EU’s new buildings law aims to renovate 15% least efficient homes

The EU's "focus on the worst performing buildings prioritises the most cost-effective renovations and helps fight energy poverty,” said EU climate chief Frans Timmermans, who presented the proposal on Wednesday (15 December). [European Union, 2021. Source: EC - Audiovisual Service]

This article is part of our special report Building decarbonisation.

The European Commission has proposed the introduction of minimum energy performance standards for the 15% worst performing buildings in Europe, which would be rated “G” on the EU’s energy performance scale, whether they are residential or not.

The proposal is contained in the the EU’s revised Energy Performance of Buildings Directive (EPBD), which the Commission presented on Wednesday (15 December) as part of a wider package of legislation aimed at halving the EU’s greenhouse gas emissions by 2030.

“Its focus on the worst performing buildings prioritises the most cost-effective renovations and helps fight energy poverty,” said EU climate chief Frans Timmermans, who presented the proposal.

By 1 January 2027, all commercial or public buildings would need to reach at least class “F” on the EU’s energy efficiency scale, and then class “E” by 1 January 2030.

Residential buildings – individual houses or apartments – would be given more time, with a requirement to reach class “F” by 1 January 2030 and class “E” by 1 January 2033.

These ratings would be based on a harmonised European scale, with the worst performing “G” class corresponding to the 15% least efficient buildings and the “A” class corresponding to zero emission buildings.

It won’t be a rigid system though, as every EU country will define its own energy performance scale based on common EU-wide parameters. “On that basis, each member state will define what are its own 15% worst performing buildings,” a senior EU official explained.

And EU countries will be free to decide the “trigger points” for renovation – such as when an apartment is sold or put out for rent.

According to the Commission, focusing on the worst performing buildings will alleviate energy poverty and benefit the poorest households who cannot afford to renovate their homes and currently pay the highest proportion of their income on heating.

“We know that the worst performing buildings are the ones that are most frequently occupied by low income households,” said a senior EU official at a press briefing on Tuesday (14 December).

“And therefore by targeting these worst performing buildings, and channelling financing and technical support where it is most needed, we are ensuring that building renovation efforts address energy poverty at the source,” the official said.

‘Change of paradigm’ for property owners

For property owners, this is a major change meaning that every building will have to be renovated by 2033 at the latest, no matter whether they are public or private, residential and non-residential, rented or not.

“This is a change of paradigm and the first time the EU will go that far in setting a direct obligation for EU citizens and businesses to renovate their homes and properties,” said Emmanuelle Causse from the International Union of Property Owners (IUPI).

“This goes beyond what has been done in the UK and France so far, where the standards apply only to rented properties,” Causse told EURACTIV. “No distinction are made anymore for multi-apartment buildings,” she pointed out, saying those need much more time to be renovated – around 4 to 6 years in France.

According to the European Commission, the new EPBD standards will support the EU’s “Renovation Wave” that was presented last year, with the aim of renovating 35 million units.

But according to property owners, the number could be higher. There are approximately 131 million residential and non-residential buildings within the EU, according to the IUPI. So if 15% of them are rated “G” and another 15% are rated “F”, this means at least 40 million buildings across the EU will have to be renovated by 2033, IUPI calculated.

“This is a Herculean task” Causse said, drawing attention to the lack of skilled labour to deliver on the objective.

“Many member states are already facing a shortage of construction workers – especially skilled workers,” Causse remarked. “And if the deadline seems far away, taking into account the time to adopt and transpose the directive, it will at best leave at best eight years to achieve this objective,” she told EURACTIV.

EU confronted with lack of skilled labour to support building renovation wave

The EU’s push to improve energy efficiency in buildings and reduce the amount of fossil fuel they consume could create more than 160,000 jobs in the energy and heating sector by 2030, according to the European Commission.

Up to €150 billion of EU funding available

The European Commission is conscious that massive efforts will need to be made. But it is also confident that sufficient capital will be available, both through private and public funds.

“It’s clear that this will require significant investment,” the senior EU official explained. “But the good news is that there are also unprecedented means that are being put forward,” the official added, saying “up to €150 billion” could become available from the EU budget to implement minimum energy performance standards between now and 2030.

EU public money would come from sources such as the European Regional Development Fund, the Cohesion Fund, and the EU’s €800 billion coronavirus recovery fund. The official also cited soon-to-be-updated EU state aid rules that will allow national governments to finance building renovation efforts.

Other parts of the EPBD proposal relate to digitalisation and transparency, including the creation of a “renovation passport” that will allow homeowners to keep track about the different stages of renovation of their building.

Fossil fuel heating phase out by 2040

But one of the most controversial aspects was left out of the EPBD revision – the idea of banning the sale of new fossil fuel boilers, which is supported by countries such as Luxembourg.

The European Commission has no right to ban heating technologies and has to “respect the division of competences between the EU and the member states,” Timmermans explained.

“We are leaving this decision to the member states, in particular considering that they have very different starting positions” when it comes to their energy mix and types of heating infrastructure in place, said Kadri Simson, the EU’s energy commissioner.

At the same time, the EPBD proposal provides “a clear legal basis in case European countries want to ban fossil fuel boilers,” Simson added, saying that “some member states are considering this”.

EU rules out banning gas boilers, aims for ‘gradual phase-out’ instead

The European Commission will not propose banning gas-fired home boilers “overnight”, a senior EU official has said, explaining that differences in energy mix between EU member states are just too big to apply a one-size-fits-all solution.

More importantly, the Commission has chosen “a dual system” combining the creation of a dedicated carbon trading system for transport and buildings in addition to energy performance standards, Timmermans said. “And the combination of the two gives the right incentives in the right places,” taking into account national circumstances, he explained.

Moreover, EU member states will be required to spell out strategies for eliminating fossil fuels from heating as part of newly-introduced National Buildings Renovation Plans to meet their climate goals.

“These plans will need to include roadmaps for phasing out fossil fuels in heating and cooling by 2040 at the latest, along with a pathway for transforming the national building stock into zero-emission buildings by 2050,” the Commission said in a statement.

Electrification ‘is the way to go’ for heating

And in terms of heating technology, the EU executive is convinced that electric solutions such as heat pumps are the best option.

“We believe really that electrification is the way to go in terms of decarbonisation of buildings as the most cost efficient pathway,” a senior EU official said. “So we’re not necessarily looking for instance, into hydrogen for heating of buildings.”

Not everybody agrees, however. Supporters of hydrogen-ready boilers and green gases in heating say they can help decarbonise the heat sector by complementing electric solutions like heat pumps and energy efficiency measures in buildings.

“We do expect heat pumps to form the backbone of Europe’s new heating system,” said Stephan Kolb, regulatory affairs director at Viessmann, the German manufacturer of home heating appliances.

But he pointed out that a heating system relying solely on heat pumps would require massive amounts of additional electricity and grid reinforcements, especially to manage winter heat demand peaks.

“We believe that, in many countries, well-dosed volumes of gaseous energy carriers will be needed to complement a backbone of heat pumps,” Kolb told EURACTIV in emailed comments. “’Well-dosed’ in a sense: much less than today’s natural gas volumes, as a result of electrification and envelope upgrades.”

EU ponders 20% hydrogen-ready standard for gas boilers

New gas boilers placed on the European market could soon be required to operate with “at least 20% hydrogen” under new standards being envisaged at EU level.

[Edited by Benjamin Fox]

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