This article is written by Thomas Osdoba, Senior Cities Advisor at EIT Climate-KIC

  • The problem: Europe’s building stock needs deep renovation if it is to reach almost complete decarbonisation by 2050
  • Why it matters: Retrofit as we know it won’t get us to net zero in time and risks prioritising immediate economic stimulus over longer-term sustainability
  • The solution: Placing retrofit at the heart of transformation strategies can accelerate decarbonisation and drive meaningful change beyond short-term economic goals

The European Green Deal set the goal for the EU to be carbon neutral by 2050. This ambition has now been incorporated into the EU-wide Climate-Law, along with a commitment to increase emissions reductions by at least 55% by 2030.

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At present, buildings are responsible for about 40% of the EU’s total energy consumption and for 36% of its greenhouse gas emissions from energy. To achieve this new target, the EU needs to reduce buildings’ greenhouse gas emissions by 60%.

Retrofit, by necessity, sits at the heart of this strategy.

As of today, only 11% of the EU existing building stock undergoes some level of renovation each year. Of those, only 0.2% involve “deep renovations”. In the European Commission’s own words: “At this pace, cutting carbon emissions from the building sector to net-zero would require centuries”.

It is only when we think and act with the whole system in mind that we will be able to reap the social, environmental and economic benefits of true transformation.

However, in recent years, the tide is turning for implementation of retrofit.

From crisis comes change

In 2020, we saw the first of many converging crises to come. In this case, Covid-19 and climate change. Nevertheless, the Commission continued to herald the Green Deal as Europe’s growth strategy and moved rapidly to adopt the building blocks in the Green Deal Action Plan.

This included, for example, the launch of the “Renovation Wave Strategy” which posits the creation of a potential 160,000 jobs by 2030, as well as the New European Bauhaus initiative, an environmental, economic and cultural project aiming to combine design, sustainability, accessibility, affordability and investment in order to help deliver the European Green Deal.

In July we will see the launch of the ‘’Fit for 55’’ package, which encompasses a whole suite of sector- specific enabling directives of relevance to this space.

Coupled with these policy developments, we also have the start of a new seven year EU Multiannual Financial Framework (MFF) and the €750b Next Generation EU recovery funding package in place, which can potentially help Member States bolster such initiatives.

How to build back better

In theory, this could be a golden moment for renovation, including the transition to renewable energy for electricity, heat and cooling. To answer this need, fast and furious studies are bubbling up all over Europe, as well as pipelines of projects and new project developments.

In a recent report from the assurance and consultancy firm, EY, 1,000 investment-ready green projects were identified that will help Europe recover from the economic slump caused by Covid-19 and also create 2 million jobs. Approximately one-third of these projects are said to be developed by SMEs, with 11% of the projects “shovel-ready” and linked to retrofit. The focus, said EY, was to create immediate social, environmental and economic value.

But at times when immediate stimulus is required, we must be wise in our movements to truly build back better from a crisis.

Tackling a complex problem by delivering a portfolio of disconnected projects may well yield some short-term economic gain. But more often than not it will miss the root causes of the problems altogether, which puts this crucial wave of public funding at increased risk of reduced efficiency, efficacy or failure.

As part of our Healthy Clean Cities programme at EIT Climate-KIC, we have seen retrofit emerge as a central theme of recovery in many of our 15 participating cities. However, once work begins, the necessary attention to retrofit evolves into deeper thinking about larger more interconnected opportunities, like circularity, deployment of distributed technologies, and the energy transition.

These larger changes are managed in a systems transformation programme that we call a Deep Demonstration, that takes a whole system view on the needs of the region, then builds portfolios of projects to deliver, interact with each other, and learn from as they scale up over time.

These portfolios of projects cover governance, policy and regulation, finance and accounting, technology and data, culture and participation and place-based solutions. Seemingly separate projects cross pollinate from each other and draw from otherwise inaccessible new enablers and opportunities to accelerate their work.

Case study: Vienna

In Vienna, there are projects in the energy space and a circular economy project on construction and refurbishment, driving down the need for new building materials and driving up the presence of circular value chains in the city.

And as a means to question fundamental notions of historic value creation in the city, there is a project to explore new contracts which enable a city to share in the increased value of land and buildings after publicly-funded improvement works - a privilege currently only preserved for nearby private residents and private sector building owners.

Within five years, subject to risk adjusted scaling, the Deep Demonstration programme in Vienna is estimated to create approximately 200,000 jobs and generate 3.4mt Co2e reductions.

This is just one transformational programme in one city, versus 100 cities Europe wide as quoted in the most recent EY report, or the 160,000 green jobs as stated by the European Commission through the Renovation Wave — proving large scale transformation does not have to hold fast-action projects back. In fact, it can accelerate them.

Covid-19 has brought the world to its knees, and it is without doubt that we need fast action to build back better. But a focus on shovel-ready projects, job creation and economic stimulus alone will not build the sustainable future we need. Driving real change, capable of long-term transformation can.

Retrofit has a central role to play, but it must not be posted at the gates of transformation to run the race for the team. It must be placed at the heart of a transformation strategy where its vital work, and ability to drive job creation and economic stimulus, can contribute to and leverage from other transformational components as part of a complete strategy.

This approach is a win-win. As it is only when we think and act with the whole system in mind that we will be able to reap the social, environmental and economic benefits of true transformation. — Thomas Osdoba

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