Policy roadmap and targets for Ultra-Low-Energy Buildings

A policy roadmap sets ambitious, yet achievable energy saving targets and includes comprehensive medium- to long-term policy-making strategies towards eventually making ultra-low-energy buildings (ULEB) the standard for both new and existing buildings. The strategies will be most effective when combining various policies and measures with consistent policy packages (such as those recommended by bigEE here, see ‘Recommended Package’, and implemented by the countries featured in the section on ‘package examples’; see also the pdf file „How policies need to interact in packages“ with an overview of the policy packages bigEE recommends for energy efficiency in new buildings and renovation) to achieve Ultra-Low-Energy Buildings and promote energy-efficient building technologies.

Worldwide implementation status
Several EU member countries have already set up policy roadmaps to achieve ULEB or nearly-Zero-Energy Buildings (nZEB) for both new and existing buildings (see table in the summary). This is based on the 2010 revision of the EU Directive on the overall energy performance of buildings. It requires member states to ensure that from 2021 onwards only nZEB will be built, in the public sector from 2019 onwards.
In China, the 5-year plans include energy efficiency targets and a policy roadmap also for energy efficiency in buildings. They are at least medium-term examples for this type of policy for the whole building stock.
As an example of a long term roadmap for the whole stock of buildings, the German Energy Concept 2050 roadmap sets up a goal of achieving a "climate-neutral building stock" by 2050, which defines a set of targets (reducing heating energy demand by 20 % by 2020 and overall primary energy demand in buildings by around 80% by 2050) .
To reach this goal, one supplementary target is that all new buildings shall be climate neutral by 2021. Another supplementary target is to increase the energy-efficiency retrofit rate from 1% to 2% as soon as possible and through 2050 (BMWi and BMU 2010).
The policy roadmap includes i.a. upgrading the MEPS for new buildings to these levels, and ensuring better funding for the KfW’s building rehabilitation programme (see the related bigEE good practice policy example)

Governance level
A policy roadmap can be implemented at the national, trans-national, regional or local level.

Related sectors

• residential
• industrial: Policy roadmaps can also target industrial or mixed industrial/commercial development zones.
• services: Policy roadmaps can address – next to the residential sector – also buildings in the commercial or public sectors.

• Low-Energy Buildings
• Ultra-Low-Energy Buildings
• nearly-Zero-Energy / Plus-Energy Buildings

In principle, all options for improving energy efficiency through optimised passive design, in active technologies and by energy management and user behaviour, are addressed by this policy in order to achieve Ultra-Low-Energy Buildings or nearly-Zero-Energy / Plus-Energy Buildings, but we did not list them separately here. In retrofit or full renovation, it may only be realistic to achieve Low-Energy Buildings; in new build, they should only be an intermediary target on the roadmap to ULEB.

In principle, all actors on the supply and demand side of buildings as well as influencing actors should work individually and together towards the goal of building ULEB or renovating the stock to ULEB standards. We highlighted those most important in that respect.

Related target groups

• Architect
• Construction company
• General management company
• Installation contractor
• Manufacturer
• Manufacturer of prefabricated houses
• Property development company
• System supplier
• Investor
• Investor-occupier
• Energy agency
• Energy consultant
• Energy Service Company
• Engineering consultant
• Governmental actor: Usually the policy roadmap is formulated at high administrative level (super-national and national). It may guide regional and local governments to formulate their own targets and measures. Thus, local governments also belong to the target group.

Direct beneficiaries
The supply-side and influencing actors mentioned all benefit directly from the policy roadmap towards ULEB because such a policy roadmap can help them to be prepared and committed to the targets as well as to reduce their uncertainties about the future market development. The implementation of the policy to achieve the targets is likely to create higher revenue for them as the initial investment in ULEB will usually be somewhat higher than for conventional buildings.
Investors in energy-efficient buildings or retrofits will benefit from reduced energy bills and / or higher building values. In the medium term, they will also save on the energy efficiency investment, as economies of scale and learning effects will bring costs of energy-efficient buildings and technologies down.

Indirect beneficiaries
The supply-side actors mentioned here will benefit more indirectly from the policy roadmap towards ULEB because their customers are usually not the investors directly but the direct beneficiaries on the supply side mentioned above, such as property development companies or manufacturers of prefabricated houses. Such a policy roadmap can, however, help them too to be prepared and committed to the targets as well as to reduce their uncertainties about the future market development. The implementation of the policy to achieve the targets is likely to create higher revenue also for them as the initial investment in ULEB will usually be somewhat higher than for conventional buildings. Tenants will benefit from energy bill savings.

Direct beneficiaries

• Architect

• General management company

• Manufacturer of prefabricated houses

• Property development company

• Investor

  Investors will mainly benefit from low energy bills due to energy-efficient buildings.

• Investor-occupier

  Investor-occupiers will mainly benefit from low energy bills due to energy-efficient buildings.

• Energy agency

• Energy consultant

• Governmental actor

  In case the policy roadmap is formulated at high administrative level (super-national and national), it guides regional and local governments to formulate their own targets and measures. Thus, local governments also directly benefit from a policy roadmap.

• Engineering consultant

• Energy Service Company

Indirect beneficiaries

• Construction company

• Installation contractor

• Manufacturer

• Real estate agent

• Retail company

• System supplier

• Wholesale company

• Tenant

  Tenants will also benefit from low energy bills due to energy-efficient buildings

• Bank

  Public, private-public and private banks indirectly benefit from a policy roadmap, because it can address their risk perception of providing financing to energy efficiency projects or other actors on the supply side.

Relevant barriers

• Technical barriers: A policy roadmap towards ULEB can address the uncertainties of market development faced both by the actors on the supplier side and by investors.
• Knowledge and information barriers: A policy roadmap can make market actors aware of the ULEB concept and its benefits for the first time.
• Lack of interest and motivation in energy efficiency-improvement: A clear political commitment and roadmap implementation can motivate market actors to take the ULEB concept serious and to pursue it.

Relevant incentives

• Directly increasing earnings or profits for actors on the supply side: The promotion of specific energy efficiency levels and options following a policy roadmap is likely to result in directly increased earnings or profits for actors on the supply side.
• Saved energy costs: Investors and investor-occupiers will save up to 80 % of energy costs compared to conventional new buildings, or the situation before retrofit, through ULEB, and around 50% through LEB. This is a high economic incentive supported by implementing a policy roadmap.

A policy roadmap towards ULEB includes an appropriate package of different policy or measures to achieve its target .
Such a policy roadmap can thus include and package all kinds of policies and measures, such as those recommended by bigEE here, see ‘Recommended Package’, and implemented by the countries featured in the section on ‘package examples’; see also the pdf file „How policies need to interact in packages“ with an overview of the policy packages bigEE recommends for energy efficiency in new buildings and renovation.

The following pre-conditions are necessary to implement policy roadmaps and targets for Ultra-Low-Energy buildings:
Agencies or other actors responsible for implementation
An implementing agency/committee should be in place to co-ordinate the preparation and implementation of the policy roadmap. In addition, a steering committee can be set up to define targets, strategic options, supportive measures, and key steps of the policy roadmap as well as to monitor and evaluate the roadmap implementation (UNDP 2011b).

Funding
Achieving the targets of a policy roadmap needs supportive funding. For instance, the German Energy Concept 2050 roadmap states, a better funding system should be established for their building rehabilitation programme and to support specific efficiency measures, use of renewables, optimum measurement and control technology etc. (BMU 2010).

Test procedures
Unless they already exist, calculation methods and test procedures for measuring the energy performance of buildings and their components and technologies will need to be developed, during the implementation of the roadmap and the policies and measures included therein. Such methods and procedures are not only particularly relevant for regulation and mandatory energy performance certificates and labels, but also for advice and financial incentives.

In our pdf file „How to design and implement policies“, we offer information on how to set energy efficiency targets and develop and implement policy roadmaps, as well as a policy planning, implementation, and learning cycle. The cycle starts with an analysis of the technical and economic potential for energy efficiency in buildings.
Preparing a policy roadmap then requires the participation of multiple stakeholders. Thus, the first step is to identify key actors in different sectors and set up a co-ordination structure. The methodology of the roadmap development should also be decided on at this stage. Secondly, a roadmap should undergo a comprehensive assessment in order to understand the status-quo and to explore the impacts of different strategies. The latter can, for example, be supported by scenario analysis. Based on the assessment, the next step is to identify strategic options and conduct analysis of these options, e.g. cost-benefit analysis. Then policies or measures (e.g. financing options) to support these strategic options should be developed. Finally, a comprehensive roadmap with consecutive steps is developed (UNDP 2011b).

Quantified target
A policy roadmap is developed on quantitative targets, based on which strategic options, as well as supportive policies and measures are used. The targets can be, for example, the percentage of buildings applying the Ultra-Low-Energy Building or nearly-Zero-Energy-Building concept, or the rate of energy-saving modernisation reducing the energy demand for heating and/or cooling by a certain percentage, within a specific time frame (e.g. by 2020, 2030, or 2050).

International co-operations
International co-operations that share experiences of preparing a policy roadmap, e.g. in terms of the comprehensive assessment or achievable energy savings, can help policy-makers to formulate the roadmap within their jurisdiction.

Monitoring
It is often difficult to predict whether the policies or measures in a long-term policy roadmap individually or as the agreed package, will actually produce the desired results. Thus, it is important that monitoring and evaluation gives feedback to the government so that they can make adjustments to the policy roadmap (BMU 2010). Accordingly, a policy roadmap should address how monitoring and evaluation will be conducted, including method, reporting, and feedback mechanisms of the formulated roadmap (UNDP 2011b). Monitoring should not only correspond to the targets but also cover the actual progress to determine whether it follows the pathway defined in the roadmap.

Evaluation
Evaluation includes reviewing how reasonable the targets are, the overall impact, costs, the benefits of the policy package and the contribution of the individual policies and measures and whether they work well or need to be improved, the feasibility of strategic options, implementation barriers, etc.. Ideally, the results are fed back into the developed policy roadmap for further adjustment, e.g. adjusting targets and identifying need for further action.

Relevant individual dynamics and side-effects

• Avoiding lost opportunities: By accelerating the market introduction or transformation towards ULEB and specific energy-efficient products and services, the policy roadmap will indirectly—through the policy package implementation of the roadmap—contribute to avoiding lost opportunities for energy savings.
• Minimising snap-back effects: The policy roadmap can be designed to minimise snap-back effects if it contains Minimum Energy Performance Standards that secure the energy efficiency levels achieved in the market and are ultimately set at ULEB levels. On the way to such levels, snap-back effects can also be minimised by a long-lasting information campaign, energy-efficient urban planning, standardisation and certification, etc..
• Minimising free-rider effects: Free-rider effects are likely to be minimal if the policy roadmap advances rapid market transformation towards making Low-Energy-Building and then ULEB levels the general and finally the legal standard. This is likely to create large energy savings additional to what would have occurred in baseline market trends.
• Creating Spill-over effects: The policy roadmap can maximise spill-over effects if it includes energy efficiency urban planning, information measures (especially those addressing the supply side of buildings markets), regulations such as standardisation and certification, etc., and in general if it achieves rapid market transformation towards making ULEB the general and finally the legal standard in new build.
• Dynamic market transformation and/or innovation: The policy roadmap contains the promotion and prioritization of certain energy efficiency design levels, such as ULEB, and the corresponding technologies or services and thus has the main objective to facilitate the market introduction or transformation of these designs, products and technologies. The ultimate goal of the roadmap is to make ULEB the general and finally the legal standard, and to eventually achieve it in the whole building stock.
• Minimising rebound effects: The policy roadmap can minimise rebound effects if it includes policies and measures to promote energy-efficient building operation, building energy management schemes, or user education, etc..

Design for sustainability aspects
The targets of a policy roadmap can also include other sustainable components, such as resource efficiency, or health, for the promotion of these aspects.

Co-benefits
In the fields of ULEB design and the related energy efficiency services and technologies, where the policy roadmap promotes and prioritizes, creation of job opportunities is a key co-benefit of policy roadmap.

• There may be a lack of knowledge and skills for preparing a policy roadmap of ULEB, for example, the skills needed to conduct a comprehensive and scientific assessment. 
• Furthermore, stakeholders fearing loss of business may resist the creation of the roadmap and targets as well as the policy package to implement the roadmap.
• The funding needed, from the government’s budget, to implement the policy package may not be available.

• In order to weaken and eventually overcome resistance to the roadmap, it is important to maximise the benefits for as many stakeholders as possible, address concerns through a stakeholder dialogue, and to form coalitions of the stakeholders who will benefit. It is also important to communicate the benefits of energy-efficient buildings and demonstrate the feasibility and if possible the cost-effectiveness of Ultra-Low-Energy Buildings (ULEBs). A gradual strengthening of energy efficiency requirements towards ULEBs will allow markets to adapt to these requirements and is also likely to reduce resistance.
• Mechanisms need to be set up at the outset to enable the feedbacks of monitoring and evaluation results to the formulated policy roadmap. 
• Capacity building and international co-operation may help to improve the knowledge and skills required for preparing a policy roadmap. 
• For funding, it is important to assess the benefits to the national economy and the state budget from increases in investment and employment as well as reduced energy imports and reduced energy prices subsidies where these exist. For example, the German KfW programmes with financial incentives and preferential loans bring back more money to the government budget than they cost (see our bigEE model example of good practice on the KfW programmes). A removal/reduction of subsidies on end-user energy prices and on energy supply and/or introduction of energy/CO₂ taxation and emissions trading may create the funding needed to finance energy efficiency policies. Developing countries and emerging economies may also use Climate finance to (co-)fund policy implementation.

Potentially achievable energy savings vary among different policy roadmaps, depending on the defined targets.
According to findings presented in the bigEE Buildings Guide, Ultra-Low-Energy Buildings (ULEB) allow primary energy savings of 60 to 90 % for heating and cooling, ventilation and water heating compared to conventional new buildings. They are cost-effective in many parts of the world. As the next table shows, many EU member states and California plan to make ULEB or nearly-Zero-Energy Buildings the standard during the years to come. Some states, such as France, Germany, and Sweden, also have targets for the whole building stock and for renovation.

Source: EC 2009, p. 10 (Low energy buildings); Data for California: CEC 2011; Enerdata 2011

The costs of preparing a policy roadmap towards ULEB can be relatively small. They mainly relate to the process and projects that help government to develop a roadmap.
Expected costs for the government implementing a policy roadmap depend on which policies and measures they decided on for achieving the defined targets in the roadmap.

Given that the potential energy savings and expected costs depend on the target and options set in the policy roadmap, it is difficult to generalize expected net benefits. However, policymakers could set interim targets and energy efficiency requirements during roadmap implementation at a level that is cost-effective to society and investors. At the same time, research and demonstration on ways to reduce the costs of energy-efficient buildings should be part of the roadmap. Furthermore, supporting broad market uptake of energy-efficient building design and technologies needed for achieving ULEB in new build and renovation will bring costs down due to economies of scale. In combination with removal/reduction of subsidies on end-user energy prices and on energy supply and/or introduction of energy/CO₂ taxation and emissions trading, we can expect that a well-designed and well-implemented roadmap will eventually make ULEB cost-effective in new build and renovation, so it will then be wise and appropriate to make them the legal standard through Minimum Energy Performance Standards.