ENERGY PRICES AND GREEN TRANSITION: THE ONLY WAY AHEAD IS TO ACCELERATE ON ENERGY SAVINGS, BUILDING RENOVATION AND RENEWABLES

The lack of agreement at yesterday’s European Council shows very clearly how contentious the energy transition still is, how delayed we are in creating the right regulation and incentives  for existing green alternatives to fossil fuels dependency that are viable, at scale and readily deployable. Instead of representing a powerful motivation to accelerate investment and policies favoring energy efficiency and renewable, the answer to this situation is for many “more of the same”: more nuclear, even if no solution was found for waste, most plants are on the way out and building new ones is a long and very expensive process; more gas, supported by the fallacious definition of “transition” fuel, which totally overlooks the fact that it is still a fossil fuel and that in most cases coal or oil are not replaced by gas but by renewables; and does not see that emphasis on gas is delaying the investment and organization needed to deploy renewables and EE solutions, about 360 billions a year in the EU alone.

In this context, the concrete implementation of EE first and the need to ensure adequate maintenance and renovation of our housing stock and buildings in general, not least to reduce pollution and improve its quality, rarely gains the center of the discussion: still, it is a huge social challenge that needs to be addressed urgently, a challenge that is also economic, industrial, technological, even artistic and cultural: in Italy, 40% of the territory and 35% of municipalities are in seismic zones; 7 million Italians live in areas that are unsafe from a hydrogeological point of view, 2.3 million families cannot afford to heat themselves decently in winter or cool themselves in summer, as many as 4.5 million homes are in class G, the worst, and 3.2 in class F (ENEA data). The situation in the rest of Europe is not very different, if it is true that about 75% of the European housing stock is insufficiently insulated and 50 million households are defined as energy poor. It is no coincidence, then, that buildings account for as much as 40% of energy consumption, 36% of greenhouse gas emissions and are a major cause of pollution, leading to the premature death of around 400,000 people every year in the EU (EEA data).

So making EU housing stock more livable, safer, less polluted and polluting, and our cities more beautiful and greener in the coming years, also taking advantage of the abundance of existing public and private resources and the impetus of the Green Deal, should be a top priority for public spending and private investment: it should also be an exciting way to get out of the doom and gloom that accompanies the current debate on the green transition: instead, the conversation in Italy is distracted by issues that are absolutely marginal to people's daily lives, such as a possible nuclear miracle in 30 years' time or very expensive and distant technologies such as carbon capture or the fable of gas as a semi-green fuel.

Unfortunately, a rearguard vision prevails, bordering on defeatism, which insists on costs without proposing any alternative; the most disadvantaged social sectors are offered nothing more than an uncomfortable status quo, as demonstrated by the controversy over the transition as a "bloodbath" or, more recently, by the outcry against the European Commission, guilty of having proposed, in a five-week-old internal draft of the directive on the energy performance of buildings (EPBD), "a ban" on the sale of the worst performing buildings in 10/15 years. Commission Vice-President Timmermans presented the final version of the directive on Wednesday  and in his perfect Italian he explained that "no European official will stop you selling your house or will confiscate it", it will be up to the Member States to decide how to respect the minimum energy performance standards; but that if we want to manage pollution and climate change we will have to act fast to renovate our houses; it will cost us "an effort, but it will be worth it" he said. And indeed, on closer inspection, in Italy this already worth it.Today it is possible to demonstrate, numbers in hand, that giving priority to renovations is worthwhile for the State and investors, not least because in Italy we are not at year zero: in a report published last week for the Chamber of Deputies on the impact of measures to encourage the renovation of the building stock, it is said, among other things, that the estimated investments activated from 2011 to date have generated an annual average of direct and induced employment of 421. 770 units compared to a loss of 600,000 since 2008; that there has been a significant growth in the emergence of the black economy and the beginning of a positive integration between construction, infrastructure and services that, if completed, will redesign our cities, as well as an overall energy saving of 0.20 million tons of oil equivalent. In addition, a recent study by CRESME for Symbola explains how renovated homes placed on the market have an average value 29% higher than those not renovated; Cambridge Economics shows how doubling the annual rate of renovations (in Italy today less than 1%) would result in an average annual saving of €400 per family. Finally, the contribution to the post-Covid recovery of the 'building superbonus' is, despite its flaws, - starting with the absurd support for gas boilers, accounted for  0.7% of GDP in 2021, with the creation of 153.000 jobs and an increasing international attention on it. Moreover, as a very important experience by Innovatec's House Verde reports, 73% of the real estate units concerned started with energy efficiency classes E or F, but at the end, in 85% of cases the energy class was higher than or equal to class A, a sign that the mechanism works. Obviously, we are not there yet; just to meet our current emission reduction targets we would have to triple the rate of building renovations every year (and multiply the installed capacity of renewables by 6), because a lot of time has been lost in past years: this is exactly why we need clear rules at European level, effective enforcement at national level and adequate resources. The point, therefore, is not to despair because you will no longer be able to sell class G buildings or they will lose their value, but to ensure that in a few years there are none  to buy anymore. The Commission's proposal, which will now have to be examined and approved by Parliament and the Council of Ministers, introduces EU-wide minimum energy performance standards for the 15% of buildings identified by each Member State as the worst performing in their building stock; public and non-residential buildings will have to be renovated and brought up to at least energy performance level F by 2027 and at least level E by 2030. Residential buildings will have to be upgraded from G to at least F by 2030, and to at least E by 2033. Regarding the higher energy performance indexes, the Commission leaves a lot (too much?) flexibility to Member States, which should set specific timetables to reach these indexes through new national building renovation plans, in line with the goal of achieving a zero-emission building stock by 2050.

At a first analysis, the directive proposed by the EU is not particularly ambitious, as the standards it proposes are not up to the challenge, the scope of the obligation to apply minimum energy performance standards is limited to the most energy-consuming classes, the space given to member states to apply them is excessive and it does not provide for a precise sanctioning or incentive mechanism. But together with the other directives presented in the "Fit for 55%" package, the existing rules on national plans for renovation and other instruments, including financial ones and the pathway to reach “zero emissions” buildings by 2050, it has the merit of placing buildings at the center of the Green Deal challenge. Our houses are indeed an invaluable asset for all of us. Making them more sustainable and efficient is the only way to increase their value and quality, and to make an indispensable contribution to the creation of new jobs and the fight against climate change.

Brussels, December 17, 2021