Buildings & Renovation

Thematic area’s main objective & scope

The buildings sector (public and residential buildings) is usually one of the largest consumers of energy
within a country, contributing mostly with a substantial share of GHG emissions within a country’s
emission portfolio. In Europe for example, buildings are the single largest energy consumer, using about
40% of total energy consumed and creating 36% of European greenhouse gas emissions (GHG). This is a
result of the fact that most buildings in Europe (and the GUMA countries) are not energy efficient and are
still mostly supplied by fossil fuels. At the same time, due to the labor-intensive nature of the construction
sector, the buildings sector can be an economic driver - employing the domestic workforce by
implementing energy efficiency and renewable energy measures on the energy supply (generation and
distribution of thermal heat and cooling) and energy demand side (lowering the required energy demand
of a building to meet the living and/or working comfort and standards) of buildings.

Thus, renovating both public and private buildings is an essential action and has been singled out in the
European Green Deal (EGD) as a key initiative to drive energy efficiency in the sector and deliver on it’s
key objective - renovating the building stock will improve energy efficiency while driving the clean energy
transition (decarbonize the building stock by 2050). However, although the building sector might be seen
as least complex to apply tangible measures and actions, from a policy perspective it is one of the most
complex to decarbonize as it is right at the intersection of energy, climate, environmental, financial, and
social (poor households, energy poverty and a just transition) policies. Therefore, given the significance
of the buildings sector in each GUMA country (the residential sector contributing to 33% of the total final
energy consumption in Georgia, 31% in Ukraine, 50% in Moldova and 36% in Armenia), the key objective
of the Building & Renovation thematic area for GUMA countries is to define the right sector’s pathway
towards its overall climate neutrality by 2050; resulting in:

o nearly zero energy demand of buildings (i.e. very low energy performance/characteristics
indicator of buildings – “kWh/m2 annually”),
o increased country’s security of energy supply by lowering the overall energy demand of
buildings (and increased resilience towards increased energy prices), and
o the creation of green-jobs/employment opportunities which a systematic renovation of
buildings is enabling within a country.

Therefore, in order to be able to provide Work Package 1 outputs - a complete overview of the present
green transition state of each GUMA country and identified gaps that are hindering them from better
alignment with the EU Green Deal framework, following Buildings & Renovation sub-areas will be
assessed:
# Sub-area Description
Understand the currently existing building stock (public and residential buildings - different
building types depending on construction periods), it’s average annual energy consumption,
average energy mix of residential and public buildings for heating, cooling, cooking and
Building stock electrical appliances purposes, existing (common) technical systems within the building sector
and current (heating systems, hot water systems, air-conditioning systems, large ventilation systems and
1 building's combination of such systems). The existence of consumption-based billing, as one of the
energy essential enablers of investments into the energy efficiency of buildings, will be assessed.
characteristics Analysis of GHG/CO2 emissions from the building sector within the country. Assessment of the
existing information and availability of data on building stock and building typology, reference
buildings, cost-optimal analysis, nZEB definition, etc.
Assessing existing minimum energy demand/characteristics requirements for construction of
new and retrofitting of existing buildings (per building type), existence of EN 52016 standard -
Energy performance of buildings, Economic evaluation procedure for energy systems in
buildings (EN 15459 standard), inspection procedures and obligations for heating and air-
conditioning systems.
Construction Assessing existence and gaps related to rulebooks and processes on energy performance
and retrofitting certification of buildings, energy auditing methodology, energy auditing and certificate
2 standards issuance tools, energy auditors training for complex and simple systems, issuance of EPC,
and policy display of EPC and online database of EPCs; roles and obligations of energy auditors,
frameworks authorities and building owners.
Assessing the integration of smart building technologies, including energy management
systems, sensors, and automation, to optimize energy use, enhance comfort, and reduce
greenhouse gas emissions. Smart readiness of buildings. Assessing smart readiness indicator
modalities (accreditation of experts, certification, coupling with energy performance
certification and inspection schemes).
Energy Evaluate responsible institutions and authorities, policies and processes related to energy
management of management of public sector buildings, energy managers on building level, existence of an
3
public sector centralized energy management information systems, MVR (monitoring, verification and
buildings reporting) system, etc.
Evaluating existing plans and the potential for renovating and retrofitting existing buildings to
improve energy performance, including the adoption of energy-efficient technologies,
building envelope upgrades, and the installation of renewable energy systems. Assess
Renovation and existence and gaps related to Long-term renovation strategy (tackling energy poverty and
4
Retrofitting worst performing buildings, public buildings and decarb heating and cooling), National
Investment framework and Renovation Programme goals, targets, indicators, eligible building
types for financial schemes/support (targeted grants, soft loans, etc.) and allocated financial
support (2030/2040/2050).
Assess availability of information and data relevant to planning of construction of new
Building sector
5 residential buildings and public buildings, growth/decline of population, country internal
planning
rural-urban influx, etc.
Assessing the availability and effectiveness of financial incentives, subsidies, and support
programs to encourage building owners and developers of both public and residential
buildings, to invest in energy-efficient renovations and sustainable construction practices,
Financial such as: soft loans, targeted grants, budget capturing, PBC, PBG, EPC (and enabling ESCOs),
6 incentives and taxes & customs fees reduction for building materials, first loss guarantees for large
support renovation programmes, subventions for energy poverty, polluter-pays mechanisms’ revenue
allocated to buildings renovation investments, etc. (including the development of financial
mechanisms to support building renovation/nZEB)
 # Sub-area Description
Assess activities related to the uptake of e-mobility by equipping buildings with certain
minimum numbers of recharging points and ducting infrastructure (i.e. for existing non-
Promotion of
7 residential and new residential and non-residential buildings), support transforming the e-
electromobility
mobility sector by providing the necessary infrastructure for recharging electric cars and
electric bicycles. The promotion of e-mobility through buildings policy will be assessed.
Energy poverty Assessing the support/existing mechanisms for social groups to cover their energy related
8 and living expenses (heating). Development of financial mechanisms to support energy poverty.
standards
Key Assess existing stakeholders (ministries/authorities, EE Fund, EE Agency, HoAs, construction
stakeholders / sector, engineers and energy auditors, inspectors for heating/cooling systems, socially
contributors to vulnerable groups (energy poverty support mechanisms) relevant for the buildings and
9
building and renovation sector. Assess their mandates, roles and responsibilities/obligations, needs and
renovation gaps (knowledge, capacities, etc.).
sector
Considering the need for skills development, training, and capacity building programs to
Workforce ensure i) a skilled workforce capable of implementing energy-efficient practices, ii)
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Development understanding of technologies, and iii) absorption capacity of the construction sector and
engineers.
Job Creation The renovation and retrofitting of buildings create employment opportunities and drive
11 and Economic economic growth. Assess the existence or gaps of studies, empirical data, information related
Growth to possible economic growth and/or job creation.
Consumption-based billing, energy management information system for public sector
12 Digitalization
buildings, smart homes, Measurement and Verification platform, net-metering policies.

The Buildings & Renovation thematic area will however not analyze the building’s supply systems (heating,
cooling, electricity, etc.) and sustainable and efficient heating and cooling (i.e. share of renewable energy
in heating and cooling), i.e. both will be covered within the Energy thematic area – i.e. due to Energy’s
coverage of country’s energy mix, energy consumption and supply, renewables, etc. Building materials
and waste management will also not be included in the analysis of Buildings & Renovation thematic area,
but shall be covered by Industry’s waste management sub-area.

If the ETS (Emission Trading System) is extended to the buildings sector from 2026 (ETS II), the impact on
the building sector should be assessed and included into WP1 and WP2 by either Buildings & Renovation
or Energy and/or Climate.

Alignment with EU Green Deal

The renovation of public and residential buildings has been singled out in the EGD as a key initiative to
drive energy efficiency in the sector and deliver on it’s objectives - lowering energy dependencies,
generating economic growth by job creation and enhance quality of life for people living in and using the
buildings. Moreover, the Energy Efficiency Directive1 (it’s update entering into force in October 2023) and
the Energy Performance of Buildings Directive2 (updated in 2023 – a revision aiming for greater ambition

1
EUR-Lex - PE_15_2023_INIT - EN - EUR-Lex (europa.eu)

2
Texts adopted - Energy performance of buildings (recast) - Tuesday, 14 March 2023 (europa.eu)
to reach EU Green Deal targets - achieve a zero-emission and fully decarbonized building stock by 2050)
have both been updated in order to align the rules for the energy performance of buildings with the
European Green Deal. Both directives are part of the “Fit for 55” proposal aiming to deliver the EGD.

A list of key directives and policy documents relevant to the thematic area is given below:

• EPBD: The Directive promotes the improvement of the energy performance of buildings
and the reduction of greenhouse gas emissions from buildings, with a view to achieving a
zero-emission building stock by 2050, taking into account the outdoor climatic conditions,
the local conditions, the requirements for indoor environmental quality and the
contribution of the building stock to demand-side flexibility for the purpose of improving
energy system efficiency and cost-effectiveness.
• EED: The Directive establishes a common framework of measures to promote energy
efficiency in order to ensure that the targets on energy efficiency are met and enables
further energy efficiency improvements. The aim of that common framework is to
contribute to security of energy supply by reducing its dependence on energy imports,
including fossil fuels. This Directive also lays down the basis for tackling energy poverty by
including it into the legislation - countries are compelled to prioritise energy efficiency
improvements for vulnerable customers, low-income households, and individuals in social
housing, including within the scope of the energy savings obligation. Furthermore, Article
6 (exemplary role of public bodies’ buildings), Article 14 (Metering for heating, cooling and
domestic hot water) and Article 15 and 16 (Sub-metering and cost allocation for heating,
cooling and domestic hot water; Remote metering) are closely connected to digitalization
within the B&R sub-thematic area.
• Renovation Wave Strategy3: The Strategy aims to double annual energy renovation rates
in the next 10 years as well as to significantly reduce emissions from the sector. The
Renovation Wave identifies 3 focus areas, i) tackling energy poverty and worst-performing
buildings, ii) public buildings and social infrastructure, and iii) decarbonising heating and
cooling.
• Various ISO standards and norms: The EPBD lists five energy performance of buildings
(EPB) standards as 'overarching'. The five ‘overarching’ EPB standards (ISO 52000-1, 52003-
1, 52010-1, 52016-1 and 52018-1) have in common that each of these describes an
important step in the assessment of the energy performance of building. The term
overarching refers to the standards that deal with the overall energy performance of a
building (module M1), while other modules deal with the building as such (M2) or specific
technical building systems or services (M3 etc.).
• Energy poverty recommendation (EU)2020/15634: Recommendation on energy poverty
provides countries with guidelines to assess energy poverty and take actions while planning
and executing renovation strategies.

3
EUR-Lex - 52020DC0662 - EN - EUR-Lex (europa.eu) & Renovation Wave Communication - Annex (europa.eu)
4
eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020H1563
The above-mentioned policies and recommendations (but not limited to) will be analysed against the
existing and planned legal framework, norms, goals and targets of each GUMA countries’ B&R sector while
conducting the green transition assessment.

Approach

The overall assessment within the WP1 for the B&R thematic area will be conducted in close cooperation
with each GUMA countries’ National Coordinator. The Team Lead will firstly conduct desk research for
each of the GUMA countries aiming to collect and gather as much publicly available information as
possible relevant for the CGTA Report (i.e. information on policy and legal framework, sector governance,
policy instruments, financing sources and instruments for the B&R sector, stakeholders, resources, energy
consumption and GHG emissions, social considerations, as well as digitalization, etc.). This will be done by
exploring the Energy Community Secretariat’s Annual Reports and Country Progress Reports, the E5P
(Eastern Europe Energy Efficiency and Environment Partnership) project reports and achievements, as
well as any other relevant report (for example UNFCCC national communications, NECPs, NDCs, B&R plans
and strategies) and articles on the B&R sector of each country. Moreover, existing laws and by-laws will
also be explored. Based on this analysis, the Team Lead will develop a zero draft of the B&R TA Report for
each country and will provide an overview of existing key policies and instruments in each country (current
overview is given in Annex 1 of this 5-pager).

These two documents (the zero draft and the overview of existing key policies and instruments, developed
based on desk research) will serve the basis for the first meeting between the TL and NCs (for each country
separately). The TL will introduce the NCs on the findings and gaps of information and will require from
the NCs to obtain more/missing data and information by additional in country research and conducting
meetings with relevant institutions and stakeholders. Based on the findings, the TL, together with the NC,
will develop a first draft of B&R TA Report with an overview of the present green transition state and
identified gaps that are hindering countries from better alignment with EU Green Deal framework. The TL
will be available for any online meetings with GUMA stakeholders (representatives to ministries, agencies,
funds, projects, academia, etc.) on country level during this process.

It is suggested that, if at that point in time the NCs did not manage to obtain missing information from
local stakeholders, a local B&R expert is engaged to support the development of the B&R TA Report. In
order to utilize the time, this decision can also be made after the initial meeting between the NCs and TL,
depending on NCs assessment of probability to obtain relevant data and information required to conduct
the Assessment.

Based on information gathered, the Initial B&R TA Assessment Reports will be developed and provided to
key stakeholders for the review (i.e. Activity 1.2). The TL will guide and lead the development process
among all experts engaged (local NCs and B&R experts). It is suggested that within Activity 1.2. the TL and
the team of engaged experts present the findings of the Initial B&R TA Assessment Report in each country
(either on-site or online if travel is not possible) to the relevant stakeholder group. Once inputs, comments
and additional missing information are obtained, the final B&R TA Assessment Report will be finalized for
each country and integrated into the Final CGTA reports in close cooperation with other TLs. These
findings will serve as the basis for the work on the WP2 – development of Green Transition Roadmaps.
The cross-cutting areas will be elaborated in close cooperation with relevant TLs. For B&R’s sub-areas
promotion of electro mobility, digitalization, finance and financial incentives for energy poverty, the B&R
will take the lead and approach other TLs with first drafts; aiming to present the work done and receive,
if any, additional comments from their perspective (requirements and expectations). For the sub-areas
“Building materials and waste management”, “Sustainable and efficient heating and cooling” and “Supply
systems for buildings”, B&R TL is expecting Energy and Industry TLs to reach out to him, if and when
required.

Linkages

# Thematic area Buildings & Renovation sub-area

Possible linkage within ETS directive if ETS is extended to the buildings sector. To be covered
1 Climate by either Buildings & Renovation, Energy and/or Climate (to be agreed once ETS is extended
to the buildings sector).
2 Industry Building materials and waste management; will be covered by Industry.
Sustainable and efficient heating and cooling (i.e. share of renewable energy in heating and
3 Energy cooling) to be covered by Energy; Supply systems for buildings (building’s supply side energy
mix) to be covered by Energy.
Promotion of electro mobility (promotion of e-mobility through buildings policy will be
4 Smart mobility assessed - i.e. activities related to the uptake of e-mobility by equipping buildings with
certain minimum numbers of recharging points and ducting infrastructure.
Transitional Various financial incentives and mechanisms to support retrofitting of public and residential
5
Finance buildings will be analyzed within B&R.
Energy management information system for public sector buildings, smart homes, existence
6 Digitalization
of smart metering by utilities, etc.
Financial incentives - subventions for energy poverty; Energy poverty and living standards -
assessing the existence of energy poverty definition in each country, and the
support/existing mechanisms for social groups to cover their energy related expenses
Just transition –
7 (heating, electricity, domestic hot water supply). Explore the role of energy service
GESEP
companies (ESCOs) and energy performance contracts (EPCs) in providing renovation
financing solutions for energy poor households that enable these vulnerable households to
overcome high upfront costs.
 Annex 1 - Overview of existing key policies and instruments in each country
Buildings & Renovation relevant policies, mechanisms,
# G U M A
tools and sectoral requirements
1 Building stock UD x x x
2 Building typology - public and residential - x - -

3 Reference buildings - x - -

4 Cost-optimal analysis - public and residential - - x -

5 nearly Zero Energy Buildings definition x x UD x

6 Long-term building renovation strategy UD - x -

7 NIF - National Investment Framework for buildings - - - x

8 Renovation Programme x x x x
9 Financial mechanisms (support) for buildings renovation x x x x

9.1 soft loans x x x x

9.2 targeted grants x x x x

9.3 Revolving fund - x UD x

9.4 budget capturing - - - -

9.5 PBC - performance based contracting - x x x

9.6 EPC - energy performance contract - x x x

9.7 ESCO - x x UD

9.8 PBG - performance based granting - - - -

9.9 polluter-pays mechanisms x UD x x

9.1 taxes & customs fees reduction - - - -

9.11 subventions for energy poverty x x x UD

9.12 guarantees x x

10 EN 52016 standard - Energy performance of buildings - - - -

11 Economic evaluation procedure for energy systems in buildings (EN 15459 standard) - - - -

12 Minimum energy demand/characteristics requirements x x x x

13 Energy audits legislation and methodology x x x x

14 Energy auditor legislation and training x x x x

15 Energy Mngt System x x x x

16 MVR system x UD UD UD

17 Energy certificates/classification tool x x x x

18 Energy certificates/classification online database - x - -

19 Environmental/EE Funds - x x x

20 EE Agency - x x -

21 Legislation enabling prosumers in building sector x - - x

22 Promotion of e-mobility through buildings policy - - - -

23 Consumption-based billing x x UD x

24 Measurement and Verification platform UD UD UD UD

“UD” – under development, “x” – existing, “-“ – non-existing