Carbon pricing in buildings? Help renovate and switch to renewables first

Including buildings in an emissions trading scheme will have a limited impact on emissions and should, at most, complement other measures like substantially increasing renovation rates, switching to renewables and phasing out fossil fuels subsidies, writes on Euractiv Monica Frassoni, president of the European Alliance to Save Energy.

On 14 July, the European Commission unveiled its long-awaited roadmap to reach the European Union’s higher emissions reduction target for 2030, the so-called “Fit for 55” package.

No wonder it chose the day traditionally celebrating the French revolution as the scope and ambitions of this massive legislative package are considerable. With it, came the proposal of setting up a parallel Emissions Trading Scheme (ETS) for road transport and heating fuels, certainly one of the most contentious measures of the package.

According to the Commission, this proposal aims to address the lack of emissions reductions in road transport and buildings, which together account for almost 60% of EU emissions. Over the last few years, emissions from the building sector have not decreased significantly, while those from road transport have even increased.

The need to act fast and with concrete steps to reduce emissions in these sectors is clear. So seems the Commission’s logic behind the proposal: if the ETS brought emissions down in the energy sector, why wouldn’t it be the case for buildings and road transport?

There are a few reasons why carbon pricing in buildings could at best complement, but not replace – and should not distract from – policies and incentives to substantially increase renovation rates, switch to renewables and phase out fossil fuels subsidies.

Read the full article

Useful links


Join us
Contact us

Follow us


© All right reserved

Carbon pricing is no silver bullet to decarbonise buildings across Europe

The introduction of a carbon price in the building sector will only encourage fuel switching and risks burdening those least able to pay with the cost of decarbonisation. If implemented, it should be complemented with legislation to boost energy efficiency.

by Monica Frassoni, President of the European Alliance to Save Energy (EU-ASE)

At the end of 2020 European Union leaders agreed to increase the bloc’s emission-reduction target to at least 55% by 2030, confirming the EU’s commitment to becoming the first climate-neutral continent by 2050. If the EU wants to achieve this ambitious goal, it needs to increase its action to decarbonise one of its most energy-intensive and polluting sectors: buildings.

As an example, the CO2 emissions from space and water heating in residential buildings represent 12% of the total EU emissions, as much as all cars in Europe combined. This is the case because more than 75% of the energy produced for heating homes currently comes from fossil fuels. Switching from fossil to low or zero-carbon fuels has an enormous potential in terms of CO2 savings—an estimated 291 tonnes of CO2 by 2050.

In this context, the European Union is discussing the opportunity to establish a carbon price in the building sector. However, that is far from being simple.

Before implementing carbon pricing, lawmakers must carefully assess its different modalities (from a tax to market-based instruments, such as an emissions trading system) and impact on the building sector, in light of its specificities. These include the low-price elasticity of energy demand, which shows that energy prices are inelastic in both the short and long term: energy consumption will fall by less than 1% in response to a 1% increase in energy prices. Such low elasticity could only be overcome with a significantly higher CO2 price.

Moreover, carbon pricing for buildings may be ineffective due to the peculiar management or ownership structure of the sector. This generates split incentives which tend to blur the responsibilities and the related costs for fuel switch. Even if a fuel switch is achieved, a carbon price alone is expected to have a limited impact in terms of buildings’ energy efficiency gains, which are crucial for achieving decarbonisation quicker and with fewer resources through renovations—especially deep ones—of the existing building stock.

 

Read the full article on FORESIGHT Climate & Energy

Useful links


Join us
Contact us

Follow us


© All right reserved

Decarbonising the building and heating sectors: considerations on carbon pricing

Energy efficiency should be the starting point for all decarbonisation efforts. Carbon pricing can play a role in this, as it can provide incentives for the fuel switch and to some extent for energy efficiency investments. Yet, it should not replace impactful regulatory measures in the building sector driving the energy savings necessary to meet climate neutrality.

 

We believe carbon pricing in the building sector can only work effectively and efficiently if:

  • Its modalities are thoroughly assessed to gauge its potential benefits for the building sector
  • It is part of a well-designed broader policy mix
  • It includes a resilient mechanism for reinvesting its revenues to prevent and reduce energy poverty

 

Read the full paper

More about our webinar on carbon pricing and buildings

Useful links


Join us
Contact us

Follow us


© All right reserved