Buildings account for the largest share of energy consumption in most European countries. For example, buildings in the UK are responsible for 41% of energy consumption and 24% of energy-related emissions, according to the International Energy Agency (IEA). Similar patterns can be seen across the continent, underscoring the importance of energy-efficient buildings in reducing the overall carbon footprint.

Improving the energy efficiency of buildings requires a holistic approach, from construction and operation to demolition. The operational phase is particularly critical, as heating, ventilation and air conditioning (HVAC) systems are among the leading sources of greenhouse gas emissions. Not only do HVAC systems require significant energy to operate, but they can also cause environmental harm through refrigerant leaks. As in many areas of the energy transition, electrification is key.

Are homes becoming more efficient?
Efforts to curb energy use in European buildings have begun to yield results. Between 2000 and 2021, final energy consumption in the residential sector decreased by 9.3%, despite an increase in household numbers and the size of homes, according to European Commission figures. Improved insulation, energy-efficient heating systems and stringent efficiency standards have contributed to these positive developments.

However, not all building types have seen progress. While residential buildings have achieved notable efficiency gains, the services sector (which includes offices, hospitals and schools) saw an increase in final energy consumption of 14.9% over the same period. This highlights the need for more targeted strategies across different building sectors.

Between 2000 and 2021, final energy consumption in the residential sector decreased by 9.3%, despite an increase in household numbers and the size of homes.

What European policies aim to influence building energy efficiency?
The design and performance of buildings are pivotal in achieving energy efficiency targets. Over recent decades, European regulations and innovative design approaches have set the stage for more sustainable buildings. The introduction of energy performance certificates has also improved consumer awareness, making energy efficiency a critical factor in the property market.

The EU has introduced several policies to enhance building energy efficiency, with two stand-out initiatives: the European Green Deal and the Renovation Wave strategy. The European Green Deal, launched in 2019, set the ambitious goal of making Europe climate-neutral by 2050. A central objective is to double the annual energy renovation rate of buildings by 2030. The emphasis is on comprehensive overhauls of building energy systems.

The Renovation Wave, introduced in 2020, builds on the Green Deal, with a focus on renovating 35 million buildings by 2030. Not only would this massively improve energy and resource efficiency, it could also create up to 160,000 jobs in the construction sector. The initiative targets three key areas: tackling energy poverty, renovating public buildings, and decarbonising heating and cooling systems. This strategy is expected to reduce emissions and lower energy bills.

Stringent regulations, such as the Energy Performance of Buildings Directive (EPBD), have driven much of Europe’s progress in building efficiency. This directive mandates that all new buildings from 2021 must be nearly zero-energy buildings (NZEBs), requiring very low energy use, largely met by renewable sources.

The recast Energy Performance of Buildings Directive (EPBD) (EU/2024/1275), adopted in May 2024, enhances the energy performance requirements for new buildings. It requires all new residential and non-residential buildings to be zero-emission buildings as of 1 January 2028 for buildings owned by public bodies and 1 January 2030 for all other new buildings, with specific exemptions. According to the revised directive, a zero-emission building has no on-site carbon emissions from fossil fuels and a very high energy performance. The new rules will align the energy performance of buildings with the EU’s climate neutrality goal for 2050 and the energy efficiency first principle. The EPBD also enforces energy performance certificates (EPCs) for all buildings.

An integrated design approach, where energy efficiency considerations are embedded from the earliest stages of planning, is thought to be one of the most effective strategies for improving building energy performance. This approach allows architects to optimise building orientation to maximise natural light and reduce heating and lighting needs; implement passive solar design by using thermal mass materials that absorb and store heat; and utilise natural ventilation to minimise the need for air conditioning.

Likewise, the choice of building materials plays a crucial role in improving energy performance. Materials with high insulation properties can reduce heating and cooling demands. Advanced insulation materials, including aerogels and vacuum insulation panels, have the potential to increase efficiency. Materials like cross-laminated timber (CLT) are also gaining popularity for their low embodied energy (the energy used during production) and ability to sequester carbon.

Voluntary standards like the Passivhaus (or Passive house) model have gained traction across Europe for delivering ultra-low energy buildings. Buildings adhering to the Passivhaus standard can reduce energy consumption by up to 90% compared to conventional structures. The first Passivhaus settlement of 22 houses, built in 1997 in Wiesbaden/Dotzheim, Germany, produced 82% in savings compared to the low energy standard, and at least 89% in savings compared to the average heating consumption in Germany. Passivhaus models feature super-insulated walls and roofs to minimise heat loss, triple-glazed windows and mechanical ventilation with heat recovery systems. While the Passivhaus standard is voluntary, it has influenced mandatory NZEB standards in various European countries, where key aspects being incorporated into national building codes.

What technologies improve energy efficiency?
Smart technologies also support effective energy use. Building energy management systems (BEMS) can optimise energy consumption by adjusting heating, cooling and lighting based on real-time data, including occupancy and external conditions. These systems integrate with renewable energy sources, such as rooftop solar panels or geothermal heating systems, to maximise energy efficiency and reduce reliance on fossil fuels. Internet of Things (IoT) devices allow for granular monitoring of energy use across various systems. The IEA estimates that digitalisation could reduce total building energy consumption between 2017 and 2040 by as much as 10%.

Electrifying buildings – especially heating and cooling systems – presents a major opportunity to boost energy efficiency. At the forefront of this transition are heat pumps, which provide both heating and cooling while consuming far less energy than traditional fossil fuel-based systems. Heat pumps are three to five times more energy efficient than gas boilers. The IEA estimates that heat pumps globally have the potential to reduce global CO₂ emissions by at least 500mn tonnes in 2030 – equivalent to the annual CO₂ emissions of all cars in Europe today. Replacing roughly one-third of the EU’s 86 million residential fossil fuel boilers with heat pumps could slash those household’s final energy consumption by 36% and their CO₂ emissions by 28%.

What are the challenges of improving energy efficiency?
Both new construction and retrofitting of existing buildings require innovative approaches, financial investment and workforce upskilling.

One of the most significant barriers to the widespread adoption of energy-efficient building practices is the high initial costs associated with advanced technologies and materials. While energy-efficient buildings lead to long-term savings, these cost reductions are not always immediately evident to consumers, making it harder to incentivise energy-efficient construction.

Governments across Europe offer incentives such as tax rebates and grants to support energy-efficient renovations. However, the availability and accessibility of such funds are often inconsistent, leading to delays or cancellations of renovation projects.

Also, to meet the demand for energy-efficient buildings, the construction workforce must possess specialised skills in areas like installing high-performance insulation, heat pumps, solar panels and smart technologies. According to the European Construction Sector Observatory, significant efforts are needed to upskill the workforce.

Another challenge is the complex regulatory environment. Building codes and energy performance standards differ significantly across Europe, and compliance with these standards requires deep knowledge of both local regulations and international benchmarks like the EPBD. While the EPBD sets minimum energy performance standards, national and local variations in building codes can add complexity. Studies have also shown that many retrofitted buildings fail to deliver the energy savings predicted due to poor quality workmanship or inadequate monitoring of energy performance.

The construction industry is highly dependent on global supply chains for materials such as insulation, advanced glazing and energy-efficient HVAC systems. Increased demand for energy-efficient building materials, combined with supply chain bottlenecks, has led to price increases.

What about ESCOs?
The rise of energy service companies (ESCOs) represents a promising business model for construction firms involved in energy-efficient renovations. Performance contracting also shifts the risk from building owners to ESCOs, incentivising construction firms to deliver high-quality, energy-efficient projects.

With a strong policy framework, Europe is on a promising path towards reducing the energy consumption and emissions of its buildings.

• Further reading: ‘Cold comfort: improving the energy-efficiency of UK building stock’. Cold, damp, shoddily-built properties blight millions of British lives. Yet opportunities abound to do something better, and there are great examples of forward-thinking building and retrofit, using fabric and design that create far warmer homes, their energy use greatly reduced. Why is there not far more of this, and what is the UK government doing about it?
• The US Department of Energy (DOE) has published a plan to reduce greenhouse gas emissions from buildings by 65% by 2035 and 90% by 2050.