knowledge 10 May 2024 |

European mandating of building energy performance: EPBD recast adopted

The European Green Deal seeks to make the EU's climate, energy, transport and taxation policies fit for reducing net greenhouse gas (GHG) emissions by 55% when compared to 1990 levels, by 2030.  As part of the “fit for 55” package, the recast Energy Performance of Buildings Directive¹ has been published in the Official Journal of the European Union and enters into force on 28 May 2024 (the “recast EPBD”)². Member States will have until 29 May 2026 to incorporate its requirements into their national laws.

Overall, the recast EPBD provides for a range of ambitious measures aimed at reducing energy emissions from buildings across the EU in a marked step change. It has the potential to be transformative, but it also has the potential to bring with it a much-increased regulatory load for building owners, developers and other stakeholders. 

Below, we set out some key aspects of the recast EPBD. While the detail of the Directive itself sets out clear targets as to the results to be achieved by each Member State, Member States also have significant discretion in certain areas as to how to achieve those results. This means that some of the important detail for Irish stakeholders will only be settled by Irish implementing legislation.  We will keep you updated as that detail evolves.

A new zero emissions standard for all new buildings

The recast EPBD will make zero-emission buildings the new standard for all new buildings (both residential and non-residential). All new public buildings should be zero-emission buildings by 2028, with a deadline of 2030 for all other new buildings. Member States may exempt certain categories of buildings from these obligations. A zero-emission building is a building with very low energy demand, zero on-site carbon emissions from fossil fuels and zero or a very low amount of operational greenhouse gas (GHG) emissions.  In practice, this is likely to mean better insulation in buildings and a switch from fossil (eg gas and oil) to electrical heating and cooling systems.

Towards better performing existing buildings 

For commercial buildings specific targets are set for renovation of the worst performing buildings: 16% by 2030 and 26% by 2033. This is to be achieved through implementation of minimum energy performance standards, which are to be met by each Member State either as part of a wide renovation plan for its building stock or at a trigger point such as a major renovation or the sale or rent or the property. 

For residential buildings specific targets are set for reducing the average primary energy use by 16% by 2030 and 20-22% by 2035. Member States are free to choose which buildings to target and which measures to take but the national measures will have to ensure that at least 55% of the decrease of the average primary energy use is achieved through the renovation of the worst-performing buildings. Member States will be required to incentivise renovation and protect vulnerable tenants from the risk of eviction due to increased rents following renovation. 

Quite how the requirements for decarbonising existing buildings will operate in Ireland won't be clear until we see the Irish implementing regulations. Member States have the option, for example, to define a ‘major renovation’ either by reference to a percentage (25%) of the surface of the building envelope that is being renovated or by reference to the percentage (again, 25%) value of the building represented by the renovation costs. Member States will also have the possibility to exempt certain categories of buildings from these obligations, including historical buildings and holiday homes.

A common approach to Energy Performance Certificates across the EU

Energy performance certificates (“EPCs”) (including the Irish BER certificate) have been in use across the EU for decades, but the use of different methodologies and formats across the Member States to date has meant that EPCs produced in different Member States are not readily comparable. The recast EPBD introduces a common scale of energy performance classes and a common template to ensure comparability between EPCs and allowing for greater transparency across the EU in lending, investment, letting and purchase decisions.

Measures to Facilitate Renovation Wave

To ensure that the renovation wave that is intended to be triggered by the recast EPBD can take off and succeed, Member States are required to put in place the plans and the tools to ensure that everyone is equipped to facilitate that including to:

• establish national Building Renovation Plans to set out the national strategy to decarbonise the building stock and how to address remaining barriers, such as financing, training and attracting more skilled workers;
• set up national building renovation passport schemes to guide building owners in their staged renovations towards zero-emission buildings; and
• establish one-stop-shops for home-owners, SMEs, and all actors in the renovation value chain, to receive dedicated and independent support and guidance. 

Specific requirements for the phase-out of fossil fuels in heating and cooling

National building renovation plans will include a roadmap with a view to phase out fossil fuel boilers by 2040.

Supporting sustainable mobility

Buildings are to boost sustainable mobility by making provision for pre-cabling, recharging points for electric vehicles and bicycle parking spaces and removing barriers to the installation of recharging points, so that the ‘right to plug' becomes a reality.   

Buildings to be solar-ready

Member States must ensure that new buildings are solar-ready, meaning that they must be fit to host rooftop photovoltaic or solar thermal installations, starting with all new public and non-residential buildings with useful floor area larger than 250 m2 by 31 December 2026. The obligations continue gradually from 31 December 2027 for existing public and non-residential buildings depending on building type and size.  New residential buildings are required to be solar ready by 31 December 2029. All of these obligations are subject to the requirements being technically, economically, and functionally feasible.

Conclusion

The publication of the recast EPBD in the Official Journal of the European Union on 8 May means that it comes into force on 28 May 2024. 

For new building and renovation projects, the two-year transposition period to the end of May 2026 is a short time in a project timeline, and building developers, owners and technical professionals will need to start considering and factoring in the increased regulatory requirements for projects under design now based on technical and industry experience. 

It is harder to anticipate how the recast EPBD will be applied to achieve decarbonisation of existing stock. The significant discretion allowed to Member States in how they implement the requirements of the recast EPBD in this respect means that there are lots of unknowns and lots of as-yet unanswerable questions around costs and implications for capital values, lettings and other dealings with relevant buildings. We will look to keep all stakeholders updated, staying close to the detail of the Irish implementing legislation as it evolves.