Prosperity through energy renovation

By Adrian Joyce, (pictured)
Autumn 2021

Adina Valean, EU Commissioner for TransportBuildings are the cornerstones of our lives with most of us spending more than 90% of our time indoors. Our use of buildings leads to the consumption of 40% of all primary energy produced in the EU resulting in about 36% of energy-related CO2 emissions. Addressing this wasteful energy use in our buildings has taken on a special significance in our efforts to address the negative effects of climate change.

It is estimated that the number of buildings standing in the EU is around 210 million. Together the heated and conditioned indoor floor area of these buildings is roughly equivalent to the size of Belgium. Around 75% of all these buildings are residential buildings – our homes – and around 80% of all buildings were built before there were any energy performance requirements in place.

Research by the Buildings Performance Institute Europe (BPIE) found that 97% of our existing buildings are inefficient as only 3% have reached an energy label "A" within the EU Energy Performance Certificate Framework that was established under the Energy Performance of Buildings Directive in 2002. The BPIE concludes that to address this poor performance and reach long-term targets, we must increase deep energy renovation urgently to reach an average of 3% of all buildings per year.

The EU has recently set itself the ambition to become the first climate neutral region in the world and has adopted the most ambitious Climate Law of any developed economy. In deciding how best to address the challenge of decarbonising their economies, member states are now faced with difficult decisions about which sectors to prioritise and which measures to introduce in their policies and regulations. But without any doubt, including the buildings sector and applying the energy efficiency first principle will be an absolute must.

Most of the laws, regulations, and strategies that address climate and energy issues are currently (in 2021) undergoing reviews as the new level of climate ambition agreed by the Heads of State for 2050 cannot be reached without revising them upwards, injecting urgency and greater ambition in them all. Among the laws to be revised is the Energy Performance of Buildings Directive (EPBD), which provides the EU with the opportunity to equip itself with a modernised and ambitious approach to decarbonising our buildings.

At the same time, and in response to the negative economic and social consequences that have resulted from the COVID-19 pandemic, the Next Generation EU initiative, designed to assist the EU in its economic recovery, has been adopted. A key part of the initiative is the establishment of the Recovery and Resilience Facility (RRF), which will mobilise more than €672 billion in grants, subsidies, and preferential loans for disbursement to the member states.

A strict criterion of the RRF is that at least 37% of the funds must be spent on climate-related actions and at least 20% must be spent on digitalisation of the economy. This means that nearly 60% of the RRF could, in theory, be spent on buildings. To access this unprecedented facility, the member states must prepare national recovery and resilience plans (NRRP) that must be approved by the European Commission and the European Council before funds can be drawn down.

An early analysis, carried out for the Renovate Europe Campaign by E3G, of the first NRRP that have been submitted to the European Commission shows that allocations of funding to energy renovation of buildings vary from a low of just 3% to nearly 26%. At these levels, it is hard to see how the member states will succeed in achieving the increased levels of energy renovation that must be attained within the next five years, thus risking missing out on a golden opportunity to improve the quality and resilience of our buildings.

To assist the member states in planning, financing, and implementing their NRRP, the European Commission has introduced additional forms of technical assistance. There is a new department of the Commission, known as DG Reform, that administers the new technical support instrument (TSI), which specifically targets energy renovation amongst other flagship initiatives and differs from other available forms of technical assistance due to three unique features:

  1. No co-financing by the member state is required.
  2. The technical assistance covers the entire reform process from preparation and design through to implementation.
  3. City and other local administrations can more easily benefit from the TSI by coordinating with their national contact points.

Whilst the matters I have laid out above generally refer to the building level, there is a growing realisation that there are great advantages to tackling the challenge of transforming our building stock at the city and/or neighbourhood level.

There is strong support for the adoption of such district or neighbourhood approaches within the European Parliament, as witnessed by the adoption, in early 2021, of an own-initiative Report on Maximising the Energy Efficiency Potential of the EU Building Stock. The rapporteur for the Report, Ciaran Cuffe (Ireland, Greens) sets out the concept of Integrated Renovation Programmes (IRPs) stating that they must be holistic, putting energy efficiency first, and must focus on the broader neighbourhood ecosystems, comprising high energy reduction targets for individual buildings.

Taking this neighbourhood or city-level, integrated approach brings valuable synergies that can more easily optimise the overall performance of the building stock within the geographical area covered by an IRP. Not least, the various energy demands, spread as they are across time and varying according to building type and use patterns, can be balanced by load sharing and supply sharing. At a neighbourhood level, shared access to renewable energy sources makes the use of those resources more economical and bundling buildings together for energy renovation to take place at the same time brings economies of scale.

Looking ahead to the time when energy renovation activity in the EU will reach the levels that match our climate ambitions, we can expect that there will be more quality jobs of a more diverse nature in the construction sector. This will stimulate our economies, increase revenues for public finances and dramatically improve the quality of life of our citizens who will be living and working in more comfortable, healthier buildings.

There is no doubt in my mind that the challenge we are facing is great, but I am reassured by the fact that achieving our energy renovation ambitions will lead us to a prosperous future.