EU needs long term goal on buildings energy efficiency

11th March 2016

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Anna Price

The EU should set a binding 2050 target to drive radical improvements in energy efficiency in existing buildings, a group of investors said today.

The Institutional Investors Group on Climate Change (IIGCC), whose members include Aviva and the Environment Agency, manages €13 trillion of assets including significant amounts in the property sector.

It believes that the European property sector needs a long term goal to drive action on energy efficiency. This could form part of the EU 2050 low-emissions development strategy that parties to the United Nations Framework Convention on Climate Change have been encouraged to develop under the Paris agreement, it suggested.

The European Commission’s 2030 climate change targets include a goal to improve energy efficiency by 27% by 2030, compared with 2007 levels. It is planning to review directives governing the energy performance of buildings and energy efficiency as part of efforts required to meet this target.

The IIGCC believes that the commission’s review needs to focus on implementation of both directives, which could be strengthened to achieve the step-change needed to meet the 2030 target.

The Energy Performance of Buildings Directive has two main elements, both of which should be expanded, the group recommended in a report. Firstly, energy performance certificates (EPCs) should be upgraded to become dynamic, electronic documents, rather than static documents as they are now, it said.

EPCs could then be used to make sure that energy efficiency was better reflected in building valuations, since they would show operational energy use as well as the theoretical energy use they were designed to achieve, the group said.

If EPCs were in electronic form, they could be updated annually or monthly with operational data, which would encourage continuous improvement in energy efficiency, it said.

In addition, EPC providers should be obliged to give building owners all the data underlying the rating they have awarded, which would allow them to model the impact of measures they were planning to take.

Regulatory tools to require buildings to meet a certain level of EPC before they can be let, such as those introduced in the UK, France and the Netherlands, should be extended to other member states, the group said. It recommended that the bottom 20% of buildings should be targeted to drive out the worst performers.

The group also recommended that the directive should oblige commercial buildings to be renovated with energy efficiency measures, rather than just public sector buildings. A large number of commercial buildings are not renovated to improve energy efficiency, even though it would be cost effective to do so, it said.

The energy efficiency directive obligates energy suppliers to improve energy efficiency of its customers as a proportion of total sales. Currently this is set at 1.5%, but the system expires in 2020. The IIGCC recommends that the energy company obligation continues beyond 2020, and is strengthened.

The group recommends the development of a variety of financial instruments to help implement the energy efficiency directive, including zero or low interest loans, public energy efficiency funds, green refurbishment bonds and on-bill repayment.

Tatiana Bosteels, chair of the IIGCC property working group and head of responsible property investment at Hermes Investment Management said: ‘While the EU is narrowly on track to deliver its 2020 energy efficiency target, a step change in effort is required to realise the target set for 2030.

‘Given that less than 2% of European buildings are replaced every year, the focus clearly has to be on ensuring the revision of these directives drive a much greater rate of renovation and refurbishment across all of Europe’s existing building stock,’ she said.

The IIGCC presented the paper to EU climate and energy commissioner Miguel Arias Cañete and representatives from the cabinet of the European Commission’s president Junker at meetings in Brussels earlier in March.


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