Feasibility study for a financial instrument and a review of existing retrofit loan schemes

This feasibility study evaluates the potential for implementing EuroPACE, an on-tax financing instrument for residential energy efficiency retrofits, across Belgium, the Netherlands, Portugal, and Spain. The report analyzes market barriers, existing national loan schemes, and case studies of successful programs in France (Oktave), Germany (KfW), and the Netherlands/UK (Energiesprong) to identify scalable models for deep retrofits.

• The report identifies several market failures that impede commercial funding for energy efficiency retrofits, including a lack of savings among poorer households, long payback periods for deep retrofits, high implicit discount rates, a knowledge gap regarding contractor selection, fragmented markets, split incentives in rental markets, and risk aversion due to uncertainty over energy savings.
• In Belgium, energy efficiency policies are regionalized. The Brussels-Capital Region offers a 0% interest loan up to €20,000 for low-income households and a mortgage loan of 0-2% interest limited to €25,000. The Walloon Region provides premiums for renovations in buildings older than 30 years, while the Flemish Region offers grants for roof, carpentry, and technical installations up to €10,000.
• The Netherlands aims for a fossil-free built environment by 2050, requiring approximately 200,000 dwelling retrofits annually. Homeowners can borrow up to €25,000 for 'very energy efficient' standards and up to €65,000 for net-zero standards, with subsidized interest rates ranging from 1.7% to 2.4% depending on the borrower and loan tenor.
• Portugal's energy efficiency efforts include the Casa Eficiente 2020 program, co-financed by the European Investment Bank (EIB) and private banks with a €200m budget for 2018-2021. However, take-up has been low; in the first six months, only 400 applications were made, borrowing €300,000. The report notes that high interest rates for unsecured loans (9.7% APR) make the scheme unattractive.
• Spain's PAREER II program, endowed with €204m, focuses on deep renovations to improve thermal envelopes and installations. The program has seen significant demand, exceeding its budget by April 2018 and requiring an additional €66m. Most beneficiaries are communities of neighbors, who account for 89% of the committed budget.
• The Energiesprong model in the Netherlands and UK achieves scale by targeting social housing providers rather than individual homeowners. It uses off-site manufacture and standardized 'net-zero' packages to reduce costs. In the UK, unit costs are projected to fall from £70,000 to £50,000 once automation is viable at 40,000 homes per year.
• The French Oktave program operates as a 'one stop shop' that connects homeowners with technical advice, contractors, and financing. It utilizes a mix of public subsidies (14% of costs) and private loans (63% of costs). It targets single-family houses built before 1975, which are the most energy-intensive.
• Germany's KfW program uses an on-lending principle where KfW refinances loans issued by local retail banks. By June 2019, it had triggered over €340bn in investments and helped 5.2 million households. A key incentive is partial debt relief, which can reach 27.5% of the loan amount for the highest energy efficiency category ('KfW-55').
• The report projects a total lending potential for EuroPACE of approximately €3.69bn over the next 10 years across the four target countries. Spain is projected to have the highest potential at €2.22bn, followed by the Netherlands at €781m, Belgium at €397m, and Portugal at ⡛n.
• To ensure the success of EuroPACE, the report recommends integrating energy efficiency into a clear regulatory framework, providing long-term low-cost loans rather than unconditional subsidies, and requiring qualified expert advice to ensure high installation standards.

APA

Vaze, P., Mok, L., Bossut, M., Chandrasekaran, A., & MacLean, E. (2020). Feasibility study for a financial instrument and a review of existing retrofit loan schemes. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/EuroPACE-2.4-Feasibility-study-for-a-financial-instrument-and-a-review-of-existing-retrofit-loan-schemes.pdf

Chicago

Vaze, Prashant, Lionel Mok, Mathilde Bossut, Abhinaya Chandrasekaran, and Eduard MacLean. Feasibility study for a financial instrument and a review of existing retrofit loan schemes. Climate Bonds Initiative, 2020. https://www.climatebonds.net/files/documents/publications/EuroPACE-2.4-Feasibility-study-for-a-financial-instrument-and-a-review-of-existing-retrofit-loan-schemes.pdf.

Wikipedia

{{cite report |last1=Vaze |first1=Prashant |last2=Mok |first2=Lionel |last3=Bossut |first3=Mathilde |last4=Chandrasekaran |first4=Abhinaya |last5=MacLean |first5=Eduard |title=Feasibility study for a financial instrument and a review of existing retrofit loan schemes |publisher=Climate Bonds Initiative |date=2020 |url=https://www.climatebonds.net/files/documents/publications/EuroPACE-2.4-Feasibility-study-for-a-financial-instrument-and-a-review-of-existing-retrofit-loan-schemes.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vaze2020feasibility, author = {Vaze, Prashant and Mok, Lionel and Bossut, Mathilde and Chandrasekaran, Abhinaya and MacLean, Eduard}, title = {{Feasibility study for a financial instrument and a review of existing retrofit loan schemes}}, institution = {Climate Bonds Initiative}, year = {2020}, url = {https://www.climatebonds.net/files/documents/publications/EuroPACE-2.4-Feasibility-study-for-a-financial-instrument-and-a-review-of-existing-retrofit-loan-schemes.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }