How carbon pricing is driving the renovation of Czech homes

Peaks of the High Tatras in the background of apartment blocks in northern Slovakia [Peter Komka / EPA-EFE]

Like other European countries, the Czech Republic’s buildings are in need of renovation. Unlike others, it partly funds renovation programmes with revenues generated from the emission trading scheme (ETS), an experiment that could be replicated across the EU.

For a decade, the Czech Republic has been recycling carbon trading revenues to fund its flagship “New Green Savings” support programme to renovate apartment buildings and single family houses.

The government sees renovation and energy efficiency as essential to meet the EU’s climate and energy goals. Czech Trade and Industry Minister, Karel Havlíček, has repeatedly emphasised that energy savings are priorities of Czech energy policy.

According to calculations made by Chance for Buildings, an industry alliance, proper building renovations could reduce the Czech Republic’s emissions by 13% by 2030.

“The Czech approach is effective mainly because it is comprehensive, consistent and set in law. This creates predictability and a better environment for long-term planning – both for businesses and for households,” said Julian Popov, former environment minister of Bulgaria.

Renovation is nothing new across central and eastern Europe. Much has focused on renovating old Soviet high-rise buildings, which are well-known for being draughty and hard to heat.

The need for renovation in central and eastern Europe is huge but very complex, said Popov. Not only does much of the building stock need structural repairs and renovation, but migration to the West and large cities has left many rural houses abandoned.

“The housing picture in central and eastern Europe goes far beyond simply energy renovation. It is a subject of energy poverty, air quality, health standards, in other words – of dignity and decent standards of living,” he said.

Barriers to renovation differ between countries, but shared problems include a lack of sophisticated financial mechanisms as well as a shortage of qualified labour caused by mass migration to the West.

The Czech Republic’s next challenge is renovating single-family homes, particularly in rural areas. These often have old-fashioned heating systems that rely on solid fuels like coal and wood, which emit pollutants into the air when burned.

“The renovation rate is very low. We have lots of buildings that haven’t been renovated,” said Ondrej Sramek, corporate affairs director for Eastern Europe at Knauf Insulation. “We know that the vast majority of buildings will be still standing in the next 30, 40 years. So, I think renovation is getting increasingly important,” he said.

People assume those who can afford a house do not require financial support for renovation, but this is not the case in rural areas where houses have been passed down through generations, Sramek added.

Czech coal mining regions confronted with 'hidden' energy poverty

While Czech coal mining regions supply heat and electricity to the whole country, local people are often unable to afford heating their own homes, researchers say. More broadly, Czechia is struggling to meet its EU reporting obligations on energy poverty, an issue common to other countries in Central and Eastern Europe.

The Czech experiment with building renovation has inspired others in Central and Eastern Europe, with both Romania and Slovakia adopting similar programmes.

Slovakia already has a good tradition of renovating apartment buildings with a rate of 2-3% per year, but now it needs to increase the depth of its renovation and look to single-family homes, which are often outside of schemes and incentives.

“It’s a big issue, especially in rural areas. And it’s often connected to heating homes with wood, in old boilers or old ovens, which cause air pollution,” said Peter Robl, public affairs manager for Knauf Insulation in Slovakia.

But even in the Czech Republic, the market for renovating these single-family homes is fragmented and hard for people to grasp, Sramek warned.

“We keep talking about one-stop shops. But I think a big question for the near future is how to aggregate renovation projects into some sizable chunks to make them interesting for large institutional investors,” he said.

Romania, too, has adopted a similar approach to the Czech Republic’s. The country has had various styles of renovation programmes over the years, particularly renovating the large number of apartment blocks the country inherited from the communist era.

People living in them pay about 20% of the renovation costs, while the rest is covered by the government and local authorities. But those schemes face a common problem: their dependence on central and local government meant that renovation has happened at different paces.

National renovation plans falling short of EU’s 2050 climate goal: study

The long-term renovations strategies that EU countries submitted last year to the European Commission are not in line with the bloc’s objective of reaching climate-neutrality by 2050, according to fresh analysis due to be published this week.

Bulgaria

Another case in point is Bulgaria. According to Eurostat, the Balkan country has the highest number of people living in energy poverty – around 30%.

Four years ago, the government began a programme to renovate old buildings, focusing on the 19,000 high rises built under the socialist regime, where most inhabitants experience energy poverty. The state has already paid in full for the renovation of about 2,000 panel blocks at a cost of €1 billion.

But while officials hoped to achieve 40% lower energy costs, studies show it was not hugely effective, with heating bills only decreasing by 15% on average.

Bulgaria is still looking to continue the renovation of these high rises, which house 25% of the country’s population, using €1 billion from the EU’s €750 billion recovery fund.

But some warn that recovery funds risk rushing projects that would be carried out anyway, because most of the EU money needs to be spent in the next three to four years.

“If you have a facility which is designed to be spent relatively quickly, there’s always a risk that you will rush some things,” said Sramek.

For him, rather than spend the money immediately on renovation, it would make more sense to fund the preparatory works, feasibility studies, energy optimisation plans and some blueprints.

“Then even if you put it on a shelf, it can sit there for a couple of years, and when the money comes around, you’re ready to go,” he added.

But despite the EU’s lofty promises about a building renovation wave, Popov is sceptical about the willingness of local politicians to deliver.

“In my view, the building renovation in the CEE is seriously neglected and, despite all grand statements about renovation wave, efficiency first and the just transition, it will remain neglected in the new wave of EU financing. The reason is – it is complicated, slow, hard work and nobody can get a great opening photo opportunity.”

Eyeing EU stimulus, Bulgarian parties pledge green transformation

Bulgarian political parties are showing an uncharacteristic interest in green policies ahead of elections on April 4, not least because the country is one of the largest per capita beneficiaries of EU funds and is now required to invest in climate and environmental issues.

[Edited by Frédéric Simon]

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Knauf Insulation


We manufacture sustainable insulation solutions For A Better World. Our products contribute to saving energy and cutting emissions. They are designed to make sure buildings are good for the environment and safe and comfortable for everyone who uses them.






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