Illuminating thoughts on energy efficiency

It is encouraging when you read a positive article on where Europe is going in energy efficiency policy.  Philip Lee, founder and managing partner of Philip Lee solicitors, writing in the Irish Independent, looks at how energy efficiency is effectively leading a revolution – creating jobs, addressing climate change and energy security, and much more. We now need many more Philip Lees to raise their voices.

A lightbulb moment – let’s cash in on the energy efficiency revolution

Sometimes legal and policy developments take place without being given the spotlight they deserve. There is a revolution taking place that will affect the property market, the finance and construction industries and that has the potential to have a very positive impact on the core challenges facing Europe – unemployment, climate change, energy security and competitiveness.

This revolution centres around energy efficiency, which has been identified by the European Commission as a solution to these challenges and a core policy objective. This policy is being supported by hundreds of billions of euro. However, few people appear to be ready to exploit the huge potential.

At a European level, funding mechanisms have been put in place and a legislative platform adopted to ensure that energy efficiency objectives are realised. This revolves around three specific legal instruments which together oblige member states, including Ireland, to retrofit their building stock and to ensure that renewable energy is used in all new buildings.

The 2010 Energy Performance of Buildings Directive – elements of which Ireland should already have adopted – requires that from July 2013 all new buildings, whether public or private, have to be designed and constructed so that the energy performance would lead to the lowest cost of that building over its estimated economic life cycle.

This means that if triple glazing, solar, thermal heating or sophisticated energy management systems might on the one hand increase the initial cost of the building but, would save more than their initial cost when looked at over the estimated life of the building, then those measures must be included in the construction. Otherwise, it is in breach of the European directive and eventually in breach of Irish Building Regulations which will implement these measures.

What is of particular concern is the fact that while a sophisticated method of calculating the life cycle of a building and the costs of various instruments to reduce energy consumption has been published by the Government (included in the 2008 Building Regulations), these measures have been found to be inconsistent with the European Commissioners’ expert analysis as to what the optimal cost level should be for buildings in an Irish climate.

Indeed, the estimates indicate that Irish Building Regulations might have, in certain instances, been out by as much as 300 per cent compared with the comparative European method of calculating optimal energy costs. This creates a big legal risk for developers of buildings – other than dwellings – constructed and occupied after July 2013. Mere compliance with the Irish Building Regulations is likely to be well short of compliance with the obligations imposed both on private and public bodies under the European Performance of Buildings Directive. It is anticipated that the Department of Environment, Community and Local Government will adopt new regulations during the course of the year but, in the intervening period, a huge risk has been created.

The newest Energy Performance of Buildings Directive also imposes an even higher standard for new buildings occupied and owned by public authorities after 2018 and all new buildings after 2020, requiring that they be ‘near zero energy buildings’. A failure to have achieved this near zero energy standard could have a very substantial impact on the ability to sell or rent a property when constructed, and at the very minimum would have an impact on its pricing.

The obligations created by the European directives on buildings and renewable energy together provide great encouragement to specialists in the construction industry who can exploit the enormous opportunities of building or retrofitting to very high standards. It also of course, gives great encouragement to the producers of the equipment or technology that can manage the more sophisticated buildings or provide energy from renewable sources.

However, these previous directives are nothing but tasters for the latest directive – the Energy Efficiency Directive – adopted in 2012. This obliges Ireland and other member states to publish in April of this year a long-term strategy for mobilising investment in the renovation of the total national stock of residential and commercial buildings, both public and private.

In Austria, where they have already launched their strategy, it is expected that their renovation measures will secure more than 40,000 jobs to 2020. European Commission documents estimate that the impact of these directives will require at least €65bn to be spent each year between now and 2020. Commission officials estimate the figure is likely to be substantially higher.

The Commission also estimated that there could be five million jobs created by these initiatives. Funding is being made available through national energy efficiency funds and through various European instruments and the European Investment Bank. The Government recently announced the launch of a €70m Energy Efficiency Fund to develop the investment market for energy efficiency projects here.

This is truly a revolution. It is aimed at making Europe more energy secure, at addressing the threat resulting from climate change and addressing the crisis of unemployment. Ireland being a small and dynamic country has a once-in-a-lifetime opportunity to get a head start in developing the financial mechanisms together with the technical and practical experience to achieve the high levels of energy performance being sought. The European directives all look to the public sector to lead by example. The question is whether we will be asleep at the wheel and let this opportunity pass or position ourselves at the heart of Europe’s energy efficiency revolution.