BPIE: Europe's buildings under the microscope - PU Europe

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IV. Separation of expenditure and benefit This is probably the most complex and long-standing barrier relating to existing buildings, particularly in countries where there is a high share of rental accommodation in the residential sector, but also because of the structure of occupancy in the non-residential sector. This barrier has been known under various names throughout the years. Most recently it is known as the ‘split incentives barrier’ or the ‘landlord/ tenant barrier’, the ‘investor/user barrier’ and the ‘principal/agent barrier’, to name the main ones. This barrier was identified as the fourth most important barrier in the BPIE survey, although there were no first place positions amongst the countries. This barrier is sometimes considered a financial barrier and, understandably, there are financial implications. It is also sometimes considered to be an institutional barrier. This is presented separately herein due to its importance in retrofit strategies. The problem originates from the fact that one person or organisation owns a building and someone else uses it. For the owner, any investment has to bring a benefit which is not necessarily through energy savings, unless it is a situation where the landlord pays the energy bills (this may sometimes be the case). Since the tenant does not own the facility, any investment in lowering energy bills has to be seen as financially advantageous for both actors. This often leads to a stalemate with nothing happening. There are many examples where the party investing in a building may not be the party reaping the financial returns (in full or in part). Examples include: • Landlords investing in a property where tenants pay the energy bill; • Landlords’ inability (through legislative restrictions or other reasons) to raise rents after a building renovation; and • Developers constructing a new building or renovating an existing one, where market prices do not reflect the energy performance of the building. As evidence from Germany 26 has shown, this is one of the most relevant barriers needing increased attention, particularly since many leases include heating charges and so the actual consumer has a lack of understanding of actual energy consumption. A comprehensive analysis on split incentives undertaken by the International Energy Agency in 2007 showed that this barrier accounts for about 30% of sectorial energy use, which is highly significant. It stated, however, that no single policy instrument can address it. The IEA stated 27 : “Neither regulatory mechanisms, (e.g. minimum energy performance standards, or regulated contract design), nor information-based instruments (i.e. awareness campaigns) alone will resolve them. Instead, governments should help design well-targeted policy packages to address PA problems in their specific national contexts, and within the particular constraints of a given sector. These packages should include measures to: a) address contract design to ensure end-users face energy prices, b) regulate the level of energy efficiency in appliances and buildings, c) improve access to information about energy efficiency performance.” This is an important point to remember in designing renovation policy pages, as will be seen in Part 3. 26 BPIE database 27 IEA, Mind the Gap, IEA/OECD, Paris, 2007, p. 12. 60 | Europe’s buildings under the microscope
Figure 2A2 – Building owner’s decision-making process for undertaking renovation work Building Intervention type Percieved pressure/need Decision factors Building typology: - residential (single family house, multifamilly building) - commercial (wholesale & retail, type of business - public - office - educational - health - other (i.e. industrial facility, agriculture etc.) Maintenance Home Improvement Urgent/ Immediate Non-urgent Stand-alone Measure Consequential Improvement Whole House Renovation Option appraisal; Time constraints Cost-benefit analysis; Payback horizon Valuing ancillary benefits Basic information Trustworthy advice Willingness to act Competing investments Added complexity Professional expertise Quality contractors Finance In summary, there is a multiplicity of reasons why building owners do not routinely consider options for improving their home’s energy performance, and even when there are convenient “trigger points”, the energy saving options can often be overlooked, ignored, rejected or only partially realised. From the consumers’ viewpoint, it is important to consider their decision-making process, which has been roughly illustrated in Figure 2A2 where the final column highlights some of the most prevalent barriers for a given scenario. Challenges Almost none of the above barriers relate to market or technical issues. This is understandable since the lack of activity resulting from the financial, structural and other barriers have not allowed many, if any, of the market and technical barriers to emerge or become apparent. The barriers undoubtedly exist as latent risks. If conditions were to change dramatically and demand for low energy renovations suddenly increased there would inevitably be issues regarding shortages of materials, components and human resources. Additionally, the supply chains and delivery systems would struggle to adapt and would undoubtedly operate inefficiently for a period of time. These issues are not permanent barriers because over time the market and the supply chain would respond to demand by building greater capacity and developing more efficient supply chains and delivery systems. The speed at which markets are able to respond will depend upon the speed of change and the extent to which clear, consistent and believable signals of change are given in advance. The following represent some of the major challenges that have to be factored in (as shown in Figure 2A3), in developing a robust and comprehensive retrofit strategy. Europe’s buildings under the microscope | 61
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Europe’s buildings under the micr
Page 3 and 4:
Foreword Buildings are at the pivot
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ContentS FOREWORD Acknowledgements
Page 7 and 8:
ExEcutivE summAry From the emotiona
Page 9 and 10: Space standards (expressed through
Page 11 and 12: Buildings vary remarkably in terms
Page 13 and 14: The absence of previous requirement
Page 15 and 16: It is, however, not sufficient to o
Page 17 and 18: In all the scenarios, the estimated
Page 19 and 20: Introduction A vital picture of the
Page 21 and 22: The Challenge Many experts agree th
Page 23 and 24: Europe’s buildings under the micr
Page 25 and 26: areas. These factors were defined f
Page 27 and 28: A. building typology From large com
Page 29 and 30: The floor space breakdown per count
Page 31 and 32: IE UK GR NO NL MT SI DK IT SK FR FI
Page 33 and 34: Figure 1A8 - The non-residential se
Page 35 and 36: While the dataset of residential bu
Page 37 and 38: Size Information on the size of non
Page 39 and 40: Ownership and tenure The ownership
Page 41 and 42: Data availability on the ownership
Page 43 and 44: C. Energy Performance It is widely
Page 45 and 46: Mtoe Figure 1C3 - Historical final
Page 47 and 48: The performance of households depen
Page 49 and 50: Within the existing European stock,
Page 51 and 52: In addition to the lack of sufficie
Page 53 and 54: Specific energy use (kWh/m 2 a) in
Page 55 and 56: A. Barriers & Challenges Improving
Page 57 and 58: years, while many businesses will n
Page 59: Lack of advice/information Even wit
Page 63 and 64: B. Regulatory and legislative frame
Page 65 and 66: At the moment all countries have im
Page 67 and 68: Although the certification schemes
Page 69 and 70: Number of countries with penalties
Page 71 and 72: IE IT LU LV MT NL PL PT RO SE SI SK
Page 73 and 74: Table 2B4 - Calculated impacts and
Page 75 and 76: LV NL NO PL PT SI SK SE UK The Mini
Page 77 and 78: Table 2B6 - Summary of building ene
Page 79 and 80: egulated energy and total energy re
Page 81 and 82: LT LV MT NL NO PL PT RO SE SI SK Mi
Page 83 and 84: Prescriptive-based requirements for
Page 85 and 86: iii. Other requirements A number of
Page 87 and 88: Building code requirements for exis
Page 89 and 90: Enforcement and Compliance Building
Page 91 and 92: Financial programmes fall into the
Page 93 and 94: Table 2C2 - A summary of selected f
Page 95 and 96: D. Other Programmes The BPIE 2011 s
Page 97 and 98: Europe’s buildings under the micr
Page 99 and 100: The previous chapters so far have g
Page 101 and 102: Even when viewed purely in economic
Page 103 and 104: At the other end of the scale, reno
Page 105 and 106: New Member States from Central and
Page 107 and 108: Determining the practical limit for
Page 109 and 110: Figure 3B1 - Cost reductions for di
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projects to assess the viability of
Page 113 and 114:
C. Setting the scene This section e
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An initially slow growth in the ann
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Scenario 4 - Two-stage renovation T
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Table 3C7 - Overall results to 2050
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Figure 3C3 below compares the prese
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Final remarks and policy recommenda
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• Finally, the EU should support
Page 127 and 128:
• A reliable and continuous data
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DEFINITIONS Air-conditioning system
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U-Value: is the measure of the rate
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