Insulating the economy: why the EU must aim high on its buildings directive – EURACTIV.com
The majority of buildings in Europe are not energy efficient, and a revision of the Energy Performance of Buildings Directive (EPBD) is needed to give businesses and investors a clearer policy direction, write Ursula Woodburn, Stephanie Pfeifer and Mike Peirce.
Ursula Woodburn is Head of EU relations at CLG Europe. Stephanie Pfeifer is the CEO of the Institutional Investors Group on Climate Change (IIGCC). Mike Peirce is Executive Director of Systems Change at Climate Group.
The European Parliament’s Industry, Research and Energy Committee will soon vote on a key component of the ‘Fit for 55’ Package: the revision of the Energy Performance of Buildings Directive (EPBD).
This legislation is not only important for achieving the EU’s climate goals but is also an opportunity to create better residential and commercial buildings while reducing bills.
An ambitious and robust revision of this directive could help to address today’s cost-of-living and energy security crises while creating a more inclusive, competitive and growing economy.
Businesses and investors are ready for the challenge to create improved, more efficient buildings for Europeans, while creating jobs and a more sustainable economy. To help enable this, businesses and investors must be given clear policy direction.
European building stock is not energy efficient
Two thirds of the buildings in the EU have poor energy performance: leaking heat in winter while not staying cool in summer. The majority of these buildings (85-95%) are expected to still be standing in 2050.
Under current policies, less than 1% of buildings are renovated each year, while data suggests the number of Europeans unable to provide enough heat in their homes has risen from 36m to 50m since 2020.
Beyond the climate crisis, which has caused unprecedented extremes of heat and cold, this is a deeply personal crisis for many families which requires urgent action.
Yet the current pace and scale of renovations are not sufficient to reduce emissions and energy bills, as the buildings sector still accounts for 36% of emissions in the EU, 40% of total energy consumption, and 53% of natural gas consumption.
Residential buildings renovation should focus on the worst-performing houses and low-income households, since people living in leaky buildings also suffer the most from the ongoing energy price spikes.
There is also evidence to suggest that more energy efficient homes are lower risk for banks. For commercial buildings, clear standards motivate building owners to plan renovations in advance, with the knowledge that a building must meet a certain energy efficiency level before it can be sold or rented with a new lease.
A robust approach aligned with the EU’s legally binding climate goals also provides investors with long-term certainty. That’s why mandatory renovation of buildings with the poorest energy performance – Minimum Energy Performance Standards (MEPS) – is at the heart of the EPBD reform.
The well-balanced position of the rapporteur and shadow rapporteurs that was agreed in December highlights the key role of MEPS. Their suggestion includes introducing standards obliging all non-residential buildings to achieve at least class “E” on the EU energy efficiency scale by January 2027 and then class “D” by 2030. For residential buildings, the same energy efficiency classes should be achieved by 2030 and 2033, respectively.
Citizens not only need better homes, they demand it. According to Rockwool’s public opinion polling, an average of 79% of respondents in the UK, USA, France, Germany, Italy, Poland and Denmark would be willing to make their homes more energy efficient if they had the means to do so, and 73% support mandatory energy performance standards for buildings given the right enabling conditions.
Businesses and investors have already recognised the need for their involvement in improving energy efficiency and deep modernisation of buildings, and see this as an opportunity for ensuring sustainable growth.
Recent data shows that for every €1 million invested in energy renovation in buildings, an average of 18 local long-term jobs are created. Recent economic models also show retrofitting buildings in Europe could create 1.2 million additional jobs and increase GDP by 1% by 2050. Ambitious renovation standards will also help lower investment risk in the renovation supply chain, supporting this important sector.
Private sector ready to invest
An enormous number of organisations stand ready to invest in energy efficiency. More than 135 businesses and organisations have joined the World Green Building Council’s commitment on net zero carbon buildings.
Climate Group’s EP100 initiative, which brings together ambitious companies committed to improving their energy efficiency, has been joined by 124 companies operating across 126 markets worldwide, with a combined annual revenue of $726+ USD billion. Individual businesses are developing responses to the need for energy efficiency.
For these business and investor initiatives to succeed, European economic actors urgently need clear and enabling policy.
The European Parliament has so far played a key leadership role in determining EU climate action, and now it is critical for the Parliament to take a robust approach for the reform of the Energy Performance of the Buildings Directive, in the run up to negotiations with EU member states.
The confirmation of the Minimum Energy Performance Standards position in the European Parliament votes over the coming days and weeks will be critical in the push to provide an achievable and needed framework for businesses and investors.
Aiming high on the EU’s building directive will significantly improve the lives of millions of Europeans, support energy security, help achieve the EU’s climate and energy ambitions, increase the number of qualified green jobs in the EU, and support the necessary investment.
Businesses and investors are ready to implement this ambitious and robust legislation. It is time for the European Parliament to show its leadership.