Page 286 - 2019 6th AFIS & ASMMA

The EPC rating of B is referred to actually in two programs. Other
And for time purposes, I would like to zoom in just on one of the sub-
categories of the real estate component, namely the acquisition of buildings.
Now it is the Technical Expert Group's idea to build in the future absolute
thresholds for energy performance. These thresholds should always have a
minimum ambition to target the top 15% most efficient buildings of the total
building stock. But for now, the Technical Expert Group is proposing some
transitional thresholds. And these transitional thresholds are related to the energy
performance levels, also briefly discussed in the previous presentation by Luca.
Now the idea is that in the case of an acquisition of an existing building,
the building should have an EPC(Energy Performance Certificate) label of
at least B. If the building doesn't have an EPC label of B at least, it needs to
be refurbished within three years to show at least 30 percent improvement
in energy performance, or otherwise after the refurbishment reach an
EPC rating of B. Now if you look at the current covered bond frameworks
and the green frameworks covering the green covered bonds outstanding,
then you actually see that half of them already make reference to that 15
percent ambition. Some of them may make reference to that 15 percent
ambition only with reference to the commercial real estate assets, but
not so much to the residential assets. Others make no reference to the
15 percent ambition at all, but that doesn't necessarily mean that their
selection of buildings isn't in that 15 percent.
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programs, they use energy efficient criteria that are for the residential
mortgage book, which are comparable with an EPC rating of B. But
the most interesting case in my view is the Norwegian green bond
frameworks in our analysis, because the Norwegian green bond
frameworks allow for the inclusion of buildings within C label, when
these EPC labels become available. Now Norway is actually not part of Session I
the EU, so you could say the taxonomy should technically only apply to
EU countries, but the European Technical Expert Group also says that
the alternative schemes for countries outside the EU that actually prove
to apply eligibility criteria that are comparable with the taxonomy, then
they should also be eligible.
Now in the case of Norway, an EPC label of C is probably as strong
as an EPC label of B in Europe. An additional point to highlight is that
the Technical Expert Group also stretches, and that there are substantial
differences between the EPC ratings in one country from the criteria for
the EPC ratings in another country. And that is also why this threshold is
subject to further review, after a report is published by the DG Energy in
this autumn.
Then moving to the 30 percent energy improvements, not all the green
bond framework criteria refer to renovations, but some of them that do
refer to renovations, indeed also make reference to the 30 percent energy
improvement requirement. But they don't provide for the alternative of
an EPC rating of B.
So all in all, if you already make a brief analysis of the existing green
bond frameworks, then you see that they are actually already quite well
aligned with the criteria of the Technical Expert Group, and probably
issuers only need to make a few amendments to the green bond
framework drafting to be assured that their framework is aligned with
these criteria.
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