The Renovation Wave proposed by the EU Commission in October 2020 is a welcome initiative, which places energy efficiency in buildings at the centre of its Green Deal. The Commission’s strategy sets the objective to at least double the current renovation rate by 2030, renovate 35 million building units, foster deep renovations and reduce energy consumption by 14% over a 10-year period.
The EU building stock accounts for about 260 million units. 1% of them is« renovated »each year, averaging a ridiculous 9% energy savings (the word « maintenance » wouldbe more accurate). Only one in five renovations is deep, i.e. resulting in a energy consumption reduction of at least 60%.
The effort requested by the Commission is significant : a 33% increase in volume (at current pace, 26 million buildings would be renovated by 2030) and a reduction in energy consumption 15 to 16 times more important than the one currently achieved (assuming that the energy consumption share of the 2.6 million building units renovated each year is equivalent to their overall “weight” in the building stock, i.e.1%).
Yet, the Commission’s objective is far from being aligned with our climate commitments. According to the Building Performance Institute Europe (BPIE), the average rate of deep renovation should approach 3% of the European building stock as quickly as possible, and the EU should reduce buildings’ final energy consumption by 24.8% by 2030. The task ahead of us is Herculean, and the need of investment tremendous: it can bee valuated at 300 billion euros per annum.
If not the only one, financing is a major barrier to be lifted. The French citizen and transpartisan association Agir pour le climat – Act for Climate –therefore initiated an on-going exchange with experts regarding the issue. A first public expression of this joint work was the holding of a Web conference in April, in partnership with the French Agency for Ecological Transition ADEME. A booklet is now being released. Intitled« Financing A Deep Renovation Wave: recovery and beyond », it gathers the contributions of some ten experts: Adrian Joyce (Renovate Europe), Stéphane Quefelec (European Environment Agency), Yamina Saheb (IPCC), Bettina Dorendorf (KfW), Peter Sweatman (Climate Strategy), Philippe Ramos (ESG expert in market finance), Uuriintuya Batsaikhan, Stanislas Jourdan and Adua Dalla Costa (Positive Money Europe).
Here are some of the ideas developed in the publication:
- The National Recovery and Resilience Plans are a unique public investment opportunity to support the transformation of Europe’s building In return,transforming our building stock will stimulate the economy, create jobs, lower health expenditures, and reduce income and environmental inequalities;
- Renovating our building stock within the EU remaining carbon budget requires the implementation of a very ambitious industrial model;
- A European Renovation Loan, at zero- coupon and EU borrowing rates(the under utilised loan component of Next Generation EU will be used as guarantee), would allow home owners with tight budgets benefit from cash savings immediately by rolling up interest payments until the loan matures (30 years) or the property is transferred;
- A Re-Mortgaging Renovation Loan, originated by banks and guaranteed on the property,would allow home owners benefit from competitive financial terms, equal or even better than the home loan due the existence of a Greenium (spread in favor of green bonds on the market);
- The European Central Bank (ECB) could address affordability even further by refinancing banks issuing renovation loans at advantageous conditions throught its TLTROs programme;
- These financing solutions must be combined with public subsidies for low income And public subsidies should only support deep renovations.
advocacy officer, Agir pour le climat