Building Decarbonization And Affordable Housing: Promoting Local Skills And Accelerating The Green Deal

Building Decarbonization

Introduction

Europe stands at a critical crossroads. On one hand, the continent is committed to an ambitious building decarbonization agenda under the European Green Deal, aiming to cut emissions from the building sector by at least 60% by 2030 and achieve climate neutrality by 2050. On the other hand, a severe affordable housing crisis is unfolding across major cities, with rising rents, purchase prices, and energy bills pushing millions into energy poverty.

The central argument of this policy paper is that these two goals are not mutually exclusive, but they can only be achieved together if local governments are given the right tools, funding, and local skills. Without a deliberate focus on social inclusion, renovation efforts risk triggering “renoviction” and green gentrification, where the poorest are priced out of newly upgraded neighborhoods. The paper concludes that accelerating the Green Deal requires a complete overhaul of financial support, better data collection, whole-of-government approaches, and a strategic focus on both hard technical skills and soft organizational capabilities at the municipal level.

The European Policy Framework for Building Decarbonization

The EU has put in place a dense web of regulations to drive building decarbonization. Key among them are the Energy Performance of Buildings Directive (EPBD), the Energy Efficiency Directive (EED), and the Emissions Trading System for fuels used in buildings. The 2020 Renovation Wave strategy set a goal to at least double annual energy renovation rates by 2030, while the Fit for 55 package and REPowerEU plan further emphasized renovation as a tool to cut gas consumption. More recently, the European Commission launched a Task Force on Housing in 2025 to develop a European Affordable Housing Plan.

Despite these policies, the EU is not on track. According to the Building Performance Institute Europe (BPIE), the bloc is 40% off the path to climate neutrality in buildings. Between 2015 and 2022, CO2 emissions from buildings fell only 14.7% against a required 27.9%. Final energy consumption dropped just 2.8% versus a 6.5% target. Cumulative investment in renovation reached only eight times the 2015 value, far below the needed 13.8 times. These figures show that building decarbonization is lagging badly, and the gap is partly due to underfunded local governments and a lack of tailored support.

The Housing Crisis and Energy Poverty: A Social Dimension

The document paints a stark picture of Europe’s housing situation. Between 2010 and 2023, housing prices rose 48% on average, with spikes of 81% in Portugal and 173% in Hungary. Over 10% of the urban population spends more than 40% of their income on housing. In 2023, 9.3% of Europeans were in arrears on mortgage, rent, or utility bills. Energy poverty affects 10.6% of Europeans, rising to 30% in Bulgaria and Greece. Poor households spend 38.2% of their income on housing compared to 16.1% for others. Single-parent families and young people are disproportionately affected.

Energy poverty is not just about cold winters. Climate change is bringing more intense heatwaves, responsible for about 48,000 additional deaths per year in Europe. Poorly insulated homes worsen heatwave impacts. Cities like Vienna and Athens are pioneering heat action plans, cooling zones, green roofs, and bioclimatic design, but most local governments lack the skills and resources to follow suit.

The paper highlights Vienna as a role model in social housing and building decarbonization. Half of Vienna’s population lives in subsidized homes, with renovations every 40 years cutting energy bills by two-thirds. District heating expansion is 75% funded by the national government. However, such models are hard to replicate elsewhere due to differences in governance, funding, and building ownership structures.

When Decarbonization Backfires: Renoviction and Green Gentrification

A key warning in the document is that building decarbonization can unintentionally worsen housing affordability. “Renoviction” a contraction of renovation and eviction, occurs when landlords raise rents by 3-5% after upgrades, pushing out existing tenants. At the neighborhood level, green gentrification happens when clusters of renovations drive up property values, displacing working-class and vulnerable communities. Barcelona’s Superblocks program, while environmentally positive, led to real estate speculation and short-term rental growth. The paper also notes that vacant housing units are increasing over 20% in Milan and 300,000 in Paris partly because some landlords cannot afford mandatory renovations and leave units empty.

The new construction versus deep renovation dilemma is another tension. The paper argues for prioritizing renovation over new builds, as construction is materials- and GHG-intensive. Policies should support renovation of existing vacant units, second homes, and old city centers rather than greenfield development. French local authorities, for example, use vacancy taxes, expropriation, and legal assistance to encourage renovation.

The Core Problem: Limited Resources and Weak Local Skills

Local governments are the key implementers of building decarbonization and affordable housing policies, but they are starved of resources. The investment gap for building renovation is EUR 142–165 billion annually. The European Investment Bank’s Municipality Survey shows that 32% of municipalities in less developed regions face severe budget constraints. Energy Cities estimates that 214,000 new local job positions are needed to decarbonize the EU building stock, at a cost of EUR 16 billion per year.

Local skills are in short supply. The EIB survey found that municipalities report critical gaps in digital skills, engineering, environmental and climate expertise, and legal-regulatory understanding. Smaller municipalities, especially in Central and Eastern Europe, have very limited staff. For example, Poland would need to massively increase its local workforce working on building decarbonization (see Figure 2 in the original document).

The paper draws painful lessons from Bulgaria and Italy. Bulgaria received over €1 billion from the Recovery and Resilience Facility for renovations, covering 100% of costs in phase one. Yet the program failed to reach the most vulnerable because it required building-wide owner consensus, and better-off households captured most benefits. Corruption investigations also emerged. Italy’s “Superbonus” 110% scheme generated €215 billion in spending over four years far above the original €35 billion and led to fraud, stranded credits, and a construction bubble. However, it did renovate 500,000 homes and created 410,000 jobs, showing that massive funding works if properly targeted. The lesson is clear: generous financing without transparency, targeting, and local capacity leads to waste and inequality.

The EU’s Limited Adequacy: Too Many Tools, Not Enough Empowerment

The EU has no direct competence on housing, but it has created a proliferation of initiatives: ELENA (technical assistance), Interreg Europe, Horizon Europe, URBACT, the Just Transition Mechanism, LIFE LOOP, the New European Bauhaus, and the Technical Support Instrument. While well-intentioned, this “spaghetti of subsidies” overwhelms local governments. Application success rates are as low as 15-50%, projects last only 3-4 years, and staff hired on temporary contracts leave with their expertise. Moreover, national governments often act as intermediaries, and political favoritism can block funds as seen in Hungary, where opposition-controlled cities were denied loan restructuring.

Local governments also face a data deficit. Large municipalities have resources but lack granular local knowledge; small municipalities have local knowledge but no resources. Without good data on building stock, energy performance, and vulnerable households, building decarbonization policies cannot be properly targeted or monitored.

Hard and Soft Skills: What Local Governments Need Most

The paper’s core contribution is a detailed local skills framework, divided into hard and soft skills.

Hard Skills

  1. Better planning – Local governments need long-term vision beyond electoral cycles, whole-of-government approaches that break silos between energy, housing, and social departments, and whole-of-society approaches that engage citizens, energy communities, and grassroots movements. The city of Leuven (Belgium) is a best practice: its Leuven 2030 NGO involves businesses, civil society, and citizen juries to co-design decarbonization and social housing policies.

  2. Data, Monitoring, Reporting, and Verification (MRV) and digital tools – Municipalities need skills in data collection, georeferencing, solar potential calculations, Urban Building Energy Models (UBEMs), and Digital Building Logbooks. Barcelona’s Metropolitan Observatory of Housing (O-HB) provides detailed annual housing data. Home care workers and even postal workers have been trained in France and Spain to identify energy-poor households and poor-performing buildings.

  3. Technical energy skills – Staff need to understand heat pumps, district heating and cooling, sustainable materials, building information modeling (BIM), and the pros and cons of step-by-step versus deep renovation. Utrecht is scaling its staff from 6 to 31 full-time equivalents to decarbonize 40,000 homes by 2030.

  4. Low-tech solutions – Not every municipality can afford advanced digital tools. The FEEL project (Frugal Cities through Energy Efficiency and Low-Tech Communities) promotes tiny houses, shared laundry rooms, and sufficiency campaigns. Vienna’s social housing includes shared common rooms to reduce square meters per household.

  5. Navigating EU regulation and programmes – Local governments need training on EU governance, identifying relevant subsidies, filling applications, and meeting compliance calendars. One-stop shops (OSS) are recommended by the EPBD but remain underdeveloped.

Soft Skills

Hard skills alone are insufficient. Local governments also need:

Without these soft skills, even well-funded building decarbonization programs fail to reach vulnerable populations or build political support.

Policy Proposals to Empower Local Governments

The paper ends with actionable proposals to reinforce local governments and accelerate the Green Deal.

  1. Put further emphasis on adaptation – Climate change is increasing heatwaves, floods, and extreme weather. Local governments must be trained to identify vulnerable people, implement emergency measures, and design adaptive infrastructure. Vienna’s Heat Action Plan and Chief Heat Officer in Athens are good models.

  2. Promote involvement of wider communities – National and EU institutions should encourage local governments to work with grassroots movements, youth, energy communities, and private sector. Construction workers need continuous training on new regulations.

  3. Reinforce the EIB and broaden ELENA – The European Investment Bank’s ELENA program is widely praised, but it needs scaling up. Local governments should have direct access to European finance without passing through national governments, which can introduce political bias.

  4. Encourage multi-disciplinary approaches – Training and support should break silos between energy, housing, and social departments. Some cities (Assen, Valencia, Amsterdam, Munich, Florence) have hired city strategists or created interdisciplinary task forces. The ManagEnergy program, however, excludes housing from its mandate, a gap that should be filled.

  5. Develop innovative approaches to acquire new skills – Peer-to-peer learning, city exchanges, and non-formal training should be expanded. The Commission and Member States must ensure small municipalities have access to these opportunities.

  6. Foster the role of one-stop shops – One-stop shops should provide clear training, advice, and direct contact with local governments, but they must be designed to simplify rather than add to the proliferation of initiatives.

Conclusion: A Just Transition Starts Locally

The document concludes that building decarbonization and affordable housing are inseparable. The Renovation Wave will fail if it accelerates green gentrification and leaves the poorest behind. Local governments are the indispensable actors, but they are currently underfunded, underskilled, and overwhelmed by fragmented EU support. Accelerating the Green Deal requires a deliberate strategy to empower municipalities with long-term funding, better data, digital tools, and a balanced mix of hard technical skills and soft organizational skills. The newly appointed EU Energy and Housing Commissioner has a unique opportunity to align climate, energy, and social policies. But without local skills and local empowerment, Europe’s ambitious building decarbonization targets will remain out of reach.

Also Read: AFFORDABLE HOUSING FUND