The construction, use, maintenance, heating and cooling of the world’s building stock accounts for over 34% of energy demand and around 37% of CO2 emissions, according to the UN Environment Programme – and this carbon footprint continues to grow. In the EU, the figure stands at about 40% of energy demand and 36% of energy consumption, according to the European Commission.
Many governments are trying to shrink the carbon footprint of buildings.Carbon Market Watch encourages and supports the rapid decarbonisation of the buildings system internationally and within the EU.
In Europe, the EU is seeking to boost the energy efficiency of its building stock, three-quarters of which is inefficient, through such policy instruments as the Energy Performance of Buildings Directive (EPBD) and the Energy Efficiency Directive.
Poorly insulated buildings and a reliance on fossil fuels exacerbate energy poverty and the dependence of the EU on imported oil and gas, as highlighted by the impact of the Russian invasion of Ukraine. Today, over 42 million people across the European Union are unable to afford to heat their homes, at the same time fossil fuel companies continue to rake in massive profits despite their role in the climate emergency.
The decarbonisation of buildings will impact people directly and is a key area in which the co-benefits of climate action can be highlighted. Effective EU policy making is needed to cut ties with fossil fuels, improve living standards by delivering warm and cosy homes and achieve permanent reductions in fuel poverty.
The EU’s expanded Emissions Trading System, ETS2, will aim to incentivise the reduction of greenhouse gas emissions by putting a price on carbon emissions from fuel use within buildings from 2027.
As a result, the price of heating and cooling our homes may increase with a disproportionate impact on lower-income member states and individuals. This is why the Social Climate Fund was created. Member states can access the SCF by devising national social climate plans that outline how they plan to spend the money to combat energy poverty. However, as the fund is capped at €86.7 billion, additional member state revenues will be needed.
When it comes to buildings, Carbon Market Watch focuses on:
“The creation of ETS2 will bring carbon pricing a lot closer to home. ETS2 revenue and the Social Climate Fund will need to be spent wisely on measures that have both a climate and social benefit.“
Eleanor Scott
Expert on carbon markets
“The creation of ETS2 will bring carbon pricing a lot closer to home. ETS2 revenue and the Social Climate Fund will need to be spent wisely on measures that have both a climate and social benefit.“
Eleanor Scott
Expert on carbon markets
Implementing ETS2 in a fair and effective manner that maximises climate benefit while ensuring a just transition
Ambitious complementary policies to the ETS2 to achieve decarbonisation of the building stock, such as increasing access to renewable energy and boosting energy efficiency measures
Applying the polluter pays principle equitably, putting an end to free emissions allowances for industry as citizens must now pay for their carbon under ETS2
The prudent spending of ETS2 revenue to achieve the decarbonisation of buildings and reduce energy poverty in the long term.
An increase in the size of the Social Climate Fund to ensure a just transition increases if ETS2 prices rise.
A dangerous approach to addressing high ETS2 prices would be to reform the Market Stability Reserve prematurely – before the real price signal and emission levels in the market become clear and without considering the environmental implications of the additional allowances that would enter the market and risk exceeding the ETS2 emissions cap.
NGOs are concerned that measures outlined in NSCPs will be insufficient to protect those most vulnerable to ETS2 prices. National governments must prioritise completing their plans as soon as possible, but not at the expense of meaningful stakeholder engagement.
Carbon Market Watch is campaigning alongside eight EU and national civil society organisations for the imminent Emissions Trading System for road transport and buildings and the Social Climate Fund to deliver a fair and effective decarbonisation transition.
Although the enlarged Emissions Trading System will impose a cost on emissions from buildings, the revenues it generates should be used to decarbonise European homes and to eradicate energy poverty. Some trailblazing projects showcase these possibilities.
sam.vandenplas[at]carbonmarketwatch.org
eleanor.scott[at]carbonmarketwatch.org
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