How to go faster and further on building renovation to sever ties with Russia

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

The EU's plan to get off Russian fossil fuels must put a significant dent in buildings' energy consumption, writes Adrian Joyce [PublicDomainPictures / Pixabay]

Vladimir Putin’s invasion of Ukraine has prompted the EU to start getting serious about its energy policy and cut its reliance on Russia. To do that, building renovation must be a priority in the EU’s REPowerEU Action Plan, due in May, writes Adrian Joyce.

Adrian Joyce is the director of the Renovate Europe Campaign.

Forty per cent of the EU’s energy demand comes from the buildings sector, which produces around 36% of greenhouse gas emissions. These statistics were already important before Russia’s invasion – now they are shocking.

They are even more shocking when you consider that available technologies can achieve up to 80% energy savings in the building stock in the EU.

The REPowerEU strategy to break away from Russian fossil fuels must put a significant dent in buildings’ energy consumption. Such a wasteful use of our limited energy resources is no longer acceptable in the new geopolitical context.

So, where could the REPowerEU strategy start on buildings? Which levers should be actioned at the EU level to trigger further and faster energy renovation actions on the ground?

Recovery funding

Financing is not an insurmountable problem for energy renovation – far from it. The existing €800 billion COVID recovery fund is already up and running, with member state governments already drawing their first tranches of grants and loans from the EU’s pandemic war chest.

Member states must be encouraged to spend more of their allocations on effective renovation schemes, given the new geopolitical situation.

Analysis in the Renovate2Recover Study reveals that governments are backing projects that deliver only 30% energy savings, the bare minimum to access the funding, with very few putting in place any incentives that would encourage more and deeper energy renovation projects.

That is not enough. Better aligning the disbursements of the recovery funding with the new geopolitical context must be strongly considered.

Multi-annual Financial Framework (MFF)

In addition to the Recovery Funding, over €1 trillion is potentially available for energy
renovations up to 2027 in the MFF. A vast majority of the MFF Partnership Agreements and Operational Programmes have not yet been agreed upon.

The time is right to encourage, facilitate, and assist member states in fast-tracking investments in the job market’s skills to deliver on energy renovations.

Member states always leave money on the table with the MFF, either through a lack of eligible projects or just inadequate administration. Including an Energy Savings Facility as a new streamlined way to access that cash in the REPowerEU Action Plan would provide the extra coordinating help needed to unlock the potential of cohesion funding and make a difference for energy renovations.

The current focus of attention on citizens’ energy bills provides the unmissable opportunity to make the step-change needed in MFF allocation procedures to channel the funding better,  boost the absorption, and maximise the impact where it is most needed, in line with the EU’s climate objectives.

Technical support

Expert support or technical assistance also comes into play to ensure that the money is spent in the most effective way possible.

The European Commission’s DG REFORM already offers Technical Assistance to member states that submit applications for it. Still, it is a too-often underappreciated service that needs to be leveraged more effectively.

Building upgrade schemes succeed or fail depending on administrative set-up, financial support, and access to expert assistance. Get these right, and you have a winning formula, triggering more energy renovations and unlocking the benefits that come with them.

Setting up a dedicated support system just for building renovations and making sure that government ministries are fully aware of it needs to be a priority. This will mean more available
funding finds a home in projects that make a real difference.

Extra Financing Tools

Other elements in the EU toolbox will also help to update the existing rules and make them fit for our climate obligations and the new geopolitical landscape that is now being established.

This should include preferential treatment in updating the EU’s fiscal rules – due later this year – with a ‘golden exemption’ that will encourage member states to allocate public financing to energy renovation projects.

Actioning all available levers to trigger more profound energy renovations from the private sector is also key. Changes to the EU’s sustainable investment rulebook – the taxonomy – should be made to ensure renovations hit 60% energy savings rather than the 30% benchmark currently deployed to be eligible for a green label.

Including Mortgage Portfolio Standards in the Buildings Directive (EPBD) recast could also make a real difference in aligning mortgage lenders with the goals of the EU Renovation Wave and the new geopolitical reality.

There is a political and public appetite to do much, much more to help the climate and sever the Russian state’s hold over the EU. Both can be achieved by boosting the right policies, but it must be done now.

Opinion leaders and policymakers often insist that there is never a ‘silver bullet’ for any particular problem, but in this instance, pumping money into the energy renovation supply chain is the exception that proves the rule.

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