A new policy guide on the Energy Efficiency Directive and Energy Savings Obligation for energy poverty alleviation

By Axelle Gallerand, IEECP

Want to learn more about alleviating energy poverty through energy efficiency?

ENSMOV and SocialWatt recently published a Policy Guide on the Energy Efficiency Directive Energy Savings Obligation and Energy Poverty Alleviation.

It is important to note that the energy savings obligation (ESO) in the Energy Efficiency Directive (EED) requires EU Member States to achieve energy savings through national policy measures. The ESO is therefore the most significant energy efficiency measure in the European policy package, contributing around 50% of the overall EED energy efficiency target.

The EU Commission’s proposed recast of the EED introduces a requirement for a share of the energy savings to be achieved among energy poor households. The policy brief provides an overview of this new requirement and explains how the shares are calculated for each Member State. It also focusses on the policy measure that contributes the most to the aggregate achievement of the ESO target, the Energy Efficiency Obligation Schemes (EEOSs), which contribute 35% of savings. The guide also provides lessons from countries where EEOSs are used to alleviate energy poverty.

The guide follows the 3 main indicators that define energy poverty:

– Inability to keep home adequately warm,

– Arrears on utility bills and the

– Share of expenditure on energy in households’ total consumption

It concludes that they produce a very wide range of ringfences ( from 2.6% for Sweden to 22.9% for Bulgaria), showing that the target groups of ringfences are quite broad ranging from vulnerable customers  to people living in social housing, leaving a considerable scope for Member States to define which individuals and groups will be targeted. Member States will do this through setting eligibility criteria for support within EEOSs and alternative measures. It also allows countries that have not formally defined energy poverty to identify a nationally suitable target group.

Experience from the SocialWatt project also reveals that savings in energy poor households, even with uplifts, cannot compete on a cost effectiveness basis with savings in the rest of the residential sector, or the commercial and industrial sectors (SocialWatt, 2021).

The guide also provides examples of measures depending on countries, for instance, in Ireland and the UK, heating controls and fossil gas boilers dominate the heating measures. In France, 51% of the White Certificates from heating measures result from fossil boiler replacements, 42% from heat pumps and 9% from biomass boilers. Measures in all three of these EEOS have largely been delivered as single measures rather than in combination or to form a ‘whole house’ retrofit.

The conclusions surrounding this guide focus on the need to multiply the variety of measures to alleviate energy poverty, to ensure security whilst facing energy prices as well as a reminder that a more complete offer of support for each household can be provided when EEOS are combined with other national and local funding and finance. Therefore, national policymakers should not rely entirely on EEOS support to address energy poverty but put into place a wider enabling framework.

Find out more on this policy guide here.

Photo by Christian Dubovan on Unsplash