Institute for European Energy and Climate Policy

The vision of climate neutrality is no longer characterised by a single spatial focus as there is a clear need for collaboration at, and across, different governance levels. This is particularly important as regional and local authorities are given a more active role in implementing energy transitions; when it comes to policymaking, though, their needs are not always considered, and decisions are mainly taken at the national level. Such an example is the Peloponnese region in Greece, where many actors criticise the ongoing construction of a new natural gas distribution network. In this article, we explore if this expansion is a good practice, or a missed opportunity of a green and inclusive transition. To do so, we couple high-resolution modelling with policy knowledge and experts’ insights to simulate different transition pathways by 2050. We show that an alternative strategy promoting electrification of heating along with energy efficiency could lead to more benefits at both the regional and the household levels. We also show that if decarbonisation is the real goal, more ambitious renovation targets should be set, while a supporting strategy that assures a fair participation of citizens should be devised. • Demand modelling coupled with policy insights to analyse energy transition by 2050. • Regional governance in support of natural gas creates lock-in at the national level. • National policymaking in place seems like a missed opportunity of green transition. • Alternative pathways, e.g., electrification, can result in better benefits overall. • Renovation rates must increase by at least 1.5 times to achieve decarbonisation.

Global demand for fossil fuels is projected to decline by up to 75 percent by 2050, requiring new economic strategies for fossil exporters to promote diversification. This study employs an inter-country input-output model to assess sector interdependence in Saudi Arabia and explore the macroeconomic impacts of investing in Power-to-X (PtX) plants. We analyze four configurations: pure solar and hybrid solar-wind systems, producing either green hydrogen or ammonia. Our comparative analysis shows that hybrid plants appear to have stronger domestic effects than pure solar configurations, while producing green ammonia instead of hydrogen generates stronger relative employment. These trends remain consistent across different sensitivities and domestic supply shares. However, the differences between configurations and sensitivities decrease with increasing domestic supply. Currently Saudi Arabia has limited developed manufacturing sectors and the economy is heavily dependent on exports of crude oil and related products-a situation often referred to as the “resource curse”. For all PtX configurations, the construction sector therefore emerges as the largest contributor to domestic employment and value added. At current import shares, foreign effects, particularly in China and the United States, account for about half of the total impact, especially in sectors such as electronics and machinery. Without embedding the hydrogen supply chain into their industrial landscape by starting to produce parts of clean technologies locally, exporters risk substantial value creation occurring predominantly abroad. Overall, our research highlights the need for targeted policy measures to capitalize on the „renewables pull effect“ when installing PtX plants for green energy exports.

The recast of the Energy Efficiency Directive proposed by the European Commission as part of the Fit-for-55 package (July 2021) clarified in its new Article 3 that the Energy Efficiency First (EE1st) principle should apply to all planning, policy and major investment decisions related to energy systems as well as non-energy sectors that have an impact on energy consumption and energy efficiency. Member States provided limited, if any, information in their National Energy and Climate Plans (NECPs) in 2019-2020 on what EE1st means in their national context and how they plan to operationalise it. EE1st was then a relatively new concept, and implementing it has proved to be a difficult task for Member States. Acknowledging this, the European Commission developed further guidelines for the implementation of EE1st in the energy, end-use, and finance sectors. To support the implementation of EE1st in the Member States, this report offers a deep-dive analysis of the implementation of EE1st in three different countries: Germany, Hungary, and Spain. Under consideration are the different policy frameworks in these countries, with a focus on buildings and their energy supply (more specifically, power and district heating sectors). The main policies relevant for EE1st implementation, potential, gaps and national specificities are analysed. The policy assessment is based on the combination of literature review and semi-structured interviews. Most of the national policies analysed were not specifically designed to meet the EE1st principle, but some have been identified as fitting EE1st. For example, the main renovation programmes in Germany include criteria or requirements that favour projects achieving higher energy performance and/or combining different types of energy efficiency actions. However, the impact of these programmes on energy supply systems are rarely explicitly considered in their rationale. Rapidly developed incentives to replace fossil fuel heating systems as a response to the current energy crisis due to the Russian war in Ukraine are another example. Although an effective and straightforward direct response to this crisis, it creates a dilemma vis-à-vis the EE1st principle, and locks-in supply systems that could be different or downsized through a holistic approach that would incorporate energy efficiency solutions. Making EE1st a reality requires a systemic approach to policymaking, with integrated planning and investment decisions, so that supply-side and demand-side resources are considered jointly. The debate around EE1st should embrace policies that are often seen from a supply perspective. Reciprocally, the energy efficiency policies should be designed with supply-side impacts in mind, considering the energy system as a whole. Implementing EE1st is not necessarily about adopting new policies: it is firstly about ensuring that the existing policies are in line with the EE1st principle. It is important to identify policies that work against EE1st, such as revenues for municipalities when they award gas concessions (Germany), or subsidised fuel prices (Hungary). The indicator(s) used to set the main energy requirements in building regulations or financial incentives can also bias decisions in favour of investing in supply systems rather than reducing energy demand. The increase in the share of RES in the energy supply could represent an opportunity for more integrated energy planning, policies, and investment decisions if demand-side resources are well recognised as part of the solution. to secure that energy supply can meet a manageable demand. Another opportunity for more integration can be found in the adaptation, upgrading or development of district heating and cooling.<br> The implementation of EE1st also calls for careful planning to anticipate the jobs and skills needed, especially cross-cutting skills: from the capacity to combine different models (for integrated energy modelling) to the capacity to coordinate building trades (for deep renovation dealing with both building envelope and heating system). EE1st means taking a new approach to policymaking, involving more integration across topics, and aligning policy targets and solutions to limit negative impacts (social, economic, urban planning, etc.). Planners, policymakers, professionals in other disciplines and the general public can all get multiple benefits from a successful implementation of EE1st.

&lt;p&gt;European Union (EU) leaders recently agreed a more ambitious 2030 climate target which, among other things, means at least doubling the annual overall energy renovation rate of 1%. In this context, intensified actions to rapidly accelerate the decarbonisation of the building sector are needed. However, retrofit actions are hindered by barriers at different stages: from the initial decision to renovate, to financing and completing energy efficiency projects. To overcome these barriers, it is necessary to act on different fronts to foster better use of EU and national public funds and mobilise a greater share of private funds. EU and national public funds should be better communicated and target end-users more effectively.&lt;/p&gt; &lt;p&gt;&lt;br&gt; Innovative financing solutions can be found in performance-based schemes, like pay for performance (P4P), which have been used so far to engage both energy and third-party service providers, mainly in North American energy efficiency projects. In P4P schemes, financial flows between the parties involved are linked to the actual/ metered and weather-normalised energy savings produced by the retrofit project. P4P schemes also rely on energy efficiency aggregators, which group buildings together into an energy savings portfolio. The energy efficiency aggregator usually acts as the intermediary between the client and the programme implementer and is compensated for delivering energy savings. However, despite the benefits that P4P models may provide, they have not yet been adopted in the EU.&lt;/p&gt; &lt;p&gt;&lt;br&gt; This report focuses on ways that policy and regulatory developments in the EU may become risks or opportunities for P4P schemes. In particular, the main goal of this study is to analyse the directives, policies and measures already adopted, as well as those under consideration by the EU. Based on a comprehensive literature review, a Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis, interviews with key stakeholders from the field, and an EU-wide online survey, we identify regulatory opportunities for P4P schemes considering the different policy measures and market uptakes. Finally, based on insights from all the different parts of our work, we devise and present ten (10) integrated strategies for rolling-out P4P schemes in the EU, by considering existing and upcoming regulatory frameworks, the exploitation of opportunities that may emerge and adaptation to potentially unfavourable developments.&lt;/p&gt;

Cities are critical actors in reducing global greenhouse gas (GHG) emissions; the level of knowledge, skills, and capacity, especially regarding innovative project planning such as sustainable energy (SE) projects, is fundamental for cities to meet their untapped potential. A range of indicator-based frameworks have been developed, focusing on general city economic competitiveness, yet these are often disconnected from the actual city operation and processes relevant to the investment cycle of SE projects. This paper proposes an integrated methodology for developing a City Capability Assessment Framework focusing on city planning, financing, and implementation capacity for SE projects. A principal component analysis (PCA) was applied to the results of a European city-survey to uncover areas highly relevant for the successful implementation of local SE projects. The insights gained aid policymakers to better understand implementation barriers, leading to the development of more effective actions and policy interventions towards the implementation of SE projects. The proposed framework can further enhance cities’ efforts with the implementation of local SE projects and guide potential investors to properly evaluate city capabilities and potential, when choosing local investment projects.

Sustainable energy management system is an important prerequisite for making informed choices about which buildings to retrofit, choosing from the entire existing building stock. However, the system itself does not say anything about the economic potential of the retrofit, what economic methods to use for appraising buildings and what indicators to look at if the aim is the highest monetary savings. This paper demonstrates to local and national governments as owners of public buildings; (1) how they can use existing data from energy management information system (EMIS) to achieve highest monetary savings; and (2) it is economically justified to implement EMIS to benefit from the highest monetary savings when choosing buildings for retrofit.