Renovation of near 20% of existing building stock to zero-carbon-ready by 2030 is ambitious but necessary

Renovating the existing building stock to a zero-carbon-ready level is a key priority for achieving the sector's decarbonisation targets for 2030 and 2050. However, the retrofitting of buildings is a significant challenge since at least 40% of buildings floor area in developed economies was built before 1980, when the first thermal regulations came into force. Retrofitting 20% of the existing building stock to a zero-carbon-ready level by 2030 is an ambitious but necessary milestone toward the Net Zero Emissions by 2050 Scenario (NZE Scenario). To achieve this goal, an annual deep renovation rate of over 2% is needed from now to 2030 and beyond.

Taking advantage of new technology opportunities and construction practices, cost-effective renovation solutions that combine energy efficiency and renewable sources are being explored at the building, and cluster and district levels. In addition to meeting climate resilience, building energy renovation is increasingly relevant to ease energy security concerns and as a means to create jobs. However, for this to happen swiftly and effectively, a strong political will is required, and policy, legal, regulatory, and administrative support frameworks need to be developed.

In buildings, energy is used for a wide array of applications, including heating, ventilation and air conditioning systems (HVAC), domestic hot water (DHW), lighting, household appliances, and electronics. Older, existing buildings are on average inefficient compared to newer buildings. While appliances can be replaced with ones that have greater energy efficiency due to their shorter lifespans, the building envelope (walls, roof, and windows), as well as technical and mechanical equipment systems, are rarely upgraded since they are high-cost and done on an as-needed basis. These components also have a longer shelf life at 40-plus years for building envelopes and 15-plus years for technical systems. Nonetheless, these are the building elements whose performance improvement can bring the most significant benefits in reducing CO₂ emissions, especially in regions with very cold or hot climates.

Improving the performance of older buildings that have not integrated energy efficiency requirements since their construction is a critical priority. As a first step, it is necessary to implement passive measures to the building envelope to enhance its thermal performance to at least the minimum levels defined by the building energy codes to reduce the energy service demand for heating and cooling. High-efficiency HVAC and DHW equipment would complement the building renovation, further reducing the energy use that renewable or other clean energy sources would ultimately supply.

Building renovation brings several additional benefits, such as providing a better-quality indoor environment by reducing building envelope anomalies (e.g. mould and others related to condensation and humidity), increasing thermal comfort, improving overall health conditions and productivity. Energy bills would also be lower for household and commercial building operations. 

Retrofitting rates for existing buildings are currently around 1%, with most of these shallow renovations. However, awareness of the importance of deep building renovation is rising quickly. Efforts to support these changes are starting to emerge, from policy programmes and building regulations to fiscal incentives and training. At the end of 2021, the European Union (EU) proposed a major recast to its key Energy Performance of Buildings Directive (EPBD). The recast EPBD aims to accelerate building renovation rates, promote the uptake of renewable energy in buildings, introduce a new EU definition of a ‘zero emissions building’, which would be applicable to all new buildings from 2027 and to all renovated buildings from 2030. The recast EPBD would also accelerate energy-efficient renovations in the worst performing 15% of EU buildings, and set minimum energy performance standards. An updated version of the EPBD will be released in the second half of 2022. Initiatives such as the Renovation Wave for Europe and the Fit for 55 Programme aim to double the building renovation rates by 2030, prioritising the worst performing buildings. Retrofitting residential buildings by decarbonising heating and cooling systems will also tackle energy poverty.

Successful examples of new building renovation strategies can already be found at both the building and district levels, where decisions were taken based on technical and economic criteria limiting the impact on consumers to the extent possible. 

Finding the optimal cost-effective combinations of building envelope renovation solutions with high-efficiency technical systems using renewable and low-emissions energy sources is the main challenge and the focus of numerous research projects. One of the most significant factors influencing the decision-making process is the initial investment required, which can be very high and often with long payback periods.

The availability of easy-to-use and reliable tools for building designers to increase energy efficiency is still limited. The same applies to technical guidance and support for the entire chain of professionals in the building sector, including owners, managers and local administration staff, who are not yet familiar with deep energy renovation projects.

Another challenge is the scarce availability of transparent and easy-to-access building performance data, which are indispensable for cultivating the market for renovations and providing a higher level of energy efficiency planning.

The fact that buildings are unique to one another is a common issue for renovation challenges, including the acceleration of retrofitting rates for existing buildings.

Shifting the scale of renovation from individual buildings to a building cluster or district level can enable energy retrofitting at a quicker pace and reduce overall cost. Upscaling energy building renovation to the district level involves advanced technical aspects and is also associated with critical social and economic factors, creating greater complexity linked to local planning. However, a massive multi-building renovation offers an opportunity to address transversal issues such as housing affordability, energy grid integration, and urban planning (mobility, accessibility, culture and leisure, green and blue spaces, infrastructure, etc.). It also amplifies another challenge already present in multi-family buildings, which is to converge different views and interests of the most diverse actors involved in the planning process. 

• Develop tools to identify and define cost-effective combinations of energy efficiency, renewable and low-emissions supply, as well as flexibility strategies and the integration of storage systems (modelling, flexible sector coupling, smart design and control, large thermal energy storage, EV chargers) at the building and the cluster or district level. Enlarge the knowledge base on how such solutions behave in different archetypes and climates to ease the standardisation of renovation options.
• Advance research into integrating renewable energy systems at the building level and in the urban environment, even targeting positive energy districts and energy communities, when possible.
• Investigate the integration of energy-efficient strategies with architecture plans, aiming for a high-quality design that adds value to the building and preserves the local cultural heritage when renovating historic buildings.
• Analyse and enhance the technical understanding of retrofitting coupled with the transition to low-temperature district energy systems and the improvement of distribution grids.
• Investigate further the use of heat pumps as a building technology to achieve ZCRB.
• Study additional energy-efficient and cost-effective cooling strategies, taking into consideration hot climates and climate change scenarios, and how to integrate space cooling efficiency metrics into building energy codes for renovated buildings.
• Test new financial and policy instruments and business models that create the basis for a massive renovation of buildings in their different typologies and climates, minimising the impact on the consumer and reflecting the increase in the market value.