The Role of Multiple Impacts of Energy Efficiency and Renewables in Enabling the Energy Efficiency First Principle

Abstract

Global climate change and energy security have become defining challenges of the 21st century, prompting ambitious international and European Union (EU) policy frameworks such as the Paris Agreement and the European Green Deal. Within this context, energy efficiency and renewable energy (‘renewables”) are pivotal strategies for achieving climate neutrality by mid-century. Energy efficiency, often termed the “first fuel,” offers cost-effective emission reductions and system benefits, while renewables provide sustainable supply-side solutions. However, barriers such as high upfront costs, fragmented potentials, and institutional inertia hinder the uptake of energy efficiency measures. To address these challenges, two concepts have gained prominence: the Energy Efficiency First (EE1st) Principle and the Multiple Impacts (MI) concept. EE1st, enshrined in the recast Energy Efficiency Directive (EED), mandates prioritising demand-side measures over supply-side options when they deliver equal or greater value. This principle requires comprehensive cost-benefit assessments that include wider societal benefits. Similarly, the MI concept broadens the evaluation of energy efficiency beyond energy savings to encompass environmental, social, and economic co-benefits, such as improved health, energy security, and macroeconomic gains, while acknowledging potential trade-offs. Despite their relevance, gaps persist in integrating MI into standard evaluations, incorporating renewables into MI frameworks, and operationalising EE1st under legislative ambiguities. This dissertation addresses these gaps through five studies structured around four research questions: the sustainability of domestic fossil fuel extraction as an energy security strategy, the implications of interpretative flexibility in EE1st implementation, methods for embedding MI in policy evaluations, and the integration of renewables into MI frameworks to enable fair comparisons under the EE1st Principle. These all contribute to the overall research question: How can a comprehensive multiple impacts framework support the implementation of the EU’s Energy Efficiency First Principle? Findings reveal that domestic fossil fuel extraction provides substantial disadvantages in relation to its environmental and social costs, particularly compared to apparent minor and short-term contributions to energy security. Analysis of EE1st interpretation demonstrates that parameters such as discount rates and cost perspectives significantly influence whether efficiency measures are deemed cost-optimal, highlighting the need for clearer legislative guidance. Furthermore, incorporating MI into evaluation frameworks enhances the comprehensiveness and transparency of policy assessments, though data gaps and monetisation challenges persist. Finally, an extended MI framework covering both energy efficiency and renewables, implemented in the open-source MICATool, enables holistic comparisons and supports EE1st application in practice, as illustrated by a case study on Milan’s residential building stock. Overall, this research advances methodological and practical approaches for integrating MI into decision-making and operationalising EE1st. It underscores the importance of systemic, multidimensional assessments to ensure cost-effective, socially beneficial, and environmentally sustainable pathways to decarbonisation but also describes some pitfalls. Policy recommendations include refining EE1st implementation guidelines, promoting societal cost perspectives, and leveraging MI frameworks to align energy policy with climate neutrality objectives.