The European Commission’s Energy Union leader Maroš Šefcovic is pushing for new public financing instruments to kick-start a wave of building renovation in Europe.
Energy Union’s aims are to establish connecting infrastructures across the continent, enforce energy legislation and increase competition across Europe to help drive down costs for citizens and businesses and boost growth, seeking to increase investment in power grids, renewable energy and other energy infrastructure, improve energy efficiency, especially for buildings, and achieve a binding target of 30 per cent reduced energy use in buildings by 2030.
It is also responsible for coordinating the Commission’s efforts to ensure the EU reaches its climate and energy targets for 2020 and 2030.
Renovating the European Union’s building stock for energy efficiency could save €80 to €153 billion of investment costs into the bloc’s power system by 2050, according to Euractiv. But to achieve this the Energy Efficiency Financial Institutions Group says that private investment in energy-efficient buildings renovation must increase five-fold by 2030. Where will the money come from?
Smart and efficient buildings
Šefcovic gave a clue in a keynote speech on “Technology and Innovation: Key Drivers for the European Energy Union” at the world’s leading trade fair for industrial technology, Hannover Messe over the weekend, where he joined President Obama and Chancellor Merkel, and participated in a panel discussion on energy storage at the “Life Needs Power” forum. He also met with US Deputy Secretary for Energy, Liz Sherwood-Randall.
“It is clear that achieving our 2030 targets … will not be possible if we overlook the enormous potential of buildings in Europe,” Šefcovic said. “In an ideal world I’d like to see new financing instruments that could start a wave of energy efficiency or better quality smartening of our buildings across Europe. This could be a multi-purpose exercise: not only for energy efficiency but also transforming buildings into nodes for the new synergised platform for the Big Data economy of the 21st century.
“[Buildings] are natural candidates for our attention and a proper regulatory approach. But it is very difficult to implement regulation if you do not have the finances. So what we are considering right now is how to find the proper incentives,” he said, announcing that a European Commission initiative, to be launched next year, will make it easier for smaller energy efficiency projects, such as building renovations, to get EU funding.
During Šefcovic’s tour of Europe to gain support for the Energy Union strategy, he said he was asked everywhere: “How can you help us – private citizens and business owners – to gain the technical expertise, advice and financial assistance for renovation, for smartening our buildings and increasing energy efficiency?” which made him realise that it was vital to unlock private investment into the energy efficiency market.
“The energy efficiency market must mature and become fully investible,” he said, adding that while there was a role for public financing – and the Commission is currently working on a financing instrument for smart buildings – the main candidate for financing was pension funds looking to make long-term investments.
Commission vice-president Jyrki Katainen, who is in charge of jobs and growth, is overseeing the Junker Plan, which aims to unlock €315 billion of private investment through €21 billion of public risk guarantees.
“We would like to have a kind of one-stop shop for smart cities and mayors, where by clicking on a link a city mayor can get ideas, information on where to go, how to do them, where they can get advice, and to really start to use the leverage of public money to get more private funds into this project,” he said.
While building renovation projects were often too small to gain funding under the Juncker Plan – the European Commission’s Investment Plan for Europe – he said there were examples of projects being aggregated to be big enough to get the loan guarantees, which convince private investors to invest.
“If you look at the results of the Juncker Plan, you will see that energy projects account for more than a third of funding, and I would say that about half of these investments are linked to energy efficiency,” Šefcovic said.
He said that by establishing an appropriate platform, as in France, aggregating energy for 40,000 households can really transform the whole region through one investment project.
“I thought this was a model that could be applied right across Europe.”
Ingrid Reumert, vice-president at the Velux Group, also at Hannover, agreed. She said that people’s savings could now cover renovation costs, despite the after-effects of the financial crisis, and said it was up to the private sector to convince consumers to reach into their pocket.
“We believe in the strength of market forces,” she said, advocating the revision and strengthening of Energy Performance Certificates.
EPCs have been widely criticised and are badly in need of a reboot if they are to be effective. This is one reform which this autumn’s announcements are expected to include.
Along with Commissioner Oettinger, Šefcovic was keen to stress the benefits of pursuing the European single market both for energy and for smart technologies, advocating the digitisation of European industry as part of the Commission’s Digital Single Market strategy.
Last week, on Velux’s Healthy Buildings Day, a special report on energy efficiency in buildings was published, which argues that building renovations can also benefit health and wellbeing, as well as stimulate investment in the construction sector and wider economy.
The EU budget for 2014-2020 significantly increased the contribution to building renovation. European Structural and Investment Funds are supposed to allocate about €19 billion for energy efficiency, notably in buildings and district heating and cooling. The Horizon 2020 program is intended to allocate €2.5 billion for energy efficiency.
EU leaders have agreed to a cut of at least 40 per cent in greenhouse gas emissions by 2030, and an increase of 27 per cent in energy efficiency and renewables.
The vow was the cornerstone of the EU’s commitment to cap global warming at last year’s landmark UN Climate Change Conference in Paris.
David Thorpe is the author of:
- Best Practices and Case Studies for Industrial Energy Efficiency Improvement (with Oung, K. and Fawkes, S. UNEP, 2016)
- A London Conversation: Business Briefing on Green Bonds (The Fifth Estate, 2015)
- The One Planet Life (Introduction: Jane Davidson. Routledge, 2015)
- Earthscan Expert Guide to Energy Management in Buildings (Earthscan, 2013)
- Earthscan Expert Guide to Energy Management in Industry (Earthscan, 2013)
- Earthscan Expert Guide to Solar Technology (Earthscan, 2011)
- Earthscan Expert Guide to Sustainable Home Refurbishment (Earthscan, 2010)