Page 40 - European Energy Innovation - spring 2020 publication

40 Spring 2020 European Energy Innovation
FINANCING THE RENOVATION WAVE
Financing the Renovation Wave
of the European Green Deal
By Adrian Joyce (pictured), Director of the Renovate Europe Campaign
The European Green Deal
was unveiled by the VDL
Commission only days after
it took office. It is to be the financing that is available to the
central core of all policy work in the
five years ahead and will put the
EU firmly on the path to be the first
climate-neutral region on the planet.
In adopting this radical approach,
the EU expects to encourage other
regions to follow and to ensure that
we collectively meet the goals set
out in the Paris Climate Agreement
of 2015.
Given that across their lifetimes
buildings are responsible for 50%
of our energy use, 50% of our GHG
emissions and 50% of all resources
taken from the planet, it is evident
that action to improve the energy
performance of our buildings is an
essential first step towards achieving
the ambition of becoming climate-
neutral by 2050. The big, fresh idea
contained in the European Green
Deal is a commitment to launch
a Renovation Wave across the EU
that will be designed to reap the full
potential tied up in our building stock.
It suggests three segments to start
the wave rolling: schools, hospitals
and social housing.
This level of ambition is welcome and
it’s very encouraging to campaigners
like me that the VDL Commission
has pinned its colours to the same
flag post on which we have been
flying our colours since 2011. One of
the major questions to be asked in
relation to the European Green Deal
is how will it be paid for?
I do not intend to exhaustively go into
all the available sources for financing
– of which there are many. No, in
this article, I just wish to expose that prompt a ‘demand response’;
one large, under-used, reservoir of by increasing the overall price
consumers pay for carbon-intensive
Member States and that I believe energy, the argument is that they
should be fully used to finance the will have incentive to use less (or be
energy renovation of the building more conscientious about energy
stock in the EU: carbon revenues. use). In the power sector – so far, the
most important sector covered by
Maximising the impact of carbon the ETS – the second, more systemic
revenues through energy efficiency incentive of carbon pricing is to
Many of the financing mechanisms drive change in the dispatch order of
that are available to implement the power generation, such that the extra
European Green Deal are adaptations cost to fossil-fuel plants makes their
of traditional approaches. While the bids higher and lower-priced cleaner
EU Emissions Trading Scheme (ETS) power generation will be selected
has been in place since 2005, with earlier in the supply mix. Depending
prices expected to rise in the future, on the carbon price and the types of
it will represent a new, substantial power plants in a power market, this
source of funds. The World Wildlife impact on dispatch – the so-called
Fund (WWF) Maximiser project ‘merit order effect’ – can have either
estimates that by 2030, the ETS moderate or negligible impacts on
could deliver revenues of €200bn to emissions. Unless lower-emitting
the Member States of the EU.1 resources are actually available to be
run more often and carbon prices are
Pricing carbon aims to stimulate high enough to prompt their use, the
action to reduce emissions in two actual impact on dispatch is often
ways. First, through price signals rather low.
Figure 1: Cumulative carbon emissions reduction with or
without 3% rise in rates to fund energy efficiency
Source: Sunderland, L. (2019). Regulatory Assistance Project. Based on RAP (2015) Carbon
caps and efficiency resources: launching a ‘virtuous circle’ for Europe.
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