In Spain, only 1% of buildings undergo energy-efficient renovations each year. The renovation of both public and private properties stands out as a key initiative to contribute to the goal of achieving net-zero emissions in the EU by 2050, in accordance with the framework defined by the European Green Deal and the European Climate Law. Furthermore, given the labor-intensive nature of the construction sector, largely dominated by local companies of all sizes, building renovations can also play a crucial role in economic recovery. To pursue this dual ambition of contributing to the decarbonization of our countries and promoting economic growth, in 2020 the Commission published a new strategy, ‘A Renovation Wave for Europe’ (A Renovation Wave for Europe), to boost rehabilitation and improve the energy efficiency of buildings.
Spain has not lagged behind, and the Recovery and Resilience Plan allocates 3.42 billion euros to renovate nearly 500,000 homes between 2021 and 2023 and improve the energy efficiency of neighborhoods and buildings. This represents a tenfold increase in the number of interventions Spain has carried out annually until now. This amount is not only significant but, in relative terms, represents one of the most substantial expenditure items under the European Recovery and Resilience Facility within the Plan (5.1%). Spain must make a greater effort than other countries to reach an annual renovation rate equivalent to 3% of the existing housing stock, which is the target set by the EU and included in the National Integrated Energy and Climate Plan (PNIEC).
Therefore, to address the level of modernization and energy efficiency of the housing stock in the coming years, it is necessary to mobilize private capital. To achieve this, it is essential for Spain to develop a stable legal framework that makes it easier for owners to make a complex decision and provides banking entities with the confidence to finance these projects.
However, beyond the fragile balance that the Government is trying to resolve with subsidies, tax deductions, guarantees, and the creation of entirely new figures in Spain—such as the rehabilitation agent, the one-stop shop, or the building passport—it is fundamental to demonstrate that political will translates into tangible actions. This must occur in an environment where optimal conditions seem to converge for the energy efficiency and modernization of neighborhoods, buildings, and homes to develop smoothly in the coming years.
According to an analysis conducted by the Green Finance Institute and E3G, Spain is the EU country with the most favorable structural conditions to foster public-private collaboration in rehabilitation and, therefore, to scale private financing beyond European recovery funds. The analysis highlights three enabling levers: political ambition, common interest, and financial capacity. These three axes are interrelated and reinforce one another.
In addition to a well-directed political framework aligned with EU directives on building energy consumption, energy efficiency, and renewable energies, Spain benefits from the interest of all stakeholders involved in the building reform and modernization process to drive innovation, facilitate the decision-making process for owners, and optimize project execution. Recovery funds have boosted the interest of all parties in working as a team and facilitating public-private collaboration. This has been evident in recent months through initiatives such as the AUNA Forum, a collective proposal to promote sustainable financing in the building sector; the CSCAE 2030 Observatory, which through the RehabilitACCIÓN sectoral initiative has promoted the PREE funds management guide and the citizen’s guide to boosting rehabilitation, among other projects; and the fluid, recurring dialogue between various ministries and the financial sector.
Likewise, European recovery funds and increasing social sensitivity toward climate risks are changing the perception of the banking sector, which sees this necessary transformation as a very attractive business opportunity. Financial products adapted to rehabilitation are already beginning to emerge in the market, tending to be granted on advantageous terms if they improve a home’s energy efficiency. However, it is essential to provide an appropriate regulatory framework to promote innovative financial products that support large-scale actions under preferential conditions in line with the goals set in the PNIEC, which requires moving beyond traditional financial formulas.
In this regard, Spain has an open, well-capitalized banking sector with entities that serve different market niches and are characterized by a significant capacity for financial innovation. These entities are committed to the 2030 Agenda and the decarbonization of our economies, and they should not hesitate to design innovative financial products to collaboratively meet the financial needs linked to housing renovation.
Beyond the setback the pandemic has caused regarding owners’ desire to invest in energy efficiency and accessibility improvements for their homes, some obstacles still remain to be overcome. A correct balance must be found among the multiple factors supporting the rehabilitation framework in Spain. Even so, there is no doubt that a profound renovation of the housing stock is on the horizon, initially driven by the incentive of European aid in a country that lags significantly behind other EU nations in energy efficiency.
That said, the effort required in Spain does not end with the recovery funds, as the country inevitably needs to renovate more than seven million homes. Therefore, having a short-term focus centered solely on the execution of European funds could be as misleading as it is generationally irresponsible. However, the business volume that this new market opens up from 2026 onward should lead us to believe that it is fundamental to capitalize on the current situation. This period is marked by a coalition of actors driven by the same interest, a financial system ready to mobilize the necessary private capital, and a committed Administration that, at least in this matter, has managed to set the necessary decarbonization path to meet the objectives set in the Paris Agreement and the 2030 Agenda.
Juan Carlos Delrieu, Director of Strategy and Sustainability at the Spanish Banking Association
