EU climate policy and its implementation in the buildings sector

On the European Union’s climate change policies

The European Union’s climate protection policy has become one of the most important, high-profile and hotly debated fields of public policy for EU institutions. As such, it forms the subject matter of wide ranging EU legislation.

The EU’s climate change policy was launched in 1987 as a subsidiary element of its overall environmental policy. In the 2009 Treaty of Lisbon climate protection was for the first time adopted into the Treaty on European Union as a political goal. Since then, the EU has committed itself to sustainable development and to working towards environmental protection and improvement of environmental quality. A specific measure taken at the time was to encourage action at international level, in particular to combat climate change, through Article 191 of the Treaty on the Functioning of the European Union (TFEU). This was followed in 2010 by the creation of the new office of EU Commissioner for Climate Action.

The Energy Policy Triangle

The energy policy triangle is a concept that encapsulates the three main objectives of energy policy: security of supply, environmental sustainability and affordability.

Security of supply means ensuring a stable and reliable energy supply for society. Environmental sustainability addresses protecting the environment and reducing the harmful effects of energy production on climate, air, water and ecosystems. Affordability means making the energy supply as efficient and cost-effective as possible in order to promote prosperity and competitiveness. The energy policy triangle ensures that decisions in the field of energy strike a balance between these three objectives and minimise potential conflicts between them.

Aligned energy policy objectives, such as the promotion of energy efficiency, energy savings and developing new and renewable energy sources, were also added to the TFEU at that time, and have since then lent important additional legitimacy to the EU’s climate protection policy.

The two degree limit

The two degree limit plays a central role in the European Union’s climate protection policy. The goal is to restrict global warming to a maximum of two degrees Celsius above pre-industrial levels. The EU is committed to maintaining this limit and taking appropriate measures to combat climate change. The two degree limit serves as a guiding principle for EU climate policy and forms part of the wider objective of achieving climate neutrality by 2050. By setting this limit the EU is contributing to global efforts to mitigate the major consequences of climate change and create a sustainable future.

Among the most important key measures here are reducing greenhouse gas emissions, promoting renewable energy and investing in sustainable mobility. Increasing energy efficiency also plays an important role. Improved energy efficiency in industry, buildings and transport can reduce energy consumption and thereby cut greenhouse gas emissions. This includes promoting energy-efficient technologies and building renovation projects, as well as improving energy efficiency standards.

The European Green Deal

In the EU, climate change policy reforms and decisions are often implemented in the context of so-called political programmes and packages, which are implemented either as changes to various existing legal instruments or through the creation of individual new laws. The most recent major climate protection policy programme was the European Green Deal, introduced in mid-2019. This was designed to bring about the transition to a modern, resource-efficient and competitive economy.

Its objectives are to eliminate net greenhouse gas emissions by 2050 and decouple growth from resource usage, without leaving any people or regions behind. Investments of around EUR 600 billion were announced to finance the Green Deal. One element of the Green Deal is a “Renovation Wave”, proposed as a strategy to enable the building sector to achieve the goals set out in the deal. The core target is to reduce net greenhouse gas emissions by at least 55% by 2030 as compared with 1990. To achieve this, during the first half of 2021 the EU Commission presented the Fit for 55 package, which makes 12 concrete proposals for new climate, energy, transport and tax policies, including for buildings.

The 2021 Fit for 55 package included three major measures of particular significance for the building sector:

• A landmark decision as to whether the buildings and transport sectors should be integrated into the European Emissions Trading System (ETS) or whether an additional emissions trading scheme should be established for these two sectors.
• A revision of the EU Energy Efficiency Directive (EED) to reflect the EU’s policy objectives and
• A revision of the EU’s Energy Performance of Buildings Directive (EPDB).

The EU Energy Efficiency Directive (EED)

The European Union’s Energy Efficiency Directive

forms a key legal foundation for the building sector. Introduced in 2012, the aim of the EED is to promote energy savings. In 2018, the directive was amended in order to support the 2030 energy efficiency policy targets. These amendments included such provisions as an obligation to install remotely readable metering devices in new and modernised buildings, as well as to provide residents with monthly consumption information once such devices have been installed.

The EED is currently being amended again to set targets for climate protection by 2030 and greenhouse gas neutrality by 2050.

Read more about the European Union’s Energy Efficiency Directive.

The EU Energy Performance of Buildings Directive (EPBD)

The EU Directive on the Energy Performance of Buildings is also currently undergoing fundamental revision. At present the amendment process is at the trilogue stage, during which the EU institutions involved, namely the European Commission, the Council of the European Union and the European Parliament engage in negotiations vis-a-vis the positions they have adopted to date.

One goal of the amendments is to achieve an emission-free, fully decarbonised European building stock by 2050, through such measures as increasing the renovation rate to make the stock more resilient. The amendments also aim to promote the digitalisation of buildings’ energy systems and expand the sustainable mobility infrastructure. Read more about the EPBD positions currently under discussion.

Extending the European Emissions Trading System (ETS) to the buildings and transport sectors

The European Emissions Trading System is a market-based instrument for reducing greenhouse gas emissions in the European Union. Companies receive a limited amount of emission permits which they can buy, sell or trade. This creates incentives for companies to cut their emissions and encourages the development of low-carbon technologies.

A second emissions trading scheme (ETS II) will be introduced by 2027 to cover CO₂ emissions from road transport and buildings. After completion of the EU legislative procedure regarding the EU Commission’s proposal for a directive to amend the Emissions Trading Directive, fuel emissions trading in the buildings and road transport sectors will also be governed by EU law. The German government intends to review the German Fuel Emissions Trading Act (Brennstoffemissionshandelsgesetz, BEHG) to ensure that it is compatibility with ETS II, and if necessary amend it “to guarantee the smoothest possible transition”. It is not yet possible to forecast the precise details of the introduction of ETS II, or to predict what its consequences will be.

A portion of the revenue from the ETS II should be earmarked for the building sector and road transport in order to offset financial hardship for low income private households, micro businesses and road users and to counteract energy and mobility poverty (a social climate fund has been proposed for this purpose).