In 2015, the European Commission adopted moderating energy demand as a pillar of the Energy Union and “Efficiency First” as a guiding principle underpinning it. Last Friday, the Commission released its third State of the Energy Union. So how is Europe doing on implementing “Efficiency First”?

The Commission states that it “has presented nearly all the proposals needed to deliver on the energy efficiency first principle.” An independent assessment conducted by RAP, OpenExp, eceee, and E3G comes to a less rosy conclusion. The authors find that while there has been some progress over the past year, Efficiency First is far from being systematically incorporated into energy and climate policies and programmes and additional efforts are needed to ensure energy savings will be the first fuel of Europe by 2030.

What’s good: Recent changes improve how efficiency is valued in impact assessments and on public balance sheets, helping to address some of the barriers to ambitious efficiency policy and market growth. The Clean Energy for All Europeans package makes some progress on Efficiency First through amendments to the Energy Efficiency Directive, Energy Performance of Buildings Directive, and legislation on the internal market for electricity.

What’s missing: Efficiency First means delivering energy savings and demand response among end-use customers whenever these resources are less costly or more valuable than supply-side alternatives. This will only happen when the potential for these resources is assessed as the first step in energy planning, investment, regulation, and market design, and when the projections of EU primary energy mix consider the societal benefits of energy efficiency through, for example, the use of a societal discount rate. It also needs to be followed up by delivery of energy savings and demand response wherever they are found to deliver higher net benefits than investments in networks or supply alone.

Where next: The authors recommend that the Commission define Efficiency First and introduce a roadmap to identify the policies and processes where efficiency is ignored or undervalued. In 2018, the negotiations over the Clean Energy for All package, proposal for the next Multiannual Financial Framework, and revisions to the State Aid Guidelines will present critical opportunities for the Commission to lead in anchoring Efficiency First in the Energy Union.

Customers must be at the centre of Europe’s strategy to deliver on the Paris Agreement as well as on Europe’s sustainable development goals. The delivery on Europe’s commitments under both agreements cannot be achieved without building a truly resilient Energy Union with a forward-looking climate change policy and a just energy transition. This means stepping up the role of energy efficiency and demand response—policies that are fundamental to the cost-effective transition to a decarbonized, renewables-based, reliable energy system.

A version of this blog was originally published by eceee.