Luxembourg: Energy Efficiency For Your Property? Act In Time!

Last Updated: 22 November 2019
Article by Jan De Heer and Margot Dadi-Tailleur

In our blog of 13 February 2019, we reported to you about the required 'C label' taking effect for office buildings as from 1 January 2023, the consequences for owners and/or landlords and tenants, which measures should be taken, who is responsible for paying for these measures, and how compliance with the required C label can be enforced.

As we mentioned in our previous blog, the C-label requirement is only enforceable as from 2023. Nevertheless, it may be important for building owners to get started on sustainability now. Of course, in order to reduce the energy bill, but also because, for instance, the method by which the energy efficiency of property will be determined will change as per 1 July 2020. If one can obtain a C label before that date, using relatively limited measures, then that label will remain in effect for 10 years. After that date, energy efficiency will be assessed on the basis of the new determination method NTA 8800, which gives rise to the question of whether one will also be entitled to a C label under that regime. Further, it is conceivable that one will also be legally obligated to take energy-savings measures before 2023. In particular – and entirely separate from the coming C-label obligation – such an obligation can follow from Article 2.15 of the Activities (Environmental Management) Decree, which we will address in this blog.

Obligation to realise energy-saving measures

Article 2.15 of the Activities (Environmental Management) Decree obligates 'operators' of so-called type A and B establishments to implement all energy-saving measures which have a payback period of five years or less. Under certain circumstances, existing office buildings may also qualify as an 'establishment' as defined by the Activities Decree. For that matter, this also applies for other (commercial) properties, such as hotels and logistics companies.

If the relevant property is leased (out), the question arises whether the (costs of the) measures are to be borne by the landlord or the tenant. The answer to this question will depend on who can be considered to be the 'operator of the establishment', which in turn depends to an important extent on the content of the lease.

Information obligation for energy savings

For each establishment which falls under the above-mentioned energy-savings obligation, there existed an obligation, pursuant to Article 2.15, par. 2, of the Activities Decree, to submit no later than 1 July 2019 a report to the competent authority in which it is evident which energy-saving measures have a payback period of five years. This report must be revised every four years. As from 5 December 2019, this obligation to provide information will also apply to operators of establishments which fall under the European Energy Efficiency Guideline (EED). We have already written about this audit obligation in our November 2015 newsletter.

According to the press release from the Dutch central government of 2 July 2019, more than 27,000 companies have already fulfilled their reporting obligation. This number seems high but it is estimated that there are between 50,000 and 60,000 companies for which the information obligation applies. Thus, there is still room for improvement.

Companies which have not yet submitted their report can be reminded by the competent authority and if necessary, eventually penalties can be imposed to persuade them to comply with the information obligation. In a letter from the House of Representatives dated 16 September 2019, the minister announced that, for the time being, his effort remains focused on improving communication about the obligation to provide information.

In light of the above, property owners would do well to (nevertheless) check whether they might qualify as an operator of an establishment and, if so, which energy-saving measures would then have a five-year payback period. We hereby mention that, in the context of the Dutch Energy Agreement for Sustainable Growth, packages of recognised measures for energy savings have been designated for 19 industries, including the office market. These approved measures can be used as guidelines for building owners when assessing which energy-saving measures they must take.

If an owner has taken all recognised measures for the relevant establishment, the obligation to provide information can be fulfilled by simply informing the competent authority of such (via a web form). In that case, no proof needs to be provided that the measures were taken, but an economic offence will be considered to have taken place if an intentionally incorrect report is submitted. The report should therefore be completed carefully.

Amendment to the Environmental Management (Activities) Regulations

If an operator has not taken all the recognised measures, the minister will assume that the relevant establishment does not satisfy the obligation to take all energy-saving measures. If an operator believes that certain recognised measures cannot be recouped within five years, this often results in a discussion (with the competent authority). Partly with a view to this, the minister has defined a calculation method in the Environmental Management (Activities) Regulations. This method is intended to provide more clarity to market parties about the way in which the payback period of energy-saving measures for an individual establishment (company or institution) should be calculated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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