“It’s about future proofing our economy, but more than that, it’s about future proofing our society…”
Dr Stjohn O’Connor representing the Irish Presidency of the Council of the EU
With just a year to go before the 30 April 2014 deadline for Member States to establish their first long-term national renovation strategies, the Europe Regional Network brought key stakeholders together in Brussels to start a crucial conversation about how this challenge will be met. This was the very first time Member States had come together and concretely discussed their plans for the strategies.
The conference focused on two main themes:
(i) The need for strong policy-making platforms to form between governments, industry and construction experts and other stakeholders, to design and deliver national renovation strategies. Examples of such platforms from France, Denmark and the UK were showcased.
(ii) The importance of ensuring active and open inter-state dialogue on experiences and emerging best practice between national policy-making platforms. Presentations were given by Member States on their policy approaches and from experts from the Building performance Institute Europe, Climate Strategy & Partners and the International Energy Agency on the ways to design renovation strategies.
Mr King, CEO of UK-GBC and Chair of the Europe Regional Network began the day with a reminder that whilst Article 4 represents a great challenge, it also represents a great opportunity for both the public sector and industry. The challenge means that people aspiring to 21st Century lifestyles will have to emit carbon at a rate similar to their predecessors in the mid-19th Century. However, the opportunity is huge if we get this right. A Copenhagen Economics study commissioned by Renovate Europe estimated that energy efficient renovation could create a monetised permanent annual benefit to society of €104-175 billion in 2020, excluding additional health benefits.
Mr King emphasised that it's crucial we now aim beyond a patchwork of solutions across the region, and we build what people have called 'investment grade' policy that finance can get behind. "This an extraordinary task we have, effectively to rebuild Europe. I think we should be thinking about the opportunity to build 'Europe 2050'. What will our built environment need to look like to meet our needs?"
Mr Nuij of DG Energy gave a presentation which outlined that despite the fact we are improving our buildings, sector level energy consumption is growing. Data shows that we need to significantly ramp up our renovation rate, but importantly we need to also increase the depth of the renovations we are carrying out. There are many benefits to doing this, and in addition to the often quoted benefits, others such as better comfort and health are increasingly driving renovation programmes in other countries.
Whilst many Member States point out the costs of renovation programmes, evidence shows that successful programmes are in fact providing a good return on investment for the state; as much as €2-5 euros out for every €1 invested by the state in Germany through job creation and lower unemployment benefits as well as tax revenues.
DG Energy expects ambitious strategies, developed by Member States through interaction with key stakeholders in the building sector, which has to deliver the strategies. The 'forward looking' element of the strategies is addressed at making sure this is a 'beyond 2020' agenda, and sources of finance must not alter every few years as is currently the case if we are to rid the market of uncertainty. "What is crucial, especially today, is the link with Cohesion Funding ... We from our side are trying to coordinate our efforts, and to push this message out to Member States, and it's important for Member States to pick up this message and look at how their Cohesion Funds can be used in the context of implementation of Article 4."
Mr Nuij also outlined the crucial role the public sector has to play in showing citizens and businesses that energy efficiency is a good investment, and the support and guidance the Commission is providing.
Mr Gatier, Director of Le Plan Bâtiment Durable gave a presentation outlining how this stakeholder platform functions to drive forwards France's energy efficiency policy, combining both public and private forces. Importantly this stakeholder process was set in law, to set a common vision, and unusually it was a unanimous political decision supported across all parties.
Government decided to place responsibility for the delivery of this policy on someone outside the public service, Philippe Pelletier. A team of 4 at the Ministry of Ecology, led by Mr Gatier, coordinates thousands of stakeholders across 4 sectors: private housing, social housing, private tertiary buildings and public tertiary buildings. Informal general assemblies take place between all stakeholders a number of times a year, with monthly meetings of 40 top representatives of the whole buildings sector and more than 20 different workshops also taking place throughout the year. Regional clusters have also been mobilised, and a tour of the process around the regions is organised.
Mr Gatier also addressed crucial challenges that Le Plan Bâtiment Durable is grappling with, such as increasing market demand to sufficient levels to drive skills programmes, and decreasing the cost of finance. He also noted on-going consultations on what ‘mandatory’ renovation legislation could look like, and how to make this transition in the housing sector given sensitivities around this issue.
Ms Ostertag from Denmark's Ministry of Climate, Energy and Building told the story of the Network for Retrofit, set up by Denmark's government specifically to implement Article 4 by creating a catalogue of retrofit initiatives.
The inspiration for the Network came from the Danish smart grid network, which was successfully created 2 years ago, when central players were invited to come up with recommendations to form a national smart grid strategy. The reason that this strategy has been so well received is the inclusive process which led to its creation, so Denmark is looking to replicate this for the renovation sector.
"What we see as really important here is that all stakeholders are included. The model is not a top down process." The Network was founded in September 2012 including around 42 stakeholders, and is due to deliver its recommendations in May 2013. It is focused on getting the experience of people in the whole retrofit value chain to the table, including the financial sector, so these 42 invited further stakeholders to the process. Now over 200 stakeholders are organised into different working groups which focus on single family houses, flats, public buildings, businesses, financing and innovation respectively.
The hope is that with all stakeholders working towards a common goal, the implementation of the resulting strategy will be far more effective, and create a real identity for the Network. The long-term Danish goal is to phase out fossil fuels by 2050, so energy efficiency will have to be maximised.
Mr King, who also chairs the Zero Carbon Hub, spoke about this unique public-private partnership which independently advises government on policy for zero carbon homes, as well as how this is inspiring a new way of thinking about policy development in the retrofit arena.
Mr King's story started with the example of the BedZED development: "Show people what's possible. I think giving people real, practical, living examples; things they can touch, smell, feel in terms of the art of the possible is incredibly important to motivate people." After 5 years of campaigning, the housing Minister announced the zero carbon homes target, and then convened the '2016 Task Force' to bring together all the relevant stakeholders to oversee policy implementation. This task force is co-chaired by government and industry.
An operational entity, the Zero Carbon Hub, was founded to help take control the various workstreams needed to deliver zero carbon. Transparency has been critical to the process and to bringing all the relevant stakeholders to the table, as the Hub is seen as objective and evidence based. The agenda is a radical one, but industry were given a fixed long-term timetable to adjust to these radical new standards, so bought into this certainty. The Hub has taught the lesson that policies must focus on outcomes not prescriptions; with clear targets and timetables, clarity and consistency from government, industry can invest and innovate to deliver the solutions we need.
The UK Government's new Energy Efficiency Strategy notes support for an industry knowledge hub around refurbishment of existing homes, and the UK's Green Construction Board is in discussions about how to take this forward to create the same value in this area that the Zero Carbon Hub has added.
Ms Boldon of the UK's Department of Energy and Climate Change provided an overview of UK renovation policy, with the UK at an early stage in its thinking on Article 4.
In November of last year, the UK government published its Energy Efficiency Strategy, which identified 4 main market barriers: embryonic markets, misaligned financial incentives, information and under-valuing energy efficiency. There are now a suite of policies targeting energy efficiency in buildings and organisations, including the 'Green Deal' and 'Carbon Reduction Commitment Energy Efficiency Scheme'.
The 'Green Deal' is the UK's flagship energy efficiency policy, which ensures that the bill payer pays for the energy efficiency savings generated by a retrofit package, so when homeowners change the repayments on a package stay with the property benefitting from the savings. A cash-back scheme has been put in place for early adopters of the scheme. The government is also bringing in minimum energy performance standards for private rented buildings from 2018, which will make it illegal to rent a building with an EPC rating below a set level (expected to be an 'E' rating).
Mr Pilát of the Czech Republic’s Ministry of Industry and Trade then presented his Ministry’s approach to energy efficiency renovation policy. The Ministry has undertaken a detailed modelling exercise in order to estimate the savings potential across the building stock. Residential buildings are classified into various categories according to typology of the building and the year built. Then energy consumption is modelled for original condition, after renovation, and from this operational cost-savings and return on investment is calculated. Average pack-back periods are calculated as around 18 years.
As a whole, the energy saving potential in buildings across the country by 2020 is around 50 PJ.
Mr Staniaszek of the Building Performance Institute Europe kicked off the second part of the day with a presentation on BPIE’s new guide to implementing Article 4. This presents the 5 main steps in the creation of a national renovation strategy.
In terms of who needs to be involved, the strategies must involve all the relevant government ministries and stakeholders, and select a clear leader as with Le Plan Bâtiment Durable. Once we know who the key players are, we need to identify where we find the necessary information on the building stock. BPIE have created an open source Data Hub for Buildings to start doing just this across Europe, and building categorisation will be particularly important to help define which technologies and interventions are most appropriate for different building types.
"If there's one key message that I'd like you to take away, it's to factor in the multiple benefits of energy efficiency in a societal cost effectiveness analysis." Political support across the spectrum is key to drive this forwards, as if the strategies change every few years we will make no progress. Also, independent committee advice on the policy moving forwards is seen as key to objective long-term delivery of the strategies. The BPIE advises Member States to allocate up to 1 year for the development of national renovation strategies.
Mr Sweatman of Climate Strategy & Partners presented the GTR Report produced alongside GBCe and other expert contributors. This creates a renovation roadmap for the Spanish housing sector. Mr Sweatman set out 7 key steps that their methodology followed and that others can follow when creating national renovation strategies.
The group who formed to create the report represent the whole buildings value chain, and brought in both national and international experts. Having an explicit methodology to better organise the complexity of the building sector is incredibly important, and is something that this process has done which could be repeated in other countries. This has allowed different renovation measures and packages to be aligned to the different buildings typologies found in Spain that they are most appropriate for. It has also enabled an 'intervention menu' to be created, but importantly here, all assumptions around the modelling for a national renovation strategy are dynamic, so need to be checked and rechecked on a regular basis to ensure the intervention menu produces the right answers.
Since creating their model they have been in close contact with the Basque region of Spain, which has created a roadmap that has allowed them to test their thinking on a regional level, and also ensure that the national level policy is headed in the right direction.
This presentation importantly brought home a number of home truths about the sort of renovation policy we commonly design, versus the sort of policy the International Energy Agency believes we need to be designing.
Energy use across IEA countries has gone up despite new energy efficiency policies coming into effect. This is partly due to design issues, such as a lack of registration systems and quality control for Energy Performance Certificates, short pay-back solutions for energy performance contracting, and a lack of evaluation for financial support instruments which are largely component based. Most incentive schemes are in fact not tied to measurable energy efficiency measures so we are unable to accurately assess their success. “We basically incentivise the lock-in effect.”
Dr Saheb also looked at policies such as the US’s PACE scheme and other on-bill financing schemes with a critical eye, in terms of their short-comings as policies and called for a holistic approach to renovation that looks beyond energy savings – to factors such as energy security, environmental protection, land-use policies and economic development. She noted that to meet the challenge we will need to move towards mandatory energy renovations each time properties are renovated, as well as binding annual energy renovation targets. A model for a one-stop-shop for consumers, as well as a European guarantee fund was also put forwards.
Mr Martín of Spain’s Ministry of Industry, Energy and Tourism presented Spain’s recently launched plans on taking forwards the renovation agenda. The impetus in Spain is not simply the Energy Efficiency Directive, but a genuine desire to improve the quality of the housing stock across the country and meet the needs of citizens.
The new law and plan are aimed at rehabilitation, regeneration and urban renewal. The plan includes programmes aimed at building rehabilitation, promoting urban regeneration, promoting building assessments and developing sustainable cities. Credit lines are due to be set up by the Official Credit Institution as a means of helping finance the implementation of this plan. Importantly, the focus is not just energy efficiency, but also accessibility, sustainability and quality of housing, to create more secure and comfortable buildings and higher quality cities. The budget for implementing the plan is over €2.3bn.
Legislative barriers that forbid certain works are being addressed to enable renovation works, and charges relevant to works are being reduced. Building Assessment Reports are also being promoted, to help homeowners learn about the measures they can take, and up to 50% of the costs of commissioning such reports will be covered by the state.
Mr Gatier gave a presentation outlining details of France’s policy aims, which includes decreasing energy consumption in existing buildings by 100kWh/m2/year by 2020, and by a further 100kWh/m2/year by 2050. A balanced strategy will move from increasing awareness, providing advice and incentives, towards placing obligation on actors to achieve savings.
Promising beginnings have been made, with over 350,000 houses already renovated. The aim is to scale renovation activity up to 500,000 houses each year, with a further 500,000 new energy efficient homes to be constructed each year. Local councils and regions are expected to play a crucial role, as will one-stop-shops for consumers to get renovation services, but advice will need to be tailored regionally.
In terms of financing, there are on-going efforts to move away from traditional subsidies and grants towards third-party financing for renovation. It is expected to take 3-5 years to make this transition, but there is likely still going to be a need to provide some forms of public subsidies to ensure interests rates on private financial products are sufficiently low. France has also announced that subsidies will become conditional upon the people carrying out the work being recognised by a public quality assurance scheme.
Dr O’Connor, representing the Irish Presidency of the Council of the EU, gave the final formal presentation of the day, setting a bold vision for Member States. Noting that we are often caught up in debate about 2020, Dr O’Connor noted that this is just a stage on the road to 2050, and this longer-term mind set is appropriate when talking about creating strategies. He emphasised the multiple economic benefits renovation creates that have been highlighted by the Copenhagen Economics study, and the role of the public sector in showing society how to grasp these. He also noted that the supply chain needed to coordinate its messaging to the public, and align goals, to avoid sending mixed signals: “We need to integrate the supply chain into the policy decision making process, to ensure everyone is on message … and here in particular, Green Building Councils have a hugely important role to play.”
In the context of financing, he noted that we must make distinctions in dialogue between solutions for the residential and those for the commercial sector, as there are fundamental differences. He also informed participants that financing energy efficiency would be one of the topics discussed by Ministers at an informal meeting to take place in Dublin, and that Ireland is currently setting up a national fund for non-residential energy efficiency. In driving demand, matching psychological and market realities with technological solutions will be fundamental going forwards, and a key part of this will be understanding when decisions are already being made about property interventions and investments. Whilst mandatory renovation is currently controversial, we may at some point need to move towards this.
Mr Truszczynski of DG Energy summed up the day’s events and concluded with words emphasising the need to look beyond the generic requirements of Article 4, to transform strategies into something that will scale up and deepen renovation across the EU. The challenge will be in moving away from short-term political cycles to provide the long-term policy framework and certainty that industry needs. Stakeholders must now assist Member States, as the requirements of the Article are complex and a lot of the groundwork has not yet been carried out.
The Commission’s aim for the next policy cycle is to improve the PRIMES modelling that has been used to inform policy to date, to help get further political buy-in to the energy efficiency agenda. “We have to go beyond the typical mantra that energy efficiency is ‘good’, and start to talk in the language of finance ministries.” The question is what policies will now speed things up, and if we make renovation mandatory how do we do this? The UK minimum future energy requirements for the private rented sector may be a model to follow.
Creating the strategies will be a long-term process. The hope in future is that Member States may agree to set targets once much of the analysis has been carried out, so strategies can be made more concrete.
The day was a valuable exercise in information sharing, and bringing transparency to what is beginning to take place across the region in terms of planning for the creation of long-term national renovation strategies. The energetic panel discussions with the audience and buzz around the day proved that there is huge interest in grasping the opportunity that national renovation strategies could offer to society and the present economy.
Converting this energy into concerted action across the region is going to be a difficult task, but the Europe Regional Network will be building on the strength of GBC stakeholder communities at national level and coordinating action going forwards. We invite you all to join us!
For further information on the Europe Regional Network’s work please contact firstname.lastname@example.org