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Energy Efficiency Directive Legislatives Updates: Started from the Bottom, Now We’re Here

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Three business men having a meeting around a tableThe April Copernicus Climate Change Services annual European State of the Climate (ESOTC) report was devastatingly clear: Europe experienced its second warmest year ever recorded, and its hottest summer on record. Carbon emissions from summer wildfires were the highest in 15 years, with some countries seeing the highest emissions in 20 years The European Alps saw a record loss of ice from glaciers. The list is long.

Grim as the situation is, we know what is causing climate change, and we know that reducing GHG emissions is the main driver to slow it. A few years ago, our Chairman Jean-Pascal Tricoire highlighted at the World Economic Forum that energy efficiency is the unsung hero to fight the climate crisis. The fear of blackouts in Europe this year combined with the absolute necessity to curve GHG emissions has shed light on the need to triple efforts on energy efficiency.

Europe has a long-recognized leadership position in energy and climate rules…

Europe energy and climate legislative framework is one of the most advanced in the world. With the Green Deal objectives to cut emissions by 55% by 2030 and become climate neutral by 2050, Europe has geared up to help avoid a planetary crisis. What is mostly missed in Europe is implementation: the EU has adopted in the past few months one of the most (if not the most) ambitious frameworks related to climate and energy legislation. On the energy efficiency side, tapping the potential of energy efficiency in factories, industrial sites, and commercial buildings is a no brainer. Energy is responsible for about 80% of the world’s carbon emissions, the International Energy Agency estimates. Tackling this waste is a big (and relatively easy) way to reduce our impact on the climate. That is where energy audits kick in.

… and is now moving forward with brand-new energy legislations to double the pace of energy efficiency

Energy audits are not new. For undertakings, from large ones to SMEs, it is always the starting point to identify the most energy intensive items, estimate the highest sources of emissions, and set up actions to reduce both energy costs and GHG emissions. What is new, however, is how the climate emergency combined with an energy crisis putting many businesses, from small to big, under the pressure to cut costs and diversify sources of supply. What is also new, is how the EU has turned the Energy Efficiency Directive and the Emissions Trading System as instruments to reach its 2030 energy and climate goals and reduce its dependency on fossil fuels imports from third countries. The Energy Efficiency Directive has been formally adopted on July 2025. It will now be published in the EU’s Official Journal and enter into force 20 days later.

With the new Directives, companies will see new obligations:

  1. The obligation to undertake energy audits will target a larger scope of companies, as it will shift from financial metrics to energy consumption (>10 TJ of annual energy consumption) ensuring that significant energy users are captured within the scope;
  2. Second, largest companies will have to implement energy management systems (>85TJ of annual energy consumption);
  3. Third, companies which have to report their emissions under the ETS will see their number of free allowances reduced significantly (up to 20%) if they do not implement the energy efficiency measures which are recommended as part of the energy audits.

Those measures will start to be implemented between 2024 and 2025. The reforms set out in the revised ETS Directive will apply from 1 January 2024, while the Energy Efficiency Directive should be formally endorsed by EU lawmakers in the coming weeks, before being translated into national law in 2024. This is tomorrow for businesses. Discover our interactive risk map to see how these changes will affect your business and what the risks are for inaction. 

Partner with Schneider Electric Sustainability Business service to comply with the new rules and achieve energy efficiency gains

At Schneider Electric, we provide consulting expertise and access to solutions to help industrial businesses increase resilience to changes in the energy market and decarbonization faster.

Find out more about what we can do to turn your energy into a controllable spend, increase energy efficiency and meet sustainability goals on our website se.com/sesb or reach out to our team of experts at EED@se.com 

Contributor:

Headshot of Jules Cordillot, Senior Sustainability Consultant at Schneider Electric

Jules Cordillot, Senior Sustainability Consultant