The EU's 2002 Energy Performance of Buildings Directive was designed to slash emissions and help the bloc meet its targets under the Kyoto Protocol. Minimising energy waste in a sector that covers over a third of the Union's energy demand was seen as a crucial element in reducing Europe's dependence on foreign fossil fuel imports.
The directive provided a common methodology for calculating the energy performance of buildings and obliged member states to draw up minimum standards. These should be applied to all new buildings and to existing buildings with a usable floor area above 1,000m² when they undergo a major renovation.
Consequently, the legislation stopped short of imposing EU-wide minimum efficiency standards in favour of a flexible approach, requiring member states to lay down concrete requirements, while accounting for local climate conditions and building traditions.
The EU took an integrated approach to calculating efficiency standards. This extends beyond insulation to aspects like heating and cooling, and heat recovery and lighting installations.
As a result, regular inspections of boilers and central air-conditioning systems and assessments of heating installations that include boilers more than 15 years old were made mandatory.
Moreover, alternative systems like decentralised energy from renewables, combined heat and power generation (CHP; see EURACTIV LinksDossier), district heating and heat pumps must be considered in new buildings with a surface area above 1,000m².
To promote greater public awareness and debate on energy savings in buildings, the directive introduced an energy performance certificate, which has to be made available each time a house is built, sold or rented out. The certificate should help potential buyers or renters to compare the building's energy performance against established national standards and benchmarks, and to consider any cost-effective improvements they could make.
The public sector was expected to take the lead by displaying energy certificates in "prominent" places in public buildings.
Lack of experts, limited scope
Although EU buildings legislation has introduced energy savings from buildings into national political debates, the expected energy savings have been delayed by insufficient workforces and lack of ambition.
The implementation of the directive first encountered problems due to the lack of qualified experts to issue certificates and carry out inspections. A shortage of trained professionals thus delayed its entry into force by three years.
Moreover, the directive excluded a massive proportion of existing building stock – 72% – from having to comply with energy performance standards by imposing the 1,000m² threshold. In any case, adding energy efficiency elements to building codes is a slow way to bring about energy savings, as only about 3% of a country's building stock is newly built or renovated even in a good economic year, experts say.
Recast of the directive
In order to rectify these shortcomings, the Commission proposed a revamp of the 2002 directive as part of its Second Strategic Energy Review in November 2008. Acknowledging that a majority of member states were still sitting on enormous untapped potential to reduce the energy consumption of their building stock, the EU executive hoped that the strengthened law would contribute towards its climate goals (see EURACTIV LinksDossier on 'Energy and climate change: Towards an integrated EU policy').
The EU executive expects the overhaul to bring the bloc's energy consumption down by 5-6%, consequently slashing CO2 emissions by 5% by 2020.
One of the key changes introduced by the draft was the extension of the scope of the directive by eliminating the current 1,000m² threshold, meaning all existing buildings undergoing major renovations would have to meet minimum efficiency levels. At the same time, alternative energy systems would have to be considered for all new buildings.
The Commission acknowledged that the considerable flexibility in the original directive had led to widely different levels of ambition in the minimum requirements laid down by member states. The draft develops a methodology to calculate the "cost-optimal" level of standards, against which member states would have to compare their actual requirements.
The recast also sought to clarify the language of energy-performance certificates, in order to turn them into "real, active energy labels of houses" to be included in sales and rental documents as well as in all advertisements.
The European Parliament adopted a strict stance on the recast (EURACTIV 24/04/09), amending the proposal by adding a condition that new buildings constructed as of 2019 would have to be zero-energy. All new buildings would consequently produce their own energy using renewable energies like solar panels while minimising energy-loss with better insulation, double-glazing and similar measures.
As for existing buildings, MEPs urged member states to set percentages for a minimum share of existing buildings to become energy-neutral in 2015 and 2020.
The Parliament also wanted smart meters to be installed by default in all new buildings, as well as when renovating new ones.
National capitals, however, took issue with the Parliament's amendments. They said that many of them were "overly ambitious and even unrealistic" and expressed concerns about an increased administrative burden (EURACTIV 08/07/09).
The European Commission, however, argues that the investment and administrative costs associated with the proposed changes would be "relatively low" compared to the benefits to be accrued. It calculated that abolishing the 1,000m² threshold for buildings undergoing renovation would trigger an annual €25 billion return on additional yearly investments of €8 billion by 2020, mainly via savings in energy bills.
'Nearly zero' standards
On 17 November 2009, EU lawmakers reached a long-awaited compromise on the recast, agreeing that all new buildings would have to comply with tough energy-performance standards and supply a significant share of their energy requirements from renewables source after 2020.
The public sector must lead the way by owning and renting buildings with such "nearly zero" energy standards by the end of 2018. Nevertheless, the concept of "nearly zero" was left vague, allowing member states to define their own standards.
Currently, there are wide variations between definitions in different member states, and often they do not include all types of energy use, from heating rooms to electricity consumption.
Critics regretted that no standards were laid down for the energy performance of existing buildings.
The text simply states that major renovations must increase energy-savings if doing so is technically, functionally and economically feasible. But member states will have to develop national plans to encourage owners to take the opportunity to install smart meters, heat pumps and heating and cooling systems using renewables.
The additional costs of improving the insulation of all building components and installing new systems have been estimated to make very energy-efficient buildings up to 10% more expensive to build than traditional buildings, depending on local conditions. However, experiences from Germany and Austria, where the lion's share of Europe's low-energy housing has been built, have shown that increased competition in the market brings down costs closer to those of standard buildings.
The lawmakers agreed that the key to implementing the reinforced legislation will be appropriate funding. As a result, an article was added to the directive on financial incentives, at both the national and EU levels.
The new legislation will require member states to list incentives from technical assistance and subsidies to low-interest loans by mid-2011 for the transition to near zero-energy buildings.
Increasing the energy performance levels of buildings requires a portfolio of solutions, many of which are already available or currently being developed.
On the energy supply side, the use of decentralised energy from renewable sources like rooftop solar panels is expected to become an increasingly feasible solution once smart meters are in place. The significant use of district heating in Sweden, Finland and Denmark, on the other hand, testifies to the potential to expand it to other EU member states.
At the other end of the spectrum, smart technologies can have a significant impact on cutting the electricity demand of buildings.
Intelligent lighting systems can bring about significant electricity savings in non-residential buildings from factories to offices, suppliers say (EURACTIV 19/03/09). Essentially, this involves installing sensors that activate lights only when somebody is in a room.
Furthermore, more efficient building components like lifts are constantly being developed. Lifts that can feed energy normally wasted when braking back into the building's internal grid can significantly reduce a building's energy use, the industry says.
Energy performance contracting
One way of raising money for energy-efficiency investment is energy performance contracting, which allows the consumer to pay for initial investments with future savings.
In essence, a building owner contracts an energy service company (ESCO) to assess the energy-saving opportunities presented by a building and to recommend improvements that will pay for themselves through savings. The ESCO guarantees that the resulting savings will finance the entire cost of the project, or it will pay the difference itself.
A typical project lasts up to 10 years, during which time the entire building is retrofitted with energy-saving solutions such as new lighting technologies, boilers, control systems and renewable energy generation tailored to the specific facility.
Energy performance contracting agreements were established in a handful of EU countries in the mid-1990s, and Germany, the UK and France now have relatively developed markets. But Europe is not even close to becoming a multibillion-dollar market like that in the US, where federal and state governments have adopted performance contracting as the preferred method for making efficiency improvements in large facilities.
Among the hindrances to market growth in Europe are a relatively low awareness of energy efficiency and performance contracting by customers and difficulties in getting financing from banks, according to experts. Nevertheless, they say that the potential is high.