New renovation rule set to boost inner-city industry

Old factory industrial site brownfield_small.jpg

This article is part of our special report Industrial revival.

SPECIAL REPORT / Newly adopted EU rules requiring governments to revamp old buildings will generate industrial renovation in cities, say commentators who welcome the energy efficiency directive approved by the European Parliament's energy committee last week (12 July).

The directive requires EU member states to renovate at least 3% of the total floor area of building of more than 500 square meters which are "owned and occupied by their central government".

Although these buildings represent just 12% of the EU's building stock, the European Commission believes this should set the example for private owners, creating a snowball effect.

Adam McCarthy, Director of Government Relations at Johnson Controls and President of EuroAce, representing companies in the building-efficiency sector, said that for every €1 million spent on building regeneration, "you create 19 jobs in and around the construction industry, building or supplying equipment.”

US example shows private sector latches on to public

McCarthy said that in the United States, a decision taken during the 1990s at the federal level to retrofit companies using third-party finance had gone on to generate €7 billion of private construction.

“We have seen over time the proportion of that business [in the US] moving from the public to the private sector. So that is a concrete case of the leading role of the public sector,” McCarthy said.

It is likely that local authorities will follow the example of central governments, according to a spokeswoman for the Building Performance Institute Europe, a non-profit group dedicated to energy savings in the built environment.

A stimulus in the construction market could result from ambitious levels of renovation flowing from the new rule, the spokeswoman said, adding: “In this way [the 3% rule] will provide a positive example to society, will improve the buildings’ public procurement and may catalyse the high quality renovation market.”

Construction industry needs a boost

Claude Turmes, the Green MEP from Luxembourg who is the chief Parliament negotiator on the efficiency bill, claims that the building renovations attached to the directive will constitute an important part of Europe’s growth initiative, which EU leaders agreed on 29 June.

The new 3% renovation provisions involve a phase-in, and will apply to buildings with a "total useful floor area" of more than 500 m2 up until July 2015, and 250 m2 thereafter.

And old industrial buildings could be among the first to benefit from the positive ripple effect of the new EU law.

2011 survey from English Heritage, a public-funded organisation, has found that almost half of listed industrial buildings could be put to new economic uses.

"Forty percent of these buildings could be reused to house new advanced manufacturing, the sorts of technology, green engineering and creative and inventive businesses on which the country's economic future now depends," said Simon Thurley, chief executive of English Heritage.

However, most developers "can be put off by a site's scale, possible contamination, conversion costs," says the public group. To encourage them, the association has launched a website that offers advice relevant to re-using industrial buildings. Developers interested in taking these on will get additional help from English Heritage to guide them through the process.

"Although not easy, there are countless examples that have been saved by committed local groups as conserved sites in the landscape, often with public access or as visitor attractions," the association said.

“In the private residential sector, the spillover effect [of the 3% rule] will be probably very low due to the different profile of this sector (private investments, still need to overcome some market barriers, permits etc),” said a spokeswoman for the Building Performance Institute Europe (BPIE), an NGO dedicated to improving the energy performance of buildings across Europe.

“While the 3% rule is a step forward, it is still not enough, lower than initially proposed by the EU Commission and supported by the EU Parliament and overall more specific legislation has to be developed or better implemented in order to really boost the construction markets and to greening the urban areas and buildings,” the BPIE spokeswoman added.

“Achieving the EU energy-saving target makes sense, not just to further our energy security and climate change goals, but also broader economic sense, because it can stimulate economic activity and create millions of jobs, whilst bringing down energy bills for business and households and reducing our dependence on energy imports,” according to Parliament's rapporteur, Claude Turmes (Greens, Luxembourg), who led negotiations with the Council on the directive.

“With regard to the 3% we were all hopeful it would be the broader public sector,” said Adam McCarthy, Director of Government Relations at Johnson Controls and President of EuroACE, representing companies in the building efficiency sector. “That said, there is a correlation between government and the public sector and private sector. We would have liked more but we genuinely believe the 3% will have an impact on the private sector as well,” McCarthy concluded.

The renovation of public buildings has been one of the most controversial issues in the energy efficiency directive.

In 2011, the European Commission proposed a 3% renovation rate that would target public buildings with a total useful floor area of over 250 square meters, an objective which activists already criticised for being too weak. 

But member states later restricted this requirement further to include only "central government-owned" and "occupied" buildings, "with a useful floor area of over 500 m2". As of 9 July 2015, this will be lowered to 250 m2. 

The rewording resulted in significant reductions in scope for many countries. Whilst in Sweden, France and the Netherlands many buildings are owned by the central government, this is not the case in Germany, where regional authorities own most public buildings.

As a result, Germany will have to refurbish only around 37 public buildings. Similarly, in the UK, many buildings owned by the central government are historic and would be exempt from this requirement.

  • Sept. 2012: Energy efficiency directive expected to be passed at European Parliament's plenary session.

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