Buildings can play an important role in reducing GHG emissions through increased energy efficiency. The European Commission mandates that all new buildings should be “zero emission buildings” (ZEB), aiming at a zero GHG emission building stock by 2050. The extent to which ZEB can contribute to reduced GHG emissions, however, varies between countries, due to different energy systems. It is also important to consider other environmental effects to avoid that climate benefits come with unintended consequences. Here, we explore the life-cycle environmental performance for a ZEB in a case where electricity and heating are largely fossil-free. The assessment concentrates on i) environmental impact of the use stage in relation to the product stage, ii) the interrelation between different energy sources, with focus on household electricity, and iii) the performance for more impact categories than primary energy use and climate change. While our results generally support the use of ZEBs from an environmental perspective, they also show that the climate benefit in this setting is marginal. However, given that energy systems are connected and energy savings in one place can reduce the demand for fossil energy elsewhere, the climate benefit of ZEBs is likely underestimated. Besides methodological implications for future studies, this indicates that current EU policy is promising, as incentives for implementation of ZEBs are unaffected by domestic effects.