Energy companies will need to make savings among final customers of 1.5% a year under a new regime of audits, inventories and savings obligations outlined in a draft directive seen by EurActiv.
Large electricity, coal, gas and fuel companies would face efficiency audits every three years, carried out "in an independent manner" by experts, according to the draft.
"Effective, proportionate and dissuasive" penalties could then follow if requirements for energy savings, audits, or smart meters and billing information were not respected.
The Commission would issue guidelines "on how to deal with the energy savings targets when final customers switch energy source, namely from fuel oil to gas, from gas to district heating or from gas to electricity".
Heat meters would also be installed for new network customers and in multi-apartment buildings to measure heat and cooling consumption in each apartment.
Member states would have the possibility to exclude small energy distributors and retail energy firms from the reporting obligations.
The draft directive is intended to help the EU reach its nominal target of a 20% increase in energy efficiency by 2020.
It is now being examined by several Commission departments before publication in late June.
Mixed reactions
But reactions to it have already been mixed, with business lobbies generally happier than environmentalists.
Sam Rowe, a spokesperson for the European Petroleum Industry Association, Europia, hailed the Commission's trajectory.
"We are absolutely on board with the policy direction of the 1.5% energy savings," she told EurActiv. "Energy efficiency is right at the top of our agenda."
She also welcomed an apparent dilution of the European Commission's commitment to re-examine whether efficiency goals should be made binding in 2013.
But environmental campaigners claimed backsliding from Brussels.
According to figures compiled by Friends of the Earth, the 1.5% obligation would only recoup energy worth at most 12 Million tonnes of oil equivalent (Mtoe) in its first year, a fraction of the 368 Mtoe of annual savings the EU is committed to reaching by 2020.
"It sounds good in principle but when you look at it, it is really weak," Friends of the Earth climate campaigner Brook Riley told EurActiv.
He noted that while the directive kept the goal of an annual 3% renovation rate for public buildings, it also allowed an opt-out for social housing because of what it called the "significant burdens" these could place on public budgets.
Public buildings only make up 12% of Europe's housing stock and, with social housing excluded, could account for substantially less energy savings than had been expected.
Stefan Scheuer, a lobbyist who provides advice to civil society organisations on environmental issues, said that the new renovation rate sounded like "a major step forward" anyway.
"It is a symbolic target and will never reach the scope we need," he said, "but nevertheless it is an important step".
The building renovation conundrum
But the measure's effectiveness could depend on a related cost optimum regulation, which is currently being discussed in Brussels.
Randall Bowie, an energy consultant for Rockwool who, in 2006, designed the Commission's Energy Efficiency Action Plan and Energy Services Directive, told EurActiv that the regulation should include the societal costs of building renovation.
"If not," he said, "the cost optimum might be set at a very weak level and renovations will not be done to a good and ambitious level".
The directive also retreats from the original energy efficiency plan's ambition of renovating buildings to the "best available energy performance class" and now only aims for "minimum energy performance requirements".
"This is disappointing," a spokesperson for the EuroAce alliance of businesses supporting energy efficiency in buildings told EurActiv. "It could be more ambitious on the demand side."
Other measures contained in the directive would see all EU citizens being given access to smart meters, allowing them to use their electricity or gas most economically.
Yearly reporting
Member states would also report back to the Commission each year – and at three yearly intervals – on their progress towards meeting the EU's 2020 target.
But Scheuer saw "a major problem" in the absence of a common methodology in the National Reform Programmes (NRPs) which the Commission uses to evaluate progress towards the 2020 goals.
"We've looked at the first ten member states' plans which came in last week and when we tried to compare them they don't make any sense, because each country reports something different - or doesn't report anything at all," he told EurActiv.
While Belgium had kept to the EU's primary energy savings target, he said, the UK had not provided any energy efficiency goals, Germany had sent in a primary target measured against a baseline year of 2008, and Finland had aimed for a 10% cut in the national baseline measured against projected Terrawatt hours consumption in 2020.
"On that basis, the Commission cannot review the situation with any confidence," he said.
In 2013 Brussels is scheduled to decide if member states are on track to meet the 2020 goals, and whether binding efficiency targets might be needed if not.