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Now that the Recast Energy Performance of Buildings Directive is
formally adopted, we consider the consolidated text.
The Directive is concerned with reducing greenhouse gas
emissions from buildings and improving their energy performance, to
achieve a zero-emission building stock by 2050.
What is the background?
The EU first legislated over 20 years ago in the Energy
Performance of Buildings Directive 2002/91/EC, when it noted that
energy efficiency was key to meeting the Kyoto Protocol.
The Directive contained features now commonplace: energy
performance certificates (“EPCs”)
(known as building energy rating certificates in Ireland) and
requirements around calculating and setting standards for the
energy performance of buildings.
The current Directive is based on a more
ambitious iteration from 2010, upgraded again in 2018.
Fit for 55 is now strengthening a significant body of
legislation to align with the Paris Agreement. The EU identifies
buildings as a priority in the decarbonisation project: they
account for 40% of final energy consumption and 36% of
energy-related greenhouse gas emissions in the EU. 75% of buildings
are energy-inefficient but 85 to 95% of today’s buildings
will still be standing in 2050. Two thirds of energy used for
heating and cooling comes from fossil fuels.
The Recast Energy Performance of Buildings Directive will
shortly be published in the OJEU and enter into force 20 days
later, with a two-year transposition period.
What are the key points?
The Recast Directive obliges Member States to put mechanisms in
place so that from 2030 all new buildings are zero-emission
buildings, and with a view to achieving a zero-emission building
stock by 2050.
At a high level, key strands include reducing energy consumption
in line with the ‘energy efficiency first’ principle
(see more in the Recast Energy Efficiency Directive); phasing out
fossil fuels from heating and cooling; and increasing the use of
renewable energy in buildings.
A key innovation is that this Directive goes beyond reducing
emissions from the use of buildings (operational
emissions) and now starts to tackle entire life-cycle
emissions.
New obligations highlighted by the EU relate to:
- setting minimum energy performance standards for
non-residential buildings, by ensuring they do not exceed
maximum energy usage thresholds, to achieve a gradual phase-out of
worst performing buildings; - reducing average primary energy
use of residential buildings by
16% in 2030 and 20-22% in 2035, with at least 55% of energy
reduction to be achieved through renovation of the 43% worst
performing residential buildings; - requiring national roadmaps to phase out fossil
fuel boilers by 2040; - facilitating deployment of solar
energy installations in new buildings, public
buildings and non-residential buildings under renovation that
requires a permit; and - facilitating sustainability
infrastructure in buildings.
Will the methodology for calculating energy performance
change?
The common general framework in Annex I for national or regional
methodologies for calculating energy performance is further
developed. For example, methodologies must now take into
consideration capacity of installed on-site renewable energy
generation and energy storage, and building automation and control
systems and their capabilities to monitor, control and optimise
energy performance.
The Commission will be required to issue guidance on calculation
of the energy performance of transparent building elements that
form part of the building envelope and the consideration of ambient
energy (for example energy extracted with heat pumps).
Will provisions for setting minimum energy performance
requirements change?
The obligation around setting minimum energy performance
requirements for buildings is currently imposed with a view to at
least achieving cost-optimal levels. It will now be set, where
relevant, with a view also to achieving more stringent reference
values such as nearly zero-energy building requirements and
zero-emission buildings requirements.
Will provisions for calculating cost optimal levels of minimum
energy performance requirements change?
By 30 June 2025, the Commission will revise the comparative
methodology framework for calculating cost-optimal levels of
minimum energy performance. Member States must calculate
cost-optimal levels of minimum energy performance requirements, and
they may take into account life-cycle global warming potential
(“GWP”) when doing this.
If a Member State finds that minimum energy performance
requirements in force are less energy-efficient than cost-optimal
levels of minimum energy performance requirements by more than 15%,
they will have to adjust minimum energy performance requirements
within two years.
What is a zero-emission building?
There is a new definition for ‘zero-emission
building’. It means “a building with a very high energy
performance, as determined in accordance with Annex I, requiring
zero or a very low amount of energy, producing zero on-site carbon
emissions from fossil fuels and producing zero or a very low amount
of operational greenhouse gas emissions …”.
A zero-emission building cannot cause any on-site carbon
emissions from fossil fuels. Where economically and technically
feasible, it must offer capacity to react to external signals and
adapt its energy use, generation or storage.
Member States must take measures to ensure that the energy
demand of a zero-emission building complies with a maximum
threshold, to be revised every time cost-optimal levels are
revised, and set at least 10% lower than the threshold for total
primary energy for nearly zero-energy buildings on the date the
Directive enters into force. There are also maximum threshold
requirements for operational emissions.
What is a nearly zero-emission building?
The existing definition is developed further so that a nearly
zero-emission building is a “building with a very high energy
performance, as determined in accordance with Annex I, which is no
worse than the 2023 cost-optimal level reported by Member States
… and where the nearly zero or very low amount of energy
required is covered to a very significant extent by energy from
renewable sources, including energy from renewable sources produced
on-site or energy from renewable sources produced
nearby”.
What is global warming potential?
Life-cycle GWP is a new calculation that represents emissions
embodied in construction products, and direct and indirect
emissions from use of the building.
GWP will have to be disclosed in the EPCs of new buildings of a
certain size from 1 January 2028, and all new buildings from 1
January 2030.
By 1 January 2027, Member States will publish a roadmap
detailing the introduction of limit values on total cumulative
life-cycle GWP of all new buildings.
What are the requirements for new buildings?
From 1 January 2030, all new buildings are to be zero-emission
buildings. The earlier deadline of 1 January 2028 is set for new
buildings owned by public bodies.
Until the application of this new requirement, Member States
must ensure that all new buildings are at least nearly zero-energy
buildings and meet minimum energy performance requirements. Where
public bodies intend to occupy a new building they do not own, they
must aim for a zero-emission building.
What are the requirements for existing buildings?
As under the current Directive, Member States must take the
necessary measures to ensure that, when buildings undergo major
renovation, energy performance is required to be upgraded to meet
minimum energy performance requirements in so far as technically,
functionally and economically feasible.
Non-residential buildings: Minimum energy performance
standards
Member States will now
establish minimum energy performance standards
which ensure that buildings do not exceed a
specified maximum energy performance threshold.
Each Member State must set maximum energy performance thresholds
such that 16% of non-residential building stock is above a
‘16% threshold’, and 26% is above a ‘26 %
threshold’. The minimum energy performance standards must
ensure that all non-residential buildings are below the 16%
threshold from 2030, and below the 26% threshold from 2033.
Residential building stock: Trajectories for progressive
renovation
New obligations require each Member State to establish a
national trajectory for the progressive renovation of the
residential building stock in line with 2030, 2040 and 2050 targets
in the National Building Renovation Plan (see more below).
The national trajectory will be expressed as a decrease in the
average primary energy use of the entire residential building stock
over the period 2020 to 2050. It must identify the number of
residential buildings and building units / floor area to be
renovated annually.
Member States must ensure that the average primary energy use in
kWh/(m2 .y) of the entire residential building stock: (a) decreases
by at least 16% compared to 2020 by 2030; (b) decreases by at least
20-22% compared to 2020 by 2035; (c) by 2040, and every 5 years
after, is equivalent to or lower than the nationally determined
value derived from a progressive decrease in average primary energy
use from 2030 to 2050.
At least 55% of the decrease must be achieved through the
renovation of the 43% worst-performing residential buildings.
What are the new obligations around solar energy?
Member States must ensure that all new buildings are designed to
optimise their solar energy generation potential.
Relevant permit-granting and grid notification procedures in
the Recast Renewable Energy
Directive apply.
There are deadlines this decade for achieving roll-out of
suitable solar energy installations for various structures (ranging
from all existing public buildings of a certain size to certain new
roofed car parks).
Are requirements around sustainable mobility developed?
More recharging points, pre-cabling and ducting, and bicycle
parking spaces will be required.
Member States must ensure that the recharging points are capable
of smart recharging and, where appropriate, bi-directional
recharging, and that they comply with certain requirements under
the Alternative Fuels Infrastructure
Regulation.
Member States must provide for measures to streamline and
accelerate the procedure for the installation of recharging points
and to remove barriers for tenants and co-owners.
What about smart readiness and data exchange?
The Directive builds on requirements for rating the smart
readiness of buildings, including development of a smart readiness
indicator. This is seen as particularly beneficial for large
buildings with a high energy demand, for the purpose of measuring
their capacity to use communication technologies and electronic
systems to adapt their operations to the needs of the occupants and
the grid.
Data will be important. Member States will be required to ensure
that building owners, tenants and managers have direct access to
their building systems’ data. No additional costs are to be
charged for accessing their data or requesting it to be made
available to third parties.
Are the requirements around technical building systems further
developed?
Yes, Member States’ obligations to set requirements to
optimise energy use of technical building systems are further
developed. For example, there are requirements around indoor
environmental quality standards and the monitoring of
systems’ efficiency.
A new definition clarifies that technical building systems are
“technical equipment of a building or building unit for space
heating, space cooling, ventilation, domestic hot water, built-in
lighting, building automation and control, on-site renewable energy
generation and energy storage, or a combination thereof, including
those systems using energy from renewable sources”.
What is deep renovation?
Deep renovation is a renovation in line with the ‘energy
efficiency first’ principle, which focuses on essential
building elements and which transforms a building or building unit:
(a) before 1 January 2030, into a nearly zero-energy building; (b)
from 1 January 2030, into a zero-emission building.
A staged ‘deep renovation’ is seen as a solution to
address high upfront costs and hassle when renovating in one
go.
Measures aiming to increase deep renovations include enhanced
financial and administrative support and renovation passports.
What are renovation passports?
The concern is that a staged deep renovation needs to be
carefully planned to avoid one renovation step from preventing
subsequent steps.
Renovation passports are intended to provide a clear roadmap for
staged deep renovations to help owners and investors plan timing
and scope. Member States will be required to introduce a scheme for
renovation passports. They may allow for the renovation passport to
be drawn up and issued jointly with the EPC.
What does the Directive say about energy performance
certificates?
EPCs will be required to detail more information than they do
today, as set out in a template in Annex V.
The letter A will correspond to zero-emission buildings, and G
to the worst-performing buildings. Member States can define an A+
class for buildings having a maximum threshold for energy demand at
least 20% lower than the maximum threshold for zero-emission
buildings, and which generate more renewable energy on-site
annually than total annual primary energy demand. Life-cycle GWP
will be stated in the EPCs for buildings renovated to A+ class.
As is the case currently, the validity of EPCs does not exceed
10 years. Where an EPC below C is issued, building owners would be
invited at a future date to a one-stop shop to receive renovation
advice.
There are new requirements around the issue
of digital EPCs, an EPC database, and access to
information and data.
Provisions are further developed in relation to inspection and
reporting on heating systems, ventilation systems and
air-conditioning systems; independent experts; and certification of
building professionals.
What are National Building Renovation Plans?
Member States will be required to establish National Building
Renovation Plans to detail the national building stock; to set
progress indicators and targets for renovation rates, energy
consumption and emissions reduction; and to outline financing
measures, investment needs, and administrative resource
requirements.
The first draft is required by 31 December 2025 and then every
five years as part of National Energy & Climate Plans submitted
under the Governance Regulation. They will be assessed
by the Commission, the recommendations of which Member States must
take due account.
What about financial and technical support?
Member States will be obliged to provide appropriate financing,
support measures and other instruments to deliver the investment
identified in their National Building Renovation Plans. They will
be obliged to make cost-effective use of national financing and EU
financing, including the Recovery and Resilience Facility, the
Social Climate Fund, the Cohesion fund, InvestEU, and EU ETS
revenues.
Member States will be required to promote the effective
development and use of funding and financial tools, such as energy
efficiency loans and mortgages for renovations, energy performance
contracting, pay-as-you-save financial schemes, fiscal incentives
like reduced tax rates on renovation works and materials, on-tax
schemes, on-bill schemes, guarantee funds, funds targeting deep
renovations, funds targeting renovations with a significant minimum
threshold of targeted energy savings and mortgage portfolio
standards. They will be required to guide investments into an
energy-efficient public building stock. They may promote and
simplify the use of public-private partnerships.
The Commission will be empowered to establish a portfolio
framework for voluntary use by financial institutions to support
lenders in targeting and increasing lending volumes. Member States
will be obliged to facilitate the aggregation of projects to enable
investor access and adopt measures to promote energy efficiency
lending products.
Member States will be required to incentivise deep renovation
and staged deep renovation with higher financial, fiscal,
administrative and technical support and may introduce mechanisms
for long-term renovation contracts.
Member States will be required to ensure the establishment of
technical assistance, including by establishing one-stop shops to
target all actors involved in building renovations. There must be
at least one one-stop shop per 80,000 inhabitants, per region, or
per one of the other parameters set out in the Directive.
Next steps
Ireland will be required to implement the Directive in domestic
law by a date in 2026 (though there is an earlier deadline of 1
January 2025 prohibiting certain support for boilers powered by
fossil fuels).
The current Directive applies until repealed two years after the
Recast Directive enters into force.
The Directive will have very significant implications for
developers, investors, landlords and tenants, who now have a
clearer line of sight of the obligations to be transposed in Irish
law, and who will wish to factor these into investment strategies
and leases.
The risk of energy inefficiency impacting marketability of
buildings is well known, and it is reasonable to predict an
acceleration of the current retrofitting trend. This will likely
prompt a renewed focus on the contractual arrangements underpinning
retrofits, including the contractual incentives for contractors to
value engineer proposed design, and the scope to maximise the value
of the supply chain in terms of reducing embedded carbon and
harvesting the data to vouch for that reduction.
The Directive is now a very detailed instrument comprising
numerous mechanisms to drive decarbonisation, and this briefing is
not a comprehensive summary. Following through on the scale of
change contemplated will require an immense and concerted effort,
coordinated at the highest levels of Government.
The Commission will review the Directive in 2028.
The authors would like to thank Michelle Donohoe for her
contribution to this briefing.
This article contains a general summary of developments and
is not a complete or definitive statement of the law. Specific
legal advice should be obtained where appropriate.
#NetZero #Building #Stock #QAs #Recast #Energy #Performance #Buildings #Directive #Renewables
