EU “Fit for 55”: The Energy Performance of Buildings Directive – it’s time for a change

Introduction 

On 15 December 2021, the European Commission took another major step towards accomplishing its ambitious goal of making Europe the first climate neutral continent by 2050, as enshrined in the EU Climate Law, by adopting a second package of proposals amending the EU’s climate, energy, land use, transport and taxation policies with a view to reducing net greenhouse gas (GHG) emissions by at least 55% by 2030.

This blog post analyses the Commission’s Proposal (including Annexes) to further amend the existing Energy Performance of Buildings Directive (EPBD II) in order to align the rules for the energy performance of buildings with the European Green Deal. The proposal seeks to decarbonise the EU's building stock by 2050 and facilitate the renovation of homes, schools, hospitals, offices and other buildings across Europe to reduce GHG emissions and energy bills, improving quality of life of those living in the European Union. This proposal forms part of the EU's "Fit for 55" package. For more information on the rest of the package, have a look at our Fit for 55 microsite.

The EPBD proposal is accompanied by a Q&A, Factsheet and press release. More info can be found also on the Commission's dedicated Energy Performance of Buildings webpage.

Overview

The EPBD proposal sets an ambitious target, namely, that, as of 2030, all new buildings must be zero-emission and, as of 2027, all new ‘public’ buildings (i.e. those built for use by the public sector) must also be zero-emission. The intention is that these new buildings will consume little energy, be powered by renewables as far as possible and emit no on-site carbon emissions from fossil fuels. Lofty ambitions! Interestingly, the buildings will also be required to state their global warming potential on their Energy Performance Certificate based on their whole-life cycle carbon emissions.

The proposal also includes the renovations of buildings and the setting of new EU-level minimum energy performance standards which will require the worst-performing 15% of building stock of each Member State to be upgraded from an Energy Performance Certificate's Grade G to at least Grade F by 2027 for all non-residential buildings and 2030 for all residential buildings.

Finally, the proposal encourages the use of electronic communications and smart technologies to ensure that buildings are able to operate efficiently. The proposal also calls for digital building databases to be established and support the rollout of charging infrastructure for electric vehicles in residential and commercial buildings with dedicated parking spaces available for bicycles.

The details

New buildings

New buildings constructed within the European Union must be zero-emission buildings by 2030 and new ‘public’ buildings must be zero-emission buildings by 2027. 

You may be left scratching your head: what is meant by a ‘zero-emission building’? Helpfully, a definition has been provided as follows: “a building with a very high energy performance in line with the energy efficiency first principle, and where the very low amount of energy still required is fully covered by energy from renewable sources at the building or district or community level where technically feasible (notably those generated on-site, from a renewable energy community or from renewable energy or waste heat from a district heating and cooling system).”

In addition to the requirement to construct and renovate zero-emission buildings, from 2030 the life-cycle ‘global warming potential’ of new buildings will need to be calculated in accordance with the ‘levels’ framework (an assessment and reporting tool for sustainability performance of buildings) to ensure that the whole-life cycle carbon emissions of the building are measured. Member States will also have to address what the Commission contemplates to be other notable arms in a building’s armoury of environmental resilience and which extend beyond the building’s energy performance. These include healthy indoor climate conditions, adaptation to climate conditions, fire safety, risks related to intense seismic activity and embedded carbon.

Major renovations 

The focus of this particular aspect of the proposal is on the very lowest performing classes of building stock in each Member State to ensure that efforts are directed towards renovating buildings with the highest potential for decarbonisation, energy poverty alleviation and increased social and economic benefits.

The existing minimum energy performance requirements that are currently in place in individual Member States will be replaced with new EU-level minimum energy performance standards for the worst performing public and non-residential buildings (which the Commission hopes will trigger the need for a number of buildings to be renovated to meet these standards). The standards will require Grade G buildings to be renovated and improved to at least energy performance Grade F at the latest by 2027 and to at least energy performance class E at the latest by 2030 (see below in respect of re-grading). In addition, the worst-performing residential buildings will be required to be renovated and improved to at least Grade F by 2030 and to at least Grade E by 2033.

Member States will be required, as part of the national building renovation plans which are set to replace ‘long-term renovation strategies’ and which will include national targets (instead of indicative milestones) in a more unified and comparable approach, to establish specific timelines for achieving higher energy performance grades by 2040 and 2050, in line with their chosen pathway for transforming their national building stock into zero-emission buildings. In addition to the minimum energy performance standards, Member States will have the option to introduce national minimum energy performance standards to be adopted into their national renovation plans. Notably, the proposed legislative amendments permit Member States to exclude certain categories of buildings from the obligation to comply with minimum energy performance standards. It remains to be seen how heavily this will be relied upon by Member States to alleviate the potential strain the private and public sectors may feel in adhering to the proposal.

At a more granular level, the Commission is of the view that Member States should not be allowed to subsidise fossil-fuel boilers as of 2027. To encourage the swift deployment of zero-emission heating systems, and to avoid investments in new generations of fossil fuel-based boilers become stranded assets, zero-emission buildings should not be permitted to generate carbon emissions on-site.

Finally, Member States will have to introduce a scheme of renovation passports (in short, a step-by-step renovation roadmap for a specific building resulting from an on-site energy audit and fulfilling specific quality criteria and indicators established in dialogue with building owners) based on the common framework to be developed by the Commission by the end of 2024.

Infrastructure for sustainable mobility

Under existing law, non-residential buildings that have more than ten parking spaces must install at least one electric-vehicle charging station and install cabling for one in every five spots so that charging points can be installed at a future date.

The proposal amends the existing law, firstly to apply it to non-residential buildings with more than five parking spaces, then to mandate cabling for every single space ensuring that, eventually, all of the charging points can be used simultaneously. Non-residential structures with more than 20 parking spaces would be required to install at least one charging station for every ten spaces by the beginning of 2027 and one for every five by 2030. Newly built and renovated office buildings must also install at least one EV charging point. Notably, an existing exemption for SMEs would also be removed.

In addition, mandatory bicycle parking spaces in new buildings and buildings undergoing major renovation are introduced in order to remove barriers to cycling as a central element of sustainable, zero-emission mobility.

‘Smart Readiness Indicator’ – data is key

To facilitate the development of new services and data collection related to buildings, a new requirement will be introduced ensuring building data is accessible to the building owner, tenant and manager or third parties. New rules on data interoperability and access to data are to be laid down by the Commission by means of an implementing act.

Energy performance certificates – a revamp! 

To ensure consistency across the European Union, by 2025 all energy performance certificates must be based on a harmonised scale of energy performance classes and comply with the template laid provided for in the legislative amendments.

The energy performance grades will be rescaled (taking into account national differences of building stocks) with the highest Grade A representing a zero-emission building and the lowest Grade G  including the 15% worst performing buildings in the national building stock. It is hoped that the rescaling will ensure comparable efforts across Member States to comply with the Union-wide EN 16 EN minimum energy performance standards. 

Notably, the validity of energy performance certificates of the lower D to G grades will be reduced to five years (from ten years) in order to ensure that they contain up-to-date information that helps members of the public reduce their consumption. Also, energy performance certificates must be issued in a digital format. 

The obligation to have an energy performance certificate will be extended to buildings undergoing major renovation, buildings for which a rental contract is renewed and all public buildings. As is currently the case, buildings or building units which are offered for sale or rent must have an energy performance certificate, and the energy performance grade and indicator will need to be stated in all advertisements, impressing the relevance and importance of energy performance on the market for sale and rental. 

All buildings occupied by public authorities and frequently visited by the public will need to display their energy performance certificate, irrespective of their size.

Access to information

Member States will be required to set up national databases for energy performance certificates of buildings which will also need to gather data related to building renovation passports and smart readiness indicators (see above). Information from the national databases will be transferred to the Building Stock Observatory, based on a template to be developed by the Commission.

Enforcement of buildings policy

The existing policy will be strengthened in respect of monitoring and enforcement, including through penalties. The strengthened provisions will focus on minimum energy performance standards and the improvement of the existing building stock.

What does it mean in practice?

The Commission’s proposal demonstrates that the Commission does not consider the existing Energy Performance of Buildings Directive, in its current form, to be fit for purpose. The EPBD proposal is meant to address this but it remains to be seen how quickly Member States will implement these energy efficiency measures, especially given the fact that growth in the real estate sector will be key to the economic recovery of many Member States that have suffered as a result of the Covid-19 pandemic.

The renewed emphasis on the public sector playing an important role in assisting the Fit for 55 package initiatives and the EPBD proposal shows that this sector is expected to play a significant role in ensuring that zero-emissions are met. This will also impact private sector companies hoping to win work building and renovating for governments via public procurement in the future, where quality criteria linked to energy efficiency and energy performance will weigh in heavily on the scores.

What’s next?

The proposal will now follow the ordinary legislative procedure, where it will be considered and negotiated by the Council (i.e. the Member States) and the European Parliament. This is likely to take up to a year and a half. 

Whilst the Fit for 55 proposal are interconnected, the timing and fate of each proposal in the Fit for 55 package is to a large extent independent and it remains to be seen when it will enter into force and in what form. In any case, the Member States will have time to transpose the new rules into national law.