New EU climate goals and energy efficiency of buildings

With an expert eye

Anna Pawłowska-Kawa, Specialist in the field of ecological heating devices

On Tuesday, February 6, 2024, the European Union authorities announced new climate goals, aiming for net greenhouse gas emissions to decrease by 90% by 2040. This is the most ambitious intermediate goal yet on the path to achieving climate neutrality by 2050.

Reuters obtained the original project, which included significant restrictions for agriculture, requiring a 30% reduction in non-CO2 emissions compared to 2015 levels. These provisions were not included in the final version of the EU plan. Despite this, the European Commission’s proposal polarized public opinion and sparked protests by farmers in the EU, including in Poland. Today, however, we will focus on buildings and their significant role in achieving climate neutrality.

Current state of buildings in the EU

Currently, buildings in the European Union account for the largest energy consumption (about 36%) among all sectors, including industry and transport. Around 80% of this energy is used for heating, cooling, and preparing domestic hot water. Eurostat data shows that approximately 35% of buildings in the EU are over 50 years old, and only about 1% undergo professional thermal modernization each year (the so-called weighted annual renovation rate). Although around 11% of buildings undergo partial renovation, it does not always result in increased energy efficiency. Nearly 75% of buildings are considered energy inefficient.

To achieve the ambitious goal of climate neutrality, improving the energy performance of buildings—both single-family homes, multi-family buildings, and public utility structures—will be essential. For new buildings, the task is simpler. For example, current technical conditions (WT 2021) ensure that for the past three years, houses in Poland have been built to a high energy standard, with the EP indicator not exceeding 70 kWh/(m²·year). While new construction investments are not a major concern for environmental impact, the modernization of existing older buildings, especially multi-apartment ones, will pose a significant challenge.

How have the EPBD directives changed over the years?

The need to save energy in buildings and reduce their environmental impact has been discussed for years. The first legislative steps in this direction appeared in December 2002 with the EPBD (Energy Performance Building Directive). The first directive on the energy performance of buildings, 2002/91/EC, aimed to raise awareness among users and buyers of buildings and to establish principles for inspecting heating and air-conditioning systems. Minimum requirements were introduced for new and modernized buildings, along with a calculation methodology for a parameter characterizing a building’s energy consumption. These small actions contributed to gradually improving construction standards. In Poland, Directive 2002/91/EC was implemented in 2009 under the amended Building Law of 19 September 2007, which required energy performance certificates for buildings intended for sale or rent.

In 2010, another European Parliament directive, 2010/31/EU, approached the issue of zero energy ambitiously for that time. The term nZEB (nearly Zero Energy Building) was introduced. According to this directive, from 2019 all newly constructed public utility buildings were to be nZEB, and from 2021 this applied to every building. Each EU country could define the requirements for nZEB based on its own conditions.

More significant changes, focusing on existing buildings, were outlined in the directive of 30 May 2018 (2018/844). This directive required member states to develop national building renovation plans aimed at nearly complete decarbonization by 2050, with intermediate targets for 2030 and 2040. It also emphasized the use of new technologies in construction and defined an indicator of buildings’ readiness to support smart grids.

The European Green Deal – a climate neutral Europe by 2050 and a Renovation Wave for Europe

The European Green Deal, adopted by the European Commission on 11 December 2019, aimed for climate neutrality in Europe by 2050, with an intermediate goal of reducing emissions by 55% by 2030. To achieve this, the current weighted annual renovation rate of 1% would need to double by 2030, reach 3% by 2035, and 4% by 2040, according to a 2023 study by the Buildings Performance Institute Europe (BPIE). Comprehensive thermal modernization of European residential buildings could reduce their demand for heating and air conditioning by about 44%, translating to energy savings of up to 777 TWh. Renovating existing buildings could lower total energy consumption in the EU by 5-6% and reduce carbon dioxide emissions by about 5%.

The European Green Deal was supplemented by the “Fit for 55” package, adopted by the EC on 14 July 2021. Its aim was to amend and harmonize existing regulations within the EU, ensuring that the community’s policy aligned with the environmental objectives set by the European Council and Parliament. Part of the package included an amendment to the Energy Efficiency Directive, which set a goal to reduce final energy consumption by 11.7% in 2030 compared to 2020 forecasts. From 2024 to 2030, the annual target for reducing final energy consumption was to gradually increase, with individual Member States expected to generate average energy savings of 1.49%.

Less than six months later, recognizing the need for more decisive and faster changes in construction, the European Commission adopted the “Directive of the European Parliament and of the Council on the energy performance of buildings (recast)” on 15 December 2021 (COM(2021) 802 final). Its main goals were to accelerate the pace of building renovations, particularly focusing on the 15% of EU buildings with the worst energy performance. The directive also emphasized promoting renewable energy technologies, such as photovoltaics and heat pumps. Additionally, it introduced the concept of a “zero emission building,” defined as a building with a primary energy input (EP) not exceeding 65 kWh/(m²·year), using local renewable energy sources, free from fossil fuel combustion, and with a low CO2 equivalent emissions impact over its entire life cycle. Zero emission buildings are intended to replace nearly zero energy buildings (nZEB).

New year – new climate goals

It might seem that the directives and their numerous amendments are enough to achieve the climate goals in the construction sector. However, nothing could be further from the truth. For a long time, there has been a debate in Brussels about the need for further changes. Experts from the European Commission have determined that the current requirements will not be sufficient to meet the “Fit for 55” targets, let alone achieve climate neutrality by 2050. They estimate that up to 90% of buildings erected before 2001 will still be in use by then, and the focus should be on deepening the Renovation Wave.

The latest revised EPBD directive was approved on 14 January this year by the Committee on Industry, Research and Energy (ITRE) and submitted for a vote in the European Parliament, scheduled for March this year.

The most important changes include the requirement for buildings to be zero-emission. From 2030, all newly constructed buildings must be ZEB. For public utility buildings, this requirement will come into force in 2028. Additionally, from 2028, EU countries will not be able to subsidize fossil fuel boilers, with exceptions for hybrid solutions and sets that include boilers with PV installations or heat pumps. Photovoltaic installations will be mandatory on every new residential building from the beginning of 2030. Article 9, paragraph 1 on minimum energy performance standards for the residential sector establishes provisions for renovating 16% of buildings with the worst energy performance by 2030 and 26% by 2033. Member States can decide whether to base these standards on primary or final energy consumption thresholds. Moreover, there will be a national trajectory to reduce the average primary energy consumption of the residential building stock by 16% by 2030 and by 20-22% by 2035.

New EU climate targets – summary

The European Union is introducing very ambitious energy efficiency goals for buildings in member states. It is not yet clear how and when the new regulations will be implemented in Polish law. Currently, the binding deadlines are the aforementioned years 2028 and 2030. While the law sets the framework, the biggest obstacle to these efforts will be financial issues. Without government aid and comprehensive subsidies for the thermal modernization of “energy vampires,” achieving these goals will not be possible, at least not in the coming years.

Starting in 2027, the EU ETS2 system will be in force in the EU, introducing fees for emissions from fossil fuels burned in buildings. This will directly increase the costs of heating with coal or gas boilers. Without appropriate support and a rational distribution of work, the pursuit of neutrality will impact the poorest, increasing rather than reducing energy poverty. The Polish Economic Institute, in its report “Impact on Households of the Inclusion of Transport and Residential Buildings in the EU ETS,” estimates that the introduction of ETS2, with the price of certificates at EUR 90/t, will increase expenditure on energy, gas, and other fuels by 42% for the poorest 20% of households by 2035.

The main financial streams we can count on are EU funds under the KPO, the FEnIKS Program, the thermal modernization relief, and the Clean Air Program. Unfortunately, the effectiveness of the latter has been lacking for some time. Applicants continue to report delays in processing applications and paying benefits. Achieving climate neutrality in buildings will require the awareness of all participants in the housing market and efficient actions by legislators at both the national and European levels.

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