The Renovation Wave’s EPBD comes to shore: The tide is high for property owners!

The Renovation Wave's EPBD comes to shore: The tide is high for property owners!

PRESS RELEASE

15 December 2021 
Brussels, Belgium

To set European building stock on the path climate neutrality by 2050, the European Commission presented today a recast of the European Performance of Buildings Directive (EPBD). This piece of legislation is traditionally extremely relevant for the real estate and housing sector in Europe. This proposal is no exception as it sets minimum standards for new and existing buildings to comply with.

The recast of the EPBD aims to strengthen the legal framework on energy performance of buildings. Among the measures presented today, the following provisions are going to particularly impact European households [1] and the real estate sector.

MANDATORY ENERGY PERFORMANCE FOR THE ‘WORST-PERFORMING’ STOCK

As announced in the Renovation Wave Strategy, the European Commission is proposing to introduce mandatory energy performance standards (MEPS). They will focus on the ‘worst-performing stock’. This means that the buildings rated G and F under the Energy Performance Certificate will have to be phased out and renovated at the latest by 2033, no matter if they are public or private, residential and non-residential, rented or not. This goes beyond what has been done in the UK and France so far, where the standards apply only to rented properties.

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. There are approximately 118 million residential and non-residential buildings within the European Union [2], if up to 15% of them are G rated and approximately (at the very least) another 15% are F (according to the new EPC scale proposed) [3], this means that between 35 to 40 million buildings across the EU will have to be renovated by 2033. This is a Herculean task!

Many Member States are already facing a shortage of construction workers – especially skilled workers. 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.al

Many Member States are already facing a shortage of construction workers – especially skilled workers. 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.

For the Commission, MEPS for the ‘worst-performing stock’ are also meant to tackle energy poverty. This is to be welcomed! But MEPS can fall short of their social objectives unless they are preceded by the appropriate incentives and technical assistance. The Commission insists that these enabling tools are to be put in place at national level. We strongly support that! But given the magnitude of the task to be fulfilled in such a short period of time, we can question the availability of sufficient support instruments and incentives. This is worrying because the worst performing stock is not only likely to be rented by vulnerable households, but also to be the home of less wealthy families and owned by landlords with limited financial means. It is also more likely to be in regions and Member States where the average income is lower and the property value low.

ENERGY PERFORMANCE CERTIFICATE TO BE RESCALED

In an attempt to further harmonise the Energy Performance Certificate (EPC) across Member States, the European Commission is requesting to align A rated buildings with the new definition of ‘zero emission buildings’ and an energy performance benchmark set according to climatic zones. It also proposes to set EPC G at 15% of the worst performing stock. This proposal is meant to even the renovation task between Member State. But at the same time, it penalises Member States whose building stocks have already undergone substantial renovation and improvement and are performing better. Moreover, it still to be assessed, but this is unclear to which extend this new provision will guarantee or on the contrary further increase the disparities between EPC classes among Member States.

ZERO-EMISSION NEW BUILDINGS

By 2030, every new building constructed in the EU will have to be zero-emission buildings. This not only means that they will need to be highly energy performant, but also that the remaining energy needs will have to be covered by on-site produced renewables, renewable energy communities or from district and cooling systems. If the focus on buildings’ greenhouse gas emissions rather than simply on the energy performance is to be welcomed, this approach fails to integrate the full possibility of decarbonised energy systems provided from the grid. 

On top of these measures, the proposal contains numerous more specific provisions that will also considerably impact the building sector, including new provisions in relation to electromobility.

In her immediate reaction to the proposal, Emmanuelle Causse, Secretary General of UIPI stated:

“The EPBD has been drafted with good intentions and we support the objective! But the text is far too prescriptive and detailed. We have been strongly and continuously advocating, in respect of the conferral, subsidiarity and proportionality principles, for some level of flexibility for Member States to accommodate different economic, climate, political and social conditions, notably in relation to the Mandatory Energy Performance Standards (MEPS). We are not there yet and we have significant concerns about the feasibility of the task ahead of us by 2033. The green transition requires to have everyone on board, and we should really refrain from too impactful and detailed measures that risk raising more resentment than support. We will continue to constructively exchange with EU institutions to ensure that the final provisions of the EPBD are supported by EU citizens and our sector and meet up with the climate ambition.”

[1] In the EU in 2019, 70 % of the population lived in a household owning their home, while the remaining 30 % lived in rented housing, Eurostat, Housing in Europe.

[2] Data on the stock are scarce and difficult to compile in Europe. Part of the available data are expressed in numbers of available dwellings, others in total building floor area. The numbers here are based on the work done under the European Building Stock Observatory and complied by RICS Data Services. It refers to the number of buildings and includes the UK, which has an estimated 10,9 million residential buildings and 1,32 million non-residential ones. 

[3] According to Art. 16 of the proposal, the energy performance classes will be rescaled with a view to the common vision for a zero-emission building stock by 2050, while taking into account national differences of building stocks: the highest-class A will represent a zero-emission building, while the lowest class G shall include the 15% worst-performing buildings in the national building stock. The remaining classes (B to F) have an even bandwidth distribution of energy performance indicators among the energy performance classes. This means that Class F should at the very least represent 15% of the stock – probably more knowing that there will be hardly any A buildings. Therefore, if all buildings should achieve E by 2033, at the very least 30% of the entire stock will need to be renovated by 2033..

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