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Fit for 55 and building renovation: tackling climate, social and economic issues

It is widely agreed that the sectors that can make the biggest difference in reducing carbon emissions include power, transport and buildings.

In Europe alone, buildings account for 40 per cent of energy consumed and 36 per cent of energy-related greenhouse gas (GHG) emissions. Although recent lockdowns have made consumers more aware of the importance of a healthy environment to live in, many challenges remain, especially in a region like Central and Eastern Europe that inherited a very bad building stock and where there is a lot to do to catch up with Western countries.

The EU’s proposal to support renewable and less polluting energy systems for our homes

The new Fit for 55 package, unveiled by the European Commission last month aims, among other things, to support the development of renewable and less polluting energy systems for our homes and public buildings. Not only by decreasing emissions and saving energy but also by tackling problems like energy poverty, low quality of life and job creation.

Fit for 55 sets higher targets for building renovation and proposes an extension of the Emissions Trading System to buildings,” says Julian Popov, Fellow of the European Climate Foundation and Chairman of the Building Performance Institute Europe. “This is possible and needed not only from a climate protection point of view but also for accelerating the economic and social conversion between East and West.”

“Building renovation is the best way to reduce air pollution in the region and it will also aid the overall energy transition since buildings efficiency is, in fact, excellent energy storage.”

Key proposals include the revision of the Energy Efficiency Directive and the Renewable Energy Directive which will make buildings more energy-efficient by making it easier to integrate renewables into the grid (for example through the development of new technologies or by integrating storage facilities and improving cross-border cooperation) and by encouraging circularity, for example, facilitating the use of waste heat.

Also, the new Effort Sharing Regulation will set emission reduction targets for all Member States by 2030 for sectors including buildings. Emissions Trading for building fuels will speed up emissions reductions and stimulate investments in renewables and energy efficiency. Specifically, it will put a price on polluting fuels, encouraging producers to innovate and invest in clean energy and offer it to end-users. It will also ensure a level playing field for all heating options, by complementing the existing carbon price on electric heating and district heating with a carbon price on domestic heating. Additionally, it aims to create revenues for Member States which can be used to support the decarbonisation of buildings.

Finally, the new Social Climate Fund will provide financial support to citizens, in particular the vulnerable households, to invest in renovation or heating systems and ensure a fair transition.

Both the COVID-19 and the recent heat waves that hit Europe have made it clear once again how much buildings are important in our everyday lives. We need safe and healthy buildings in which live and work; we need our homes to be warm during winter and cool during summer. Having spent so much time at home, after the outbreak of the coronavirus pandemic, consumers have started to rethink ways to produce and consume energy and those decisions that were once postponed (why changing those windows that have worked for the past decade?) were implemented, especially thanks to governmental policies and subsidies that gave citizens motivation and confidence to undertake home renovations.

CEE must make a good use of EU funds

As Peter Robl, Public Affairs Manager Eastern Europe at Knauf Insulation wrote, Central and Eastern European Member States are also ready to deliver building renovation. In an opinion editorial for CEENERGYNEWS, he mentioned several good examples from the region, like Bulgaria which has a successful track record with a program for multi-apartment building renovations, or Poland which started the Clean Air Program aimed to combat air pollution, or Czechia that has a positive experience with its New Green Savings, a program delivering quality renovation of 8,000 single-family homes a year.

However, Julian Popov warns of major burdens, like labour shortages, skills and a slow rate of innovation.

“CEE countries need to invest a significant part of the renovation funds into the software part of the equation: increase funding for training, research and innovation,” he tells CEENERGYNEWS. “It is essential that EU funds are used as a lever to unlock other financial sources, personal savings, borrowing, future bills reduction, on-bill loan repayment and others. Without a step change in technological and financial innovation, the buildings renovation targets will be difficult to achieve.”

As for what concerns the technological part, actually, a study prepared at the end of 2020 by construction experts and leading international academics revealed that the technology and skills already exist to achieve net- or nearly- zero energy building in almost every part of the world at costs in the range of those of traditional projects.

The key to achieving net-zero targets is the maximisation of energy efficiency through building features, with remaining energy requirements generated from locally produced, renewable energy sources such as solar panels. The use of renewable materials, such as timber, can also help decrease CO2 emissions. Bio-based materials could represent a double win in construction: first, by replacing energy- and carbon-intensive materials such as cement and second, by storing carbon temporarily.

CEE could be ready to deploy such technologies but it really needs to make good use of the funds, exactly because of the gap it still has with the Western Member States and there is still a long way to go.

As Nolan Theisen, Climate and Energy Fellow at GLOBSEC says, the Fit for 55 package is merely the starting point.

“Easily the most far-reaching and controversial part of the Fit for 55 package is the proposed extension of the emissions trading system to buildings and transport sectors from 2026, championed by Germany and loudly opposed by France and Poland,” he tells CEENERGYNEWS. “CEE Member States mostly fall into the latter camp, concerned with exposing end consumers to higher energy costs.”

For him, the European Commission’s solution of a social climate fund that would be allocated to Member States according to their share of vulnerable households is merely the starting point for negotiations between the Commission, European Parliament and Member States.

“All parties are fully aware that getting the social justice dimension right is the only way it will succeed,” he concludes.

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