Summary of a study on fiscal and financial incentives for improving Europe’s building stock

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Well-designed financial and fiscal programmes for energy efficiency improvement projects in buildings have a cost-effectiveness to governments of around €20-25/ tonnes of carbon emissions mitigated, which is lower than virtually all alternative non-traded carbon abatement measures.  That is the conclusion of the latest research report from the European Alliance of Companies for Energy Efficiency in Buildings (EuroACE) which looked at over 100 instruments currently in place across the EU representing tens of billions of Euros of investment in energy efficiency.  This shows the value that energy efficient construction can add to the drive towards a low carbon future.  The potential of energy efficiency is illustrated by the fact that energy consumption in buildings and buildings-related services represents approximately 40 per cent of the EU's total energy consumption. 

Measures to improve the energy performance of buildings and dwellings offer huge potential for job creation in the construction industry.  To take advantage of this opportunity, the industry and its personnel require new incentives, more training and information on how higher energy efficiency levels in buildings can be achieved. 

Well-designed and implemented financial instruments, as well as fiscal and financial incentives, can play a hugely significant role in helping the EU meet its climate change targets, creating large numbers of 'green' jobs, reducing Europe's energy dependency and in addressing the problem of energy poverty in Europe. 

Grants and preferential loans proved to be the most common form of instrument and, from the findings, appear to be top in terms of impact and cost-effectiveness.  Schemes operated by third parties were shown to be just as effective as those implemented directly by governments.  Attractive financial packages are much more successful when accompanied by targeted communication campaigns.  Well-designed and implemented instruments whose impact is properly assessed offer cost-effective ways not only to save carbon and energy, but also to improve air quality, reduce energy bills and create local employment. 

Large-scale implementation of sustainable construction for new buildings as well as in modifications to existing buildings will require high levels of investment.  Ability to access funding from appropriate financial mechanisms is often cited as one of the barriers to increased energy efficiency renovations in buildings.  Consideration must be given to the obstacles of a technical, economic, financial, legal, administrative, bureaucratic, institutional, management-related and socio-behavioural nature.  The research carried out by EuroACE shows that the necessary funding is available and that the energy efficiency of Europe's buildings would be advanced by an even more efficient and effective use of available funding. 

The key recommendations emerging from these results are that application procedures need to be clearer and simpler; that targeted training should be given to those who deliver funding to the public; and that eligible new products should be easily added as they come on the market.

The final report, case studies and country specific overviews can be downloaded from the EuroACE website: -> Publications & Reports