Last month the European Central Bank (ECB) published its own opinion on the EU Energy Performance of Buildings Directive (EPBD) – a key directive currently under review by EU institutions, on which we have focused our campaigning efforts in the last year. Overall, the ECB supports the directive, which aims to improve the energy performance of Europe’s building stock. What’s more, some of the ECB’s arguments reinforce our Unlock campaign’s main messages and demands. Will the ECB’s intervention bring us one step closer to unlocking funding for greener and more efficient homes?

Building renovation as a catalyst to a safe and free Europe

The ECB emphasises that increasing the pace and scope of building renovations across Europe is not only crucial to achieving the EU’s net-zero target, but also to ensuring the Union’s energy security, by freeing us from the burden of fossil fuels imported from autocratic petro-states. The Central Bank also recognises that energy efficient and decarbonised houses are key for dealing with energy price shocks, such as the one that is driving current inflation in the euro area.

As we have been arguing for the past year, all these points can be summed up in one short concept: EU institutions need to work together to future proof our homes. This will lift millions out of energy poverty and alleviate the cost of living for people, all while fighting against the environmental breakdown and securing a more sustainable, safe and stable future.

Energy inefficiency as a financial stability risk

One important point comes out clearly from the ECB’s opinion, and that is that the energy inefficiency of houses is a factor of financial instability too. 

The ECB’s latest climate stress test results have already shown that banks can face a wave of insolvencies on their mortgage loans, as high energy prices hit consumers living in energy-inefficient homes. We have underlined how these findings should be a wake-up call for EU institutions and governments to make sure that banks develop strategies to help their customers renovate their homes. We also called for EU policy makers and member states to commit to making information on the energy performance certificates (EPCs) accessible, and for banks to start collecting this data.

In its recent opinion, the ECB supports the call for financial and credit institutions to be able to access EPCs, as this would help them improve their assessment of climate-related risks.

The importance of boosting affordable finance for energy efficient home renovations

We welcome the fact that the ECB had its say on such a crucial directive. This is a sign that an ambitious EPBD is necessary for the success of EU environmental goals, but also for going back to stable prices and for safeguarding the stability of our financial system. 

The ECB itself, though, must not forget that it too can take a more proactive role in making sure that financing for green projects – such as energy-efficient home renovations – is supported by lower interest rates. This is a battle we will continue to fight for.

For now, it is the turn of the European Parliament, whose Industry and Energy committee will vote on their position on the EPBD on February 9th.