The Treaty of Lisbon places energy at the heart of European activity. It effectively gives it a new legal basis which lacked in the previous treaties (Article 194 of the Treaty on the Functioning of the European Union (TFEU).

The aims of the policy are supported by market-based tools (mainly taxes, subsidies and the CO2 emissions trading scheme), by developing energy technologies (especially technologies for energy efficiency and renewable or low-carbon energy) and by Community financial instruments. Furthermore, in December 2008 the EU adopted a series of measures with the objective of reducing the EU’s contribution to global warming and guaranteeing energy supply.

Reducing energy consumption and eliminating energy wastage are among the main goals of the European Union (EU). EU support for improving energy efficiency will prove decisive for competitiveness, security of supply and for meeting the commitments on climate change made under the Kyoto Protocol. There is significant potential for reducing consumption, especially in energy-intensive sectors such as buildings, manufacturing, energy conversion and transport. At the end of 2006, the EU pledged to cut its annual consumption of primary energy by 20% by 2020. To achieve this goal, it is working to mobilise public opinion, decision-makers and market operators and to set minimum energy efficiency standards and rules on labelling for products, services and infrastructure.

Renewable sources of energy - wind power, solar power (thermal and photovoltaic), hydro-electric power, tidal power, geothermal energy and biomass - are an essential alternative to fossil fuels. Using these sources helps not only to reduce greenhouse gas emissions from energy generation and consumption but also to reduce the European Union's (EU) dependence on imports of fossil fuels (in particular oil and gas).

In order to reach the ambitious target of a 20% share of energy from renewable sources in the overall energy mix, the EU plans to focus efforts on the electricity, heating and cooling sectors and on biofuels. In transport, which is almost exclusively dependent on oil, the Commission hopes that the share of biofuels in overall fuel consumption will be 10% by 2020.