In the short term, €7 billion will be spent to make energy efficient buildings in Spain a reality in adapting existing stock rather than building new houses.
In recent weeks, an increasing number of workers have been hanging from the roofs of homes in northern Madrid, installing solar panels to allow them to generate their own electricity.
The EU’s funding wave is attempting to make such activities much more common.
The Spanish government is betting big on retrofitting existing buildings to make them more energy efficient, shifting away from the country’s traditional new construction. Despite criticism of the Spanish left-wing government’s funding of the construction sector, this is nearly a tenth of the € 70 billion grant expected from Europe’s Emergency Coronavirus Recovery Fund.
The Energy Efficiency Programme, as the largest and most important component of Spain’s reconstruction plan, will serve as a litmus test to determine whether a country is capable of using EU funding to really transform its economy or if it will repeat past mistakes.
The funds will be used to subsidise work such as improving private housing insulation, installing solar panels and heat pumps, and renovating government buildings and social housing units over the next three years, with a budget of €7 billion.
According to the government, it is an important step toward the EU’s 2030 goal of reducing carbon emissions. Not only that, but the potential for job creation and skill development in the country’s coronavirus-ravaged economy is enormous.
“This will be one of the best ways to revitalise the economy,” said Teresa Ribera, Spain’s Deputy Prime Minister for the Environment, in an interview.
“It is critical not only for environmental reasons, but also for social and economic reasons. “In terms of efficiency and materials used, large-scale housing developments in the 1960s and 1970s did not meet standards, so it is time for a change” she adds.
However, critics say the plan is an example of old and bad habits. Rather than more productive investment, the Spanish economy will once more rely on construction as a driving force for growth.
Prior to the financial crisis, the sector was an important part of the economy, contributing significantly to banking and corporate profits as well as tax revenues.
The fact that Spain built more homes in 2004 than France, Germany, and Italy combined demonstrates the importance of the construction industry. However, in the aftermath of the crash, Spain was left with billions of euros in bad debt, half-finished buildings and ridiculous investment projects, and tens of thousands of workers with useless construction skills.
Luis Garicano, a Ciudadanos MP, is concerned that the plan is too broad and that focusing on the construction sector is a gamble that might not pay off.
“My concern is that there is a significant bottleneck in these specific construction skills related to building rehabilitation,” he explained. “We might train a lot of people some very outdated skills that they will not be able to use afterwards.”
But the government officials are very optimistic.
“This is just the beginning, but it is a strong start with EU resources that will allow us to accelerate projects we already have,” Ribera says. “It most emphatically does not end in 2023 or 2024.”
Joan Grossard, director of the Spanish State Institute for Energy Diversification and a key participant in the programme, believes that the programme is desperately needed. And many people overlook its true goal, which is rehabilitation rather than construction.
“The construction of new buildings cannot be the driving force of the economy,” he said. “The goal is to create a nearly new economic sector and transform the construction sector into one focused on building rehabilitation.”
The investment requirements are enormous. According to the government, a total of € 40 billion will be required to modernise Spanish buildings by 2030. Grossard claims that the new subsidies incentivize people to perform insulation and other tasks.
He and Rivera are hoping that banks and energy companies will also contribute to the modernization fund. And we hope that a one-stop advisory shop will be established within the businesses involved and will assist people in making improvements.
“Things must be simple, and we need financial incentives to inspire millions of real estate owners to change their mindset,” Rivera said. “However, the country that invented the mortgage system that fuels the construction boom should be able to do the same with energy efficient buildings in Spain.”
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