A net-zero building stock by 2050. That is the overarching ambition of the EPBD. Throughout Europe, investments in energy renovation are expected to rise due to the ambitious targets of the directive. A recent study indicates that, across Europe, delivering on the directive requires total investments of up to EUR 298 billion annually, leaving behind an investment gap of EUR 149 billion a year. This gap places demand on the financial system to develop schemes that enable building owners to raise financing for renovations.

Financing models
Denmark offers a diverse ecosystem of financing models. One option is mortgage credit, which – by securing loans against real estate – provides long-term, stable financing at interest rates typically lower than those offered by banks. Other models leverage energy savings to fund investments. For instance, ESCO models enable energy service companies to finance projects on behalf of large property owners, such as municipalities or housing associations, with repayment coming from the resulting savings. This approach allows building owners to implement energy renovations with short payback periods, even without upfront capital. The social housing sector, which accounts for one-fifth of Denmark’s residential buildings, has also established a self-financing mechanism – the National Building Fund – that supports social renovation projects. Moreover, publicly funded subsidy schemes and tax deductions further help private homeowners finance renovations.

Leveraging holistic benefits
Energy renovation of buildings delivers multiple benefits. Meeting the EPBD-targets would result in annual returns from energy savings across Europe of EUR 81 billion by 2030, which more than halves the investment gap. Renovating the worst performing buildings also addresses socioeconomic issues related to energy bills, aiding the more than one in ten Europeans who cannot afford to heat up their home. The benefits extend beyond economic ones. Since we spend roughly 90 percent of our lives indoors, buildings matter, but one in three Europeans live and work in buildings with poor indoor environmental quality that negatively impacts their well-being, health and productivity. The total annual economic benefits of improving poor indoor climates in residential and public buildings across Europe would amount to more than EUR 600 billion by 2050. Therefore, investing in and financing energy renovations isn’t just about improving the sustainability of the building mass; it’s also good business that improves people’s lives.