The European Banking Federation is recommending to the European Commission that the “button” be pressed for the energy renovation of buildings through guaranteed loans, especially for vulnerable households, within the framework of an ongoing consultation on this issue.

Alongside support for vulnerable households, the European banking body stresses the need for a guarantees-and-subsidies programme for apartment blocks, where ownership is fragmented and decision-making is more difficult.

It underlines the need for a comprehensive policy that takes into account the specific characteristics of each member state.

In the positions of European banks, special reference is also made to Greece, which lies in one of the warmest regions of Europe, meaning its needs differ from those of other geographical areas.

To improve the risk–return profile, it is necessary for public guarantees and subsidies to be provided at EU level, supported by a clear and stable regulatory framework.

Simplification of administrative procedures for access to public financial support is also recommended, especially for small and medium-sized enterprises and households.

Different buildings, different needs by country

Before implementing any policy measures to boost building renovation, it is essential to recognise the significant diversity that exists in the real estate sector across the EU.

The housing stock, energy mix, and renovation capacity differ from one member state to another. From this perspective, tailored incentives and solutions are required for different countries.

– Regarding housing stock differences, in Spain and Latvia the majority of the population lives in apartments (65.3% and 64.4% respectively). By contrast, in countries such as Ireland, the Netherlands and Belgium, most people live in single-family homes (90.2%, 77.1% and 76.8% respectively).

This distinction significantly affects decision-making approaches, approvals and technical assessments related to housing renovation.

In countries dominated by single-family homes, each household usually makes independent decisions, and renovations depend solely on individual budgets.

In countries where apartments are more common, decisions on renovating an entire building are taken collectively. This means renovation projects often depend on the financial capacity of multiple residents, who may have differing financial situations and sometimes conflicting interests. From this perspective, simplifying decision-making processes in apartment buildings is crucial.

– Regarding climate zones, renovation priorities differ across them. For example, insulation and heating upgrades are more critical in colder zones (e.g. Finland, Sweden), while cooling and shading may be more relevant in warmer areas (e.g. Spain and Greece). Any EU-level policy measures should take these climate-related differences into account.

– Space heating systems also differ significantly across EU countries. In countries such as the Netherlands, Italy and Hungary, natural gas dominates domestic heating, covering over 50% of needs. Conversely, countries such as Portugal, Croatia and Bulgaria already rely heavily on renewable energy sources, with Portugal reaching up to 88.2%. This diversity highlights the importance of targeted planning.

In terms of household energy consumption, a one-size-fits-all approach will not be effective. Countries dependent on gas may need incentives to support energy source switching and infrastructure upgrades, while those already using renewables may benefit more from efficiency improvements.

How borrower profiles will be built

Banks insist on strengthening the risk–return profile of EU policies. Specific solutions are required for the most vulnerable households living in the worst-performing buildings.

Targeting such buildings is challenging for financial institutions due to the high credit risk associated with poor-quality collateral and the fact that vulnerable households often live in them.

Nevertheless, supporting these households is crucial in order to reduce their energy costs and prevent energy poverty. Even with guarantees and subsidies in place, banks are expected to apply strict risk-based lending rules, which means loans may still be impossible due to inadequate repayment capacity. Therefore, banks call for deeper public–private sector cooperation to address this issue.

Public Guarantees

Specific recommendations include:

– Administrative procedures must be simplified, especially for smaller projects undertaken by SMEs and households, so that bureaucracy and costs do not outweigh the benefits of using guarantees.

– Public guarantees should also be available for apartment buildings where the borrower is a homeowners’ association, particularly in countries where such housing predominates.

– To ensure market continuity and investor confidence, a clear, long-term framework for guarantee programmes supported by EU funds should be created, ensuring support remains available for as long as needed.

– Allow the pledging of Energy Saving Certificates to facilitate financing and stimulate demand.

– Public authorities should ensure a stable, long-term regulatory framework with predictable carbon pricing and clear renovation standards.

– Although tax policy and fiscal incentives are the responsibility of member states, long-term, stable and predictable incentives — such as property tax reductions for renovated buildings or lower income tax and VAT for builders and contractors — can improve the financial attractiveness of such projects.

Decisions on building renovation remain the responsibility of property owners, and there are multiple reasons behind each decision. Overall, the more affordable renovations are and the greater their benefits (e.g. significantly lower energy costs), the more likely households and businesses are to invest in upgrades.

Pitfalls and obstacles

The increase in lending for energy renovations depends not only on incentives and demand-side financing, but also on sufficient capacity to carry out the required work. If demand rises faster than supply, labour and material costs could increase, reducing the impact of public financial support.

Therefore, EU-level efforts must stimulate both demand and supply in parallel to ensure long-term success.

One major obstacle is the lack of awareness among borrowers about the benefits of energy renovations. Well-coordinated EU and national awareness campaigns are needed, with public authorities taking a leading role. Additionally, the entire renovation process should be simplified through one-stop service centres for property owners, as foreseen in the EPBD.

There are ways to improve the risk–return profile of energy renovation projects, but a holistic approach is necessary — not just from a financing perspective. Households and businesses often consult technical experts, energy service providers and contractors before turning to banks for financing. To increase lending, public authorities must first stimulate demand.

Non-financial measures

Banks propose:

– Adopting a holistic approach across all sectors. Real estate should not be treated in isolation, as decarbonisation goals cannot be achieved without an appropriate industrial policy. For example, decarbonising buildings depends heavily on decarbonising the national energy grid and increasing renewable energy production capacity.

– National governments should take a leading role in the renovation process and facilitate cooperation among stakeholders, including commercial banks, regulators, property owners, housing associations, contractors, installers, utilities and the media, ideally through unified coordination centres.

– Increasing awareness and understanding: According to banks, a key barrier is lack of awareness among borrowers about the benefits of energy renovations, and public authorities must take the lead in addressing this.