The EU Climate Law: How it impacts businesses in the building industry

The Climate Law approved in June 2021 makes the EU’s greenhouse gas emission targets legally binding. This signals the start of a major policy overhaul for many sectors including construction. But what does the law entail – and how might it impact business in construction? Get the run-down in this 8-minute read.


Don't have the full 8 minutes?


What is the EU Climate Law?

In 2019 the European Commission launched the EU Green Deal, an ambitious policy that sets Europe on a path to being carbon neutral by 2050. This target will result in a cleaner environment, more affordable energy, smarter transport, and a better quality of life for those living and working in EU countries.

The Climate Law sets this policy into law and increases the 2030 greenhouse gas emission reduction target from 40% to 55%. Reaching carbon neutrality requires big changes to policy and governance. EU member countries are legally obliged to make changes at their national level to reach Europe's goal of being carbon neutral by 2050.


Why construction should place the EU Climate Law on high alert

The question is: what does the Climate Law mean for the construction industry, and more specifically, manufacturers? Well, there are a lot of points covered in the policy, but we've sifted through it and have put together a summary of what you need to know:

  • Emission reduction targets
    The new Effort Sharing Regulation sets emission reduction targets for all EU countries by 2030 for industries, including buildings.

    How big of a part will our industry play in making the regulation come to fruition? Well, considering that buildings and construction account for 36% of final energy use and 39% of energy and process-related carbon dioxide – quite a big one. More on this later!

  • Emissions trading in favor of clean alternatives
    Emissions Trading for building fuels will put a price on polluting fuels to encourage producers to innovate and invest in clean alternatives. Revenue generated from this will go towards funding a Social Climate Fund to provide financial support to citizens to invest in renovation or cleaner heating systems. The Emissions Trading will also create revenues for EU countries to support the decarbonization of buildings.

  • Renewable Energy
    The revised Renewable Energy Directive will set a benchmark of 49% of renewables in buildings and raise the use of renewable energy in district heating and cooling by 2.1 percentage points each year.

  • Renovating and restoring existing structures
    The strengthened Energy Efficiency Directive introduces a legal requirement to put energy efficiency first in planning and investment decisions. What does this mean in practice?

    The public sector will be required to renovate 3% of its buildings each year to reduce energy use and the cost to taxpayers. A new target will be set for all EU countries to reduce energy use in the public sector by 1.7% each year. The Directive will also encourage public bodies to use Energy Performance Contracts for the renovation of large non-residential buildings.


Why construction should place the EU Climate Law on high alert


The Climate Law's impact in the EU – and beyond

Governments worldwide are watching to see what impact the adjustment to existing policies and the introduction of new policies will make on Europe's CO2 emissions. In a collective effort to reduce CO2 emissions, other countries or continents may decide to follow the move made by the European Union's member states.

In fact, the UK is also pledging to reduce emissions to net zero by 2050. Also enshrined into UK law is the target of reducing emissions in 2030 by at least 68% compared to 1990 levels and achieving a 78% reduction by 2035.

The Climate Law has a huge impact on manufacturers supplying the construction sector, as the EU plans on charging importers at borders for the carbon emitted in making products like cement, steel, and aluminum abroad.


Buildings and construction are major climate culprits

Why is part of the Climate Law targeting the construction industry? Let's be honest; we're not leading the way in sustainability. Some are, such as MOSO bamboo, but we're miles away from where we should be.

While other industries (like aviation) have been called out for their contribution to CO2 emissions, the construction industry has so far managed to slip under the radar.

This is surprising given that the building and construction sectors are responsible for 39% of energy use and process-related CO2 emissions and 36% of final energy use. Plus, the manufacture of building materials and products like steel, cement, and glass account for 11% of CO2 emissions. Get the full climate breakdown now.


Building one new Tokyo every quarter

As mentioned in our report: Why sustainability is key to getting specified, the stark reality is that the demand for housing will only increase. The UN Department of Economic and Social Affairs reports that by 2050, the urban population will rise to 6.7 billion. That equates to a staggering 68% of the world's population living in an urban environment.

The United Nations projects 230 billion square meters (2.5 trillion ft2) in new construction by 2060 to meet the needs of the rising population. That's equivalent to one Paris every week, one New York City every 34 days, or roughly one Tokyo each quarter.

Building one new Tokyo every quarter

The reality is that we're faced with a situation where we can't stop building, but our planet can't support it.

It might sound bleak. Disheartening, even. But as we all know from watching countless superhero movies: sometimes the villain's change of heart ends up saving the world.

So, how can we build green and healthy buildings without putting construction (and business) to a grinding halt? The only solution is to build differently. To reap the benefits and squeeze the most out of new technological advancements that allow us to build better, smarter, and faster.

But all of that sounds like marketing fluff, or wishful thinking, at best – right? It's not.


Why BIM is key to meeting the EU Climate Law

Mitigating a carbon footprint means making better decisions in building design, construction, and management to reduce CO2 emissions. And this is one of the primary reasons BIM exists and is becoming mandatory for public procurements worldwide.

We've created an entire page covering the BIM basics. Still, it bears (swift) repeating: BIM, short for Building Information Modelling, is a 3D digital building process where information about every building component is managed across the project team and throughout its lifecycle. This gives stakeholders involved in a project the ability to:

  • run simulations of the building's life cycle energy
  • assess product and material life cycles
  • calculate statements about energy and embodied carbon dioxide
  • forecast volumes to minimize waste
  • examine the future performance of the assets
  • detect and resolve construction faults (such as clashes) before the shovel even nicks the ground.

Effort Sharing Regulation – check!

BIM is often used in the context of new builds. But it's a valuable tool for renovating existing structures – even historic buildings (HBIM). Reverting to the EU Climate Law's "Energy Efficiency Directive" BIM can prove quite an edge for the 3% annual renovation rate – both in speed and analyzing materials to a net-zero carbon standard.


BIM for manufacturers: facilitating greener design

BIM is often seen as a process used by architects, engineers, contractors, and owners/operators. But that's not the whole story. Manufacturers play an important – nay! critical! – role in BIM.

But... Collaboration isn't the only BIM perk. As a manufacturer, you surely want to stay up-to-date with current trends and designer demands. So, what's the specifier 411 on sustainability? We asked 2,568 of them to score the importance of sustainable design on a scale of 0-10. The result? An impressive 7,6.


Want more? Get your copy of Why sustainability is key to getting specified.


Unfortunately, aspiration can only get you so far. Architects and engineers can't cut emissions nor design to a net-zero carbon standard without the correct information. And contractors certainly can't submit climate declarations based on a gut feeling.

So, what do they need to comply with the new EU Climate Law? You guessed it: environmental product data.

BIM: A competitive edge for manufacturers

BIM enables greater and greener collaboration with specifiers. But how can manufacturers get a foot in? And how can you meet the new net-zero demand? Well, it all comes down to creating manufacturer-specific BIM objects. These information-rich digital twins of your products are the components designers use to populate and create their BIM models.

But what's the business gain? Well, it isn't just an added bonus or goodwill. As shown in Kanlux's interview 7 cases for the business value of BIM, it can make or break a deal and open doors to public projects.

Why? Manufacturers who create BIM objects provide specifiers with the information they need to make environmentally conscious decisions that align with the client and the new EU Climate Law (which will go hand-in-hand with most public procurements, by the way). If you can't meet their information needs: you'll be weeded out before being given a running chance.


To sum it all up...

The EU climate law might feel like a hard blow at first sight. But the sirens have been alarming for quite a while. The EU climate law is just a catalyst that cements what we already knew: that it's time that we not only wake up but listen, make amends, and take action. As an industry, we need to join forces and embrace innovations. Innovations that allow us to do more, do better and build a brighter, greener future for all.


Want to take the next step? Get closer to the EU Climate Law and designer demands by joining the BIMobject marketplace today!


This blog post is for inspirational and informational purposes only and does not constitute legal advice nor shall it be construed, or relied, on as such.

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