national energy efficiency fund, which could be used to implement policy measures as a priority among people affected by energy poverty, vulnerable customers, people in low income households and, where applicable, people living in social housing.

(69)

Member States and obligated parties should make use of all available means and technologies, except with regard to the use of direct fossil fuel combustion technologies, to achieve the cumulative end-use energy savings required, including by promoting smart and sustainable technologies in efficient district heating and cooling systems, efficient heating and cooling infrastructure, efficient and smart buildings, electrical vehicles and industries and energy audits or equivalent management systems, provided that the energy savings claimed comply with this Directive. Member States should aim for a high degree of flexibility in the design and implementation of alternative policy measures. Member States should encourage actions resulting in energy savings over a long lifetime.

(70)

Long-term energy efficiency measures continue to deliver energy savings after 2020 but, in order to contribute to the Union’s 2030 energy efficiency target, those measures should deliver new savings after 2020. On the other hand, energy savings achieved after 31 December 2020 should not count towards the cumulative end-use energy savings required for the period from 1 January 2014 to 31 December 2020.

(71)

Additionality is a fundamental underlying principle of the energy savings obligation provided for in this Directive, in so far as it ensures that Member States put in place policies and measures specifically designed for the purpose of fulfilling the energy savings obligation. New savings should be additional to ‘business as usual’, so that savings that would have occurred in any event should not count towards fulfilling the energy savings obligation. In order to calculate the impact of the measures introduced, only net savings, measured as the change of energy consumption that is directly attributable to the energy efficiency measure in question implemented for the purpose of the energy savings obligation provided for in this Directive, should be counted. To calculate net savings, Member States should establish a baseline scenario of how the situation would evolve in the absence of the measure in question. The policy measure in question should be evaluated against that baseline. Member States should take into account minimum requirements provided by the relevant legislative framework at Union level and the fact that other policy measures may be carried out in the same time frame which may also have an impact on the amount of energy savings, so that not all changes observed since the introduction of a particular policy measure can be attributed to that policy measure alone. The actions of the obligated, participating or entrusted party should in fact contribute to the achievement of the energy savings claimed in order to ensure the fulfilment of the materiality requirement.

(72)

It is important to consider, where relevant, all steps in the energy chain in the calculation of energy savings in order to increase the energy savings potential in the transmission and distribution of electricity. Studies and the consultation of stakeholders have revealed a significant potential. However, the physical and economic conditions are quite different among Member States, and often within several Member States, and there is a large number of system operators. Those circumstances point to a decentralised approach, pursuant to the subsidiarity principle. National Regulatory Authorities have the required knowledge, legal competences and the administrative capacity to promote the development of an energy efficient electricity grid. Entities such as the European Network of Transmission System Operators for Electricity (ENTSO-E) and the European Entity for Distribution System Operators can also provide useful contributions to, and should support their members in, the uptake of energy efficiency measures.

(73)

Similar considerations apply for the very large number of natural gas system operators. The role of natural gas and the rate of supply and coverage of the territory is highly variable among Member States. In those cases, National Regulatory Authorities are best placed to monitor and steer the system evolution towards an increased efficiency, and entities such as the European Network of Transmission System Operators for Gas can provide useful contributions to, and should support their members in, the uptake of energy efficiency measures.

(74)

The role of ESCOs is important in developing, designing, building, and arranging financing for projects that save energy, reduce energy costs, and decrease operations and maintenance costs in sectors such as buildings, industry and transport.

(75)

Consideration of the water-energy nexus is particularly important to address the interdependent use of energy and water and the increasing pressure on both resources. The effective management of water can make a significant contribution to energy savings yielding not only climate benefits, but also economic and social benefits. The water and wastewater sectors account for 3,5 % of electricity use in the Union and that share is expected to rise. At the same time, water leaks account for 24 % of total water consumed in the Union and the energy sector is the largest consumer of water, accounting for 44 % of consumption. The potential for energy savings through the use of smart technologies and processes across all industrial, residential and commercial water cycles and applications should be fully explored and realised whenever cost-effective, and the energy efficiency first principle should be considered. In addition, advanced irrigation technologies, rainwater harvesting and water reuse technologies could substantially reduce water consumption in agriculture, buildings and industry and the energy used for treating and transporting it.

(76)

In accordance with Article 9 of the Treaty on the Functioning of the European Union (TFEU), the Union’s energy efficiency policies should be inclusive and should therefore ensure equal access to energy efficiency measures for all consumers affected by energy poverty. Improvements in energy efficiency should be implemented as a priority among people affected by energy poverty, vulnerable customers and final users, people in low-income or medium-income households, people living in social housing, older people as well as people living in rural and remote areas and in the outermost regions. In that context, specific attention should be paid to particular groups which are more at risk of being affected by energy poverty or are more susceptible to the adverse impacts of energy poverty, such as women, persons with disabilities, older people, children, and people with a minority racial or ethnic background. Member States can require obligated parties to include social aims in energy-saving measures in relation to energy poverty, and this possibility has already been extended to alternative policy measures and national energy efficiency funds. That should be transformed into an obligation to protect and empower vulnerable customers and final users and to alleviate energy poverty, while allowing Member States to retain full flexibility with regard to the type of policy measure, its size, scope and content. If an energy efficiency obligation scheme does not permit measures relating to individual energy consumers, the Member State may take measures to alleviate energy poverty by means of alternative policy measures alone. Within their policy mix, Member States should ensure that other policy measures do not have an adverse effect on people affected by energy poverty vulnerable customers, final users and, where applicable, people living in social housing. Member States should make best possible use of public funding investments into energy efficiency improvement measures, including funding and financial facilities established at Union level.

(77)

Each Member State should define the concept of vulnerable customers, which may refer to energy poverty and, inter alia, to the prohibition of disconnection of electricity to such customers in critical times. The concept of vulnerable customers may include income levels, the share of energy expenditure of disposable income, the energy efficiency of homes, critical dependence on electrical equipment for health reasons, age or other criteria. This allows Member States to include people in low-income households.

(78)

According to Recommendation (EU) 2020/1563, around 34 million households in the Union were unable to keep their home adequately warm in 2019. The European Green Deal prioritises the social dimension of the transition by committing to the principle that ‘no one is left behind’. The green transition, including the clean transition, affects women and men differently and may have a particular impact on some disadvantaged groups including people with disabilities. Energy efficiency measures must therefore be central to any cost-effective strategy to address energy poverty and consumer vulnerability and are complementary to social security policies at Member State level. To ensure that energy efficiency measures reduce energy poverty for tenants sustainably, the cost-effectiveness of such measures, as well as their affordability to property owners and tenants, should be taken into account, and adequate financial and technical support for such measures should be guaranteed at Member State level. Member States should support the local and regional level in identifying and alleviating energy poverty. The Union’s building stock needs, in the long term, to be converted to nearly zero-energy buildings in accordance with the objectives of the Paris Agreement. Current building renovation rates are insufficient and buildings occupied by citizens on low incomes who are affected by energy poverty are the hardest to reach. The measures laid down in this Directive with regard to energy savings obligations, energy efficiency obligation schemes and alternative policy measures are therefore of particular importance.

(79)

Member States should strive to ensure that measures to promote or facilitate energy efficiency, in particular those concerning buildings and mobility, do not lead to a disproportionate increase in the cost of services relating to such measures or to greater social exclusion.

(80)

To tap the energy savings potential in certain market segments where energy audits are generally not offered commercially, such as small and medium-sized enterprises (SMEs), Member States should develop programmes to encourage and support SMEs to undergo energy audits and to implement the recommendations arising from those energy audits. Energy audits should be mandatory and regular for enterprises with an average annual energy consumption above a certain threshold, as energy savings can be significant. Energy audits should take into account relevant European or international standards, such as EN ISO 50001 (Energy Management Systems), or EN 16247-1 (Energy Audits), or, if including an energy audit, EN ISO 14000 (Environmental Management Systems) and thus be also in accordance with this Directive, which does not go beyond the requirements of those relevant standards. A specific European standard on energy audits is currently under development. Energy audits may be carried out on a stand-alone basis or be part of a broader environmental management system or an energy performance contract. In all such cases those systems should comply with the minimum requirements laid down in this Directive. In addition, specific mechanisms and schemes established to monitor emissions and fuel consumption by certain transport operators, for example under Union law the EU ETS, may be considered compatible with energy audits, including in energy management systems, if they comply with the minimum requirements laid down in this Directive. For those enterprises already implementing the energy audit obligation, energy audits should continue to be carried out at least every four years from the date of the previous energy audit, in accordance with this Directive.

(81)

Member States could establish guidelines for enterprises to follow in implementing measures to achieve new annual savings identified in the energy audit.

(82)

The enterprise’s average consumption should be the criterion to define the application of energy management systems and of energy audits in order to increase the sensitivity of those mechanisms in identifying relevant opportunities for cost-effective energy savings. An enterprise that is below the consumption thresholds defined for energy management systems and energy audits should be encouraged to undergo energy audits and to implement the recommendations resulting from those audits.

(83)

Where energy audits are carried out by in-house experts, they should not be directly engaged in the activity audited in order to guarantee their independence.

(84)

Member States should promote the implementation of energy management systems and energy audits within the public administration at national, regional and local level.

(85)

The ICT sector is another important sector which receives increasing attention. In 2018 the energy consumption of data centres in the Union was 76,8 TWh. This is expected to rise to 98,5 TWh by 2030, a 28 % increase. This increase in absolute terms can also be seen in relative terms: within the Union, data centres accounted for 2,7 % of electricity demand in 2018 and will reach 3,21 % by 2030 if development continues on the current trajectory. The Union’s Digital Strategy already highlighted the need for highly energy-efficient and sustainable data centres and calls for transparency measures for telecommunication operators on their environmental footprint. To promote sustainable development in the ICT sector, particularly of data centres, Member States should require the collection and publication of data which are relevant for the energy performance, water footprint and demand-side flexibility of data centres, on the basis of a common Union template. Member States should require the collection and publication of data only about data centres with a significant footprint, for which appropriate design or efficiency interventions, for new or existing installations respectively, can result in a considerable reduction of energy and water consumption, an increase in systems’ efficiency promoting decarbonisation of the grid or in the reuse of waste heat in nearby facilities and heat networks. Data centre sustainability indicators could be established on the basis of that data collected, taking also into account already existing initiatives in the sector.

(86)

The reporting obligation applies to those data centres, which meet the threshold set out in this Directive. In all cases and specifically for onsite enterprise data centres, the reporting obligation should be understood as referring to the spaces and equipment that serve primarily or exclusively for data-related functions (server rooms), including the necessary associated equipment, for example, associated cooling, lighting, battery arrays, or uninterruptible power supplies. Any IT equipment placed or installed in primarily public access, common use or office space or supporting other corporate functions, such as workstations, laptops, photocopiers, sensors, security equipment, or white goods and audiovisual appliances should be excluded from the reporting obligation. The same exclusion should also apply to server, networking, storage, and associated equipment that would be scattered across a site such as single servers, single racks, or Wi-Fi and networking points.

(87)

The collected data should be used to measure at least some basic dimensions of a sustainable data centre, namely how efficiently it uses energy, how much of that energy comes from renewable energy sources, the reuse of any waste heat that it produces, the effectiveness of cooling, the effectiveness of carbon usage and the usage of freshwater. The collected data and the sustainability indicators should raise awareness among data centre owners and operators, manufacturers of equipment, developers of software and services, users of data centre services at all levels as well as entities and organisations that deploy, use or procure cloud and data centre services. The collected data and the sustainability indicators should also give confidence about the actual improvements following efforts and measures to increase the sustainability in new or existing data centres. Finally, those data and indicators should be used as a basis for transparent and evidence-based planning and decision making. The Commission should assess the efficiency of data centres on the basis of the information communicated by the obligated data centres.

(88)

Following an assessment, when establishing the possible sector-specific energy efficiency partnerships, the Commission should bring together key stakeholders, including non-governmental organisations and the social partners, in sectors such as ICT, transport, finance and buildings in an inclusive and representative manner.

(89)

Lower consumer spending on energy should be achieved by assisting consumers in reducing their energy use by reducing the energy needs of buildings and improvements in the efficiency of appliances, which should be combined with the availability of low-energy transport modes integrated with public transport, shared mobility and cycling. Member States should also consider improving connectivity in rural and remote areas.

(90)

It is crucial to raise the awareness of all Union citizens about the benefits of increased energy efficiency and to provide them with accurate information on the ways in which it can be achieved. Citizens of all ages should also be involved in the energy transition via the European Climate Pact and the Conference on the Future of Europe. Increased energy efficiency is also highly important for the security of energy supply of the Union through lowering its dependence on import of fuels from third countries.

(91)

The costs and benefits of all energy efficiency measures taken, including pay-back periods, should be made fully transparent to consumers.

(92)

When implementing this Directive and taking other measures in the field of energy efficiency, Member States should pay particular attention to synergies between energy efficiency measures and the efficient use of natural resources in line with the principles of the circular economy.

(93)

Taking advantage of new business models and technologies, Member States should endeavour to promote and facilitate the uptake of energy efficiency measures, including through innovative energy services for large and small customers.

(94)

It is necessary to provide for frequent and enhanced feedback on energy consumption where technically feasible and cost-efficient in view of the measurement devices in place. This Directive clarifies that the cost-efficiency of sub-metering depends on whether the related costs are proportionate to the potential energy savings. The assessment of whether sub-metering is cost-efficient may take into account the effect of other concrete, planned measures in a given building, such as any forthcoming renovation.

(95)

This Directive also clarifies that rights relating to billing, and information about billing or consumption should apply to consumers of heating, cooling or domestic hot water supplied from a central source even where they have no direct, individual contractual relationship with an energy supplier.

(96)

In order to achieve the transparency of accounting for individual consumption of thermal energy, and thereby facilitate the implementation of sub-metering, Member States should ensure they have in place transparent, publicly available national rules on the allocation of the cost of heating, cooling and domestic hot water consumption in multi-apartment and multi-purpose buildings. In addition to transparency, Member States could consider taking measures to strengthen competition in the provision of sub-metering services and thereby help ensure that any costs borne by the final users are reasonable.

(97)

Newly installed heat meters and heat cost allocators should be remotely readable to ensure cost-effective, and frequent provision of, consumption information. The provisions of this Directive relating to metering for heating, cooling and domestic hot water; sub-metering and cost allocation for heating, cooling and domestic hot water; remote reading requirement; billing and consumption information for heating and cooling and domestic hot water; the cost of access to metering and billing and consumption information for heating, cooling and domestic hot water; and the minimum requirements for billing and consumption information for heating, cooling and domestic hot water, are intended to apply only to heating, cooling and domestic hot water supplied from a central source. Member States are free to decide whether walk-by or drive-by technologies are to be considered remotely readable or not. Remotely readable devices do not require access to individual apartments or units to be read.

(98)

Member States should take into account the fact that the successful implementation of new technologies for measuring energy consumption requires enhanced investment in education and skills for both users and energy suppliers.

(99)

Billing information and annual statements are an important means by which customers are informed of their energy consumption. Data on consumption and costs can also convey other information that helps consumers to compare their current deal with other offers and to make use of complaint-management and alternative dispute-resolution mechanisms. However, considering that bill-related disputes are a common source of consumer complaints and a factor which contributes to persistently low levels of consumer satisfaction and engagement with their energy providers, it is necessary to make bills simpler, clearer and easier to understand, while ensuring that separate instruments, such as billing information, information tools and annual statements, provide all the necessary information to enable consumers to regulate their energy consumption, compare offers and switch suppliers.

(100)

When designing energy efficiency improvement measures, Member States should take due account of the need to ensure the correct functioning of the internal market and the consistent implementation of the acquis, in accordance with the TFEU.

(101)

High-efficiency cogeneration and efficient district heating and cooling have significant potential for saving primary energy in the Union. Member States should carry out a comprehensive assessment of the potential for high-efficiency cogeneration and efficient district heating and cooling. Those assessments should be consistent with Member States’ integrated national energy and climate plans and their long-term renovation strategies, and could include trajectories leading to a renewable energy and waste heat based national heating and cooling sector within a timeframe compatible with the achievement of the climate neutrality objective. New electricity generation installations and existing installations which are substantially refurbished or whose permit or licence is updated should, subject to a cost-benefit analysis showing a cost-benefit surplus, be equipped with high-efficiency cogeneration units to recover waste heat stemming from the production of electricity. Similarly, other facilities with substantial annual average energy input should be equipped with technical solutions to deploy waste heat from the facility where the cost-benefit analysis shows a cost-benefit surplus. This waste heat could be transported where it is needed through district heating networks. The events that trigger a requirement for authorisation criteria to be applied will generally be such as to also trigger requirements for permits under Directive 2010/75/EU and for authorisation under Directive (EU) 2019/944.

(102)

It may be appropriate for electricity generation installations that are intended to make use of geological storage permitted under Directive 2009/31/EC of the European Parliament and of the Council (24) to be located in places where the recovery of waste heat, through high-efficiency cogeneration or by supplying a district heating or cooling network, is not cost-effective. Member States should therefore be able to exempt those installations from the obligation to carry out a cost-benefit analysis for providing the installation with equipment allowing the recovery of waste heat by means of a high-efficiency cogeneration unit. It should also be possible to exempt peak-load and back-up electricity generation installations which are planned to operate under 1 500 operating hours per year as a rolling average over a period of five years from the requirement to also provide heat.

(103)

It is appropriate for Member States to encourage the introduction of measures and procedures to promote cogeneration installations with a total rated thermal input of less than 5 MW in order to encourage distributed energy generation.

(104)

To implement national comprehensive assessments, Member States should encourage the assessments of the potential for high-efficiency cogeneration and efficient district heating and cooling at regional and local level. Member States should take steps to promote and facilitate the realisation of the identified cost-efficient potential of high-efficiency cogeneration and efficient district heating and cooling.

(105)

Requirements for efficient district heating and cooling should be consistent with long-term climate policy goals, the climate and environmental standards and the priorities of the Union, and should comply with the principle of ‘do no significant harm’ within the meaning of Regulation (EU) 2020/852. All the district heating and cooling systems should aim for improved ability to interact with other parts of the energy system in order to optimise the use of energy and prevent energy waste by using the full potential of buildings to store heat or cold, including the excess heat from service facilities and nearby data centres. For that reason, efficient district heating and cooling systems should ensure the increase of primary energy efficiency and a progressive integration of renewable energy and waste heat and cold as defined in Directive (EU) 2018/2001 of the European Parliament and of the Council (25). Therefore, this Directive introduces progressively stricter requirements for heating and cooling supply which should be applicable during specific established time periods and should be permanently applicable from 1 January 2050 onwards.

(106)

The principles to calculate the share of the heat or cold from renewable energy sources in efficient district heating and cooling should be consistent with Directive (EU) 2018/2001 and Eurostat methodologies for statistical reporting. Pursuant to Article 7(1) of Directive (EU) 2018/2001, the gross final consumption of energy from renewable sources includes gross final consumption of energy from renewable sources in the heating and cooling sector. A gross final energy consumption of heat or cold in district heating or cooling equals heat or cold energy supply going into the network serving the final customers or energy distributors.

(107)

Heat pumps are important for the decarbonisation of the heating and cooling supply, also in district heating. The methodology established in Annex VII to Directive (EU) 2018/2001 provides rules to count energy captured by heat pumps as energy from renewable sources and prevents double counting of the electricity from renewable sources. For the purposes of calculating the share of renewable energy in a district heating network, all the heat originating from the heat pump and going into the network should be accounted as renewable energy, provided that the heat pump meets the minimum efficiency criteria set out in Annex VII to Directive (EU) 2018/2001 at the time of its installation.

(108)

High-efficiency cogeneration has been defined by the energy savings obtained by combined production instead of separate production of heat and electricity. Requirements for high-efficiency cogeneration should be consistent with long-term climate policy goals. The definitions of cogeneration and high-efficiency cogeneration used in Union legislation should be without prejudice to the use of different definitions in national legislation for purposes other than those of the Union legislation in question. To maximise energy savings and avoid energy saving opportunities being missed, the greatest attention should be paid to the operating conditions of cogeneration units.

(109)

To ensure transparency and allow the final customer to choose between electricity from cogeneration and electricity produced by other techniques, the origin of high-efficiency cogeneration should be guaranteed on the basis of harmonised efficiency reference values. Guarantee of origin schemes do not of themselves imply a right to benefit from national support mechanisms. It is important that all forms of electricity produced from high-efficiency cogeneration can be covered by guarantees of origin. Guarantees of origin should be distinguished from exchangeable certificates.

(110)

The specific structure of the cogeneration and district heating and cooling sectors, which include many producers that are SMEs, should be taken into account, especially when reviewing the administrative procedures for obtaining permission to construct cogeneration capacity or associated networks, in application of the ‘think small first’ principle.

(111)

Most Union businesses are SMEs. They represent an enormous energy saving potential for the Union. To help them adopt energy efficiency measures, Member States should establish a favourable framework aimed at providing SMEs with technical assistance and targeted information.

(112)

Member States should establish, on the basis of objective, transparent and non-discriminatory criteria, rules governing the bearing and sharing of costs of grid connections and grid reinforcements and rules for technical adaptations needed to integrate new producers of electricity produced from high-efficiency cogeneration, taking into account network codes and guidelines developed in accordance with Regulations (EU) 2019/943 (26) and (EC) No 715/2009 of the European Parliament and of the Council (27). Producers of electricity generated from high-efficiency cogeneration should be allowed to issue a call for tender for the connection work. Access to the grid system for electricity produced from high-efficiency cogeneration, especially for small scale and micro-cogeneration units, should be facilitated. In accordance with Article 3(2) of Directive 2009/73/EC and Article 9(2) of Directive (EU) 2019/944, it is possible for Member States to impose public service obligations, including in relation to energy efficiency, on enterprises operating in the electricity and gas sectors.

(113)

It is necessary to set out provisions relating to billing, single point of contact, out-of-court dispute settlement, energy poverty and basic contractual rights, with the aim of aligning them, where appropriate, with the relevant provisions regarding electricity pursuant to Directive (EU) 2019/944, in order to strengthen consumer protection and enable final customers to receive more frequent, clear and up-to-date information about their heating, cooling or domestic hot water consumption and to regulate their energy use.

(114)

This Directive strengthens the protection of consumers by introducing basic contractual rights for district heating, cooling and domestic hot water, coherent with the level of rights, protection and empowerment that Directive (EU) 2019/944 has introduced for final customers in the electricity sector. Plain and unambiguous information concerning their rights should be made available to consumers. Several factors impede consumers from accessing, understanding and acting upon the various sources of market information available to them. The introduction of basic contractual rights can help, among others, with a proper understanding of the baseline of the quality of services offered in the contract by the supplier, including the quality and characteristics of the supplied energy. In addition, it can contribute to the minimisation of hidden or extra costs that could result from the introduction of either upgraded or new services after the signing of the contract without a clear understanding and agreement by the customer. Those services could concern, among others, the energy supplied, metering and billing services, purchase and installation or ancillary and maintenance services and costs relating to the network, metering devices, local heating or cooling equipment. The requirements will contribute to the improvement of comparability of offers and ensure the same level of basic contractual rights for all Union citizens regarding heating, cooling and domestic hot water, without restricting national competences.

(115)

In the case of planned disconnection from heating, cooling and domestic hot water, suppliers should provide the customers concerned with adequate information on alternative measures, such as sources of support to avoid disconnection, prepayment systems, energy audits, energy consultancy services, alternative payment plans, debt management advice or disconnection moratoria.

(116)

Greater consumer protection should be guaranteed through the availability of effective, independent out-of-court dispute settlement mechanisms for all consumers, such as an energy ombudsperson, a consumer body or a regulatory authority. Member States should, therefore, introduce speedy and effective complaint-handling procedures.

(117)

The contribution of renewable energy communities, pursuant to Directive (EU) 2018/2001, and citizen energy communities, pursuant to Directive (EU) 2019/944, towards the objectives of the European Green Deal and the Climate Target Plan, should be recognised and actively supported. Member States should, therefore, consider and promote the role of renewable energy communities and citizen energy communities. Those communities can help Member States to achieve the objectives of this Directive by advancing energy efficiency at local or household level, as well as in public buildings, in cooperation with local authorities. They can empower and engage consumers and enable certain groups of household customers, including in rural and remote areas, to participate in energy efficiency projects and interventions that can combine actions with investment in renewable energy. Energy communities can have a strong role to play in educating and increasing citizens’ awareness of measures designed to achieve energy savings. If properly supported by Member States, energy communities can help fighting energy poverty through the facilitation of energy efficiency projects, reduced energy consumption and lower supply tariffs.

(118)

Long-term behavioural changes in energy consumption can be achieved through the empowerment of citizens. Energy communities can help deliver long-term energy savings, particularly among households, and an increase in sustainable investments from citizens and small businesses. Member States should empower such actions by citizens through support for community energy projects and organisations. In addition, engagement strategies, involving all relevant stakeholders at national and local level in the policy-making process, can be part of the local or regional decarbonisation plans or national buildings renovation plans, with the objective of increasing awareness, obtaining feedback on policies and improving their acceptance by the public.

(119)

The contribution of one-stop shops or similar structures as mechanisms that can enable multiple target groups, including citizens, SMEs and public authorities, to design and implement projects and measures relating to the clean energy transition should be recognised. The contribution of one-stop shops can be very important for vulnerable customers, as they could receive reliable and accessible information about energy efficiency improvements. That contribution can include the provision of technical, administrative and financial advice and assistance, the facilitation of the necessary administrative procedures or of access to financial markets, guidance with regard to the Union and national legal frameworks, including public procurement rules and criteria, and the EU taxonomy.

(120)

The Commission should review the impact of its measures to support the development of platforms or fora, involving, inter alia, the European social dialogue bodies, on fostering training programmes for energy efficiency, and should propose further measures where appropriate. The Commission should also encourage the European social partners in their discussions on energy efficiency, especially for vulnerable customers and final users, including those in energy poverty.

(121)

A fair transition towards a climate-neutral Union by 2050 is central to the European Green Deal. The European Pillar of Social Rights, jointly proclaimed by the European Parliament, the Council and the Commission on 17 November 2017, includes energy among the essential services that everyone is entitled to access. Support for access to such services must be available for those in need, particularly in a context of inflationary pressure and significant increases in energy prices.

(122)

It is necessary to ensure that people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing are protected and, to that end, empowered to actively participate in the energy efficiency improvement interventions, measures and related consumer protection or information measures that Member States implement. Targeted awareness-raising campaigns should be developed to illustrate the benefits of energy efficiency as well to provide information on the financial support available.

(123)

Public funding available at Union and national level should be strategically invested into energy efficiency improvement measures, in particular for the benefit of people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing. Member States should take advantage of any financial contribution they might receive from the Social Climate Fund established by Regulation (EU) 2023/955 of the European Parliament and of the Council (28), and of revenues from allowances from the EU ETS. Those revenues will support Member States in fulfilling their obligation to implement energy efficiency measures and policy measures under the energy savings obligation as a priority among people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing including those living in rural and remote regions.

(124)

National funding schemes should be complemented by suitable schemes of better information, technical and administrative assistance, and easier access to finance that will enable the best use of the available funds especially by people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing.

(125)

Member States should empower and protect all people equally, irrespective of sex, gender, age, disability, race or ethnic origin, sexual orientation, religion or belief, and ensure that those most affected, those put at greater risk of being affected by energy poverty, or those most exposed to the adverse impacts of energy poverty are adequately protected. In addition, Member States should ensure that energy efficiency measures do not exacerbate any existing inequalities, in particular with respect to energy poverty.

(126)

Pursuant to Article 15(2) of Directive 2012/27/EU, all Member States have undertaken an assessment of the energy efficiency potential of their gas and electricity infrastructure, and have identified concrete measures and investments for the introduction of cost-effective energy efficiency improvements in the network infrastructure, with a timetable for their introduction. The results of those actions represent a solid basis for the application of the energy efficiency first principle in their network planning, network development and investment decisions.

(127)

National energy regulatory authorities should take an integrated approach encompassing potential savings in the energy supply and the end-use sectors. Without prejudice to security of supply, market integration and anticipatory investments in offshore grids necessary for the deployment of offshore renewable energy, national energy regulatory authorities should ensure that the energy efficiency first principle is applied in the planning and decision-making processes and that network tariffs and regulations incentivise improvements in energy efficiency. Member States should also ensure that transmission and distribution system operators consider the energy efficiency first principle. That would help transmission and distribution system operators to consider better energy efficiency solutions for and incremental costs incurred from the procurement of demand-side resources, as well as the environmental and socio-economic impacts of different network investments and operation plans. Such an approach requires a shift from the narrow economic efficiency perspective to maximised social welfare. The energy efficiency first principle should in particular be applied in the context of scenario building for energy infrastructure expansion where demand-side solutions could be considered as viable alternatives and need to be properly assessed, and should become an intrinsic part of the assessment of network planning projects. Its application should be scrutinised by national regulatory authorities.

(128)

A sufficient number of reliable professionals competent in the field of energy efficiency should be available to ensure the effective and timely implementation of this Directive, for instance as regards compliance with the requirements on energy audits and implementation of energy efficiency obligation schemes. Member States should therefore put in place certification or equivalent qualification, or both, and suitable training schemes for the providers of energy services, energy audits and other energy efficiency improvement measures in close cooperation with the social partners, training providers and other relevant stakeholders. The schemes should be assessed every four years starting as of December 2024 and, if needed, be updated to ensure the necessary level of competences for energy services providers, energy auditors, energy managers and installers of building elements.

(129)

It is necessary to continue developing the market for energy services to ensure the availability of both the demand for and the supply of energy services. Transparency, for example by means of lists of certified energy services providers and available model contracts, exchange of best practices and guidelines greatly contribute to the uptake of energy services and energy performance contracting and can also help stimulate demand and increase the trust in energy services providers. In an energy performance contract the beneficiary of the energy service avoids investment costs by using part of the financial value of energy savings to fully or partially repay the investment carried out by a third party. That can help attract private capital which is key for increasing building renovation rates in the Union, bring expertise into the market and create innovative business models. Therefore, non-residential buildings with the useful floor area above 750 m2 should be required to assess the feasibility of using energy performance contracting for renovation. That is a step ahead to increase the trust in energy services companies and pave the way for increasing such projects in the future.

(130)

Given the ambitious renovation objectives over the next decade in the context of the Renovation Wave, it is necessary to increase the role of independent market intermediaries including one-stop shops or similar support mechanisms in order to stimulate market development on the demand and supply sides and to promote energy performance contracting for renovation of both private and public buildings. Local energy agencies could play a key role in that regard, and identify and support setting up potential facilitators or one-stop shops. This Directive should help improve the availability of products, services and advice, including by promoting the potential for entrepreneurs to fill the gaps in the market and to provide for innovative ways to enhance energy efficiency, while ensuring respect for the principle of non-discrimination.

(131)

Energy performance contracting still faces important barriers in several Member States due to remaining regulatory and non-regulatory barriers. It is therefore necessary to address the ambiguities of the national legislative frameworks, lack of expertise, especially as regards tendering procedures, and competing loans and grants.

(132)

Member States should continue supporting the public sector in the uptake of energy performance contracting by providing model contracts that take into account the available European or international standards, tendering guidelines and the Guide to the Statistical Treatment of Energy Performance Contracts published in May 2018 by Eurostat and the European Investment Bank (EIB) on the treatment of energy performance contracting in government accounts, which have provided opportunities for addressing remaining regulatory barriers to those contracts in Member States.

(133)

Member States have taken measures to identify and address regulatory and non-regulatory barriers. However, there is a need to increase the effort to remove regulatory and non-regulatory barriers to the use of energy performance contracting and third-party financing arrangements which help achieve energy savings. Those barriers include accounting rules and practices that prevent capital investments and annual financial savings resulting from energy efficiency improvement measures from being adequately reflected in the accounts for the whole life of the investment.

(134)

Member States used the 2014 and 2017 national energy efficiency action plans to report progress in removing regulatory and non-regulatory barriers to energy efficiency, as regards split incentives between owners and tenants or among owners of a building or building units. Member States should continue working in that direction and tap the potential for energy efficiency in the context of the 2016 Eurostat statistics, in particular the fact that more than four out of ten Europeans live in flats and more than three out of ten Europeans are tenants.

(135)

Member States, including regional and local authorities, should be encouraged to make full use of the European funds available under the multiannual financial framework for the years 2021 to 2027 laid down in Council Regulation (EU, Euratom) 2020/2093 (29) the Recovery and Resilience Facility, established by Regulation (EU) 2021/241 of the European Parliament and of the Council (30), as well as the financial instruments and technical assistance available under the InvestEU programme, established by Regulation (EU) 2021/523 of the European Parliament and of the Council (31), to trigger private and public investments in energy efficiency improvement measures. Investment in energy efficiency has the potential to contribute to economic growth, employment, innovation and a reduction in energy poverty in households, and therefore makes a positive contribution to economic, social and territorial cohesion and green recovery. Potential areas for funding include energy efficiency measures in public buildings and housing, and providing new skills through the development of training, reskilling and upskilling of professionals, in particular in jobs related to building renovation, to promote employment in the energy efficiency sector. The Commission will ensure synergies between the different funding instruments, in particular the funds in shared management and in direct management, such as the centrally-managed programmes Horizon Europe and LIFE, as well as between grants, loans and technical assistance to maximise their leverage effect on private financing and their impact on the achievement of energy efficiency policy objectives.

(136)

Member States should encourage the use of financing facilities to further the objectives of this Directive. Such financing facilities could include financial contributions and fines for infringements of certain provisions of this Directive, resources allocated to energy efficiency under Article 10(3) of Directive 2003/87/EC, and resources allocated to energy efficiency in the European funds and programmes, and dedicated European financial instruments, such as the European Energy Efficiency Fund.

(137)

Financing facilities could be based, where applicable, on resources allocated to energy efficiency from Union project bonds, resources allocated to energy efficiency from the EIB and other European financial institutions, in particular the European Bank for Reconstruction and Development (EBRD) and the Council of Europe Development Bank, resources leveraged in financial institutions, national resources, including through the creation of regulatory and fiscal frameworks encouraging the implementation of energy efficiency initiatives and programmes, and revenues from annual emission allocations under Decision No 406/2009/EC of the European Parliament and of the Council (32).

(138)

The financing facilities could in particular use contributions, resources and revenues from those resources to enable and encourage private capital investment, in particular drawing on institutional investors, while using criteria ensuring the achievement of both environmental and social objectives for the granting of funds; make use of innovative financing mechanisms, including loan guarantees for private capital, loan guarantees to foster energy performance contracting, grants, subsidised loans and dedicated credit lines, third-party financing systems, that reduce the risks of energy efficiency projects and allow for cost-effective renovations even among low- and medium-revenue households; be linked to programmes or agencies which will aggregate and assess the quality of energy saving projects, provide technical assistance, promote the energy services market and help to generate consumer demand for energy services.

(139)

The financing facilities could also provide appropriate resources to support training and certification programmes which improve and accredit skills for energy efficiency, provide resources for research on and demonstration and acceleration of uptake of small-scale and micro technologies in the generation of energy and the optimisation of the connections of those generators to the grid, be linked to programmes undertaking action to promote energy efficiency in all dwellings to prevent energy poverty and stimulate landlords letting dwellings to render their property as energy-efficient as possible, and provide appropriate resources to support social dialogue and standard-setting with the aim of improving energy efficiency and ensuring good working conditions and health and safety at work.

(140)

Available Union funding programmes, financial instruments and innovative financing mechanisms should be used to give practical effect to the objective of improving the energy performance of public bodies’ buildings. In that respect, Member States may use their revenues from annual emission allocations under Decision No 406/2009/EC in the development of such mechanisms on a voluntary basis and taking into account national budgetary rules. The Commission and the Member States should provide regional and local administrations with adequate information on such Union funding programmes, financial instruments and innovative financing mechanisms.

(141)

In the implementation of the energy efficiency target, the Commission should monitor the impact of the relevant measures on Directive 2003/87/EC in order to maintain the incentives in the EU ETS rewarding low carbon investments and to prepare the EU ETS sectors for the innovations needed in the future. It will need to monitor the impact on those industry sectors which are exposed to a significant risk of carbon leakage as listed in the Annex to Commission Decision 2014/746/EU (33), in order to ensure that this Directive promotes and does not impede the development of those sectors.

(142)

Member State measures should be supported by well-designed and effective Union financial instruments under the InvestEU programme, and by financing from the EIB and the EBRD, which should support investments in energy efficiency at all stages of the energy chain and use a comprehensive cost-benefit analysis with a model of differentiated discount rates. Financial support should focus on cost-effective methods for increasing energy efficiency, which would lead to a reduction in energy consumption. The EIB and the EBRD should, together with national promotional banks, design, generate and finance programmes and projects tailored for the efficiency sector, including for energy-poor households.

(143)

Cross-sectoral law provides a strong basis for consumer protection for a wide range of current energy services, and is likely to evolve. Nevertheless, certain basic contractual rights of customers should be clearly established. Plain and unambiguous information should be made available to consumers concerning their rights in relation to the energy sector.

(144)

In order to be able to evaluate the effectiveness of this Directive, a requirement to conduct a general review of this Directive and to submit a report to the European Parliament and to the Council by 28 February 2027 should be laid down. That review should allow necessary alignments, also taking into account economic and innovation developments.

(145)

Local and regional authorities should be given a leading role in the development and design, execution and assessment of the measures laid down in this Directive, so that they are able properly to address the specific features of their own climate, culture and society.

(146)

Reflecting technological progress and the growing share of renewable energy sources in the electricity generation sector, the default coefficient for savings in kWh electricity should be reviewed in order to reflect changes in the primary energy factor for electricity and other energy carriers. The calculation methodology is in accordance with the Eurostat energy balances and definitions, except for the allocation method of fuel input for heat and electricity in combined heat and power plants, for which the efficiency of the reference system, required for the allocation of fuel consumption, was aligned with Eurostat data for 2015 and 2020. Calculations reflecting the energy mix of the primary energy factor for electricity are based on annual average values. The ‘physical energy content’ accounting method is used for nuclear electricity and heat generation and the ‘technical conversion efficiency’ method is used for electricity and heat generation from fossil fuels and biomass. For non-combustible renewable energy, the method is the direct equivalent based on the ‘total primary energy’ approach. To calculate the primary energy share for electricity in cogeneration, the method set out in this Directive is applied. An average rather than a marginal market position is used. Conversion efficiencies are assumed to be 100 % for non-combustible renewables, 10 % for geothermal power stations and 33 % for nuclear power stations. The calculation of total efficiency for cogeneration is based on the most recent data from Eurostat. The conversion, transmission and distribution losses are taken into account. Distribution losses for energy carriers other than electricity are not considered in the calculations, due to the lack of reliable data and the complexity of the calculation. As for system boundaries, the primary energy factor is 1 for all energy sources. The selected coefficient for the primary energy factor for electricity is the average of 2024 and 2025 values, since a forward-looking primary energy factor will provide a more appropriate indicator than a historical one. The analysis covers the Member States and Norway. The dataset for Norway is based on the ENTSO-E data.

(147)

Energy savings which result from the implementation of Union law should not be claimed unless they result from a measure that goes beyond the minimum required by the Union legal act in question, whether by setting more ambitious energy efficiency requirements at Member State level or by increasing the take-up of the measure. Buildings present a substantial potential for further increasing energy efficiency, and the renovation of buildings is an essential and long-term element with economies of scale in increasing energy savings. It is therefore necessary to clarify that it is possible to claim all energy savings stemming from measures promoting the renovation of existing buildings, provided that they exceed the savings that would have occurred in the absence of the policy measure and provided that the Member State demonstrates that the obligated, participating or entrusted party has in fact contributed to the achievement of the energy savings claimed.

(148)

In accordance with the communication of the Commission of 25 February 2015 on ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’ and the principles of better regulation, monitoring and verification rules for the implementation of energy efficiency obligation schemes and alternative policy measures, including the requirement to check a statistically representative sample of measures, should be given greater prominence.

(149)

Energy generated on or in buildings from renewable energy technologies reduces the amount of energy supplied from fossil fuels. The reduction of energy consumption and the use of energy from renewable sources in the buildings sector are important measures to reduce the Union’s energy dependence and GHG emissions, especially in view of the ambitious climate and energy objectives set for 2030 as well as the global commitment made in the context of the Paris Agreement. For the purposes of their cumulative energy savings obligation, it is possible for Member States to take into account energy savings from policy measures promoting renewable technologies to meet their energy savings requirements in accordance with the calculation methodology provided for in this Directive. Energy savings from policy measures regarding the use of direct fossil fuel combustion should not be counted.

(150)

Some of the changes introduced by this Directive might require a subsequent amendment to Regulation (EU) 2018/1999 in order to ensure coherence between the two legal acts. New provisions, mainly relating to setting national contributions, gap filling mechanisms and reporting obligations, should be streamlined with and transferred to that Regulation, once it is amended. Some provisions of Regulation (EU) 2018/1999 might also need to be reassessed in view of the changes proposed in this Directive. The additional reporting and monitoring requirements should not create any new parallel reporting systems but would be subject to the existing monitoring and reporting framework under Regulation (EU) 2018/1999.

(151)

To foster the practical implementation of this Directive at national, regional and local level, the Commission should continue to support the exchange of experiences on practices, benchmarking, networking activities, as well as innovative practices by means of an online platform.

(152)

Since the objectives of this Directive, namely to achieve the Union’s energy efficiency target and to pave the way towards further energy efficiency improvements and towards climate neutrality, cannot be sufficiently achieved by the Member States but can rather, by reason of the scale and effects of the action, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

(153)

In order to permit adaptation to technical progress and changes in the distribution of energy sources, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the review of the harmonised efficiency reference values laid down on the basis of this Directive, in respect of the values, calculation methods, default primary energy coefficient and requirements in the Annexes to this Directive and in respect of supplementing this Directive by establishing a common Union scheme for rating the sustainability of data centres located in its territory. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (34). In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(154)

Regulation (EU) 2023/955 should be amended in order to take account of the definition of energy poverty established in this Directive. That would ensure consistency, coherence, complementarity and synergy among different instruments and funding in particular addressing households in energy poverty.

(155)

The obligation to transpose this Directive into national law should be confined to those provisions which represent a substantive amendment as compared to the earlier Directive. The obligation to transpose the provisions which are unchanged arises under the earlier Directive.

(156)

This Directive should be without prejudice to the obligations of the Member States relating to the time-limits for the transposition into national law of the Directives set out in Part B of Annex XVI,