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.