In December last year, EU legislators happened to reach a long-awaited agreement on the recast of the Energy Performance of Buildings Directive- EPBD. While the agreement has to be formally adopted and has to enter into force, FIEC as well as its Irish President, Philip Crampton, have gone on to already take a closer look at what is going to be a major legislative text that is going to shape the European renovation and new construction market for the coming years. As per Crampton, success when it comes to the new EU Green Buildings Directive completely depends on three main challenges:
85% of buildings across the EU were built before 2000, and almost 75% of them happen to be having a poor energy performance. The yearly renovation rate all throughout the EU remains very low. As per Copernicus, the EU’s climate observatory, last year has been the hottest year on record. This is reminding us of the immediate need for action if one has to meet the EU’s ambitious climate as well as energy saving targets.
That is why FIEC believes that the European Commission has done pretty well so as to present the new proposal for the revision of the Energy Performance of Buildings Directive in 2021.
Discussions pertaining to the proposal began in early 2022 and happened to be quite heavily influenced due to the economic consequences of the Russian-Ukraine war, which went on to leave EU citizens as well as businesses struggling due to high energy prices. All these events came on top of an existing difficult situation for the European Commission as well as the European Parliament: the inherently varied starting points of Member States when it comes to building renovation. It is therefore ideal to congratulate the EU institutions, as they have brought the negotiations to a successful end under such circumstances.
It is well to be noted that, from a climate perspective, one believes that the revised EPBD will go on to help decarbonize EU building stock. It will at the same time make buildings more energy efficient as well as resilient when it comes to the effects of climate change by way of new tools that will go on to enhance the energy efficiency of buildings by directly decreasing the CO2 emissions and by having a look at their life cycle performance, right from the extraction of raw materials to the manufacturing of products used in construction to the exact construction of the building as well as its operational phase.
From market and business standpoint, the new legislation has the capacity to push the renovation market across Europe. One is already seeing a gradual but, at the same time, steady shift from new construction to renovation as well as conversion. Renovation already happens to have a third of all activities throughout FIEC members and their companies, which are just behind non-residential construction segment, and this number is all set to increase due to the new EPBD.
Unfortunately, one can see that EPBD lacks clarity as far as benchmarks for building renovation are concerned. Member States are going to be having immense flexibility in order to set their own national trajectories for decreasing the average primary energy consumption when it comes to residential buildings and will have to reach kind of a minimum performance standard for non-residential buildings, however, there are numerous possible exemptions, and it is really hard to say the number of buildings the companies will have to renovate. It is indeed a matter of regret that the text does not offer a satisfactory level of planning certainty when it comes to construction companies.
Three main questions remain for FIEC.
The first issue is the funding issue. One is aware that the European approach towards building renovation has a massive social impact. Many of the structures that will need some form of renovation are considered to be the worst performers and happen to be often owned by susceptible people. From their perspective, the EPBD, hence goes on to raise questions pertaining to financial feasibility.
The EU’s renovation strategy has to be socially just as well as equitable. One needs to make sure that lower as well as middle-income households get support financially as well as technically in their renovation endeavors. The Member States as well as the financial sector happen to have a shared responsibility to provide support across households. National governments ensure that the EU funds that are available get used as effectively as possible when it comes to cost-effective renovations and that they reach people who are looking to renovate their homes. Member States should create as well as maintain apt framework conditions in terms of energy-efficient renovations and also make use of all instruments that are proposed by the EPBD so as to stimulate the renovation wave.
It is great to note that the EU has gone on to recognize the significance of SMEs within the EU’s efforts in order to renovate its old building stock. Without many SMEs, the Renovation Wave is not likely to succeed. Within the FIEC, 95% of the over 3 million companies that are represented by 32-member federations happen to be having less than 20 employees.
Given the major role of the financial sector when it comes to supporting households as well as businesses, a number of questions arise: Will financial actors make sure of the provision of sufficient innovative financial along with credit products for renovation? Will they get access to reliable information when it comes to energy performance of buildings to make good investment decisions?
The second critical issue is to make sure that the skills of the industry are reduced in the long term so as to keep doing energy renovations throughout the Member States. They happen to be having the ownership to promote education along with training of workers, as needed by the new EPBD, so as to ensure the availability of a sufficient workforce and also to create new high-quality jobs across the sector.
The third major challenge happens to be the impact of the EPBD on fresh construction and housing. One must not forget the housing situation across Europe, especially in France, Ireland, Belgium, Germany, and Sweden, where a struggle for affordable housing and new construction has been seen. This crisis is most likely to spread to other EU countries as well in the months to come. FIEC is for sure looking for answers to this issue: What is the impact EPBD will have on the new construction segment and high construction costs that are already existing in Europe? What will the transition to more energy-efficient renovations go on to mean when it comes to the new construction segment?
These questions have to be addressed by the EU, Member States, financial institutions, as well as the construction sector jointly. Only when these issues get effectively addressed will one see the new EPBD reach its total potential and also witness a real Renovation Wave across Europe. FIEC, along with its member federations along with companies, is all set to have itself involved in real-time execution of the EPBD.
