Ursula von der Leyen and Frans Timmermans have pledged to kick-start a renovation wave across Europe. This is a management challenge with three aspects that have to be met, write building industry CEOs.
This opinion was signed by eight CEOs, listed at the base of the article.*
Fine words renovate no building. But President Ursula von der Leyen’s State of the Union speech was a political knockout. The bottom line: the European Union cannot meet 55% by 2030 emissions reduction target without at least doubling building renovation rates. That is why the green recovery needs to start at home, literally.
Per euro invested, the buildings sector is Europe’s biggest job creator. At the same time, real estate is our most valuable financial asset, worth tens of trillions of euros. Yet even as the COVID-19 crisis continues, one in four households cannot pay their energy bills. The stakes are high indeed.
That is why Ms von der Leyen and her right-hand man on the Green Deal, Executive Vice-President Frans Timmermans, have pledged to kick-start a Renovation Wave across Europe. A ‘ways and means’ Commission action plan is due in October.
We believe it must focus on three mutually supportive strands of work: legislation (in next year’s revision of the Energy Performance of Buildings Directive), finance and project support.
First, legislation: the EU already has world-class energy efficiency standards for new buildings. The Renovation Wave needs to outline a strategy to guarantee high standards for the hundreds of millions of Europeans living and working in existing buildings.
So-called minimum energy performance requirements look like the best solution. They are already standard practice in some member states, where they go hand in hand with financial and technical support.
In the Netherlands, for example, offices must be energy performance Class C by 2023, otherwise they cannot be leased out. Meanwhile, the country’s two million social housing units are on track to be B standard by next year.
No other approach is as clear and easy to communicate. It also offers a combination of ambition and flexibility, since each member state works out for itself how best to implement the standards.
The Renovation Wave should therefore endorse minimum requirements as the most promising legislative option to upgrade millions of buildings over the next years, with everything this means for emission cuts, energy poverty, investment and employment.
It also needs to identify the key practical questions, notably which building sectors to cover first and what levels of ambition to set, which need to be addressed before next year’s revision of the Buildings Directive.
Second, finance. The Commission has confirmed that 37% of the EU recovery funds must be used for green investments and it is clearly prioritising building renovation. The crucial next step is to provide member states with guidance on how to share out the 37%.
Given the importance of the 2030 emissions goal, we recommend doing so on the basis of each sector’s share of emissions. This would mean an EU average of 36% of the recovery funds for buildings – enough to kick-start the Renovation Wave in many countries and create over a million and a half new jobs.
Meanwhile, the European Investment Bank is already using EU money to de-risk energy efficiency lending and attract much bigger sums from institutional investors. Let’s do much more, much faster. The investment community needs safe, sustainable placements just as much as households and SMEs require cheap financing.
Third, project support. The Commission is investing heavily in what it calls technical assistance: helping local authorities, cities and governments with hands-on advice to improve and expand their renovation programmes. This is essential work.
But it is happening outside the public eye. Much more must be done to promote the services offered by lesser-knowns like DG REFORM, DG REGIO, EASME, the EIB and others. Their commitment is impressive and they can make all the difference between projects stalling and going ahead.
All this makes the Renovation Wave sound like a management challenge – and of course, it is. The fact is the buildings we live and work in are Europe’s largest source of emissions, and therefore a linchpin of the Green Deal.
They are also our biggest investment opportunity and an essential driver of a green, socially just and financially sustainable recovery. Ms von der Leyen and Mr Timmermans have set high expectations. Now it is time to meet them.
- Michalis Kontos, Managing Director of Fibran S.A.
- David Ducarme, COO of Knauf Insulation
- Todd Fister, President Insulation of Owens Corning/Paroc
- Mirella Vitale, Senior Vice-President of Rockwool Group
- Marc Lüdi, CEO of Sager
- Benoît Bazin, COO of Saint-Gobain
- Jochen Friedrichs, CEO of Ursa
- Jan te Bos, Director General of Eurima