Abstract

Buildings are responsible for 36% of EU’s greenhouse gas emissions (GHG) from energy. In order to meet the 2030 target of GHG reduction of 55%, therefore, an enormous effort needs to be put into boosting energy efficiency (EE) in the built environment. The European Commission has rightly identified housing renovation as a key priority for the EU Green Deal and as such its flagship initiative the “Renovation Wave” is an ambitious project, but scalable funding is badly missing to reach the targets set in the initiative.

This paper aims to outline how the European Central Bank’s (ECB) Targeted Longer-Term Refinancing Operations (TLTROs) can provide the firepower to the Commission’s “Renovation Wave” to accelerate energy efficiency (EE) renovations across the eurozone. Under the TLTROs, the ECB currently provides €1.750 trillion of loans to banks with negative interest rates (-1%), which represents a public subsidy, without climate and environmental conditionalities.

The authors propose to amend the TLTRO programme by offering a deeply accommodative rate on loans if banks increase their volume of EE renovation loans to households and SMEs. President Christine Lagarde already stated that the so-called “Green TLTROs” will be considered for its strategy review as part of ECB efforts to combat climate change.

The ECB through its TLTROs has the financial firepower to unleash bank lending and mainstream renovation affordability and boost the incentives for banks to cover the cost of renovation and for customers to take out our renovation loans. If the green TLTROs were successful, existing fiscal subsidies could be redeployed towards public building renovation or for enhanced targeted financial support for low-income households who fall out of the scope of this initiative, because they are ineligible for bank loans. This is especially true in these times of global pandemic and its enormous economic fallout, with many households thrown deeper into energy poverty.

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Panels of

1. Energy consumption and wellbeing

2. Policy innovations to ensure, scale and sustain action

3. Policy, finance and governance

4. Monitoring and evaluation for a wise, just and inclusive transition

5. A smart new start for sustainable communities

6. Transport and mobility

7. Policies for a green recovery in the buildings sector

8. Buildings: technologies and systems beyond energy efficiency

9. Products, appliances, ICT