To meet the European Union’s carbon goal of reducing emissions by at least 55% net from 1990 levels, the European Commission wants the buildings sector to take the lead. The EU’s Climate Plan Impact Assessment sees building renovations and sustainable renewable heating system replacements cutting carbon emissions in the sector by 60% by 2030. At the same time, this transformation must be equitable. While this is a massive undertaking, it also presents an opportunity to renovate the EU’s building sector.

In Pricing is just the icing, authors Samuel Thomas, Louise Sunderland and Marion Santini make the case that a comprehensive framework is needed to tackle the market failures and barriers to buildings sector decarbonisation. Regulatory measures and carbon pricing can help drive the demand for energy efficiency and heating system replacements. But significant efforts are needed to mitigate the impact of increased energy prices on energy-poor, vulnerable and low-income households with the worst performing buildings.

The introduction of carbon pricing should be gradual and measured. This could happen at the national or EU level, as one part of a broader package of measures to meet increased Effort Sharing Regulation (ESR) targets. Relying on extending the EU Emission Trading System (ETS) — or setting up a parallel ETS — to meet the climate goal, would carry risks that might financially strain consumers and ultimately slow decarbonisation efforts. Only a comprehensive and ambitious buildings policy framework will deliver on Europe’s climate and energy goals.