Sustainable Plus Energy Neighbourhoods (SPENs) are more than neighbourhoods with a positive energy balance. Conceptualising new buildings that are integrated into the urban infrastructure and engaging local communities in decision-making can yield multiple economic, environmental and social benefits.

This report maps the developing policy landscape at the EU level and provides recommendations to guide policymakers in the implementation of SPENs at national and local level.

For the first time, the 2024 EPBD recast includes an explicit mention of ‘integrated district or neighbourhood approaches’. Multiple benefits of this approach are listed, such as cost-effectiveness and integration with energy, mobility, green infrastructure, circularity and sufficiency.

The 2024 EPBD recast introduced the concept of zero-emission building (ZEB), replacing the nearly zero-energy buildings (NZEB) of the EPBD recast in 2010. By 2030, all new buildings should achieve ZEB standard and the goal for the existing stock is to become ZEB by 2050. The first difference between the concepts lies in considering the embodied carbon emissions along with operational emissions with the calculation of the ‘Life-cycle Global Warming Potential’. The second difference concerns the sources of renewable energy, such as renewable energy communities, efficient district heating and energy from other carbon-free sources, besides the ‘on-site and nearby’ renewable energy. These changes will also influence indirectly new developments of SPENs.

To achieve these more ambitious social, energy and environmental targets, SPEN projects often require additional upfront investments compared to business as usual. Scaling up SPENs will require a more substantial contribution from private finance and will require sustainable finance solutions that generate inclusive and long-term benefits for all stakeholders.

SPENs have a unique opportunity to integrate wider environmental and social objectives that are well aligned with all three ESG dimensions and EU taxonomy requirements. While SPENs require significant additional investments, they also provide multiple benefits for society and residents, and present a lower risk for investors.

Key recommendations for EPBD implementation:

• Scale up renovations of worst-performing buildings using an integrated neighbourhood approach, while keeping the ambition set by the minimum requirements for major renovations at the building level.
• Extend the neighbourhood approach recommended for renovations to new constructions, considering interactions with the energy, water, mobility and green infrastructure, and implementing circularity and sufficiency principles.
• When implementing ZEB, prioritise ‘on-site and nearby’ renewable energy sources, to avoid costly grid upgrades.
• When implementing the common guidelines for the recalibration of EPCs, consider the need to ensure more comparability, transparency and consistency for validating and demonstrating alignment with the requirements of the EU Taxonomy.
• Implement the recommended A+ class in the harmonised EPC scheme for buildings with 20% lower energy demand than ZEB buildings (class A).
• Provide public incentives and enable green loans for projects with higher ambitions than minimum requirements for new construction (A+ buildings) and renovations.
• Provide public incentives based on income, tailoring them for vulnerable households. Encourage access to private finance for lower-income households by providing additional guarantees and longer payback periods for loans.