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Are offices and warehouses facing a wave of forced renovation?

Increasing energy efficiency to Class E by 1 January 2027, the requirement to adopt solar installations and to provide recharging points for electric cars in car parks are just some of the provisions of the new draft EPBD that will affect non-residential buildings. These changes are worth looking into, as they could massively shake up the capex of many older buildings.

The European Union is leading the way in the fight against global warming. Work on the Energy Performance of Buildings Directive (so-called EPBD IV) is well under way. Under the draft, innovations will be introduced in terms of energy standards for buildings. Buildings will no longer only have to comply with energy efficiency requirements, but they will also be classified based on climate standards. Among others they will be classified according to a new GWP indicator and assessed in terms of the quality of the environment provided inside.

The EPBD proposal aims to unify the criteria for assessing the energy efficiency of buildings within the EU through, among others, the introduction of uniform classes ranging from A to G, which is currently not applied in Poland. According to the latest draft of the EPBD, existing office buildings or warehouses will be required to achieve Class E status by 1 January 2027, and Class D by 1 January 2030. Achieving these standards may often involve deep or substantial renovations that exceed 25% of the building's value or affect at least 25% of the building envelope. In cases where substantial renovations are necessary, it may also require a change of the heating system if the building relies solely on fossil fuels. In fact, the draft Directive proposes a ban on fossil fuel heating systems once the Directive is transposed, with Member States having 24 months from the entry into force of EPBD IV to comply.

The same applies to the installation of photovoltaic systems on buildings. The proposal mandates Member States to ensure the installation of solar thermal installations on all non-residential buildings by 31 December 2026, subject to technical feasibility and economic and functional viability. While this deadline seems ambitious, Member States are supposed to stimulate the adoption of these solutions through the introduction of appropriate technical, administrative, and financial incentives, such as household batteries or heat pumps.

Another significant aspect of the proposal is the promotion of electromobility. Member States are required to install at least one recharging point for every ten parking spaces in non-residential buildings with more than twenty parking spaces by 1 January 2027, along with ensuring the minimum required number of parking spaces for bicycles.

One of the notable proposals in EPBD IV is the introduction of the Global Warming Potential (GWP) indicator. Since buildings account for 36% of the EU's energy-related greenhouse gas emissions, it has been deemed necessary to classify buildings based on their contribution to global warming. The GWP indicator will allow assessment of a building's impact on global warming throughout its lifecycle, from construction to operation, demolition, or reuse. This classification system can significantly influence the appeal of a building to potential investors or tenants. The European Commission aims to establish a framework for calculating GWP by 31 December 2025.

Although the final version of the directive is still being finalized, it is expected that a significant number of the proposed changes will be retained. EPBD IV is likely to be enacted and published in the third or fourth quarter of 2023. Member States will then have 24 months for its transposition into their national laws.


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