The recast of the European Union's Energy Performance of Buildings Directive introduced the concept of nearly zero-energy buildings, requiring its adoption from 2021 by all new buildings and existing ones submitted to major renovations. European Union member states must also ensure minimum energy requirements for buildings in order to achieve cost-optimal levels during their life cycle. Cost optimality and nearly zero-energy buildings are important concepts in European Union energy policies. These concepts are related, but one is more focused on costs, while the other is more concerned with low energy consumption and on site-renewable energy harvesting. If these approaches result in major differences in the selection of the best package of retrofit measures, then the transition from the cost-optimal concept to nearly zero-energy buildings might be problematic. To assess the most cost-effective solutions to achieve net-zero, a building in Porto, Portugal, was analysed. This determined not only the most cost-effective retrofit solutions but also compared these net-zero solutions with those resulting from the cost-optimal calculation. Both approaches lead to similar results, indicating that the transition between ‘cost optimality’ to ‘nearly zero-energy buildings’ could occur in Portugal.

The construction sector is facing increasingly strict energy efficiency regulations. Existing buildings have specific technical, functional and economic constraints, which, in fulfilling regulations, could lead to costly and complex renovation procedures and also lead to missed opportunities for improving their energy performance. In this article, the methodology for comparing cost-optimality in building renovations, developed in the International Energy Agency (IEA)–Energy in Buildings and Communities (EBC) Annex 56 project, is extended with a life cycle assessment by including embodied primary energy and carbon emissions in the calculations. The objective is to understand the relevance of embodied energy and carbon emissions in the evaluation of the cost effectiveness of building renovation solutions towards nearly zero energy buildings, as well as the effect of the embodied values in the achievable carbon emissions and primary energy reductions expected in an energy renovation. Results from six case studies, representative of different regions in Europe, suggest that embodied values of energy and carbon emissions have a decreasing effect—ranging from 2 to 32%—on the potential reductions of energy and emissions that can be achieved with renovation measures in buildings. In addition, the consideration of the embodied energy and carbon emissions does not affect the ranking of the renovation packages.