Title page
Contents
Executive summary 1
1. Introduction 2
2. Europe's buildings-related emissions are not falling fast enough 2
2.1. Energy renovations 2
2.2. Progress on deploying clean-energy solutions 4
3. The lack of an attractive investment case 6
3.1. The long wait for economic returns 6
3.2. Electricity is relatively overpriced 7
3.3. Lack of upfront capital and borrowing constraints 8
3.4. Split incentives 8
3.5. Administrative burden and disaggregated demand 8
4. Europe's new carbon price is a revolutionary step 10
5. Missing money: the need for more investment 11
5.1. The investment gap 11
5.2. EU financing 12
5.3. New funding: ETS and ETS2 revenues and the Social Climate Fund 12
5.4. Progressive distribution by country 13
6. Policy options, trade-offs and recommendations 14
7. Conclusions 18
References 20
Table 1. Net-present value of deep renovation including fuel switching for a German household by fuel type (numbers in brackets: gas, oil, coal)... 7
Table 2. Annual investment gap to achieve the 2030 targets and potential energy savings, € billions per year 16
Table 3. estimated investment gap and suggested relevant instruments by type of building 19
Figure 1. Fossil-fuel use in heating and cooling in residential and non-residential sectors, emissions reductions, 1990-2022, Mt/CO₂eq 3
Figure 2. Percentage change per country in fossil-fuel emissions from building heating and cooling, 2005-2021 4
Figure 3. Final energy consumption of heating and cooling in households by fuel type, 2021 5
Figure 4. Composition of electricity and gas prices for households in the EU, eurocents/KWh, May 2024 8
Figure 5. Yearly financial impact (additional heating cost in €) on the average EU household with a gas boiler 10
Figure 6/Figure 7. Additional annual investment needs for energy renovations, € billions and % of GDP 12
Figure 7/Figure 8. Per country expected revenues from ETS2, € billions, 2026-2032, carbon price of €60 13
Boxes
Box 1. Hits and misses in energy-efficient renovation support schemes 9