Author: Jarkko Heikura
Tools for the EU's Green Transition: What Companies Need to Know
The ambitious climate and environmental goals of the EU’s Fit for 55 package are intended to become concrete requirements for companies through national legislation and regulations by the end of 2026. This package is part of the European Green Deal, aiming to make the EU’s economy climate-neutral by 2050.
EU Directives Timeline
- Energy Efficiency Directive (EED)
- Energy Performance of Buildings Directive (EPBD)
- Also noteworthy: Corporate Sustainability Reporting Directive (CSRD), Renewable Energy Directive (RED), Urban Wastewater Treatment Directive (UWWTD), Emissions Trading System (ETS2), Industrial Emissions Directive (IED2.0), and EU taxonomy
But what does this array of abbreviations mean in practice? Let's delve into six key directives and regulations guiding companies toward a more sustainable future:
1. EU Taxonomy – The Map for Green Finance
The EU taxonomy is a classification system for sustainable finance that defines which economic activities are environmentally sustainable. For companies, this means that to attract green investments and financing, they must demonstrate that their operations support climate goals. The EU taxonomy becomes mandatory for large, medium-sized, and small companies starting from the 2025 financial year. Companies with sustainability reporting obligations must also report the extent to which their activities align with the EU taxonomy, adhering to sustainability criteria such as the CSRD reporting framework developed at the EU level.
Objectives include:
- Biodiversity
- Climate change mitigation
- Climate change adaptation
- Protection of water and marine resources
- Promotion of circular economy
- Pollution prevention
Image Source: RATEKO
The taxonomy’s requirements must be considered throughout the project’s duration. Requirements should be incorporated from the outset into plans and procurement materials to demonstrate compliance. In investment calculations and project development, it’s beneficial to comprehensively consider sustainability. In construction, the EU taxonomy guides projects through aspects like energy efficiency, reducing carbon footprints, and sustainable material choices.
Image Source: RATEKO
2. Sustainability Reporting (CSRD) – Transparency in Corporate Responsibility
The Corporate Sustainability Reporting Directive (CSRD) expands and deepens corporate sustainability reporting. It obligates large and listed companies to report on their environmental, social, and governance impacts as required by ESRS standards. The aim is to increase transparency and provide investors with better information on companies’ sustainability.
A key change introduced by CSRD is the requirement for a double materiality assessment to determine which sustainability topics a company should report on. Double materiality means assessing both how sustainability issues affect the company and how the company’s operations impact society and the environment.
Sustainability reporting directive (CSRD) timelines
Image source: Taloushallintoliitto
3. Industrial Emissions Directive (IED) – Stricter Emission Controls
The Industrial Emissions Directive (IED) sets stricter emission limits for industries, requiring companies to adopt the best available techniques (BAT). The directive applies to industries with significant environmental impacts, such as energy production, chemicals, and waste management.
IED emphasizes pollution prevention and sustainable resource use. Companies must obtain an environmental permit, which considers factors like energy efficiency, emission control, and waste management.
4. Renewable Energy Directive (RED) – Increasing the Use of Renewable Energy
The Renewable Energy Directive (RED) sets the EU’s targets for renewable energy use. This includes obligations to increase the share of renewable energy in electricity production, transportation, and heating. It encourages investments in renewable energy sources and supports the development of energy communities. According to the directive, 42.5% of energy consumption must come from renewable sources by 2030. The obligation applies to energy and fuel production/distribution as well as major industrial consumers.
This means additional investments in solar, wind, and bioenergy, as well as the use of advanced biofuels derived from non-recyclable waste and non-biological origins.
5. Energy Efficiency Directives (EED & EPBD) – Focus on Reducing Energy Consumption
The revised Energy Efficiency Directive (EED) sets binding targets for improving energy efficiency, affecting both businesses and public entities. The directive treats energy efficiency as a separate energy source and emphasizes the principle of “Energy Efficiency First” in decision-making.
It changes the criteria for mandatory energy audits to annual energy consumption (over 2.8 GWh) instead of company size. In addition, the updated EED requires greater utilization of waste heat and the creation of cost-benefit analyses for waste heat at the facility level if the installed power exceeds 1 MW for data centers or over 7 MW for service and industrial facilities.
The Building Performance Directive (EPBD), on the other hand, focuses on improving the energy efficiency of buildings, which includes stricter requirements for building energy performance and new incentives for low-carbon solutions.
The core of the EPBD includes:
- Improving the energy efficiency of existing buildings
- A requirement for zero-energy buildings (ZEB) for new buildings starting from 2030
- Solar panels and electric vehicle charging points mandatory for new and certain renovated buildings
- Automation and energy management systems becoming mandatory for large consumers.
EU Emissions Trading System – A Tool for Carbon Pricing
The EU’s revised Emissions Trading System (EU ETS) expands the trading of emission allowances to new sectors and tightens emission reduction targets. In the future, the number of emission allowances will decrease more rapidly, raising their price and encouraging companies to invest in low-emission technologies. The emissions trading system now also covers maritime transport and will gradually extend to the construction and transport sectors, significantly increasing its scope.
How can we help?
At Despro, we have extensive experience in renewable energy, the transition to low-emission technologies, and energy efficiency, as well as integrating these into daily operations in a changing world. Our experts from various fields are happy to assist you in assessing whether the changes in directives impact your business and ensure that your projects align with future criteria. Contact us, and we will help you find the solutions that are best suited for you!
Jarkko Heikura
Head of Industry
