European Commission analysis of the long-term renovation strategies


Following the Energy performance of buildings directive, EU member states have had to submit long-term renovation strategies (LTRS) to the European Commission.

This process has great importance because of the European Commission can use long-term renovation strategies implementation for each state to help infer what the member states cannot handle separately and therefore needs to be in the new EU legislation.

Only 19 of the EU member-states have so far drafted strategies: Austria, Belgium, Bulgaria, Cyprus, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Latvia, Luxembourg, the Netherlands, Romania, Slovakia, Spain and Sweden.

Civil servants from each state drafted the strategies with great care to conform formally to the Energy performance of buildings directive requirements for long-term renovation. However, details regarding budgets and milestones lack clarity across the board, and there is high variance in regards to costs.

Why building renovation is so important for the EU greenhouse gas targets

Buildings are indispensable for reaching the EU’s carbon neutrality, energy efficiency and renewable energy objectives. The building stock is the largest single energy consumer in Europe, accounting for 40% of the EU’s energy consumption and 36% of its GHG emissions. To achieve the net 55% emission reduction target by 2030 the EU should reduce buildings’ greenhouse gas emissions by 60%, their final energy consumption by 14% and energy consumption for heating and cooling by 18%.

For 75% of the EU’s existing building stock, energy performance is poor and the buildings were constructed before current energy requirements were in place. It is estimated that about 85-95% of today’s buildings will be in use by 2050. Today, only 11% of the EU’s existing building stock undergoes some level of renovation each year, and a focus on reducing energy consumption, modernizing technical building systems and installing renewables is lacking in most cases.

However, very rarely, renovation works address buildings’ energy performance. The weighted annual energy renovation rate is low at some 1%. At this pace, cutting carbon emissions from buildings to net-zero would require centuries.

This is why the Commission adopted the ‘Renovation Wave for Europe’ initiative with the objective to at least double the annual energy renovation rate of residential and nonresidential buildings by 2030 and to foster deep energy renovations.

According to the impact assessment for the Climate Target Plan 2030, the residential sector would have to undergo the highest reduction in energy demand in heating and cooling, ranging between -19% to -23%, compared to 2015. The annual rate of replacement of heating equipment would have to reach around 4% in both the residential and services sector. During the same time period, the share of renewables and waste heat would have to increase to 38-42% to reach the objective.

Using public funding to leverage additional private-sector investment

So far, there are only a handful of good proposals for combining private and public funding for building renovation.

A couple of worthwhile mentions are Denmark’s ‘loan pool’ plan for renovation amounting to DKK 100 million per year and Romania’s plan to use € 600 million private sector funds for renovating municipal buildings (along with € 700 million of EU funds for municipal plus another EU € 300 million for central government building renovation)

Closing thoughts

While a handful of countries have been more proactive, such as Belgium, Denmark, France, Greece and the Netherlands introducing mandatory minimum energy performance levels, Long-term renovation strategies continue to be work-in-progress for most EU member-states, lacking clear goals and cohesion.

Given the mostly uncommitted pace for building renovation of EU member-states, we can expect the European Commission’s upcoming legislation to double-down on renovation and to inspire building modernization across the EU in the following years.