In 2002, the EU took their first steps towards improving the energy performance of their buildings with the EU Energy Performance of Buildings Directive (2002/19/EC). There have been many updates to the directive since and in 2018, the Energy Performance of Buildings Directive (2018/844) (the "2018 Directive") set the goal for buildings to be as near to zero energy as reasonably practicable. On 14 March 2023 the European Parliament took another big step towards meeting their decarbonisation goals by accepting the European Commission's proposed revisions to the 2018 Directive (the "EPB Recast Directive").
The Energy Performance of Buildings Directive
The EPB Recast Directive has re-defined a "Zero Emission Building" as a building with a very strong energy performance and where the little amount of energy still required is fully covered by energy from renewable sources.
The purpose of the EPB Recast Directive is to set minimum requirements and a common framework across all member states for calculating energy performance and accelerate the cost-effective renovation of existing buildings. Some of its core aims are to:
- lower carbon emissions;
- reduce energy consumption and waste;
- diminish the impact and cost of energy bills; and
- facilitate renovation.
Whether driven by recent inflation in the cost of energy or increased pressure to achieve climate objectives of zero-emission buildings by 2050, the speed of legislative activity in this area is a strong indicator of intent from the EU.
Standardisation of Energy Ratings, Minimum Energy Performance Standards and Other Key Provisions
The headline proposal of the EPB Recast Directive is the requirement for all buildings to be Zero Emission Buildings on a phased basis from 1 January 2026 to 2050.
It is currently proposed that all new publically owned, occupied or operated buildings must be Zero Emission Buildings from 1 January 2026 and all other new buildings must be zero-emission by 1 January 2028. All existing buildings must be zero-emission by 2050 (see Minimum Energy Performance Standards section below). There are proposed exceptions to the zero-emission targets, for example heritage or religious buildings.
The European Commission made several more specific provisions, some of the most relevant of which include:
Re-scaling and Standardisation of Energy Ratings
Building energy rating ("BER") certificates are used in Ireland to provide a method of assessing building energy performance. More generally they are referred to as energy performance certificates (EPCs) across Europe. One important provision of the EPB Recast Directive relates to the harmonisation of the scale of assessment of building energy performance across the EU. It is proposed that all buildings will be assigned a rating between G and A, with G representing the lowest rating in terms of energy performance and A representing buildings which meet the definition of a Zero-Emission Building in the EPB Recast Directive. This will allow for objective tracking of performance and assist with meeting targets.
Minimum Energy Performance Standards
Following on from the proposed changes to the classification of EPCs, the EU have proposed a gradual, bottom up approach to improving the energy performance of existing buildings. This means the staged phasing out of the lowest scoring buildings over time with a view to achieving Zero Emission Buildings by 2050. The EPB Recast Directive places more onerous obligations on buildings owned by public bodies and commercial buildings. For example, it is proposed that as of 1 January 2027 all publically owned and commercial buildings must obtain at least a class E rating and by 1 January 2030 a class D rating, whereas for private residential buildings, the EPC requirements are class E by 2030 and class D by 2033. The EPB Recast Directive requires member states to continue this upward trajectory of EPC certs until all buildings reach class A by 2050.
Subject to certain exemptions, a BER certificate must currently be produced to an interested party where commercial or residential buildings are being offered for sale or letting (European Union (Energy Performance of Buildings) Regulations 2012). The Recast Directive will place greater obligations on owners/landlords in that a BER certificate must not only be produced but once the Directive is implemented, the commercial or residential building will also have to achieve the required minimum energy performance rating, for example a class E rating for residential buildings from 1 January 2030.
It is proposed that all Member States track their energy performance data which will then have to be transferred to a centralised EU Building Stock Observatory. The plan is that this will underpin progress tracking and enable further action to be taken if required.
It is further proposed that direct access to building systems data be provided to building owners, tenants and managers with a view to assisting with green leasing arrangements, which aim to align tenant and landlord interest around matters such as water consumption and energy efficiency.
Additional proposals in the EPB Recast Directive include requirements regarding sustainable energy infrastructure such as charging points and solar panels on properties.
Notably, a significant feature of the EPB Recast Directive is the introduction of financial incentives and support measures geared towards removing the barriers, financial or otherwise, to renovating buildings.
Consequences of Non-Compliance
Properties that do not keep up with the fast pace of carbon focused legislation risk being left 'stranded'. Stranded assets are properties that will be exposed to the risk of early obsolescence due to climate change because they will not meet future regulatory efficiency standards or market expectations. For further information, please see Stranded Real Estate – A Real Possibility.
The EPB Recast Directive Currently in Trilogue Negotiations
Since the European Parliament's approval of the proposed EPB Recast Directive, 'trilogue' negotiations between the European Parliament, the Council and the European Commission are ongoing which will eventually lead to a final draft of the legislation. Although not certain, it appears that it will be 2025 before we see Irish legislation implementing the EPB Recast Directive.
Should you have any questions in relation to the EPB Recast Directive, please do not hesitate to contact a member of our Construction and Engineering team.