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The Fit for 55 package is a set of proposals to revise and update EU legislation and to put in place new initiatives with the aim of ensuring that EU policies are into line with the climate goals agreed by the Council and the European Parliament. It refers to the EU’s target of reducing net greenhouse gas emissions by at least 55% by 2030​. The proposed package aims to bring EU legislation in line with the 2030 goal.

The package of proposals aims at providing a coherent and balanced framework for reaching the EU’s climate objectives, which:

  • ensures a just and socially fair transition
  • maintains and strengthens innovation and competitiveness of EU industry while ensuring a level playing field vis-à-vis third country economic operators
  • underpins the EU’s position as leading the way in the global fight against climate change.

On 25 July 2023, the EU has officially concluded the inter-institutional negotiations on the enhanced legal framework for energy efficiency. The Council’s endorsement follows the one given by the European Parliament earlier this month and marks the final step in the legislative process that started in July 2021 as part of the ‘Fit for 55’ package. By recasting the Energy Efficiency Directive, the EU is moving one step closer to achieving its climate goals, making an unwavering commitment to becoming climate-neutral by 2050.

The ‘Fit for 55’ package is setting a legally binding target of 11.7% reduction in final energy consumption by 2030 compared to the 2020 reference year, the updated legislation introduces a series of measures to help accelerate energy efficiency practices. Notably, EU countries will now be legally required to prioritise energy efficiency in policymaking, planning, and major investments, giving the “energy efficiency first principle” substantial legal standing for the first time.

Moreover, the EU countries agreed to almost double their annual energy savings obligation in the coming years. Under the recast Directive, EU countries will be required to achieve an average annual energy savings rate of 1.49% from 2024 to 2030, up from the current requirement of 0.8%, driving energy savings in critical sectors like buildings, industry, and transport.

With the definition of energy poverty included in the legislation, EU countries are compelled to prioritise energy efficiency improvements for vulnerable customers, low-income households, and individuals in social housing, including within the scope of the energy savings obligation.

The recast directive further strengthens the exemplary role to be played by the public sector in enhancing energy efficiency practices. A significant advancement is the introduction of an annual energy consumption reduction target of 1.9% for the public sector as a whole. Moreover, the annual 3% buildings renovation obligation is being extended to all levels of public administration. The public sector will also play a driving role in the development of the energy services market. Energy Performance Contracts will be prioritised in the implementation of energy efficiency projects in the public sector, whenever possible. Public bodies will continue to consider energy efficiency requirements when making decisions regarding the purchase of products, buildings, and services, fostering systematic improvements.

Businesses operating in the EU will be able to benefit from assessments of their energy use practices, with energy management systems becoming a default requirement for large energy consumers exceeding 85 TJ of annual energy consumption and will be subject to mandatory audits in the event of non-compliance. Enterprises with an energy consumption above 10 TJ will have to perform an energy audit and prepare an action plan for the different recommendations. The agreement also introduces a reporting scheme of energy performance in large data centres, promoting transparency and optimisation of energy efficiency potential.

Given the importance of digitalisation and data centres, the directive introduces an obligation for the monitoring of the energy performance of data centres. An EU-level database will collect and publish data, which is relevant for the energy performance and water footprint of data centres with significant energy consumption.

The new legislation also promotes local heating and cooling plans in larger municipalities. Moreover, based on the revised definition of efficient district heating and cooling included in the legislation, minimum requirements will be gradually tightened in the coming years towards achieving a fully decarbonised district heating and cooling supply by 2050.

Equipping the workforce with relevant skills will also be key to the successful achievement of the enhanced targets.  EU countries will therefore need to ensure that certification and qualification opportunities are available for energy efficiency-related professions.

The agreement further supports energy efficiency financing provisions to facilitate investments, including from the private sector, which has a key role to play given the limited public resources available for the clean energy transition. EU countries are tasked with promoting innovative financing schemes and green lending products, ensuring wider access through transparent investment. Enhanced reporting on energy efficiency investments will improve accountability and transparency.

The amending directive will entering into force after publication (September) in the EU Official Journal.

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