JRC: Need to speed up building renovation to meet climate goals

(eceee news, 29 Nov 2019) A new report from the EU Commission Joint Research Centre (JRC) estimates that the majority of buildings in the EU are in need of an energy efficiency upgrade. It gives an overview of the most important public schemes for building renovation across the EU and investigates new private financial products to stimulate energy efficiency in buildings.

According to the report, EU building renovation is not in line with its potential. A timely transition of the EU building sector towards climate-neutral levels by 2050 cannot be ensured, at today's renovation rate of around 1% of buildings per year, the report concludes. Today’s actual energy renovations neither meet the rate, scale nor the depth aligned with their energy efficiency potential.

The report shows that EU Member States currently deploy various public support instruments, primarily in the form of grants/subsidies, soft loans and tax incentives targeting residential, commercial and public buildings. New elements include the reinforcement of existing financial instruments, establishment of new financial models or supporting mechanisms and a more active participation of financial institutions.

The report stresses the importance of more effective use of public EU funding and the need to de-risk energy efficiency investments in buildings by giving investors and private financiers a better understanding of the risks and benefits of energy efficiency.

Financial institutions have become more active at offering specialised financial products geared towards energy efficiency investments, the report concludes.

Findings include:

  • A total of 129 ongoing public financial and fiscal schemes supporting energy renovations in buildings have been identified: around 61% of these are in the form of grants and subsidies, 19% soft loans, 10% tax incentives and the rest 10% combination of the above.
  • Grants and subsidies are deployed in all Member States, but represent the main type of public support for energy renovations in Austria, Croatia, Ireland, Cyprus, Hungary, Latvia, Greece, Poland, Spain and Slovakia.
  • Loans and soft loans are available in over half of the EU countries, some of which are supported by state guarantees (e.g. Bulgaria, Estonia, France, Italy and Romania) and others are designed as revolving funds (e.g. Bulgaria, Estonia, Netherlands, UK).
  • Tax incentives are typically offered in the form of income tax deductions or credits (e.g. Belgium, France, Denmark, Finland, Sweden, Italy and the UK) or VAT reduction such as in Belgium, France and the Netherlands.
  • Public financial support is available for residential buildings only in Finland, Ireland, Estonia, and Romania.
  • For all other countries, the main focus of public funding is the residential sector, with some instruments also targeting commercial buildings and/or public buildings or a different combination of building types.
  • Energy efficiency insurance, an innovative product which aims to shield from under-achievement and increase trust and awareness of energy efficiency projects, is currently used in Germany and the UK.
  • Many energy efficiency interventions are often incurred “behind the scenes” of maintenance, modernization or routine restoration works.

Link to the report.