EU to crack down on poor building performance

Proposals from the European Commission to set minimum energy standards for buildings have ramped up after Russia’s invasion of Ukraine. PlaceTech sets out everything that real estate needs to know about this policy update.

Revisions to the existing Energy Performance of Buildings Directive (EPBD) are making their way through the EU’s legislative machine this year.

The first batch of amendments, proposed at the end of 2021, is part of the EU’s initiative (known as Fit for 55) to cut carbon by at least 55% by 2030. Since then, the Commission has proposed further revisions to bolster the bloc’s renewable energy independence in the wake of the war in Ukraine.

Highlights

1. There are targets for both new and existing buildings

Article 7 of the EPBD states that new buildings must be ‘zero-emission’ by January 2030 (or January 2027 if they are owned or occupied by public authorities).

Existing buildings will have to meet the following energy performance standards, as set out in Article 9:

• Energy performance class F by January 2027, rising to E in January 2030, in the case of non-residential buildings and buildings owned or occupied by public bodies
• Energy performance class F by January 2030, rising to E in January 2033, in the case of residential buildings

2. ‘Zero-emission’ doesn’t mean ‘zero-emission’

Despite sounding unambiguous, the term ‘zero-emission’ has an entire section dedicated to clarifying what it means.

“’Zero-emission’ does not say you don’t have any emissions,” says Alexander Dlouhy, head of Osborne Clarke’s decarbonisation practice in Germany. Instead, a zero-emission building is one that has a high energy performance, and which uses renewable sources for the energy that it does consume.

The directive sets out annual energy use thresholds by region and building type in Annex III.

3. Being ahead doesn’t mean your job is done

Minimum standards for existing buildings are based on energy performance certificates. But the EU will rescale them to ensure every member states pulls its weight. Class G will be defined as the worst performing 15% of national building stock in each country. That 15% will need to be retrofitted to rise to an F by 2027 (or 2030 in the residential sector).

“This directive does not acknowledge that some countries may be further ahead compared to others,” Dlouhy says. The point is for every country, regardless of how well it already performs, to improve between now and 2030.

4. Penalties could vary

The EPBD does not set out consequences for infringement, but rather puts the onus on member states to come up with penalties that are “effective, proportionate and dissuasive”. Dlouhy says there will “definitely be some interaction” between the EU and the member states as they set out mechanisms for compliance.

5. The war in Ukraine turned up the heat on regulations

In May, the European Commission added further amendments to the EPBD, centred on reducing Europe’s reliance on Russian fossil fuels.

There are several new proposals, including requiring member states to identify areas where they can install renewable energy plants.

However, the most relevant revision for real estate is Article 9a. This requires all new buildings to be designed to “optimise their solar energy generation potential”.

Member states will have to ensure that suitable solar energy installations are carried out in new public and commercial buildings (by December 2026), existing public and commercial buildings (by December 2027) and in all new residential buildings (by December 2029).

6. These proposals reflect a shift from targets to minimum standards

With the EPBD the EU “moves away from setting targets as an overall goal to setting minimum performance standards”, Dlouhy says. Step by step, the EU is focusing its net zero trajectory, going from an overall strategy (to meet its Fit for 55 goals) to creating emission reduction pathways for members, to now putting in place minimum standards.