Building renovation is a silver bullet and it is time to pull the trigger

The European Commission’s ‘renovation wave for Europe’ splashed onto the scene last October with the release of its updated strategy including a lofty goal for the doubling of the annual EU renovation rate over the next ten years. Shortly thereafter in December, the International Energy Agency (IEA) warned that global progress on energy efficiency was regressing to its lowest rate in a decade as a result of the pandemic, with Executive Director Fatih Birol publicly calling on governments to pick up the pace in their recovery packages, or else.

Leaders across Europe seems to have gotten the message, but will the tremor of recovery trigger the tidal wave of long overdue and underprioritized renovations, especially in CEE?

There are all kinds of facts and figures that warrant the undivided attention of national and local officials to deliver on the Commission’s renovation ambition: buildings consume 40% of primary energy while causing more than 20% of GHG emissions, 75% of today’s building stock are inefficient, indoor air is typically twice as polluted as outdoor air, the inexorable link to energy poverty for the 34 million that cannot afford heat and energy bills (renovation reduces these too), and the list goes on. Smart renovations solve or at last significantly mitigate all of these problems simultaneously. Moreover, we possess the technology, tools and know-how, and there has never been more money available both in terms of private savings and public (EU) funding, both a direct result of the yearlong pandemic.

The building sector and renovations, in particular, are tailor-made for sparking immediate economic activity. There are projects to form a seemingly endless pipeline across all building categories, and from early phase evaluation to strategic planning and construction, most service providers are local SMEs that can hire flexibly and respond to demand. As a ‘bonus’, a rare positive externality, these projects and investments also contribute to energy savings and emission reductions, not only improving quality of life for citizens but moving member states closer to upward revised climate targets.

So what is the problem?

Energy efficiency has always been for lack of a better word boring, failing to capture the imagination like floating solar PV, an autonomous electric vehicle, or the Tesla home battery. The work behind the scenes of metering, insulation, heat pumps, windows, lights, new appliances etc. is conventional and unnoticeable by nature. Even as the most economically rational solution to climate and energy challenges, this has not translated to commensurate actions or results, and most would agree with Dr Birol that energy efficiency is woefully under deployed when it should be the first option.

Often acknowledged as the low hanging fruit of sectoral decarbonization relative to the unique long-term challenges posed by transport (carbon-intensive infrastructure and consumer behaviour inertia) and industry (early-stage, uncompetitive clean technologies dependent on subsidies), there is an assumption that it will in some sense take care of itself, that it does not need the same push. But this could not be further from the truth, especially given the current favourable circumstances.

Thankfully CEE governments have gotten the message too. Slovakia and Poland in particular have designs to lavish a large portion of their EU recovery funds on building renovation. Yet this windfall of committed public cash is more troubling than reassuring to most experts and business leaders intimately familiar with the region’s poor track record of EU fund management.

Administrative capacities are stretched even thinner now, applied to impact assessments of the new climate targets, updating national energy and climate plans (NECPs), and negotiating the new terms of the European Green Deal that will be put forward by the European Commission in June. Factoring in the time pressure with the distraction of the pandemic, how could cost-effectiveness and absorption improve?

More acutely problematic is that underlying national building renovation laws and building registries remain underdeveloped and incomplete. For renovations to be successful standards must be established, first for auditing and data collection itself, and then for their application, i.e. a design manual for each building category. Renovations should not be undertaken for the sake of renovation. The highest value-added occurs during the strategic planning phase, where CEE countries struggle the most in the absence of a coherent strategy or method to implement it.

The recovery does not afford the luxury of time to implement much need revisions and reforms that would normally span over years not months, putting value for money and binding climate objectives in jeopardy. On the other hand, the logic and momentum of building renovation at the centre of green economic recovery seems to be accelerating discussion about reforms and could lead to earlier adoption.

The West-East Europe energy transition divide can be expressed in renovation rates like cleantech R&D and electric charging infrastructure, and it should come as no surprise that current CEE building renovation realities and EU expectations appear worlds apart. The Commission is well aware that it needs to devote more than financial resources to help CEE help itself, and is moving in this direction. Ultimately it is up to governments to make the changes. In this case, the logic and simplicity of energy efficiency should serve as inspiration for streamlining of building renovation through the adoption of best practices. While this cannot be accomplished by 30 April, it is a good starting point for something that is no longer being ignored.