Building expert: Policymakers using ‘shortsighted’ subsidies to cushion energy crisis

By: Kira Taylor | EURACTIV.com

Subsidising energy bills to cushion the blow of the energy crisis is an “enormous waste of money”, according to Oliver Rapf. While it is necessary to shield consumers, EU countries should be looking at energy efficiency measures that create long-term improvements and help tackle the climate crisis, he argues.

Oliver Rapf is the executive director of the Buildings Performance Institute Europe, an independent centre of expertise on the energy performance of buildings. He spoke to EURACTIV’s Kira Taylor about BPIE’s new buildings tracker and the role of buildings in the energy crisis.

INTERVIEW HIGHLIGHTS:

• Building renovation in Europe is not on track to reach net zero emissions by 2050 and the gap is widening.
• While supporting households through the energy crisis is needed, EU policymakers are using shortsighted subsidies rather than driving renovation that would create long-term improvements.
• Energy saving can be achieved by big buildings, like shopping centres, lowering temperatures and reducing lighting, and consumers can take small steps to improve energy efficiency, but the big push needs to come from deep renovations, supported by governments.
• Minimum energy performance standards under the energy performance of buildings directive could drive more renovation, but there are concerns these will be watered down by EU countries.

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BPIE recently published its first edition of the EU buildings climate tracker. What were the main results? And are EU countries on track to fully decarbonise their building stock by 2050?

We developed the tracker to monitor the progress towards climate neutrality by 2050 and, of course, the delivery of the Paris Agreement. We composed this index consisting of six sub-indicators to not only look at the development of CO2 emissions but also ask the questions: ‘Are investments going in the right way? Are we making progress on renewable heating and cooling?’

What the tracker found is that we are slowly moving towards climate neutrality, but not with sufficient speed. In fact, the gap between where we should be and where we are in reality is widening. For us, that’s a clear sign we need to accelerate the effort to close this gap.

What are your main recommendations for EU countries to close that gap?

What we really need is for countries to implement their renovation strategies in an effective way. Every member state has delivered a renovation strategy to the European Commission. We now need to make sure they’re effectively implemented or updated if they are not effective enough and if they do not show how member states will meet certain decarbonisation milestones in 2025 and 2030.

We now have significant funding coming from the EU. The recovery and resilience funds are a great opportunity to have more effective financial support instruments, but also the regular EU budget, the MFF, provides a lot of funding opportunities.

In the past, some member states found it difficult to absorb all the funding available. That means member states should invest in increasing their ability and capacity to absorb funds and distribute them to different renovation projects through well-targeted and well-designed financial instruments.

Because of the war in Ukraine and the energy crisis, we’ve heard a lot of talk about energy efficiency at the EU level, including a higher energy efficiency target. How can Europe seize that momentum? Are you actually seeing that on the local level?

On the EU level, the current revision of the energy performance of buildings directive (EPBD) provides the ideal opportunity to make structural changes in favour of energy efficiency. The introduction of so-called minimum energy performance standards for buildings will be the right policy to secure more energy efficient buildings for European citizens.

On the local level, I think that all municipalities and all national governments are addressing the issue, but not necessarily with the right long-term perspective. Much of the focus right now is on buffering the impacts of very high energy costs on European citizens, which is a necessary short-term measure – we want to make sure that people are able to heat their homes and not have to sacrifice other necessary expenses.

But the debate about structural changes and how we consume energy is lacking. While I understand the short-term focus, we definitely need to make sure that we have these mid-term solutions too.

Of course, renovation cannot happen overnight. But in March, we suggested short-term efficiency measures which could have been implemented over the summer, like a big effort to insulate attics. It didn’t happen. Maybe individual people took action and insulated their loft, but there was no government support whatsoever.

I regret this short-sightedness in most policymakers who do not address the more structural changes – changes which could have been implemented over the summer and can also be implemented over the coming years.

What do you think the barriers are?

Doing simple things like loft insulation could be done by most people. I don’t see any technical barriers. I don’t see any financial barriers. I just see a lack of political focus on these short-term solutions.

Ahead of this winter, are there any similar quick fixes for building decarbonisation or energy efficiency that could help reduce energy bills for consumers?

A quick fix is for everybody to check their home or apartment for major leaks. A technically easy thing to do is check how leaky your windows are and buy insulation tape for the frame. Things like drawing the curtains at night to keep the warmth in, all these measures help a little bit but they do not replace the big structural changes.

Every government right now is willing to subsidise energy costs to a certain degree. The plans look different in every country, but every country is investing in subsidising energy bills one way or the other, which in the end, is an enormous waste of money because the money will literally be burned through the gas, oil and electricity people are consuming.

Again, the reasoning in terms of social cushioning is understandable and acceptable. But I would like to see a similar public investment to trigger short-term private investments in efficiency, but unfortunately, this is not really in the focus of policymakers.

The EU has a demand reduction target for gas and is looking at a reduction target for electricity. How can large buildings, like shopping centres, and also households contribute towards that?

The short-term measures are very similar for all buildings. You just have to reduce the heating levels. In big public places, where people move in and out, you can easily do that. You can also reduce lighting, especially in shopping centres.

The same applies to homes. It really depends on people’s individual living situations as well. If you live alone in your house, you can easily check whether the loft is insulated. If it’s a multifamily apartment building, the situation is different and probably more complex.

What I would expect, in particular from the real estate investment companies who own non-residential buildings, like shopping centres and stadiums, is that they develop a plan for how to renovate their buildings and make investments to bring down energy consumption significantly and which put them on the pathway to climate neutrality.

Is there enough information from governments or the EU to explain what measures people should be taking? Or do you think that there’s still this information gap when it comes to driving efficiency?

When it comes to targeting individual consumers, individual citizens, I think we could definitely have much more information. I also see a big role for DIY stores.

Definitely, local and regional governments should put out much more information because people who work on the issue might be very familiar with what could be done, but people who have different occupations might benefit from more advice.

When it comes to commercial properties, normally the bigger properties have facility managers onsite, who should know what to do. But they need to get the mandate from the owners, from the investors to develop deeper interventions.

Obviously, the revision of the energy performance of buildings directive (EPBD) will be key to driving energy efficiency. What elements do you think are most important in it? And do you have any concerns that it might be watered down as the European Parliament and EU countries draft their positions on it?

One of the most important elements is the introduction of mandatory minimum energy performance standards (MEPS). They’re a new policy instrument, which has already been tested in some member states and which can really change the dynamic of the renovation market.

We know that we need to accelerate the rate of renovation and that we need deeper renovations – that’s exactly what these minimum energy performance standards can deliver.

Now, the devil is in the detail. The essential question is how do you design it so that these MEPS do not create socially unfair requirements? We know that the European Parliament is supporting quite a substantial strengthening of MEPS, but I’m quite concerned by what I hear about discussions in the Council, where member states are making an effort to water the requirements down.

At a recent BPIE event, we heard concern from the Czech presidency on these requirements. Do you think there is a scenario where you could have safeguards for households alongside strong minimum energy performance standards?

We can definitely design MEPS in a way that ensures low-income households are not burdened with a requirement to make an investment they can’t afford. In my opinion, it makes sense to look at the investment capability of the different owners and structure MEPS around these.

We have a large amount of European real estate, whether it’s commercial or residential, owned by large investors. They have the capability and the means to invest in upgrading. So I think we need to have different requirements for different owner groups. So we definitely must avoid social hardships but also make sure that the worst performing buildings are benefiting from renovation.

We need a mix of financial instruments and incentives, so that low-income households who own their property but do not have the means to invest can benefit. Whereas other groups who can afford renovation and who own property as a financial asset should face different requirements.

The upcoming negotiations must make sure that these minimum standards will be both effective to trigger more and deeper renovation and be socially fair. I am convinced that this can be achieved.

Do you have any other concerns about the EPBD?

There is a strengthening of energy performance certificates (EPCs), which is good because they are giving information on the current performance of the building, but what has been proposed will not roll these out fast enough.

Ideally, we would have an energy performance certificate for all buildings as quickly as possible because it’s the start of a potential renovation journey. Of course, for those groups in society who can’t afford it, we should offer it for free. We talked earlier about how prepared governments are to subsidise energy consumption – why should they not subsidise information as a starting point to renovate buildings?

I think the same applies to the building renovation passport. The certificates give you the status quo and the passport can explain where the renovation journey could and should go. So it gives a perspective into the future and, therefore, triggers investments. It should also be rolled out quickly.

We also need to look at the carbon emissions over the life of the building, what’s known as whole life carbon. We haven’t really seen it discussed in the Council yet and, while the European Parliament agree on gathering and disclosing data, they don’t want to set requirements to reduce those emissions.

Ultimately, the carbon costs of the renovation wave will be significant, and construction activities will need to consider whole life carbon for both existing and new buildings. The revised EPBD should kick off the comprehensive collection of such data by member states which would then allow the definition of benchmarks for new buildings and renovation activities. This means that we need a clear legislative roadmap in the EPBD so that regulators, the construction industry and investors can prepare and implement the necessary policies.

[Edited by Frédéric Simon]