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In Brief

The European Commission has published a roadmap for revision of the Energy Performance of Buildings Directive (the ‘EPBD’), with the aim of improving the energy efficiency of both residential and commercial property, to deliver on the EU’s climate and energy objectives.

Impact of the Roadmap on the Construction and Property Sectors

When unveiling the European Green Deal in December 2019, the EU committed to various climate and energy objectives to be achieved by 2030 and 2050. The EU has targeted the building sector as an area where significant advances are needed as buildings, both residential and commercial, are responsible for 36% of energy-related greenhouse gas emissions in the EU.

It has become increasingly clear that the EPBD in its current form will not be sufficient to meet the EU’s climate goals and requires revision.

The existing EPBD

Although the existing directive has made some inroads in increasing energy efficiency, progress has been slow. The directive requires new buildings to be ‘nearly zero-energy’, but it has not effectively addressed the fact that almost 75% of the EU’s existing building stock is inefficient.

Coupled with this, deep renovations on existing buildings are carried out on only 0.2% of building stock annually. If renovation rates are not increased, the EU has estimated that climate goals would certainly not be reached by 2030 or 2050, but would take centuries.

EU proposals for revision

The revision proposals aim to strengthen the legal framework on the energy performance of buildings; to double the annual energy renovation rate of buildings by 2030, to foster deep energy renovation, and ultimately to contribute to the achievement of the EU’s climate neutrality objective for 2050.

The proposals to achieve this include:-

  1. Mandatory minimum energy performance standards, introduced on a phased basis, starting with stricter requirements for specific types of buildings (e.g. public buildings and office buildings), and extending progressively to all buildings;
  2. Energy Performance Certificates, updating the current framework to increase quality and availability, including consideration of digital solutions;
  3. Deep renovation standards, requiring a certain standard of renovation works that would reduce energy consumption by at least 60%; and
  4. Introduction of Building Renovation Passports.

Effect

Construction and property sectors may see these new policies as burdensome. Although the EU’s main aim is the reduction of greenhouse gases, which we all agree is necessary, there are also many positive effects that can be highlighted by the introduction of these new measures.

In particular, these measures will denote a significant stimulus into the construction sector with the implementation of the deep renovation standard and upgrading buildings to the new minimum energy performance standard. This will also have the effect of creating jobs, particularly in the SMEs that make up approximately 90% of the construction sector.

We are also likely to see increased investments, innovation and competitiveness in the construction and property sectors to deliver these new measures.

The EPBD’s new measures will require significant upfront investment. The Commission has noted that financial support measures will be needed to avoid unfair effects such as increased rents effecting low-income housing. Although the details of these supports are yet to be unveiled, their consideration is welcome.

What Next?

The Commission’s public consultation is open until 22nd June 2021, seeking views from stakeholders on the suggested improvements. The adoption of the Directive is expected in Q4 2021.

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‘Always professional to work with.’ Practice head(s): Sandra Egan; Lorraine Power; Harry Fehily.

Lorraine Power

Real Estate | Legal 500 EMEA 2021

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‘Always professional to work with.’ Practice head(s): Sandra Egan; Lorraine Power; Harry Fehily.

Sandra Egan

Real Estate | Legal 500 EMEA 2021

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Includes 'proactive, innovative and commercial thinkers' and advises on transactions involving a variety of assets, from office space to hotels. Particularly active in assisting investment funds and REITs with acquisitions.

Real Estate | Legal 500 EMEA 2021

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‘Approachable very professional in their approach to my company’s work. They understand timelines and are always open to discussion on how to speed up certain things.’

Real Estate | Legal 500 EMEA 2021

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Sandra Egan has proven experience in the negotiation of lease agreements and real estate asset transactions. One client praises Egan's practical approach, while another states: "She is hugely efficient and makes complicated projects look easy.

Sandra Egan

Real Estate | Chambers Europe 2021