Acquisition and ownership of buildings




Climate change mitigation:

Principle:
The acquisition of buildings designed to minimise energy use and carbon emissions throughout the lifecycle instead of lower-performing ones can make a substantial contribution to climate change mitigation objectives. While specific data on embodied carbon and thus carbon emissions from the full lifecycle is still limited and needs to be further generated, the acquisition of buildings designed to minimise energy use and carbon emissions during the use phase can already make an important contribution by directing users towards high-performing properties and by sending signals to markets about the need to lift the overall energy performance of the whole stock. For large non-residential buildings (i.e. buildings with an effective rated output for heating systems or systems for combined space heating and ventilation of over 290 kW, or buildings with floor area over 1000 m2), an additional requirement is introduced to ensure that these buildings are operated efficiently, and that actual energy and carbon savings are delivered each year. Condition for non-eligibility: to avoid lock-in and undermining the climate mitigation objective, the acquisition and ownership of buildings for the purpose of extraction, storage, transportation or manufacture of fossil fuels are not eligible. Use of alternative schemes as proxies: outside EU Member States, established schemes such as ‘green building’ certifications or building regulations may be used as alternative proof of eligibility, provided that this is verified by the Sustainable Finance Platform. The organisation responsible for the scheme will be able to apply for official recognition of its scheme by presenting evidence that a specific level of certification/regulation can be considered equivalent (or superior) to the taxonomy mitigation and DNSH threshold established for the relevant climatic zone and building type. The Sustainable Finance Platform will assess the evidence and approve or reject the application.

Metric and threshold:

The metric is Primary Energy Demand (PED): the annual primary energy demand associated with regulated energy use during the operational phase of the building life-cycle
(i.e. ‘module B6’ according to EN15978), calculated ex-ante according to the national methodologies for asset design assessment, or as defined in the set of standards ISO 52000, expressed as kWh/m2 per year.

Case A – Acquisition of buildings built before 31 December 2020.

The calculated performance of the building must be within the top 15% of the local existing stock in terms of operational Primary Energy Demand, expressed as kWh/m2y. Alignment with this criterion can be demonstrated by providing adequate evidence comparing the performance of the relevant asset to the performance of the local stock built before 31 December 2020. Such evidence should be based on a representative sample of the building stock in the respective area where the building is located, distinguishing at the very least between residential and non-residential buildings. The area can be defined as a city, a region or a country.
Certification schemes such as EPCs may be used as evidence of eligibility when adequate data is available to demonstrate that a specific level (e.g. EPC A) clearly falls within the top 15% of the respective local stock. The TEG recognises that more work needs to be done to collect and analyse data in order to define absolute thresholds corresponding to the performance of the top 15% of each local stock, such as data showing the distribution of EPCs across the stock and the thresholds used to define EPC ratings.
Large non-residential buildings must meet an additional requirement: efficient building operations must be ensured through dedicated energy management.

Case B – Acquisition of buildings built after 31 December 2020. 

The building must meet the criteria established for the ‘Construction of new buildings’ that are relevant at the time of the acquisition. 
Large non-residential buildings must meet an additional requirement: efficient building operations must be ensured through dedicated energy management.

Rationale:
The acquisition of buildings designed to minimise energy use and carbon emissions throughout the lifecycle instead of lower-performing ones can make a substantial contribution to climate change mitigation objectives by: • creating demand for such buildings; this in turn will stimulate owners to build and renovate buildings to a higher level of performance than they would have done otherwise. • sending a clear signal to the market that the acquisition of such buildings against an ever more stringent legislative background and changing client preferences can help reduce future potential risk and value depreciation. For buildings built after 2020, the same criteria established for the activity ‘Construction of new buildings’ are applied. Buildings built before 2021 are assessed on the basis of a best in class approach in each local stock. Rather than attempting to establish absolute thresholds with an incomplete set of data, for the time being the TEG opted for a threshold based on a percentage of the stock, which ensures a level-playing field across different Member States. For now, the corresponding 15% was deemed an appropriate level for the best in class performance, finding a compromise between the need to establish high standards of performance while recognising the need to maintain and create opportunity in the existing market.

Climate change mitigation do no significant harm:

Summary:
The main potential for significant harm to the other environmental objectives associated with the acquisition of buildings is determined by: • Lack of resistance to extreme weather events (including flooding), and lack of resilience of to future temperature increases in terms of internal comfort conditions. • Excessive water consumption due to inefficient water appliances. • Presence of asbestos and/or substances of very high concern in the building materials. • Presence of hazardous contaminants in the soil of the building site. • Inappropriate building location: impacts on ecosystems if built on greenfield and especially if in a conservation area or high biodiversity value area.

Adaptation
• Refer to the screening criteria for DNSH to climate change adaptation.

Pollution:
If the building covers more than 1000 m2 of floor area: If the property is located on a potentially contaminated site (brownfield site), the site must be subject to an investigation for potential contaminants, for example using standard BS 10175.

Based on legislation:

Regulation:

Ecosystems:
6.a – The building must not be built on protected natural areas, such as land designated as Natura 2000, UNESCO World Heritage and Key Biodiversity Areas (KBAs), or equivalent outside the EU as defined by UNESCO and / or the International Union for Conservation of Nature (IUCN) under the following categories: • Category Ia: Strict Nature Reserve • Category Ib: Wilderness Area • Category II: National Park Buildings that are associated supporting infrastructure to the protected natural area, such as visitor centres, museums or technical facilities are exempted from this criterion. 6.b - The building must not be built on arable or greenfield land of recognised high biodiversity value and land that serves as habitat of endangered species (flora and fauna) listed on the European Red List and / or the IUCN Red List.

Based on legislation:
Y

Regulation:
Natura 2000 (Habitats Directive, Birds Directive)


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