Differing views within the European Commission on how the EU’s unprecedented recovery fund can be spent, and a rush to translate national spending plans from their original language, risk slowing down the EU’s building renovation wave, experts say.
The EU launched the €750 billion recovery fund to help countries relaunch their economies and “build back better” after the COVID-19 pandemic.
In a major win for the European Green Deal, 37% of the money will be set aside for climate-friendly expenditure, such as renewable energies, electric vehicle charging points, or building renovation.
The European Commission launched a building renovation wave in October last year, aiming to rally popular support behind plans to cut emissions from buildings and reduce energy bills.
Spending on renovation is like killing three birds with one stone: it boosts local economies, tackles energy poverty and reduces greenhouse gas emissions, the EU executive argues.
But to be effective, the renovation wave needs close coordination between the EU and all levels of government at the national and local level. And there are concerns this may not be happening.
Recovery plans are a golden opportunity to plan and implement deep renovation, according to Katarzyna Wardal from Knauf Insulation, a leading provider of building insulation materials. Each EU country needs to have a precise plan and a financing system in place in order to get the renovation wave started, she added.
That has been the case in some EU countries. The sums of money allocated to renovation in Italy, Germany, France, Spain, Poland, and other countries like Romania and the Baltics, are looking encouraging, said Brook Riley, head of EU affairs at Rockwool, another building insulation manufacturer.
However, he said the money hasn’t started flowing yet. “The challenge we’re seeing is that this money is in a way out of reach if you do not have the distribution channels, network, and political commitment, to actually match up the money with the buildings.”
Stumbling blocks to building back better
The recovery fund has hit several stumbling blocks, including late submissions of national spending programmes by EU member states and a lack of public consultation on national priorities. Governments had until 30 April to submit their national recovery plans but only 21 out of 27 had done so by the end of May.
And in the race to meet the deadline, some EU countries have rushed the public consultation phase, campaigners say. “Unfortunately, to some extent, that ship has sailed,” said Felix Heilmann from the think tank E3G, saying that concerns around transparency have not been remedied and that pressure to start spending as quickly as possible may prevent this from ever happening.
Ciarán Cuffe, a Green MEP from Ireland, believes the public consultation process has been going reasonably well in his home country, but added: “I don’t think public consultation featured in all member states.”
Now, there are concerns that the two-month window for the European Commission to approve the national plans is putting pressure on translators to work through nuances in the documents that can be hundreds of pages long.
In addition, there are concerns that funding for technical assistance to consumers as well as national and local governments – a key part of ensuring renovation actually happens on the ground – could fall in the gap between the EU’s seven-year budget and recovery fund.
One source explained that the European Commission team responsible for guiding EU countries on how to spend the money, known as the recovery and resilience taskforce (RECOVER), have given EU countries different information on how the money can be spent.
Moreover, the Commission does not yet have a systematic approach when it comes to advising EU countries on how to design and finance building renovation programmes.
Asked about this, a European Commission spokesperson told EURACTIV that “around 100 Commission staff” are currently working as part of the recovery taskforce. “RECOVER draws on experience and expertise from across the Commission’s services, including DG REGIO, to assist with the assessment of recovery and resilience plans,” the spokesperson said. “Translators are being involved already at an early stage in the process in order to ensure that documents are ready in time, in line with the Commission’s practices.”
Despite the Commission’s best efforts, it will be several months before EU countries see the money. Once it receives national recovery plans, the European Commission has two months to evaluate them. This assessment is based on eleven criteria, including the requirement to reserve at least 37% of spending on climate objectives. After receiving the Commission’s green light, national recovery plans are then transmitted to the EU Council of Ministers, which has four weeks to approve or reject them individually, voting by a qualified majority.
If all goes according to plan, the first transfers of EU money, a total of 13% in the form of pre-financing (around €104 billion), will start flowing to national capitals by the end of July.
But EU countries that want to move faster have received conflicting messages from Brussels as to whether they can use their EU budget appropriations to bridge the gap. For instance, RECOVER officials have told Poland that the EU budget could be used interchangeably with the recovery fund while Lithuania and Romania were told that the two sources cannot be combined.
Meanwhile, DG REGIO – the Commission department dealing with EU regional funds – says the money for setting up renovation schemes can come from the EU’s regular budget while the money for the actual renovation work can come from the recovery fund.
This is causing confusion among renovation professionals. “You need the money, you need the will in the member states to renovate the homes, and you also need the people in RECOVER and elsewhere in the Commission to be all on the same page about the best way to scale up your renovation programmes,” said Riley.
Contacted by EURACTIV, the EU executive said it was using all the administrative flexibility offered in the EU budget and recovery fund to release the money as quickly as possible.
“The Commission aims at maximising the absorption and impact from the different EU funds,” said a European Commission spokesperson. “A strategic approach taking into account the different timelines and legal requirements is warranted in every member state. EU funds can be used in a complementary way to support the similar objectives in the green and digital transition,” the spokesperson said.
Still, all of this creates uncertainty as to how EU money can be spent.
For those in the construction sector, technical assistance – or one-stop shops – are seen as vital to advise consumers in their renovation works and ensure buildings achieve the highest possible standard when it comes to energy efficiency.
Technical assistance “is certified one stop shops, combining financial and technical solutions including the design and implementation of the projects, so that people avoid the hassle of finding financial support and the technicians with the right skills,” said Wardal from Knauf Insulation.
“It is really crucial that the Commission stays firm on the application of energy efficiency first in the national recovery and resilience plans when it comes to building renovation. For example, exchange of heat sources without ensuring energy performance of the envelope is not in line with efficiency first and risks an increase in energy poverty,” she warned.
Other aspects of technical assistance are considered key. For instance, an existing scheme in Bulgaria is sufficient to bring buildings to a Class B or A standard, but funding is only available if it comes to a Class C, meaning overshooting the target is actively discouraged.
This is a particular concern in countries like Spain, which are putting significant amounts of money towards long-neglected renovation.
In June, the European Commission is going to announce priority areas for technical assistance that will include building renovation.
[Edited by Frédéric Simon]