More Liberal voices. A Response to the EC Public Consultation on Sustainable Buildings

Lithuanian Free Market Institute in partnership  in partnership with F. A. Hayek Foundation (Slovakia), Civil Development Forum (FOR) (Poland), Institute of Economic and Social Studies (INESS) (Slovakia), Institute for Market Economics (IME) (Bulgaria), Centre for Economic and Market Analyses (CETA),  (Czech Republic)and the Friedrich Naumann Foundation for Freedom (Germany) contributed to the public consultation of European Commission on sustainable buildings, which took place from 09.07.2013  to 01.10.2013.

sustainable building

Sustainable Buildings

Objective of the consultation

The European Commission wants to gather views and additional information on the possible introduction of EU wide measures to achieve better environmental performance of buildings. Resource use and related environmental impacts all along the life-cycle of buildings are in the scope. The consultation puts forward questions related to the problem definition as well as to possible policy options.

Response in brief

One of the best measures that EC could implement or change, regarding the environmental impact of buildings, is easier procedures to change the purpose of the building (i.e. from administrative, public purpose or factory to residential and vice versa). There could also be fewer requirements or permits for building additional structures, redesigning the building, renovating, increasing energy efficiency (i.e. improving insulation and etc.).


It is speculative to suggest that water usage during construction or composition of construction materials have any meaningful and measurable environmental impact. The use and reuse of water during the lifecycle of the building usually not on the building itself, but on sewage and water treatment facilities, that operate on a city level, not building level.

Majority of residential blocks of flats, built before 1991 have a very poor energy performance. But there is no clear demand for other environmental efficiency.

The major reason for increasing demand for build space is the fact that welfare of Europeans is increasing. Naturally people want to live in and can live in bigger and better apartments (commercial buildings as well). This demand is a consequence of economic growth which provides people with more opportunities and better living conditions. There is no reason in any way to limit or prohibit the demand for build space and actual building size or purpose of these buildings or how they should be used. It seems odd, that the increasing welfare of Europeans is seen in a negative light by EC, which the increasing demand for build space is a representation of.

Public Procurement (PP) is a procedure designed for public institutions, so that these institutions could purchase goods   and services which these institutions need to conduct their activities. In itself this is not in any way an instrument intended to influence the market, but simply provide procedures for purchasing required goods or services.

Green Public Procurement (GPP) it is opposite off PP and misleading the public. Even though EU public authorities consume goods and services equivalent of 19% of EU GDP through PP, it is not good that GPP is though off as an instrument to impact the market by reducing environmental impact by their actions, when choosing what kind of goods and services to acquire. It is falls to think that this would incentivize producers and entrepreneurs to create and develop green technologies. It is more likely that such producers and industries in general only create not what the actual market demands to be created, but just the necessary and sufficient technologies which are later used in producing goods and services, which are needed by the public authorities. It may lead to the situation, where producers and industries will be pushing for setting specific rules, regulations and standards that everyone has to abide, but only they benefit. In the end this increases the costs for consumers, decreases competition, and paves the path for corruption and protectionist measures.

For private sector. Because energy prices are high, businesses and people, but mostly businesses are investing a lot of time and money to develop more efficient energy use technologies and innovations for producing goods and services or for other means. Additionally it would be wise to make it easier to change the purpose of buildings or land used (e.g. when changing an administrative purpose building into a residential one, there could be a less regulation or no requirements of additional permits, or when changing the outside looks (i.e. design), building additional structure to the building itself and etc.).

Most importantly, additional regulations and directives regarding energy efficiency of buildings through the whole cycle from extracting materials to decommissioning the building for waste, increases the cost and the final price of a building or apartment, thus affecting the ability (i.e. making it more difficult and costly) of less well of people to acquire housing.

For public sector. There is no need to increase financing for public sector through additional directives or regulations. However, the practices of how the money is being spent has to change by enforcing more effective use of it with measures such as inventorization, introducing indicators of efficiency, third party audits and etc. There should be a minimum efficiency requirement applicable to public authorities in the way it spends taxpayer’s money.

LFMI remarks on “Sustainable buildings”

The most important question regarding the issue of environmental impact of buildings through the whole life cycle should be concerning, how any regulations or directives could affect prices. If regulations were implemented and market participants had to abide, to certain requirements on what materials to use, how they should be made or extracted, the amount of water to be used and many more, this would affect costs of buildings and the final price for housing, thus making it more difficult for people to acquire it. This would not solve a problem of housing and housing prices and make things more difficult and expensive.

Governments should be also concerned about the possible higher costs that regulations regarding the environmental impact could have on public buildings that are already in use or are in planning to be built (schools, libraries, administrative buildings and etc.). It would be wrong to push regulations regarding uncertain, unclear benefits to the environment, making construction more expensive and using more of taxpayers’ money.

This issue of reducing the impact to the environment (i.e. sustainability) of buildings is a misleading preconception that any intervention could positively affect the environment, but at the same time it could have negative consequences to the ordinary European citizen. This would mean more permits, more time for construction, higher costs and higher price of the final product. This is completely opposite to the idea that people should have the opportunity to acquire housing based on market prices, not on regulations that make it more difficult for them to purchase home.

One of the best measures that EC could implement or change, regarding the environmental impact of buildings, is easier procedures to change the purpose of the building (i.e. from administrative, public purpose or factory to residential and vice versa). There could also be fewer requirements or permits for building additional structures, redesigning the building, renovating, increasing energy efficiency (i.e. improving insulation ant etc.). This would mean new life for old buildings and less demand for new space. It would also reduce the pressure to improve and expand infrastructure in the cities, because they are not expanding as fast as they are now.

Voluntary schemes (green scheme) could be an option for construction companies, producers of construction equipment and materials, and real estate developers that want to be green (i.e. reducing environmental impact of buildings). If companies choose to position themselves and conduct their businesses in that way it would be their option, but they still would have to compete under market rules. On the other hand mandatory schemes across the board could mean increased costs of construction and higher final price of housing for consumer. It could also negatively affect the level of innovation in the market, level of investment, competition and willingness of entrepreneurs to participate in such market.