The European Union’s post-Covid-19 recovery plan, to be presented on Wednesday 27 May, could include the creation of a “European Renovation Financing Facility”, as well as proposals in the field of renewable energy and hydrogen, according to an internal European Commission note consulted by EUROPE on Monday 18 May.
Renovation. In order to ensure that the renovation of buildings contributes “substantially and rapidly to the recovery effort”, the Commission could propose to establish a “European Renovation Financing Facility”, the document reveals.
Aimed at mobilising €350 billion of investment per year, this mechanism would aim to “bridge the gaps between the upfront cost of renovation, the accruing of its benefits and the non-monetary nature of some of these”.
Targeting all types of buildings and a wide array of improvements (insulation, installation of solar panels, more efficient and renewable heating and cooling systems, etc.), the mechanism would be financed by the additional funds provided for under the recovery plan.
The document further states that “the facility will centrally manage and blend €25 billion in grants and €65 billion of guarantees ring-fenced and allocated to InvestEU”.
Under this mechanism, the first initiative to be launched will be “an EU NegaWatt Initiative” covering: (1) public sector buildings, particularly hospitals and schools, and (2) social housing and other forms of low-income housing, the note says. To this end, a pilot programme will be developed, first with the European Investment Bank (EIB) and then with other partners.
In the future, the mechanism will be extended to a broader range of buildings, including offices, farms and private residential buildings, the paper also suggests.
In order to target the latter, the facility will strengthen the supply of green mortgages by allocating €5 billion of InvestEU guarantees. This guarantee will aim to mobilise €50 billion of investment in order to develop an attractive mass financing product for renovation when purchasing or refinancing property (e.g., through risk-sharing allowing mortgage lenders to cover the costs of renovating buildings on the same low interest rate and long-term terms as the mortgage).
More broadly, the document foresees that the Commission will review the state aid rules by 2021 to provide a framework for public authorities to support high quality renovation. In the meantime, the relevant rules will be applied “with flexibility”.
Renewable energies and hydrogen. The note further stresses that the recovery plan should reinforce the expansion of renewable energy and the development of hydrogen, in particular through the creation of a “green infrastructure fund for renewables and hydrogen”.
According to the text, the fund would amount to €10 billion per year and would be administered by the EIB. It would mainly include loans with a leverage factor.
With specific regard to renewable energies, the text proposes in particular to support national instruments through additional European funding as a multiplier of Member States’ funding.
“This would amount to €10 billion over 2 years, using EIB co-financing of these projects; supported through EU guarantees (e.g., InvestEU)”, the note states.
With regard to hydrogen, the paper suggests that the EU should commit to producing 1 million tonnes of “clean hydrogen” per year (hydrogen produced through electrolysis or hydrogen produced from natural gas but decarbonised through carbon capture and storage technologies).
In addition, in order to accelerate hydrogen research and innovation, the Recovery Plan could help to provide the remaining 40% of the co-financing of the ‘Innovation Fund’ over the next 2 years at a cost of €2-4 billion. Currently, this fund covers up to 60% of eligible costs for the development of technologies with high decarbonation potential.
Finally, the note states that the amount of the “European Clean Hydrogen Partnership’ (fuel cells and hydrogen joint undertaking) could be doubled in the next Multiannual Financial Framework (MFF) from €650 million to €1.3 billion. (Original version in French by Damien Genicot)