With fraudulent practices on Europe’s energy refurbishment market, national market authorities are needed!

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Some energy efficiency companies have developed strong expertise, enabling them to offer turnkey projects that are 100% financed for private individuals. [GEO PLC]

This article is part of our special report Saving energy, a European challenge of varying scale.

While the environmental transition was felt in the European Parliament elections, others have been experimenting with it on the ground.

On 25 April 2019, the “Energy Efficiency First” workshop brought together companies, experts and energy efficiency policymakers from all over Europe. At the heart of the debates was the fight against fraudulent practices in the energy refurbishment sector, and is being forcefully extended to the French Parliament with its draft energy and climate bill. The building sector is the most energy-intensive sector. It is therefore urgent to act and restore confidence in this environmental, social and economic issue that affects 27 million households unable to pay their energy bills.

Energy refurbishment: we have the funds, companies and a European framework to make it work.

Every year, in Europe, several billion euros are invested in energy refurbishment.

In France, in addition to European subsidies, the figure lies at €6 billion, with €2 billion for national public subsidies (energy transition tax credit, eco-loan, national housing agency subsidies, etc.), and €4 billion for the Energy Savings Certificate (EEC) scheme.

At a French and European level, energy suppliers are required to finance energy-saving operations. These subsidies come in the form of bonuses for households, industries or local authorities to carry out various projects, such as the free insulation of roofs, the replacement of oil boilers, etc.

The aim of the European Energy Efficiency Directive (EU/27/2012) is to ensure European member states achieve EU energy-saving targets. Only seventeen member states have mobilised it.

For the various actors, there is no shortage of national and European, private and public subsidies for energy refurbishment. The challenge is to optimise these subsidies to best finance household projects.  Innovative and expert companies from all EU member states then emerged on the market.

A common cause: fighting abuse and restoring the confidence of the construction industry!

Faced with the challenge, objectives to finance renovation projects have gradually expanded.

Some energy efficiency companies have developed strong expertise, enabling them to offer turnkey projects that are 100% financed for private individuals! Testing programmes have multiplied to experiment with the low-cost renovation of the entire household. Positive results are returning from the field: investment stimulation, market growth,[1] reduced consumption by vulnerable households…[2]

However, two main trends have emerged in the European market. Subsidies have become more complex, and dishonest companies have followed the trend. These companies have used the energy refurbishment’s aid system to finance poorly-executed works, or worse, to commit large-scale financial fraud.

In Ireland, Italy and France, fraud, malfunctions and household mistrust have been reported by media organisations, politicians and energy suppliers. These are real obstacles to achieving large-scale refurbishment.

States need to regulate the market by creating authorities that deal with renovation and by letting approved operators emerge!

To stop abuse, creating trust is necessary! States agree on the difficulty of convincing households to take action when it comes to saving energy. No one wakes up with the bright idea of completely refurbishing their home in an energy efficient manner.

So when households agree to insulation or to changing their boiler, it needs to be accorded strong guarantees such as: “Will the work be carried out properly? Will I receive the promised help? Is it a scam when the quotation is at 0 €? Can I trust this craftsman with this job?”

The state alone cannot provide all the answers as it is neutral and cannot recommend one actor over another. However, to achieve a set of objectives, the public regulator has to define them and supervise the practices of innovative companies to meet the agreed-on goals.

These companies, which made commitments of quality and transparency regarding their artisan partners and bonuses paid, are not able to support housing renovation by themselves either.

There is, therefore, a need to ensure close cooperation between the public and private sectors.

In the same way that France created its own supervisory body for the financial markets in 2003, the energy refurbishment sector should also be getting its authority! Such a body would impose processes for the setting up of financing files by ensuring the consent of households. It would also have the power to supervise worksites, issue approvals and even withdraw them.

Public decision-makers want to see progress on the energy refurbishment market. This means that EU member states need to take measures to enable the emergence of energy transition operators.

[1]  +12% by 2030 according to the European Council for an Energy Efficient Economy.

[2] This is based on the figures for the UK between 2004 and 2015. Energy consumption by households has seen a 27% decrease for gas and a 13% decrease for electricity.

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