Decarbonisation and heating transition in the building sector

The new version of the Energy Performance of Buildings Directive (EU) 2024/1275 (EPBD) was published in the Official Journal of the European Union on 08 May 2024. [1]

On 07 December 2023, political agreement had been reached on the revision of the EU Energy Performance of Buildings Directive[2] dating from 2010 in order to reduce emissions and energy consumption in buildings throughout the EU. The decarbonisation and greening of the building sector is a key measure for achieving the goal of climate neutrality in Europe by 2050. The building sector accounts for around 40% of final energy consumption and 36% of energy-related greenhouse gas emissions in the EU. Two thirds of the energy used to heat and cool buildings still comes from fossil fuels. Natural gas is most widespread as a fuel for heating, accounting for around 39% of energy consumption for space heating in residential buildings.

The revision of the directive is part of the Commission's "Fit for 55" proposals to implement the European Green Deal and the European Climate Law. With the revision of the Energy Performance of Buildings Directive, the EU is pursuing the ambitious goal of decarbonising the building stock throughout the Union by 2050. Most of the provisions of the EU Buildings Directive will come into force on 28 May 2024.

New requirements under the revised Energy Performance of Buildings Directive (EPBD)

• Zero-emission buildings: With the revision of the EU directive, the so-called nearly-zero energy building will be replaced by the zero-emission building as the minimum standard for new buildings. The zero-emission building need a very low amount of energy, causing no CO₂ emissions from fossil fuels on site and no or only a very small amount of greenhouse gas emissions for operation. From 2030, all new buildings are to be zero-emission buildings, with new public buildings already being zero-emission from 2028. By 2050, all buildings are to achieve the zero-emission building status. The standard for zero-emission buildings will be developed by the Member States.
• National trajectories and minimum energy performance targets for non-residential buildings: Each Member State will set its own national trajectory to reduce the average primary energy consumption of residential buildings by 16% by 2030 and by 20-22% by 2035. For non-residential buildings, the revised directive provides for the gradual introduction of minimum energy performance targets; in this context, those 16% of buildings which show the worst energy performance must be renovated by 2030, followed by the worst 26% by 2033.
• National Building Renovation Plan: In order to achieve the transformation of existing buildings into zero-emission buildings by 2050, Member States must draw up National Building Renovation Plans in line with the "energy efficiency first" principle, including roadmaps for the transformation of the national building stock into zero-emission buildings. Building on the national trajectories and the minimum energy performance targets for non-residential buildings, these must set clear 2030, 2040 and 2050 targets for the conversion of the building stock to zero-emission buildings by 2050 (both public and private residential and non-residential buildings). The National Building Renovation Plans must ensure that sufficient funding is made available at national level to mobilise private investment. The Commission will also contribute EU funds for this purpose. According to EU estimates, this contribution will amount to more than EUR 100 billion between 2023 and 2030. The National Building Renovation Plans must be drawn up and submitted to the Commission every five years. They form part of the integrated national energy and climate plan of Regulation (EU) 2018/1999. The first National Building Renovation Plan must be submitted to the Commission by 31 December 2026.
• Phasing out fossil-fuelled boilers: A complete phase-out of fossil-fuelled boilers is to be implemented by 2040. As a matter of principle, the phase-out of fossil fuels covers both heating and cooling. The National Building Renovation Plans should set out details in this regard. From 2025, national subsidies for boilers which run exclusively on fossil fuels will not be permitted.
• New energy performance certificate: The energy performance certificates have been revised. In the revised certificates there is a common scale from A to G. The introduction of a common scale of energy performance classes and a common template should ensure sufficient comparability of energy performance certificates across the Union. Class A covers zero-emission buildings, while class G is the category for the buildings in the national building stock which have the worst energy performance. Moreover, Member States can define an "A+" energy efficiency class for buildings that have an even better energy performance than zero-emission buildings as the renewable energy they generate (on site) over the year exceeds their energy consumption. The energy performance certificates issued must be stored in a national database. These certificates must be issued and handed over to (potential) buyers and tenants more frequently than before, for example in the case of extensive refurbishments and renewals of tenancy agreements.
• Solar energy in buildings: Member states must gradually install solar energy systems in public buildings and non-residential buildings, depending on their size; starting from 2030, this will also apply to all new residential buildings wherever this is technically and economically feasible.
• Broadening the use of renewable energies: Where technically and economically feasible, 100% of the annual primary energy consumption in zero-emission buildings (i.e. in all new buildings from 2030) must be covered by renewable energies generated on site, in the vicinity or by a renewable energy community, with energy from an efficient district heating and cooling system or with energy from CO₂ -free sources.
• Expansion of charging infrastructure: The EU Alternative Fuels Infrastructure Regulation (AFIR)[3] contains targets for publicly accessible charging infrastructure. The revised EPBD supplements the AFIR with requirements for charging infrastructure and pre-cabling in buildings and adjacent car parks, both in residential buildings and in the workplace, in order to create the required charging infrastructure.
• Exemptions: Exemptions are still provided for, in particular as regards agricultural and listed buildings, as well as buildings protected due to their architectural or historical value, churches and places of worship.

The implementation of the revised EU Energy Performance of Buildings Directive (EPBD) at national level

Once it has come into force, the revised Directive must be implemented by 29 May 2026. The ban on subsidies for the installation of fossil-fuel operated boilers will already apply as from 01 January 2025.

As was the case before, many of the requirements of the revised EPBD will primarily be implemented in the (provincial) building codes and construction (engineering) regulations as well as housing subsidy regulations. The OIB (Austrian Institute of Construction Engineering) guidelines will also have to be revised. An amendment to the Energy Performance Certificate Submission Act (EAVG 2012)[4] is also expected.

With the Renewable Heating Package[5], the existing ban on the installation of heating systems based on fossil oil and coal under the Oil Boiler Installation Ban Act (ÖKEVG 2019) was extended to all systems which can be operated with fossil fuels. An obligation to replace or convert existing systems running on fossil fuels was not set forth in the Renewable Heating Act (EWG). The installation ban applies to new buildings (Section 3 of the EWG); as regards existing buildings, legislative measures have so far included an increased range of subsidies. In particular, the subsidy programme has been expanded as part of the Environmental Subsidies Act (UFG). Achieving the revised EPBD's target of completely phasing out fossil fuel boilers by 2040 (through subsidies only) will certainly be a challenge. According to estimates from 2023, 35% of main residences in Austria are heated directly with fossil fuels. [6]

Apart from a plus in subsidies, it will probably also be necessary to modernise the provisions of tenancy and housing law in order to facilitate the switch to renewable heating and cooling supply systems. In particular, the Heating Act lags far behind with regard to new decentralised supply models (contracting, local heating etc.), which are particularly important for the heating transition (the definition of supply costs in Section 2(8) of the Heating Act is a good example of this).

KWR's Sustainability Law Team will be happy to assist you with questions regarding the modernisation of real estate in terms of energy supply and any issues relating to the implementation of renewable energy projects.