Europe gets tough on Energy Performance of Buildings

In November 2008 the European Commission published its proposal for what it calls a Recast of the Energy Performance of Buildings Directive (2002) (“EPBD”). In truth, this amounts to a significant ticking off by the EU of Member States for low ambition and inconsistency in implementation of the EPBD. The central message of the EU is clear: energy performance within the real estate sector will be taken seriously.

The EPBD recast proposal has been developed on the basis of a broad range of contributions from Member States and interested parties, provided on various public occasions including public online consultation. The new proposals seek to broaden, clarify and strengthen the scope of the Directive.

This article looks at the key proposals in the round which are relevant to the real estate and cleantech sectors. There are, however, a number of aspects of this recast which are potentially far reaching, and these will be set out in subsequent Law-Nows.

40% of the problem and 40% of the solution

The buildings sector is seen as the largest sector in terms of CO2 emissions in the EU being responsible for about 40% of the EU’s total final energy consumption and CO2 emissions. The sector has significant untapped potential for cost-effective energy savings which, if realised, would mean that in 2020 the EU will consume 11% less final energy. This in turn translates to a number of benefits such as reduced energy needs, reduced import dependency and impact on the climate, reduced energy bills, an estimated increase in jobs (280,000 – 450,000) and the encouragement of local development.

EPBD Directive

The Energy Performace of Buildings directive was designed to provide the following:

• A standard methodology calculation to assess the energy performance of buildings
• Promotion of alternative techniques
• Minimum requirements for the energy performance of buildings
• Energy certification of buildings
• Regular inspection of boilers and air-conditioning systems.

Key proposals

The draft directive proposal sets out to broaden the scope of the current EBPD Directive by means of the following changes:

• An EU requirement for new and refurbished buildings to meet nationally-set minimum energy efficiency standards is to be extended to all buildings regardless of their size. Thus the current 1000m2 useful floor space threshold is to be scrapped. It is estimated that this exclusion effectively excluded 72 per cent of the building stock. This move is expected to increase investment costs by €8bn annually, but deliver energy savings of €25bn a year by 2020
• An express requirement for EU Member States to apply “effective, proportionate and dissuasive” penalties for non-compliance with the law (this is aimed at other Member States rather than the UK). The fines may depend on the energy consumption, or energy demand of the building/effective rated output of the inspected heating/air-conditioning system
• By mid-2011 Member States are to draw up "national roadmaps" containing targets and timelines for the development of low or zero carbon buildings. Member States are expected to demonstrate the leading role of public authorities in the setting up of specific targets for buildings occupied by them. In UK a consultation on the definition of zero carbon for homes was launched on 17 December 2008 and closes on 18 March 2009. You can access the consultation by clicking Definition of Zero Carbon Homes and Non-Domestic Buildings: Consultation
• As from 30 June 2014, Member States will no longer be able to provide incentives for the construction or renovation of buildings which do not comply with minimum energy performance requirements
• The obligation to consider alternative systems for new buildings is to be extended to all buildings. This enlarges the EPBD’s scope and supports the EU’s targets on renewables.
• Requirements on energy performance certificates and building inspections are also to be strengthened. The energy performance of buildings certificate is to be provided without fail every time there is a property transaction. Furthermore, the display certificate requirement is to be broadened. If a useful area over 250 m2 of a building is occupied by a public authority or is frequently visited by the public, a display certificate should be issued by 31 December 2010 and displayed in a prominent place clearly visible to the public
• Inspections of heating and air conditioning systems will advise consumers to make a better use of these appliances by either improving their operation or replacing them entirely where necessary

Key objectives

The belief is that the potential to increase the performance of buildings is enormous but poorly tapped. There is also a feeling that Member States lack the will or ambition to make the necessary changes. It is estimated that the Recast Directive will bring about energy savings in the region of 60-80 Mtoe by 2020 and the total EU energy consumption could be reduced by 5-6%. This looks like being a key proposal by the EU in its endeavours to transform the EU into a lower carbon economy.