Since 2022, the European Sustainable Real Estate Initiative (ESREI), driven by OID, is studying EPCs in Europe and already published 2 studies on the subject. As EPCs are part of the Energy Performance of Buildings Directive (EPBD) requirements, ESREI also worked on this directive to understand how it works and what framework it gives to the challenges around the energy performance of buildings. At the end of 2021, the EU Commission proposed a recast of the EPBD, that was adopted by the European Parliament in March 2023. The text is currently discussed and must be approved by the EU Council before being officially adopted at the European level to be transposed in national regulations.
Brief background on the EPBD and Energy Performance Certificates
The EPBD first came into force on January 2006 and set out a framework for the minimum energy efficiency of buildings. It defines the general method for calculating energy performance. Since the EPBD is not specific to any building types, it acts as a lever to improve the overall performance of the EU building stock and facilitate the decarbonisation of the sector in line with European and global targets.
As an EU directive, the EPBD must be transposed into national regulations by Member States. The directive renders energy performance certificates (EPCs) obligatory, whose main objective is to clearly describe the building’s estimated energy performance. Thanks to the widespread use of EPCs in regulations and public policies, they are employed to measure energy efficiency, carry out large-scale renovations, and (re)direct investments towards the most efficient products.
What is at stake in the 2023 revision?
The widespread use of EPCs as a measurement instrument within the EU has revealed several pitfalls relating to the methods used, but also to the reliability of results. The existence of national versions has led to a lack of European EPC standardisation. The revised text approved in March 2023 by the European Parliament aims to clarify the EPC through a “common general framework for a methodology for calculating the integrated energy performance of buildings”, and “the application of minimum requirements”, with an overall objective of a highly efficient and decarbonised building stock by 2050.
Stricter requirements in the move from NZEB to ZEB
The text features a set of definitions necessary to understand the directive.
Zero-emission buildings (or ZEBs) are buildings with a very high energy performance that contribute to optimising the energy system through flexible energy demand (in line with the capacity of consumers to adapt their energy consumption) and for which the very low quantity of energy required is wholly covered by energy from renewable sources.
On the other hand, Nearly zero-emission buildings (NZEBs) are buildings with a very high energy performance that is almost totally covered by energy produced from renewable sources, in particular renewable energy produced from resources on site or nearby. This EU energy performance standard is explained in detail in a special study published in April by the ESREI.
The EPBD revision therefore sets out a new energy performance standard for buildings, along with the ambition to decarbonise the sector’s energy consumption through the use of renewable energy. Indeed, the ZEB standard constitutes the new yardstick for energy-efficient buildings in Europe, superseding the NZEB standard previously used as a reference.
Renovating existing buildings to make them more energy efficient
The text adopted in March 2023 refers to worst-performing buildings and minimum energy performance standards. “Worst performing buildings” come under E, F and G bands and minimum energy performance standards are rules that existing buildings must abide by in order to satisfy a performance requirement as part of a building renovation plan.
To tackle the sector’s carbon impact, the revision proposes basing performance requirements on the ZEB standard. All existing buildings must attain ZEB status by 2050 and a timetable is in place for newbuilds. All new buildings occupied, operated, or owned by public authorities must conform to ZEB standards by 1 January 2026, and other new buildings must do so by 1 January 2028. The requirements established by the Parliament are stricter than those initially proposed by the Commission, which set the deadlines at 2030 and 2027.
Lastly, the recast proposition introduces the obligation to establish minimum energy performance thresholds for the entire EU building stock, in other words including existing buildings. As a result, non-residential and public buildings will need to reach at least an E-band energy performance by 2027, and D by 2030, thus phasing out classes F and G by 2027 and class E by 2030. These deadlines are stricter than the European Commission’s initial proposal, which required that non-residential buildings reach at least band F or E.
Changing the method to integrate the carbon issue
The directive also establishes the obligation to calculate the carbon impact of a building, which must be displayed. The GWP (global warming potential) indicator shows the overall contribution made by buildings to the emissions responsible for climate change. It is expressed in CO2/m2 eq. kg (from the useful floor area) and groups GHG emissions included in construction products and direct and indirect emissions related to building usage. The obligation to calculate the GWP constitutes a first step towards considering the performance of a building over its entire lifespan and the move to a circular economy. GWP is calculated over a reference period of 50 years, and must feature in EPCs starting from January 2027 for new buildings. Thus, the EU directive anticipates the introduction of a carbon rating, which already features on EPCs in some countries in the form of energy-carbon scales.
Revising the energy scale
The revision adopted in March 2023 also establishes a rehaul of the EPC energy rating scale. The new energy ratings will range from A to G, with band A corresponding to ZEB buildings and band G corresponding to the 15% worst-performing buildings in the national building stock at the point when the scale is introduced (i.e. 2025). The other bands, from A to F, must evenly distribute the energy performance indicators between them. The aim is to guarantee that all countries make similar efforts on the worst-performing bands and to confirm the new common horizon of attaining the ZEB standard.
The entire property sector requires action to reduce its environmental impact, both in terms of energy and greenhouse gas emissions. The European Commission is therefore tackling this issue by revising one of its most structuring regulations regarding performance of buildings, the EPBD. The proposed recast should be definitely adopted within the year. Besides the goal to improve consistency between national variations of the directive, the new text will bring much stricter requirements and wider scope (particularly regarding GHG emissions), thus moving towards more energy-saving real estate and a lower overall impact of buildings in terms of both usage and construction.
The Green Building Observatory (OID in French) has launched a European programme in 2021, the European Sustainable Real Estate Initiative (ESREI), for a minimum duration of 2 years. This OID sponsored programme brings together real estate stakeholders to discuss ESG issues and the situation regarding ESG regulations across Europe.
The ESREI programme is now sponsored by Advenis REIM, AEW, Amundi Asset Management, Axa Investment Managers, BNP Paribas Real Estate, CBRE Global Investors, Icade, Ivanhoe Cambridge, La Française REIM, Mazars, Ofi Invest, Pimco Prime Real Estate and PERIAL Asset Management. Contact the ESREI team at esrei@o-immobilierdurable.fr if you are interested to join us ! 
