Policy convergence hands opportunity to construction industry

Europe's construction industry can drive EU policy goals, if it steps up to the plate. [University of Salford Press/Flickr]

This article is part of our special report Sustainable construction.

SPECIAL REPORT / Europe’s construction industry can provide part of the answer to many of the European Union’ economic and environmental concerns.

New European Commission policies to bolster energy security, fight climate change, boost flagging economies and shift the EU to a sustainable future foresee an important role for the construction industry.

Policymakers have pinpointed building renovation, construction, and demolition as vital to the success of major economic, environmental, energy and security strategies.

“There’s a convergence of policy development which will deliver the construction industry the chance to take the lead in the continued economic recovery in Europe,” said Adrian Joyce, campaign director of Renovate Europe.

This special report will look at some of the ways that the industry is and can take advantage of this unique opportunity.

Energy Union and COP21

Today (18 November), the Commission will publish its State of the Energy Union report. The document outlines the EU energy market, highlighting the barriers to the creation of the Energy Union.

The Energy Union is the bloc’s response to two threats; energy security and climate change. Russia’s willingness to cut off gas supplies to the Ukraine, a vital transit country for EU supplies, gave the project the political impetus it needed to get off the ground.

At the same time, the Energy Union aims to help shift the EU towards a low-carbon economy. Global warming is uppermost in policymakers’ minds because of the UN Climate Change Conference, which begins in Paris on 30 November.

World leaders will try and reach an international deal to cap global warming at two degrees above pre-industrial levels at the COP21. EU leaders have already agreed to cut their greenhouse gas emissions by at least 40% by 2030, and to increase energy efficiency by at least 27%.

>>Read: EU leaders adopt ‘flexible’ energy and climate targets for 2030

Today’s report, due to be launched at noon, was drafted to sketch out where the EU currently stands and what can be done to reach those goals.

Leaked versions of the report revealed that buildings and the construction industry have an influential part to play. Building renovation can deliver emissions cuts and efficiency increases, as well as local jobs and economic growth.

That is recognised in the leaked report. In 2016, the executive will make legislative proposals to revise the Energy Efficiency Directive to ensure it helps the bloc hit the 2030 goals.

“Equally important is a particular focus on buildings, whose energy represents about 40% of the EU’s total final energy consumption and a quarter of non-ETS greenhouse gas emissions,” the leaked paper said. ETS refers to the Emissions Trading System, which is the EU’s carbon market. 

The Renovate Europe campaign said that EU buildings were responsible for 36% of the bloc’s CO2 emissions. 75% of homes in the EU are inefficient, the European Commission has said.

The report said that a “thorough evaluation” of the poorly implemented Energy Performance of Buildings Directive was ongoing, before it too is revised.

>>Read: 27 member states hit with EU legal action over energy efficiency

Greater energy efficiency also minimises demand, strengthening the bloc’s energy independence. Renovate Europe said that the EU imports more than half (53%) of its energy every year, costing the bloc €400 billion annually. Reducing that dependence will make the EU more resilient to price shocks and unreliable suppliers, such as Russia.

Despite the multiple advantages of building renovation, current renovation rates are just 1% per year.

Growth and investment

Renovation programmes will stimulate investment and directly create two million local jobs in the construction sector, which is a bellweather for the economy as a whole.

€60-€100 billion is needed to be invested annually in EU buildings to achieve Europe’s 2020 energy efficiency target of 20% compared to 1990 levels.

Private investment in energy-efficient buildings renovation must increase five-fold by 2030, according to the Energy Efficiency Financial Institutions Group (EEFIG), which has called for a “historic level of public-private collaboration” to bridge the funding gap for energy savings projects.

>>Read: Energy efficiency investment must increase five-fold, warns report

“Financing the required upfront energy efficiency investments remains a substantial challenge,” the draft Energy Union report said.

Dragging Europe back to growth is a preoccupation of the Juncker Commission. It conceived the European Fund for Strategic Investment (EFSI) to disburse the €21 billion public money earmarked for loan guarantees in the Juncker Investment Plan.

The draft State of the Energy Union report recognises that the EFSI is not ideally suited to financing smaller efficiency projects, such as renovation. The executive wants to set up a scheme that would allow smaller investments to be aggregated; stacked on top of each other to make a bigger investment.

>>Read: Commission plans scheme to boost energy efficiency investment in buildings

The aggregation of smaller renovation projects is inspired by Energies POSIT’IF. The French company stacked up planned efficiency renovations of apartments to secure funding from the EFSI.

The scheme will strengthen development assistance and “off-the-shelf instruments with standard terms and conditions, notably in the area of buildings”.

Construction and demolition

The construction and demolition industries are singled out for special attention in leaked European Commission documents for its retabled circular economy package of waste, incineration and recycling laws.

The circular economy is a term used to describe a sustainable, low carbon economy, where, as far as is possible, nothing is wasted. It is seen as vital for the future of a planet, with finite resources and a booming population.

The Commission controversially axed the package drafted by its predecessor, the Barroso administration, as part of its drive for better regulation.

The replacement is expected to be launched in December. EURACTIV has seen internal documents that will form the basis of the new package.

The draft says that construction and demolition waste represents one of the highest volumes of waste in Europe.

While much of the “waste” can be recycled or re-used, the rates at which member states actually achieve that vary hugely across the EU.

The executive plans to develop guidelines for demolition sites to improve recycling rates by, for example, ensuring valuable materials are identified and recovered.

These will be complemented by voluntary protocols, aimed at spreading best practice through the European industry.

Guidelines will also be drafted to ensure potentially dangerous waste is properly handled.

Buildings last a long time. Nine out of every ten buildings in the EU will be standing and occupied by 2050. But new buildings should also be designed in a way that makes them more recyclable in the future and minimise their environmental impact, according to the Commission document.

The executive will develop environmental performance indicators to cover the whole lifecycle of a building, supporting that with demonstration projects and guidelines for green public procurement.

Climate change, the political response to the Ukraine, boosting jobs and growth, and the long-term goal of creating a circular economy to ensure the future are all central policy goals of the Juncker Commission.

The Concrete Initiative is a platform set up by industry associations to engage stakeholders on many of these issues, examining the economic, environmental and social implications of sustainable construction. It aims to show how the construction industry can help solve the challenges facing policymakers.

Patrick Liébus, President of the European Builders Confederation, said,“Craftsmen and SMEs from the construction sector in Europe have long been supporting all measures to enhance energy efficiency in buildings. With the Energy Efficiency Directive, the upcoming Package on Circular Economy and the possibility to use funds from the Juncker Plan, the EU has empowered construction SMEs in achieving sustainability in buildings.

“The work done by the EU institutions should boost the building sector activity, create many qualified jobs and significantly contribute to reducing Europe’s costs for energy imports thus increasing energy security whilst improving quality of life and reducing fuel poverty. COP 21 must follow this path and include a commitment towards buildings.”

The Energy Union is part of the political response to the threat to EU gas supplies. The majority of Russian gas imports to the EU, about 30% of its annual needs, goes through Ukraine. In 2009, Russia turned off the taps, causing shortages in the EU.

Plans for the Union have developed beyond questions of security of supply to encompass issues such as fighting climate change. 

The Renovate Europe campaign says that, thanks to modern technology, buildings' energy demands can be cut by 80%. But, it adds, in order for that to happen, there needs to be an effective regulatory and legislative framework in place. 

The Juncker Plan – unveiled late last year – aims to create a new European Fund for Strategic Investments (EFSI), with €5 billion coming from the European Investment Bank (EIB) and an €8 billion guarantee from existing EU funds designed to secure a contribution of €16 billion in total from the institutions.

The €8 billion guarantee will come over a three-year period from the Connecting Europe Facility (€3.3 billion); Europe’s research programme Horizon 2020 (€2.7 billion) and so-called “budget margin”, or unused funds, worth €2 billion.

The resulting EFSI fund totalling €21 billion is expected to generate €240 billion for long-term investments and €75 billion for SMEs and mid-cap firms over the period 2015-2017.

World leaders will meet in Paris in November and December at the UN Climate Change Conference in an effort to seal a deal capping global warming at no more than two degrees above pre-industrial levels.

  • 18 November: Launch of State of Energy Union report
  • 30 November: UN Climate Change Conference
  • December 2015: Circular Economy package launch

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