Guidelines on policy design options for the implementation of E1st in buildings and the related energy systems

This report adds a holistic perspective to the concept of “energy energy efficiency first” (EE1st) and provides general guidelines on how energy efficiency should be treated in an integrated approach across different policy areas within the energy system. While the previous ENEFIRST research aimed to identify priority areas and exemplary policy approaches for how EE1st can be implemented in buildings and related energy systems, this contribution wants to break the silos of policy-making and implementation and points out necessary preconditions for implementing EE1st across the energy system. In a nutshell, the report shows how EE1st can be a way to promote integrated planning and investment decisions for the energy system where supply-side and demand-side resources are considered jointly to provide long-term benefits to society and the energy system as a whole. First, the report explores integrated approaches for energy planning to consider both supply- and demand-side resources, so that energy infrastructure planning and planning in the buildings sector are coordinated, especially regarding the interaction of heat supply and buildings’ energy performance. Quantitative analyses and integrated energy system models appear a prerequisite to setting realistic policy objectives as well as designing policies to achieve these. Quantitative modelling outcomes help make different scenarios with many uncertain variables more tangible and help determine if and to what extent demand-side resources turn out to be more cost-effective for society than supply-side alternatives. The report further provides an overview of why and how energy efficiency interventions should be considered in investment decisions across policy areas, for both the public and private sector. Although it should be a consensus that large energy-related investments are subject to comprehensive cost-benefit assessments, it is not always the case in reality. The document stresses the role of multiple impacts in cost-benefit assessments and how all societal benefits should be considered in public and private sector investment decisions. While private households follow a different logic compared to public investors, their investments in building renovation measures or into upgrades of heating installations should also be in line with the EE1st concept. This allows occupants and the whole energy system to realise the benefits, and ensures individual decisions are in line with national and EU objectives. As not every investor or private building owner will apply a sophisticated cost-benefit analysis, nor consider the benefits to society, public policies are needed to provide incentives or requirements for private investors to take investment decisions considering both the individual’s and society’s perspectives. These ENEFIRST policy guidelines are a timely addition to the Recommendation and guidelines on Energy Efficiency First: from principles to practice by the European Commission, published on September 28, 2021. They are complementary by providing a clear focus on the buildings sector, one of the key areas where progress is lacking to achieve 2050 decarbonisation targets. The Fit-for-55 package, proposing ambitious pathways to strengthen EU legislation to reach the climate target of reducing net greenhouse gas (GHG) emissions by at least 55% below 1990 levels by 2030, introduces some interesting changes to better harmonise the EU energy directives. The report starts with a deep dive into the legislative proposals of the July package and analyses the new or revised provisions that can be connected with the implementation of the EE1st principle