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A €120bn investment program for the European Union 3-year Juncker
Plan Massive financing of the energy transition in schools, hospitals, etc. for
a competitive EU
I. Background and issues
1. Prioritising the energy efficiency of public buildings as a quality investment
Since buildings represent 40% of energy consumption in Europe, they are a major segment of the
energy transition, accounting for hundreds of billions of euros. The share of public buildings
(excluding social housing) is estimated at around 10% of total surface area. The program builds on
the duty of European, national and local authorities to set an example and stimulate quality
investment. In Europe, public buildings (schools, offices, hospitals and so on) are estimated to be a
largely untapped source of potential of financially sustainable renovation (entirely funded by energy
savings as opposed to subsidies) of at least €120bn over the next 3 years, that is to say €100bn more
than the current investment trend (BAU of €20bn or even less over the next 3 years). This untapped
potential, which urgently needs to be more accurately assessed in the EU, is reason enough for a
public intervention:
The public finance situation is heavily constrained and could deteriorate in most European
countries, hindering public building retrofit projects and lowering the BAU trajectory.
public accounting standards in the EU and member states (MS) are a burden on these projects
and their “conventional” financing mechanisms;
project finance mechanisms remain ill-suited to these medium-sized operations;
stimulating demand (currently weak and politically undervalued) calls for a clearly articulated
long-term real estate strategy by MS and key projects to achieve it;
current financing capacities and regulations would be insufficient for such a proactive policy.
The €120bn investment program consists in financially long -or very long- term financially viable
projects, with a 3% IRR objective.
2. Support of EU objectives
Energy renovations in public buildings would contribute to many EU goals:
exemplary reduction of CO2 emissions in the context of COP21, in accordance with European
1
targets ;
improvement of the EU’s highly skewed energy trade balance;
2
energy independence : the EU28 imports more than 50% of the energy it consumes and the
Ukraine crisis is currently underlining Europe’s vulnerability;
investment spurring the EU’s competitiveness: fossil-fuel imports represent more than €1bn per
day but energy savings would enable the EU to use these resources to generate more added
value;
According to economic estimates, investing €120bn over 3 years in public buildings would reduce
their energy consumption by 10-15% and would reduce their CO2 emissions by the same
percentage.
These French proposals respond to the need for long-term financing of the European economy 3
focusing on the “real economy” without increasing the public debt, thus responding to today’s
market failures. They will improve the traceability of that financing to facilitate safe and transparent
monitoring of the scheme by public authorities.
3. Unrivalled socio-economic benefits
Energy renovations bring key non-financial socio-economic benefits besides those previously mentioned:
local job creation, in part through SMEs: with about 15 jobs/year per million euros invested, a
€120bn program of investment in public buildings would result in more than 600,000 additional
yearly jobs during 3 years;
1
European Commission. 2020 climate and energy package and 2030 framework for climate and energy policies.
2
Energy consumption for heating in public buildings: 50% gas and 20% fuel oil (France).
3 European Commission. Communication on long term financing of the European economy. March 2014.
Plan Massive financing of the energy transition in schools, hospitals, etc. for
a competitive EU
I. Background and issues
1. Prioritising the energy efficiency of public buildings as a quality investment
Since buildings represent 40% of energy consumption in Europe, they are a major segment of the
energy transition, accounting for hundreds of billions of euros. The share of public buildings
(excluding social housing) is estimated at around 10% of total surface area. The program builds on
the duty of European, national and local authorities to set an example and stimulate quality
investment. In Europe, public buildings (schools, offices, hospitals and so on) are estimated to be a
largely untapped source of potential of financially sustainable renovation (entirely funded by energy
savings as opposed to subsidies) of at least €120bn over the next 3 years, that is to say €100bn more
than the current investment trend (BAU of €20bn or even less over the next 3 years). This untapped
potential, which urgently needs to be more accurately assessed in the EU, is reason enough for a
public intervention:
The public finance situation is heavily constrained and could deteriorate in most European
countries, hindering public building retrofit projects and lowering the BAU trajectory.
public accounting standards in the EU and member states (MS) are a burden on these projects
and their “conventional” financing mechanisms;
project finance mechanisms remain ill-suited to these medium-sized operations;
stimulating demand (currently weak and politically undervalued) calls for a clearly articulated
long-term real estate strategy by MS and key projects to achieve it;
current financing capacities and regulations would be insufficient for such a proactive policy.
The €120bn investment program consists in financially long -or very long- term financially viable
projects, with a 3% IRR objective.
2. Support of EU objectives
Energy renovations in public buildings would contribute to many EU goals:
exemplary reduction of CO2 emissions in the context of COP21, in accordance with European
1
targets ;
improvement of the EU’s highly skewed energy trade balance;
2
energy independence : the EU28 imports more than 50% of the energy it consumes and the
Ukraine crisis is currently underlining Europe’s vulnerability;
investment spurring the EU’s competitiveness: fossil-fuel imports represent more than €1bn per
day but energy savings would enable the EU to use these resources to generate more added
value;
According to economic estimates, investing €120bn over 3 years in public buildings would reduce
their energy consumption by 10-15% and would reduce their CO2 emissions by the same
percentage.
These French proposals respond to the need for long-term financing of the European economy 3
focusing on the “real economy” without increasing the public debt, thus responding to today’s
market failures. They will improve the traceability of that financing to facilitate safe and transparent
monitoring of the scheme by public authorities.
3. Unrivalled socio-economic benefits
Energy renovations bring key non-financial socio-economic benefits besides those previously mentioned:
local job creation, in part through SMEs: with about 15 jobs/year per million euros invested, a
€120bn program of investment in public buildings would result in more than 600,000 additional
yearly jobs during 3 years;
1
European Commission. 2020 climate and energy package and 2030 framework for climate and energy policies.
2
Energy consumption for heating in public buildings: 50% gas and 20% fuel oil (France).
3 European Commission. Communication on long term financing of the European economy. March 2014.
