Call for clearer legislation and innovative & financing

25th June, 2013

The scale and scope of building retrofits will need to double if the European Union (EU) is to meet energy and climate goals by 2020, according to the report Investing in energy efficiency in Europe’s buildings, published by The Economist Intelligence Unit. The report also highlights the need for real estate companies to invest in a substantial building retrofit programme to maintain the value of their investment. The report is based on a survey of building sector executives and was commissioned by the Global Buildings Performance Network (GBPN) in collaboration with its European hub, the Building Performance Institute Europe (BPIE), and in partnership with the World Business Council for Sustainable Development (WBCSD). The report calls on the EU to encourage deep renovations through clear legislation and innovative financing mechanisms to help meet its 2020 targets of improving energy efficiency levels by 20% and achieving a 20% reduction in greenhouse gas emissions from 1990 levels.

The changes are needed because approximately 40% of the EU’s building stock was constructed before 1960, and many older buildings are in “dire need” of renovation, says the report. The large proportion of inefficient older buildings means building energy consumption now accounts for 40% of total primary energy consumption and 36% of greenhouse gas emissions. Despite the need for energy efficient retrofits, the report says rate of renovation in the EU is low. Only 1% of building stock has been refurbished, with a minority of these upgrades classed as substantial or deep retrofits.In addition to the EU targets, renovation is essential for real estate companies to maintain and increase the value of real estate portfolios. The report says that prior to the current economic downturn the constant increase in real estate prices concealed the depreciating value of existing building stock. Today, substantial energy efficient retrofits are crucial to achieving lasting value for property companies looking to maintain the value of their portfolio. Companies that delay retrofits will expose themselves to asset depreciation risk, it says. As a result of the downturn many property owners now audit their portfolios to identify where they can achieve the most cost effective energy efficiency measures. The report says the biggest barrier to pursuing investment in energy efficiency is regulatory uncertainty. It says that the EU has taken some positive steps to improve regulation, but ambiguity regarding definitions of what constitutes a deep retrofit and a nearly zero energy building is affecting implementation at a national level. Currently the EU has more than one hundred public financing mechanisms in place to promote energy efficiency in the building sector, most of which focus on existing buildings. In the current economic climate, however, the report calls for public money to be used to attract private finance such as Germany’s use of its national development bank, KfW, and the UK’s Green Deal. However, it warns that investment capital will not be forthcoming unless companies and member states provide more data on the performance of energy efficiency investments to show investors the value achieved by investing in energy efficiency.

Story Source:BRE Retrofit Briefing, May 2013, Volume 1, Issue 5

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