Energy Performance of Buildings Directive

DateAugust 24, 2023

First revised in 2010, the Energy Performance Building Directive (EPBD) was revised again in 2018. The goal was then to accelerate the cost-effective renovation of existing buildings and promote intelligent technologies. On March 14th, 2023, the European Parliament adopted with a large majority a new revision of the directive, proposed in 2021 by the Commission. 

What does the 2023 revision imply?

This new revision is part of the “EU fit for 55” plan, whose main objective is to achieve climate neutrality by 2050 and to reduce GHG emissions by at least 55% by 2030 compared to 1990. The EPBD is also an essential element of the Renovation Wave Strategy (MEMO). Presented in October 2020, the MEMO set out measures aiming to at least double the annual energy renovation rate by 2030.

The revision of the directive in 2023 also aims to:

  • Accelerate the pace and scale of renovation of non-energy-efficient buildings,
  • Provide more information on the energy performance of buildings. 

More concretely, it also aims to: 

  • Define numerical energy performance thresholds for zero-emission buildings (ZEB),
  • Harmonize A and G EPDs between Member States, 
  • And clarify the pace of renovation of the existing building stock by allowing minimum EPCs to be staggered over time. 

What is the European Energy Performance of Buildings Directive? 

Adopted in 2002 and in force since 2006, the EPBD is part of the legacy of the 1997 Kyoto Protocol to empower the EU to achieve its ambitions to limit global warming and encourage sustainability.  
The EPBD is the European Union’s main legislative instrument for promoting the improvement of the energy performance of buildings within the EU and decarbonizing the building stock of Member States. Since its adoption, the EPBD has been closely linked to the EU’s climate objectives, and has been adapted to reflect their progressive evolution.

Its central role in achieving climate objectives is explained by the fact that buildings are responsible for around 40% of the EU’s energy consumption and 36% of its CO2 emissions. Against this backdrop, the directive’s primary objective – to systematically improve the energy performance of buildings and increase the level and depth of renovation – has remained unchanged since its adoption.

What are the EPBD key objectives?

The directive is based on four key principles:  

  • A common methodology to compute the integrated energy performance of buildings. 
  • Minimum standards for the energy performance of new buildings and existing buildings undergoing major renovations (to be defined nationally by each Member State)  
  • Certification schemes for new and existing buildings and, in public buildings, the display of certificates and other relevant information. Certification is only valid for 5 years.  
  • Regular inspection of boilers and central air-conditioning systems in buildings and assessment of a heating installation when it includes boilers older than 15 years. 

What does imply the EPBD recast for the real estate sector?

Until this revised directive is transposed into national law in EU countries, the sector can already anticipate that European governments will have to implement more ambitious action plans than those already in place. This will most likely be accompanied by more stringent regulations. They will probably be focused on the obligation to carry out energy renovations, on minimum energy performance labels, on the use of more energy-efficient equipment, on the provision of information systems, on the use of a more responsible energy mix, and so on.  

In addition, property managers will have to comply with ESG reporting standards and regulations, with the entry into force of the European Taxonomy and the Corporate Sustainability Reporting Directive (CSRD).  

Asset owners and occupiers have every interest in integrating ambitious energy performance targets into their investment strategy, and defining an action plan to achieve them. The time to act is now, to anticipate constraints and become first in class in the building sector. 

What does the sector think about the EPBD revision?

In a letter sent to key Members of the European Parliament (MEPs) on December 2nd 2022 emphasising its strong support for an ambitious outcome of the EPBD revision, the Institutional Investors Group on Climate Change (IIGCC) explained that investors will be critical for the meeting the objectives of the recast EPBD. IIGCC emphasises the need for strong signals to accelerate private sector investment in buildings’ energy efficiency, finance deep retrofits, and support the acceleration of transition finance flows in line with the EU’s sustainable finance agenda.