Energy efficiency in buildings: greater focus on cost-effectiveness still needed

Short description: 
Faced with the challenge of mitigating climate change, EU leaders have committed to saving 20 % of the EU Member States’ projected energy consumption by 2020 and 32.5 % by 2030. Improving the energy efficiency of buildings is a key tool to achieving these targets. Buildings consume the greatest share of energy and have the largest energy savings potential. The latest assessment of the progress made by Member States towards the energy efficiency targets shows that the EU 2020 target is unlikely to be met, as EU energy consumption is rising again since 2014. We aim to issue recommendations that should help the EU to achieve its 2030 energy efficiency target by improving the cost-effectiveness of its 2021-2027 Cohesion policy spending. The European Court of Auditors (ECA) visited five Member States (Bulgaria, Czechia, Ireland, Italy (Puglia), Lithuania) that allocated some €2.9 billion of their Cohesion policy funds for energy efficiency in buildings and assessed whether this budget was being used cost-effectively and whether the Commission and Member States had implemented recommendations from our special report 21/2012 on energy efficiency in public buildings.
Description: 

Faced with the challenge of mitigating climate change, EU leaders have committed to saving 20 % of the EU Member States’ projected energy consumption by 2020 and 32.5 % by 2030. Improving the energy efficiency of buildings is a key tool to achieving these targets. Buildings consume the greatest share of energy and have the largest energy savings potential.

The latest assessment of the progress made by Member States towards the energy efficiency targets shows that the EU 2020 target is unlikely to be met, as EU energy consumption is rising again since 2014. We aim to issue recommendations that should help the EU to achieve its 2030 energy efficiency target by improving the cost-effectiveness of its 2021-2027 Cohesion policy spending.

Collectively, Cohesion policy operational programmes allocated a budget of around €14 billion, equal to 4 % of all 2014-2020 Cohesion policy funds (€357 billion), to improve the energy efficiency of buildings, of which €4.6 billion for residential buildings. In addition, Member States budgeted €5.4 billion for national co-financing for all buildings, of which €2 billion for residential buildings.

We visited five Member States (Bulgaria, Czechia, Ireland, Italy (Puglia), Lithuania) that allocated some €2.9 billion of their Cohesion policy funds for energy efficiency in buildings. We assessed whether this budget was being used cost-effectively and whether the Commission and Member States had implemented recommendations from our special report 21/2012 on energy efficiency in public buildings.

The Commission has issued extensive guidance for improving energy efficiency investments in buildings, including their cost-effectiveness, as we recommended in our special report 21/2012. We found examples of good practice: the use of financial instruments combined with grants and the modulation of the level of the aid rate to increase the leverage of private funding and reduce the risk of deadweight.

Member States required projects to be based on an energy audit, to deliver some levels of energy savings, and to improve the buildings’ energy rating. In most cases, they allocated the budget to projects on a first-come first-served basis, which did not allow them to assess their relative costs and benefits. This meant they rarely prioritised projects delivering energy savings or other benefits at lower costs.

The monitoring system does not provide data on energy saved through spending EU funds on renovating residential buildings. This means that the Commission is unable to assess the EU budget’s contribution to the EU energy efficiency target. No indicator measures the other benefits these investments may generate.

As in our special report 21/2012, we conclude that cost-effectiveness is not guiding EU spending on energy efficiency in buildings. Better management, especially in the area of project selection, could lead to higher energy savings per euro invested.

Against a background of increased ambition for the EU energy efficiency targets and a perspective of tightening budgets, ensuring cost-effectiveness of the spending is more important than ever. On this basis, we issue the recommendations, which should help the EU to achieve its 2030 energy efficiency target by improving the cost-effectiveness of its 2021-2027 Cohesion policy spending. These cover planning and targeting investments; selecting projects delivering higher energy savings and other benefits at lower costs through assessing relative costs and benefits; using indicators to measure energy savings and other benefits, and rewarding measures that save energy in a cost-effective way.

Year: 
2020
Language: 
English
Topics: 
Buildings
Energy Efficiency/Saving
Financing
Statistics
Resource category: 
Guidelines/Methodology