My perspective of green building regulations in EU and beyond

The Paris Agreement, established in 2016 as an international response to climate change, sets the ambitious goal of restricting the global temperature rise to 1.5 °C. Its influence resonates deeply within green building regulations worldwide, which are pivotal in promoting sustainable development and combatting the adverse effects of climate change globally. This focus on decarbonisation is extended by the UN's Sustainable Development Goals (SDGs), which provide a more holistic view of sustainability and ESG that goes beyond the decarbonization goal.

The comprehensive legislation significantly influences various sectors, including the Real Estate and Construction industry. Given the substantial impact of buildings in this sector on carbon footprint and their relevance to societal and governance objectives, a transformation of buildings and their related ecosystems becomes imperative. This chapter introduces four distinct rationales for converting the existing building stock into high-performing structures: EU Green Building Regulations, Finance-Driven frameworks and benchmarking, green building certification adherence to Local legislation, and pursuit of green building certification. While the distinctions between these frameworks and standards may seem blurred, they all converge with a singular objective—to create buildings that perform at higher levels.

EU Green Building Regulations

The EU has taken a leading role in sustainable development policies, particularly concerning green buildings. At the forefront of these efforts is the EU Green Deal, a comprehensive strategy meticulously crafted to uphold the sustainability of the EU's economy, with a keen emphasis on the construction industry. This multifaceted approach encompasses an array of initiatives, policies, and regulations thoughtfully designed to reduce emissions, champion renewable energy sources, and foster sustainable economic expansion. In doing so, it presents a holistic framework for sustainability, addressing not just energy efficiency but also encompassing biodiversity, pollution, and various other environmental facets relevant to the realm of buildings and construction. This commitment is encapsulated in the European Green Deal's overarching objective of achieving climate neutrality by 2050.

Finance-Driven Frameworks and benchmarking

The EU Taxonomy is a framework that supports the Green Deal's objectives by providing a set of regulations to identify and assess environmentally sustainable activities. The taxonomy helps align financial flows with sustainable investments, contributing to the funding of the Green Deal's initiatives. It aims to establish a common language for investors and businesses to identify environmentally sustainable activities and investments. The taxonomy focuses on six environmental objectives, including climate change mitigation and adaptation. In the context of real estate and commercial property, the EU Taxonomy is relevant for assessing and disclosing the environmental sustainability of these assets. It provides criteria for determining whether a real estate investment as an economic activity can be considered sustainable. It helps promote transparency and facilitates informed decision-making by aligning investments with environmentally sustainable practices.

The EU Taxonomy supports the generation of concrete tools such as the Carbon Risk Real Estate Monitor (CRREM) path. However, comparable obligations and other governmental decarbonization plans exist globally, that provide a call for action to investors. Approximately 90% of Real Estate Investment Trusts (REITs) annually disclose their ESG performance to investors through platforms like Global Real Estate Sustainability Benchmark (GRESB). Overall, the taxonomy and other finance-driven frameworks and regulations encourage the real estate sector to contribute to the EU's broader goals of achieving a green and sustainable economy.

Green building certification

While green building certifications operate voluntarily and lack legal binding, it's noteworthy that most of these certification systems were established before the 2016 Paris Agreement. Embracing regulatory frameworks enhances the systems' capacity and reliability for compliance with Environmental, Social, and Governance (ESG) standards. Notably, various globally recognized systems like  Leadership in Energy and Environmental Design (LEED) and Building Research Establishment Environmental Assessment (BREEAM) play a significant role in this landscape. BREEAM's National Scheme Operator (NSO) concept facilitates the assimilation of overarching requirements and circumstances. Additionally, other systems, such as Singapore's GREEN MARK, widely adopted in various Asian countries, and Germany's DGNB, extending its influence beyond its origin, contribute to the diverse array of available options in the realm of green building certifications. Other schemes focus more on the health aspect of buildings, such as WELL and Fitwel. Taken together, green building certifications provide a comprehensive landscape.

Localization of building performance requirements

Local standards, driven by the overarching principles outlined in The Paris Agreement and the EU Green Deal, include the recent French laws on energy efficiency. Such as the DEET (Dispositif Eco-Energie Tertiare – Energy Efficiency Tertiary scheme), which sets targets for reducing energy consumption in larger tertiary buildings by 40% by 2030 or the Loi EnR (Energie Renouvelable – Renewable Energy), requiring non- larger residential buildings than 500 square meters and lager carparks to install solar panels. Similar to the EU regulation also obligations related to HVAC performance are given by BACS (Dispositif Eco-Energie Tertiare – Energy Efficiency Tertiary scheme) mandating the installation of building automation and control systems in non-residential buildings by 2025. In France, there is a regulated market orientating towards the requirements of the EU.

In Germany, the GEG (Gebäude Energie Gesetz) was installed recently. The law aims to promote the use of renewable energy in heating systems, mandating that, as of January 1, 2024, new buildings must have heating systems deriving at least 65% of their heat from renewable sources. The law encourages a transition to environmentally friendly heating systems and provides flexibility for building owners to choose suitable options, considering factors like local heating plans. Exceptions and transition periods are outlined, and financial support is available through the Bundesförderung für effiziente Gebäude (BEG). The law emphasizes the importance of planning for a sustainable and cost-effective heating transition, contributing to reducing fossil fuel dependency in building heating systems by 2045. In addition, the QNG (Qualitätssiegel Nachhaltiges Gebäude – Quality Scheme sustainable buildings) scheme currently under development aims to provide a minimum standard for certification schemes.

In the US standards are localized on a district or city level in which New York City displays one of the most rigorous building codes in the country. It was among the pioneering major cities to embrace decarbonization and implement regulations aimed at reducing emissions, notably through the Climate Mobilization Act (CMA) passed in 2019. The CMA targets a 40% reduction in carbon emissions from NYC buildings by 2030 and an 80% reduction by 2050. Around 50,000 buildings are expected to achieve these reductions, as stipulated by the CMA. Regulatory bodies throughout the U.S. are starting to emulate New York's example by enacting sustainability-focused laws and imposing penalties on non-compliant entities. Over 30 cities across the country have committed to establishing decarbonization and sustainability objectives by Earth Day 2024. For instance, Boston's Building Energy Reporting and Disclosure Ordinance (BERDO) mandates that buildings must meet emissions targets based on their usage type, aiming for a 50% reduction by 2030 and complete elimination by 2050 or Washington D.C. requires all buildings larger to reduce carbon emissions by 50% by 2032 and completely by 2050.

Conclusion

The challenge of generating high-performance buildings comes from angles such as EU Green Building Regulations, Finance-Driven frameworks and benchmarking, green building certification adherence to Local legislation- While the EU's approach emphasizes stringent criteria for energy performance and efficiency, aiming to reduce greenhouse gas emissions and promote sustainability across the construction sector, in contrast, international green building certification schemes like BREEAM and local initiatives such as New York City's Climate Mobilization Act or French Energy Efficiency laws showcase diverse strategies tailored to regional contexts, but all with the shared goals of reducing carbon footprints and enhancing ESG stewardship. As cities and countries worldwide adopt and adopt green building regulations, stakeholders, including investors, property managers, and tenants, face increasing ESG responsibilities. This paradigm shift underscores the growing importance of sustainability in real estate practices and the need to refine real estate practices that take action to increase the adoption of high-performance buildings globally.

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