Packed with drafty old buildings, E.U. pushes for energy-neutral designs

In another bid to reduce carbon emissions and energy consumption, the European Union is requiring all new buildings to produce nearly as much energy as they consume starting in 2020.

Building codes continue to vary greatly from country to country, leading to concerns that most builders won't have the skills to live up to the new requirements. In addition, the E.U. mandate does not provide incentives to renovate existing buildings, which will continue their extravagant consumption of energy for decades.

But calls from environmentalists and insulation companies for subsidies to kick-start refurbishment programs are falling on deaf ears at a time when most European governments are cutting budgets to deal with bulging deficits.

Buildings account for about 40 percent of the European Union's energy consumption and emit about 35 percent of greenhouse gases, making the sector the largest single producer of carbon dioxide in the union. All new residential buildings will have to be nearly carbon-neutral by 2020 and use renewable energy as much as possible, while new public buildings will have to meet the target two years earlier.

Governments will have to draw up national plans to show how they will meet the target, which is estimated to cost €8 billion. The European Union will allocate some money to member states to help them pay for it. It estimates that the new rules will save consumers €25 billion per year as well as create between 280,000 and 450,000 jobs in construction and in the manufacturing of energy-efficient heat pumps and air conditioning units.

"This is why we are investing in new capacity in Europe, as it will have a positive impact on our business," Henrik Frank Nielsen, vice president at Rockwool, the world's second-largest insulation maker, said.

"The question is exactly when it will start moving," Nielsen said. "With the situation you see right now with all the deficits in the various European countries, there's of course a lot of pressure in keeping costs down. Nobody knows at this stage when incentive programs for energy efficiency improvements will start materializing. It's a little uncertain."

In 1977, Denmark was the first country to set what were then demanding energy efficiency requirements for buildings. The first E.U. energy-saving standards for buildings were established in 2002 and applied to buildings with a footprint larger than 1,000 square meters (10,760 square feet). The new rules from 2020 will apply to all residential and public buildings covering more than 500 square meters (5,382 square feet).

At the moment, new construction is down in Europe, as the industry has not yet digested the real estate development rush caused by easy loans before the financial crisis.

"Countries are very different in their approach with respect to the speed of doing something about it," Nielsen said. "The Germans, the French and the English are in the lead."

Britain has mandated all new buildings must be at the "passive house" standard by 2013, meaning using 85 percent less energy and producing 95 percent less CO2 than a regular house.


'Locking in waste'

"Britain has on average some of the oldest housing stock in Europe, much of it built in the era of cheap coal, but that's no excuse," said Chris Huhne, the United Kingdom's energy and climate change minister, in a speech to the U.K. Energy Summit last month. "Why have we kept building inefficient homes? We have been locking in waste. At the moment, we may as well be burning £50 notes outside our front doors."

The U.K. target will be tightened even more in 2016, when all new buildings will have to produce more energy than they consume, or be "energy plus."

"We must fix ourselves on a path to a decarbonized society and economy, stimulating growth while meeting the twin challenges of climate change and energy security," Huhne said. "I want Britain to be the best place in the world to do energy business, to lead the world in decarbonizing the economy."

France and Germany also are moving beyond the E.U. requirements, mandating energy-plus houses in 2020, a standard Ireland aims for already in 2013. At the other end of the spectrum, the poorest building energy efficiency standards in the European Union are currently in the Czech Republic and Poland.

Denmark has lost its pole position in the field, for now mandating a 50 percent improvement in building energy efficiency by 2015. That means that a new house built in Denmark that year will consume 25 percent more energy than a similar one in Ireland, Germany or France. Denmark's Economy and Business Affairs Minister Brian Mikkelsen told Parliament in a letter that the government will study the effects of its building requirements in 2015 before deciding how to proceed in order to comply with the E.U. regulations five years after that.

"France, Great Britain and Germany have set targets that are ambitious but not unattainable," said Eelco van Heel, chief executive of Rockwool. "The technology is here, we know how to do it, and the costs won't be particularly high when we get critical mass behind it."

Untrained workers and budget deficits

The technology for building a home that produces as much energy as it consumes is indeed known, but not many construction companies have employed it. This lack of experience can make the difference between the European houses of 2020 being money savers in the long run or money down the drain in the short run.

Zero-carbon homes cost a bit more but, more importantly, they require more building precision. It is not enough for the house to face south and have smart windows that maximize solar heat gain in the winter and reject it in the summer. If the walls and roof are not properly insulated, for example, the smallest air leaks can make a big difference between a house that gets most of its heat from the occupants and their computers and TV sets and one that will still require fossil-fuel heating.

"Europe's lead in low-carbon technologies is now at risk," Huhne said. "Our industrial future, our competitiveness and our prosperity depend on being a pioneer of the new green industries that will decarbonize our economies, and we need to be ahead of the international game."

Countries like Germany and Austria have a fair amount of experience with passive houses -- the concept itself was created in Germany -- while others are only beginning to learn. In Denmark, for example, the first energy-plus house was built this summer in a Copenhagen suburb, outfitted with special half-meter (1.6 feet) wall insulation, a heat pump and solar panels. The architects and the construction company treated it as much as an experience-building exercise as a commercial endeavor.

The European Builders Confederation lobby group wants E.U. countries to establish training programs to teach construction workers how to build energy efficient houses. "It is vital to increase training of the work force responsible for implementing energy efficiency measures in buildings," said Andrea Marconi, president of EBC. "I call on member states to come up with a list of financial incentives for both professionals and users."

But at a time when most E.U. members are looking for ways to cut budget deficits after running stimulus plans to exit the recession, there is little money available for financial incentives.

"Cheaper loans or a subsidy from the government are probably not the way forward when you look at the finances of Denmark. You need to use other instruments," said Lykke Friis, Denmark's climate and energy minister, in a ClimateWire interview earlier this month. And the United Kingdom has shut down its Low Carbon Buildings Fund earlier than planned to save £3 million while also halving the funds that will be made available to local authorities for "eco-towns" next year.

14 million U.K. homes need insulation

The bulk of the CO2 emission savings could be achieved by refurbishing old buildings, but again without government subsidies this is likely to take a long time. Denmark briefly ran one such program in 2008, when it provided 1.5 billion Danish crowns ($260 million) for home renovations as part of the country's economic stimulus program. The funds were quickly snapped up by homeowners.

"Existing buildings represent about 99 percent of the buildings stock and are the first cause of CO2 emissions before new buildings," Arthouros Zervos, president of the European Renewable Energy Council, said in a statement. According to Zervos, between 1.2 percent and 1.4 percent of existing buildings get renovated each year. "A mandatory target for upgrading the existing building stock would be a useful tool," he said.

Rockwool's Van Heel struck a similar note. "We are still much too slow in Europe in modernizing those millions of homes and workplaces that are causing a tremendous waste of energy," he said. "With the right measures and up-front financing, those cost-efficient green investments can be speeded up substantially."

Huhne said his government wanted a radical overhaul of existing homes to save energy, carbon and costs, but he has yet to announce specific measures.

"Most of the homes we will use in 2050 have of course already been built," Huhne said. "There are currently up to 14 million homes in the U.K. which could benefit from insulation. We are working on the package for each home, which could unlock tens of billions of spending in the coming years. The aim is that every participating householder will save money by insulating their home."

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