The European Central Bank (ECB) has expressed support for a proposed directive which seeks to improve the energy performance of buildings. In a new opinion published last week, the ECB made clear that the proposal from the European Commission (EC) “will not only contribute to the Union’s climate goals, but will also support the Union’s efforts to ensure energy security”.
The proposed directive aims to reduce energy consumption in the building sector to help meet the EU’s commitment to be net zero by 2050. The proposal would, among other things, remove barriers to building renovations and set energy efficiency targets for new construction.
The ECB’s opinion, adopted by its governing council, explained that support for the proposal is based on the expectation that it would reduce the EU’s reliance on and demand for fossil fuels. The central bank expects that energy customers would be made more resilient to price change and the directive would bring “more certainty to the pace and timeline of the Union’s sustainable transition”.
There was also explicit support for the directive’s efforts to improve the ability of financial institutions to access energy performance certificates (EPC). These explain to consumers the energy efficiency of buildings, and increased access to more granular information would allow financial institutions to evaluate their climate-related transition risks.
The ECB did not fully support the proposal, and made several suggestions to increase harmonisation of EPC and other standards across the EU. For example, while applauding the proposal’s mandate that member states institute mortgage portfolio standards for lenders, the ECB criticised the lack of guidelines around what those standards should be, such that lenders in different states could be operating under different standards.
There was also criticism about the lack of uniformity around EPCs, arguing that lenders would have difficulty calculate the physical risks of their loan portfolios without standardisation.
The ECB’s opinion has received support from climate advocates. In a statement to Green Central Banking, Positive Money Europe’s Adua Dalla Costa stated that the “opinion highlights how a strong [directive] is not only necessary to reduce emissions and ensure people live in healthy homes, it is also key to the central bank’s primary mandate of price stability and its role as supervisory authority”.
A strong building directive has also been a key plank in the Unlock campaign, which wants to see substantial funding directed towards greening existing homes and other buildings.
The European Parliament’s Committee on Economic and Monetary Affairs will hold a vote to finalise the directive on 9 February, and a final vote is expected in March.
This page was last updated January 25, 2023
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