The Social Footprint of ENGAGE: Financing the Green Transition to Reduce Energy Poverty

The European Green Deal, launched by the European Commission in December 2019, presented a new growth strategy aiming to transform the EU into a fair and prosperous society, with a modern, resource-efficient, and competitive economy free of net greenhouse gas emissions by 2050.

To address the twin challenge of energy efficiency and affordability, the European Green Deal called upon the EU and the Member States to engage in a “Renovation Wave” of public and private buildings.

The Renovation Wave for Europe strategy focuses on three main areas:

  • Tackling energy poverty and worst-performing buildings
  • Public buildings and social infrastructure
  • Decarbonising heating and cooling

In the European Green Deal, the European Commission already highlighted the risk of energy poverty for households that cannot afford key energy services to ensure a basic standard of living and suggested that effective financing programs could not only reduce energy bills and help the environment, but also protect the most vulnerable consumers.

Identifying the Key Drivers of Energy Poverty

The European Commission published a Recommendation on energy poverty in 2020, issued as part of the Renovation wave strategy. Building on this recommendation, the Fit for 55 package, adopted in July 2021, proposed specific measures to identify key drivers of energy-poverty risks for consumers, considering structural solutions to vulnerabilities and underlying inequalities.

The three most commonly identified causes for energy poverty are:

  • low-income levels
  • poor household energy efficiency and energy performance of buildings
  • high energy prices.

The Fit for 55 packages also included a proposal for a revision of the Energy Efficiency Directive to put a stronger focus on alleviating energy poverty and empowering consumers. As such, an amended Energy Efficiency Directive was formally agreed on 24 July 2023, which implements stronger requirements for raising awareness and providing information.

The Challenges Facing European Households

According to the Energy Poverty Advisory Hub, in 2020 over 35 million Europeans (equal to 8% of the EU population as a whole) were unable to keep their homes adequately warm.

With 27% of final energy consumption in the EU coming from households, poor-quality dwellings and appliances greatly influence the quantity of energy needed to guarantee a comfortable and healthy way of living.  

According to the European Commission, almost 75% of the EU building stock is energy inefficient and only about 1% of the building stock is renovated each year.

It predicts that the renovation of existing buildings could reduce the EU’s total energy consumption by 5-6% and that current renovation rates would need to at least double in order for EU climate and energy objectives to be met.

ENGAGE’s Role in Fighting Energy Poverty

By targeting the data-related and legal obstacles in promoting building renovation and providing financial (funding) support for the necessary upfront investment, ENGAGE aims to boost and accelerate the decarbonisation path for the EU’s building stock.

The ENGAGE Consortium’s first deliverable is a one-size-fits-all template including credit, cadastral, and sustainable finance information in compliance with the EU Taxonomy, the Energy Performance for Buildings Directive as well as the General Data Protection Regulation.

The templates will be operationalised through the ENGAGE portal, which will promote the financing of energy efficiency renovations and improve access to finance for newly built houses, incorporating incentives at European level.

Improvements in the energy performance of buildings will not only contribute to the European Green Deal’s ambitious goal of carbon-neutrality by 2050 but will also help tackle energy poverty by lowering the energy bills of the most vulnerable households.

To learn more about ENGAGE, please email or contact Project Coordinator, Marco Angheben via +49 (0) 69 50986 9017.