With buildings responsible for up to 36% of the EU’s greenhouse gas emissions, the need for large scale improvements in the energy efficiency of buildings has never been clearer. That is why the European Union has adopted plans for a comprehensive update to the Energy Performance of Buildings Directive on March 12^th 2024.

The proposed revision establishes ambitious targets to progressively reduce the greenhouse gas emissions and energy consumption of the EU building sector, ultimately obligating the building and real estate sectors to be climate neutral by 2050. To achieve this, the directive includes the following key provisions:

• Mandating all new buildings to be zero-emission by 2030, with public authority-owned new buildings or occupied buildings required to meet this standard even earlier by 2028.
• Fostering renovation efforts by targeting the 16% worst-performing non-residential buildings by 2030 and progressively increasing energy performance standards.
• Setting clear benchmarks for reducing the average primary energy usage in residential buildings by at least 16% by 2030 and 20-22% by 2035.

Crucially, the directive emphasizes a life-cycle approach to emissions calculation, which not only factors in operational emissions but also those that arise from the production and disposal of building materials.

Additionally, member states are tasked with phasing out fossil fuels in heating and cooling systems in their renovation plans by 2040, with a ban on subsidizing stand-alone fossil fuel boilers starting as early as 2025. Instead, the directive incentivizes the adoption of hybrid heating systems utilizing renewable energy sources.

For our real estate partners, this update presents a prime opportunity to align their transition strategies with their sustainability goals. Through early compliance with these updated regulations, for example by applying the highest standards energy efficiency when developing new projects or by phasing out fossil-fuel boilers from existing properties, they can mitigate the risk of future non-compliance penalties and capitalize on potential government incentives, securing a competitive advantage in the increasingly eco-focused market landscape. Not only will this lead to a greener future but also enhance the value and appeal of their properties in a rapidly evolving market.