Renovation Wave Initiative it was a hot topic for Autumn 2020. Its details were announced by the European Commision on 14 October and shortly after we enabled the discussion of the EU Officials and the CEE countries representatives. Discussions included the renovation programs in their countries and how this new initiative and synergies with the additional New Generation EU/Recovery funds can help to increase the level of deep energy renovation.
Our webinar was part of the Central and Eastern Energy Efficiency Forum C4E 2020 edition, an edition that includes online events and the conference in Romania, in April, next year.
Just two days after the launch of Renovation Wave Strategy by the European Commission, we welcomed over 200 participants at our energy efficiency community meeting along with European Commissioner for Energy Kadri Simson in a dialogue with the official representatives responsible for energy from Croatia, Bulgaria, Czech Republic and a member of the European Parliament from Romania to discuss about how we can make it work in the CEE countries.
Participants were mainly from CEE, with a balanced representation of all sectors – 20% academia, 22% civil society, 21% government & public sector and 36% business & trade associations and were an active part of the conversation by submitting answers to our polls and questions for the panelists. As the essence of C4E events is the mix of different stakeholders, diverse perspectives and a genuine CEE region focused conversation we provided each speaker with the opportunity to present their first reactions.
Commissioner Kadri Simson introduced the “hot of the press” Renovation wave as a very important part of the European Green Deal, foundation of EU Recovery Strategy and also the first glimpse into what the new increased 55% emission reduction target by 2030 means for buildings as the largest energy consuming sector of economy. She stressed out that it is impossible to decarbonize Europe without decarbonizing buildings which means reduction of their GHG emissions by 60%. For which the annual renovation rate in combination with depth of renovation need to at least double by 2030. Renovation Wave will create a lot of jobs, bring benefits for the private and public and will helps us to achieve our climate goal.
In the first round of reactions all panelists welcomed the new initiative as very useful and a great opportunity.
Mr Stankov pointed out that Bulgaria wants to be even more ambitious and achieve 5% renovation rate instead of 3% building on renovation program from 2015 in which more than 2000 multi-apartment buildings were renovated and annual savings over 1TWh were achieved. By 2050 Bulgaria wants to have 60% of buildings renovated yielding 7300 TWh saving per year.
Mr Kriz welcomed the Renovation Wave too. While the Czech Republic already has many programs both based on structural funds and national programs, renovation still needs to get a bigger priority, especially with all the new instruments coming: New cohesion policy, Modernization Fund, Resilience and Recovery Fund and Just transition Fund. He also noted that while earlier energy efficiency and renewables may have been split, they seem to be coming together lately, which is positive.
Mr Pislaru pointed out that 37% of recovery funding is earmarked for climate objectives, which together with competitiveness and innovation objectives come together well in Renovation Wave and also noted that social objectives are key: jobs, lifting up people from energy poverty and access to housing.
Mr Milatic reported that Croatia also plans to increase renovation rate from today’s 1% to 3% by 2030, for which EUR 1bn will be needed each year. He also reminded that lack of workforce is a big issue, which was shared experience among many panelists.
Participants were asked to respond to a poll question
In response to this poll, Mr Goldstein commented on quality coming last in the poll. Renovation is not only about the rate (number of buildings), but also about quality of renovation reflected not only in energy savings, but also lifecycle emissions (so we can compare for example two same-looking bricks to see which one is more sustainable) and other aspects that include resilience, safety, accessibility and also aesthetics. These are all long-term benefits for energy system, citizens and the economy.
In the following panel discussion number of topics were raised. Mr Pislaru usefully structured the challenges into five dilemmas, around which the debate gravitated:
While the Commission puts a great emphasis on regions and municipalities, sometimes traction at local level is slower. This was seconded by Mr Kriz who pointed out lack of awareness as a key barrier. Many mayors as well as private investors still don’t fully understand the effects and benefits of deep renovation. His Ministry is therefore working on a completely new program to support development of projects and feasibility studies for building renovations that should help overcome this.
Public sector can and will push but partnering with the private sector and creating new markets is essential for success. An example given by Mr Kriz could be better green public procurement focusing on qualitative criteria (such as for instance recycled materials) rather than just simple lowest cost. With new guidelines this should become easier. Support for SMEs was also mentioned as key segment by Mr Stankov next to public sector and residential buildings.
While some member states can finance themselves, others cannot. Bulgaria is certainly not the only country which faces the problem with lack of funding. Mr Stankov explained that only about 10% of buildings are efficient and 90% need renovation and thus financing & programs. For this reason, Bulgaria is establishing new Decarbonization Fund, which will concentrate money from different sources. The first focus will be apartment buildings, that are most ready. Mr Pislaru reminded, that energy efficiency should be self-financing over time and therefore grants should be gradually supplemented by loans. This was echoed by Mr Goldstein: grants are easy to give while they last, but they will run out at some point and we need to make financing sustainable. The time for developing innovative financing is now and this needs to include combinations with loans, guarantees, green mortgage, tax rebates (like 110% eco-bonus in Italy), or on-bill financing.
Many countries in CEE region face issue with legacy of partial renovations when some elements were done but others neglected. The principles of deep renovation should be upheld and Mr Kriz confirmed this by experience with the Czech single-family homes renovation program funded from EU ETS revenues. Home-owners often prefer DIY approach in a sequence of small shallow renovation in what he called “salami tactics”. Communication and link to quality of a deep renovation is key.
Pushing this agenda will have limited results if there is no pull. Integrated approach involving all stakeholders is needed and Mr Milatic confirmed this: Energy efficiency is not only insulation and windows, but also support for e-mobility in buildings, digitalization and other things. With batteries later we can achieve self-sustaining buildings using renewable energy. Mr Goldstein agreed that buildings should not be a battleground of different technologies and solution, but instead a place where all come together.
An extra question was about state aid rules. According to Mr Kriz they really need improvement, because in his experience they sometimes can block renovations. Differentiation by size of enterprise (in this case residential building owner) doesn’t really make sense in case of a renovation. The only criterion should be the depth of renovation because by renovating, actors don’t actually compete. Mr Karlis took note of this and informed that this issue will be taken up by DG competition as a part of Renovation Wave as well.
On another question from the audience about EU quality label for workers Mr Karlis responded that they are looking at cross-border certification which could be the first step.
He then concluded the interesting debate with formulating a general objective on which everybody could agree: “We need to make renovation simple, easy and dare I say fun!”