EBF recommends boosting energy renovations in buildings

The European Banking Federation (EBF) submitted its response to the European Commission’s consultation. This consultation aims to increase lending for energy renovations in buildings. The EBF welcomes the initiative to develop a voluntary and non-binding portfolio framework to boost this lending. However, it is crucial to also address existing demand and supply-side issues that currently exist within the European Union. Solving these fundamental problems is essential for sustainable progress. EU initiatives must stimulate strong, sustained demand for renovation projects and address supply-side issues. Resolving these will naturally increase private financing, satisfying market demand. It is also crucial to strengthen the economic case for energy efficiency improvements in both residential and non-residential buildings. A main barrier is borrowers' lack of awareness regarding energy renovation benefits. Well-coordinated EU and national campaigns are vital to raise awareness of energy efficiency and its advantages. Public authorities should lead these efforts. Simplifying the renovation process is also recommended, perhaps by creating one-stop shops for property owners. To improve the risk-return profile, predictable EU-level subsidies, grants, and public guarantees are essential. These need support from a clear, stable regulatory framework. Streamlining administrative procedures for accessing public financial support, especially for SMEs and households, is also recommended. Targeting worst-performing buildings is challenging for financial institutions. This is due to high credit risk from poor collateral and vulnerable households residing there. Supporting these households is crucial to lower energy costs and prevent energy poverty. However, strict loan origination rules mean lending might be impossible due to insufficient repayment capacity. Therefore, even with guarantees and grants, a deeper public-private partnership is needed. This collaboration is essential to effectively address the complex issues surrounding financing renovations for the most vulnerable. Increasing lending for energy renovations requires both demand-side incentives and sufficient capacity to deliver the work. If demand outpaces supply, labor and material costs could rise, lessening public financial support impact. Thus, EU efforts must stimulate demand and supply in parallel for long-term success.