By the end of that year, Member States must ensure that all newly-constructed buildings have a "very high energy performance", under rules agreed in Brussels. The energy needs of the buildings must be covered to a very significant extent from renewable sources, including energy produced on-site or nearby.

The public sector must set an example by owning or renting only this kind of building by the end of 2018 and by promoting the conversion of existing buildings into "nearly zero" standard. European Parliament negotiators insisted that specific target dates be included in the compromise text, which must still be formally approved by the Council before the full Parliament gives its final endorsement early next year.

Once adopted and published in the EU Official Journal, Member States will have two years to bring their national laws into line with the new directive for renewable energy in new buildings.

“At the Copenhagen conference [COP15 in December], Europe could present an effective tool to make the ambitious environmental objectives happen,” says Silvia-Adriana Ticau of the EU Council. “We are committed to invest more and to better use the financial instruments for the energy efficiency of buildings and renewable energy."

The Council agreed to the Parliament's amendments which require Member States to set national plans for increasing the number of nearly zero energy buildings using renewable energy. By mid-2011, they must compile a list of financial and other incentives for the transition, such as technical assistance, subsidies, loan schemes and low interest loans.

Existing buildings will have to improve their energy performance after major renovations, if technically, functionally and economically feasible. Member States would encourage owners to use the renovation as a time to install smart meters and replace existing heating and cooling systems with high-efficiency alternatives such as heat pumps or renewable energy-based systems.

Member States would require energy performance certificates to be issued for any buildings constructed, sold or rented to a new tenant, and for buildings where at least 500 m2 are occupied by a public authority and frequently visited by the public. Five years after the legislation takes effect, this threshold will be lowered to 250 m2.

The certificates will need to provide recommendations for improvement and may also include additional information, such as annual energy consumption and the percentage of renewable energy in total energy consumption. Exclusions to the requirements would be small houses with floorspace of less than 50 m2, holiday homes used for less than four months a year, religious buildings, industrial sites, and protected historic buildings where an energy-efficiency measure would "unacceptably alter their character or appearance".

Buildings consume 40% of energy in Europe and emit 36% of the continent’s CO2 emissions. This Directive encouraging more renewable energy in buildings could mean a reduction in GHG emissions equivalent to 70% of the current EU target of Kyoto, and save each home €300 per year in energy bills, while boosting the construction and building renovation industry in Europe.

The 27-country EU wants to cut carbon emissions to 20% below 1990 levels by 2020 and will increase cuts to 33% if other OECD regions pledge similar moves at the global climate talks in December.

“Energy performance of buildings is key to achieving our EU Climate & Energy objectives for 2020, namely the reduction of GHG emissions and the achievement of a 20% of energy savings,” says Energy Commissioner Andris Piebalgs. “Improving the energy performance of buildings is a cost effective way of fighting against climate change and improving energy security, while also boosting the building sector and the EU economy as a whole."