Refurbishment Rising: Ireland’s Push Towards Circular Construction

Construction has not been easy in Ireland. Tight margins, boom-bust decades, and now a labyrinth of legislation to try and navigate in between managing the day job on site. The bad news? More regulation is on the way: the Environmental Protection (Miscellaneous Provisions) Bill, the Safety, Health and Welfare at Work (Quarries) Regulations, and the Irish imposition of the EU Omnibus simplification packages are but three of those that will directly impact the sector. The good news? There is an increasing push by legislators to move to simplify this web of rules.

The Issue: Draghi Report

More readable than one would expect, the ‘Draghi Report on EU Competitiveness’ delivered late last year to the EU Commission [1] offers insights into where EU policy, and by extension the rules impacting Irish construction, is headed. Much attention has been given to green procurement and the drive to introduce standardised building codes across the EU. Less discussed is the effort to create a true ‘Single Market’ for waste and recycling in Europe, particularly promoting the use of recycled materials in the construction sector to reduce carbon emissions i.e. ‘Circularity’. Importantly the report recommends that the Commission leverage and effectively enforce existing legislation rather than introducing additional regulation. A key pillar of this existing legislation is the recast Energy Performance of Buildings Directive (Recast EPBD) which came into law in the EU in May 2024 [2]. Ireland has not yet transposed the law and has until May 2026 to implement the Recast EPBD.

The Policy: Recast EPBD raising the bar

Earlier versions of the EPBD promoted energy efficiency in buildings and led to the introduction of Building Energy Rating (BERs) and the Nearly Zero Energy Building (NZEB) standard. The Recast EPBD focuses not just on operational energy use but the whole-life-cycle performance of buildings and principles of a circular economy [3]. The Irish Green Building Council (IGBC) does great work in this area. They have issued multiple reports and roadmaps showing that reusing and retrofitting existing buildings is one of the most effective ways to cut embodied carbon and reduce whole life emissions [4]. The Recast EPBD obliges Ireland to establish minimum energy performance standards (MEPS) such that:

• by 2030 the worst performing 16% of non-residential buildings must be improved; and
• by 2033 all buildings within the worst performing 26% must be improved [5].

There are also various other measures within the Recast EPBD such as: ensuring that new buildings are solar-ready (fit to host solar installations), a binding target to increase the average energy performance of the residential building stock, and that from 1 January 2028 all new buildings owned by public bodies are ‘zero-emission buildings’ with the requirement applying to all new buildings from 1 January 2030.

The Practical Impact: Global Warming Potential (GWP)

Perhaps the most significant practical impact will be the overhaul of the existing BER regime. Under the new rules, Ireland must calculate and disclose the whole life cycle carbon emissions (but for operational emissions and embodied emissions) for certain buildings. In order to calculate those emissions the Recast EPBD seeks to introduce a measure termed the Global Warming Potential (GWP) to record a building’s whole life cycle indicating that building’s overall contribution to emissions that lead to climate change. According to an in depth report recently commissioned by the SEAI “the GWP requirements of the revised EPBD represents a significant change for the Irish construction sector” [6]. While this may be the case the OGP’s current ‘Cost Control and Carbon’ reporting templates [7] already provide for reporting on embodied carbon during construction as an option; knowledge of these forms should assist parties in transitioning to the GWP requirements. The total lifecycle GWP is communicated as a numeric indicator for each lifecycle stage expressed as kgCO2eq/(m2) (of useful floor area) calculated over a 50 year reference period. Ireland must ensure that the GWP is calculated and disclosed in the revised BER:

• from 2028 for all new buildings with useful floor area over 1,000m2; and
• from 2030 for all new buildings [8].

Similar to BERs, the more favourable the GWP the more attractive the building is from a value point of view. When viewed alongside MEPS, a nationwide refurbishment program looks inevitable. The strain on infrastructure is already restricting available development land and as such any increase in the utilisation of existing capacity as opposed to a need for new connections will be welcomed by the various public utility infrastructure bodies [9]. An impactful reduction in infrastructure concerns, the possibility of grants and tax incentives [10] and the future proofing of projects by aligning them with policy direction may allow the refurbishment of existing buildings to become a more financially attractive investment to developers.

The Future

Almost three million companies in the euro area are highly dependent on nature in some way and in 2024 circa 75% of euro area bank loans extended to such companies [11] [12]. While political leaders in the USA, the UK (via Reform), and other countries push to deregulate themselves away from sustainability programs, Ireland appears to be moving towards less complex but increasingly standardised EU-wide legislation. Sustainable building remains a key focus for long term development in Ireland, from macro concepts such as the ’15 minute city’ principles driving the Cork Docklands scheme to the ‘green premium’ that now attaches to the value of energy efficient buildings. RDJ’s recent achievement of BCorp status reflects this focus: businesses cannot choose between economy and the environment, it must serve both. As Pope Francis wrote in Laudato Si, we are called “to hear both the cry of the earth and the cry of the poor” [13]. Construction in Ireland may not get any easier, however the moral and financial reasons to embrace the move towards decarbonisation are stronger than ever.

[1] Draghi Report here

[2] Energy Performance of Buildings Directive 2024 here

[3] “buildings are responsible for greenhouse gas emissions before, during and after their operational lifetime”, Annex III here

[4] IGBC Website Here

[5] Article 9 here, non-residential buildings have >50% of useful floor area being used for non-residential purposes. ‘Useful floor area’ is a defined term (Article 1 (51) meaning “the area of the floor of a building needed as parameter to quantify specific conditions of use that are expressed per unit of floor area and for the application of the simplifications and the zoning and allocation or re-allocation rules”. The definition is deliberately broad as property measurement standards differ between the Member States. An amendment to move towards a common methodology for floor area measurement was not included in the final text (proposal here).

[6] RPS RKD Report here

[7] CWMF notice here

[8] Article 7 here

[9] RDJ’s Foundations 24 event here

[10] IGBC section 3.2 here

[11] Deputy Governor of Central Bank Sharon Donnery here &

[12] reflecting a ECB paper here

[13] “Encyclical Letter Laudato Si’ of the Holy Father Francis”  here