EU auditors: Taxpayer-funded retrofit scheme falls short on energy savings – despite cost

A Government retrofitting scheme aimed at improving the energy efficiency and warmth of homes has been criticised by the European Court of Auditors.

In a special report, delivered last month to the European Parliament and the European Council, the institution – which looks after the interests of EU taxpayers – warned that certain EU-funded projects are not achieving significant energy savings per euro invested.

The report specifically criticises the national authorities of five member states – including Ireland – for failing to target EU funds towards projects that are “most likely to realise energy savings”.

From an Irish perspective, the auditors focused on the Better Energy Warmer Homes scheme, which was established in 2000 to target low-income households that are unable to afford proper heating.

The auditors also examined similar EU-funded schemes in Bulgaria, the Czech Republic, Italy and Lithuania. In total all five member states were allocated €2.9 billion in EU funds for projects to increase the energy efficiency of buildings.

However, as a result of the findings, the court of auditors contends that the overall contribution of EU funding to the union’s energy efficiency targets “is not clear”.

It is worth noting that this development follows confirmation that the first progress report from Just Transition Commissioner, Kieran Mulvey, has been submitted to the Department of Communications, Climate Action and the Environment.

Mulvey’s report will guide the midlands’ response to the accelerated ceasing of peat harvesting for electricity generation in the region. The response includes a €20 million fund aimed at creating new jobs in the area of retrofitting and upgrading houses – as set out in the Government’s Climate Action Plan.

Returning to the auditors report, it highlights that in 2014 the EU began co-financing the Better Energy Warmer Homes scheme, while national funding for the scheme reduced. The scheme costs €20 million per year and it’s run by the Sustainable Energy Authority of Ireland (SEAI).

It provides simple upgrades to homes including: dry-lining; attic insulation; lagging jackets for hot-water tanks; and cavity-wall insulation. Upgrades of this kind are relatively cheap (the average cost of projects funded in the 2014-2017 period was €3,161).

However, after examination, the auditors found that the energy rating of most of the supported households did not improve after the project, confirming that the investments did not yield much in terms of energy savings.

Following our audit and commission observations, the Irish authorities reported that energy ratings did not improve for 52% of households renovated by the Better Energy Warmer Home Schemes in 2017.

“The Irish authorities are currently reviewing the projects for households renovated in 2014, 2015, 2016 and 2018 to verify how many did not have their energy rating improved.”

Under its conclusions and recommendations for all five member states the report says:

“We conclude that cost-effectiveness does not guide EU spending on energy efficiency in buildings. Despite improved guidance from the commission, we found persisting weaknesses, especially in project selection.

“The funded investments are still not focused on achieving the greatest potential energy savings for the budget invested.

“Project selection procedures more focused on cost-effectiveness could lead to higher energy savings per euro invested,” it is stated.

SEAI response

The SEAI has responded to the European Court of Auditors criticism. In a statement to AgriLand, a spokesperson for the authority said:

“The primary aim of the Warmer Homes Scheme (WHS) is to address energy poverty by delivering energy efficiency measures to those homeowners deemed to be in, or at risk of, such poverty.

“The programme delivers many benefits to the subject homeowners including improved comfort, quality of life, and health.

This audit, conducted by the European Court of Auditors, addresses the scheme over the period 2014-2018 in terms of energy efficiency only and not other benefits such as energy poverty reductions.

It said the scheme underwent “a significant change” in mid-2018, expanding to include more extensive measures, including external-wall insulation which is now funded under the scheme.

“This has resulted in deeper retrofits and more dramatic results for homeowners.”

It added that there have been “substantial improvements” made to the energy ratings of many of those participating on the scheme.

“In 2018, 77% of homes saw at least one energy consumption classification change,” it was stated.

Regarding investment in the scheme, the SEAI said its funding has increased from €35.5 million in 2018, to €52.8 million in Budget 2020.

“Since 2000, the scheme has provided upgrades to over 142,000 homes across Ireland, improving the lives of some of Ireland’s most vulnerable citizens,” the statement concluded.

The services are Government-funded, co-financed by the European Union under the European Regional and Development Fund.

EU energy targets

Faced with the challenge of mitigating climate change, EU leaders have committed to saving 20% of the EU member states’ projected energy consumption by 2020 and 32.5% by 2030.

Buildings consume the greatest share of energy and have the largest energy-saving potential. They therefore are said to play “a pivotal role” in meeting the EU’s energy savings targets.

For 2014-2020, the EU allocated some €14 billion to improving the energy efficiency of buildings, €4.6 billion of which was for residential buildings.

In addition, member states budgeted €5.4 billion in national co-financing for improvements to all types of buildings, around €2 billion of which was for residential buildings.