When the European Commission unveiled its proposed €750 billion recovery fund two weeks ago, green activists were expecting a detailed spending programme, with billions of euros allocated to clean mobility, renewables, and an upcoming EU-wide building renovation wave.
What they got in the end was an elaborate plan to borrow hundreds of billions of euros on financial markets that would later be redistributed to hard-hit regions in the form of loans and grants.
To be sure, the recovery plan sent plenty of signals to ecologists. First, the EU executive promised that 25% of the money would be spent on climate-friendly technologies. And a “do no harm” principle applying across the entire EU budget means the most polluting fossil fuel projects should in principle be excluded from receiving EU recovery money.
Moreover, an upcoming EU-wide renovation wave will aim to “at least double the annual renovation rate of existing building stock,” the Commission said, fleshing out earlier announcements by Commission vice-president Frans Timmermans.
Buildings are responsible for 40% of the EU’s primary energy consumption, making the renovation wave a “flagship” of EU efforts to cut global warming emissions.
But there was no detailed programme on how to spend the €750 billion fund. And some analysts have publicly doubted the Commission’s ability to strictly enforce green criteria and resist pressure from EU capitals at a time when Europe is entering its worst recession since World War Two.
Green building advocates, for their part, were at pains to hide their disappointment.
“While I welcome the announcement of a doubly increased renovation rate of the building stock across Europe, it was very disappointing to see that the Commission had not proposed a dedicated fund within the recovery package that would cover the upcoming renovation wave,” said Ciarán Cuffe, an Irish MEP from the Green party.
According to Cuffe, the EU recovery plan and renovation wave has the potential to create more than two million new jobs and contribute to a clean economy, on top of phasing out the worst energy performing buildings.
But without a dedicated budget, he doubts those promises can be kept.
“We need to have a clear cut and dedicated fund that would ensure the renovation wave lives up to its potential,” the Irish lawmaker said in a statement.
Other green building advocates were disappointed too.
“I think it’s fair to say that the recovery plan was underwhelming,” said Julie Kjestrup, head of EU office for Danfoss, a Danish technology firm which makes building automation and control equipment.
The recovery plan’s emphasis on the green and digital transitions is “of course very welcome and an important step forward,” Kjestrup said. “However, we’re missing the ‘how to’s’ for now: there is no dedicated renovation facility and it’s not clear how renovation can or will be financed via the other instruments outlined,” she told EURACTIV.
Brook Riley, a former green activist, summarised the general sense of disappointment. “The Commission is talking the talk on renovation; we now need to see if they’ll walk the walk,” said Riley who now works as a Brussels lobbyist for Danish insulation firm Rockwool.
But he also saw some positives. First, the Commission has identified a financing gap of €185bn per year for renovating residential and commercial buildings.
“That’s helpful,” he told EURACTIV. “It shows how much support is needed”.
And in theory, there is no limit to the amount of funds that could be allocated to green buildings, he said, which is also positive.
In fact, he said, the biggest challenge will be to put together enough good projects to capture all the EU funding that will be available.
“Even if we had a lot of ring-fenced money we’d still struggle to generate enough projects, just because renovation projects are complex to put together… Therefore a better way of looking at it is that if we can get more projects off the ground we can go above the 25% threshold.”
Key to the success, he says, is the technical assistance – or project support – that will be provided by the Commission and the European Investment Bank (EIB), which will be in charge of distributing some of the funds.
Still, the absence of detailed spending plans leaves plenty of question marks as to the European Commission’s resolve to address energy consumption from buildings, which are responsible for 36% of the bloc’s total emissions.
“Buildings are the bedrock of decarbonisation and where the battle for climate neutrality will be won or lost,” said Simone Alessandri, director at the European Building Automation and Controls Association, an industry group.
However, he says “there is little clarity” on how these funds will be used. “The system is relying too much on the goals and use of funds by member states,” he told EURACTIV in emailed comments.
According to Alessandri, the upcoming renovation wave expected in September could try to address this by setting clear targets and prioritising deep renovation measures to make sure the funds are used to achieve net-zero carbon buildings by 2050.
In Brussels, the Commission is highly aware of the potential of buildings to reduce Europe’s carbon emissions. And the COVID-19 crisis has only reinforced the case for building renovation, said the EU’s energy Commissioner Kadri Simson, who pointed to the sector’s potential to restart the economy and boost employment at the local level.
However, the EU executive has struggled to nudge member states into action on building renovation programmes, which rely on smooth cooperation with local authorities.
National governments have been slow to implement existing EU rules, with only five of them meeting a 10 March deadline to submit national renovation strategies that were due under the revised EU energy performance of buildings directive.
And while all EU countries, including the United Kingdom, have since submitted their plan, national building renovation strategies are often “lacking in ambition,” Alessandri pointed out, saying: “There should be more clarity from the Commission on the fact these [recovery] funds should be linked to the deployment of measures already agreed at EU level”.
For many, there will be more opportunities for the Commission to clarify later on how the recovery money will be spent.
“The Commission makes clear that the Green Deal is central to the EU recovery strategy and that a massive renovation wave of our buildings and a more circular economy are top priorities,” said Mirella Vitale, senior vice president at Rockwool.
But she said crucial details were still missing from the Commission plan.
“It will also be important to ensure an efficient mechanism – a transmission link, if you will – between the funding sources and the intended beneficiaries among home and building owners. This would facilitate private institutional investment in energy efficiency building renovation and help create a major new green asset class,” Vitale said.
[Edited by Zoran Radosavljevic]