The report underscores that financing is the central challenge in achieving the European Union’s ambitious targets for building energy efficiency. With an annual investment gap of €149 billion, the scale of funding required far exceeds current public allocations. The brief stresses that traditional subsidies and grants alone are insufficient, and that a comprehensive financial strategy is essential to mobilise both public and private capital for large-scale renovations.

A blended approach is recommended, combining targeted grants for the most inefficient buildings—often occupied by vulnerable households—with preferential loans, tax incentives, and regulatory obligations for others. The authors highlight the importance of leveraging private finance, particularly through the active involvement of the banking sector. Public-private partnerships, zero-interest loans, and energy performance contracts are identified as key instruments to unlock additional investment and reduce the reliance on state budgets.

The introduction of the ETS2 carbon pricing scheme in 2027 is expected to generate substantial revenues, which, alongside EU funds such as the Social Climate Fund and the Recovery and Resilience Facility, could be directed towards renovation efforts. However, the report warns that clear rules and robust accountability are needed to ensure these funds are effectively allocated to energy efficiency projects, rather than being diverted to other uses or compensatory measures.

Finally, the report calls for innovative financing tools—such as pay-as-you-save schemes and one-stop shops—to simplify access to funding and reduce administrative barriers for households and businesses. By frontloading investment support, phasing out fossil fuel subsidies, and leveraging future energy savings, the EU can make building renovation both financially viable and socially equitable, ensuring progress towards its climate objectives.