EU Taxonomy regulation will affect property projects in Ireland in 202221 Feb 22
New EU Taxonomy legislation to affect new builds, renovations and building acquisitions across the EU.
EU Taxonomy legislation will affect many businesses, especially those involved in property projects. Here's EU Taxonomy regulation explained:
What is EU Taxonomy?
The legislation specifies standards for the green classification of buildings and applies to new builds, renovations and building acquisitions across the EU, including Ireland. Its aim is to create a new language for what it means to be green.
Phase 1 came into force on 1 January, 2022 with a further phase applying from 1 January 2023. While the legislation applies directly only to certain large companies and financial institutions it is already having an impact on property projects in Ireland.
The most impact it will have is that in order to qualify for low interest rate “green” funding, the project must comply to EU Taxonomy legislation. Additionally, to purchase, forward purchase or forward fund deals, EU Taxonomy compliance is now listed as an essential condition for companies.
“EU Taxonomy regulation has changed the way businesses operate and will continue to have an impact on new property projects,” Michael Boyle, Director of Sustainability at Ethos Engineering, said. “Compliance with EU Taxonomy can be a vital cog for the success of new property projects going forward.”
While compliance to this new legislation may seem straightforward, there are a lot of complexities within it. For example, a developer may find the regulations do not directly apply to them, but it does apply to their bank or the buyer of the building, and so the project must comply.
EU Taxonomy Objectives
In order to meet EU Taxonomy compliance, six environmental objectives must be met.
From 1 January 2022, the first two implemented are:
Climate Change Mitigation
Climate Change Adaptation
From 1 January 2023, this will expand to include the remaining 4 covering:
Behind each objective are a growing number of technical specifications and measures that must comply. For example, Climate Change Mitigation requires a building to have a primary energy demand 10% lower than Nearly Net Zero Energy Building (nZEB).
“As with any regulation, anticipating its impact and designing it in to a building and project approach from the start is the best and cheapest way to ensure you get the optimum result,” Boyle said. “And a lot less costly than trying to retro-fit a complete or in-progress building.”
The overall framework of EU Taxonomy is that every building must make a substantial contribution to at least one of the six environmental objectives, do no significant harm to the other 5 objectives, and comply with minimum safeguards.
Key Action Items for Businesses today
To ensure that a new build, renovation or building acquisition is compliant with the new EU Taxonomy legislations, Michael Boyle recommends these three key actions for businesses:
Ensure you fully understand the EU Taxonomy regulations and how they apply to you, your projects, your funder and/or your customers and clients
Build compliance in from the very beginning all the way through from concept to design, specification, tender packs, construction, and handover
Put in place the management structures and systems to make sure compliance is enforced and evidenced.
Ethos Engineering has been helping clients and partners with all three of these key actions, including briefing sessions for their teams. If you would like some help with any aspect of EU Taxonomy or to arrange a briefing for your team then please feel free to get in touch with Michael Boyle here.