After almost two years of work on Energy Performance Certificates (EPCs) across Europe, the OID’s ESREI programme published a third and final study focusing on non-residential EPCs and office buildings. As non-residential buildings account for 25% of the European real estate stock, sustainability and decarbonation of those are essential to reach carbon neutrality by 2050.
Office buildings: a specific property type
In terms of regulations, standards are evolving at different paces for residential and commercial buildings. The case of France provides a good example of a two-speed updating process. The French EPC for housing was revised in 2021, but the equivalent for commercial buildings has not been updated yet.
The numerous building types that need to be taken into account in non-residential EPCs tend to create difficulties in the implementations of EU directives. The discrimination between the various non-residential buildings typologies changes from a country to another and, for instance, the “office” typology tends to be overlooked in some case and simply assimilated to “non-residential buildings”.
Nevertheless, the forthcoming EPBD revision distinguishes major types of buildings to determine energy performance thresholds: residential, office, and other non-residential buildings. In the long term, this could make office EPCs more consistent. As the regulatory requirements are beginning to have strong impacts, the need to have methods for calculating performance standards based on the same type of buildings is increasingly urgent. It is therefore vital to be able to stipulate thresholds and criteria specific to office buildings in all EU countries.
Non-residential EPCs in Europe: a common framework but structural differences
Each European country is free to interpret the EPBD when adopting it into national law, which explains some of the national differences observed. While physical and technical parameters are difficult to change, other variables (occupation scenarios, climate zones, primary and final energy conversion factors) are highly dependent on the local, cultural and political context.
In spite of a common framework given by the EPBD requirements (in the original text as well as in its successive revisions), European EPCs still show a major lack of harmonisation and comparability from one country to another. Indeed, the thresholds of each energy class (A, B, C, …), the number of energy bands in the scale, the existence of a carbon rating scale, or the unit used to measure energy performance can vary in every country. As a result, energy performance certification varies widely in Europe and making a clear comparison of national building stocks constitutes a real challenge.
Challenges regarding harmonisation and regulatory obsolescence
Under the impulse of European and national regulations, EPCs have become a reference tool all across Europe. But this almost systematic use as a regulatory indicator triggered several challenges, as EPCs become a favored indicator for national regulators to enhance building decarbonation, despite a lack of coordination at European scale.
Now that EPCs have a major regulatory role to play, it is time to align them on common European framework and ambitions – a goal pursued in the recent recast of the EPBD. Yet achieving this essential and unavoidable harmonisation of these national tools without damaging their national accomplishments will not be trivial.
Not to mention potential market impact: the framework established by the EPBD, the different resulting national regulations, and the key role played by EPCs in measuring energy performance will have an impact on the market in the coming months and years. A regulatory obsolescence is impending, as non-compliant properties will not only see their value drop, but they may also even become unusable in the current conditions.
The harmonisation constitutes a major project for EPCs at the European level. This issue is tackled by the European Union in its recast proposal of the EPBD. The text adopted in March 2023 addresses many challenges. The Zero Emission Building standard will soon replace the actual NZEB as the top energy performance certificate and minimum energy performance standards will apply to existing buildings as well. A rehaul of the energy rating scale is also scheduled, along with a phasing-out of the worst performing buildings. In this pressing regulatory context, buildings that do not comply with regulatory requirements on energy performance could become considerably less attractive and competitive on the market, with a direct risk on their value.
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 ! 
