Tripling EU / UK Energy Efficiency Policy: the NZEB

This article was originally published in issue 49 of Passive House Plus magazine. Want immediate access to all back issues and exclusive extra content? Click here to subscribe for as little as €15, or click here to receive the next issue free of charge

I n 1997, the Kyoto Protocol marked the first major international attempt to address climate change, but it was only in the early 2000s that energy efficiency in buildings began to gain serious traction, initially through basic U-value targets for retrofits and new builds.

A key moment came in 2002 when the EU’s Energy Performance of Buildings Directive (EPBD) was transposed into national legislation, setting the stage for progressive improvements in building energy efficiency standards across Europe.

Despite these early steps, by 2005, the energy efficiency of many buildings remained subpar.

In my experience with retrofitting a building from 2005, it became clear that early regulations had failed to address critical areas such as cavity wall insulation. At the time, only 50 mm of insulation on interior walls and floors was typical with perma-vents in windows – a stark reminder of how much work was left to achieve energy efficiency targets.

A significant milestone in the UK's and Ireland's energy efficiency journey occurred in 2007 with the introduction of energy performance certificates (EPCs). These certificates – named Building Energy Ratings (BERs) in Ireland – raised awareness about energy performance and gave consumers the knowledge needed to make informed decisions when purchasing or renting homes. EU studies, including those by the Fraunhofer Institute, called for a tripling of energy efficiency efforts to meet the EU’s climate and energy goals.

In 2010, the EU revised the EPBD, introducing the concept of nearly zero energy buildings (NZEBs). While NZEB standards were not directly linked to the passive house standard, they aligned with its principles. This revision required EU member states to calculate “cost-optimal” standards every five years, ensuring that building codes evolved beyond basic U-value targets. In Ireland, cost-optimal calculations for new builds were completed in 2013, and for retrofits in 2015.

Despite these policy advances, challenges persist, particularly in retrofitting the existing housing stock. In both the UK and Ireland, nearly 99 per cent of the buildings require retrofitting to meet the 2050 net-zero carbon targets. A large proportion of the housing stock, especially older buildings, currently fall below the required energy performance standards, with many rated D or worse on the EPC scale. The scale of the retrofit challenge is substantial. Government initiatives such as the UK’s Green Homes Grant (2021) and Ireland’s SEAI Better Energy Homes Scheme have provided vital financial incentives, driving the retrofit market forward. However, rising material and labour costs are threatening to derail progress.

While technologies such as photovoltaic (PV) systems have seen price reductions, key retrofit measures like external insulation, heat pumps, and upgrades to elements such as sills, soffits, and fascia have become increasingly expensive. These rising costs pose a significant challenge for homeowners and landlords trying to meet NZEB targets, threatening the affordability and feasibility of deeper retrofits.

Compounding this issue is the escalating cost of construction, which has become a major barrier for property owners aiming to meet national decarbonisation goals. As retrofit costs increase, the gap between ambitious policy goals and practical implementation widens. Without effective measures to address these rising costs, both the UK and Ireland risk missing their 2030 zero-emission building targets.

The challenge of rising retrofit costs goes beyond affordability; it also raises concerns about equity and access. Increased costs may disproportionately affect lower-income homeowners, sidelining those who would benefit most from energy-efficient retrofits. If achieving NZEB standards becomes unmanageable, meeting broader climate objectives will be harder, and the disparity between high and low energy-performance buildings is likely to widen.

Looking ahead, addressing these cost challenges is essential to ensuring retrofitting remains accessible to a broad range of property owners, from homeowners to landlords. Policy frameworks must evolve to ensure that support structures for retrofitting remain effective and accessible, particularly in the face of economic pressures. The bureaucratic nature of grant application processes for NZEB retrofits also adds unnecessary costs and delays on-site.

The Irish National Retrofit Plan, while a crucial step forward, is showing signs of strain. For example, the Better Energy Homes Scheme reported a 14 per cent drop in retrofit numbers, although solar PV installations continue to see strong growth. This indicates that while simpler retrofit measures with shorter payback periods are becoming more popular, more complex and costly measures are being sidelined due to financial pressures.

The path to zero-emission buildings is undeniably challenging, but it is not insurmountable. By building on the foundations laid by the EPBD, NZEB standards, and national policies, Ireland and the UK have the potential to transform their built environments into sustainable, energy-efficient, and zero-carbon assets for the future. However, achieving these ambitious goals will require addressing rising costs and improving bureaucratic efficiencies. The closure of the UK Green Homes Grant in 2021, following administrative issues and limited uptake, highlighted the need for better policy design and management.

As policymakers in both the UK and Ireland confront these challenges, they must recognise that 2030 targets will likely be missed without immediate action. Streamlining grant administration, increasing grant amounts to reflect market costs, reducing grant timelines (the 17-20 months for the Better Energy Warmer Homes Scheme is unacceptable), and removing VAT on essential retrofit materials such as triple glazed windows, insulation, ventilation, and heat pumps are critical steps.

In my next article, I will explore the current state of retrofit in more detail and assess the progress made toward achieving zero-emission buildings.