May 2023

Is the Construction Industry ready for Zero Carbon?

Penteris partner and Construction guru Sebastian Janicki, delves into what is the construction industry’s next great hurdle…

The Russian attack on Ukraine in 2022 and the ensuing increase in the price of energy inadvertently led to a greater focus on energy efficiency across Europe. It also triggered a quickening in work on regulations for the reduction of greenhouse gas emissions and energy consumption in the EU construction sector. Recent legislative work will no doubt impact the entire EU construction market.

Cleaner buildings

As buildings in the EU are responsible for 40% of energy consumption and 36% of greenhouse gas emissions, work on revising the Energy Performance of Buildings Directive is at an advanced stage. This is key to “Fit for 55”, part of the European climate law which seeks to attain climate neutrality by 2050. To achieve this, the revision requires zero-emission of all new buildings from 2028 (except for buildings occupied, operated, or owned by public authorities, which should meet this requirement from 2026).

In addition, all new buildings must be equipped with solar technologies by 2028 (where technically suitable and economically feasible). Residential buildings have until 2032 to comply.

Cleaner materials

No less important are the new deadlines for achieving certain energy efficiency classes by residential and non-residential buildings (respectively by 2033 and 2030). Meeting these requirements will force a shift from the use of current materials to other materials (such as wood, which has a lower carbon footprint than other primary building materials, or more frequent use of prefabricated concrete).

Particular solutions implementing the above targets will be established by each EU member in “national renovation plans” which permit some exclusions from the above obligations (including monuments, technical buildings, places of worship, and public social housing if the costs of renovation cannot be compensated by savings on energy bills). The revised directive will also facilitate the financing of the above requirements from EU funds.

Cleaner Poland

Responding to the incentive for energy efficiency, the Polish government is already in the process of executing its long-term strategy for the renovation of buildings, which aims to renovate 7.5 million buildings by 2050 (i.e. a quarter of a million buildings per year). Of this number, 4.7 million will undergo drastic thermal modernisation, news of which has caused a massive rise in stock prices of thermal modernisation-related companies in Poland. It is useful to note at this point that Poland’s construction sector is the sixth largest in Europe.

These steps will undoubtedly reshape the EU construction market in the upcoming years, and impact the strategies of developers across the continent and the world.

Originally published April 2023 in GGI Real Estate News

For more construction tips, get in touch with the author Sebastian Janicki