France puts its ETS money into housing renovation

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France has decided to use the money generated by the Emissions Trading System for carbon dioxide to fund an ambitious energy-efficient renovation programme announced by President François Hollande. EurActiv.fr reports.

Hollande recently announced he would stick to the promises made during is electoral campaign on the refurbishment of one million houses per year from the existing building stock.

The money needed for this refurbishment will mostly come from the auctioning of France's CO2 allowances, as enshrined in a recently published paper

The paper is France's national adaptation of the EU's carbon market reform and it says that carbon allowances should be used for the annual one million house renovation plan. Sources close to Hollande claimed that the money generated by the auction could amount to about €600 million, EurActiv France reported.

“The revenue from the auctioning of CO2 allowances owned by the state will go into financing the thermal renovation of buildings,” the paper reads. 

This option was suggested before by Green MEP Claude Turmes, who negotiated the Energy Efficiency Directive on behalf of the European Parliament. 

“The EU-ETS market, if re-calibrated, would push the price of carbon up. The revenue from ETS could be over €120 billion," Turmes said.

"So the ETS re-calibration is not only an issue of climate change, but a tool for governments, which could reinvest this money into energy efficiency,” the MEP said, speaking in the European Parliament on the day the Energy Efficiency Directive was approved by MEPs.

Industry criticisms

The move to divert ETS money into making buildings more energy-efficient has received a lukewarm welcome from the  French industry.

"The revenues from ETS  should be given to the industry, if France wants to make the transition to a low-carbon economy and keep the French industry a competitive industry at the same time," said Jean Pelin, director general of the Union of Chemical Industries (UIC).

"Most manufacturers will have to buy significant amounts of allowances as of 2013. Taking this into account, the Union for Chemical Industries indicates that the figure could reach 100 million at current price for French chemical manufacturers," Pelin said.

"It is imperative that a large part of the revenues of the auction is redistributed annually to industrial companies, as allowed by the European Commission and just like the Germans have also planned to do," he added.

An EU-wide revamp

Hollande's housing renovation promises are in line with the 20% energy savings targets that all EU member states committed to achieve by 2020. 

According to the new Energy Efficiency Directive, energy companies will be requested to reduce their energy sales to industrial and household clients by at least 1.5% each year. This will most likely be done through energy companies offering energy efficiency services to clients, which will improve the energy efficiency of their houses. 

The directive included a 3% renovation rate for public buildings which are “central government-owned and occupied”. It also set an obligation on each EU member state to draw up a roadmap to make the entire building sector more energy efficient by 2050 (commercial, public and private households included).

But whilst ambitions have been written down and signed by all member states, no country has yet put figures next to these goals. 

The investments needed for member states to reach their targets would require around €40 billion to €50 billion, according to the European Commission.

Some of this money will be sourced from the EU's 2014-2020 budget, EU Energy Commissioner Günther Oettinger announced. 

"I think it is very sensible that in the budget discussion we are going to include a set of objectives that we will be co-financing to promote energy efficiency. We need incentives in the best sense of the word, we need to encourage local authorities to invest in energy efficiency," Oettinger said.

As discussions on the EU budget are developing, it is looking likely that at least €20 billion out of the proposed €1 trillion budget will be dedicated to 'green' projects and energy efficiency in buildings, EurActiv has learned.

Some money could also come from the European Investment Bank and EU project bonds, Turmes suggested.

Timeline: 
  • Autumn 2012: EU Council of Ministers to formally approve compromise on Energy Efficiency Directive
  • April 2013 Member states present their national programmes for the implementation of the Energy Efficiency Directive
  • 2014, 2016: European Commission reviews the Directive
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