PIK - Potsdam Institute for Climate Impact Research’s Post

After 8 months of work, I am glad to share this #Bruegel policy brief co-authored with Ugne Keliauskaite, Ben McWilliams and Simone Tagliapietra. Buildings is one of the hardest sectors to decarbonise, not because we lack the technology but because it depends on private decisions. By 2030, the EU must reduce heating and cooling emissions by the equivalent of the emissions of Slovakia, every year. This requires tripling of the current decarbonisation rate. The EU has introduced a policy toolkit that includes strengthened price signals against fossil-fuel heating through emissions trading (the ETS2), and setting energy-consumption reduction targets in the Energy Performance Building Directive (EPBD). EU countries must take the EPBD targets seriously and implement policies to accelerate building retrofits and the adoption of clean heating. If they don’t, there is a concrete risk that EU climate targets will not be met and the costs of the ETS2 for households could be almost twice the higher costs seen during the 2022 energy crisis (even though the ETS2 revenues will be correspondingly high). We estimate that achieving the EPBD’s energy savings targets requires filling an investment gap of about €150 billion per year up to 2030 (or 1% of EU GDP). This is a daunting but feasible goal. By leveraging energy savings from electrification and retrofitting to reduce renovation costs, the investment gap could be more than halved. Additionally, effective use of EU funds and emissions trading revenues can further shrink the gap. As there is no silver bullet, a mix of tools is needed. Prioritising grants for the worst-performing buildings, often occupied by vulnerable consumers, will yield climate benefits and benefits in terms of improved air quality (see a recent #Bruegel paper published by Miquel Oliu-Barton and Juan M.), health, productivity, energy security and lower future government outlays to alleviate energy poverty. Moreover, traditional public subsidies have not successfully engaged the banking sector, which must now be at the forefront of the challenge. Countries also need to adjust relative energy prices through taxation and subsidies, and expand one-stop shops to streamline the renovation process for consumers. For all of this and much more, please find here the policy brief --> https://lnkd.in/enqzzbNF For the recording of the fascinating discussion with fantastic panellists - Cecilia Berthaud from the Ecological Planning at the Prime Minister Office in France - Michael Pahle from PIK - Potsdam Institute for Climate Impact Research - Carlos Sanchez Rivero from the European Commission - Marion Santini from Regulatory Assistance Project (RAP) Please find the recording here --> https://lnkd.in/eMYwFSDR Feedback is welcome and I hope you find it interesting!