Op-Ed

Energy renovation of buildings: a question of confidence

Buildings account for 40.6% of the EU’s final energy consumption. Energy-efficient retrofits of buildings, particularly in the residential sector, are therefore a major lever in achieving the 27% energy efficiency target set at the European level by 2030. In Europe, all levels of governance – national, regional and communal – have already integrated these objectives and have even gone beyond.The technical and financial instruments allowing energy efficient retrofits of buildings are numerous. Nevertheless, they are unanimously considered as too shy in the residential sector compared to the extremely ambitious objectives that have been set. If the answers do not provide the expected solution, perhaps we should rephrase the question, abandon the idea that the multiplication of tools will solve the issue, and find new levers.

It is doubtlessly necessary to question the governance of these tools. The issue of energy efficient retrofits of buildings is often addressed at the national level. Yet it is both wider and more local. Wider because there will be no energy transition in Europe without energy efficient renovation of buildings. The framework for action must therefore be European, even more so in view of the major impact of this issue on public and private debt. More local because retrofitting, even if more « industrialized », implies knowledge of the building stock and of local entrepreneurs and impacts on land value, which belongs to the local. For example, as in the case of the Brussels Region, it is time to encourage the establishment of local financing mechanisms under the principle of subsidiarity. At the same time, in the name of the same principle, strong involvement of the European level is necessary in terms of loan guarantees and financing facilitation for local authorities.

Likewise, it is essential to work on the right mix between traditional tools and innovative tools, which deserve to be developed. So far, OECD countries have used the simplest and most comprehensive mechanisms, through taxation, regulatory constraints and white certificates. However, these mechanisms are now reaching their limits. Their effects are limited by a weak or even non-existent response to the various difficulties of the residential segment, beyond the fact that they cannot unlock other mechanisms with more potential. Whether called PACE (a mechanism in the United States that allows the user to finance investment through the local authority and to reimburse it through local taxes) or building elevation, these innovative mechanisms remove several limits (financing capacity, underperformance, divergence of interests between stakeholders…) in decision-making related to investment in energy efficiency. They also have the immense advantage of giving a hand to local authorities because they are linked to local taxation (PACE) and to the local urban plan (elevation).

It is surely necessary to dig deeper. The energy transition goes beyond the technical, legal, and financial dimension alone. It presupposes a Copernican revolution. In a world where demand for energy will increasingly have to adapt to supply, final consumers and their uses must be placed at the core of the system. This means that no renovation can be achieved without these simple questions: What are the expectations of this consumer, who is at the same time tenant or owner, and taxpayer? Do they trust the service that is provided? Do they even know of it, and if so, do they understand it?

By answering these questions, the approach to energy-efficient renovation can be renewed and can focus on comfort, well-being, and services rather than technology; it can focus on building value rather than savings. And it can focus on customer experience, sector structuring and accompaniment to overcome defiance. Three challenges to be addressed in a collaborative approach between local public actors, businesses, and urban dwellers.

This op-ed first appeared in Urban Snapshot (February 2017) by La Fabrique de la Cité.

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La Fabrique de la Cité

La Fabrique de la Cité is a think tank dedicated to urban foresight, created by the VINCI group, its sponsor, in 2010. La Fabrique de la Cité acts as a forum where urban stakeholders, whether French or international, collaborate to bring forth new ways of building and rebuilding cities.

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