There is ample evidence that reducing energy use in the existing building stock has large environmental and economic benefits. Research by Copenhagen Economics suggests that the market value of buildings significantly increase following an energy renovation, providing collateral value for financing the up-front cost of the renovation. This makes mortgages an obvious solution to finance green renovations of the building stock.
However, we have noted three barriers preventing a mortgage-based solution:
The potential to establish mortgages as a source of finance for green renovations differs widely between different countries. Consequently, to kick-start green mortgage finance, we suggest adopting a pragmatic country-by-country approach, to overcome the different country-specific barriers described above. This could be an important first step in order to achieve the long-term goal of a pan-European private bank financing mechanism.Download