It’s unfortunate that it took a pandemic to see something so obvious. Energy efficiency is the Cinderella of climate solutions: virtuous and unassuming, but too often overlooked. Most people focus on her glamorous siblings – renewables and electric vehicles. The Climate Group’s Jenny Chu, Head of Energy Productivity Initiatives asks, is it finally time for her glass slipper moment?
The EU calls it the Renovation Wave, one of the central pillars of the upcoming European Green Deal. The ambition is to massively accelerate the rate of improvements to private and public sector buildings: going faster and deeper than ever before, in an effort to support the economic recovery from COVID-19.
This is because energy efficiency is a jobs machine, making it one of the most attractive forms of economic stimulus. According to recent estimates from McKinsey, €1 invested today will add over €2 of value for a large European economy. Governments can double their money.
Powering up the jobs machine
The logic is simple. Improving millions of buildings creates hundreds of thousands of new green collar jobs. It reduces energy bills for households, businesses and public sector bodies. Lowering demand also makes it more affordable to transform the energy system – benefiting entire regions, not just big cities.
Solutions are readily available today and affordable, so projects can be ‘shovel-ready’ at short notice. In most cases renovation offers attractive returns just through energy cost savings, without factoring in additional wider social benefits from improved air quality and healthier indoor environments.
Even low hanging-fruit is worthwhile. The fashion retailer H&M, a member of the Climate Group’s global EP100 initiative on smarter energy use, cut electricity use in stores by over 10% in three years. The company reports saving over €120,000 from replacing 9,250 lightbulbs with LEDs and it has enrolled nearly 700 of its suppliers into energy efficiency programmes.
Renovation also offers an ideal opportunity to install solar panels and charging infrastructure for electric vehicles, building in resilience to the impacts of a changing climate, such as heatwaves and flooding.
Getting fit for a sustainable future
As well as getting the economy back on track, radical improvements in energy efficiency are fundamental to delivering on Europe’s climate goals. Buildings are the EU’s single largest source of emissions, responsible for over a third of the bloc’s total.
Most of the buildings that will exist in 2050 have already been built. Around three-quarters of those standing now were constructed before energy performance legislation, and over a third are over 50 years old, with the oldest needing careful management to preserve European heritage.
Despite the clear case for faster renovation, the current rate is just 1% a year, with deep renovation at just 0.2%. The EU wants these rates to at least double through the Renovation Wave. We would need to reach around 3% to have a realistic chance of meeting our climate goals, and each year of delay makes the challenge more intense.
We need a lot more insulation installed, as well as highly efficient heating and cooling systems. The good news is that concentrating our efforts magnifies the benefits. There are significant economies of scale that can be achieved, something that became evident through deep retrofits of just a few thousand buildings during the Energiesprong programme.
Efforts to improve energy efficiency will support a boom in manufacturing for sustainable building products and energy technologies, as seen in China just over a decade ago. Europe now has a golden opportunity to do the same for its local industry, becoming a powerhouse in buildings retrofit and creating valuable export opportunities.
Just another fairy tale?
Of course, if this is really going to be energy efficiency’s glass slipper moment, it needs more than a little help from a fairy godmother. As much as we might wish it to be true, happily ever after doesn’t happen by waving a magic wand.
Stronger regulation has an important role to play. The Italian region of Lombardy is part of the Under2 Coalition of subnational governments, of which the Climate Group is secretariat. By introducing mandatory energy certification for new and renovated buildings, it has brought over 2.3 million buildings up to standard, helping to lower energy consumption per square meter by two-thirds. Now, part of its €3 billion COVID-19 recovery fund will support even more of these projects.
There many other necessary policy changes that will help us to deploy energy efficiency rapidly and at scale. These range from technical assistance, skills training, and support for organisations, to tax breaks, enhanced access to finance, and resolving issues between landlords and tenants.
The Renovation Wave can help solve a lot of Europe’s economic and environmental problems. It will provide healthier, more sustainable spaces to live and work, while accelerating low carbon industrial development.
But all this has been tried before without great success. Unless there is serious commitment from policymakers, we risk the Green New Deal turning into a pumpkin.
