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Energy performance of buildings

Overall state of play

Evaluation finalised: SWD(2016) 408 and SWD(2016) 409, 30 November 2016
Commission proposal adopted on:
• on 30 November 2016, COM(2016)76
• on 15 December 2021, COM(2021)802 (recast proposal)
Legal Act: Adopted Directive (EU) 2018/844; Date of effect: 9 July 2018

State of play, main conclusions, outlook:

The Commission evaluated Directive 2010/31/EU on the energy performance of buildings (EPBD) and proposed a legislative revision on this basis, including the "Smart finance for smart buildings" initiative (Annex I of the Clean energy for all Europeans of the Communication).

The energy efficiency contribution to moderation of demand is one of the key dimensions to achieve a resilient Energy Union. In this context especially the buildings sector has an important efficiency potential. The buildings stock is the largest single energy consumer in the EU and represents 40% of EU energy consumption. In addition, about 75% of the housing stock is energy inefficient and has a high cost-effective energy efficiency potential. The evaluation found that the EPBD resulted in a strengthening of minimum energy performance requirements in building codes in Member States between 2005 and 2013 of e.g. 66% for new buildings in France and 60% for new and existing residential buildings in Ireland.

Efficiency could be boosted if renovation rates would increase from the current estimated 0.5-1.2% to above 2%. However there is a need to stimulate investment by buildings owners and to address the issue that financing is often hampered by the small-scale of many building projects.

The evaluation revealed relatively limited regulatory shortcomings and supported maintaining the key elements and existing architecture of the Directive. It showed that there was however some scope for simplifying and streamlining outdated measures, and for enhancing compliance through fine tuning of existing provisions and better linking them with financial support. Additionally the evaluation pointed to the scope for modernisation of the Directive in the light of technological developments (including ICT, smart building systems, e-vehicle charging in building car parks etc) and the need to increase building renovation rates while supporting the decarbonisation of buildings in the long-term. This was necessary as the Directive was defined having a 2020 perspective in mind and it should be made ready for 2030 and beyond.

The main objective of the review of the EPBD, including the 'Smart Financing for Smart Buildings' initiative was therefore to address these shortcomings and to promote a greater take-up of energy efficiency in the buildings sector. This would help deliver cost-effective greenhouse gas emission reductions and contribute to ensuring the security of energy supply in the EU. The initiative is also expected to have a positive impact on the overall economy and especially SMEs by improving the competitiveness of European construction and energy services industries while boosting innovation and creating or retaining jobs in Europe.

The new recast proposal tabled in 2021 has two main objectives: (1) contribute to reducing GHG emissions of buildings and final energy consumption by 2030 and (2) ensure that buildings make an adequate contribution to achieving climate neutrality by 2050. The specific objectives are: to increase the rate and depth of building renovations; to improve information on energy performance and sustainability of buildings with the use of digital tools; to ensure that new buildings are in line with the 2050 climate neutrality objective; and to integrate buildings into decarbonised and digitalised energy systems.

The revision of the EPBD by the Commission amends an existing Directive for the third time and largely relies on structures and rules that are already in place. Nevertheless, public authorities will face costs linked to national transposition, monitoring and enforcement, and certain administrative costs incurred to comply with obligations to provide information. The latter includes elements of administrative simplification brought forward by the digitalisation of Energy Performance Certificates (EPCs) and databases. The monitoring of the building stock would be facilitated by the availability of data collected by digital tools, thereby reducing administrative costs. Digital EPCs have the potential to reduce compliance costs for building owners, if interoperability with national databases and buildings permitting procedures is ensured.

State of Play:

Finalised: SWD(2016) 408 and SWD(2016) 409, 30.11.2016

Scope:

Evaluation of Directive 2010/31/EU on the energy performance of buildings.

Evaluation findings:

The evaluation showed that the Directive is effective and is delivering on its general and specific objectives.

There is evidence of around 48.9 Mto of additional final energy savings in 2014 in buildings compared to the 2007 baseline of the EPBD. These savings occur mainly within the scope of the EPBD - space heating, cooling and domestic hot water - and a significant part can be attributed to factors influenced by policy interventions. This figure of 48.9 Mto in 2014 is in line with the 2008 Impact Assessment supporting the EPBD, which estimated that the Directive would deliver 60 to 80 Mto of final energy savings by 2020.

The evaluation showed that the overall architecture of the Directive, combining minimum requirements and certification, is working, in particular for new buildings. Targets for all new buildings to be of nearly zero-energy by 2020 have proved to set a 'future-proof' vision for the sector and mobilise stakeholders accordingly.

However, the evaluation identified ways in which national transposition and implementation can be further developed through better enforcement, compliance monitoring and evaluation.

At EU level, opportunities for simplification or modernisation of outdated provisions and streamlining existing provisions in the light of technological progress were detected (e.g. in particular, the requirement to assess the technical, environmental and economic feasibility of high-efficiency alternative systems, or the regular inspection of heating and air conditioning systems).

In conclusion, the evaluation revealed relatively limited regulatory shortcomings. There was however some scope for simplifying and streamlining outdated measures, and for enhancing compliance through fine tuning of existing provisions and better linking them with financial support. Additionally the evaluation pointed to the scope for modernisation of the Directive in the light of technological developments and the need to increase building renovation rates while supporting the decarbonisation of buildings in the long-term.

Estimated savings and benefits

Benefits:

In 2013, compared to the recast EPBD's 2007 baseline, around 37 Mtoe additional final energy savings were realised in buildings in the households and services sectors (neutralising other factors such as climate, and the economic crisis). During the same period, GHG emissions are estimated to have been reduced by 63 Mt CO2 (i.e. 8% of the 1990 emissions of household and service sector), mainly in the household sector. 72 000 direct and indirect maintained jobs can be associated with the energy renovation of the EU building stock. The EPBD intervenes in synergy with other EU legislation (notably for product efficiency) and is thus expected to have contributed to such benefits.

By design, the EPBD includes provisions to ensure its cost-effectiveness. The cost-optimal benchmarking methodology to steer existing national energy performance requirements towards cost-efficient levels is working. This methodology ensures that Member States are not required to set minimum energy performance requirements which are not cost-effective over the estimated economic lifecycle. Member States have made use of this option.

Costs:

Concerning EPCs, certification is sometimes seen as an administrative burden. However, with a relatively limited additional transaction cost (in the range of €85-140 for an apartment or single family house EPC, valid for 10 years), EPCs are proven to have positively influenced property valuation (in the range of up to 5-10% higher sale or rental prices both for the sale and rental market, hence effectively contributing to the creation of a demand driven market for energy efficiency in buildings).

As regards administrative costs, the 2010 revision ensured continuity of national efforts to transpose and implement the 2002 EPBD. The main provisions, scope and structure were therefore retained in a conscious effort to ease transposition of the 2010 Directive and limit related administrative burden. Member States have estimated total costs of national implementation at a level of €160.8 million for all Member States (without clarifying if these are linked to the recast EPBD specifically).

Finally, the 2010 Directive has partially succeeded in ensuring that buyers/tenants/owners receive good quality information at a reasonable cost on the energy performance of buildings and about the performance of their heating and air-conditioning systems.

Due to the diversity and disaggregation of the buildings sector, it remains challenging to acquire good data on building characteristics, energy use, and financial implications of renovation in terms of cost savings or asset values. This lack of data has negative consequences on the market perception of the cost-effective energy saving potential of the EU building stock, on enforcement tracking, on monitoring and evaluation. EPC registers/databases can be a key instrument for reinforced compliance, improve the knowledge on the building stock and better inform policy makers and support the decisions of market players.

Enforcement, compliance and implementation represent a challenge for several aspects of the EPBD.

State of Play:

Adopted: COM(2016) 765, adopted by the Commission on 30.11.2016

Which objective(s) did the Commission pursue?

The general objective of the review of the EPBD, including the 'Smart Finance for Smart Buildings' Initiative was to promote greater take-up of energy efficiency in the buildings sector and deliver cost-effective greenhouse gas emission reductions as well as to contribute to ensuring security of energy supply in the Union. The specific objectives of the initiative are (1) to address the shortcomings identified by the evaluation of the EPBD so as to ensure it remains fit for purpose (2) to consider the need for additional measures relating to energy efficiency and the use of renewable energy in buildings, with a 2030 perspective; (3) to deliver improved access to funding and stimulate investments ('Smart Financing for Smart Buildings'). It also aimed at simplifying and modernising the Directive to make sure it remains fit for purpose.

Estimated savings and benefits

The Commission proposal removed the obligation to conduct a study on the feasibility of alternative high efficiency alternative systems for new buildings which could lead to cost savings of ca. €200 million/year. It further proposed a simplified inspection regime for Member State authorities which are estimated to result in savings of average €200 per inspection for ca. 13.5 million instances of inspections in non-domestic buildings in the 15 concerned Member States during 2020-2030 (assuming full compliance). Additional measures proposed are expected to reduce the administrative burden of the EPBD by €98.1 million per year.

State of Play:

Adopted: Directive (EU) 2018/844, date of effect: 9 July 2018

Outcome of legislative procedure

The review of the Energy Performance of Buildings Directive had two specific objectives:

• The first stemmed from the political mandate of the Commission, reflected in the Energy Union Strategy, "to review the Directive and propose revisions where needed to underpin the 2030 target".

• The second was meant to "address the shortcomings identified by the evaluation of the Directive so as to ensure that it remains fit for purpose (REFIT component)".

The final text of the revised EPBD:

• Creates a clear path towards a low and zero-emission building stock in the EU by 2050 underpinned by national roadmaps to decarbonise buildings.

• Encourages the use of information and communication technology (ICT) and smart technologies to ensure buildings operate efficiently for example by introducing automation and control systems.

• Supports the rollout of the infrastructure for e-mobility in all buildings (although to a lesser extent than in the Commission's proposal).

• Introduces a "smart readiness indicator" which will measure the buildings' capacity to use new technologies and electronic systems to adapt to the needs of the consumer, optimise its operation and interact with the grid.

• Integrates and substantially strengthens long-term building renovation strategies.

• Mobilises public and private financing and investment.

• Helps combatting energy poverty and reducing the household energy bill by renovating older buildings.

The objectives of the review of the EPBD proposed by the Commission have been confirmed in the legislative procedure and several provisions have been reinforced as compared to the original Commission proposal thus delivering somewhat more savings, particularly through reinforced provisions on long term renovation roadmaps and on the deployment of ICT and electro mobility.

While the Commission had proposed some simplified obligations on the feasibility of high-efficiency alternative systems and on inspection regimes, legislators accepted some elements while including, in the same articles, some additional obligations. Therefore, for those two aspects, it cannot be said that as a result of the revision, the Directive has been simplified. The overall outcome of the revision as agreed by the co-legislators corresponds to a net increased level of ambition in relation to energy performance of buildings in the EU.

State of Play:

Member States had to bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 10 March 2020 and communicate these to the Commission.

The Commission will continue monitoring the completeness of the notified national transposition measures, and subsequently their conformity with the requirements of EU law. In terms of completeness, some Member States have already transposed the revised EPBD to a significant extent, while others to a lesser extent only. Therefore, the enforcement efforts will be continued and intensified, as appropriate, so as to ensure that the revised EPBD is transposed completely and implemented correctly across the EU.