Tomas Trubacik: Using EU-ETS revenues to fund building renovations – a Czech example
Back in 2009, inspired by German KfW support scheme, the then Czech government launched its own support scheme for single family houses energy renovations. Since then, tens thousands of households have used the opportunity to improve their home. In 2020, under the covid-19 pandemic, the programme registered almost 17 thousand unique applications asking for more than EUR 142m (CZK 3,7bn) in subsidy support – a record year for the programme so far. The success was not granted though. The programme has survived governmental changes as well as several calls (start/stop system) with more applications than available funding. But the quite unique funding is part of the success story.
Since beginning, the programme has been funded by emission revenues. In 2009, the programme started with EUR 0,8bn injection from one-off sale of Kyoto emissions oversupply by the Czech government. The then call ended up in 2010 with an oversupply of projects creating a pressure on politicians to ensure more stable and long-term funding. In 2012 a legal basis was provided . This implementing act of EU-ETS scheme into Czech legislation made Czech EU-ETS revenues up to EUR 153m (CZK 4bn) annually assigned by law to the State Environmental Fund – a managing authority of the programme. It took another year to re-launch the support scheme and another year to finally launch the current New Green Savings.
In 2015 an important step was taken. The start-stop system was abandoned and continuous call with an end in 2021 was established. This was a huge step as applicants could prepare their renovation projects according to their time needs. Since then, more than 60 thousand families took their chance to renovate their house, install solar panels, change their heat source, or even build new house in passive energy standard with a greenroof.
This trading period is over. The new is on and so are the preparations for the new programme called New Green Savings 2030 to be launched this fall. The transition should be smooth – it will be an evolution, not a revolution, as representatives of the Fund says. Amended law  made no changes to the mandatory assignment of revenues to the State Environmental Fund, making it clear, that with the current EU-ETS price, there will be EUR 1,53bn (CZK 40bn) available for the period 2021-2030. The New Green Savings programme is a Czech renovation flagship, important for the fulfilment of national targets in energy efficiency, emissions as well as renewable energy.
The problem is that even with this stable funding the programme will need more. As of the new scheme is launched, it will newly support also the renovation of apartment buildings outside the Prague region which were supported with EU structural funds in 2014-2020 period. The programme will thus unify whole residential sector support under one scheme, under one authority – clearly a step forward. Last year was a record not only for SFH renovation but for the MFH as well and this high numbers unfortunately mean also high financial needs which combined exceed EUR 269m (CZK 7bn). This is more than currently available. Knowing this, the National Recovery Plan under the Recovery and Resilience Facility counts with additional EUR 730m (CZK 19bn) for building renovation and air quality improvements. A half should support building renovation in the New Green Savings 2030 programme and the rest should be used for also popular domestic coal heat-sources replacement subsidies. Until 2023 the funding thus seems to be ensured and the programme will once again help with the post-crisis recovery as in 2009/2010.
It is obviously needed to start to think how to ensure funding later-on. There is an ongoing debate on loans and more sustainable funding scheme in the future. With the “Fit-for-55” package coming and a need to increase a renovation rate in all sectors to meet climate targets, we will need that. Hopefully, the popularity of the New Green Savings programme might once again help politicians to find additional sources.
Looking around CEE region, the Czech scheme is unfortunately still quite unique. And it is definitely not because of some unique circumstances in the Czech Republic. The scheme can be replicated elsewhere. And main lessons learned?
- Stability of funding (EU-ETS revenues might be even more attractive with high CO2 price)
- Stability of support (continuous call – no start-stop system)
- Stability of conditions (rather mild level of support motivating into deeper renovations)
And maybe most important – patience. It took several years to get to this point and the political support was not always granted.
This case has inspired other in the CEE region and stakeholders in Slovakia, Poland, Romania and other countries are now looking at this option. We look ahead with hope that such funding opportunity will prove to be replicable with success in other countries in the region.
 Act No. 383/2012 Coll., on Emissions Trading
 Act No. 1/2020 Coll. amending the Act No. 383/2012 Coll.
About the Author:
Tomas is still an idealist trying to create a better world. For last 6 years he has been advocating for energy efficiency and favourable energy, climate and construction legislation at Chance for Buildings. He is a boy scout leader, beekeeper, rail and public transport enthusiast. He is quite into biking, swimming, Moravian folklore and wine.