(1)

Moderation of energy demand is one of the five dimensions of the Energy Union Strategy established by the Commission communication of 25 February 2015 entitled ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’. 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 greenhouse gas emissions, improve energy security by reducing dependence on energy imports from outside the Union, 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, thus improving citizens' quality of life. This is in line with the Union commitments made in the framework of the Energy Union and global climate agenda established by the 2015 Paris Agreement on climate change following the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (4) (the ‘Paris Agreement’), committing to keep the increase of the global average temperature to well below 2 °C above pre-industrial levels and to pursuing efforts to limit the temperature increase to 1,5 °C above pre-industrial levels.

(2)

Directive 2012/27/EU of the European Parliament and of the Council (5) is an element to progress towards the Energy Union, under which energy efficiency is to be treated as an energy source in its own right. The energy efficiency first principle should be taken into account when setting new rules for the supply side and other policy areas. The Commission should ensure that energy efficiency and demand-side response can compete on equal terms with generation capacity. Energy efficiency needs to be considered whenever decisions relating to planning the energy system or to financing are taken. Energy efficiency improvements need to be made whenever they are more cost-effective than equivalent supply-side solutions. This ought to help exploit the multiple benefits of energy efficiency for the Union, in particular for citizens and businesses.

(3)

Energy efficiency should be recognised as a crucial element and a priority consideration in future investment decisions on the Union's energy infrastructure.

(4)

Reaching an ambitious energy efficiency target requires barriers to be removed in order to facilitate investment in energy efficiency measures. One step in that direction is the clarification provided by Eurostat on 19 September 2017 on how to record energy performance contracts in national accounts, which removes uncertainties and facilitates the use of such contracts.

(5)

The European Council 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. It is therefore appropriate to amend Directive 2012/27/EU, in order to adapt it to the 2030 perspective.

(6)

The need for the Union to achieve its energy efficiency targets at Union level, expressed in primary and/or final energy consumption, should be clearly set out in the form of a target of at least 32,5 % for 2030. Projections made in 2007 showed a primary energy consumption in 2030 of 1 887 Mtoe and a final energy consumption of 1 416 Mtoe. A 32,5 % reduction results in 1 273 Mtoe and 956 Mtoe in 2030 respectively. That target, which is of the same nature as the Union's 2020 target, should be assessed by the Commission for the purpose of revising it upwards by 2023 in the case of substantial cost reductions or, where needed, to meet the Union's international commitments for decarbonisation. There are no binding targets at Member State level in the 2020 and 2030 perspectives, and the freedom of Member States to set their national contributions based either on primary or final energy consumption or primary or final energy savings, or on energy intensity, should continue not to be restricted. Member States should set their national indicative energy efficiency contributions taking into account that the Union's 2030 energy consumption has to be no more than 1 273 Mtoe of primary energy and/or no more than 956 Mtoe of final energy. This means that primary energy consumption in the Union should be reduced by 26 %, and final energy consumption should be reduced by 20 % compared to the 2005 levels. 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 of the European Parliament and of the Council (6).

(7)

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 that efficiency will enable better use to be made of renewable energy.

(8)

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.

(9)

The obligation on Member States to establish long-term strategies for mobilising investment and facilitating the renovation of their national building stock and notify them to the Commission is removed from Directive 2012/27/EU and added to Directive 2010/31/EU of the European Parliament and of the Council (7) where that obligation fits in with long-term plans for nearly zero energy buildings (NZEBs) and the decarbonisation of buildings.

(10)

In view of the climate and energy framework for 2030, the energy savings obligation established by Directive 2012/27/EU should be extended beyond 2020. That extension would create greater stability for investors and thus encourage 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 NZEBs. The energy savings obligation has an important role in the creation of local growth and jobs, and should be maintained to ensure that the Union can achieve its energy and climate objectives by creating further opportunities and to break 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.

(11)

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 established in particular by Directive (EU) 2016/2284 of the European Parliament and of the Council (8).

(12)

Member States are required to achieve cumulative end-use energy savings for the entire obligation period 2021 to 2030, equivalent to new annual savings of at least 0,8 % of final energy consumption. That requirement could be met by new policy measures that are adopted during the new 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 new period. To that end, Member States should be able to make use of an energy efficiency obligation scheme, alternative policy measures, or both. In addition, various options, including whether energy used in transport is included, in whole or in part, in the calculation baseline, should be provided in order to give Member States flexibility in how they calculate the amount of their energy savings, whilst ensuring that the required cumulative end-use energy savings equivalent to new annual savings of at least 0,8 % are reached.

(13)

It would, however, be disproportionate to impose such a requirement on Cyprus and on Malta. The energy market of those small island Member States exhibits specific characteristics which substantially limit the range of measures available to meet the energy savings obligation, such as the existence of a single electricity distributor, the absence of natural gas networks and of district heating and district cooling systems, as well as the small size of petroleum distribution companies. Those specific characteristics are compounded by the small size of the energy markets of those Member States. Therefore, Cyprus and Malta should be required only to achieve cumulative end-use energy savings equivalent to new savings of 0,24 % of final energy consumption for the period 2021 to 2030.

(14)

Where they use an obligation scheme, Member States should designate obligated parties among energy distributors, retail energy sales companies and transport fuel distributors or retailers on the basis of objective and non-discriminatory criteria. The designation or exemption from designation of certain categories of such distributors or retailers should not be understood to be incompatible with the principle of non-discrimination. Member States are therefore able to choose whether such distributors or retailers or only certain categories thereof are designated as obligated parties.

(15)

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 policies fostering a shift to better performing fuels 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 Annex V to Directive 2012/27/EU as amended by this Directive. Such measures should, if appropriate, be consistent with Member States' national policy frameworks established pursuant to Directive 2014/94/EU of the European Parliament and of the Council (9).

(16)

Measures taken by Member States pursuant to Regulation (EU) 2018/842 of the European Parliament and of the Council (10) 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-saving obligation under Directive 2012/27/EU as amended by this Directive.

(17)

As an alternative to requiring obligated parties to achieve the amount of cumulative end-use energy savings required under Article 7(1) of Directive 2012/27/EU as amended by this Directive, it should be possible for Member States, in their obligation schemes, to permit or require obligated parties to contribute to an Energy Efficiency National Fund.

(18)

Without prejudice to Article 7(4) and (5) as introduced by this Directive, Member States and obligated parties should make use of all available means and technologies to achieve the cumulative end-use energy savings required, including by promoting sustainable technologies in efficient district heating and cooling systems, efficient heating and cooling infrastructure and energy audits or equivalent management systems, provided that the energy savings claimed comply with the requirements laid down in Article 7 of and Annex V to Directive 2012/27/EU as amended by this Directive. Member States should aim for a high degree of flexibility in the design and implementation of alternative policy measures.

(19)

Long-term energy efficiency measures will 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.

(20)

New savings should be additional to ‘business as usual’, so that savings that would have occurred in any event should not count towards the achievement of the energy savings requirements. 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, 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 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 being evaluated 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.

(21)

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.

(22)

The effective management of water can make a significant contribution to energy savings. 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 should be fully explored.

(23)

In accordance with Article 9 of the Treaty on the Functioning of the European Union, the Union's energy efficiency policies should be inclusive and should therefore ensure accessibility to energy efficiency measures for consumers affected by energy poverty. Improvements to the energy efficiency of buildings should, in particular, benefit vulnerable households, including those affected by energy poverty, and, where appropriate, those living in social housing. Member States can already require obligated parties to include social aims in energy-saving measures in relation to energy poverty and this possibility should be extended to alternative policy measures and Energy Efficiency National Funds and should be transformed into an obligation, while allowing Member States to retain full flexibility with regard to their 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.

(24)

Around 50 million households in the Union are affected by energy poverty. 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 support for such measures should be guaranteed at Member State level. The Union's building stock needs, in the long term, to be converted to NZEBs 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.

(25)

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 and cycling.

(26)

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. 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.

(27)

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

(28)

When implementing Directive 2012/27/EU as amended by 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.

(29)

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.

(30)

As part of the measures set out in the Commission's Communication of 15 July 2015 entitled ‘Delivering a New Deal for Energy Consumers’, in the context of the Energy Union and the Heating and Cooling strategy, consumers' minimum rights to accurate, reliable, clear and timely information about their energy consumption need to be strengthened. Articles 9 to 11 of, and Annex VII to, Directive 2012/27/EU should be amended 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 whether sub-metering is cost-efficient or not 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.

(31)

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. The definition of the term ‘final customer’ is capable of being understood as referring only to natural or legal persons purchasing energy based on a direct, individual contract with an energy supplier. For the purposes of the relevant provisions, the term ‘final user’ should therefore be introduced to refer to a broader group of consumers and should, in addition to final customers purchasing heating, cooling or domestic hot water for their own end-use, also cover occupants of individual buildings or of individual units of multi-apartment or multi-purpose buildings where such units are supplied from a central source and where the occupants have no direct or individual contract with the energy supplier. The term ‘sub-metering’ should refer to measuring consumption in individual units of such buildings.

(32)

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.

(33)

By 25 October 2020, newly installed heat meters and heat cost allocators should be remotely readable to ensure cost-effective, frequent provision of consumption information. The amendments to Directive 2012/27/EU introduced by 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; 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.

(34)

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.

(35)

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.

(36)

Member State measures should be supported by well-designed and effective Union financial instruments, such as the European Structural and Investment Funds, the European Fund for Strategic Investments, and by financing from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (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.

(37)

In order to make it possible for the Annexes to Directive 2012/27/EU and the harmonised efficiency reference values to be updated, it is necessary to extend the delegation of powers granted to the Commission. 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 (11). 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.

(38)

In order to be able to evaluate the effectiveness of Directive 2012/27/EU as amended by this Directive, a requirement to conduct a general review of that Directive and to submit a report to the European Parliament and to the Council by 28 February 2024 should be introduced. That review should take place after the global stocktake by the United Nations Framework Convention on Climate Change in 2023, in order to allow necessary alignments to that process to be introduced, also taking into account economic and innovation developments.

(39)

Local and regional authorities should be given a leading role in the development and design, execution and assessment of the measures laid down in Directive 2012/27/EU, so that they are able properly to address the specific features of their own climate, culture and society.

(40)

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 (PEF) for electricity. Calculations reflecting the energy mix of the PEF 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 Annex II to Directive 2012/27/EU 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. As for system boundaries, the PEF is 1 for all energy sources. The PEF value refers to 2018 and is based on data interpolated from the most recent version of the PRIMES Reference Scenario for 2015 and 2020 and adjusted with Eurostat data until 2016. The analysis covers the Member States and Norway. The dataset for Norway is based on the European Network of Transmission System Operators for Electricity data.

(41)

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.

(42)

In accordance with the Energy Union Strategy 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. In Directive 2012/27/EU, as amended by this Directive, a statistically significant proportion and representative sample of the energy efficiency improvement measures should be understood to require the establishment of a subset of a statistical population of the energy-saving measures in question in such a way that it accurately reflects the entire population of all energy-saving measures, and thus allows for reasonably reliable conclusions regarding confidence in the totality of the measures.

(43)

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 greenhouse gas emissions, especially in view of 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 Member States may take into account, where applicable, energy savings from renewable energy generated on or in buildings for own use to meet their energy savings requirements.

(44)

In accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents (12), Member States have undertaken to accompany, in justified cases, the notification of their transposition measures with one or more documents explaining the relationship between the components of a directive and the corresponding parts of national transposition instruments. With regard to this Directive, the legislator considers the transmission of such documents to be justified.

(45)

Since the objectives of this Directive, namely to achieve the Union's energy efficiency targets of 20 % by 2020 and of at least 32,5 % by 2030 and to pave the way towards further energy efficiency improvements beyond those dates, 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.

(46)

Directive 2012/27/EU should therefore be amended accordingly,