A new report by Positive Money Europe proposes to accelerate building renovations in the EU by tweaking the European Central Bank’s gigantic “TLTROs” programme to incentivize banks to offer and unlock cheap loans for building renovations.

With its “Renovation Wave” initiative, the European Commission has rightly identified improving the energy efficiency of buildings through renovations as a key priority for the EU’s climate strategy. However, without scalable financial firepower, the European Commission is doomed to disappoint on its ambition to double the pace of building renovation by 2030. 

Positive Money Europe’s new policy paper, ”Money looking for a home”, proposes to turn the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTROs) programme into a dedicated financial instrument to scale up bank loans for energy efficiency and building renovations. 

Under TLTROs, the ECB currently provides €1.75 trillion of loans to banks with negative interest rates (-1%), but without climate or environmental conditions. Because of this negative interest rate, the programme is effectively a public subsidy for banks.

The report by Uuriintuya Batsaikhan and Stanislas Jourdan proposes to launch a “Renovation-TLTROs” pilot programme under which the TLTRO rules would be tweaked to offer a super-negative discount rate (below the current -1.0%) to banks on their portfolio of loans that are dedicated to energy-efficiency renovation projects.

Key benefits of the proposal include:

  • The discount rate offered under the Renovation TLTROs programme would boost incentives by banks to extend credit for renovation purposes, by reducing the transaction costs for banks and customers;
  • It will incentivize and facilitate the process of setting up renovation projects for millions of households and businesses, by turning the banking sector into a distributed network of one-stop-shops for energy-efficiency renovations;
  • Easier access to bank loans for renovations will incentivise households and businesses to carry out deep renovations instead of lighter and insufficient projects;
  • With mainstream access to virtually costless renovation loans, a number of existing public subsidies for renovation could be redirected towards public and social housing or for enhanced and targeted support for low-income households, empowering a fairer and just green transition.

This paper builds upon a previous study on “green TLTROs” published in September 2020 by Positive Money Europe and Sustainable Finance Lab. Following this publication, the ECB President Christine Lagarde had committed to look into ways to green its TLTRO programme as part of the ECB’s strategy review, due to be finalised by September 2021. 

Going forward, the ECB and the European Commission should swiftly begin cooperating on the technicalities of the idea, in order to further explore the feasibility and economic impact of targeting TLTROs towards building renovations.





As a supporter, you’re at the heart of everything we do. We’d love to keep you updated about our exciting work and the ways you can help, including campaigns and events that you might be interested in. We promise never to sell or swap your details and you can change your preferences at any time. To do so, simply call +32 2 880 04 34 or email info@positivemoney.eu

You have Successfully Subscribed!

Share This