There are big decarbonisation gains to be had in a renovation wave in Central and Eastern Europe (CEE) precisely because their building stock is very energy-inefficient, explains Christophe Jost at CEE Bankwatch. But Bankwatch’s report on eight national plans – Bulgaria, Czechia, Estonia, Hungary, Latvia, Poland, Romania and Slovakia – reveals weaknesses in scale, funding, strategy and policy. Many are planning to comply with only the former 40% emissions reduction target by 2030 and not the EC’s ‘Fit for 55’ proposed 55% reduction, says Jost. He summarises each nations’ plans, pointing at the weaknesses along with a summary of renovation budgets compared to total national recovery budgets. Energy poverty and existing fossil infrastructure make many CEE nations a special case and EU funding – always under negotiation – will be crucial, but short term solutions will only make decarbonisation harder in the long run, says Jost.

One of the most crucial sectors to address in order to achieve climate targets through EU recovery spending is buildings. Buildings account for 40 per cent of the energy consumed and are responsible for 26 per cent of the greenhouse gases emitted in Europe. Renovating the building stock can also lead to job creation and tackle other social challenges like air quality and energy poverty.

The recent Renovation Wave strategy suggests doubling the renovation rate and improving the quality of renovation. This should be done through the application of the ‘energy efficiency first’ principle, accelerating the integration of renewables in buildings and decarbonising heating systems. Many actions are planned at the EU level, some of which are included in the recently released Fit for 55 package.

Use the Recovery and Resilience Facility, says EC

The potential of the Recovery and Resilience Facility to speed up renovations is vast. It is no wonder the Commission has strongly encouraged Member States to include dedicated investments for buildings in their plans, identifying this sector as one of the six flagship initiatives in the EUR 672.5 billion recovery fund. The Commission went as far as proposing concrete measures to the governments, such as dedicated home renovation support schemes and one-stop-shops facilitating energy renovation projects.

Up to €55bn planned across Europe

In the end investments in the building sector are present in almost all national recovery plans. The Commission estimates that between EUR 50 and 55 billion are planned for building renovation throughout Europe, second only to clean transport.

The need for a renovation wave is particularly evident in central and eastern Europe (CEE) due to its less efficient building stock and higher rates of energy poverty, particularly in Bulgaria, Slovakia and Hungary. Since the region is more dependent on EU funds than other parts of Europe, the recovery plans present a key opportunity to invest in long lasting building renovation measures that contribute to climate action.

CEE: national plans

CEE Bankwatch Network assessed the planned measures in eight countries – Bulgaria, Czechia, Estonia, Hungary, Latvia, Poland, Romania and Slovakia – and finds that all are planning funds for building. Estonia is preparing to renovate 100,000 individual homes and 14,000 apartment buildings. Romania will establish a dedicated renovation wave fund, and Bulgaria will for the first time tackle energy poverty for a number of households throughout the country.

But given the enormous funding needs, more allocations for the building sector are needed. For instance, in Czechia, the recovery plan is supposed to largely contribute to the national renovation programme, but it will support only 35,000 medium and complex-deep renovations, when the national strategy in the sector estimates twice as many renovations. In Bulgaria, an interesting measure to support renewable energies in residential buildings not connected to district heating and gas networks is only available to too few participating households. A five to tenfold increase would actually be needed to tackle the energy poverty needs.

Where are the policy reforms?

A lack of funds is not the only reflection of the low ambition of governments to really tackle this issue. National plans are supposed to include reforms as well, and a proper legislative framework is needed to remove barriers and put in place incentives when it comes to improving energy efficiency. Yet in many countries some loopholes will make it harder to facilitate renovations.

For instance, in Latvia, there are no plans to introduce much-needed individual heat meters in multi-apartment buildings. In Hungary, the recovery plan should be the occasion to introduce a comprehensive energy housing scheme that includes a non-refundable element, given the marginal availability of grants in the national energy efficiency programme. Also, in Romania the EUR 2.2 billion Renovation Wave Fund might not be enough without training the workforce to adapt to the stricter renovation standards.

Modernising heating to make it clean

Several member states, are also missing the opportunity to modernise heating systems, and some are planning support to fossil fuels based heating, sometimes at high levels. They pose a risk of using more fossil fuels at the time when the EU wishes to switch to more renewables. Slovakia proposes an allocation to support gas boilers installation for 40,000 households affected by energy poverty. While the intention is laudable, this is a short-term solution and the recovery plan would be better used to support renewables and energy efficiency. Poland as well included widespread support for gas heating systems.

Outdated strategies

These measures reflect a lack of vision to transform the building stock at a fast pace. In many recovery plans, CEE countries refer to outdated strategies to justify investments for building renovation. The mindset of countries is still focused on the former 2030 objectives and in some cases, even those objectives aren’t mentioned. This is likely to affect the quality of renovation and can lead Member States to limit their new measures to a mere improvement of existing solutions.

Slovakia plans weak renovations with the aim of complying with a national strategy relying on insufficient assumptions (such as a decrease of greenhouse gas of 25 per cent by 2050). Bulgaria as well shows limited ambitions as it is prioritising investments for Class C energy efficiency measures, thus hampering other households to achieve close to zero energy consumption.

Fit for 55?

The Recovery and Resilience Facility is an opportunity to massively improve energy efficiency and adapt the building stock to new standards. It is regrettable that some Member States are planning to comply with only the former 40 per cent greenhouse gas reduction target by 2030 just when the Commission proposes a legislative package to achieve a 55 per cent reduction.

These measures are likely to make only little energy savings compared to the tremendous figures set out in the Renovation Wave, and it severely hampers the implementation of this strategy. As it stands, the recovery plans will not contribute to the necessary transformation of the building stock in central and eastern Europe.

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Christophe Jost is a Senior EU Policy Officer at CEE Bankwatch Network