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New EU regulations on zero-emission buildings: implications and challenges

The EU member states have given the green light to the revised directive on the energy efficiency of buildings and formally adopted the new requirements, which entered into force in all EU countries in May 2024. The aim of the directive is to reduce greenhouse gas emissions and energy poverty.

We speak to Gencay Tatlidamak, ý’s Sustainability Director Germany, and asked him what he thinks about the new rules.

The EU Energy Performance of Buildings Directive was revised in March, with strict targets to make the building sector climate neutral by 2050. Can you explain what these targets are?

This is something we are often asked and that comes up in every discussion with our customers. Essentially, the question is: what does climate neutrality by 2050 mean? The question can be divided into two aspects. The first aspect is energy neutrality, which means that all new buildings will be planned and constructed in such a way that, firstly, their energy requirements are significantly reduced and, secondly, that these energy requirements are covered by renewable energies. This aspect is therefore about the climate neutrality of the operation of the buildings.

But there is another issue. The first aspect relates to climate neutrality in terms of energy supply. This means that CO2 emissions during operation must be neutral. However, there is another CO2 driver that also plays an important role, and that is the grey emissions that occur in the structure of buildings. These emissions arise during the production of concrete, steel and other construction material. Here in particular, it is difficult or even impossible to achieve climate neutrality, because the production of concrete always generates CO2 as a product of the chemical reaction during manufacture.

At ý, climate neutrality not only means zero emissions during operation, but also reduced grey emissions. It is important that not only the building is planned to be climate neutral, but also that the grey emissions are offset with a good energy concept. This can only work if buildings generate more energy from renewable sources on site than they need themselves. That’s what makes a good energy concept for us.

Reduction of CO2 emissions in the building sector through structural and operational measures. Image: ý

However, what we repeatedly find in our projects is that the energy supply networks, particularly in Germany (heating, cooling, power supply) have not yet been decarbonised. The energy requirements of an entire building cannot be covered by photovoltaic systems alone, as the space available on buildings for such systems is limited. In addition, the availability of photovoltaic electricity is variable over time. Therefore, part of the demand must be covered by an energy supply network.

We therefore need to ask ourselves what the emission factor (g/kWh) of supply networks is. What percentage of electricity supplied to customers comes from renewable sources, such as wind, water or sun? In Germany the aim is to provide CO2-neutral electricity by 2040. Many district heating suppliers have set themselves the same goal. Let’s take the example of the district heating network in Berlin. The company responsible has set itself the goal of reducing its CO2 emissions by around 55 per cent by 2030 and achieving fossil-free operation in the sense of net zero emissions by 2040. District heating in Munich is also becoming more environmentally friendly but is not yet completely decarbonised. A lot of geothermal energy is used here. However, it is (only) 16 years until 2040. Anyone who is familiar with district heating generation will view this target with scepticism because they know that achieving it depends on the cities. If the goal of climate neutrality is to be realised by 2050, as the directive says, our infrastructure must first be decarbonised in the very near future.

As a planning and consulting company, we work with clients to realise their ambition of reducing energy requirements. There is one interesting strategy, namely the electrification of our buildings. If we fully electrify a building, for example only work with heat pump technology and not with district heating, then it is possible to organise a building’s energy supply independently of a country’s electricity mix by using green electricity tariffs. Our challenge is to weigh up to what extent we need to push renewable energies and to what extent we can best utilise them in the building. At the moment, there is no ‘must regulation’ for this, only a ‘should regulation’. As consultants, it is our job to show clients the many advantages of sustainable buildings. In recent years, we have noticed that we are increasingly being listened to when it comes to ambitious sustainability measures. So, we can and must prepare buildings and neighbourhoods for climate neutrality starting today.

What has been your experience with ý clients? What attitude do they have towards the decarbonisation of the construction industry?

Fortunately, we have realised in our work that there is already a change in mindset among our customers in this respect. We work with highly ambitious clients and also have our own Net Zero targets. For example, we currently work closely with a large company with the goal of achieving net zero in its operations by 2040. They are already demanding that all their buildings be electrified to enable the widest possible use of green electricity. We are working with this customer on many decarbonisation issues. Other large companies in the high-tech sector, for whom we do a lot of work in the field of technical building services, also have precisely this goal. I’m very positive about the future.

Some of these targets sound very ambitious. For instance, one is that all new buildings owned or occupied by public authorities should be zero-emissions by 2028. That is only four years away. In your expert opinion, is this too ambitious or does it not go far enough? And what are potential hurdles?

That’s right, it’s very ambitious and it’s only possible if you build fully electrified buildings with a green electricity supply. Buildings that will be completed in 2028 are being planned now. For us, this means that all new buildings that we are planning at present must be exclusively climate neutral. A large construction project in the Europacity quarter in Berlin is planned based on this concept. The building is due to be completed in 2028 and will be powered by green electricity generated from renewable sources such as photovoltaics, wind power and hydropower.

However, this is a private construction project. If you look at public sector construction projects, it becomes difficult. Here, the decision-making processes are a major hurdle that must be overcome. These processes are particularly protracted in Germany and if a city or municipality wants to have climate-neutral buildings from 2028, major decisions have to be made now.

This includes not only the decision to aim for climate neutrality, but also how much should be invested and who the right partners and collaborators are.

In general, I believe it is possible, but it is not an issue that can be tackled in the next few years. Concrete plans and climate road maps need to be in place now, in conjunction with a very active decision-making process. But my experience tells me that something like this is challenging in Germany. 

ý can provide support as a carbon consultant in much the same way as a cost consultant keeps an eye on the costs of major projects. We have developed the role of “Sustainability Guardian” specifically for this purpose. In this role, we support projects from the concept phase right through to the planning stage.

Gencay Tatlidamak, Sustainability Director Germany, ý

Which EU countries can achieve this?

In other European countries, such as the UK, these ambitions already exist for both private and public buildings. Spain and Italy have also already exceeded these targets. Denmark, which is very exemplary in this area, is the pioneer. Denmark already requires builders to submit life cycle costs and a corresponding energy concept to receive planning permission for new private and public buildings above a certain size. We can still learn a lot from Denmark.

What are the big obstacles you foresee that would impede the EU building sector from achieving the targets set by the new directive?

For me that is definitely the decarbonisation of the energy supply and infrastructure, as I have already mentioned. If our buildings still obtain their electricity, heating or cooling from conventional, CO2-rich energy sources such as coal or gas, then we will never achieve our climate targets, or only very slowly.

I also believe that in the short term, there should be mandatory regulations. Whenever a new directive comes from the EU, it should always be a ‘must-regulation’ that every member state is obligated to adhere to.

The third major hurdle I see here is the funding situation. The issue of the right funding for infrastructure refurbishment and the right funding for construction companies is not on the table at the moment. I still see a great need for support from the federal states in Germany. Energy laws need to be updated so subsidies can be used effectively and, in turn, encourage more construction companies to build in a climate efficient or climate-neutral way. I am currently working on an existing project for which ý has developed an energy concept based on heat pumps. A building physicist has confirmed in a feasibility study that generating energy for this building using heat pump technology would work, but that no subsidies are available for this. This is because the calculation process used to calculate the energy requirements of a building is outdated. We are planning for the future, but we are working with very outdated standards. You cannot plan for 2050 with these standards because they are not future-orientated. These standards need to be changed as quickly as possible.

What should be the consequences for an EU member state if such a mandatory requirement were to be disregarded?

Non-compliance should be consistently pursued, and the EU country sanctioned. As far as I know, there are already agreements in place if CO2 emission targets are not met, but for me the question of how realistic these values are is also important. Who sets the standards for CO2 emissions from buildings? And how can cities, for example, have their building stock assessed with regard to the CO2 benchmark? I see a great need for development here.

If all new buildings must be zero-emissions as of 2030 what can developers do now to plan for this target? How can ý help with this?

I think construction companies need to change the way they work. If clients want to achieve climate neutrality for their buildings, they absolutely need a different kind of project management. They need decarbonisation-orientated, integrated project management (IPA). Holistic planning to find the best solutions for all disciplines while taking economic efficiency into account is the way forward. ý can provide support as a carbon consultant in much the same way as a cost consultant keeps an eye on the costs of major projects. We have developed the role of “Sustainability Guardian” specifically for this purpose. In this role, we support projects from the concept phase right through to the planning stage. At key points, we analyse the content of the planning for its impact on the sustainability of the project and, if necessary, develop proposals to improve it.

The revised directive speaks of member states having to outline how they will adopt measures to decarbonise heating systems by 2040. This sounds like a guideline rather than a hard deadline. Do you think that is wise?

I think this is about district heating. The big utilities have made their plans to decarbonise their district heating network. This is nothing new for them. Such plans have been on the table for three years. Stadtwerke München or Vattenfall, for example, have been working on their strategies for three or four years. But that can’t happen overnight. We will continue to be dependent on various energy sources for the time being.

I see it like this: almost all the major electricity suppliers are privately owned. Decarbonising the grids means an enormous financial burden for these companies, because renewable energy sources have high investment costs. This is why the utilities must be given intensive support with their plans. A lot will have to be invested by then to achieve this goal.

But it can work. Stadtwerke München has invested quickly in its existing plants in recent years and has modernised them. Geothermal energy has been expanded the most, which in my view is very exemplary. This is also possible at municipal level, but as I said, there needs to be a rethink in terms of internal decision-making processes. If the EU once again only sets these targets as a ‘should regulation’, then this is just another way for large companies to make a tick in a box and say, yes, we want to become or remain sustainable. I would like to see validated figures required by law. Every developer should have to publish concrete figures on the carbon footprint of a development. That would be a big step for me.

According to Ciarán Cuffe, Rapporteur for the Energy Performance of Buildings Directive, the directive will not only tackle 36% of Europe’s CO2 emissions, which come from the building sector, but it will also “help bring down energy bills and addresses the root causes of energy poverty, while delivering thousands of high-quality, local jobs across the EU”. Can you explain how it will do that?

I estimate that new jobs will definitely be created, because if we use more and more renewable energies, we will also need new expertise and other design processes.

In the short term, we will not see our electricity bills reduced. The end consumer will have to pay extra, because the energy suppliers will pass on the costs of their new investment in a decarbonised supply grid to their customers or, if there are subsidies, it’s taxpayers’ money. We all have to pay for it first, the investors, the customers, all of us. Only in the medium term, when the initial investment has amortised, will it become cheaper. Building owners, local authorities, cities and federal states now have to decide whether they want to pay more now and get future-proof and sustainable buildings as a result or build more cheaply now and then have to renovate their buildings again in 10 or 20 years’ time to achieve the 2050 climate target. Experience has shown that it is always more expensive to decarbonise buildings retrospectively than to do it right from the start.

There are other important advantages that come with a high level of sustainability. This often goes hand in hand with a high degree of self-sufficiency of the buildings. This means that the buildings can generate a large proportion of the energy they use on site or obtain it from the surrounding area. This energy then does not have to be drawn from the grid, which is very advantageous in times of high energy prices, as we saw two years ago during the energy crisis. However, a high level of sustainability also goes hand in hand with cleaner air and better financing options because of a high ESG rating. The advantages are therefore multi-layered.

As far as possible, we advise our customers to always include the carbon footprint of their existing or new build in their calculations, as this is better in the long term. This is also anchored in our own ý Net Zero Routemap. It informs everything we do for our customers across all our disciplines, because only together can we show clients the right path. I am confident and hopeful and look positively into the future and the great thing is that ý is very active in this area.