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Renovation Wave: opportunities for the construction sector

“The green recovery starts at home” said Commissioner for Energy Kadri Simson during the presentation of the European Commission’s Renovation Wave initiative on 14 October. Buildings are responsible for 40% of the energy consumption in the EU, while 75% of European buildings are not energy efficient. With its eyes fixed on the 2050 climate-neutrality target, the European Commission aims to double renovation rates in the next ten years to increase the energy efficiency of buildings and to cut emissions. The goal is to renovate 35 million buildings by 2030, supported with funding of €672.5 billion from the Recovery and Resilience Facility. The Renovation Wave, therefore, offers new opportunities for the construction sector.

Priority actions

The strategy’s main priority is the renovation of the least energy-efficient buildings, which often house people who are most affected by energy poverty. The Commission expects that focussing on these constructions will lead to the greatest cut in emissions. Additional attention is paid to public sector buildings and the decarbonization of heating and cooling systems. The publication of the initiatives to speed up renovations of public buildings, as well as a revision of the Renewable Energy Directive to increase heating and cooling energy targets is planned for June 2021. Legal certainty to take up renovations, well-targeted funding, project capacity increases, smart buildings and the use of circular materials are lead actions to realize the transformation of European homes, schools, offices and townhalls.

Consequences and opportunities for businesses

Renovation of buildings

The Renovation Wave initiative, aimed at renovating the current stock of buildings, would bring opportunities to companies, notably, in the construction sector. The proposal that public buildings should be renovated at a higher pace than those in the private sector might lead to an increased demand in the short term. The Commission also put forward the use of efficient and sustainable products generating a higher energy consumption reduction, which will benefit the sectors providing these materials.

European Bauhaus

The proposals of the Commission do not only focus on CO2 reduction, but also envisage the launch of new European building designs. The launch of the New European Bauhaus will include the vision on how Europe will look like in the future, opening up opportunities for both the designing dimension of the new sustainable style as well as the construction side. The Commission will bring together architects, artists, students, engineers and designers to shape new construction designs.

European Green Deal Impact Scan

Financing opportunities

The Renovation Wave initiative opens up funding opportunities for the construction sector on both national and EU level. To realize action in the above-mentioned areas, an annual investment of €57 billion is foreseen from the Recovery and Resilience Facility. Other funding will be granted by the revenues from the carbon market. In addition, the European Commission will revise state aid rules, so national governments can support renovation in their respective countries.

 Electric vehicles

With electric mobility on the rise, charging vehicles at home or in public places (e.g. office buildings) will be a common practice in the near future. The Commission stresses that in order to reach the 2030 CO2 reduction targets, electric bikes, cars and vans will be the preferred mode of transport. Therefore, innovation, connectivity and accessibility of charging infrastructure will be the main aspects of the Renovation Wave which will thus present opportunities for the construction sector. Buildings will need to be equipped with the necessary infrastructure to support e-mobility.

State of play

In order to realize the European Renovation Wave, the Commission calls on the European institutions and all stakeholders to engage in a discussion on the strategy. Input from different sectors will now determine in what way the current plans and proposals will still be fine-tuned. Dr2 Consultants is eager to help your business understand the impact of the Renovation Wave and assist you in shaping its outcome by building a sound Public Affairs strategy.

For a full overview of the European Commission’s proposed measures, please see the annex to the Renovation Wave initiative.


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Updated EU climate plans: opportunities for businesses at national level

New Belgian federal government’s sustainability policy priorities

After 493 days of negotiations between the political parties in Belgium since the elections in May 2019, the new federal government of the Kingdom of Belgium was sworn in on 1 October 2020 with Alexander De Croo (Open Vld) appointed as new Prime Minister. With a clear difference in engagement compared to Charles Michel’s so-called ‘Swedish coalition”, sustainability – together with employment and solidarity – is one of the key themes in the new coalition agreement, which confirms full commitment to the climate ambitions of the Paris Agreement and the European Green Deal. The ambition is to reduce greenhouse gas emissions by 55% by 2030 and make Belgium climate neutral by 2050.

Another urgent focus of the new government will be addressing the corona crisis and the path to economic recovery by transitioning into a more sustainable economic model. The “Government De Croo” sets out investments and new policies in line with the goals of the European Green Deal, however, it often remains unclear how the goals will be achieved in practice.

Renewable energy sources 

The new Belgian federal government proposes to invest more in the development of renewable energy sources, in particular in wind and solar energy, i.e. by exploring potential additional capacity for offshore wind in the Belgian North Sea. However, environmental organizations already raised their concerns about the lack of measures that would protect nature reserves in the North Sea in case economic activities would be exploited in the area. Additionally, in their pursuit of climate neutrality, public companies are encouraged to develop their own sustainable energy supplies and to gradually replace polluting sources, including nuclear energy.

Sustainable transport 

Railway is within the competency of the federal government, where additional investments are expected with the ambition to create more efficient and faster international (night) train connections to major European cities and consequently make Brussels a truly international train hub. The government is also aiming to double the freight traffic by 2030. In consultation with the regions, the government will put forward proposals on the uptake of zero-emission vehicles (subject to the availability of such affordable vehicles on the Belgian market) including an obligation on zero-emission company vehicles by 2026. Also, together with the regions, this government will strive for an ambitious modal shift and the promotion of Mobility-as-a-Service with a view to a significantly increase the share of sustainable mobility modes.

Circular economy 

The new government – in consultation with the regions – will develop a federal circular economy action plan to significantly reduce the use of raw materials and the material footprint in production and consumption. The federal government will also set best practices and include the principle of a circular economy in its public tenders. In line with the ambitions of the European Green Deal, the Belgian government will also promote reduction of waste, reuse and recycling.

Biodiversity 

To improve the negative impact on the biodiversity, the new federal government will investigate the impact of the ban of certain plastics and push to harmonize these standards at the European level. Furthermore, the government will realize an ambitious reduction plan for pesticides with special attention for Belgian (agricultural) companies in order to avoid any competitive disadvantage. In general, the new government seems to align the national biodiversity strategy much more with the European biodiversity strategy.

Recovery 

The new government is investing €3.2 billion in new policies, out of which  €2.3 billion will be earmarked for social policy. €1 billion is reserved for relaunching the economy following the corona crisis, including investment in a new economy (e.g. more energy-efficient government buildings, the development of the use of sustainable accumulators and batteries, improvement and intensification of freight transport by rail and inland waterways). Furthermore, spin-offs that have a positive effect on sustainable development, more specifically on renewable energy, insulation of buildings, climate-friendly technologies, but also in the field of digitization and mobility will be set as priorities. Further details are set to be announced in the coming weeks and months.

Conclusion 

The new Belgian federal government has without doubt set out ambitious goals to achieve a more sustainable and circular economy for the coming years. Together with the recovery plan following the COVID-19 crisis, this provides new opportunities but also poses challenges for companies to adopt their operational and business environments. It is therefore crucial to stay up-to-date with the latest developments and understand when is the right momentum to proactive influence the political agenda.

Dr2 Consultants offers comprehensive Public Affairs support for companies and organizations that are impacted by Belgian policies – either at federal or at regional level. Furthermore, registration is still possible for our dedicated online Belgian Public Affairs training on 16 October 2020 that will provide participants with the opportunity to have a deeper look at the new priorities of the federal and regional governments.

 

Summer recess – what’s next?

As EU leaders agreed on a new proposal for the new Multiannual Financial Framework and the Recovery Plan on 21 July, the European Parliament was given good food for thought over its summer recess. However, the new long-term budget is not the only priority on the EU agenda. The Commission is already chewing on a series of proposals to be expected later this year and in 2021. In fact, now is the moment to deliver input on some key, planned legislative proposals, as the Commission launched a series of public consultations that are open until after summer. Let’s have a look what is next after the 2020 summer recess.

Transport: smarter and greener

The green and digital transition as the twin priorities of the Von der Leyen Commission are also reflected in the upcoming transport initiatives. To deliver the ambitious European Green Deal climate neutrality objective, the mobility sector needs a 90% emission reduction by 2050. The Strategy for Sustainable and Smart Mobility, expected towards the end of the year, will be the overarching strategy for the delivery of the twin transitions in this area. Stakeholders can contribute to the public consultation until 23 September.

Expectedly, the strategy will include the integration of alternative fuels, in line with the recently published hydrogen strategy that already outlines a pathway for the deployment until 2050 in all modes. The strategy is also complemented by the upcoming FuelEU initiatives for the maritime and aviation sector. The FuelEU Maritime initiative, aimed at boosing alternative fuels in shipping specifically, is open for feedback until 10 September. The public consultation on ReFuelEU Aviation, initially planned for the first quarter of 2020, is still to be expected ahead of the Commission proposal this year.

Sustainability: a bigger role for tax

Taxation will become a more important instrument for the Commission to align consumer choices and business investments with its climate targets. On 23 July, public consultations on both the revision of the Energy Taxation Directive and the creation of a Carbon Border Adjustment Mechanism were launched. Having been unchanged since its adoption in 2003, the Energy Taxation Directive will be subject to a thorough review. The exact changes are yet to be determined based on the consultation outcome, however, what is clear is that it will include a correction of the minimum taxation rates for electricity, gas, and coal, as well as a tax exemption reduction for fossil fuels. The proposal, which is part of the European Green Deal, is scheduled for June 2021. The consultation is open for feedback until 14 October.

In addition, the Commission proposes a Carbon Border Adjustment Mechanism to prevent ‘carbon leakage’. This ‘CO2-tax’ internalizes emissions in the price of a product, so production does not shift to countries with lower climate ambitions. The exact instrument is still to be determined, and could take the form of an EU-wide import tax or an extension of the Emmission Trading System (ETS). The latter has already seen critical responses, as this may not be in line with WTO rules. The Commission plans to scrutinize the issue and present a proposal later this year. The revenues would directly contribute to the ‘own resources’ of the EU budget for the next seven years that would help finance the new €750 billion recovery plan. Stakeholders can deliver their contribution to the plan until 28 October.

Digital: fit for the COVID-19 reality

Following its pledge to make Europe ‘fit for the digital age’, the Digital Education Action Plan and the Digital Services Act are also high on the Commission’s agenda. The Digital Education Action Plan, due to be published in September this year, will be part of the Next Generation EU program. The COVID-19 crisis has seen schools and universities close their doors and increasingly turn to remote, digital teaching. The Action Plan aims to promote high-quality and inclusive education and training in the post-COVID digital reality. Feedback on the proposal can be delivered until 4 September.

Part of the Next Generation EU financing is the digital tax element of the Digital Services Act, to be presented by the end of 2020. The Digital Services Act is an attempt to regulate online platforms when it comes to illegal goods, product safety, political advertising and offensive content. The initiative may face intense debates before its approval, as previous attempts to implement an EU-wide Digital Taxation mechanism have so far been unsuccessful. The consultation remains open until 8 September.

Next steps

The Commission’s proposals on the above initiatives are expected before the end of 2020, except for the Energy Taxation Directive which is due in June next year. From the above-mentioned public consultations, it is evident that the European Commission is gearing up for a busy end-of-year period. Early (proactive) action is desirable for stakeholders that aim to represent their interests on these files, which will also be closely examined by the European Parliament and Council of the EU in 2021 (and later).

Want to know more about the upcoming initiatives, COVID-19, or other files that might affect your business? Please contact Dr2 Consultants to see what we can do for you.

Climate ambitions of Flanders and the European Green Deal

On 21 June, in an interview on Flemish news television VRT, First Executive Vice-President of the European Commission, Frans Timmermans, called on Flanders to be more ambitious in the fight against climate neutrality. However, he also said, he was optimistic that Flanders would do its part being a wealthy region, which already has industrial pioneers on board for the European objectives. But what exactly are the Flemish climate objectives, and how are they aligned with the EU plans?

Greenhouse gas emissions reduction by 35%

The Flemish climate policy plan sets out the guidelines for the climate policy for the period 2021-2030. In line with the objective imposed by the EU for Belgium, the plan puts forward the objective to reduce greenhouse gas emissions in Flanders by 35% by 2030 compared to 2005. However, the EU is setting this goal at a reduction level of 50-55% by 2030. The required effort is identified per sector and, where necessary, the greenhouse gas reduction target is converted into sub-targets. In addition, the plan also contains the main measures required to achieve this objective and puts Flanders on the path towards a low-carbon future.

Energy efficiency

Another priority for Flanders is to increase energy efficiency for all sectors. The three largest energy consumption sectors in Flanders are industry, residential and transport sectors. In addition to improving energy efficiency, simultaneous efforts must be made to achieve the strong development of renewable energy. Energy services and technologies will be digitally controlled and intelligently linked. However, this is a huge challenge for Flanders. In the period 2005-2018, emissions decreased by only 5%. The Flemish Government, therefore, intends to focus more on increasing innovation, the persistence of circular economy, parallel federal policies and additional EU instruments (legislative and financial).

Transforming buildings will also play an important role in increasing the energy efficiency in densely populated Flanders. The climate policy plan encourages the renovation of residential buildings, rebuilding after demolition and making the heating installation more sustainable. This is in line with the EU’s ‘Renovation Wave’ initiative, part of the European Green Deal, with the goal to double the annual renovation rate of the existing building stock. The European Commission will publish communication on this in September 2020.

How can Dr2 Consultants advise you

The EU’s ambition is to lead the way towards a more sustainable future. Contrary to the fear that the COVID-19 pandemic would jeopardize the green agenda for the coming years, the Commission has shown its commitment to accelerate the green transition during the recovery phase. This green transition will pose challenges but will also provide opportunities to businesses, like front runners who can introduce their new and innovative approaches in Flanders. With the Dr2 Consultants’ European Green Deal Impact Scan, we will provide you with a comprehensive analysis of how the European Green Deal will affect your business, identifying the opportunities and challenges and highlighting moments to positively influence the policies and legislation. In addition, we are able to provide you with high-end intelligence on the developments in Flanders that allows for a comprehensive overview of relevant files for your business.

Europe’s green recovery from the COVID-19 pandemic

On 27 May, the European Commission’s published its historic proposal for the ‘Next Generation EU’ recovery fund worth €750 billion, topping the renewed proposal for a €1.1 trillion Multiannual Financial Framework (MFF) 2021-2027. This proposal for unprecedented investment in the European economy is set to dominate the political agenda of the European institutions for the upcoming months. However, as the European Green Deal was put on the top of the agenda only recently, the current situation begs the question how Green Deal initiatives are incorporated into the Commission’s recovery plans.

Main takeaways                

  •  The European Green Deal will be central in Next Generation EU, public recovery investments should follow EU energy and climate priorities;
  • Additional funding of €30 billion for the Just Transition Fund, bringing the total up to €40 billion;
  • The CAP budget will fall by around €34 billion, but farmers will receive funds for the green transition;
  • The Commission will increase its own resources via an extension of the Emission Trading System (ETS) to the maritime and aviation sectors and a carbon border adjustment mechanism.

Accelerated investments in the green transition

Within the recovery fund, the Commission proposes to set up a Solvency Support Instrument to mobilize private investment and thereby kick-start the economy. The Solvency Support Instrument will have a budget of €31 billion and will unlock up to €300 billion in support that will be linked to the green and digital ambitions of the EU. Apart from that, a new Strategic Investment Facility will be built into InvestEU, generating investment up to €150 billion in boosting the resilience of strategic sectors, notably linked to the green and digital transition.

To kick-start the green transition in times of crisis, the European Commission will come up with a Communication to start a European ‘renovation wave’ in the third quarter of 2020. This massive renovation wave of buildings will improve energy efficiency and promote the circular economy, whilst creating local jobs in the coming years.

On top of the renovation wave, the Commission will focus on rolling out renewable energy projects, especially wind and solar. To this end, the Commission will publish an offshore renewable energy strategy later this year. Moreover, the EU will reinforce its efforts to develop a clean hydrogen economy in Europe, something that is currently mainly promoted by Germany and the Netherlands.

When it comes to clean transport and logistics, the Commission aims to accelerate the production and deployment of sustainable vehicles and vessels as well as alternative fuels. This ambition includes the installation of one million charging points for electric vehicles and a boost for rail travel and clean mobility in European cities and regions.

The Next Generation EU recovery fund also adds €30 billion to the Just Transition Mechanism, bringing its allocated budget 2021-2027 up to €40 billion. As part of the Just Transition Mechanism, the Just Transition Fund will be reinforced to support re-skilling and to help businesses create new economic opportunities in the regions of the EU that are most affected by the green transition.

EU ‘green’ levies to finance recovery

How will this sustainable recovery be financed? The Next Generation EU will raise money by temporarily lifting the own resources ceiling to 2.00% of EU Gross National Income, allowing the Commission to use its strong credit rating to borrow €750 billion on the financial markets. To repay these loans in a fair and shared way, the Commission proposes a number of new own resources. The Commission will for example increase its own resources via an extension of the Emission Trading System (ETS) to the maritime and aviation sectors and a carbon border adjustment mechanism.

Next steps

German chancellor Angela Merkel, shortly before the start of the German Presidency of the Council of the EU, expressed the ambition to reach a compromise on the future EU budget and recovery fund by fall 2020. The proposal of the Commission, as well as the plans put forward by the Franco-German axis and the Frugal Four (Austria, Denmark, the Netherlands and Sweden), have kept the green transition high on the agenda and one can therefore reasonably expect the EU’s great leap forward in green technologies to materialize in the upcoming years.

News alert: Dr2 Consultants launches European Green Deal Impact Scan

The start of the new European Commission marked also the start of a new European Growth Strategy: the European Green Deal. The ultimate goal: to become the first climate-neutral economy by 2050!

The measures stemming from the European Green Deal will provide opportunities but will also pose challenges to businesses. Whether you are a front runner in your respective field or a company which is challenged by these new policies, the European Green Deal will affect your business.

Dr2 Consultants’ experience in dealing with sustainability issues allows us to identify clear-cut opportunities and threats for organizations dealing with the green transition.

Dr2 Consultants has, therefore, developed a ‘European Green Deal Impact Scan’. The Impact Scan will give you a comprehensive overview of how the European Green Deal will affect your business, identifying the opportunities and challenges as well as highlighting moments to positively influence policies and legislation.

If you want to know more about our European Green Deal Impact Scan, please visit our dedicated web page and do not hesitate to reach out to Ward Scheelen via w.scheelen@dr2consultants.eu.

Visit EGD Impact Scan webpage

Bold sustainability ambitions in the European Union

Already in July, Ursula von der Leyen made clear that the new European Commission has bold ambitions to tackle climate change: The European Union must become an example of how to live sustainably. In this regard, energy efficiency and circular economy are central to the European way of life.

Frans Timmermans and the European Green Deal

The European Green Deal will be the guide for this ambitious transition, targeting among other things, an emission reduction of 50% to 55% by 2030. This target is about 10-15% higher than the current 2030 climate and energy framework. The Commissioner in charge of the Green Deal will be the Dutchman, Frans Timmermans, who also holds the position of first Executive Vice-President of the next European Commission. In his hearing in the European Parliament on 8 October, he urged the European Parliament to be ambitious and lead by example in the world. To make a real difference with regards to global warming, the EU needs to focus on talks with its global partners, according to Timmermans. He feels like he has got a strong mandate, since according to statistics, 9 out of 10 European citizens want the EU to act decisively on climate change.

Concretely, Timmermans will propose a draft Climate Law within the first 100 days of his mandate. This law will put into legislation the EU’s climate ambitions, but most importantly determine the in between steps to be taken to reach these goals. Timmermans is strongly considering using infringement procedures against Member States not complying with the EU’s upcoming climate laws and its ambitions. Furthermore, the Climate Pact will engage citizens with the EU’s climate policy which would make legislation seem less ‘top-down’.

Virginijus Sinkevičius and the European Circular Economy

Three years after its adoption, the Circular Economy Action Plan can be considered fully completed. Its 54 actions have now been delivered or are being implemented. Together with Timmermans, Lithuanian Virginijus Sinkevičius will however increase the ambitions in the field of the circular economy. Sinkevičius stated during his hearing in the European Parliament on 3 October that if the EU ensured the complete circular use of just four materials (steel, aluminum, cement and plastic) – which goes further than the existing Circular Economy Action Plan – EU’s industrial emissions would be cut in half.

Sinkevičius believes that a new action plan can involve three major areas:

  • First, by examining the ways in which the EU produces and consumes. He mentioned particular further action on eco-design and more focus on reuse and repair. This strand could also integrate circularity in other sectors such as textiles, construction, food and ICT.
  • Second, by helping consumers make informed choices.
  • Third, by moving beyond recycling. Waste should not only be minimized, but prevented completely in areas such as textiles and construction.

Environment Council

Not only the European Commission wants to increase the European ambitions regarding climate change and sustainability, but also the Council realizes their importance. On 4 October, Environment Ministers held a debate on the EU’s strategic long-term vision for a climate neutral economy and adopted conclusions on climate change, which set out the EU’s position for the UN climate change meetings (COP25) in Chile in December 2019. The Council called for action to promote circularity systemically across the value chain, including from the consumer perspective, in key sectors including textiles, transport, food as well as construction and demolition. The Council also stressed the need for more measures on batteries and plastics.