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Energy Performance of Buildings Directive (EPBD) 2024 Revisions

2024 EPBD - Energy Performance of Buildings Directive revisions

What is the Energy Performance of Buildings Directive?

The Energy Performance of Buildings Directive (EPBD) is designed to provide a legislative framework to decarbonise and improve the energy efficiency of the EU’s building stock. First developed in 2002 and revised multiple times since, it has become the EU’s most important legislative tool. The latest revision was enacted in May of 2024, which includes additional clarity and requirements needed to achieve a zero-emission building stock by 2050.

 

When Does it Come into Force?

It is already agreed upon at an EU-level, but member states are required to take the directive and translate it into their national law, usually this is finalized within 24 months, with timescales of certain items written into the directive. But expect different member states to use some discretion on how it is implemented.

 

How will this Impact Real Estate Developers?

Expect building regulations to get stricter with respect to energy efficiency. The directive contains a new definition for “zero emissions building” that all public buildings and buildings over 1,000m2 will have to follow from 2028 and all buildings from 2030. This means:

  •         10% better energy efficiency than “nearly zero-energy buildings” (effectively current standards)
  •         No fossil fuels to be used in buildings

 

In addition:

  • Solar must be installed on all new non-residential by 2027 and 2030 for residential
  • All energy must be derived from renewable energy by 2030
  • EV charging, EV pre-cabling, and bicycle spaces are required for residential and non-residential car parks, following guidance

 

As with most building regulation changes, costs may increase while contractors adapt to the changes, and increased adoption of heat pumps as a replacement to boilers should be expected. The rules on solar and EVs are likely to continue expansion of the solar and EV industries.

 

How will this Impact Real Estate Owners?

The EPBD creates significant financial risk for real estate owners. It is important to ensure a good understanding of impacted portfolios and any risk exposure that may exist.

 
Minimum Energy Performance Standards for Commercial Properties

Minimum Energy Performance Standards (MEPS) is the most important part of EPBD for commercial property owners. Member states are required to set thresholds for minimum energy performance with the poorest performing buildings facing penalties for non-compliance (the level to be determined by the member state). These thresholds will become stricter towards 2040 and 2050 so only zero-emissions buildings will remain unpenalized.

The MEPS will require penalties (with exemptions) on the worst-performing fractions of the building stock:

  •         Worst 16% of building stock from 2030
  •         Worst 26% of building stock from 2033

 

The regulation is likely to have a significant impact on the saleability of poor performing assets and so having energy efficiency upgrade plans in place prior to the deadlines is recommended.

 
Residential Property Improvement

The EPBD provides new targets for residential buildings: primary energy consumption is required to decrease 16% by 2030, followed by a 20-22% reduction by 2035. A significant portion, at least 55%, of this reduction must stem from renovating the worst-performing buildings.

These are challenging targets with member states having discretion on how they are met. It’s likely that targets will be achieved through renovation driven by subsidies as well as member state-led energy efficiency targets, such as what is happening in France.

 
EPC Realignment

The Energy Performance Certificate (EPC) system means that every member state has its own scoring system for EPCs. The EPC system is being standardised across the EU on an A (or A0) to G scale so future EPCs will not be comparable to existing EPCs. The legislation may be used to define MEPS and will make old and new EPC incomparable.

 

Fossil Fuel Boiler Phase-out

Member states are required to put in place phase-out plans for fossil fuel boilers by 2040. The requirements are up to the discretion of the member states, but considering the lifetime of a boiler can be beyond 25 years, replacement with non-fossil fuel technologies, such as heat pumps, should be considered for all end-of-life replacement projects.

 

 

How can GreenGen help?

GreenGen provides end-to-end ESG and energy efficiency support, including:

  •         Legislation research and advisory services
  •         Energy and net zero carbon plans to meet new requirements
  •         Risk analysis, impact assessment, and mitigation solutions
  •         Implementation of improvements, including solar PV and EV

 

For further information, reach out to the GreenGen team: