Page 41 - European Energy Innovation - spring 2020 publication

Spring 2020 European Energy Innovation 41

FINANCING THE RENOVATION WAVE

The introduction of new carbon taxes Photo: © Simon Pugh Photography
and carbon prices is challenging
and struggles to gain public while in France, the Association recognised to be among the most
support in many areas, as the cost national de l’habitat (ANAH) cost-effective energy saving schemes
of the schemes are passed on to targets renovations of low-income across all sectors in the country.
consumers through the cost of households.
energy. With the carbon price in the Over the period 2014-18, €350m was
EU ETS currently low – at just over One stand-out example, which could distributed for the energy renovation
€20 – the reality is that each tonne be replicated within the roll-out of of over 32,000 dwellings. These
of carbon saved carries a cost of the European Green Deal, comes subsidies offered to households
€248 for consumers. It is well known from the Czech Republic, where a to undertake renovations achieve
that power markets magnify the 2012 law requires that at least 50% a leverage factor of about 1:3, with
consumer cost of carbon prices. At of carbon revenues be devoted each euro invested by the State
€20/t, however, carbon prices are not to measures that reduce GHG attracting a further three euro of
effective on either front. How much emissions. The Czech scheme directs private (householder) investment. If
consumers reduce use in response half of the recycled revenues toward this 1:3 return was to be sustained
to the price signal is very low and no the New Green Savings Scheme, and 100% of national revenues were
substantial shift has been noted in a building renovation programme to be recycled into the scheme, by
dispatch order.
Figure 2: Residential buildings require – by far – the largest
Given that passing the costs investment for energy efficiency
associated with CO2 emissions on
to both producers and consumers is
a core element of carbon pricing, it
effectively raises the value of units of
carbon-intensive/fossil-based energy
that don’t need to be produced
or consumed. In this regard,
using carbon revenues to support
investment in energy efficiency
renovations is a straightforward way
to buffer the costs. In fact, a recent
study by the Regulatory Assistance
Project, based on evidence both
from Europe and abroad, shows that
directing carbon revenues to energy
efficiency saves 7-9 times more
carbon than price mechanisms alone,
while also delivering other benefits.
(Figure 1).

Additionally, investment in improving
the energy performance of buildings
can offset current regressive forms
of revenue generation – i.e. taxes
on energy bills – that have higher
impacts on low-income households.
Taxes calculated as a percentage
of income and expenditures clearly
place a much heavier burden on such
households.

At least three Member States have Source: European Commission (2019). National Energy and Climate Plans bringing principles
programmes that link carbon pricing to action.
to energy efficiency. Germany
dedicates KfW loans to such projects

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