(Originally published by our project partner EuSEE Mediapool)

In economics, few concepts are as counterintuitive yet as persistent as the Jevons paradox. Formulated in the 19th century by British economist William Stanley Jevons, it states that technological progress which improves the efficiency of resource use does not necessarily lead to lower overall consumption. On the contrary, it can result in higher consumption. The reason is simple: increased efficiency reduces the real cost of a service, which in turn drives demand sharply higher.

Over the past decade and a half, Bulgaria has become a perfect illustration of this paradox. In just the last five years, hundreds of millions of euros from the European Union’s Cohesion Fund have been channelled into improving energy efficiency in businesses, transport and households. Before that, billions of euros from the national budget were spent on renovating prefabricated apartment blocks.

The aim of the EU cohesion mechanism was clear – to help the most energy-intensive economy in the bloc reduce consumption and its carbon footprint, while achieving convergence with European standards.

The outcome, however, has been the exact opposite. Data from Bulgaria’s Electricity System Operator (ESO) for the first five months of 2026 show that, instead of reducing its needs, the country consumed 7.18% more electricity compared with the same period a year earlier.

Energy intensity in transport is rising, while the impact of the large-scale renovation programme for multi-family residential buildings remains practically invisible in macroeconomic balances.

How did the EU’s grant-based mechanism, designed as a tool for decarbonisation, become a driver of higher energy consumption?

A reverse effect in Bulgarian households

The billions spent on renovating prefabricated housing estates have failed to deliver a reduction in residential energy consumption. The reason is that many residents of apartments upgraded with national and EU funds do not save the energy that renovation programmes were expected to generate. Instead, they use the savings to improve their standard of living.

“If previously they had a certain budget for energy bills, they keep that budget and use it for higher consumption – for example, by raising indoor temperatures during winter or increasing cooling during the summer,” Dragomir Tsanev, executive director of the Centre for Energy Efficiency EnEffect, told Mediapool.

Rather than lowering their bills, households simply heat rooms that previously remained colder and have invested heavily in air-conditioning systems for the summer months.

This pursuit of greater thermal comfort has also been encouraged by parallel European programmes supporting the replacement of old solid-fuel stoves with heat pumps and air-conditioning systems.

While the Environment Operational Programme reported 101 GWh of energy savings from reduced household coal consumption in 2024, the same newly installed air-conditioning units have increased pressure on the electricity grid.

An additional factor has been economic growth of 3.4% in 2024, which offset the effects of industrial renovation measures. Internal migration towards cities and families moving into larger – although more modern and energy-efficient – homes have also contributed.

Consumption has further been driven by the rapid spread of new household appliances.

“If ten years ago dishwashers were owned by 5% of households, today 15% have such appliances,” Ivaylo Aleksiev, executive director of the Sustainable Energy Development Agency (SEDA), told Mediapool.

The statistical façade of energy savings

Against this background, official reports on energy savings appear optimistic. However, a closer examination of the methodology reveals significant systemic weaknesses.

According to SEDA, Bulgaria achieved savings of almost 674 GWh in 2024 compared with the previous year. Yet analysis shows that a substantial part of this result is a statistical construct rather than a reflection of genuine efficiency improvements.

The reason is the more than threefold collapse in Bulgaria’s net electricity exports. When electricity generation and transit decrease, physical losses in transmission and distribution networks automatically fall as well.

These “incidental” savings are then counted as achievements by network operators, despite not being linked to actual investments in energy efficiency.

The problem is further aggravated by the complete decentralisation of the system and the absence of common standards for measuring savings.

The Institute for Energy Efficiency points out that there is no unified methodology through which obligated parties are required to prove their energy savings.

Operators rely on their own models, certified by external auditors, or use consultants to carry out assessments, creating risks of:

• artificially inflated results

• double counting of the same measures

• a lack of genuine verification that savings correspond to real reductions in physical consumption rather than existing only “on paper”.

Industry moving at two speeds

SEDA data indicate that the only significant contribution has come from the industrial sector, which improved its energy efficiency by 26% between 2010 and 2024.

However, just two days ago, the EU’s statistical office published completely different figures on Bulgaria’s industrial energy consumption over the same period.

According to Eurostat, over those 14 years Bulgarian factories reduced their energy consumption by just 0.9%, placing the country last in the European Union in terms of industrial energy savings.

At the same time, large and medium-sized companies have absorbed hundreds of millions of euros from EU funds in recent years to replace outdated technological equipment.

Moreover, in an effort to protect themselves from high wholesale electricity prices and network tariffs, companies have installed around 100 MW of renewable energy capacity for their own consumption.

This has allowed them to eliminate energy losses associated with long-distance transmission. However, economic growth has “eaten into” the savings of electricity, natural gas and other fuels achieved by businesses.

Companies continue to apply the practices introduced through EU funding because they see their long-term value.

Yet while large businesses maintain sustained energy management policies through dedicated energy managers, small and micro-enterprises often abandon these practices once the mandatory monitoring period of an EU-funded project expires.

As a result, Bulgaria’s economy remains critically energy-intensive. According to Eurostat data, the country uses three times more energy than the EU average to generate one euro of GDP.

Transport remains the black hole

The situation is worst in the transport sector. Not only has there been no improvement, but energy consumption has increased significantly – by as much as 12%.

This is mainly due to the growing number of private vehicles, but also to the expansion of road freight transport amid the continued decline of rail’s share in both freight and passenger services.

Railways are not only a more environmentally friendly form of transport, but also consume less energy, as electricity has a lower energy intensity than diesel and petrol.

It turns out that the hundreds of millions of euros allocated under the Environment Operational Programme 2021–2027 to replace old diesel-powered urban buses in municipalities across Bulgaria with new electric buses, or to replace trolleybuses with more modern and energy-efficient models, have made no measurable contribution to reducing fuel consumption.

Grant dependency and administrative failure to monitor results

The major structural flaw of Bulgaria’s cohesion model is that it has created complete dependence on non-repayable financing while failing to generate market incentives for private investment.

“Despite the billions poured into renovating residential buildings, not a single euro was allocated to assess the actual savings achieved or the quality of the renovation works,” Dragomir Tsanev, director of EnEffect, stressed.

The state has effectively abandoned the energy certification of buildings. Energy performance certificates, which by law were supposed to become mandatory in property transactions, today have virtually no market value and are perceived by citizens simply as an unnecessary administrative burden. At the same time, more than 90% of Bulgaria’s occupied housing stock consists of single-family houses, which remain outside the scope of the major renovation programmes despite their enormous potential for energy savings.

According to EnEffect, Bulgaria needs to introduce a central register of energy savings. Such a system would provide greater transparency on how energy savings are achieved and what share comes from genuine investments and deep renovation of technological equipment or buildings, compared with low-cost operational or behavioural measures. A similar database would provide a clearer picture of whether existing schemes are actually supporting genuine decarbonisation and long-term reductions in energy consumption, experts from the centre argue.

Bulgaria has committed to Brussels to reduce its final energy consumption by 31.67% by 2030, while public buildings are expected to reach nearly zero-energy consumption standards. However, reality tells a different story. In the services sector and public buildings, energy intensity is currently 4.4% higher than it was 14 years ago.

As long as reforms are implemented only under pressure from the European Commission and rely almost entirely on grants, the 2030 targets will remain out of reach.

Without strict administrative oversight, a central register of actual energy savings and market mechanisms that engage private capital from citizens and businesses, European billions will continue to finance comfort rather than Bulgaria’s energy independence.