EUROPEAN COMMISSION Brussels, 15.12.2021 COM(2021) 802 final 2021/0426(COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the energy performance of buildings (recast) (Text with EEA relevance) {SEC(2021) 430 final} - {SWD(2021) 453 final} - {SWD(2021) 454 final}



EXPLANATORY MEMORANDUM 1. CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal The revision of the Energy Performance of Buildings Directive (EPBD) is part of the 2021 Commission Work Programme “Fit for 55” package and complements the other components of the package proposed in July 2021, setting the vision for achieving a zero-emission building stock by 2050. As already indicated in the Climate Action Plan, it is a key legislative instrument to deliver on the 2030 and 2050 decarbonisation objectives. It follows up on key components of the three focus areas of the Renovation Wave Strategy, including the intention to propose mandatory minimum energy performance standards, following an impact assessment looking at their scope, timeline, phasing in and accompanying support policies. Given the need for appropriate consultation and impact assessment processes, the proposed revision could only come slightly later than the first set of “Fit for 55” initiatives adopted in July 2021. The proposal is particularly important because buildings account for 40% of energy consumed and 36% of energy-related direct and indirect greenhouse gas emissions. In the EU, heating, cooling and domestic hot water account for 80% of the energy that households consume. Making Europe more resilient calls for renovation of EU buildings, making them more energy efficient and less dependent on fossil fuels. Renovation is key for reducing the energy consumption of buildings, for bringing down emissions and for reducing energy bills. In addition, renovation generates local jobs and economic growth. Given the long lead-in time required to induce changes in the building sector, a timely revision of the Directive is needed to support achieving the “Fit for 55” objectives. 1.1.Interplay “Fit for 55” package and notably the new ETS The “Fit for 55” package consists of a set of inter-connected proposals backed by impact assessment analysis taking this into account. The analysis showed that an over-reliance on strengthened regulatory policies would lead to unnecessarily high economic burdens, while carbon pricing alone would not overcome persistent market failures and non-economic barriers. The chosen policy mix therefore carefully balances pricing, targets, standards and support measures. The proposed EPBD revision is set within the same frame. As a consequence, a change in the balance of the overall mix would call for adjusting different parts of policy. A weakening in pricing and targets measures fostering the decarbonisation of the building sector would call for correspondingly more stringent regulatory measures in the EPBD revision, most notably with regard to fossil fuel phase out and mandatory minimum energy performance standards. The relevant Commission’s impact assessments have shown that the achievement of targets would be less certain and more costly in the absence of a carbon price signal on heating fuels, such as the proposed new emissions trading system (ETS) for buildings and road transport. This works best hand in hand with EU regulatory measures and complementary national measures, as incentivised by the proposed higher ambition in the Effort Sharing Regulation (ESR), the Energy Efficiency Directive (EED) and the Renewable Energy Directive (RED). The new ETS creates economic incentives for building decarbonisation and generates revenues for public support, targeted in particular to support vulnerable households. The revised EPBD addresses non-economic barriers to renovation. It creates an enabling framework to provide financial support to renovation without directly mobilizing the required funding. A revised EPBD could contribute significantly to achieving the 2030 objectives. The EPBD Impact Assessment shows that, in its absence, the overall emission reductions needed will fall short by roughly half of what is needed in the residential and services sector to achieve the 2030 goal. Without these revisions, more measures at Member State level would be necessary to make up for this gap, but uncertainty around their effectiveness, timeliness and consistency with the 2050 decarbonisation objective enshrined in the European Climate Law would dull incentives for a rapid scale up in renovation rates. In the absence of strengthened EU or national regulatory measures boosting the rate of renovations, carbon price would need to be higher and ultimately non-economic barriers to renovations would remain unaddressed. It will be important to preserve consistency across all building-related provisions in the package during negotiations to agree on a coherent and robust framework for buildings to meet the EU’s 2030 and 2050 targets. 1.2.Issues around vulnerability, affordability and energy poverty A main novelty of the revision is the introduction of minimum energy performance standards to trigger the required transformation of the sector. Building renovation has two widely recognised positive economic impacts: 1. decreasing energy costs, alleviating energy poverty, and 2. increasing the value of more energy performing buildings. Other benefits include better quality of living and shorter average vacancy periods. The benefits of lower energy bills are even more relevant in a context of high energy prices. People living in worst-performing buildings and those facing energy poverty would benefit from renovated and better buildings and from reduced energy costs, and be buffered from further market price increases and volatility. On the other hand, landlords may be tempted to pass renovation costs to tenants to cover for their upfront investment. Also, a more pronounced focus on addressing the shortcomings of existing worst-performing buildings could reduce further their prices in market transactions, even if a certain correlation between energy performance classes and value already exists today. EU-wide minimum energy performance standards have been carefully designed to mitigate possible negative social effects and maximise their social benefits, notably as regards improving living conditions in worst-performing buildings and alleviating or even preventing energy poverty. Member States will be required to support compliance with minimum energy performance standards with an adequate support framework that includes financial support, technical assistance, removal of barriers and monitoring of social impacts, in particular on the most vulnerable. National building renovation plans will pay attention to monitoring the reduction of people affected by energy poverty and of population living in inadequate housing (e.g. leaking walls or roofs) or with inadequate thermal comfort conditions. The plans will present an overview of national policies and measures empowering and protecting vulnerable households, alleviating energy poverty and ensuring housing affordability. The measures in this proposal are coherent with policy and measures across EU instruments supporting a socially just transition. These include reporting on progress towards national indicative objectives to reduce the number of households in energy poverty under the National Energy and Climate Plans and planned investments to mitigate distributional effects and to promote structural solutions – notably energy renovation of buildings including energy efficiency improvement measures or integration of energy production from renewable energy sources, decarbonisation of their heating and cooling systems – to reduce fossil fuel reliance in line with the proposed Social Climate Plans, as well as the Energy Poverty Advisory Hub, which supports Member States’ efforts in alleviating and monitoring energy poverty. 1.3.Availability of financing, EU funds and national support measures

The proposal is well coordinated with other relevant instruments, notably as regards EU and national funds. The Recovery and Resilience Facility (RRF) is triggering significant investments into building renovation thanks to the strong ‘Renovate’ flagship components across national recovery and resilience plans. This will continue between now and 2025-2026 paving the way for improvements triggered by the EPBD to come in. Under the current Multiannual Financial Framework (‘MFF’), there is availability of EU funds across different programmes, which have identified the buildings sector as a priority: regional funds under Cohesion Policy, Just Transition Fund, and Invest EU are key in this regard. They are complemented by the dedicated technical support and assistance from the European Commission to national public administrations in order to facilitate the necessary reforms and the preparations for investments to be effective. The proposed new ETS’s Social Climate Fund would bridge the gap between the RRF, and the transition between this current MFF and the post-2027 period, and mobilise EUR 72.2 billion for the period 2025-2032 to support households, notably those living in worst-performing buildings. This Fund would cover the upfront costs and ease compliance of low-income households with the minimum energy performance standards proposed in the EPBD. The investments under the national Social Climate Plans will be an integral part of the financing measures contained in the National building renovation plans under the EPBD. In order to be classified as a sustainable economic activity under the EU Taxonomy Climate Delegated Act, building renovation needs to either achieve 30% energy savings, comply with minimum energy performance requirements for major renovation or consist of specific individual measures classified as sustainable. Renovation to comply with the proposed Union-wide minimum energy performance standards is typically in line with the EU Taxonomy criteria related to building renovation activities. In addition, the Commission is currently revising the relevant state aid framework and aims to make it more conducive to the needs of the EPBD revision and in particular of the EU-level minimum energy performance standards (MEPS). The resulting state aid provisions would be important to incentivize early compliance with minimum energy performance standards set at EU level in relation to improving the worst-performing buildings. 1.4.Objectives of the proposal The main objectives of this revision are reducing buildings’ greenhouse gas (GHG) emissions and final energy consumption by 2030 and setting a long-term vision for buildings towards EU-wide climate neutrality in 2050. In order to meet them, the initiative is grounded in several specific objectives: to increase the rate and depth of buildings renovations, to improve information on energy performance and sustainability of buildings, and to ensure that all buildings will be in line with the 2050 climate neutrality requirements. Strengthened financial support and modernisation and system integration are levers to deliver on these objectives. •Consistency with existing policy provisions in the policy area As explained above, the proposed revision aims at fostering both push and pull factors supporting buildings’ decarbonisation in conjunction with the incentives for national action established in the ESR and the carbon pricing impacts of the new emissions trading system for buildings and road transport. The proposal revises an existing legislative tool. As such, it cannot substitute for a target, such as those set under the ESR, but it supports their achievement. It works hand in hand with the proposed new ETS, one fostering the decarbonisation of heating fuels and technologies and the other reducing energy consumption. The EPBD will set the overall vision for new and existing buildings that applies across building-related provisions of the other “Fit for 55” initiatives. By upscaling actions to reduce energy consumption in the building sector, the EPBD will also contribute to the delivery of the overall energy efficiency targets set in the Energy Efficiency Directive (EED). The higher number of renovations triggered by the EPBD proposal and by the requirement for new buildings to install heating systems with zero direct greenhouse gas emissions and to integrate renewable energies to become zero-emission buildings will enable the indicative 2030 target for the share of renewables in buildings’ final energy consumption in line with the Renewable Energy Directive (RED). The proposal will support the replacement of inefficient fossil-fuel boilers by systems with no direct GHG emissions, such as heat pumps and other renewable based technologies. The proposal upgrades private recharging infrastructure in car parks in and adjacent to buildings, complementing the updated Alternative Fuel Infrastructure Regulation (AFIR) setting stronger ambitions on the overall targets, including on publicly available recharging infrastructure for electric vehicles. In line with the European Green and the new EU Urban mobility framework also includes provisions for improving bicycle parking infrastructure. The proposal similarly complements products legislation, e.g. the Energy Labelling Regulation (ELR), which incentivises consumers to purchase best-in-class energy-related products and appliances placed in buildings. The EPBD works in tandem with the Ecodesign Directive (ED), which sets energy performance and other environmental performance requirements on energy-related products, in particular for technical building systems (e.g. boilers, heat pumps or light sources) and equipment used in buildings (e.g. household appliances). The performance of construction products is addressed in the Construction Products Regulation (CPR) and the proposal also contributes to continuous progress towards climate adaptation, through the provisions related to strengthening of the climate resilience of buildings. In parallel, the strengthened information tools of the EPBD, which will include also a carbon metric, will help financial investors monetise the benefits of buildings decarbonisation and household or commercial actors to better factor in the economic benefits of building renovations and their repayment plans. These aspects are also aligned with the building-related elements of the EU taxonomy for sustainable activities. 2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis The proposal is based on Article 194(2) of the Treaty on the Functioning of the European Union, the legal basis for Union policy on energy. The proposed measures aim at ‘promot[ing] energy efficiency and energy saving and the development of new and renewable forms of energy’ (Article 194(1)(c) TFEU). •Subsidiarity (for non-exclusive competence) 2.1. The need for EU action Energy policy is a shared competence between the EU and Member States and an area of well-established EU policy. To a large extent the proposed changes in the EPBD reflect the need to update it in order to reflect the increased ambition of the EU climate and energy targets. This is in addition to the fact that the assessment of the EU-wide impact of the National Energy & Climate Plans (‘NECP’) that the Commission published in September 2020 showed an ambition gap as regards energy efficiency: 2.8 percentage points for primary energy consumption and 3.1 points for final energy consumption in the EU, as compared to the 2030 goals currently in force. Further EU wide measures in the revised EPBD are thus needed in line with what is foreseen in the Energy Union Governance Regulation. Buildings are local infrastructures but insufficient renovation rates and depth are a common issue faced by all Member States in the EU. The underlying causes are mostly of non-economic nature and relevant across Member States. Setting a common EU framework for the decarbonisation trajectory of buildings and related requirements while allowing for adaptation to national circumstances would thus bring much needed certainty for all actors across the supply chain of renovation and construction, and predictability and readiness to all stakeholders, from industries, to local and national workforces, private investors and financial institutions. Past experience with the long-term renovation strategies underlines the importance of better ensuring the right mix between flexibility and harmonised requirements to spur sufficient efforts across all Member States for the achievement of EU-level targets.

2.2. EU added value A strengthened common EU framework will provide the incentives for Member States with different levels of ambition to accelerate, in a coordinated way and at the necessary scale, the energy transition towards more energy efficient and performant buildings. Sufficiently strong regulatory signals – for both the existing stock and new buildings - will drive investments into building renovation, create jobs, stimulate innovation, increase the benefits of the internal market for construction products and appliances and have a positive impact on the competitiveness of the construction ecosystem and related sectors. This, together with a reinforced ‘shared language’ of common standards and access to information, will also ensure that the buildings sector reduces its GHG emissions in the most cost-effective way, e.g. through economies of scale. Buildings do not move across borders, but building-related financing as well as the technologies and solutions that are installed therein do, from insulation, to heat pumps, efficient glazing, or photovoltaic panels. EU action leads to a modernisation of national regulations in the building sector to meet the decarbonisation objectives, opening wider markets for innovative products globally and enabling cost reductions when they are most needed, and industrial growth. Finally, EU action through the revised EPBD brings multiple benefits, from better health and wellbeing for citizens, local job creation supporting recovery, alleviation of energy poverty, social inclusion, improved living conditions, reduced greenhouse gas emissions, climate resilience, to the reduction of energy consumption and energy costs. It is also in accordance with the New European Bauhaus initiative, which invites to combine sustainability of buildings and the built environment with quality of living and social inclusion. •Proportionality The measures included in the legislative proposal are considered proportionate and build to the maximum on the existing design of the original 2002 Directive and the 2010 and 2018 revisions. As detailed in section 3 below, the concerns expressed by the Regulatory Scrutiny Board in its negative opinions on the proportionality and the level of EU harmonisation of the preferred option identified in the accompanying impact assessment report have been addressed by modifying the proposal to ensure the respect of the subsidiarity and proportionality principles. •Choice of the instrument The proposal entails substantive amendments to the EPBD, which was already amended in 2018. This proposal therefore is for a recast of the existing Directive, in line with the Commission’s commitment under paragraph 46 of the Inter-institutional Agreement on better law-making. The new legal act will replace and repeal the earlier Directive (EU) 2010/31/EU. 3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Ex-post evaluations/fitness checks of existing legislation The EPBD was evaluated in 2016. The measures stemming from the last review of the EPBD (2018) were transposed recently (2020), not allowing to gather sufficient data on their impact to make a new evaluation relevant. •Stakeholder consultations Complementary methods have been used to allow for a comprehensive consultation process enabling all stakeholders to have a say. –An Inception Impact Assessment (Roadmap) was published on the Commission Have Your Say portal on 22 February 2021. It was open for feedback during 4 weeks and received 243 replies; –A public consultation, based on a structured online questionnaire in the EU Survey tool and in line with the Commission Better Regulation rules was published on the Have Your Say portal from 30 March 2021, for 12 weeks. It covered the scope, type and design of possible policy options, based on multiple-choice and open questions. Like the Roadmap, it was open to all. 535 replies were received. The majority of participants were business associations and companies (52%), followed by EU citizens (15%), NGOs (12%) and local and national public authorities (7%). –Five dedicated and targeted workshops were organised between 31 March and 3 June 2021. These events were organised thematically to address specific areas for policy options, on “Setting a vision for buildings and a decarbonised building stock”, “Minimum energy performance standards for existing buildings”, “Strengthening buildings information tools (with a focus on energy performance certificates)”, “Fostering the green and digital transition” and “Accessible and affordable financing – energy poverty”. More than 200 participants took part in each workshop on average. –Additional engagement with stakeholders has taken place on an ad hoc basis. The Commission also informed national delegations and administrations and collected their views at meetings of the Energy Working Party, the Energy Performance of Buildings Committee and the Concerted Action plenary meetings. 3.1. Summary of stakeholders’ views

A clear majority of respondents to the public consultation expressed support for minimum energy performance standards (75% of respondents in favour). 61% of participants expressed the view that the EPBD provisions on the Long-Term Renovation Strategies should be modified and 89% supported the option to strengthen the monitoring of objectives identified by Member States in their Long-Term Renovation Strategies. 84% were in favour of defining zero-emission buildings in the EPBD. 73% of respondents were of the opinion that the EPBD could contribute to making a wider range of building-related energy performance data available and accessible. Energy performance certificates need to be updated and the quality improved according to a clear majority (65%) and an even stronger one (76%) backed harmonising energy performance certificates. More than two thirds of respondents (68%) favoured including in the EPBD measures to report on whole life-cycle carbon emissions (manufacturing and construction, use and end of life). On e-mobility, respondents expressed support overall for strengthened requirements. More than three quarters (77%) were in favour of linking renovation funding support to the depth of renovation and 68% were of the view that it would be beneficial to provide a legal definition of “deep renovation”. Finally, on financing, the general view expressed, also in the workshops, was that it should be more accessible, through a combination of direct grants, tax incentives, energy efficiency mortgages and other types of incentive mechanisms, and that it should come together with provisions on access to one-stop-shops. Targeted financial support for lower and middle-income households was identified as being the most important policy measure addressing energy poverty. The policy workshops concurred with the public consultation in terms of overall direction and provided useful additional insights. •Collection and use of expertise This proposal builds on the 2016 evaluation and on data and experiences from the implementation of the EPBD. The JRC provided support on the analysis and assessment of compliance and of national practices. The EPBD Concerted Action initiative produced analysis of the national experiences of implementation of the EPBD. In addition, the Commission bases itself on the growing body of peer-reviewed empirical research and makes use of several support contracts ongoing or recently completed. The quantitative and qualitative assessment of impacts and administrative costs and the analysis of the input from stakeholders was supported by a specific technical support contract. The analysis within this contract was conducted using a set of modelling tools to represent the building stock and the broader macro-economic and social impacts. The main statistics and data used, also to populate the dataset underlying the models used, refer to the Building Stock Observatory and EUROSTAT indicators. Results from several ongoing research and innovation projects funded under the Horizon2020 programme were also assessed and provided input to the analysis. This proposal benefits also from the evidence gathered in the impact assessment of the 2030 Climate Target Plan, and relevant evidence compiled in other Green Deal initiatives. As other proposals of the “Fit for 55” policy package, the baseline for assessment considers the updated EU Reference Scenario, a projection of the evolution of EU and national energy systems and greenhouse gas emissions under the current policy framework which includes COVID-19 impacts. •Impact assessment The analysis in the impact assessment confirmed that the EPBD framework is insufficient for the achievement of the 2030 climate objectives. In particular, no specific measure is in place to address non-economic barriers limiting energy renovation of buildings. The draft impact assessment was submitted twice to the Commission’s Regulatory Scrutiny Board. Following a first negative opinion, the Board issued a final second negative opinion , which underlined the need for political guidance on whether, and under which conditions, the proposal for the EPBD review could proceed further. The Board explained that it maintained its negative opinion because the draft impact assessment report failed to (1) clearly identify the additional gap the EPBD revision would have to fill given the rest of the “Fit for 55” proposals; (2) convincingly show the need for harmonised EU level measures given the heterogeneity of the building sector in Member States; and (3) sufficiently clarify the reason for the selection of the various individual components of the preferred package of policy options. The working methods of the European Commission empower the Vice President for Inter-Institutional Relations and Foresight to approve the continuation of an initiative that has been subject to a second negative opinion by the Regulatory Scrutiny Board. Because of the political importance of this initiative, its role within the Fit for 55 package of proposals of July 2021, the urgency of action in the field of building renovation and the fact that the need for policy guidance expressed by the Regulatory Scrutiny Board could be satisfactorily met in the adapted legal proposal, the Commission, also in the light of the agreement by the Vice President for Inter-Institutional Relations and Foresight, has considered it opportune to proceed with the EPBD revision. The Commission considers the Board’s finding with regard to the insufficient clarity on the role of the EPBD within the “Fit for 55” package to reflect its assessment of the quality of the draft impact assessment report rather than a fundamental concern about the overall policy mix of the “Fit for 55” package. It is important to flag also that the opinions of the Regulatory Scrutiny Board are an assessment of the quality of the draft impact assessment and not an assessment of the related legislative proposals. The interplay between regulatory measures, pricing mechanisms and targets was explained in the preceding sections of this explanatory memorandum. It frames the proposed EPBD revision in the same manner as it framed all other proposals of the “Fit for 55” package, which were all supported by individual impact assessment reports positively assessed by the Board. The Commission has carefully considered the Board’s view that the draft impact assessment report did not provide sufficiently solid evidence supporting the preferred set of policy measures, most notably with regard to the degree of EU harmonisation proposed therein. Against this background, the Commission has deviated from the option indicated in the draft impact assessment to introduce a phased-in and time-bound tightening of EU-level minimum energy performance standards (MEPS) for certain type of buildings coupled with an obligation for Member States to introduce national MEPS for all other buildings. Now, the national MEPS are proposed as voluntary and differences in national building stocks are better taken into consideration by giving greater flexibility to Member States in drawing up their plans to achieve the goal of a zero-emission building stock by 2050. However, EU-level minimum energy performance standards for the very worst-performing buildings have been retained to ensure sufficient initial effort from all on those buildings where the biggest energy efficiency gains, GHG emissions reductions and societal co-benefits can be achieved. Member States are left free to establish the specific timelines for these buildings to achieve higher energy performance classes by 2040 and 2050. Where Member States establish national MEPS, they should be designed with a view to the national roadmap and the national targets for 2030, 2040 and 2050 that Member States will establish as part of their National building renovation plans to reach the overall decarbonisation objective by 2050. Crucially, the very worst-performing buildings covered by the EU-level minimum energy performance standards are also the buildings where deeper renovation efforts are required and for which the incentives provided by carbon prices are most likely to fall short, given the pervasive market failures affecting this sub-sector across all Member States. Importantly, as the residential segment of those buildings is also that where the most vulnerable households tend to live, the proposed measure (and its supporting financial framework) is considered crucial for a climate transition that leaves no one behind. In addition, the proposal gives longer timelines for residential buildings to phase-in and comply with the EU-level minimum energy performance standards, as compared to buildings owned by public bodies and to other non-residential buildings. In addition to the above, the proposal has also been modified making a significant number of elements in the Energy Performance Certificates optional. Compared to the preferred option in the draft impact assessment where most measures were obligatory, the present proposal provides further flexibility to Member States. Existing mechanisms have also been prioritised over the creation of new requirements, notably by slimming down the requirements for National Building Renovation Plans and fully integrating them with the NECPs. The resulting proposal leaves a large margin for manoeuvre to Member States to adapt their buildings regulatory and financing policies to national and local circumstances with a view to meet a common overall ambition. The contribution of the EPBD revision to the overall “Fit for 55” package is not diminished but the key responsibility for its realisation falls more upon Member States than originally envisaged, with due respect for the principle of subsidiarity. Member States are called to design and implement appropriately ambitious National Building Renovation Plans taking into due account of their ESR targets and of the proposed cap on the emission from the use of heating fuels in the building sector. The Commission will assess the National Building Renovation Plans against this background. The review clause makes explicit reference to the Commission assessment of whether EU-building related measures, including carbon pricing, will bring sufficient improvements to deliver a fully decarbonised, zero-emission building stock by 2050, or whether further binding measures at Union level, such as strengthened EU-wide minimum energy performance standards, need to be introduced, at the latest by the end of 2027. More specific comments about the Board’s findings can be found in Annex I to the impact assessment accompanying this proposal. The impact assessment provides an analysis of the problem and identifies possible measures to increase renovation rates and depth, enable decarbonisation of new and existing buildings and increase the modernisation of buildings enabled by digitalisation. It packages them within four main options, representing a progressive increase in the level of ambition: low, moderate, high and higher ambition. Option 3 is identified therein as the preferred one. Following the Regulatory Scrutiny Board’s findings on the latter, the EPBD proposal was revised and is now based on a mix of option 2 (with moderate ambition) for existing buildings and option 3 (with high ambition) for information tools and new buildings.

•Regulatory fitness and simplification A key objective of the revision of the EPBD in 2018 was to reduce administrative burden. It had been estimated that taken together, the measures of the preferred policy option would reduce administrative burden by almost EUR 100 million per year. The key purpose of this revision together with the building-related aspects of the other “Fit for 55” proposals is to align the building sector with the Union’s enhanced climate ambitions. To ensure effectiveness, new and updated requirements are necessary. Those requirements will mainly impact administrative authorities at national and local level in the Member States and, to a lesser extent, building owners, and will mainly rely on existing procedures and structures already in place. They have the right level of ambition – on the one hand to reach our Green Deal targets and at the same time to give business and end consumers the time to adapt. As indicated in the impact assessment, the digitalisation of Energy Performance Certificates and the new provisions on data exchange and databases shall nonetheless reduce administrative and compliance costs and facilitate administrative procedures linked to building renovations. •Fundamental rights The Proposal is in line with Article 37 of the Charter of Fundamental Rights of the European Union, which requires that a high level of environmental protection and the improvement of the quality of the environment be integrated into the policies of the Union and ensured in accordance with the principle of sustainable development. It is designed in respect of the right to property laid down in Article 17 of the Charter, and builds on Article 34 of the Charter which “recognises and respects the right to […] housing assistance so as to ensure a decent existence for all those who lack sufficient resources, in accordance with the rules laid down by Union law and national laws and practices.” 4. BUDGETARY IMPLICATIONS This proposal does not have any implication for the EU budget. It amends an existing Directive and largely relies on structures and rules that are already in place. 5. OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements After adoption by the co-legislators of this Recast Directive, the Commission will undertake the following actions to facilitate its transposition: –Draft a correlation table that serves as transposition check-list for both Member States and the Commission; –Organise meetings with Member States’ experts in charge of transposing the different parts of the Directive to discuss how to transpose them and solve doubts, either in the context of the Concerted Action for the EPBD (CA-EPBD) or in a committee format; –Be available for bilateral meetings and calls with Member States in case of specific questions on the transposition of the Directive; –After the transposition deadline, the Commission will carry out a comprehensive assessment of whether Member States have completely and correctly transposed the Directive. The proposal complements the Governance Regulation, which ensures that a transparent and reliable planning, reporting and monitoring system is in place, based on the NECPs and streamlined progress reports by Member States. From 2023, Member States must report biennially on the progress made in implementing the plans and in addition, by 30 June 2023 they must notify the Commission of their draft updates of the plans, with the final updates due on 30 June 2024. The submission of building renovation plans will follow the cycles of the national energy and climate plans (NECP), except for the first building renovation plan. •Explanatory documents (for directives) Article 32(1) provides that Member States shall communicate their transposition measures together with a correlation table. This is in line with the ruling of the European Court of Justice (case C-543/17), pursuant to which Member States must accompany their notifications of national transposition measures with sufficiently clear and precise information, indicating which provisions of national law transpose which provisions of a directive. This must be provided for each obligation, not only at “article level”. If Member States comply with this obligation, they would not need, in principle, to send explanatory documents on the transposition to the Commission. •Detailed explanation of the specific provisions of the proposal

Directive 2010/31/EU is amended as follows to align provisions on new and existing buildings, and on information tools, to the European Green Deal, to update its content in light of technical progress and simplify its set-up and to ensure reinforced finance and enforcement mechanisms: –The subject matter is amended to underline that the proposal for a recast EPBD sets the vision for achieving a zero-emission building stock by 2050 and to reflect a new complementary carbon metric to orient choices towards decarbonised solutions. While the focus of the proposal is the reduction of operational greenhouse gas emissions, first steps are taken to address carbon emissions over the whole life-cycle of a building. –A new definition of zero-emission building is introduced in Article 2: a building with a very high energy performance in line with the energy efficiency first principle, and where the very low amount of energy still required is fully covered by energy from renewable sources at the building or district or community level where technically feasible (notably those generated on-site, from a renewable energy community or from renewable energy or waste heat from a district heating and cooling system). Zero-emission buildings become the new standard for new buildings, the level to be attained by a deep renovation as of 2030 and the vision for the building stock in 2050. Article 2 also clarifies the definition of “nearly zero-energy building”, which remains the standard for new buildings until the application of the zero-emission building standard, and becomes the level to be attained by a deep renovation until 2030. It newly defines “deep renovation” as a gold standard for building renovation and “staged deep renovation” to ease its delivery. Article 2 introduces a definition of “mortgage portfolio standards”) as a mechanism to incentivise mortgage lenders to improve the energy performance of their portfolio of buildings, and encourage potential clients to make their properties more energy performing. –Article 3 on National building renovation plans (previously named long-term renovation strategies) is made more operational. The monitoring framework is strengthened by introducing an assessment of the draft national building renovation plans by the Commission and the issuing of recommendations as part of the NECP process. To facilitate the presentation of the information and its assessment by the Commission and improve comparability of national plans, a common template with mandatory and voluntary elements is provided in Annex II. Mandatory elements to report upon encompass district and neighbourhood approaches, including the role of renewable energy communities and citizen energy communities. The building renovation plans shall be submitted as part of the NECPs and their updates; exceptionally, the first draft plan is to be submitted by 30 June 2024 to take into account the time for adoption and entry into force of the revised EPBD. Progress in achieving the national targets and the contribution of the building renovation plans to national and Union targets will be reported as part of the biennial reporting under the Governance Regulation. –Article 4 (ex-Article 3) on the methodology for calculating the energy performance of buildings in conjunction with Annex I is updated to clarify the possible use of metered energy use to calculate energy performance, and verify the correctness of calculated energy use. The article specifies how to account for the on-site use of energy from renewable sources, such as for recharging points, and for energy supplied from energy communities. –Article 5 (ex-Article 4) on the setting of minimum energy performance requirements is amended to adapt the previously possible total exemption of protected buildings to technical progress, which allows improving the energy performance of such buildings without altering their technical character and appearance. –Article 6 (ex-Article 5) on the calculation of cost-optimal levels is aligned to the Green Deal, specifying that the costs of greenhouse gas allowances as well as environmental and health externalities of energy use are to be considered when determining the lowest costs. The Commission will revise the cost-optimal methodology by 30 June 2026. –Article 7 brings together all provisions on new buildings: (a)It specifies that as of 2030, new buildings must be zero-emission buildings; new public buildings must be zero-emission as of 2027. The specific requirements for zero-emission buildings are laid down in Annex III; (b)The life-cycle Global Warming Potential (GWP) of new buildings will have to be calculated as of 2030 in accordance with the Level(s) framework, thus informing on the whole-life cycle emissions of new construction. Whole-life cycle emissions are particularly relevant for large buildings, which is why the obligation to calculate them already applies to large buildings (with a useful floor area larger than 2000 square meters) as of 2027. (c)Member States shall address for new buildings important dimensions going beyond energy performance, namely healthy indoor climate conditions, adaptation to climate change, fire safety, risks related to intense seismic activity and accessibility for persons with disabilities. They shall also address carbon removals associated to carbon storage in or on buildings. –Article 8 – 10 and 15 on existing buildings and financial support combine: (a)The current provisions on major renovation, which offer an opportunity to apply minimum energy performance requirements in place (to ensure minimum renovation depth), and also to address structural improvements, adaptation to climate change, removing hazardous substances including asbestos, and accessibility for persons with disabilities, are complemented with new EU-level minimum energy performance standards (triggering an increase in renovation rates) for the worst-performing public (i.e. buildings and building units owned by public bodies) and non-residential buildings. They require EPC class G buildings to be renovated and improved to at least energy performance class F at the latest by 2027 and to at least energy performance class E at the latest by 2030, and the worst-performing residential buildings to at least class F by 2030 and to at least class E by 2033. The focus on the very lowest performing classes of the building stock ensures that efforts focus on buildings with the highest potential for decarbonisation, energy poverty alleviation and extended social and economic benefits. Member States shall also, as part of the national building renovation plans, establish specific timelines for achieving higher energy performance classes (for buildings falling in the scope of Article 9(1)) by 2040 and 2050, in line with their pathway for transforming the national building stock into zero-emission buildings. In addition to the minimum energy performance standards in accordance with Article 9(1), Member States have the option to introduce national minimum energy performance standards in their national renovation plans. Member States must support compliance with minimum energy performance standards with an enabling framework including financing support, in particular targeting vulnerable households and people affected by energy poverty or living in social housing, technical assistance, and monitoring mechanisms. The proposed provisions allow Member States to exclude several categories of buildings from the obligation to comply with minimum energy performance standards. (b)The introduction of voluntary renovation passports to equip building owners planning a staged renovation of their building. Member States will have to introduce a scheme of renovation passports based on the common framework to be developed by the Commission by the end of 2024, in order to give their citizens access to the use of this tool. (c)Stronger provisions on the removal of obstacles and barriers to renovation, and on the mobilisation of financial incentives with one-stop-shops accessible to all building ecosystem’s stakeholders, so that all barriers to building renovation, not only the costs, are addressed and Member States promote appropriate training. Higher financial incentives and technical support measures are directed to deep renovation projects and those targeting a sizeable number of buildings and leading to considerable overall energy savings. With the same objective in mind, since based on standard lifespans a boiler bought in the mid-2020s may still be in use in 2050, Member States should not be allowed to subsidise fossil-fuel boilers as of 2027. (d)To encourage the swift deployment of heating systems with zero direct emissions, and to avoid that investments in new generations of fossil fuel-based boilers become stranded assets, zero-emission buildings should not generate carbon emissions on-site and Member States may opt for the use of a primary energy factor for electricity aligned with the EU average. (e)Finally, Member States are required to focus their financial support on the alleviation of energy poverty and to support social housing, and to shield tenants from disproportionate rent levels following renovation. As a follow up to the opinions of the Regulatory Scrutiny Board, the retained option on Minimum Energy Performance Standards does not directly correspond to any of the four options analysed in the draft impact assessment submitted to the Board. The proposal has carefully been amended in view of subsidiarity and proportionality, taking into account the differences across building stocks in different Member States and giving flexibility to Member States in how they address their specific circumstances and achieve the necessary improvements of their national building stock. It places an EU-wide focus on the 15% worst-performing buildings in the corresponding national building stocks in order to maximise energy savings, cost-effectiveness and energy poverty alleviation impacts as well as more comprehensive social and economic co-benefits associated with achieving the EU’s climate and energy objectives. –The previous Article 8 is restructured. Article 11 focusses on technical building systems only, and a clear legal basis for national bans of boilers based on fossil fuels is introduced, allowing Member States to set requirements for heat generators based on greenhouse gas emissions or the type of fuel used. Several Member States consider such measures as essential to achieve a decarbonised building stock and to improve air quality and health. This provision addresses the current legal uncertainty on whether such bans are permitted under Article 6(1) of the Ecodesign Directive and free market rules under the Treaties. In recognition of the importance of good indoor air quality to ensure healthy buildings, the installation of measuring and control devices for the monitoring and regulation of indoor air quality is required in new buildings and, where feasible, in existing buildings undergoing major renovations. –Article 12 on infrastructure for sustainable mobility is aligned with the increased climate ambition, strengthening the current requirements. Pre-cabling becomes the norm for all new buildings and buildings undergoing major renovation, and the roll-out of recharging points in new and renovated office buildings is reinforced in particular. Recharging points need to enable smart charging and Member States shall remove barriers to the installation of recharging points in residential buildings, ensuring a “right to plug” in line with the relevant provisions in the proposal for an Alternative Fuels Infrastructure Regulation. In addition, mandatory bicycle parking spaces in new buildings and buildings undergoing major renovation are introduced in order to remove barriers to cycling as a central element of sustainable, zero-emission mobility.

–Articles 13 reinforces the Smart Readiness Indicator for large non-residential buildings as of 2026. To facilitate development of new services related to buildings, a new Article 14 specific to building data ensures that the building owner, tenant and manager or third parties can have access to building systems’ data. New rules on data interoperability and access to data are to be laid down by the Commission by means of an implementing act. –Articles 16 to 19 improve the already existing provisions on energy performance certificates, their issuing and display, and their databases: (a)To ensure comparability across the Union, by 2025 all energy performance certificates must be based on a harmonised scale of energy performance classes and comply with the template laid down in Annex V. (b)The energy performance classes will be rescaled with a view to the common vision for a zero-emission building stock by 2050, while taking into account national differences of building stocks: the highest class A represents a zero-emission building, while the lowest class G shall include the 15% worst-performing buildings in the national building stock. This rescaling will ensure comparable efforts across Member States to comply with the Union-wide minimum energy performance standards pursuant to Article 9. The indicator on the basis of which buildings are to be rated (primary energy use in kWh/(m2.y)) remains unchanged, and is complemented by an indicator on operational greenhouse gas emissions and renewable energy. Other indicators remain voluntary for Member States to choose from, offering a toolbox approach that can be adjusted to national conditions. (c)The validity of energy performance certificates of the lower D to G classes is reduced to five years in order to ensure that they contain up-to-date information that helps citizens reduce their consumption. Simplified procedures must be available for the updates of energy performance certificates in certain simple cases and energy performance certificates must be issued in a digital format. Measures to increase reliability of the issued certificates are introduced (on-site visit and quality control). (d)Better coverage of the building stock with EPCs is a precondition for its improvement, but at the same time Member States would need to ensure that they are affordable. The obligation to have an energy performance certificate is extended to buildings undergoing major renovation, buildings for which a rental contract is renewed and all public buildings. Buildings or building units which are offered for sale or rent must have an energy performance certificate, and the energy performance class and indicator should be stated in all advertisements, ensuring the relevance of energy performance on the market for sale and rental. All buildings occupied by public authorities and frequently visited by the public must display their energy performance certificate, irrespective of their size. (e)Member States shall set up national databases for energy performance certificates of buildings, which also allow to gather data related to building renovation passports and smart readiness indicators. Information from the national databases shall be transferred to the Building Stock Observatory, based on a template to be developed by the Commission. –Current provisions on inspections are grouped together and clarified to facilitate their implementation, whilst including ventilation systems as part of the EPBD measures aimed at addressing indoor air quality. To ensure the quality and reliability of renovations or of new construction works, it is foreseen that national inspection schemes or alternative tools shall be set up to verify that delivered construction and renovation works meet the designed energy performance and improve citizens’ satisfaction and trust. In the same vein, providers of integrated renovation works must have access to certification or qualification schemes to ensure reliable quality of those works. The threshold for the mandatory installation of building automation and control systems should be lowered for non-residential buildings as of 2030, and new residential buildings and residential buildings undergoing major renovations must be equipped with certain monitoring and control functionalities to improve and optimise their management and operation. –Enforcement of buildings policy is key to ensure that it makes real progress on the ground. Current independent control systems are extended to include renovation passports and smart readiness indicators. Monitoring and enforcement, including through penalties, will focus in particular on minimum energy performance standards and the improvement of the existing building stock. Final provisions and review clause: with a view to the review of the EPBD in 2021 in the context of delivering on the Green Deal, the date for the next review pursuant to Article 25 is set to the end of 2027, at the latest. The review clause makes explicit reference to the Commission assessment of whether building-related measures in EU legislation, including carbon pricing, will bring sufficient improvements to deliver a fully decarbonised, zero-emission building stock by 2050, or whether further binding measures at Union level such as strengthened minimum energy performance need to be introduced. Article 32 on transposition clarifies that Member States shall provide a correlation table together with their transposition measures. 🡻 2010/31/EU 2021/0426 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the energy performance of buildings (recast) (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) thereof, Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, Acting in accordance with the ordinary legislative procedure, Whereas: 🡻 2010/31/EU recital 1 (adapted) (1)Directive 2002/91/EC ⌦ 2010/31/EU ⌫ of the European Parliament and of the Council of 16 December 2002 on the energy performance of buildings has been ⌦ substantially ⌫ amended ⌦ several times ⌫. Since further substantive amendments are to be made, it ⌦ that Directive ⌫ should be recast in the interests of clarity. ⇩ new (2)Under the Paris Agreement, adopted in December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC), its Parties have agreed to hold the increase in the global average temperature well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels. Reaching the objectives of the Paris Agreement is at the core of the Commission Communication on “The European Green Deal” of 11 December 2019. The Union committed itself to reduce the Union’s economy-wide net greenhouse gas emissions by at least 55 % by 2030 below 1990 levels in the updated nationally determined contribution submitted to the UNFCCC Secretariat on 17 December 2020. (3)As announced in the Green Deal, the Commission presented its Renovation Wave strategy on 14 October 2020. The strategy contains an action plan with concrete regulatory, financing and enabling measures, with the objective to at least double the annual energy renovation rate of buildings by 2030 and to foster deep renovations. The revision of the Energy Performance of Buildings Directive is necessary as one of the vehicles to deliver on the Renovation Wave. It will also contribute to delivering on the New European Bauhaus initiative and the European mission on climate-neutral and smart cities. (4)Regulation (EU) 2021/1119 of the European Parliament and of the Council, the ‘European Climate Law’, enshrines the target of economy-wide climate neutrality by 2050 in legislation and establishes a binding Union domestic reduction commitment of net greenhouse gas emissions (emissions after deduction of removals) of at least 55 % below 1990 levels by 2030. (5)The “Fit for 55” legislative package announced in the European Commission 2021 Work Programme aims to implement those objectives. It covers a range of policy areas including energy efficiency, renewable energy, land use, land change and forestry, energy taxation, effort sharing, emissions trading and alternative fuels infrastructure. The revision of Directive 2010/31/EU is an integral part of that package. 🡻 2010/31/EU recital 2 An efficient, prudent, rational and sustainable utilisation of energy applies, inter alia, to oil products, natural gas and solid fuels, which are essential sources of energy, but also the leading sources of carbon dioxide emissions. 🡻 2010/31/EU recital 3 (adapted) ⇨ new

(6)Buildings account for 40 % of ⌦ final ⌫ total energy consumption in the Union ⇨ and 36% of its energy-related greenhouse gas emissions ⇦ . The sector is expanding, which is bound to increase its energy consumption. Therefore, reduction of energy consumption ⇨ , in line with the energy efficiency first principle as laid down in Article 3 [revised EED] and defined in Article 2(18) of Regulation (EU) 2018/1999 of the European Parliament and of the Council ⇦ and the use of energy from renewable sources in the buildings sector constitute important measures needed to reduce the Union’s energy dependency and greenhouse gas emissions. Together with an increased use of energy from renewable sources, measures taken to reduce energy consumption in the Union would allow the Union to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), and to honour both its long term commitment to maintain the global temperature rise below 2 °C, and its commitment to reduce, by 2020, overall greenhouse gas emissions by at least 20 % below 1990 levels, and by 30 % in the event of an international agreement being reached. Reduced energy consumption and an increased use of energy from renewable sources also have an important part to play in ⇨ reducing the Union’s energy dependency, ⇦ promoting security of energy supply, ⌦ and ⌫ technological developments and in creating opportunities for employment and regional development, in particular in ⇨ islands and ⇦ rural areas. ⇩ new (7)Buildings are responsible for greenhouse gas emissions before, during and after their operational lifetime. The 2050 vision for a decarbonised building stock goes beyond the current focus on operational greenhouse gas emissions. The whole life-cycle emissions of buildings should therefore progressively be taken into account, starting with new buildings. Buildings are a significant material bank, being repositories for resources over many decades, and the design options largely influence the whole life-cycle emissions both for new buildings and renovations. The whole life-cycle performance of buildings should be taken into account not only in new construction, but also in renovations through the inclusion of policies for the reduction of whole life-cycle greenhouse gas emissions in Member States’ building renovation plans. (8)Minimizing the whole life-cycle greenhouse gas emissions of buildings requires resource efficiency and circularity. This can also be combined with turning parts of the building stock into a temporary carbon sink. (9)The global warming potential over the whole life-cycle indicates the building’s overall contribution to emissions that lead to climate change. It brings together greenhouse gas emissions embodied in construction products with direct and indirect emissions from the use stage. A requirement to calculate the life-cycle global warming potential of new buildings therefore constitutes a first step towards increased consideration of the whole life-cycle performance of buildings and a circular economy. (10)Buildings are responsible for about half of primary fine particulate matter (PM2.5) emissions in the EU that cause premature death and illness. Improving energy performance of buildings can and should reduce pollutant emissions at the same time, in line with Directive (EU) 2016/2284 of the European Parliament and the Council. 🡻 2010/31/EU recital 4 Management of energy demand is an important tool enabling the Union to influence the global energy market and hence the security of energy supply in the medium and long term. 🡻 2010/31/EU recital 5 (adapted) The European Council of March 2007 emphasised the need to increase energy efficiency in the Union so as to achieve the objective of reducing by 20 % the Union’s energy consumption by 2020 and called for a thorough and rapid implementation of the priorities established in the Commission Communication entitled ‘Action plan for energy efficiency: realising the potential’. That action plan identified the significant potential for cost-effective energy savings in the buildings sector. The European Parliament, in its resolution of 31 January 2008, called for the strengthening of the provisions of Directive 2002/91/EC, and has called at various times, on the latest occasion in its resolution of 3 February 2009 on the Second Strategic Energy Review, for the 20 % energy efficiency target in 2020 to be made binding. Moreover, Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020 , sets national binding targets for CO2 reduction for which energy efficiency in the building sector will be crucial, and Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources provides for the promotion of energy efficiency in the context of a binding target for energy from renewable sources accounting for 20 % of total Union energy consumption by 2020. 🡻 2010/31/EU recital 6 (adapted) The European Council of March 2007 reaffirmed the Union’s commitment to the Union-wide development of energy from renewable sources by endorsing a mandatory target of a 20 % share of energy from renewable sources by 2020. Directive 2009/28/EC establishes a common framework for the promotion of energy from renewable sources. 🡻 2010/31/EU recital 7 (adapted) It is necessary to lay down more concrete actions with a view to achieving the great unrealised potential for energy savings in buildings and reducing the large differences between Member States’ results in this sector.

🡻 2010/31/EU recital 8 (adapted) ⇨ new (11)Measures to improve further the energy performance of buildings should take into account climatic ⌦ conditions, ⌫ ⇨ including adaptation to climate change, ⇦ and local conditions as well as indoor climate environment and cost-effectiveness. These ⌦ Those ⌫ measures should not affect other requirements concerning buildings such as accessibility ⇨ , fire safety and seismic ⇦ safety and the intended use of the building. 🡻 2010/31/EU recital 9 ⇨ new (12)The energy performance of buildings should be calculated on the basis of a methodology, which may be differentiated at national and regional level. That includes, in addition to thermal characteristics, other factors that play an increasingly important role such as heating and air-conditioning installations, application of energy from renewable sources, ⇨ building automation and control systems, smart solutions, ⇦ passive heating and cooling elements, shading, indoor air-quality, adequate natural light and design of the building. The methodology for calculating energy performance should be based not only on the season in which heating ⇨ or air-conditioning ⇦ is required, but should cover the annual energy performance of a building. That methodology should take into account existing European standards. ⇨ The methodology should ensure the representation of actual operating conditions and enable the use of metered energy to verify correctness and for comparability, and the methodology should be based on hourly or sub-hourly time-steps. In order to encourage the use of renewable energy on-site, and in addition to the common general framework, Member States should take the necessary measures so that the benefits of maximising the use of renewable energy on-site, including for other-uses (such as electric vehicle charging points), are recognised and accounted for in the calculation methodology. ⇦ 🡻 2010/31/EU recital 10 (adapted) ⇨ new (13)It is the sole responsibility of Member States ⇨ should ⇦ to set minimum requirements for the energy performance of buildings and building elements. Those requirements should be set with a view to achieving the cost-optimal balance between the investments involved and the energy costs saved throughout the lifecycle of the building, without prejudice to the right of Member States to set minimum requirements which are more energy efficient than cost-optimal energy efficiency levels. Provision should be made for the possibility for Member States to review regularly their minimum energy performance requirements for buildings in the light of technical progress. 🡻 2010/31/EU recital 11 The objective of cost-effective or cost-optimal energy efficiency levels may, in certain circumstances, for example in the light of climatic differences, justify the setting by Member States of cost-effective or cost-optimal requirements for building elements that would in practice limit the installation of building products that comply with standards set by Union legislation, provided that such requirements do not constitute an unjustifiable market barrier. ⇩ new (14)Two-thirds of the energy used for heating and cooling of buildings still comes from fossil fuels. In order to decarbonise the building sector, it is of particular importance to phase out fossil fuel in heating and cooling. Therefore, Member States should indicate their national policies and measures to phase out fossil fuels in heating and cooling in their building renovation plans, and no financial incentives should be given for the installation of fossil fuel boilers under the next Multiannual Financial Framework as of 2027, with the exception of those selected for investment, before 2027, under the European Regional Development Fund and on the Cohesion Fund. A clear legal basis for the ban of heat generators based on their greenhouse gas emissions or the type of fuel used should support national phase-out policies and measures. 🡻 2010/31/EU recital 12 ⇨ new

(15)⇨ Energy performance requirements for technical building systems should apply to whole systems, as installed in buildings, and not to the performance of standalone components, which fall under the scope of product-specific regulations under Directive 2009/125/EC. ⇦ When setting energy performance requirements for technical building systems, Member States should use, where available and appropriate, harmonised instruments, in particular testing and calculation methods and energy efficiency classes developed under measures implementing Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for the setting of ecodesign requirements for energy-related products and Directive 2010/30/EU19 May 2010 on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products Regulation (EU) 2017/1369 of the European Parliament and of the Council , with a view to ensuring coherence with related initiatives and minimise, to the extent possible, potential fragmentation of the market. 🡻 2010/31/EU recital 13 (16)This Directive is without prejudice to Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU). The term ‘incentive’ used in this Directive should not therefore be interpreted as constituting State aid. 🡻 2010/31/EU recital 14 (adapted) ⇨ new (17)The Commission should lay down a comparative methodology framework for calculating cost-optimal levels of minimum energy performance requirements. ⇨ A review of this framework should enable the calculation of both energy and emission performance and should take into account environmental and health externalities, as well as the ETS extension and carbon prices. ⇦ Member States should use this ⌦ that ⌫ framework to compare the results with the minimum energy performance requirements which they have adopted. Should significant discrepancies, i.e. exceeding 15 %, exist between the calculated cost-optimal levels of minimum energy performance requirements and the minimum energy performance requirements in force, Member States should justify the difference or plan appropriate steps to reduce the discrepancy. The estimated economic lifecycle of a building or building element should be determined by Member States, taking into account current practices and experience in defining typical economic lifecycles. The results of this ⌦ that ⌫ comparison and the data used to reach these ⌦ those ⌫ results should be regularly reported to the Commission. These ⌦ Those ⌫ reports should enable the Commission to assess and report on the progress of Member States in reaching cost-optimal levels of minimum energy performance requirements. 🡻 2010/31/EU recital 15 Buildings have an impact on long-term energy consumption. Given the long renovation cycle for existing buildings, new, and existing buildings that are subject to major renovation, should therefore meet minimum energy performance requirements adapted to the local climate. As the application of alternative energy supply systems is not generally explored to its full potential, alternative energy supply systems should be considered for new buildings, regardless of their size, pursuant to the principle of first ensuring that energy needs for heating and cooling are reduced to cost-optimal levels. 🡻 2010/31/EU recital 16 (18)Major renovations of existing buildings, regardless of their size, provide an opportunity to take cost-effective measures to enhance energy performance. For reasons of cost-effectiveness, it should be possible to limit the minimum energy performance requirements to the renovated parts that are most relevant for the energy performance of the building. Member States should be able to choose to define a ‘major renovation’ either in terms of a percentage of the surface of the building envelope or in terms of the value of the building. If a Member State decides to define a major renovation in terms of the value of the building, values such as the actuarial value, or the current value based on the cost of reconstruction, excluding the value of the land upon which the building is situated, could be used. 🡻 2010/31/EU recital 17 Measures are needed to increase the number of buildings which not only fulfil current minimum energy performance requirements, but are also more energy efficient, thereby reducing both energy consumption and carbon dioxide emissions. For this purpose Member States should draw up national plans for increasing the number of nearly zero-energy buildings and regularly report such plans to the Commission. ⇩ new (19)The enhanced climate and energy ambition of the Union requires a new vision for buildings: the zero-emission building, the very low energy demand of which is fully covered by energy from renewable sources where technically feasible. All new buildings should be zero-emission buildings, and all existing buildings should be transformed into zero-emission buildings by 2050.

(20)Different options are available to cover the energy needs of an efficient building by energy from renewable sources: on-site renewables such as solar thermal, solar photovoltaics, heat pumps and biomass, renewable energy provided by renewable energy communities or citizen energy communities, and district heating and cooling based on renewables or waste heat. (21)The necessary decarbonisation of the Union building stock requires energy renovation at a large scale: almost 75% of that building stock is inefficient according to current building standards, and 85-95% of the buildings that exist today will still be standing in 2050. However, the weighted annual energy renovation rate is persistently low at around 1%. At the current pace, the decarbonisation of the building sector would require centuries. Triggering and supporting building renovation, including a shift towards emission-free heating systems, is therefore a key goal of this Directive. (22)Minimum energy performance standards are the essential regulatory tool to trigger renovation of existing buildings on a large scale, as they tackle the key barriers to renovation such as split incentives and co-ownership structures, which cannot be overcome by economic incentives. The introduction of minimum energy performance standards should lead to a gradual phase-out of the worst-performing buildings and a continuous improvement of the national building stock, contributing to the long-term goal of a decarbonised building stock by 2050. (23)Minimum energy performance standards set at Union level should focus on the renovation of the buildings with the highest potential in terms of decarbonisation, energy poverty alleviation and extended social and economic benefits, in particular on the very worst-performing buildings, which need to be renovated as a priority. (24)As regards the rest of the national building stock, Member States are free to decide whether they wish to introduce minimum energy performance standards, designed at national level and adapted to national conditions. When reviewing this Directive, the Commission should assess whether further binding minimum energy performance standards need to be introduced in order to achieve a decarbonised building stock by 2050. (25)The introduction of minimum energy performance standards should be accompanied by an enabling framework including technical assistance and financial measures. Minimum energy performance standards set at national level do not amount to “Union standards” within the meaning of State aid rules, while Union-wide minimum energy performance standards might be considered constituting such “Union standards”. In line with revised State aid rules, Member States may grant State aid to building renovation to comply with the Union-wide energy performance standards, namely to achieve a certain energy performance class, until those Union-wide standards become mandatory. Once the standards are mandatory, Member States may continue to grant State aid for the renovation of buildings and building units falling under the Union-wide energy performance standards as long as the building renovation aims at a higher standard than the specified minimum energy performance class. (26)The EU Taxonomy classifies environmentally sustainable economic activities across the economy, including for the building sector. Under the EU Taxonomy Climate Delegated Act, building renovation is considered a sustainable activity where it achieves at least 30% energy savings, complies with minimum energy performance requirements for major renovation of existing buildings, or consists of individual measures related to the energy performance of buildings, such as the installation, maintenance or repair of energy efficiency equipment or of instruments and devices for measuring, regulating and controlling the energy performance of buildings, where such individual measures comply with the criteria set out. Building renovation to comply with Union-wide minimum energy performance standards is typically in line with the EU Taxonomy criteria related to building renovation activities. (27)The Union-wide minimum energy performance standards should be based on harmonised energy performance classes. By defining the lowest energy performance class G as the worst-performing 15% of each Member State’s national building stock, the harmonisation of energy performance classes ensures similar efforts by all Member States, while the definition of the best energy performance class A ensures the convergence of the harmonised energy performance class scale towards the common vision of zero-emission buildings. (28)Minimum energy performance requirements for existing buildings and building elements were already contained in the predecessors of this Directive and should continue to apply. While the newly introduced minimum energy performance standards set a floor for the minimum energy performance of existing buildings and ensure that renovation of inefficient buildings takes place, minimum energy performance requirements for existing buildings and building elements ensure the necessary depth of renovation when a renovation takes place. (29)To achieve a highly energy efficient and decarbonised building stock and the transformation of existing buildings into zero-emission buildings by 2050, Member States should establish national building renovation plans, which replace the long-term renovation strategies and become an even stronger, fully operational planning tool for Member States, with a stronger focus on financing and ensuring that appropriately skilled workers are available for carrying out building renovations. In their building renovation plans, Member States should set their own national building renovation targets. In line with Article 21(b)(7) of Regulation (EU) 2018/1999 and with the enabling conditions set under Regulation (EU) 2021/60 of the European Parliament and of the Council, Member States should provide an outline of financing measures, as well as an outline of the investment needs and the administrative resources for the implementation of their building renovation plans. (30)The national building renovation plans should be based on a harmonised template in order to ensure comparability of plans. In order to ensure the required ambition, the Commission should assess the draft plans and issue recommendations to Member States. (31)The national building renovation plans should be closely linked with the integrated national energy and climate plans under Regulation (EU) 2018/1999, and progress in achieving the national targets and the contribution of the building renovation plans to national and Union targets should be reported as part of the biennial reporting under Regulation (EU) 2018/1999. Considering the urgency to scale up renovation based on solid national plans, the date for the submission of the first national building renovation plan should be set as early as possible. (32)Staged renovation can be a solution to address the issues of high upfront costs and hassle for the inhabitants that may occur when renovating ‘in one go’. However, such staged renovation needs to be carefully planned in order to avoid that one renovation step precludes necessary subsequent steps. Renovation passports provide a clear roadmap for staged renovation, helping owners and investors plan the best timing and scope for interventions. Therefore, renovation passports should be made available as a voluntary tool to building owners across all Member States. (33)The concept of ‘deep renovation’ has not yet been defined in Union legislation. With a view to achieving the long-term vision for buildings, deep renovation should be defined as a renovation that transforms buildings into zero-emission buildings; in a first step, as a renovation that transforms buildings into nearly zero-energy buildings. This definition serves the purpose of increasing the energy performance of buildings. A deep renovation for energy performance purposes is a prime opportunity to address other aspects such as living conditions of vulnerable households, increasing climate resilience, resilience against disaster risks including seismic resilience, fire safety, the removal of hazardous substances including asbestos, and accessibility for persons with disabilities. (34)In order to foster deep renovation, which is one of the goals of the Renovation Wave strategy, Member States should give enhanced financial and administrative support to deep renovation. (35)Member States should support energy performance upgrades of existing buildings that contribute to achieving a healthy indoor environment, including through the removal of asbestos and other harmful substances, preventing the illegal removal of harmful substances, and facilitating compliance with existing legislative acts such as Directives 2009/148/EU and (EU) 2016/2284 of the European Parliament and of the Council. (36)Electric vehicles are expected to play a crucial role in the decarbonisation and efficiency of the electricity system, namely through the provision of flexibility, balancing and storage services, especially through aggregation. This potential of electric vehicles to integrate with the electricity system and contribute to system efficiency and further absorption of renewable electricity should be fully exploited. Charging in relation to buildings is particularly important, since this is where electric vehicles park regularly and for long periods of time. Slow charging is economical and the installation of recharging points in private spaces can provide energy storage to the related building and integration of smart charging services and system integration services in general. (37)Combined with an increased share of renewable electricity production, electric vehicles produce fewer greenhouse gas emissions. Electric vehicles constitute an important component of a clean energy transition based on energy efficiency measures, alternative fuels, renewable energy and innovative solutions for the management of energy flexibility. Building codes can be effectively used to introduce targeted requirements to support the deployment of recharging infrastructure in car parks of residential and non-residential buildings. Member States should remove barriers such as split incentives and administrative complications which individual owners encounter when trying to install a recharging point on their parking space. (38)Pre-cabling provides the right conditions for the rapid deployment of recharging points if and where they are needed. Readily available infrastructure will decrease the costs of installation of recharging points for individual owners and ensure that electric vehicle users have access to recharging points. Establishing requirements for electromobility at Union level concerning the pre-equipping of parking spaces and the installation of recharging points is an effective way to promote electric vehicles in the near future while enabling further development at a reduced cost in the medium to long term. Where technically feasible, Member States should ensure the accessibility of recharging points for persons with disabilities. (39)Smart charging and bidirectional charging enable the energy system integration of buildings. Recharging points where electric vehicles typically park for extended periods of time, such as where people park for reasons of residence or employment, are highly relevant to energy system integration, therefore smart charging functionalities need to be ensured. In situations where bidirectional charging would assist further penetration of renewable electricity by electric vehicle fleets in transport and the electricity system in general, such functionality should also be made available.

(40)Promoting green mobility is a key part of the European Green Deal and buildings can play an important role in providing the necessary infrastructure, not only for recharging of electric vehicles but also for bicycles. A shift to soft mobility such as cycling can significantly reduce greenhouse gas emissions from transport. As set out in the 2030 Climate Target Plan, increasing the modal shares of clean and efficient private and public transport, such as cycling, will drastically lower pollution from transport and bring major benefits to individual citizens and communities. The lack of bike parking spaces is a major barrier to the uptake of cycling, both in residential and non-residential buildings. Building codes can effectively support the transition to cleaner mobility by establishing requirements for a minimum number of bicycle parking spaces. (41)The agendas of the Digital Single Market and the Energy Union should be aligned and should serve common goals. The digitalisation of the energy system is quickly changing the energy landscape, from the integration of renewables to smart grids and smart-ready buildings. In order to digitalise the building sector, the Union’s connectivity targets and ambitions for the deployment of high-capacity communication networks are important for smart homes and well-connected communities. Targeted incentives should be provided to promote smart-ready systems and digital solutions in the built environment. This would offer new opportunities for energy savings, by providing consumers with more accurate information about their consumption patterns, and by enabling the system operator to manage the grid more effectively. (42)In order to facilitate a competitive and innovative market for smart building services that contributes to efficient energy use and integration of renewable energy in buildings and support investments in renovation, Member States should ensure direct access to building systems’ data by interested parties. To avoid excessive administrative costs for third parties, Member States shall facilitate the full interoperability of services and of the data exchange within the Union. (43)The smart readiness indicator should be used to measure the capacity of buildings to use information and communication technologies and electronic systems to adapt the operation of buildings to the needs of the occupants and the grid and to improve the energy efficiency and overall performance of buildings. The smart readiness indicator should raise awareness amongst building owners and occupants of the value behind building automation and electronic monitoring of technical building systems and should give confidence to occupants about the actual savings of those new enhanced-functionalities. The smart readiness indicator is particularly beneficial for large buildings with high energy demand. For other buildings, the scheme for rating the smart readiness of buildings should be optional for Member States. 🡻 2010/31/EU recital 18 (adapted) ⇨ new (44)⇨ Access to sufficient funding is crucial to meet the 2030 and 2050 energy efficiency targets. ⇦ Union financial instruments and other measures are being ⌦ have been ⌫ put into place or adapted with the aim of ⇨ supporting the energy performance of buildings ⇦ stimulating energy efficiency-related measures. ⇨ The most recent initiatives to increase the availability of financing at Union level include, inter alia, the ‘Renovate’ flagship component of the Recovery and Resilience Facility established by Regulation (EU) 2041/241 of the European Parliament and the Council and the Social Climate Fund established by Regulation (EU) …/…. Several other key EU programmes can support energy renovation under the 2021-2027 Multiannual Financial Framework, including the cohesion policy funds and the InvestEU Fund established by Regulation (EU) 2021/523 of the European Parliament and of the Council. Through Framework Programmes for research and innovation, the Union invests in grants or loans to push the best technology and improve the energy performance of buildings, including through partnerships with industry and Member States such as the Clean Energy Transition and Built4People European Partnerships. ⇦ Such financial instruments at Union level include, inter alia, Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund , amended to allow increased investments in energy efficiency in housing; the public-private partnership on a ‘European energy-efficient buildings’ initiative to promote green technologies and the development of energy-efficient systems and materials in new and renovated buildings; the EC-European Investment Bank (EIB) initiative ‘EU sustainable energy financing initiative’ which aims to enable, inter alia, investments for energy efficiency and the EIB-led ‘Marguerite Fund’: the 2020 European Fund for Energy, Climate Change and Infrastructure; Council Directive 2009/47/EC of 5 May 2009 amending Directive 2006/112/EC as regards reduced rates of value added tax , structural and cohesion funds instrument Jeremie (Joint European Resources for micro to medium enterprises); the Energy Efficiency Finance Facility; the Competitiveness and Innovation Framework Programme including the Intelligent Energy Europe II Programme focused specifically on removing market barriers related to energy efficiency and energy from renewable sources through for example the technical assistance facility ELENA (European Local Energy Assistance); the Covenant of Mayors; the Entrepreneurship and Innovation programme; the ICT Policy Support Programme 2010, and the Seventh Research Framework Programme. The European Bank for Reconstruction and Development also provides funding with the aim of stimulating energy-efficiency-related measures. 🡻 2010/31/EU recital 19 ⇨ new (45)Union financial instruments should be used to give practical effect to the objectives of this Directive, without however substituting national measures. In particular, ⇨ due to the scale of the renovation effort needed, ⇦ they should be used for providing appropriate and innovative means of financing to catalyse investment in energy ⇨ performance of buildings ⇦ efficiency measures. They could play an important role in the development of national, regional and local energy efficiency funds, instruments, or mechanisms, which deliver such financing possibilities to private property owners, to small and medium-sized enterprises and to energy efficiency service companies. ⇩ new (46)Financial mechanisms, incentives and the mobilisation of financial institutions for energy renovations in buildings should play a central role in national building renovation plans and be actively promoted by Member States. Such measures should include encouraging energy efficient mortgages for certified energy efficient building renovations, promoting investments for public authorities in an energy efficient building stock, for example by public-private partnerships or energy performance contracts or reducing the perceived risk of the investments. (47)Financing alone will not deliver on the renovation needs. Together with financing, setting up accessible and transparent advisory tools and assistance instruments such as one-stop-shops that provide integrated energy renovation services or facilitators, as well as implementing other measures and initiatives such as those referred to in the Commission’s Smart Finance for Smart Buildings Initiative, is indispensable to provide the right enabling framework and break barriers to renovation. (48)Inefficient buildings are often linked to energy poverty and social problems. Vulnerable households are particularly exposed to increasing energy prices as they spend a larger proportion of their budget on energy products. By reducing excessive energy bills, building renovation can lift people out of energy poverty and also prevent it. At the same time, building renovation does not come for free, and it is essential to ensure that the social impact of the costs for building renovation, notably on vulnerable households, is kept in check. The renovation wave should leave no one behind and be seized as an opportunity to improve the situation of vulnerable households, and a fair transition towards climate neutrality should be ensured. Therefore, financial incentives and other policy measures should as a priority target vulnerable households, people affected by energy poverty and people living in social housing, and Member States should take measures to prevent evictions because of renovation. The Commission proposal for a Council Recommendation on ensuring a fair transition towards climate neutrality provides a common framework and shared understanding of comprehensive policies and investments needed for ensuring that the transition is fair. 🡻 2010/31/EU recital 20 In order to provide the Commission with adequate information, Member States should draw up lists of existing and proposed measures, including those of a financial nature, other than those required by this Directive, which promote the objectives of this Directive. The existing and proposed measures listed by Member States may include, in particular, measures that aim to reduce existing legal and market barriers and encourage investments and/or other activities to increase the energy efficiency of new and existing buildings, thus potentially contributing to reducing energy poverty. Such measures could include, but should not be limited to, free or subsidised technical assistance and advice, direct subsidies, subsidised loan schemes or low interest loans, grant schemes and loan guarantee schemes. The public authorities and other institutions which provide those measures of a financial nature could link the application of such measures to the indicated energy performance and the recommendations from energy performance certificates.

🡻 2010/31/EU recital 21 In order to limit the reporting burden on Member States it should be possible to integrate the reports required by this Directive into the Energy Efficiency Action Plans referred to in Article 14(2) of Directive 2006/32/EC of the European Parliament and of the Council of 5 April 2006 on energy end-use efficiency and energy services . The public sector in each Member State should lead the way in the field of energy performance of buildings, and therefore the national plans should set more ambitious targets for the buildings occupied by public authorities. 🡻 2010/31/EU recital 22 (adapted) ⇨ new (49)⇨ In order to ensure that the energy performance of buildings can be taken into account by prospective buyers or tenants early in the process, buildings or building units which are offered for sale or rent should have an energy performance certificate, and the energy performance class and indicator should be stated in all advertisements. ⇦ The prospective buyer ⌦ or ⌫ and tenant of a building or building unit should, in the energy performance certificate, be given correct information about the energy performance of the building and practical advice on improving such performance. Information campaigns may serve to further encourage owners and tenants to improve the energy performance of their building or building unit. Owners and tenants of commercial buildings should also be encouraged to exchange information regarding actual energy consumption, in order to ensure that all the data are available to make informed decisions about necessary improvements. The energy performance certificate should also provide information about the actual impact of heating and cooling on the energy needs of the building, on its primary energy consumption ⇨ , on its renewable energy production ⇦ and on its ⇨ operational greenhouse gas ⇦ carbon dioxide emissions. ⇩ new (50)The monitoring of the building stock is facilitated by the availability of data collected by digital tools, thereby reducing administrative costs. Therefore, national databases for energy performance of buildings should be set up, and the information contained therein should be transferred to the EU Building Stock Observatory. 🡻 2010/31/EU recital 23 Public authorities should lead by example and should endeavour to implement the recommendations included in the energy performance certificate. Member States should include within their national plans measures to support public authorities to become early adopters of energy efficiency improvements and to implement the recommendations included in the energy performance certificate as soon as feasible. 🡻 2010/31/EU recital 24 (adapted) ⇨ new (51)Buildings occupied by public authorities and buildings frequently visited by the public should set an example by showing that environmental and energy considerations are being taken into account and therefore those buildings should be subject to energy certification on a regular basis. The dissemination to the public of information on energy performance should be enhanced by clearly displaying these ⌦ those ⌫ energy performance certificates, in particular in buildings of a certain size which are occupied by public authorities or which are frequently visited by the public, such as ⇨ town halls, schools, ⇦ shops and shopping centres, supermarkets, restaurants, theatres, banks and hotels. 🡻 2010/31/EU recital 25 (adapted) (52)Recent years have seen a rise in the number of air-conditioning systems in European countries. This ⌦ That ⌫ creates considerable problems at peak load times, increasing the cost of electricity and disrupting the energy balance. Priority should be given to strategies which enhance the thermal performance of buildings during the summer period. To that end, there should be focus on measures which avoid overheating, such as shading and sufficient thermal capacity in the building construction, and further development and application of passive cooling techniques, primarily those that improve indoor climatic conditions and the micro-climate around buildings.

🡻 2010/31/EU recital 26 ⇨ new (53)Regular maintenance and inspection of heating ⇨ , ventilation ⇦ and air-conditioning systems by qualified personnel contributes to maintaining their correct adjustment in accordance with the product specification and in that way ensures optimal performance from an environmental, safety and energy point of view. An independent assessment of the entire heating ⇨ , ventilation ⇦ and air-conditioning system should occur at regular intervals during its lifecycle in particular before its replacement or upgrading. In order to minimise the administrative burden on building owners and tenants, Member States should endeavour to combine inspections and certifications as far as possible. 🡻 2010/31/EU recital 27 (adapted) ⇨ new (54)A common approach to the energy performance certification of buildings ⇨ , renovation passports, smart readiness indicators ⇦ and to the inspection of heating and air-conditioning systems, carried out by qualified and/or ⇨ certified ⇦ accredited e