Benefits for society and the economy
Investing in deep energy renovation makes good economic sense. That’s because investing in deep energy retrofits not only help reduce energy consumption and give our building stock a greener profile, it will also help stimulate the economy at a time where it needs it the most.
To put things into perspective, the building industry employs 10 percent of all workers in the EU and accounts for 8.2 percent of the GDP. However, due to the COVID-19 crisis, it’s expected that construction activity will decline by 20-25 percent. This puts millions of jobs at risk and can have a severe negative impact on the economy.
But by investing in renovation now, we can reverse this trend, create local jobs and help lift ourselves out of the current crisis. In fact, it’s estimated that for each $1.2B USB, 24,000 local jobs are secured. That might not sound like a lot, but if you consider that reaching the 2050 climate target set out by the Paris Agreement, €185 billion worth of investment is needed, that translates into roughly 3.3 million jobs! And that’s not all; studies have shown that renovating buildings can help lift residents out of energy poverty, reduce crime and cut health care costs, meaning that maintaining a 2.5 percent deep renovation rate in the EU would create a net benefit to society.
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Benefits for residents
Renovating buildings is great for society and for the people living or working within them. It’s estimated that 15 percent of people in developed countries live in energy poverty. That means they cannot afford to adequately heat their homes. Cold surfaces, lack of ventilation and the presence of draughts may lead to mould growth and associated respiratory health problems. Renovating buildings for greater energy efficiency will help lift residents out of energy poverty and provide comfortable and healthy indoor environments. It’s estimated that a $1.20 investment in renovation saves 50 cents worth of health cost.
At the same time, better and greener buildings can help keep us safer, healthier and more comfortable. Some noticeable examples within the many benefits from renovating buildings include:
- 12 percent increase in employee productivity due to better indoor climate, potentially increasing EU’s GDP by up to $595 billion.
- 11 percent reduction in average hospital stay duration, potentially saving €45 billion in health costs each year in the EU.
- 8 percent increase in academic performance helping children develop and learn better.
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Benefits for building owners and investors
The altruistic benefits aside, renovation also makes a solid business case for building owners. Increased energy efficiency leads to an increase in energy class which in turn leads to an increase in property value. One study from Denmark shows, that for each increase on the energy label scale (similar to energy star's commercial building rating), the house price increased by EUR $6665 – 9640 USD for an average house of 1075 ft2. Adding this benefit together with the energy savings, increased rents and reduced future maintenance and you end up with an internal rate of return (IRR) of 5-6 percent over a 30 years period. For an investment such as a building renovation with very low volatility, that’s a very good return on investment!
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Benefits for the climate
Did you really think we were going to skip the climate benefits? While all the above makes deep energy retrofits an enticing opportunity, the environmental benefits puts the icing on the cake. With buildings being responsible for 40 percent of global greenhouse gas emissions, they are the single largest source of emissions in the world. This naturally makes it a prime place to invest in to reach our climate goals.
Retrofitting Europe’s buildings could save 660 millions tonnes of CO2, which is twice is much as the entirety of France emits in a year. In terms of energy, that’s 3,650 billion kWh of energy saved each year. That’s the equivalent to the energy created by 5.8 million football fields filled with solar panels. Needless to say, renovation is the most cost-efficient way to reduce emissions and is also significantly less resource intensive than other options.
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