The EU's Energy Performance of Buildings Directive (EPBD): What does the future hold for companies?

The energy transition is in full swing. Following the sometimes heated discussions in Germany last year about the Building Energy Act (GEG), often referred to as the "Heating Act", a further step has now been taken in Brussels.

After lengthy negotiations, the Council of Ministers of the European Union approved the revised "Energy Performance of Buildings Directive" (EPBD) on 12 April 2024. An EU law that has been in place since 2003 and which, in its updated form, is part of the "Fit for 55" climate program. It is part of the measures to implement the European Green Deal, which aims to make Europe the first climate-neutral continent.

In this article, we would like to give you an overview of the Energy Performance of Buildings Directive. The adopted amendment had been watered down several times; for example, an obligation to renovate old and less energy-efficient buildings initially envisaged by the EU Commission was expressly not included.

The member states now have two years to transpose the EPBD into national law - only then will it become directly effective in the individual countries. In our blog article, we explain what this means for you as a company and what you can already do now.

The EU's climate policy targets are ambitious. By 2030, greenhouse gas emissions in the EU are to be reduced by 55 per cent compared to 1990 levels, and the entire building sector is to be decarbonized by 2050. This is to be achieved with a comprehensive series of measures and directives. The EPBD plays a central role in this. It aims to reduce the primary energy consumption of the member states by at least 55 percent. Buildings account for around 40 percent of energy consumption and 36 percent of CO2 emissions in the EU, so the building sector plays a key role in achieving the climate targets.  

By 2040, the use of fossil fuels in buildings is to be completely phased out and replaced by renewable energies and, in particular, solar energy. The German government is pursuing a strategy of "recognizing all climate protection measures" and primarily wants to incentivize, while avoiding mandatory measures. For example, the installation of a PV system could make it possible to achieve "net zero" without having to implement cost-intensive measures elsewhere.  

In addition, it is also important to think about a future-proof infrastructure today while contemplating the construction measures necessary and to create the conditions for this. This is why the construction of charging stations for electric cars is to be supported, as are sufficient parking spaces for bicycles. Last but not least, the EPBD also helps to strengthen Europe's energy independence and thus stabilizes energy costs.  

The ambitious goals are accompanied by equally ambitious financial resources: the EU wants to provide "at least 1 trillion euros" by 2030. Around 500 billion is to come directly from the EU budget, with funds such as InvestEU and the European Investment Bank providing the rest. The European Commission had already adopted the "Sustainable Europe Investment Plan" in 2020.  

First of all, there are no direct consequences, as the EU directive must first be transposed into national law. Germany generally has two years to do this. Furthermore, the requirements of the EPBD are aimed at the entire building stock in a country. Yet, mandatory individual measures for non-residential buildings are to be avoided. Instead, the German government wants to priorities the refurbishment of public buildings in order to achieve the EPBD targets as a whole.

In principle, it is up to the member states to decide how the planned targets are to be achieved. This makes sense, as not only is the climate in Finland different to that in Spain, for example, but the building fabric is also often fundamentally different. According to Federal Building Minister Klara Geywitz, Germany is in a good position because many instruments have already been created, for example with the provisions of the Building Energy Act (GEG) or the Heat Planning Act (WPG), both of which came into force on 1 January 2024.  

Nevertheless, some things are already clear today. 

• The EPBD distinguishes between residential and non-residential buildings. The latter are treated more strictly. By 2030, 16 percent of the most inefficient non-residential buildings is to be renovated. The target is 26 percent by 2033. According to the 2024 Building Report by the German Energy Agency (DENA), around half of all non-residential buildings are currently still heated with fossil fuels. 

• Mandatory measures are only planned for public buildings. Minister Geywitz is in favor of combining the implementation of the EPBD in Germany with the often overdue refurbishment of schools and hospitals. As things stand at present, there will be no mandatory refurbishment or other compulsory measures for existing buildings. 

• The use of fossil fuels to generate heat is to be gradually phased out and finally ended by 2040. In future, the roofs of new buildings must also be "solar-ready" so that PV systems can be installed with little effort and at the lowest possible cost. 

• The zero-emission house will become the standard for new buildings. This means that from 2030, all new buildings must no longer have any emissions from fossil fuels and must be supplied with climate-neutral energy. Renewable energies, such as PV systems on the roof, can play an important role here. 

• PV systems on roofs should gradually become mandatory for non-residential buildings by 2030. The same applies to residential buildings, but with the limitation of where it is "technically and economically feasible". However, it is completely unclear what form this requirement might take. At present, an actual solar obligation seems conceivable for new buildings at best. 

Companies are therefore facing a number of challenges - but these are also associated with opportunities for long-term cost savings and even new revenues, particularly with regard to PV systems. Not only can PV systems reduce a company's own energy costs, but previously unused areas can also be rented or leased out and thus made profitable. In addition, the ESG ratings for your own company improve when you start generating sustainable energy.

Last but not least, your own location becomes more attractive for employees if, for example, there are facilities for charging electric cars or suitable parking and charging points for e-bikes and cargo bikes.  

At present, it is not yet clear what exactly the implementation in Germany will look like, and which measures will be subsidized and to what extent. One thing is clear though: It is worth taking a proactive approach to the energy transition in your own company. And the course can already be set today for the successful implementation of the EPBD. 

We recommend that companies take the following steps to prepare now for the imminent entry into force of the Energy Performance of Buildings Directive:

• Check the extensive possibilities of state subsidies. On its website, the Federal Ministry of Economics and Climate Protection provides information on the "Federal Subsidy Program for Efficient Buildings" for non-residential buildings (BEG-NWG). The funding programs are implemented by the Kreditanstalt für Wiederaufbau (KfW) and the Federal Office of Economics and Export Control (BAFA). 

• Check and utilize the potential of your premises for solar power. Almost all roofs are suitable for a PV system. The load-bearing capacity of the roof is usually not a problem, especially for older existing properties, because in the past significantly higher snow loads were expected than is the case today. And a solar installation does not necessarily require a high investment. ENVIRIA, for example, offers solar systems for rent, which can pay for themselves immediately thanks to the cost savings compared to the electricity market. It is therefore easy to make the switch, even on a small budget. 

• Carry out a thorough assessment of your own energy consumption. Analyzing the load profile reveals a wide range of potential savings that are often not associated with restrictions. By installing an electricity storage system, for example, solar energy can also be utilized when the sun is not shining. This means that companies can use green electricity around the clock and do not have to resort to fossil energy from coal and gas-fired power plants at night. This significantly improves the environmental balance. 

Even if much is still unclear, companies can already take important steps today. The Energy Performance of Buildings Directive (EPBD) should also be seen as an opportunity to become greener and make forward-looking decisions. These pay off in many areas: Switching to solar energy, for example, has various cost benefits and also has a positive impact on the competitiveness of businesses. In order to take decisive steps with confidence and without detours, it is advisable to seek expert advice so that companies are not distracted from their core business.