Spend wisely: Use cohesion funding for energy renovation

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

The EU and its Member States must use all resources at their disposal to reduce energy demand in buildings. This includes funding from the EU's long-term budget, much of which is still unclaimed, writes Adrian Joyce. [ronstik / Shutterstock]

The EU budget can go a long way toward helping member states achieve higher ambition on energy-efficiency renovation of buildings. But the money must be spent wisely, writes Adrian Joyce.

Adrian Joyce is director of the Renovate Europe Campaign.

With skyrocketing energy prices and Europe’s leaky buildings consuming a high of 40% energy, business as usual is no longer acceptable. Greater action on buildings is unavoidable if we are to effectively wean the EU off its Russian energy dependence.

The buildings sector remains the climate sector with the largest investment gap to achieve its goals. So, where will the money come from to make this happen?

Enter the Multi-Annual Financial Framework (MFF)

MFF funding amounts to some €1 trillion to be spent over the 2021-2027 period. It is a very large pot of money available for spending by member states since 1st January 2021, but still mostly unclaimed.

With only 6 Partnership Agreements approved and no Operational Programmes yet agreed upon, the time to be making the right decisions on cohesion funding is now.

As the cash-strapped member states scramble to get these cohesion documents approved by the end of the year to open additional funding streams, the REPowerEU Plan released last month clarified a common truth: that better connecting the dots between the regulatory framework, the economic reforms and the funding is the only way to go if we are to achieve our common goal of reducing the EU’s dependence on Russian imported fossil fuels.

What does this mean for buildings?

On the regulatory framework, REPowerEU called in its EU Save Plan for higher ambition for buildings in the Energy Efficiency (EED) and Energy Performance of Buildings Directives (EPBD) currently under review – for example, by boosting the depth and scope of the Minimum Energy Performance Standards (MEPS).

On the economic reforms and funding, REPowerEU explicitly stated that member states must take into account the 2022 European Semester Country-specific Recommendations (published alongside the REPowerEU Plan) in the programming of the 2021-2027 cohesion policy funds and in any potential new “REPowerEU” Chapters that member states may add to their Recovery and Resilience Plans.

A quick read through these Country-Specific Recommendations and “energy renovation” is a key recommendation in each of the 27 Country Reports.

This coordination between investments and reforms pushing in the same direction effectively tested with the National Recovery and Resilience Plans is crucial.

So how best to use this MFF funding for buildings?

The European Regional Development Fund (ERDF), Cohesion Funds (CF) and the European Social Fund Plus (ESF+) can make a big difference for buildings. But clearly, MFF funding alone (or any unique EU public funding mechanism for that matter) will not be sufficient to accelerate renovation across the EU at the pace required to achieve our climate goals.

This is why it is so important that the Operational Programmes are designed and implemented in a way that creates and sustains a renovation market for the longer term, beyond the “cliff-edge” end of the programming period.

Learning how to fish

In finalising the Operational Programmes in the coming months, Member States must seek to use the MFF funding primarily as seed money to attract and leverage private financing.

Partnership with other funding streams, whether at the National or EU level, must also be a serious consideration for Operational Programmes, which will help ensure full complementarity with the Long-term Renovation Strategies and achievement of the EU climate neutrality objectives.

Finally, MFF funding must be maximised to its full potential during the implementation phase.

This means communicating loudly to the local population about the multiple benefits of energy renovation for building occupants and for society at large in creating jobs, tackling fuel poverty and reducing air pollution – this will help in gaining wider support and in boosting impact on the ground.

But maximising MFF funding also means better tracking and data collection from each buildings-related program – this is a crucial stepping stone in creating a renovation market with more private sector involvement and investment.

The EU and its Member States must use all resources at their disposal (both regulatory and financing tools) to reduce energy demand in buildings. This includes MFF funding, much of which is still unclaimed.

But ensuring the cohesion funding is spent wisely, in good coordination with other (private) renovation funding streams, and in support of a strong regulatory framework for buildings must be the guiding lighthouse for a sustainable future.

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