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European Sustainable Energy Week
News blog2 June 2022European Climate, Infrastructure and Environment Executive Agency7 min read

Energy Efficient Mortgages to fund the hope for a better future

By Luca Bertalot, Secretary General – European Mortgage Federation – European Covered Bond Council (EMF-ECBC) & EEMI Consortium Coordinator. 

Luca Bertalot

At this unprecedented time of crisis, we need to transform challenges into opportunities, looking the next generation in the eyes. Our homes, the place where we raise our children, are at the heart of our lives and interests. Exactly like the word Home or οἴκος (oikos) -at the heart of the Ancient Greek word ‘oikonomia’- a sustainable economy has to be built on around the concept of Home, the cornerstone of citizens interest. A financial sector centred on an ESG (Environment, Social and Governance) ‘ecosystem’ that promotes green values and raises environmental awareness can play a major role. By bringing together lenders, investors, SMEs and utilities, the Energy Efficient Mortgages Initiative not only aims to boost consumer demand for building energy renovation but also to align strategies for the financial sector to become a cornerstone of the energy transition.

More than 100 000 homes every day - half a million per week - must be renovated until 2030 for the EU to reach its climate objectives. Taking into account that European buildings account for 40% of greenhouse gas emissions in Europe, an effective home retrofit can bring up to 70% reduction of energy consumption, therefore improving families’ quality of life, benefitting to the environment and the real-economy by stimulating job creation and driving wealth creation.

Indeed, the scale of investment needed to improve the energy performance of more than 220 million residential dwellings in order to achieve the EU’s energy savings targets is huge and cannot be met by the public sector alone. The EU financial sector will play a central role in the transition to a more sustainable economy, reducing energy poverty for households, safeguarding consumer wealth in terms of disposable income and asset value and supporting economic growth and job creation.

Against this background, the value of aligning the interests of lenders, investors, SMEs, utilities and, most importantly, consumers in multi-service European-wide platforms is strategic. The significance of these efforts is perhaps even more relevant today than ever before in light of the recentlyannounced Joint REPowerEU Action - supporting consumers in improving the energy performance of their homes will be crucial in securing the EU’s energy independence. 

The #REPowerEU plan, technically ambitious and politically revolutionary, envisages diversifying supplies, increasing production and importing volumes of biomethane and renewable hydrogen, creating a European platform for joint gas purchases and storage, and tripling supplies by next winter. In addition, a new temporary framework of state aid to businesses is envisaged.

In this sense, the plan represents an ideological turning point, reorienting the legislative paradigm developed in recent years in the finance and energy fields. This turning point is already profoundly influencing the current political and legislative debates on the EU Taxonomy, the Energy Performance of Buildings Directive, the implementation of the final Basel III Reforms and, more generally, across the board, all issues related to digitalisation and sustainability.

The real breakthrough of a net-zero Europe will come through the large-scale use of green mortgages. Today, the mortgage market is equivalent to around 46% of the EU's GDP. Facilitating the transition to green mortgages is crucial to achieving a climate neutral economy, there is therefore a need for in-depth energy upgrading.

In this respect, it is important to ask how much it costs each owner, individual or family, to make the necessary “jump” in energy class: the answer is at least 25-30 thousand euros of investment. There are not many who can afford these sums without systemic help/stimulus. The problem is that if the necessary "green" improvements are not made, there will inevitably be a net and tangible loss in energy consumption.

A family can save up to 70% on its energy bills with an investment that achieves two “jumps” in energy class, which today translates concretely into defending the purchasing power of families by mitigating the effect of inflation on disposable income. 


From public subsidies, at local, regional or state level or from private finance markets, based on a wide range of product offerings which meet consumer needs and support the climate transition in the process? Member States cannot fully assume this huge burden on public debt, which would mean shifting the cost to future generations, so we have to build a mechanism that brings together public and private stakeholders, working in coordination and leveraging each other’s contributions and actions. 

The contribution of financial markets, if combined with public intervention and structured in the right way, can give life and impetus to a genuine green renaissance, capable of giving an economic boost not only to the mortgage, construction, and real estate industries but to the entire economy.

The positive repercussions would be felt not only from an environmental point of view, but also in terms of employment, research and development, certification, and the professional skills involved in this work.

This is precisely the role of the Energy Efficient Mortgages Initiative (EEMI). EEMI aims to boost consumer demand for building energy renovation. Bringing together a wide range of relevant market players, including lenders, investors, SMEs and utilities, the EEMI is aligning strategies and actions through a new, innovative market mechanism focussed on a green ‘fulcrum’ of products, services and data, delivered by way of a ‘one stop shop’. 

The Initiative also proposes macroprudential measures to support, through legislation, consumer demand, lending institutions’ ESG financing capabilities and investor ESG due diligence, as private capital cornerstones of the Renovation Wave Strategy and NextGenerationEU.

The EEMI will build a constellation of national platforms focussed on local characteristics and implementation needs but with a European footprint, combining efforts of the public and private market sectors.

There is also another very important aspect to this new green ecosystem narrative. As pointed out earlier, the home is a very special place where people spend at least one third to more than half of their lives. This makes it an ideal focal point for financial education for citizens as consumers by embedding a new culture with greener microeconomic decisions in support of a transition economy.

Such an exercise should not be seen as 'just' a philanthropic decision taken by already environmentally conscious people who also tend to be more affluent. It will be a win-win solution especially for those families for whom it is more difficult to make ends meet and who are more likely to live in less energy-efficient homes, and for whom running and living costs represent a larger share of their budget.

Over the past years, we have realised more than ever that sustainability is the new reality. We are stronger when acting collectively, and cooperation at global level will help us move towards more sustainable houses, bringing the hope to all generations for a greener future.


About the author:
Luca Bertalot is Secretary General of the European Mortgage Federation - European Covered Bond Council (EMF-ECBC), representing the interests of EU mortgage lenders and the covered bond community in discussions with the European Institutions and stakeholders in general on all issues relating to the retail and funding sides of the mortgage business. Established in 1967, the EMF is the voice of the European mortgage industry, providing data and information on European mortgage markets. The EMF has 14 members across 12 EU Member States as well as a number of observer members.

In his capacity as EMF-ECBC Secretary General, Luca is also Consortium Coordinator for the Energy Efficient Mortgages (EEM) Initiative. In addition, Luca is a member of the European Commission’s Sustainable Energy Investment (SEI) Forum’s Advisory Group and the Advisory Board of the Ca’ Foscari University of Venice’s Economics Department.


Disclaimer: This article is a contribution from a partner. All rights reserved.
Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use that might be made of the information in the article. The opinions expressed are those of the author(s) only and should not be considered as representative of the European Commission’s official position.



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