System efficiency is a key metric to evaluate how far the European Green Deal has taken us in the energy transition.
Why system efficiency and what is it? System efficiency is the measure of how well a system utilizes resources to achieve its desired output with minimal waste. In this context, it refers to the systematic application of the Energy Efficiency First (EE1) principle. This means that examining system efficiency provides a way to assess the broad socio-economic advantages linked to measures improving energy efficiency.
To maximize efficiency, we need to accelerate the decarbonisation of buildings, ensure that future energy networks are designed to electrify most of the economy, while strategically focusing on using hydrogen in hard-to-electrify applications as gas networks are decommissioned due to declining fossil gas demand.
The recent agreement on the Energy Performance of Buildings Directive (EPBD) only requires minimal obligations for Member States, leaves flexibility for fossil fuel technologies, and avoids banning certain heating technologies in buildings.
Despite positive steps such as establishing the European Network of Network Operators of Hydrogen (ENNOH) to counter fossil gas industry influence, challenges remain in the gas package directive, which applies hydrogen unbundling rules only to Transmission System Operators (TSOs), leaving Distribution System Operators (DSOs) exempt and potentially leading to costly hydrogen investments at the local level.
Considering the above, the next EU Commission can improve overall energy system efficiency by following three priorities:
- Making energy efficiency an energy security priority through a new task force that focuses on leveraging energy efficiency progress and demand flexibility as an active lever towards European energy security.
- Making local delivery institutions fit for delivering energy efficiency, providing increased support for municipalities and regional governments and setting targets for system transformation.
- Enhancing system efficiency in gas networks by establishing a framework for decommissioning obsolete fossil infrastructure and strategically designing hydrogen networks for areas where no other decarbonisation option exists.
Raphael Hanoteaux
Senior Policy Advisor
E3G
In a fast-changing political and economic environment, 2025 was a year of continued efforts to strengthen security, stability, and competitiveness for European businesses.
Throughout the year, our work demonstrated that energy efficiency is not only essential to achieving climate goals, but also a key driver of innovation, energy independence and sustainable long-term growth across Europe.
Strong engagement with policymakers, combined with the successful organisation of the 4th European Energy Efficiency Day, highlighted the importance of collaboration and dialogue in advancing shared objectives. Partnerships across sectors and institutions remained central to delivering impact and shaping effective energy policies.
Looking ahead to 2026, we will intensify our efforts to secure the regulatory certainty that can accelerate the energy transition, while providing businesses with the investment confidence they need and strengthening Europe’s competitiveness.
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