The European Parliament has backed amendments to draft legislation that would require EU Member States to ensure that all buildings constructed after 31 December 2018 consume no more than the amount of energy that they produce from on-site renewable energy sources such as solar panels and wind turbines. The practical and commercial viability of this "zero energy" proposal has caused concern across the construction and real estate sectors, particularly in the UK where these sectors are already dealing with domestic proposals for zero carbon buildings. The proposal may not be enacted as drafted as it will be debated further within the EU institutions and is likely to be subject to intensive lobbying by industry.

Background – the new Energy Performance of Buildings Directive

In November 2008, the European Commission published a draft Directive to repeal and replace the existing Energy Performance of Buildings Directive. The draft Directive is intended to be a clearer and stronger recasting of the existing Directive and would introduce the following key changes:

  • Member States would be required to draw up plans for "increasing the number of buildings of which both carbon dioxide and primary energy consumption are low or equal to zero". Member States would also be required to define what is meant by low and zero carbon buildings, and set targets for the proportion of buildings that will be low or zero carbon by 2015 and 2020.
  • The existing requirement to set minimum energy performance requirements in respect of large buildings that undergo major renovations would be extended to all buildings. Member States would also be required to set minimum energy performance requirements for the installation of technical building systems, such as heating and lighting.  
  • The existing requirement to consider alternative heating and energy supply systems before construction begins, which currently applies to large buildings only, would be extended to all new buildings.  
  • An Energy Performance Certificate (EPC) would continue to be required when a building is being constructed, sold or leased, but would also be required by 31 December 2010 for all buildings in which a public authority occupies over 250 square metres of the total useful area. Where a building has a total useful area of over 250 square metres that is "frequently visited by the public" any EPC that has been issued would need to be displayed. This will cover some private sector properties.  

The "zero energy" proposal

In April 2009, the European Parliament approved amendments to the draft Directive to require all new buildings to be zero energy by 2019 with 549 votes in favour, 51 votes against, and 26 abstentions. The Parliament defines zero energy buildings as those "where, as a result of the very high level of energy efficiency of the building, the overall annual primary energy consumption is equal to or less than the energy production from renewable energy sources on-site." The text does not specify what constitutes "on-site" although it would appear that the energy would not necessarily have to be generated within or on the building itself. "Primary energy" is defined to mean energy from renewable and non-renewable sources which has not undergone any conversion or transformation process and so would cover the use of crude energy for heating and lighting for instance, but not the use of energy that has been converted or transformed such as that embodied in building materials.

The Parliament also approved amendments which would require Member States to draw up action plans by mid-2011 setting out financial instruments for improving the energy efficiency of buildings, such as low-interest loans, rebates on income or property taxes, or requiring energy suppliers to offer financial assistance to consumers. The Parliament has also called on the Commission to propose additional EU funding to promote the energy efficiency of buildings. Other amendments approved would require a building's energy performance to be upgraded to meet at least minimum energy performance requirements if it undergoes major renovation works or if building components and technical systems (such as windows and air conditioning systems) are replaced.

Industry concern

The "zero energy" proposal has caused significant concern in the real estate and construction sectors given that small-scale renewable energy production is, at present, usually not cost-effective and in many cases impractical. It has been suggested that the proposed approach is overly restrictive and could inhibit the further development of the renewable energy sector, and that an alternative approach that allows off-site renewables production to bring buildings to a zero energy standard should be given further consideration. The UK real estate and energy sectors have for some time faced domestic proposals for zero carbon buildings. In December 2006, the Government announced that it wanted all new homes in England to be zero carbon by 2016. In March 2008, further targets were announced for all new non-domestic buildings in England to be zero carbon by 2019, and all new public buildings by 2018. The Government is currently consulting on the definition of "zero carbon". The consultation document appears to accept that it may not be practical or commercially viable to expect the energy demand of new homes to be met by solely by on-site renewables and proposes that developers may discharge their obligations in part through other "allowable solutions" such as providing energy efficient appliances. A similar approach might ultimately be adopted at the EU level.

Next steps

The Council of Ministers, which comprises EU Member State ministers, will debate the amendments later this summer. The Council has already noted its "concern on several amendments proposed by the European Parliament which appear at first sight to be overly ambitious and unrealistic." It has also stated that it eagerly awaits the Commission’s opinion on these amendments which has yet to be forthcoming. Both the Parliament and the Council are required to agree on an identical text before the Directive can be adopted.

It is expected that there will be significant further debate and resulting amendments to the current proposals. The incoming Swedish Presidency of the Council of the European Union has identified the draft Directive as one of the key pieces of legislation that it will promote during its presidency from July to December this year. In order to ensure that its concerns are addressed, industry will need to take advantage of the opportunities that there will be to participate in and influence the legislative process either by means of direct lobbying or via industry associations.