European Historic Houses, European Landowners’ Organization, European Property Federation and The European Group of Valuers’ Associations reiterate the support given to Energy Commissioner Kadri Simson from January 2021 including renovation of the worst performing building stock by 2030, cut-off dates for sale or rental of non-renovated buildings and the phasing out of fossil fuels, but identify four structural flaws:

The first flaw is that the Directive creates an obligation on owners of the worst-performing building stock to renovate their homes, workshops and shops, whether they were intending to or not, whether they could afford to or not, and whether they were able to secure financing or not, and if they don’t, their governments will be under EU legal obligation to apply “effective, proportionate and dissuasive penalties”, words recycled from the existing Directive and which were appropriate for the existing Directive’s infinitely smaller obligations.

Penalties for pensioners, unemployed persons or working poor who can’t get by on their pension, unemployment check or minimum wage as it is, and whose only way of avoiding such penalties will be to renovate, and certainly not by means of credit they will never obtain. 

We presume that the Commission’s calculation is that fear of these social consequences will motivate member states to provide sufficient public support, but it is clear that in many member states this will not happen.

The first way out of this is by deletion of the penalties provision relating to the minimum energy performance standards. That does not equate to neutering the Directive; member states will still be under obligation to ensure renovation of the worst-performing building stock and the Commission and Court will still have the power to constrain member states to comply. But the obligation will be on the member states, not on EU citizens. Those who govern should be free to decide on the principle and degree of dissuasiveness of any penalties for their constituents. (see suggested amendment to Article 9(6), page 6)

The second way out leads to the Proposal’s second – connected – flaw: the extraordinary inadequacy of its financial incentives provisions, stuck at the level of ambition of the existing Directive. On this aspect, the Proposal is fatally flawed by retaining the ‘old EU’ approach of simply legislating without providing the financial support essential to palliating the most socially damaging impacts of the legislation.

If Commission, Council and Parliament truly aim to legislate a step-change to building and renovation not seen since the reconstruction following World War II – which they must, and which we support – then the public support has to be at a level that has some relation to the scale of the challenge, and it must be European – the ultimate expression of European solidarity in the face of an existential threat.

On top of government grants for the most vulnerable, all means at the EU’s disposal must be mobilised, inter alia:

1.    There has to be an EU solution guaranteeing access for all EPC ‘G’ and ‘F’ level EU homeowners and microenterprises to affordable long-term funding for deep home and microenterprise renovations. The EU political and financial authorities must find a way of working with retail banks to offer millions of unified EU Renovation Loans backed with public guarantees and linked to the buildings’ value. (see suggested Article 15(1)(a), page 10)

2.    Existing Structural Funding will have to be given – quickly – a much greater renovation focus at the expense of expenditure that is far less essential for European climate policy and energy sovereignty. (see suggested Article 15(1)(b), page 10)

Concomitantly, outside the purview of this Directive, all EU ETS auction revenue must be channelled to a combination of immediate fuel-price relief and renovation support and the size of Social Climate Fund must be radically increased.

That would be ‘the Europe that protects’. 

This must be given the highest priority and be up and running by the EPBD’s transposition deadline. If the EU is incapable of ensuring financial support equal to the scale of the obligations ensuing from the MEPSs, then the fallout for, and backlash from, the most vulnerable citizens will make for interesting events at national level.

The third structural flaw is that the recast of the Directive has ceased to accommodate both energy efficiency renovation and green energy supply. We wish good luck to national or local governments who would have to explain to their constituents that their homes, workshops and shops running on green energy and producing low CO2 emissions will have to be renovated quickly anyway under EU law.

In this respect, the Proposal’s radical switch to all-renovation in the Article 2 definition of ‘zero-emission building’, Article 3 National building renovation plan (due to the references to ‘zero emission building’), Annex I Common general framework for the calculation of energy performance of buildings as well as the Article 16 energy performance certificate and the corresponding Annex V template for EPCs must be reversed, all the more so in Article 16 and Annex V that the EPC is now the gauge and trigger for the minimum energy performance standards.

As a counter example, see how France’s energy performance and climate certificate accommodates the primary energy consumption/greenhouse gas emissions dichotomy. (see end of Annex I)

For ease of reference, all amendments to articles and annexes needed to restore a proper balance between energy efficiency renovation and green energy supply – and which are spread throughout this document in numerical order – are grouped together in Annex I.

The final flaw concerns infringements of the principles of subsidiarity and proportionality. Precisely because of the immense sacrifice this Directive will entail even if modified along the lines indicated above, Commission, Council and Parliament have an absolute obligation to avoid overburdening the EU’s millions of building owners and landlords with obligations having only marginal impact on GHG emissions or, worse, having no relation to energy performance at all. Yet there are several such provisions in the Proposal that we identify and attempt to improve below.

If the Union is to address efficiently the existential threats of climate warming and energy dependency, then it must both raise its political game on the big issues and avoid overregulating the rest. It is in this spirit that we ask Commission, Council and Parliament to consider our suggested amendments.

Full Position with suggested amendments available on request