EU green renovation push raises the heat on EU countries

 

EU green renovation push raises the heat on EU countries

 

Capitals are wary that higher EU energy efficiency targets and a new carbon market for buildings may stir social discontent at home.

 

The new measures will dramatically increase pressure on countries to roll out ambitious renovation policies

 

BY AITOR HERNÁNDEZ-MORALES AND LOUISE GUILLOT

July 9, 2021 4:24 pm

https://www.politico.eu/article/eu-green-renovation-push-raises-the-heat-on-eu-countries/

 

The EU plans to put the squeeze on countries to make buildings more energy efficient — and that's setting off fears of a clash between Brussels and national capitals and the possibility of a populist backlash.

 

The European Commission wants to cut greenhouse gas emissions by at least 55 percent by 2030, and doing that means a radical rethink of how buildings are treated. About three-quarters of the EU's building stock is considered to be energy-inefficient, and buildings account for more than a third of the bloc's energy-related greenhouse gas emissions.

 

The Commission aims to tackle the issue on July 14 in its Fit for 55 package, a major legislative proposal aimed at hitting the bloc's 2030 climate pledges that will include new energy efficiency targets and a proposal to extend carbon trading to the buildings sector.

 

But those measures risk putting further strain on Brussels' relationship with member countries, which will have to take on costly renovations in the public sector and fend off potential anger from homeowners and tenants facing higher heating bills.

 

Governments are especially nervous about the Commission's proposal for a new carbon cap-and-trade system, which would oblige fossil heating fuels suppliers to buy permits for the greenhouse gases they emit — something that could hike energy prices.

 

Critics, including Poland’s Prime Minister Mateusz Morawiecki, Slovenia’s Janez Janša, Latvia’s Arturs Krišjānis Kariņš and Luxembourg’s Xavier Bettel, say that risks shifting costs onto the bloc's poorest people. France, too, is wary of how higher prices will play domestically, given the unrest unleashed by the Yellow Jackets protest movement in response to planned tax hikes on gasoline in 2018.

 

It's a "hot topic," Emmanuel Constantin, adviser for renovation and construction in the cabinet of French Junior Minister for Housing Emmanuelle Wargon, acknowledged at a POLITICO event last month, because "you are going into people's houses."

 

Higher targets

The new measures will dramatically increase pressure on countries to roll out ambitious renovation policies to meet EU targets.

 

The Fit for 55 package is expected to raise the bloc's collective energy efficiency target for 2030 from 32.5 percent to 37 percent and nearly double member countries’ annual energy savings obligations, which are set to rise from 0.8 to 1.5 percent — which means countries have to cut their energy use by that amount every year.

 

A draft version of the revamped directive also proposes forcing countries to revamp all public buildings — meaning everything from local hospitals to city halls, municipal theaters and public housing.

 

“Up until this point there was an obligation to renovate 3 percent of public buildings each year, but that only applied to the central government,” said Brook Riley, head of EU affairs for Danish multinational building group Rockwool. “In Germany, for example, that just meant ministry buildings mostly in Berlin, so less than 0.5 percent of the building stock.”

 

The expansion to social housing would be "a very big deal," according to Riley, as it accounts for up to 10 percent of the EU's buildings.

 

Some capitals appear to be embracing the challenge. The Spanish government has made improving energy efficiency the focus of its recovery plan and has earmarked €7.8 billion in EU funds to carry out the largest private home and public building renovation scheme in the country’s history.

 

“Spain is aware of how important renovations are to reduce our buildings' energy consumption," Deputy Prime Minister and Ecological Transition Minister Teresa Ribera told POLITICO.

 

The government's program aims to green Spanish cities with measures targeting inefficient buildings built before 2007. It also includes a plan tailored to rural parts of the country that aims to not only lower energy consumption but also create green jobs in the country's interior, she said.

 

Other countries are less enthusiastic about the prospect of massively ramping up home renovations.

 

In Portugal, a national government already struggling with a serious energy poverty problem as a result of poorly insulated buildings, warns that higher energy efficiency targets will pose "a huge challenge."

 

Lisbon has earmarked a modest €600 million for measures to improve buildings’ energy efficiency in its recovery plan, and “doesn’t have an infinite amount of money for this,” Portuguese Environment Minister João Pedro Matos Fernandes told POLITICO, stressing that Lisbon would need a lot of help from the EU to make it happen.

 

Beyond the cost, countries are also likely to struggle with physically carrying out renovations at the necessary scale and speed to meet higher targets, according to Rockwool's Riley.

 

“Public money, institutional investments, bank loans: The money is or will be there,” he said. “The problem is that the bureaucratic workforce in the ministries, regional governments and city administrations is lacking, and governments are going to have to scramble to find those people who are needed to actually get the money to the buildings.”

 

Beware the backlash

Perhaps the greatest challenge will be to ensure the renovation push doesn't exacerbate social inequality and unleash a wave of popular protests.

 

France, where the upheaval caused by the Yellow Jackets protest movement is still fresh in ministers' minds, is drafting new regulations to avoid a backlash and provide support to poorer households, said Constantin.

 

France earmarked almost €7 billion over two years to the renovation of public buildings, social housing and private housing. It decided to work with subsidies instead of tax credits and prioritize lower-income applications, according to Constantin. "The ecological transition, and especially housing renovation, needs to take social inequalities into account … If you design it simply and at the same time ensure that grants are higher for low-income households … People really engage in the transition."

 

The French government has also been careful to not impose renovations on its citizenry: While the country’s draft climate bill includes a slew of measures to promote renovations, it only makes them mandatory for homeowners seeking to rent out the least energy-efficient properties from 2025 onward.

 

Still, the prospect that Brussels could create a new carbon market for building emissions remains a major source of concern, said Constantin, who warned that — without proper support measures to mitigate its effect — it risks angering the working class. “We really have a concern about the social impact and the burden it may have on households.”

 

French MEP Pascal Canfin, from the liberal Renew Europe group, has come out against the proposed measure, arguing that it would be “fundamentally anti-redistributive because the fuel budget and the heating budget take a proportionally larger share of the budget of the poorest households than those of the richest.”

 

The Commission has responded to those concerns by creating a Climate Action Social Facility to protect vulnerable households from higher energy bills. “The idea is to help those who are disproportionally affected by these changes,” Green Deal chief Frans Timmermans told France Inter last month.

 

But while the Dutchman acknowledged the potential for social unrest, he stressed that he was “more afraid of the climate crisis, more afraid of the ecocide that can result from it.”

 

“If we do nothing we will totally lose control of the climate crisis, and people who will lose the most will be the poor,” he said. “When I propose changes, I propose them because we have no other option, but we can make these changes with solidarity.”