ENERGY PERFORMANCE OF BUILDINGS DIRECTIVE
Legislation and Guidance
As the transposition deadline (29 May 2026) approaches, the European Commission published four instruments on the transposition of the Recast Energy Performance of Buildings Directive.
A Delegated Regulation revises the methodological framework for calculating cost-optimal levels to be used by Member States for calculating cost-optimal levels of minimum energy performance requirements for new and existing buildings and building elements. It also sets out rules for the application of the comparative methodology framework to selected reference buildings. It is accompanied by Guidelines.
A Communication sets out 13 Annexes to provide interpretative and practical guidance on the following aspects of the Directive:
- minimum energy performance standards for non-residential buildings and trajectories for the progressive renovation of residential buildings (Article 9),
- financial incentives, skills and market barriers (Article 17) and one-stop shops (Article 18),
- energy performance certificates (Articles 19-21, Annex V) and independent control systems (Article 27, Annex VI),
- renovation passport (Article 12, Annex VIII),
- databases for the energy performance of buildings (Article 22),
- data exchange (Article 16),
- zero-emission buildings (Articles 7 and 11),
- solar energy in buildings (Article 10),
- infrastructure for sustainable mobility (Article 14),
- technical building systems, indoor environmental quality and inspections (Articles 13, 23 and 24),
- fossil fuel boilers (Article 13, Annex II),
- common general framework for the calculation of the energy performance of buildings (Annex I), and
- life-cycle global warming potential of new buildings (Article 7(2) and (5)).
ALTERNATIVE DISPUTE RESOLUTION
Public Works Contracts
The Office of Government Procurement invites observations until 22 August 2025 on proposals to amend the alternative dispute resolution mechanisms in the public works contracts and promote dispute avoidance. The proposals suggest:
- amending existing dispute resolution mechanisms to address issues more efficiently from a time and cost perspective,
- adjusting the role of the Standing Conciliator to create a stronger forum for dispute avoidance once an issue is raised that may delay Substantial Completion, increase the Contract Sum or impact on the performance of the completed asset. It is intended to strengthen the dispute avoidance aspect of conciliation with arbitration as the ultimate procedure to resolve disputes. The OGP also publishes a report into the operation of the roles of Standing Conciliator and Project Board,
- introducing institutional arbitration into PWCs and for costs to be apportioned by the arbitrator. It is proposed to adopt the International Chamber of Commerce Arbitration Rules.
As noted in the proposal document, adjudication is available in respect of payment disputes arising under a construction contract in accordance with the terms of the Construction Contracts Act 2013.
Adjudication: Referral of a Dispute under a Settlement Agreement
In the UK, a party to a construction contract may refer for adjudication a dispute arising under the contract, and "construction contract" is defined in substantially similar terms as in Ireland under the Construction Contracts Act 2013. Where an agreement relates to construction operations and other matters, the adjudication provisions in the UK Act apply to it only so far as it relates to construction operations. In the Irish Act, where a contract contains provisions in relation to activities other than those referred to in the definition of a construction contract and section 1(2), it is a construction contract only so far as it relates to those activities.
The question arose in London Eco Homes Ltd v Raise Now Ealing Ltd [2025] EWHC 1505 (TCC) as to whether an adjudicator had jurisdiction in a dispute under a settlement agreement. While the settlement agreement did make provision for construction operations, it related to other matters which clearly were not construction operations. The Court considered that, as the dispute arose not out of the provision of "necessary works or modifications" (the construction operations), but rather out of the timing and/or acceptability of the provision of a collateral warranty, the dispute was not sufficiently connected with or related to construction operations to trigger a statutory entitlement to adjudication.
On the facts of this case, the Court did find that there was a contractual entitlement to adjudication and enforced the adjudicator's decision on that basis. However, that aspect of the case arises from a fundamental difference in the UK legislation (as compared to Irish legislation) in that UK law requires an adjudication mechanism to be set out in construction contracts whereas, in Ireland, providing for adjudication in contracts would risk duplication and inconsistency with the legislation.
CONSTRUCTION CONTRACTS
JCT
In the UK, the JCT 2024 edition of the target cost family of contracts and guides is now available. It is based on the JCT Design and Build Contract and is similarly intended for larger design and build works. However, it provides for a Target Cost, rather than a Contract Sum. The Target Cost is agreed based on estimated costs, and the contractor is paid for actual allowable costs plus a fee. Any difference from the target is shared between the Client and the Contractor.
Rates of Pay
The Sectoral Employment Order (Construction Sector) 2024 comes into operation on 1 August 2025. It amends the Sectoral Employment Order (Construction Sector) 2019 to provide for increases in pay and pensions to construction workers.
INFRASTRUCTURE
National Development Plan
An updated National Development Plan indicates that, in addition to €275.4 billion of public capital investment for 2026-2035, there will be €10 billion in equity funding for 2026-2030 to support the delivery of large projects in water, energy and transport sectors. The Government states that this is the largest ever capital investment plan in the history of the State.
HOUSING
Affordable Housing
The European Commission is consulting until 17 October 2025 on a European affordable housing plan. It is intended to address policy actions in funding and investment, housing supply and affordability, access to finance, public and private investment, digitising processes and accelerating permitting and public procurement, and improving the functioning of rental markets. It is also intended to take a comprehensive approach to construction as regards skills shortages, working conditions and facilitating construction services provision. The Commission intends to adopt a plan in Q1 of 2026.
In Ireland, the Minister for Housing, Local Government and Heritage, James Browne, announced that he would be introducing a single stage approval process for all social housing projects under €200 million.
Design Standards
A mentioned in our Planning section, new planning design standards for apartments have been published under the Planning and Development Act 2000. A design guide for State sponsored student accommodation has also been published.
Modern Methods of Construction
The Department of Further and Higher Education, Research, Innovation and Science published a Modern Methods of Construction Action Plan, setting out 58 actions intended to accelerate skills development, drive innovation, and support the transition to more efficient, sustainable construction.
SUSTAINABILITY
Climate Action Litigation
In Alternative A5 Alliance v Northern Ireland Department for Infrastructure[2025] NIKB 42, the High Court in Northern Ireland quashed the Department for Infrastructure's decision to begin the first phase of construction of the A5 Western Transport Corridor dual carriageway project. One of the grounds for quashing the decision was that it failed to comply with section 52 of the Climate Change (Northern Ireland) Act 2022, which requires the Department to exercise its functions, so far as is possible to do so, in a manner consistent with the achievement of emissions reduction targets and carbon budgets.
The Judge considered that, in order to comply with its section 52 duty "the DfI needs to be able to produce cogent evidence that its decision has been made following careful planning, synchronisation and co-ordination between all Northern Ireland government departments, the result of which demonstrates that the project fits into plans, strategies and policies which map out a realistic and achievable pathway for Northern Ireland to achieve net zero by 2050, meeting the interval targets on the way and staying within the carbon budgets that have now been set".
Though there are differences in the legislation, similar issues arise in this judgment as regards infrastructure development, as in the case of Coolglass Windfarm Ltd v An Bord Pleanála [2025] IEHC 1, which concerns section 15 of the Climate Action and Low Carbon Development Acts, and is under consideration in the Supreme Court in Ireland.
Carbon Reporting
The Office of Public Procurement published updated Cost Control and Carbon Reporting Templates for the Capital Works Management Framework. The templates are based on the International Cost Management Standard, 3rd edition, for reporting on cost and carbon across the asset life cycle.
Emissions
Latest data on greenhouse gas emissions published by the EPA indicate that, for a second year in succession, Ireland's emissions were below the 1990 baseline. However, the EPA states there were decreases in all key areas except buildings. There was a decrease in emissions from the cement sector.
Energy Labelling of Low Temperature Heat Emitters
The European Commission calls for evidence until 29 July 2025 on a proposed Delegated Regulation on energy labelling of low temperature heat emitters, a new product group included in the 2022-2024 Eco-design and energy labelling work plan.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
