System efficiency in 2024: Three priorities for the next EU Commission

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: 

  1. 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. 
  2. Making local delivery institutions fit for delivering energy efficiency, providing increased support for municipalities and regional governments and setting targets for system transformation. 
  3. 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

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Repetition Is Key: The Latin Maxim “Repetita Iuvant” Holds True.

Since the European Commission unveiled the Clean Energy for All Europeans package on 30 November 2016, including the Energy Performance of Buildings Directive (EPBD) revision, the alliance has consistently played a central role in shaping its contents. Through collective efforts we have actively contributed position papers, organized events, and proposed amendments — all available on our website.

Why do we need an ambitious final revision of the EPBD? Below are my three compelling reasons:

Energy and Emissions Impact: Buildings account for approximately 40% of energy consumption and 36% of CO2 emissions in the EU. They stand as the largest energy consumers in Europe. To maintain our competitive edge while the clean energy transition reshapes global energy markets, we must act on buildings.

Greenhouse Gas Reduction: The EPBD represents the primary EU policy avenue for tackling both operational and embedded greenhouse gas emissions in the building sector. This approach will effectively decarbonize the EU building stock, boost the EU building sector’s competitiveness, create new employment opportunities, and support the research, development, and innovation of relevant technologies.

Sustainability Strategies: The final EPBD revision should incorporate sustainable strategies such as circularity, sufficiency, and the utilization of low-carbon and natural-based materials. These strategies are essential for reducing Whole Life Carbon emissions and ensuring the decarbonization of buildings. Phasing out fossil fuels from new heating and cooling systems across the EU must happen by 2030.

Stay tuned and join us to making a significant impact by reaching a deal on the Directive by the end of 2023. 

Sergio Andreis
Kyoto Club

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Digital Twin of buildings: a way to enhance energy efficiency and net zero commitments

Buildings in the EU are responsible for 40% of energy consumption and 36% of greenhouse gas emissions that includes construction, usage, renovation and demolition phases (1). Legislation such as the European Energy Performance of Buildings Directive (EPBD) is progressively addressing these challenges by establishing concepts of zero emission and nearly zero emission buildings. The EU Energy Efficiency Directive (EED) established the “how” by universal deployment of smart meters and high-efficiency drives. The EU Renewable Energy Directive (RED) paved the way for renewables and waste heat recovery in the urban environment. Digitalization brings it all together.

Digital Twins are a representation of real-world physical assets that serves for simulation, integration, testing, monitoring, and maintenance purposes.

In the context of buildings, Digital Twins bring numerous benefits. First, it connects the smart building to the smart city so that a building is no longer managed as an isolated entity but as an active cell in a larger organism with which it interacts at many levels: people, goods, utilities and data.

Second, it leverages AI to build complex models, forecast, reduce risk and send early warnings on any areas of interest: from building occupancy and comfort temperature to biological risks and cyber attacks.

Third, it makes sustainability and carbon footprint visible real-time and therefore actionable. It also reinforces District Heating and Cooling’s advantages for heat delivery, sustainability and affordability.

Last but not least, it is easy to implement without disrupting current building infrastructure, ideal for building renovations as well it is technology agnostic, it leverages all utilities and sensors already installed (telecoms, water, power, surveillance, HVAC).

In conclusion, digital twins of buildings are a good way forward to drive an ambitious energy efficiency and net zero agenda in the future that should be considered by policy-makers, local authorities and stakeholders.

Victor Ferre
Senior Director Vertical Marketing – Building Services Europe

Source: 1. In focus: Energy efficiency in buildings. European Commission

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It’s time to unlock the demand side potential in accelerating the energy transition.

In recent months the term “polycrisis” has found its way into our vocabulary. This term captures the multiple crises (climate; energy; inflation; war in Ukraine; …) that are impacting society at large. A sobering reality is that all these crises were created by mankind, as we use the wrong energy and waste too much of it, thus paying far too much in powering our economies and living our lives. On the flipside this means that as mankind we are in the driver’s seat in tackling these challenges. The good news is that the solutions are also interrelated and have raised the relevance and awareness of the energy transition to efficient and clean technologies.

Much attention goes out to the “supply side” of the energy transition, both on the energy mix (with ongoing high use of coal; a search for alternative gas supplies; scaling renewables; investments in hydrogen and nuclear) and energy intensive industries with large stimuli programs in Europe and the US (the Green Deal Industrial Plan and the Inflation Reduction Act). Yet the structural changes to decarbonize our energy system at the supply side of the energy transition will need time to reach scale and impact.

As the world needs solutions on a much shorter term, the time is right to unlock the vast potential at the “demand side” of the energy transition. This largely comes down to stepping up our collective efforts on energy efficiency.

The electrification of heating, transport and other service systems require a massive amount of electricity. The average global electricity consumption of a household (3400 kWh) is almost exactly equal to the annual amount of electricity needed to charge an electric vehicle or to power a heat pump. Already the grid is close to a point where countries are at or near capacity.

For example, while the lighting sector is positively known for the transition to LED lighting, lighting alone still accounts for 13% of global electricity usage. Importantly around half of all light points in the US and EU are still conventional, offering an enormous opportunity for rapid reductions of lighting-related energy consumption. LED lighting retrofits are relatively fast and easy, with few invasive activities involved.

Through a complete switch to connected LEDs, the EU has the potential to save €65.1 billion in energy costs annually and mitigate 51 MTons of carbon emissions, while freeing up enough electricity to power 47 million heat pumps and thus keep a quarter of all households warm each year. The reduction in carbon dioxide would be equal to the sequestration capacity of a forest the size of Switzerland.

Like for lighting, many other solutions exist and Europe’s “demand side companies” operate at the cutting edge of active and passive energy efficiency technologies including lighting, building management systems, sensors, controls, insulation, windows and many others.

Energy efficiency technologies can generate savings often called “low-hanging fruit” waiting to be picked, so let us roll up our sleeves and pick those fruits for the benefit of Europe’s competitiveness and the well-being of its citizens.

Harry Verhaar
Head of Global Public and Government Affairs

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Step up political leadership on energy demand reduction

It’s four months since European Leaders agreed to reduce their countries’ gas demand by 15% [1], and two months since they agreed on a similar target for electricity demand (10% total reduction, with 5% during peak hours [2]). And it’s now the time to ensure the delivery of these targets.

As the pressure on European citizens and industries from high energy prices persists, the delivery of those targets becomes more than ever a matter of political leadership. Gas supplies from Russia are likely to fall next year while competition for liquified natural gas (LNG) supplies increases. Filling in gas storage ahead of next year’s winter might prove far more challenging [3]. We need a long-term solution.

The only option left is to act on the energy demand side. Reducing energy consumption would come with three substantial benefits. First, a permanent improvement to energy security. Second, lower carbon emissions. And finally, a shift in the state budgets, from short-term relief funds to capital investment on assets like better building stock and modern industrial processes.

Now is the time for leaders to use all the tools at their disposal to enable a substantial and sustained reduction of energy consumption. This includes setting up an industrial strategy and designing ambitious regulations. But it also requires galvanising efforts around skills and technical support in sectors where it is most chronically needed, like buildings retrofit and electrification. Next year is the European Year of Skills and offers a great opportunity to do so [4].

For the buildings sector, there are ample examples of good practices of investment in skills and advisory services like one stop shops [5]. Member States, industry and social partners can share and scale them to reduce energy consumption in buildings across the EU. But the industry needs more than incentives for innovation and public investments. Above all it needs a clear signal about the direction of travel. It is up for political leaders to do this through ambitious regulations, like minimum energy performance standards [6], while encouraging the sector to embrace modernisation and digitalisation.

This is the time for European leaders, social partners, and private sector stakeholders to think strategically about the practical delivery of energy saving targets as they pave the way towards green and digital transitions. 

Vilislava Ivanova
Senior Researcher

1. European Council (2022). Member states commit to reducing gas demand by 15% next winter
2. European Council (2022). Council agrees on emergency measures to reduce energy prices
3. IEA (2022). Europe needs to take immediate action to avoid risk of natural gas shortage next year 4. EC (2022). Commission kick-starts work on the European Year of Skills
5. Renovate Europe (2022). Speeding up the delivery of renovation – skills
6. E3G (2022). High Minimum Energy Performance Standards for buildings

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