Caroline Simpson

Open Letter to Energy Ministers of the EU Member States

Subject:                 Energy Price Rises: Renovate Buildings to Protect Consumers

Dear Minister,

In the context of your meeting on the 26^th of October, you will be debating the “toolbox” of measures tabled by the European Commission to address the rising energy prices.  We call on you to prioritise building energy renovation to protect consumers.

The increased price per unit puts the spotlight once again on our vulnerability to high rates, and costs, of energy imports.  In 2015, the EU imported 53% of its energy needs and we highlighted at the time (see our video here) that this was costing the EU around €400 billion per year.  The situation has since degraded as the EU imported nearly 61% of its energy needs in 2019[1].  This dependence on imports must end or unpredictable price rises will occur again and again.

Buildings in the EU account for the largest share of final energy consumption, at a high of 40% of energy demand.  This is largely due to the poor energy performance of the building stock, with more than 97% below the A-level grading[2].

The truly sustainable answer to tackle rising energy prices and protect consumers is to cut our energy demand through deep energy renovation. Thanks to technologies readily available, it is possible to reduce the energy demand of the building stock in the EU by 80%, thus drastically reducing the amount of energy needed in each building (homes, offices, hospitals, public buildings etc.) to create comfortable and healthy indoor environments, and leading to a 30% reduction in total energy use in the EU.

Direct financial support to vulnerable households is only a stopgap solution.  The Commission acknowledged in its communication that Member States should “step up investments on energy efficiency and in buildings performance, which lowers energy consumption and energy costs and eases pressure on energy markets” as a medium-term measure to tackle energy prices.

More specifically, we call on you to take action to accelerate building energy renovation in two respects:

• Front-loading and prioritising the investments and reforms related to building renovation in the National Recovery Plans (see Study), in order to set a path that will benefit all, and in particular vulnerable consumers;
• Securing ambitious buildings elements in the Fit-for-55 package and in particular Minimum Energy Performance Standards (MEPS) in the Energy Performance of Buildings Directive (EPBD) as an indispensable driver to create visibility and future-proof our buildings.

A transformation of the building stock in the EU is urgently needed to achieve climate neutrality and protect consumers against variation in unit prices, thereby making comfortable, healthy indoor environments an affordable option for all.

Yours sincerely,

Adrian Joyce
Campaign Director

[1] See Eurostat article here
[2] See BPIE publication here.

A major Study by E3G for the Renovate Europe Campaign (REC) analysed the share devoted to energy renovation of the building stock in the National Recovery and Resilience Plans (NRRPs), showing that ambition remains low and that Member States lack foresight for planning beyond 2026. In a moment when increasing energy efficiency is made more urgent than ever because of skyrocketing energy prices, the Plans represent a huge, missed opportunity to significantly lower energy demand.

On its 10th Anniversary, Renovate Europe launched Renovate2Recover, a study undertaken by E3G with input from the Campaign’s National Partners, that shows that the massive funding being made available under the Recovery and Resilience Facility (RRF) is not being used to its full potential. The study sets out 9 recommendations that would allow Member States to implement transformative Plans and meet the Renovation Wave objectives.

With a view to boosting the green transition, Member States were mandated to spend at least 37% of the RRF on climate-related action, with energy renovation encouraged as a flagship component. Among the 18 Member States assessed, the Study found that an average of only 8% is allocated to energy renovation, achieving in most cases only a 30% energy savings, the bare minimum required by the RRF guidelines.

“This unprecedented additional injection of public funds is a golden opportunity to set the EU building stock firmly on the path to achieving its Renovation Wave goals to 2030 and meeting the 2050 climate targets”, said Adrian Joyce, Campaign Director. “But these renovations must be done properly, and the money must be spent well. And for this, we need deep (or staged deep) renovations, going well beyond 30% energy saving”.

In addition to raising the level of expected energy savings, the Study also emphasises the need to invest in the enabling framework to create sustainable renovation markets.

“In the delivery phase, the planned investments must be linked to reforms so that it creates a fertile ground for the renovation market to grow and ‘deepen’ beyond 2026” commented Vilislava Ivanova, the lead researcher at E3G for the Study. “Otherwise, the NRRP investment efforts risk ‘falling off a cliff’ after 2026. Attracting private finance should be prioritised, alongside efforts to build delivery capacity and create synergies with other EU and national funding sources.”

Unfortunately, Member States displayed limited foresight to set up an enabling infrastructure that can coordinate the renovation sector beyond the implementation of the individual measures in the NRRPs.

The Study also highlights the importance of an ambitious regulatory framework at EU-level to complement and drive action from the NRRPs on the ground. The outcome of the Fit-for-55 legislative proposals, all of which would enter into force while NRRP funding is being invested, will be crucial in this respect. For example, the introduction of mandatory Minimum Energy Performance Standards (MEPS) under the EPBD would send a strong signal to the whole renovation value chain, from institutional investors to building users.

The Study covers 18 of the 27 Member States and finds that the total amount they plan to invest in energy renovation is €39.9bn, or 8.4% of the total funding allocation. This percentage varies from a low of just over 3% in Austria to a high of over 16% in Belgium. Looking at the numbers in per capita terms, we see that there is huge variation across the EU with Greece planning to spend €384 per capita on energy renovation and Austria planning to spend just €11 per capita. Proposed investments in energy renovation are concentrated in the residential sector, which receives over €23bn (58%) of funding, with the public sector buildings appearing as the second largest target for investment with close to €13bn (34%).

“Although in their current form, the NRRPS will not be transformational for building renovation, there is still room for Member States to course-correct during the implementation phase”, added Caroline Simpson, Renovate Europe Campaign Manager. “This Study should be seen as a starting point for Member States to put their building stock on the right path to 2030 and 2050, by raising the depth of renovation and planning ahead to create a sustainable renovation ecosystem for the benefit of citizens, businesses and the environment beyond 2026.”

The National Partners of the Renovate Europe Campaign will be vigilant in monitoring the efforts of the Member States and will be involved in reacting to the successive assessments and recommendations that the European Commission will issue on the NRRPs over the period to 2026.

The full Study and all 18 individual Country Profiles can be downloaded here.

ENDS

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For more information on the content of the Study, contact:

• Caroline Simpson – caroline.simpson@euroace.org
• Vilislava Ivanova – vilislava.ivanova@e3g.org