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Why energy retrofitting hasn’t taken off 

Andreas Rudinger
Andreas Rüdinger
Research Associate in Energy Transition at IDDRI
Key takeaways
  • The building sector is responsible for 28% of global greenhouse gas (GHG) emissions, two thirds of which relate exclusively to indirect emissions (heating, lighting, ventilation etc.).
  • While the potential for energy retrofitting is currently under-exploited, it is a crucial step towards reducing indirect GHG emissions.
  • So far, energy renovation has been slow because there is a lack of both real government action and support from the real estate sector.
  • We seem to be moving in the right direction, but it is not yet possible to meet long-term objectives: energy retrofitting must therefore become a new social norm.

The build­ing sec­tor (res­i­den­tial and non-res­i­den­tial) is respon­si­ble for 28% of glob­al green­house gas (GHG) emis­sions1. Although the French aver­age is in line with this fig­ure, the sec­tor accounts for 36% of the Euro­pean Union’s emis­sions2. So, what are the prin­ci­pal means of mit­i­ga­tion? Indi­rect emis­sions. Heat­ing, domes­tic hot water, light­ing, ven­ti­la­tion, and house­hold appli­ances account for two thirds of the sector’s emis­sions. Accord­ing to Ademe, in France, the sector’s con­sump­tion has increased by 20% in 30 years3.

Some coun­tries are now set­ting tar­gets. Ther­mal reg­u­la­tions gov­ern the con­struc­tion of new build­ings (the RE2020 is applic­a­ble in France, for exam­ple). Many retro­fitting plans, based on finan­cial aid, aim to improve the ther­mal insu­la­tion and heat­ing of exist­ing build­ings. Ener­gy retro­fitting is a cru­cial means of mit­i­ga­tion, but the build­ing ren­o­va­tion rate is only 1.1% in main­land France4. As such, we can see that ener­gy retro­fitting is strug­gling to gain momen­tum: CO2 emis­sions from hous­ing ener­gy con­sump­tion fell by an aver­age of 2.5% per year between 2012 and 20195, yet 17% of French hous­ing (i.e. 5.2 mil­lion dwellings) are ener­gy “sieves”6.

So, how can we speed up ener­gy retro­fitting in France? A report pub­lished in May 2022 by IDDRI and ADEME7 is based on work car­ried out by 23 experts, as one of the authors, Andreas Rüdinger, describes in detail.

Why has the implementation of energy retrofitting been so slow?

Every­one agrees on the impor­tance of ener­gy retro­fitting, but there has been no real progress, it is in total dis­ar­ray! In our report car­ried out in 2020, we iden­ti­fied var­i­ous stick­ing points that we call con­tro­ver­sies. The most impor­tant of these is the dif­fi­cul­ty of impos­ing ener­gy-effi­cient ren­o­va­tion as a new social norm.

On the house­hold side, for exam­ple, there is no label to com­pare prop­er­ties on the hous­ing mar­ket. The ener­gy per­for­mance diag­no­sis pro­vides use­ful indi­ca­tors, but ener­gy per­for­mance is far from being a pri­or­i­ty in the prop­er­ty mar­ket. Real estate pro­fes­sion­als also need to recog­nise this new stan­dard. How­ev­er, pro­fes­sion­al fed­er­a­tions are still very reluc­tant to accept ener­gy ren­o­va­tion oblig­a­tions and the con­straints that could result from them and are gen­er­al­ly less inter­est­ed in ener­gy ren­o­va­tion than in new construction.

Don’t public policies have a role to play in developing this new social norm?

Of course. Over the past 10 years, it has become clear that there is no strate­gic roadmap. Each year, sub­si­dies allo­cat­ed dif­fer­ent­ly: some­times towards spe­cif­ic equip­ment (such as the replace­ment of boil­ers), and less towards oth­ers (such as dou­ble glaz­ing), or towards retro­fitting pack­ages, etc. In 2017, a study showed the val­ue of set­ting up a sin­gle-sub­sidy based on the per­for­mance achieved after ren­o­va­tion. The 2019 Ener­gy and Cli­mate Law oblig­es the State to include a com­pre­hen­sive plan for ener­gy retro­fitting in the next Mul­ti­an­nu­al Ener­gy Pro­gramme, but this has been slow to materialise.

This lack of a coher­ent lead­er­ship is one of the major obsta­cles to achiev­ing wide­spread retro­fitting. It is impos­si­ble to car­ry out any real trans­for­ma­tion of the sec­tor, as com­pa­nies can­not invest with­out a medi­um-term vision. This trans­for­ma­tion is how­ev­er nec­es­sary because there is not enough incentive. 

Is this a lack of strategic vision or an economic problem?

The sec­ond con­tro­ver­sy iden­ti­fied is the lack of a strate­gic roadmap, which gen­er­ates eco­nom­ic obsta­cles. Eco­nom­ic analy­sis of retro­fitting suf­fers from a lack of con­sis­ten­cy. How then can we define the scope of the cost of ener­gy retro­fitting? For some, it rep­re­sents the entire cost of the work. But this then includes work that is not relat­ed to ener­gy per­for­mance because most house­holds car­ry out more com­pre­hen­sive ren­o­va­tions than just for that pur­pose. Oth­er analy­ses focus on the addi­tion­al cost direct­ly attrib­ut­able to the ener­gy per­for­mance improve­ments, exclud­ing main­te­nance and repair work (e.g. replac­ing a boil­er at the end of its life is not includ­ed in the cost of ener­gy renovation). 

The same ques­tion aris­es for the ben­e­fits obtained: should we only take into account the reduc­tion in ener­gy bills, or should we include the ben­e­fits relat­ed to com­fort and par­tic­i­pa­tion in the eco­log­i­cal tran­si­tion? To over­come this con­tro­ver­sy, we pro­pose eval­u­at­ing not the prof­itabil­i­ty but the eco­nom­ic via­bil­i­ty of ren­o­va­tion. It inte­grates dif­fer­ent cri­te­ria: the ben­e­fits for house­holds in the broad sense, finan­cial sol­ven­cy and the reduc­tion of risks linked to effi­cient retro­fitting. This last point remains cru­cial for build­ing col­lec­tive con­fi­dence around “low ener­gy” renovation. 

Effi­cient retro­fitting can­not be a basic ren­o­va­tion result­ing in a bet­ter per­for­mance class than F.

Final­ly, it should not be for­got­ten that by tack­ling the “ther­mal sieves”, inhab­it­ed by low-income house­holds, we are also work­ing towards a fair tran­si­tion. A large part of the cost of ren­o­va­tion is cov­ered by pub­lic finances, but the remain­ing costs or pre-financ­ing can be a real obsta­cle. In response to the ener­gy cri­sis, the French gov­ern­ment com­mit­ted €30 bil­lion to freeze prices and help pay bills: this kind of invest­ment in ener­gy retro­fitting would have been sig­nif­i­cant, but noth­ing has been done.

Given these findings, how can we speed up energy retrofitting?

We need to make effi­cient retro­fitting a new social norm. The term “effi­cient ren­o­va­tion” must be more clear­ly defined and made trans­par­ent for indus­try play­ers, as is the case in Ger­many. It can­not be a basic ren­o­va­tion that results in a bet­ter per­for­mance class than F. An effi­cient retro­fit is a com­pre­hen­sive ren­o­va­tion that ensures the deliv­ery of a “low ener­gy building”.

In order to work towards this goal, sub­si­dies must be accom­pa­nied by per­for­mance oblig­a­tions at the end of the work. Today, there is no sys­tem­at­ic mon­i­tor­ing of the impact of the sub­si­dies, and one-off works receive more sup­port on a pro-rata basis. This sys­tem is not only detri­men­tal to ener­gy per­for­mance but also to the mon­i­tor­ing of poli­cies. We have no clear vision of the real effec­tive­ness of the ren­o­va­tions undertaken.

Yet GHG emissions from the building sector are falling. In 2021, they will even remain below the emissions ceiling set by the National Low Carbon Strategy (NLCS): amounting to only 74.9 Mt CO2e, compared to a threshold of 77 Mt CO2e8!

This is cer­tain­ly a step in the right direc­tion. When we start­ed our study three years ago, the build­ing sec­tor was the one that was fur­thest behind on its car­bon bud­get. How­ev­er, it should be not­ed that the cur­rent good results are part­ly explained by two changes: the sec­tor’s car­bon bud­get was increased in the revi­sion of the SNBC in 2020 (edi­tor’s note: it went from 65.4 to 80 Mt CO2e for 2020) and the method of cal­cu­lat­ing GHG emis­sions was changed, shift­ing part of the emis­sions to the ener­gy sector.

This down­ward trend can be explained by short-term gains, such as the mas­sive replace­ment of boil­ers. How­ev­er, these gains will not allow the long-term objec­tives to be met, in par­tic­u­lar the objec­tive of achiev­ing a “low ener­gy build­ing” aver­age per­for­mance lev­el for the sec­tor as a whole by 2050.

Anaïs Marechal
1Glob­al alliance for build­ings and con­struc­tion, 2018 Glob­al Sta­tus Report : towards a zero emis­sion, effi­cient and resilient build­ings and con­struc­tion sec­tor, Unit­ed Nation Envi­ron­ment (2018), ISBN 978–92-807‑3729- 5.
2High Coun­cil for the Cli­mate, Ren­o­vate bet­ter: lessons from Europe, Novem­ber 2020.
3https://expertises.ademe.fr/batiment/quoi-parle‑t con­sulté le 29/08/2022
4Accord­ing to INSEE, data avail­able at: https://​www​.insee​.fr/​f​r​/​s​t​a​t​i​s​t​i​q​u​e​s​/​3​6​2​0​8​9​4​#​c​o​n​s​ulter  
5Nation­al Ener­gy Ren­o­va­tion Mon­i­tor­ing Cen­tre (Obser­va­toire nation­al de la réno­va­tion énergé­tique), Mon­i­tor­ing chart for ener­gy ren­o­va­tion in the res­i­den­tial sec­tor, updat­ed on 29 July 2022, Sta­tis­ti­cal Data and Stud­ies Depart­ment
6Nation­al Ener­gy Ren­o­va­tion Mon­i­tor­ing Cen­tre (Obser­va­toire nation­al de la réno­va­tion énergé­tique), The hous­ing sec­tor by ener­gy per­for­mance class on 1 Jan­u­ary 2022, July 2022
7Rüdinger, A., Gas­pard, A., (2022). Réus­sir le pari de la réno­va­tion énergé­tique. Rap­port de la plate­forme d’experts pour la réno­va­tion énergé­tique des loge­ments en France. Étude N°05/22, Iddri, Paris, France, p60.
8Web­site con­sult­ed on 30/09/22 : https://​www​.obser​va​toire​-cli​mat​-energie​.fr/​c​l​i​m​a​t​/​b​a​t​i​m​ents/

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