EU Renovation Wave and Direct funding for energy efficient building and renovation projects

EU Renovation Wave

The Renovation Wave is part of the EU Green Deal and focuses on a refurbished and improved building stock in the EU, which will help pave the way for a decarbonized and clean energy system, as the building sector is one of the largest energy consumers in Europe, responsible for more than one third of the EU’s emissions.

In practice, the Renovation Wave has an important role in facilitating access to EU funding for energy efficient building renovation.

The renovation wave will address current low decarbonization and renovation rates of around 1% across the EU and tackle the underlying barriers for improving the energy efficiency of the EU building stock. Currently, roughly 75% of the building stock is energy inefficient, yet almost 80% of today’s buildings will still be in use in 2050.

Renovation is a major opportunity for economic growth as it provides jobs and boosts the construction sector, which is largely dominated by local businesses, while strengthening Europe’s industrial competitiveness. Building renovation is therefore central to the post-COVID 19 economic recovery, and was specifically referred to in the recovery plan published by the European Commission on 27 May 2020.

The renovation wave initiative will build on measures agreed under the Clean energy for all Europeans package, notably the requirement for each EU country to publish a long-term building renovation strategy (LTRS), other aspects of the amending Directive on the Energy Performance of Buildings ((EU) 2018/844), and building-related aspects of each Member State’s national energy and climate plans (NECP).

EC Strategic Communication: A Renovation Wave for Europe – greening our buildings, creating jobs, improving lives

On October 14th, 2020, the Commission has published a Renovation Wave Strategic Communication on the initiative for the years to come, which covers concrete legislative and non-legislative measures and enabling tools, financing and non-financing aspects, and take into account different levels of action at EU, national and local or regional level.

Here are some key takeaways:

  •  The 27 member states and the European Parliament are about to vote a European Climate Law that imposes a reduction of GHG emissions of at least 55% by 2030. Buildings account for 36% of EU carbon emissions, so the rate of deep renovation has to be doubled or tripled – “The objective is to at least double the annual energy renovation rate of residential and non-residential buildings by 2030 and to foster deep energy renovations. Mobilizing forces at all levels towards these goals will result in 35 million building units renovated by 2030.”
  • Stepping-up the pace for energy renovation via legislature – “Today, only 11% of the EU existing building stock undergoes some level of renovation each year. However, very rarely, renovation works address energy performance of buildings. The weighted annual energy renovation rate is low at some 1%. Across the EU, deep renovations that reduce energy consumption by at least 60% are carried out only in 0.2% of the building stock per year and in some regions, energy renovation rates are virtually absent. At this pace, cutting carbon emissions from the building sector to net-zero would require centuries. It is time to act.”
  • Adherence to good practices applied by some member states introducing minimum performance levels and specified compliance deadlines – “Building on such good practices, the Commission will propose mandatory minimum energy performance standards as part of the revision of the Energy Performance of Buildings Directive (EPBD) by the end of 2021, following an impact assessment looking at the scope, timeline and phasing of a progressive implementation of such requirements, including the need for accompanying support policies. Such measures will facilitate linking specific national, regional and local incentives and support compliance with these minimum standards.
  • Extension of the existing requirement to energy renovate 3% of the buildings owned and occupied by central governments to all public administration levels.
  • Introducing a ‘deep renovation’ standard, to enable anchoring significant private financing to transparent, measurable and genuinely “green” investments.
  • Indicative milestones for the renovation of public and private service buildings for 2030 and 2040
  • Revision of the Renewable Energy Directive by June 2021 strengthening the existing renewable heating and cooling target and introducing a requirement to use minimum levels of renewables in buildings.
  • Extending energy audit requirements to larger and more complex non-residential buildings such as hospitals, schools or offices.
  • Introduction of Digital Building Logbooks that will integrate all building related data provided by the upcoming Building Renovation Passports, Smart Readiness Indicators, Level(s) and EPCs to ensure compatibility and integration of data throughout the renovation journey

Direct funding opportunities for energy efficient building and renovation projects

We are looking towards a large amount of direct funding the EU will allocate to real estate projects and a big part of that will be in the form of “sustainable infrastructure” investments:

“transport, including multimodal transport, road safety, including in accordance with the Union objective of eliminating fatal road accidents and serious injuries by 2050, the renewal and maintenance of rail and road infrastructure, energy, in particular renewable energy, energy efficiency in accordance with the 2030 energy framework, buildings renovation projects focused on energy savings and the integration of buildings into a connected energy, storage, digital and transport systems, improving interconnection levels, digital connectivity and access, including in rural areas, supply and processing of raw materials, space, oceans, water, including inland waterways, waste management in accordance with the waste hierarchy and the circular economy, nature and other environment infrastructure, cultural heritage, tourism, equipment, mobile assets and the deployment of innovative technologies that contribute to the environmental or climate resilience or social sustainability objectives of the Union and that meet the environmental or social sustainability standards of the Union.”

While “sustainable infrastructure” investment operation covers a lot of ground, it is estimated that a significant percentage of the funding budget will be available for building renovation and grid connection.

Furthermore, the Renovation Wave Strategic Communication presents several key directions for funding in Chapter 3.2. Reinforced, accessible and more targeted funding.

Considering the massive public and private investment at European level to set the Union firmly on the path to a sustainable and resilient recovery, with the European Council President and the President of the European Commission agreeing on a EUR 1.074 billion long-term budget and a EUR 750 billion COVID-19 recovery fund, we see great opportunities for development in the area of energy efficient building and renovation projects.