Financial and fiscal instruments across the EU
At today's renovation rate of around 1% of buildings per year, a timely transition of the EU building sector towards climate-neutral levels by 2050 cannot be ensured. To accelerate energy efficiency investments in this area, the European Commission has intensified its efforts in recent years, with specific calls to strengthen the existing financial framework, increase funding levels, diversify types of financial models and explore new supporting mechanisms. Various private and public financial and fiscal mechanisms for energy renovations in buildings are currently available in Europe in the form of non-repayable rewards, debt financing, equity financing, etc.
This report provides a country-by-country overview of the most important public schemes identified across the EU and investigates new private financial products in place to stimulate more energy efficiency investments in residential, commercial and public buildings. Good practices are identified based on the criteria of impact, cost effectiveness, ambition level of energy efficiency upgrades, funding sustainability/continuity, scalability and outreach to hard-to-reach groups.
The research has shown that EU Member States currently deploy various public support instruments, each tailored to address specific barriers, segments and recipient groups within the sector. These are primarily in the form of grants/subsidies, followed by soft loans and tax incentives which target residential, commercial and public buildings.
While private investments are not included in our findings, achieving the goals set out by the Paris agreement and the EU would require significantly higher levels of funding (IEA, 2017). A shift towards more sustainable public financing means (e.g. from grants to guarantees) which can leverage higher levels of private funds would also be needed to meet the investment scalability needs, together with limiting access to grants to vulnerable or difficult-to-access groups and exploring new, innovative mechanisms.