Building renovation must be top of the EU budget priority list for 2014-2020

The renovation of buildings to high energy performance standards has the potential to be the most cost effective investment any European nation can make, given the benefits in terms of job creation, quality of life, economic stimulus and energy security that such investments deliver. For these reasons the Buildings Performance Institute Europe (BPIE) is advocating for the maximum possible allocation of EU funds to the energy renovation of buildings under the recently agreed multi-annual financial framework (MFF) for 2014-2020.

This bold assertion stems from the fact that there is a multiplicity of benefits that arise when energy saving measures are applied to existing buildings. Most obvious are the savings on energy bills that accrue to the building owner or investor. Yet the totality of benefits is in fact much greater.

Some of these additional benefits are also realised by the owner/investor, such as improved comfort, better internal air quality, improved sound insulation and increased property value (sale or rental). These additional benefits are not readily quantified and thus rarely get factored into the investment calculation.

However, many of the benefits are realised by society at large, rather than the individual investor. More efficient use of energy reduces energy imports, thereby improving balance of payments – a key issue given that nearly all of Europe’s member states rely on imported energy to meet demand.

Investment in building renovation creates jobs – in manufacturing, installation and throughout the extensive supply chain of products and services that support such investments. These jobs reduce unemployment costs, increase tax receipts and stimulate local economic growth through increased disposable income.

Then there are the health benefits from improved living conditions and lower air pollution levels, resulting in fewer working days lost to ill health and a lower burden on state health services. Addressing the dire situation of families unable to afford keeping their homes adequately heated can only be solved in a long term, sustainable and cost effective way by significantly improving the thermal performance and heating system efficiencies of the housing stock.

There are energy system benefits too. It is cheaper to save a unit of energy than to supply one, thereby avoiding the cost of new generation capacity and other supply infrastructure. Lower heating demands in winter, and cooling demands in summer, reduce the traditional peaks in energy supply which are the most expensive to supply, so costs are reduced for all users.

Furthermore, according to the Intergovernmental Panel on Climate Change, saving energy in buildings is the cheapest way of reducing carbon emissions.

Quantifying the combined impact of all these benefits is not an easy task, yet it is one that the energy efficiency team at the International Energy Agency has taken on board as a current assignment (pdf). BPIE believes that if the co-benefits were systematically valued and monetised, they could significantly exceed the energy cost savings.

A greener EU budget to exit the crisis

---

Read our positions

So what have these multiple benefits got to do with the MFF? Rather a lot, as it happens.

The EU’s new Energy Efficiency Directive, adopted in October 2012, includes a requirement for member states to develop long term renovation strategies for national building stocks. These strategies require the mobilisation of funds to invest in improving the energy performance of homes, offices, hospitals, retail outlets, educational establishments and the myriad of other buildings that we spend most of our lives inside. Yet finding the financing for such investments has always been one of the biggest barriers.

This is where EU funding via the MFF can – and should – play a key role in the forthcoming seven year budgetary period that the member states are now starting to plan for.

Under the MFF deal reached in early February (pdf), future spending should support growth, employment, competitiveness and convergence, in line with the Europe 2020 Strategy. And with the need to restore and reinforce fiscal discipline, “the value of each euro spent must be carefully examined ensuring that the European Added Value and quality of spending under the future MFF are enhanced”.

BPIE believes that allocating MFF resources to building renovation is a wise investment that can help realise multiple benefits all across economic, societal, environmental and energy security dimensions. Accordingly, we advocate assigning high priority for programmes that stimulate building owners – from private households and small businesses to public bodies and commercial real estate firms – to renovate their properties to very high energy performance levels.

Public funding alone cannot provide all the investment required to improve Europe’s building stock, so spending programmes need to be designed in a way that they leverage private capital – be that building owners’ own financial resources, or funding from financial providers and the wider investment community.

Deep renovation of national building stocks, in line with the requirements set out in the Energy Efficiency Directive, is a long term venture spanning a number of decades. The period to 2020 is a crucial time during which the market needs to be transformed from low renovation rates (around 1 percent of total floor area each year) and shallow renovation (typically 20-30 percent energy saving) to high rates (2.5 to 3 percent per year) and depths (saving 60 percent or more).

The MFF 2014-2020 can provide member states and regions with the resources to kickstart the required transformation.