Challenge for Europe

Technologies exist that can significantly reduce this energy consumption: thermal insulation of buildings and local production of warm water using thermal solar panels. Thermal insulation of buildings has the potential to reduce the energy consumption by a factor of 8, from 300 kWh/m2.year (for an old apartment building with no specific insulation) to 40 kWh/m2.year (German KfW 40 standard). Thermal solar panels, coupled with an auxiliary, conventional heat source covering the times when solar radiation is insufficient, reduces energy consumption for warm water by an average of 40%. Thermal solar energy use has the following advantages: the yield is high (>30%) and the energy retrieved from the sun can be stored both easily and with a good yield, by simply storing hot water. This is in stark contrast with the current weaknesses of photovoltaic solar energy use.

The major area in which such technologies should be deployed is the base of existing buildings: every year, new construction represents only a fraction of that base, and many existing buildings, specifically in the city centres, are expected to stay for an undefined future, with no foreseeable plans for their destruction (and this makes great sense, for other reasons, related to the preservation of urban heritage).

These technologies are ready, available, and highly efficient. They can have a lasting and major effect on the reduction of CO2 emissions in Europe. They make great economic sense for the users of buildings, by significantly reducing their energy bills. In a time of “peak oil” and (hopefully) carbon taxes, these are bound to increase over the long-term. Their implementation would create massive, non-delocatable employment, among those very low-qualified workers that are most vulnerable to economic downturn.

Their deployment is however inhibited by two factors: (1) financial means are necessary for the required investment and (2) legal issues related to property rights multiply the hurdles for building owners to decide to make an investment.

Proposals

I propose therefore that a significant proportion (>30%) of the economic stimulus packages currently being implemented in Europe be dedicated to the financing of renovations for existing buildings, in the direction of improved energy efficiency and insulation (reaching 100 kWh/m2.year) and solar thermal energy production (for warm water production and, when the circumstances are favourable, for heating). This fraction of the economic stimulus package may come more specifically in the form of having the State / the European Union bear the cost of interest payments on loans (i.e. “zero-interest rates loans” as seen from the consumer) and guaranteeing them.

I also propose some modifications to the rules for decision-making regarding such renovations in the following directions:

  1. A simple majority of households (or of the organisations) living (resp. working) in the building is sufficient for the decision to undertake the renovations to be valid. Voting rights in this decision-making is independent of whether the households (resp. the organisations) are owners or simple tenants of their residence (resp. their office). In other words, tenants have here the same decision-making rights as owners, and no unanimity is requested
  2. When the decision to renovate the building is taken, an independent source is mobilised to estimate the expected yearly financial gain to be expected in terms of heating and warm water savings. This independent source may either be an engineer / architect with a specific training or publicly available databases and abacuses
  3. For each such renovation project, a specific loan is set up, in which the owner(s) of the building are jointly responsible, and that is backed by the fraction of the yearly financial gain that is attributed to the owner (see below). This additional loan is not counted when considering the financial reliability of the building owners (e.g. it is not included in the liabilities that a bank would consider when deciding whether to attribute a new credit), and is guaranteed by the State / the European Union (as another component of the economic stimulus package)
  4. This estimated yearly financial gain is split fairly (e.g. 50-50) between the user and the owner of the building. The fraction of this yearly financial gain due to the owner is dedicated to paying back the loan that was established for the renovation project. It is paid by the user(s) of the building (i.e. as a supplement to the rent). The fraction due to the user is simply the savings made in warm water and heating costs.

These latter rules are indeed a limitation to property rights as they are currently understood. However, precedents exist in which owners of buildings are forced to undertake works that they would not otherwise have done: in the case of danger of collapse or for chimney sweeping, to prevent damage to others. The stakes of global warming are on a larger scale than the building itself, but are no less urgent and pressing.

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