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Co-benefits quantified: employment, energy security and fuel poverty implications of the large-scale, deep retrofitting of the Hungarian building stock

Panel: 5. Saving energy in buildings: The time to act is now

This is a peer-reviewed paper.

Authors:
Sergio Tirado Herrero, Center for Climate Change and Sustainable Energy Policy (3CSEP). Central European University (CEU)., Hungary
Diana Ürge-Vorsatz, Center for Climate Change and Sustainable Energy Policy (3CSEP), Central European University, Hungary
Daniele Arena, Center for Climate Change and Sustainable Energy Policy (3CSEP), Central European University, Hungary
Álmos Telegdy, Department of Economics, Central European University, Hungary

Abstract

This paper presents the key results of a research that has analysed and quantified the co-benefits of a concrete case where co-benefits have a strong chance to drive policy-making: deep energy-efficient retrofits of buildings in Hungary. In this country, buildings are responsible for half of the energy-related CO2 emissions, are one of the least energy-efficient in the EU, and contain the largest potential for cost-effective mitigation among the different end-use sectors. At the same time, Hungary has the second lowest employment rate of the EU and the OECD, is highly dependent on natural gas imports and a substantial part of its population lives in fuel poverty. Deep energy-efficient retrofitting of the building stock offers a (partial) solution to most of these problems. The main focus of the research was on employment benefits, for which a novel combination of Input-Output analysis with detailed bottom-up estimates was applied. Our findings indicate that if Hungary’s residential and public buildings are deep-retrofitted, up to 2030: i) 85% of its heating-related energy consumed and CO2 emitted in 2010 will be avoided; ii) up to 59% of the January net gas imports will be avoided; and iii) as much as 180,000 net additional jobs can be created, with this figure getting lower in time and depending on the renovation dynamic. At the same time, if suboptimal retrofits continue to dominate, 45% of the 2010 heating-related CO2 emissions will be locked-in, with also energy security and employment benefits significantly lower than in deep renovation scenarios. The paper also offers a discussion on the qualitative aspects of the forecasted employment effects in the Hungarian labour market, including its geographic and skill level distribution, as well as recommendations stemming from an overall macroeconomic assessment of such a program. A few weeks after the study's release, the Hungarian government announced its commitment to a deep retrofit program of its building stock.

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