European Scrutiny Committee Contents

32 Energy performance of buildings



+ ADDs 1-7

COM(08) 780

Draft Directive on the energy performance of buildings (recast)

Legal baseArticle 175(1)EC; co-decision; QMV
DepartmentCommunities and Local Government
Basis of considerationMinister's letters of 14 December 2009 and 13 April 2010
Previous Committee ReportHC 19-iv (2008-09), chapter 6 (21 January 2009) and HC 19-xxiii (2008-09), chapter 2 (8 July 2009)
Discussed in CouncilSee para 32.9 below
Committee's assessmentPolitically important
Committee's decisionCleared


32.1 Directive 2002/91/EC aims to improve the energy performance of buildings, and combines different regulatory and information-based measures. In particular, it requires Member States to set minimum energy performance requirements, and to ensure that these are met by new buildings, and by existing buildings with a floor area above 1000m2 when these undergo major renovation. It also requires them to establish arrangements for the issue and display of energy performance certificates, and for the inspection of boilers and air conditioning systems of a specified output.

32.2 Since the buildings sector is the largest user of energy and carbon dioxide emitter in the EU, and one which the Commission considers could produce cost-effective savings substantially reducing energy consumption by 2020, it put forward in November 2008 this proposal to re-cast Directive 2002/91/EC. The proposal would thus retain many of the Directive's existing provisions, but it would also extend its scope, and clarify and strengthen a number of its provisions, notably:

  • by extending to all existing buildings, irrespective of floor area, the need to meet specified minimum energy performance requirements when they undergo a major renovation;
  • by requiring Member States to calculate energy performance requirements which take into account European standards;
  • by introducing minimum energy performance requirements for systems, such as boilers, water heaters and air conditioning, installed in buildings;
  • by requiring Member States to increase the number of new and refurbished buildings for which carbon dioxide emissions and primary energy consumption are low or equal to zero, setting targets for the minimum percentages to be achieved by 2020 for residential, non-residential and public buildings, and intermediate targets for 2015;
  • by introducing more specific requirements on to the content of energy performance certificates, coupled with new requirements governing their issue when buildings are constructed, sold or rented, and where over 250m2 is occupied by a public authority;
  • by reducing from 1000m2 to 250m2 the area above which such a certificate has to be prominently displayed if a building is occupied by a public authority, and introducing a similar requirement for any building above 250m2 which is frequently visited by the public; and
  • by extending the requirement on Member States to establish regular inspections of boiler heating systems to include all boilers with an output greater than 20kW.

These changes would have to come into force by the end of 2010 for buildings occupied by public authorities, and by the end of January 2012 for all others.

32.3 The main change, however, would relate to the setting of minimum energy performance requirements by Member States, which the Commission proposed should be gradually aligned with cost-optimal levels calculated in accordance with a methodology it would develop by the end of 2010. Member States would be required to achieve those levels by 30 June 2017, and, as from 30 June 2014, they would no longer be able to provide incentives for the construction or renovation of buildings which did not meet them.

32.4 Our predecessors noted in their Report of 18 January 2009 that, whilst the majority of the proposals were in line with, or replicate, the measures which the UK had already adopted, some would go much further, and were regarded as "extremely challenging". In addition, some of the definitions in the proposal needed to be clarified; and the financial implications, though not yet quantified, were likely to be significant.

32.5 They were also told that the Government would be able to produce an Impact Assessment once the proposals have been agreed, and, although they recognised that a number of uncertainties made it difficult to produce such an Assessment, they expressed concern at the suggestion that this could only be done after the measure had been adopted. In particular, they stressed the need for a proper Assessment before any such agreement, and said that, before they could consider clearing the proposal, they would wish to see this (and to receive more information on the progress of negotiations in Brussels).

32.6 Our predecessors subsequently noted on 8 July 2009 that they had recently received a letter from the Government, together with a supplementary Explanatory Memorandum. These said that, subject to the outcome of a consultation exercise, the Government was in the main content with the vast majority of what had been proposed, not least because the UK had in many such cases already gone further (or was proposing to do so). However, they noted that the Government had identified three main areas of concern where issues of subsidiarity or costs might outweigh the benefits, namely:

  • the suggestion that there should be a single methodology to calculate cost-optimal levels of energy efficiency, where the impact could not in any case be confirmed until this had been developed by the Commission;
  • the setting by the Commission of the definition of low and zero carbon properties, together with an obligation on Member States to set targets for the number of buildings meeting this requirement; and
  • the extension to public buildings larger than 250m2 of a requirement to display an energy certificate, where the Government considered that the focus should instead be on encouraging the take up of the existing requirement applying to buildings larger than 1000m2.

32.7 Our predecessors also noted that the Government had provided an Impact Assessment, which suggested that there would be a one-off cost of about £2.5 million, as well as annual costs of £8 million arising from the wider display of energy certificates within the public sector, but that the average annual monetised benefit would be only £1.3 million (though there would also be certain non-monetised benefits arising from an annual reduction in emissions of carbon dioxide). The Assessment further noted that there would be additional, as yet unquantified, costs in meeting the requirements relating to cost-optimal improvements and arising from a single definition of low and zero carbon buildings (together with the associated targets to increase the number of such buildings).

32.8 In commenting on the complexity of this apparently straightforward document, our predecessors also noted that the costs and benefits quantified so far would result in a small net cost, and that the Government still had a number of outstanding concerns, including the timetable envisaged by the Commission, and the subsidiarity implications of achieving cost-optimal levels of energy efficiency, and of the projected increase in the number of low and zero carbon buildings. They therefore said that they intended to continue to hold the document under scrutiny, pending further clarification on these points, and the outcome of the Government's consultation exercise.

Minister's letters of 14 December 2009 and 13 April 2010

32.9 Despite a request to be kept informed of developments, our predecessors were next sent a letter on 14 December 2009 by the then Parliamentary Under-Secretary of State at the Department for Communities and Local Government (Mr Ian Austin), indicating that political agreement had been reached on 19 November. Moreover, that letter did not in fact reach them — a fact which only came to light at the end of March 2010, as a result of which the Minister wrote again on 13 April 2010, enclosing a further copy of his original letter.

32.10 In these letters, the Minister highlighted the following main changes which had been made to the original proposal:

  • the suggestion that the number of low or zero carbon new and existing buildings should be increased had been dropped, and a concept of "near zero energy building" introduced, including a requirement that, in such a case, the energy should to a very significant extent be from renewable sources, including that produced on-site or nearby: this would be accompanied by a requirement that all new buildings receiving planning permission after 31 December 2020 (or 31 December 2018, in the case of new buildings occupied by public authorities) must comply with it;
  • the definition of "cost optimal level" had been revised, and has now been defined as the energy performance level which leads to the lowest cost during the estimated life cycle — which is to be determined by each Member State — taking into account energy-related investment costs, maintenance and operating costs, and disposal costs, where applicable; and
  • the thresholds for the display of energy performance certificates had been changed, so that for buildings occupied by a public authority and frequently visited by the public it would now be reduced from its present level of 1000m2 to 500m2 (reducing further to 250m2 five years after implementation), whilst the proposed new threshold for commercial buildings has been increased from 250m2 to 500m2.

32.11 The Minister said that the UK fully supported the definition of near zero energy buildings, which fitted very well with its own definition of zero carbon homes, and that, although it was initially concerned that any requirement on the reliance of renewable energy sources could increase development costs, the Commission had issued an assurance that this represented an aspiration rather than an obligation. He added that, in view of the change made to the definition of cost-optimal, the Government's earlier concerns over subsidiarity had been allayed. In particular, he suggested that the standards currently in force in the UK would equal, and may exceed, the level of performance which would now be required, and that the UK would not in any case provide incentives for the construction of renovation of buildings which do not comply with minimum energy performance standards. His Department has also provided a revised Impact Assessment, which suggests that there would now be a one-off cost of £2.5 million and an average annual cost of £760,000, whilst the annual benefit would be £2.5 million, thus giving rise to a net benefit.


32.12 It is evident from the information provided — albeit belatedly — by the previous Government to our predecessors that the UK's earlier concerns about this proposal have now been met, and also that, rather than a small net cost, there will now be a small net benefit. In view of this, and the fact that the proposal was agreed by the Council as long ago as November 2009, we see no point in holding the document under scrutiny. We are therefore clearing it.

32.13 However, in doing so, we would like to register two concerns over the way in which this document was handled by the Department. First, although our predecessors specifically asked in their Report of 8 July 2009 to be kept informed of developments, the then Minister did not write until 14 December 2009 to say that political agreement had been reached a month earlier. This demonstrably unsatisfactory situation was then compounded by the fact that this letter did not reach us — a fact which only came to light at the end of March, when departmental officials asked whether the Committee had seen the letter.

32.14 We appreciate that these difficulties cannot be laid at the door of the present Government, but we would expect the Department — and indeed all Departments — to keep us fully informed of developments, particularly where there has been an explicit request for this to be done, and above all to provide information before a document has been agreed. Secondly, if a Minister has sent us a letter which evidently merits a response from us, but no such response has been received within (say) two or three weeks, we believe that departments should, as a matter of course, check whether we have indeed received the letter. That would at least help to avoid the further delay which occurred in this instance.

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