A question investigated by The Economist Intelligence Unit (EIU) in a new survey among building sector and real estate executives in Europe. The GBPN in collaboration with its EU Hub, the Buildings Performance Institute Europe (BPIE) and in partnership with the World Business Council for Sustainable Development (WBCSD), commissioned the EIU to put European industry stakeholders under the spotlight.
In the new survey “Investing in Energy Efficiency in Europe’s Buildings”, EIU explores how companies in the European building sector approach energy efficiency investments, how they perceive the latest EU regulations, and how innovative financing could help them ramp up retrofits to achieve emission reduction targets.
- The ﬁnancial crisis, which has caused downward pressure on real estate valuations across much of the EU, has highlighted the need for renovation of existing building stock. This will be needed to maintain and even increase the value of portfolios; deep retroﬁts will be crucial to achieving lasting value.
- EU companies are relatively active in retroﬁtting buildings compared with their counterparts in other regions, but efforts need to double to meet EU energy efﬁciency goals by 2020. Our 2012 survey revealed that 43% of EU respondents in the building sector focus on retroﬁts—more than in the US (37%) and in China (23%), for example. The majority (57%), however, still focus on new builds, with energy-efﬁcient retroﬁts still accounting for only a meager 1% of existing stock.
- The EU has taken some positive steps to improve regulation, but ambiguity regarding deﬁnitions of what constitutes a “deep retroﬁt” and a “nearly zero-energy building” affects implementation at national levels. Indeed, 29% of the EU survey respondents identiﬁed regulatory uncertainty as a barrier to pursuing energy efﬁciency investments. Furthermore, implementation of energy efﬁciency-related directives varies by country, which limits the ability of property owners to achieve economies of scale across the region.
- Regulatory uncertainty should not be an excuse as waiting on the sidelines in anticipation of better laws exposes companies to the risk of asset depreciation. Large property owners are starting to audit their portfolios to identify where they can achieve the most cost-effective energy efﬁciency measures. The deeper the retroﬁt, the lower the asset depreciation risk.
- Attracting large institutional investors in retroﬁt ﬁnance will require energy efﬁciency project aggregators. Aggregators can be public or private and can appear either as a result of regulation or client demand. To be effective, however, they require clear energy performance objectives, standardized contract structures that allocate responsibility for performance, and data collection and transparency about results.
- A survey of 96 EU executives in the building sector (69% real estate segment and 31% of the building construction sector)
- Four in-depth interviews with experts and C-level executives in the EU building sector
- Desk research based on the newest data and reports on the topic
- [Report] Energy Efficiency Efforts in U.S. Buildings Should Focus on Improvements in Regulation and Financing
- Energy Efficiency and Energy Savings: A View from the Building Sector
- Investing in Energy Efficiency in Europe’s Buildings: A View from the Construction and Real Estate sectors