Europe faces a challenging energy price crisis, aggravated by the war in Ukraine and growing pressure to limit our dependence on Russian energy imports. It is becoming increasingly clear that we cannot afford to waste energy any longer. The European Parliament and Council are currently debating a series of legislative proposals from the European Commission, known collectively as the 'Fit for 55' package. This creates a unique opportunity to ensure energy efficiency is put at the centre of the European Union’s energy, climate and growth policies.

 

Energy Efficiency Directive (EED)

The new edition of the EU’s Energy Efficiency Directive (EED) will set out detailed energy efficiency measures and targets. The EED should mainstream the 'energy efficiency first' principle across major energy investments, in energy supply, grids and consumption. It will promote integrated long term planning to unlock energy efficiency potential, especially in heating and cooling – a sector which is inherently local and diverse. COGEN Europe welcomes higher ambition on energy efficiency and calls on the EU to support all solutions that can deliver cost-effective energy savings, including high efficiency cogeneration and efficient district heating. Demand reduction must be accompanied by a more efficient supply of energy, in order to ensure that energy waste is avoided already before heat and power reach consumers. When it comes to industry, energy efficiency should be correlated with energy productivity, rather than trying to impose caps on consumption. In this respect, key European industries are calling for high efficiency cogeneration to be better recognised in the new EED and more broadly across the entire 'Fit for 55' package.

See our Position Paper on the Energy Efficiency Directive (EED).

 

Renewable Energy Directive (RED)

Energy efficiency will be critical in further fostering the uptake of renewable energy sources. It must therefore be better represented in the revision of the Renewable Energy Directive (RED). The integration of renewable energy requires costly investments in infrastructure, including the upgrading and extension of electricity grids as well as different types of storage. We must therefore optimise the deployment of renewable energy capacity and infrastructure across all energy vectors, in electricity, gas and heat networks, to ensure maximum uptake at lowest cost for the economy and consumers. Moreover, renewable fuels like bioenergy, hydrogen, renewable gases are not yet widely available and affordable. It is therefore crucial to prioritise their efficient use in high efficiency cogeneration, in order to improve resource efficiency and reduce the cost of energy.

See our Position Paper on the Renewable Energy Directive (RED).

 

Energy Taxation Directive (ETD)

Equally important is the Energy Taxation Directive (ETD), as energy taxes can be an effective instrument to promote energy efficiency and reduce the wasting of energy. While energy taxes should be reduced or exempted for renewable energy sources and electricity generated from renewables, utilising cogeneration to ensure the most efficient use of energy products must also be incentivised.

See our Position Paper on the Energy Taxation Directive (ETD).

 

EU Emissions Trading System (EU ETS) and Effort Sharing Regulation (ESR)

The EU ETS (ETS I), its extension to buildings (ETS II) and Effort Sharing Regulation (ESR) could also benefit from a greater focus on energy efficiency solutions, as energy savings are associated with cost-effective emission reductions. As carbon pricing is being considered for the building sector, it is important to create a level playing field for all renewable and energy efficient building solutions across the electricity, gas and district heating sectors. Given the potential complementarities and overlaps between ETS I, ETS II and ESR, especially for the heating and cooling sector, there is a risk of internal carbon leakage between these parallel systems. On one hand, electrification of heat would be shifting emissions from ESR to ETS I. Conversely, promoting decentralised generation will shift emissions from ETS I to ESR. Robust accounting mechanisms and correlated carbon pricing will be needed to ensure that overall emissions are reduced and technological neutrality is respected.

 

In Europe, there are numerous opportunities for cost-effective energy efficiency investments spanning across the entire energy value chain, in energy generation, transmission, distribution and end use. Technologies like cogeneration are available today to accelerate Europe’s efficient switch to cleaner fuels and support a more autonomous, resilient, competitive and prosperous Europe.

New EU legislation that is currently being finalised under the umbrella of 'Fit for 55' must consistently and ambitiously promote energy efficiency, in order to ensure Europe can accelerate its decarbonisation efforts and reduce our dependence on energy imports, whilst also ensuring that households, businesses and industries have access to affordable energy.

Published on 7 April 2022

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