Energy efficiency: the key to a successful energy transition

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Energy waste is a significant contributor to greenhouse gas emissions, drives up the demand for energy imports, and increases costs for households and the wider economy.

By improving our society’s energy efficiency (EE) we can reduce – and, in time, eliminate our reliance on fossil fuels. This would result from the use of less power-hungry appliances and from direct electrification, as electric solutions consume less primary energy.

Making our energy use more efficient is one of the most achievable steps we can take towards decarbonisation and improving EU’s energy security.

So, what is energy efficiency and how can we make it a priority?

What is energy efficiency and why does it matter

Working towards energy efficiency means eliminating energy waste by consuming less primary energy to perform a task.

The energy efficiency definition encompasses electrification as well as the use of technologies that reduce the overall energy consumption. For instance, electric heat pumps can heat houses requiring up to 5 times less primary energy than oil or gas heaters from the latest generation. Moreover, electric heaters are cleaner than their oil or gas counterparts (particularly when using sustainably produced electricity). By favouring more efficient electrical heating systems, consumers can lower their heating bills, produce less harmful emissions in the process and save energy overall. 

The same logic can be applied to every sector of the economy, where improving energy efficiency is often the cheapest and most immediate way to reduce the use of fossil fuels. From buildings to transportation, and industry to energy generation, European countries and citizens can lower their impact on the environment and improve their quality of life while saving money. As an example, an assessment of Europe’s building stock shows that 75 % are energy inefficient. Thanks to investments in their insulation, we could improve their energy efficiency and ensure that people live and work in a comfortable environment without denting their budgets. Research shows that the benefits, including energy savings, will outweigh the costs of the transformation. 

Increasing energy efficiency by reducing energy waste and electrifying our societies is also a critical goal to reduce Europe’s dependency on oil and gas imports. In 2017, fuel imports costed EU citizens more than €5bn per week, so replacing fossil fuels with low and zero carbon electricity would significantly improve the EU’s energy security and would translate into cost savings for consumers. Reducing our energy imports would also positively shift Europe’s trade balance while reducing geopolitical tensions and price volatility.


Where can energy efficiency be improved?

According to the European Commission, energy efficiency is one of the key pillars for fulfilling our climate objectives. Moreover, analysis by the International Energy Agency (IEA) shows that improvements in energy efficiency can halve energy-related greenhouse gas emissions, a requirement for meeting our international energy and climate targets, over the next 20 years.



Forty percent of all the energy used in Europe comes from its buildings, three- quarters of which are considered energy inefficient. This means that heating our homes accounts for a significant part of the overall CO2 emissions (over one third in total), resulting in higher energy bills. Lighting and other appliances also contribute to a building’s energy consumption and represent an area where simple swaps, such as using LED light bulbs and energy-efficient appliances, can make a significant difference. 

The European Union has established labelling criteria for buildings and guidelines that help improve their energy efficiency. The Directive on Energy Performance for Buildings is one of these documents. Currently up for revision, this Directive has played a key role in establishing standards for new buildings and those undergoing substantial renovations.   

In addition, the Renovation Wave initiative, which is part of the post-COVID19 recovery and resilience programme, is of critical importance for Europe’s decarbonisation. This effort will not only help tackle climate change, but create business opportunities, green jobs, and support low-income households. The European Commission estimates that upgrading the building stock’s energy performance will stimulate the construction and renewable energy industries by creating 18 million direct jobs, generating 9% of Europe’s GDP. 

The electrification of heating and cooling or high-efficient and decarbonised district heating and cooling in buildings will be key to reaching carbon-neutrality by 2050. Electric heat pumps are a worthwhile first step in the form of a market-ready solution, particularly when integrated into a smart energy system involving solar panels, batteries, proper insulation, and energy- management tools. 

To make the transition easier for homeowners, governments across Europe are offering help and support in the form of grants, while energy providers are installing smart metres. As a result, customers will have the means to create a more energy-efficient home. This, in turn, will translate into significant savings while simultaneously providing householders with access to accurate information on their energy usage. 



There are also strong links between smart homes and the electrification of the transport sector. By the end of the decade, there will be 65 million electric vehicles on Europe’s roads (a figure meant to reach to 130 million by 2035), shows the joint Eurelectric-EY’s report “Power sector accelerating e-mobility". It is anticipated that around 90% of charging will take place at home or at the workplace, making the deployment of smart-charging infrastructure in residential and commercial estates, as well as in public spaces, critical.  

In addition to providing cleaner air for citizens, the electrification of transport will dramatically increase its energy performance. Electric vehicles deliver equivalent services to their combustion-powered counterparts but boast a much higher energy efficiency even when factoring in power- transformation losses. For instance, combustion engines offer a tank- to- wheel conversion efficiency of 20-30%, compared to 80-90% for electric cars. 

By promoting e-mobility, we will be able to reduce fossil fuels consumption and preserve energy, saving a significant amount of money while increasing the pace of our transition to a zero-emission world, powered by clean and renewable electricity


Energy Generation and Distribution

Better energy efficiency may also be achieved right at the source, in the ways in which power is generated and distributed throughout the grid. By digitilising the latter, for instance, real-time information can be made available on demand, making it possible to monitor how the power is being used, and where improvements should be made to reduce peak load demand. 

Alternative solutions should also be put in place to make the most of our infrastructure. Combined heat and power systems could be implemented to capture the heat “wasted” by power plants during the production of electricity and divert it to be used by nearby buildings and facilities. Such practices increase the energy efficiency of power generation by 33-80%. 


Human behaviour

The only way for energy efficient solutions to be widely endorsed and have a substantial impact is to tell consumers they exist and what can be gained by adopting them.

As the economic and environmental benefits of relying on energy-efficient technologies become apparent, people’s motivation will soar. 

The digital revolution will empower consumers and raise awareness, giving them a more active role in managing their energy consumption. Progress will also drive more sustainable habits in the business world, helping EU companies to maintain global industry leadership. 


The right skills and the right measures

Improvements in energy efficiency in general, and the Renovation Wave in particular, will not happen without the right measures to finance the upgrades and the right skills to implement them. Initiatives must therefore be taken at a European level to put energy efficiency among the top priorities of our governments.

The “energy efficiency first principle” involves shaping energy policy and directing investment decisions towards making the efficient use of energy a priority. This far-reaching guiding principle should complement sustainability, climate neutrality, and green growth objectives to build a more energy-efficient Europe. The intent is to make our energy supply and demand more efficient by implementing cost-effective end-use energy savings, more sustainable transmission and distribution practices, and a sound decision-making process. 

In July 2021, the European Commission also adopted a legislative proposal to revise the Energy Efficiency Directive (EED). The “Fit for 55” package encompasses this change, along with other measures meant to overhaul the climate and energy legislation. Its main goal is to set the EU more firmly on its path to climate neutrality by 2050 and to reduce its greenhouse gas emissions by a minimum of 55% (compared with 1990 levels) by 2030. The previous target was a 40% reduction in emissions. According to the EED, the EU needs to meet the agreed goal of 32.5% energy efficiency improvements to get there in time; this would almost double the Member States’ current annual energy saving obligations. 

Electrification brings great opportunities to advance energy efficiency across the entire energy system, even at end- user level. Clean electricity excels at reducing energy conversions, making it the most efficient energy carrier. With the use of low or zero carbon primary energy carriers (solar, wind, hydro, nuclear) to produce electricity, the conversion rate to final energy is much higher than with fossil fuels. Therefore, the most reliable strategy to reach the EED’s new targets would be to act at governmental level. By addressing energy poverty, investing in the 3% renovation target for buildings in the public sector, and helping consumers to adopt more energy-efficient habits, governments can take further concrete steps towards achieving the new 55% greenhouse gas emission reduction targets. 

Research, technology, innovation, and a new outlook on energy production and consumption, will be essential if we want to reach climate neutrality by 2050, maintain security of supply and lower Europe’s dependency on imported fuels. With the right measures in place and with energy efficiency as a pivotal principal, all sectors will contribute to this goal at the lowest- possible cost for consumers. 


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