Key Messages from the Czech Experience 2007–2023
Upcycling Emission Trading Revenues to Building Renovation Programs
Petr Holub, Director General for Climate Protection at the Ministry of the Environment of Czechia, participated in the high-level conference Renovate Europe Day 2023 that took place in Madrid (Spain) on the 3rd of October 2023. Listen to his intervention here.
In the heart of Europe, the Czech Republic has been quietly leading the way with its approach to energy efficiency and carbon reduction over the past decade and a half. Their (New) Green Savings Programme, a grant scheme for residential building owners to energy renovate their home and install renewables, is a shining example of how policy initiatives can lead to substantial benefits. From 2007 to 2023, this programme has evolved and matured, offering valuable lessons for policy-makers in other countries in the EU.
Key Message 1: It Is Upcycling
The first lesson from the Czech experience is the concept of upcycling. It is about converting emission trading revenues into something far more valuable. For every euro invested in renovation, the Czech Republic has seen five times more savings in energy costs through carbon pricing. Moreover, each euro of public funds creates three euros of total investment, resulting in a total leverage factor of 10.
But it’s not just about financial gains; this initiative has also created local jobs in small and medium enterprises, fostering growth in the local economy. The impact extends beyond economics, as building owners and occupiers enjoy multiple benefits in terms of comfort, reduced energy bills, and a reduced carbon footprint.
Key Message 2: It Takes Time and Confidence
The journey from a government decision in 2007 to a well-established, continuous scheme in 2015 teaches us the importance of patience and confidence. Pilot projects and short-term initiatives won’t cut it when it comes to encouraging household investments in energy-efficient renovations.
Household investment decisions are often not rational, and trigger points can be few and far between. This emphasizes the necessity of creating confidence in the public by offering a long-term, predictable investment environment. The stop-and-go approach, often seen in rapidly changing or discontinued policies, just doesn’t work.
Key Message 3: Motivate for Deep Renovation
The Czech initiative offers three tiers of support, with higher grant rates for more comprehensive renovation efforts. Advisory and project development assistance further incentivise deep renovations Looking ahead to 2024 and beyond, there are plans to significantly upscale project development assistance (PDA) and offer preferential renovation loans for deep and overall renovations.
Key Message 4: Don’t Fear Ambitious Quality Requirements
The construction market will adapt and learn. However, it’s crucial to keep administration simple, with grant calculations based on physical variables, for example the area of insulated facades. Efficient administration, with application checks within weeks instead of months and prompt grant payments, is critical. Additionally, blending different funding sources can streamline the process, but it should be transparent to applicants, making it as seamless as possible.
Key Message 5: Let’s Be Inclusive
The programme aims to be inclusive, with a special provision for low-income groups. The “New Green Savings Light” provides up to 100% prefinanced grants, with a maximum of 6.000 euros for partial measures. Furthermore, advisory services are bundled with the grants and provided by local groups, helping neighbours navigate the renovation process.
Inclusivity has been a key aspect of the Czech program’s success, making it possible to focus on the worst-performing buildings and ensure that no one is left behind in the transition to energy-efficient homes.
Key Message 6: COVID and Energy Prices Had Their Influence
The COVID-19 pandemic and rising energy prices had a significant influence on the Czech Republic’s renovation program. During lockdowns, people spent more time at home and realised the value of living in high-quality housing. Many had the time to develop renovation projects, leading to increased interest in the program.
Likewise, during the price hikes in late 2021 and 2022, interest in energy-efficient measures, particularly in photovoltaics and heat pumps, multiplied. However, the volume of deep renovations stagnated. Recognising this, the programme plans to refocus efforts on deep renovations in the coming years.
The Time is Now, 2030 is Tomorrow
There is a unique opportunity to leverage the Modernisation Fund, Social Climate Fund, national ETS1, and ETS2 revenues for climate measures. The ETS directive as of 2024 mandates that all such revenues must be used for climate measures, further emphasizing the urgency.
The draft update of the National Energy and Climate Plan (NECP) counts on a progressive renovation scenario, underscoring the commitment to ambitious climate goals. With lessons learned from the Czech experience, other countries can follow suit, utilising upcycled revenues for comprehensive building renovation programmes and accelerating their carbon reduction efforts.