The following section provides clarification on a number of technical nuances of the Taxonomy technical screening criteria for various types of activities, such as: forestry, manufacturing, energy, water supply, sewerage, waste management and remediation activities, including transport of CO2, transport, construction and real estate activities, information and communication and professional, scientific, and technical activities.
The below highlights a sample of selected FAQs and respective clarifications, which focus on construction and real estate activities:
Regarding the preparation of construction site waste for recycling (DNSH to circular economy), can it be assumed that compliance with national law and any applicable threshold values is sufficient for a construction activity to be Taxonomy-aligned? The TSC require that the specific threshold for the reuse, recycling, and other material recovery construction and demolition waste applies on the construction site. This means that this threshold has to be reached per specific project and cannot necessarily be considered fulfilled merely by complying with the relevant threshold values in national legislation.
How can non-EU real estate assets be classified as Taxonomy-aligned? How are building standards (Leadership in Energy and Environmental Design (LEED), Building Research Establishment Environmental Assessment Method (BREEAM), DGNB) treated in the EU Taxonomy? Is there any way to demonstrate that a LEED or BREEAM building is Taxonomy-aligned? The [green buildings] standards mentioned are not explicitly considered in the Climate DA. Where they can help demonstrate compliance with the TSC, they can be accepted for the purpose of compliance with the TSC.
As of today, many Energy Performance Certificates (EPC) in some Member States are based on energy consumption rather than energy demand. Can these consumption-based energy certificates be used on an equal basis to prove Taxonomy-alignment? If it is an officially produced EPC, it can be accepted, and used on equal terms.
What are the actual Nearly Zero-Energy Buildings (NZEB) thresholds in each Member State (region)? This information can be obtained from national authorities. Any new building in the EU should have an Energy Performance Certificate (EPC), and the EPC indicates the relevant value for the respective building and how it compares to reference values, such as NZEB.
For residential buildings, can compliance with the technical screening criteria of the activity “Construction of new buildings” in Section 7.1. be demonstrated by using a limited sub-set of apartment units, instead of checking compliance for the whole property? Does this possibility also apply in non-residential buildings? For the energy threshold, this depends on national regulations i.e. if the EPC applies to the whole building, or to each apartment. Whichever is the requirement at national level, it should apply for both residential and non-residential buildings. The correct EPC will be provided in any case, in line with the national regulations. For identical apartments, having normally identical EPCs, a limited sub-set can be used. However, if there are different types of apartments, with different EPCs, all types need to be checked.
Which elements should be provided to prove that the new construction is not built on one of the site types referred to in the criteria for DNSH to biodiversity for the activity “Construction of new buildings” in Section 7.1. (e.g. arable land or high in biodiversity)? On this basis, the building permit can be used as proof of compliance to show that new construction is not built on the land types noted in the DNSH criterion.
For the activity “Renovation of existing buildings” in Section 7.2., what is the definition of major renovation in each Member State? According to Article 2(1)(10) of the Energy Performance of Buildings Directive, “major renovation” means the renovation of a building where: (a) the total cost of the renovation relating to the building envelope or the technical building systems is higher than 25% of the value of the building, excluding the value of the land upon which the building is situated; or (b) more than 25% of the surface of the building envelope undergoes renovation. Member States may choose to apply option (a) or (b), or both. The information can be checked with the Member State concerned.
For the activity “Renovation of existing buildings” in Section 7.2., does the wording ‘is based on a detailed building survey, an energy audit conducted by an accredited independent expert or any other transparent and proportionate method’ mean that to determine the starting Primary Energy Demand (PED) value in addition to an on-site measurement of the PED, alternative methods are acceptable as long as they are ‘transparent and proportionate’? Would it be acceptable to determine (e.g. by using property characteristics and year of construction) upper and lower estimated PED-values for existing energy labels and use the upper PED-values as the starting-PED-value to determine the starting point of a renovation? Where an Energy Performance Certificate (EPC) is not available or cannot be generated, the initial primary energy demand and the estimated improvement can be based on a detailed building survey, an energy audit conducted by an accredited independent expert or any other transparent and proportionate method. The 30% improvement should result from an actual reduction in primary energy demand (where the reductions in net primary energy demand through renewable energy sources are not considered) and can be achieved through a succession of measures within a maximum of three years.
For the activity “Acquisition and ownership of buildings” in Section 7.7., what happens if a building has several Energy Performance Certificates? When a building has several EPCs, the parts of the buildings covered by EPCs that qualify under the technical screening criteria are to be considered Taxonomy-aligned.
For the activity “Acquisition and ownership of buildings” in Section 7.7., to determine when a property was ‘built’, which date should be used: the date a property was actually completed and delivered to the owner / occupier; the date of the application for a construction permit; or the date of the confirmation of completion of a construction permit? For the application of the Taxonomy criteria, the date of the application for a construction permit is relevant.
Can companies use EPC equivalents for assessing alignment with the technical screening criteria of the activity “Acquisition and ownership of buildings” in Section 7.7. in countries where EPC is not offered? In the EU, all Member States have EPCs. However, some Member States may exclude specific types of buildings from EPC schemes e.g. industrial buildings, temporary buildings. Within the EU, whenever an EPC is available for the relevant building considered, it should be used. When this is not possible, equivalents can be used instead. Outside the EU, equivalents can be used instead of the EPCs.
How are buildings assessed in countries where there is no Nearly Zero Energy Buildings threshold, i.e. countries outside the EU? Can companies use equivalents or thresholds from an EU country with a similar climate? Some countries, even outside the EU, have defined NZEB and low energy buildings. Wherever such definitions exist, they can be used. When NZEB are not clearly defined in the national legislation, equivalents can be used, e.g. equivalents or thresholds from an EU country with a similar climate, when possible.
What are the rules for defining the top 15% and top 30% benchmarks of the national market (with a distinction between residential and commercial) as referenced in the technical screening criteria of the activity “Acquisition and ownership of buildings” in Section 7.7? What should be done if there is no Energy Performance Certificate (EPC) nor any data to determine whether a building belongs to the best 15% of the national building stock? In the absence of a relevant EPC, a technical study can be done to estimate the relevant threshold for the top 15% of the national (or regional) building stock for that category of building. There may be information available from national databases or studies produced by certain organisations (e.g. World Green Building Council). Whenever there is such a study publicly available, it can be used. When there is no study available, it has to be conducted. It can be expected that e.g. interested market actors or associations / institutes / public authorities could be willing to conduct or commission such studies and make them public, so that other entities (in particular smaller ones) could use them afterwards. The EPC remains the simplest option, in the EU, as it can easily be obtained for most buildings, and it is also mandatory when a building is sold.
What should be done if it is currently not possible to quantitatively name the top 15% of the building stock before 31.12.2020, and there is no corresponding national evaluation of the Energy Performance Certificates already issued, and there is no valid data based on the operating energy demand of the existing building stock? As a first simplification, can calculated energy efficiency data (e.g. from energy performance certificates with standardised energy requirements for household electricity / operating electricity) be used as opposed to real consumption data (from buildings in operation) to determine Taxonomy-alignment with the substantial contribution criteria of the activity “Acquisition and ownership of buildings” in Section 7.7? In order to use the option of demonstrating that the building is within the top 15% of the national or regional building stock, adequate evidence should be provided (e.g. a recent study), which at least compares the performance of the relevant asset to the performance of the national or regional stock built before 31 December 2020 and at least distinguishes between residential and non-residential buildings. If such data is not available, a study can be conducted to perform such an assessment. Alternatively, the option of an EPC class A can be used. There is no requirement to conduct the assessment based on real consumption data for demonstrating that a building is within the top 15% of the building stock. In fact, it is recommended to use estimated energy consumption, which better reflects the energy performance of the building (being less influenced by occupancy and behaviour patterns). Only for large non-residential buildings (with an effective rated output for heating systems, systems for combined space heating and ventilation, air-conditioning systems or systems for combined air-conditioning and ventilation of over 290 kW), is it required to show that the building is also efficiently operated through energy performance monitoring and assessment.
The top 15% is a dynamic metric. Is grandfathering guaranteed for properties, e.g. over the entire term of a green bond, if they were among the top 15% at the time of issue? There is no grandfathering of the technical screening criteria themselves. If the criteria are revised and changed, or an activity falls out of compliance with criteria that are dynamic, a new assessment of (and where relevant effort to ensure) compliance is needed, as of the date when the criteria apply. This is distinct from the grandfathering of financial instruments or transactions on the basis of the criteria at the time of issuance or conclusion of a loan, where separate rules apply (see for instance Article 7(5) of the Disclosures Delegated Act which allows financial undertakings to report financed Taxonomy-aligned activities as such for up to five years after the application of revised criteria / changed coverage of criteria).
Does Section 7.7 (“Acquisition and ownership of buildings”) differentiate the eligibility of the revenues derived from the ownership of the building (meeting technical screening criteria) depending on the type of economic activity being carried out? For example, in the case of airport buildings and terminals meeting the technical screening criteria under Section 7.7, can the revenues derived from the building ownership be covered regardless of their nature e.g. rents from duty-free shops or rents from ground handlers operations in the terminal? Activities detailed within the framework of Section 7.7 do not define the type of revenues derived from the building ownership that can be eligible or not. However, only revenues derived from the ownership of the building, e.g. rents, can be considered regardless of the activities that take place in a building (duty-free shops, ground handlers operations). Other non-related revenues, e.g. revenues that are not derived from the ownership of the building, but directly from aeronautical activities carried out by the airport operator cannot be considered and are not covered by this activity. For instance, the rents for the occupation of the building paid by duty-free shops are eligible, but not the revenues generated by duty-free shops from the sale of products to consumers.