Legal Proposals

We advocate for a Right to Reuse for existing buildings based on three key pillars: (I) tax reductions for renovation works and the reuse of materials, (II) fair rules for the assessment of existing buildings, and (III) new values for the embedded CO2 in existing structures.

Introduction

The European Union is committed to becoming a global leader in sustainability by leveraging the potential of green technologies and markets while pursuing ambitious climate goals in the different sectors. This dual focus is encapsulated in the EU's vision of synergizing new technologies and market opportunities, maximizing available resources for both economic and ecological benefits. In this context, we must ask: how can the impact of yesterday become the value of tomorrow?

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The renovation of public and private buildings presents enormous potential, as proposed by the European Union under the "Renovation Wave" of the Green Deal. The ambitious and legally binding goal of EU member states to decarbonize the building stock by 2050 can be translated into tangible numbers: Currently, only 25% of the European building stock has been renovated, meaning that 75% of the work is still ahead of us. At the current annual renovation rate of 1%, it would take 75 years, three times longer than we have to reach the agreed climate goals. Therefore, we face the challenge of tripling the renovation rate to meet the target, as detailed in the European Green Deal.

The building sector is pivotal in this endeavor. It stands as one of the most profitable and vital markets within the EU, yet it is also one of the most significant contributors to CO² emissions and energy consumption. According to the European Commission, buildings are responsible for approximately 36% of CO² emissions and 40% of total energy consumption in the EU, representing 35% of energy-related EU emissions in 2021. Moreover, the sector generates over 35% of the EU's total waste, highlighting its substantial environmental footprint.

Nevertheless, our current approach to building is founded on outdated principles that favor demolition and new construction over the preservation, renovation, and transformation of existing structures. This model, which thrived when resources seemed inexhaustible and new construction was cheaper and simpler, has become unsustainable.

First, the present material and energy shortages underline the urgency of transitioning to more sustainable practices. Second, we have realized that both the past and the future must be considered. Buildings are the homes of tomorrow at yesterday's prices, and risks associated with potential future crises must be factored in. Scarce resources can no longer be wasted on unnecessary new constructions. Because demolition is as outdated as food waste, fast fashion, and single-use plastics. Third, preserving existing structures helps maintain cultural and historical continuity, fostering a sense of identity and community.

The building sector is therefore integral to achieving the EU goals, offering a substantial lever to address social, economic, and ecological needs. By adopting policies that incentivize renovation and the sustainable use of existing structures, we can preserve histories and communities and align economic incentives with environmental stewardship. This has the potential to fundamentally transform the construction and architecture sector, shifting from a material-intensive to a labor-intensive economy, as renovation offers not only the opportunity to reduce emissions but also to create new jobs in the construction industry all over Europe.

Our proposals are designed to stimulate the Europe-wide renovation market through different measures such as tax incentives, harmonization of standards to leverage the potentials of existing buildings, and more valuation of existing buildings and their embodied energy. These proposals build on existing EU legislation, foremost the Energy Performance of Buildings Directive (“EPBD”). The EPBD places significant emphasis on energy renovations, aiming to enhance the energy efficiency of existing buildings, which, due to the high operational costs of buildings, is a logical and powerful lever. Nevertheless, it is not enough and only a first step, as it does not fully take into account the embodied energy in the buildings, which represents the majority of emissions in a building's life cycle.

Thus, our proposals build on existing tools to preserve this energy and renovate more efficiently. First and foremost, the life cycle assessment includes all energy needed to construct a building - from the extraction of raw materials, production, and construction phases, through the use phase, to the end-of-life phase, including demolition and disposal. However, it does not account for the grey energy, which is the CO² that was emitted in the past to build the existing buildings and is stored within them. Nevertheless, it is essential to calculate and account for this invested energy in order to shift its past impact toward future potential.

These incentives not only promote practices that not only reduce emissions, but also enhance the market potential and cultural heritage of our built environment. By valuing the historical and cultural identity embedded in our buildings, we can foster a sense of continuity and identity that enriches our collective future.

In conclusion, transforming the building sector is essential for the EU's sustainable growth. By making the impact of yesterday the value of tomorrow, we can create a resilient and prosperous Europe that honors its past while building a sustainable future.

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1. Boosting Renovation Markets with Tax Incentives

Exemptions from VAT must be granted for the renovation of buildings in order to promote the renovation market and in this way contribute to reducing greenhouse gas emissions in the building sector.

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Tax incentives are a crucial instrument to promote renovation markets across the EU. To make renovations financially more attractive than demolition and new construction, it is essential to expand the current scope of incentives. Currently, Member States have only had the option of setting reduced VAT rates for certain renovation works. However, given the increasing challenges of material shortages, volatile supply chains, lack of housing and climate change, it is necessary to further enhance these incentives. The VAT Directive must therefore be amended to fully exempt sustainable renovation works of all existing buildings from VAT. Such an exemption should cover the costs of labour and construction materials necessary to carry out renovations. Building materials should only be exempt from VAT if they are produced from renewable raw materials or if they are used construction products.
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2. Fair and Harmonized Assessment Standards for Renovations

The introduction of mandatory Europe-wide standards for risk assessment of the building stock is necessary to harness the potential of existing buildings, strengthen the internal market, and promote investment in renovation projects.

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Whether a building is renovated and transformed or demolished and rebuilt depends on an assessment aimed at determining its condition. Within the European Union, there are significantly different approaches to this assessment, ranging from methodological standards and regulations on what is assessed to the role and tasks of the experts commissioned to carry out the assessment .

As a result, assessments in the Member States vary greatly when determining the extent to which buildings can be renovated or not. Not least because financial institutions base their investment decisions largely on the above-mentioned risk assessments, leading to significant differences between the Member States in investment scope within this sector.

In many cases, the current standards lead to a distorted assessment because they focus solely on the presumed risks of existing buildings, but completely ignore their potential. At the same time, they do not address the important risks associated with the construction of new buildings, including in particular resource limitations, material shortages, and volatile supply chains. This may put renovation projects at a double disadvantage compared to the construction of new buildings, which in turn significantly undermines efforts to achieve sustainable development.

In order to strengthen the internal market and promote investments in renovation projects all over Europe and at the same time reduce the emissions of greenhouse gasses in the building sector resulting from the construction of new buildings, the standards for risk assessment must therefore be harmonized across Europe. These objectives could be achieved by harmonizing the existing rules on the methodology for technical assessment of buildings for their reuse and reprogrammation, as well as the role and tasks of the experts commissioned to carry out such assessments. In order to provide practical and workable guidance, the European Union should also involve the European standardization organizations, including in particular the European Committee for Standardization, in the development and preparation of the standards for risk assessment. In line with the EPBD, the following aspects should in particular be addressed in this context: fire safety, accessibility for persons with disabilities, hazardous materials including asbestos, structural capacities für additions and transformations, mechanical plant exchange for heating, ventilation and air conditioning (HVAC) and energy retrofit.

Other elements to be taken into account in the assessment relate to the potentials arising from relevant renovation projects including in particular any time benefits associated with carrying out renovations, (lack of) dependencies on global supply chains and the impact on climate change. With regard to the latter point, the results of the intertemporal life cycle assessments (see proposal 3.1 below) and the Union's climate goals should be taken into account in particular. At the same time, uniform standards should be introduced for determining the market value of the building stock on the basis of the above-mentioned technical assessments, in particular with regard to their potential for future additions, upgrades or transformations. Risk assessments of financial institutions should necessarily be carried out on the basis of the above-mentioned standards. Such standards could be established on the basis of the European Union's competences in the areas of the internal market.

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3. Introduction and Application of Intertemporal Life Cycle Assessments in the Building Sector

The introduction of intertemporal life cycle assessments is key to revealing how many CO² emissions are actually associated with a building, from the past to the present and future. Currently, the life cycle assessments as defined in the EPBD particularly include production and transport of construction products, construction-site activities, the use of energy in the building and replacement of construction products, as well as demolition, transport and management of waste materials and their reuse, recycling and final disposal. Especially to promote climate protection and raise awareness about effective CO² emissions, it is necessary to extend the scope of application of life cycle assessments to all existing buildings and to define for this purpose specific criteria for the calculation of emissions for existing buildings and to include the relevant information in the energy performance certificates (see 3.1.). In order to promote sustainable investments in the building sector, the principles of intertemporal Life Cycle Assessments should also be taken into consideration within the framework of the taxonomy regulation (see 3.2.). Intertemporal life cycle assessments should also be used extensively when checking the approval of construction projects (see 3.3.). In order to be more effective, sector-specific emissions targets should also be set (see 3.4.). In addition to these measures, the European Environment Agency should also be given appropriate reporting and monitoring tasks with a view to implementing the principles of intertemporal life cycle assessment (see 3.5.).

3.1. Obligation to Document Expended CO² Emissions of Existing Buildings in Accordance with the Principles of Intertemporal Life Cycle Assessments

In the building sector, intertemporal life cycle assessments shall be carried out in order to disclose how many emissions are associated with the construction and operation of buildings and to promote renovations over new buildings.

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The application of intertemporal life cycle assessments ensures that, in addition to the emissions resulting from the operation of the building, the grey emissions generated during the construction of the existing building and, following any demolition, during the construction of the new building are also taken into account.

Due to the high overall energy efficiency, grey emissions become the majority of a building's overall life cycle emissions. Measures to reduce embodied emissions can achieve further greenhouse gas savings, often at little additional cost. The first step is therefore to make these grey emissions visible. This could encourage greater promotion of sustainable building practices and make renovations more attractive compared to the construction of new buildings and lead to more informed decisions in the construction sector.

To this end, the scope of application of life cycle assessments in the EPBD should be extended to all existing buildings. For this purpose, the information on all emissions generated over the life cycle should be included in the energy performance certificates. For comparability and transparency, uniform standards must be established across Europe for determining grey emissions, using the available tools as part of the life cycle assessment calculation that is already part of current EU legislation. Since an accurate determination of historical emissions is too complex, the evaluation is to be based on current benchmarks for component emissions.

In this context, it must also be taken into consideration that the existing legislation at EU level does not place any value on the embodied energy contained in existing buildings, making it more attractive for investors to demolish and rebuild buildings rather than preserving existing buildings. This practice often leads to unnecessary CO² emissions and the loss of valuable building structure.

In order to address this problematic practice, the area of the existing building should be taken into account when determining within the framework of the life cycle assessment the CO² emissions per m² resulting from construction projects aimed at preserving the substance of the existing building (“integrated carbon footprint calculation”). Using this calculation method, the resulting CO² emissions would be based on a larger area which would significantly reduce the emissions per m² of the respective renovation project. This privilege when determining CO² emissions should be given to all renovation projects, including their transformation, expansion and all other construction measures, which preserve the substance of the existing building. Renovation projects that lead to a significant reduction of the carbon footprint on this basis should be eligible to receive EU funding (see below proposal n° 4).

The objectives of this proposal could be achieved in particular by supplementing Directive 2024/1725, which lays down the basis for the energy performance certificates, with appropriate requirements. Due to the complexity of determining embodied emissions for existing buildings, Directive (EU) 2024/1275 should also be amended correspondingly to provide the basis for the details to be set out by the Commission in a delegated act. The methodology shall be reviewed and, where needed, updated every five years to take account of all relevant new technological developments.

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3.2. Utilizing the Taxonomy Regulation to Boost Investments

The assessment of the sustainability of investments in renovation projects should be based on a life cycle assessment.

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Achieving the climate goals requires significant investments that cannot be financed with public funds alone. The financial sector must therefore make a significant contribution to achieving the goals of the European Green Deal. The ecologically sustainable economic activities that are considered worthy of investment are determined in a uniform European classification system based on the Taxonomy Regulation, which is intended to replace a large number of inconsistent sustainability assessment systems.

To be considered ecologically sustainable, an economic activity must, in particular, make a significant contribution to the achievement of the environmental objectives defined in the Taxonomy Regulation and not lead to a significant impairment of one or more of these environmental objectives. The listed environmental goals include, in particular, climate protection, adaptation to climate change, the transition to a circular economy, the prevention and reduction of environmental pollution, etc.

In particular, economic activities that avoid or reduce CO² emissions, as well as activities that, without directly reducing the CO² content in the atmosphere, enable other economic activities to make a significant contribution to one or more of the environmental goals to achieve environmental goals or as transitional activities that still cause CO² emissions but represent significant progress towards complete CO² avoidance.

According to the current legal situation, renovations in this sense only make a significant contribution to climate protection if the renovation leads to a higher overall energy efficiency of the building or the renovated part or to an improvement in primary energy requirements. In line with the objectives of the initiative, the assessment in such a case should also take into consideration the outcome of intertemporal life cycle assessments. In this way, the level of investment in renovations could be increased and ultimately contribute to lower emissions in the building sector.

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3.3. Strengthening EU Climate Targets with Sector-Specific Goals

In order to increase the pressure to act to reduce greenhouse gas emissions, binding sector-specific targets should be set, especially for the building sector in accordance with Intertemporal Life Cycle Assessments, including the expended CO2 of existing buildings.

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The Effort Sharing Regulation sets binding national annual targets for reducing greenhouse gas emissions for each Member State. These commitments are also part of the national energy and climate plans provided for under the Governance Regulation. In order to increase the pressure on the Member States to act and achieve the annual targets, the annual targets set out in the Effort Sharing Regulation (and in the following regulations) should be broken down in regards to the building sector and all other relevant areas. When setting goals for the building sector, the life cycle assessments of the existing building stock to be applied under this initiative should also be taken into account.

The sector-specific targets must be sufficiently strict, otherwise the overall European target cannot be achieved („ambition gap“). In addition, the said targets should be progressively tightened in order to meet the goal of climate neutrality within the prescribed timelines. In this context, renovation quotas should also be set - tailored to the conditions in the various Member States - and included in the national building renovation plans in order to achieve the objectives of this initiative. In order to encourage the Member States more strongly to achieve these targets, their fulfillment should be linked to the financial support granted under the European Structural and Investment Funds („conditionality mechanism“).

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3.4. More meaningful consideration of climate effects

As part of the substantive examination of the admissibility of construction projects, the associated greenhouse gas emissions must be comprehensively taken into account on the basis of a intertemporal life cycle assessment.

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As things currently stand, under European law, climate protection concerns can essentially only be taken into account for certain construction projects as part of the environmental impact assessment process. Currently, the consideration of climate protection concerns is primarily of a procedural nature. To give greater weight to climate protection concerns, the principles of intertemporal life cycle assessment for existing buildings should also be applied to construction projects. This is not yet the case in legal practice. So far, climate protection concerns have only a relatively small scope of application. In addition, unlike before, climate protection concerns should also be systematically taken into account in the examination on the merits of all projects on the basis of a life cycle assessment. It should also be made clear that, as part of the considerations to be made, climate protection must be given particular weight. When examining projects, the required sector-specific goals as mentioned above would also have to be taken into account. By applying stricter standards for the approval of construction projects, an incentive can be created for more renovation projects or other more sustainable solutions.
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3.5 Monitoring and Reporting

The application of life cycle assessment in the building sector should be monitored by the European Environment Agency and be the subject of an annual report with a view to its contribution to reducing greenhouse gas emissions.

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The European Environment Agency should be given the task of monitoring the application of the principles of intertemporal life cycle assessment and submit an annual report on the contribution this makes to reducing greenhouse gas emissions. For this purpose, the Regulation on the European Environment Agency should be amended accordingly.
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4. Financial Support

The Union should provide appropriate financial resources to support renovation projects across Europe and research in this area.

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In the future financial framework for the period from 2028 to 2034, financial resources should also be made available to the extent necessary for the Europe-wide funding of renovation projects, especially if they lead to a reduction in the carbon footprint (see proposal 3.1 above). The Cohesion Fund, the European Regional Development Fund and all other appropriate EU funding programs should be supplemented for this purpose, in order to provide appropriate funding opportunities.Without adequate financial support, Member States will not be able to reach the sector-specific CO² targets and support renovation projects as envisaged by this initiative (delivery gap).

In order to achieve the goals set, it is also necessary to pursue new, innovative approaches. Appropriate funds should therefore also be made available in the area of ​​research and development. In particular, the planned successor program to Horizon Europe for the period 2028-2034 should be used for this purpose.

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