THE RECOVERY, TRANSFORMATION AND RESILIENCE PLAN. EUROPEAN ENVIRONMENTAL OBJECTIVES
In an environment of environmental evolution that includes improvements such as renewable energies or energy efficiency (hand in hand), Law 10/2022 of 14 June 2022 on urgent measures to promote building rehabilitation activity in the context of the Recovery, Transformation and Resilience Plan was published on 16 June 2022. The commitments assumed by Europe are also for the Member States, and since 2020 Spain has been managing a large amount of European funds received for housing refurbishment, with a main focus for all transformative activity: energy efficiency.
Europe plays a crucial role in this regard. Plans such as the European Plan for Recovery, Transformation and Resilience ensure that the right to decent housing, which is reflected in Article 47 of the Spanish Constitution, does not collide with other rights related to the environment.
In the context of this Rehabilitation Plan, more than 72,000 million euros of European funds are earmarked, and, among the objectives, is the rehabilitation of housing, whose owners will see the costs of refurbishing their homes covered by between 35% and 100%.
This refurbishment will receive some 5.8 billion euros and will be centred on energy efficiency. Of this ¤5.8 billion, 70% will be allocated to private homes, and the remaining 30% to public buildings, whether state, regional or municipal.
The Autonomous Communities are going to be the main actors when it comes to bringing together the competences in refurbishment.
There are plans and programmes that are certainly useful and revealing tools when it comes to analysing the action procedures and aims of the main Plan:
The already existing Building Energy Rehabilitation Plan, which in 2020 already earmarked some 300 million euros for its final objectives. The problem is that it has an expiry date, and that is the origin of the other two ”arms” of this state plan:
- Programme aimed at meeting the demographic challenge (with support for the smallest municipalities, with less than 5,000 inhabitants, and seeking, among other aims, to halt the rural exodus that has occurred in recent decades and that produces an overcrowding of the large urban centres that leads to an increase in speculation, taking advantage of the incipient increase in demand, which makes it possible to increase the prices of the housing on offer. This achieves a dual purpose: to stop the flight of small population centres and to form one of the many fronts necessary to combat speculative practices).
- Programme for refurbishment in the remaining municipalities (this is the programme that will use the largest percentage of funds, concentrating on communities and neighbourhoods and contributing between 35 and 70% of the refurbishment costs, depending on the amount of the work and the level of energy savings.
- In order not to delve too deeply into an issue that is interrelated to the main point of the article, but which is not the subject of this analysis, a minimum energy saving threshold of 30% of the previous year’s expenditure is already set for eligibility for aid, with a minimum saving of 60% being considered to be a significant saving. The implementation of tax deductions for refurbishment is also being considered at this time, but it is with the Law analysed in the article that a definitive step is taken towards the fiscal promotion of the energy-related refurbishment of the housing stock.
THE LEGAL CONTEXT: A SIMPLE BUT EFFECTIVE BODY OF LEGISLATION
Law 10/2022, of 14 June, on urgent measures to boost building renovation activity in the context of the Recovery, Transformation and Resilience Plan is blunt in its preamble when defining the current situation of renovation activity in the national context. The housing stock is old (more than 5.5 million residential dwellings were built before 1980) and only 0.3% of the buildings are in letter A (optimal emission levels) and only 0.2% in letter A in terms of energy consumption.
Going further, a comparison with our “EU neighbours” shows that retrofitting rates are 8 to 10 times lower than in the rest of Europe. These data are alarming, and it is clear that there is a need for greater promotion of the refurbishment of a housing stock which, in addition to being obsolete in part, has alarming levels of emissions and energy expenditure, slowing down compliance with the objectives set by the EU and other international bodies, with energy renovation being essential to achieve climate neutrality by 2050.
The law also states that all social, political and economic agents must embrace the objectives that mark the horizon: in an environment in which a large part of the business fabric has been affected or has even disappeared due to the pandemic, the plans and programmes of Rehabilitation reach out to Member States and favour the creation of employment.
It is crucial to implement efficient energy consumption policies. The private individual will be able to meet expenses that favour sustainable development (local trade, textile production, agriculture, livestock farming, etc., with the minimum environmental damage in terms of pollutant gas emissions, pesticides, etc.) and will even be able to finance his own energy works, complementing those already carried out by the State or the Autonomous Communities, or by the private individual, subsidised by the latter.
Investment and the achievement of objectives such as decarbonisation are important points in the rehabilitation movement.
It is worth mentioning the circular economy, which aims to keep existing materials and products in the production/consumption cycle for as long as possible.
It produces two main benefits:
Firstly, clearly, the reduction of pollutant emissions by not having to maintain large-scale production with such aggressive percentages of increased activity from year to year. Keeping the products on the market minimises pollution
and links to a second main benefit: in the same factories/workplaces where materials and products in the process of reuse are treated, a network of jobs is created directly and indirectly: from the management staff to the permanent-discontinuous employee, everyone enjoys a new opportunity that, possibly and approaching the general employment situation, they would not have had otherwise.
With a list of principles that tend, on the one hand, to effectively control rehabilitation in order to achieve the objectives and eliminate spurious movements that have purposes other than those set out in a common way. Numerous components come into play that influence the transformation activity, which must be weighed against environmental objectives, such as the protection and conservation of buildings of historical or cultural importance (BIC or Bienes de Interés Cultural) or achieving a balance between a good indoor environment and emissions reduced to a minimum.
There are 3 main reasons for the urgency of the measures:
– The deterioration of the Housing Stock (mentioned above).
– Compliance with the National Integrated Energy and Climate Plan.
– Opportunity to use resources that lead to a growth of activity and a correct channelling of investments in commercial traffic.
There are also 3 main types of measures (although there are others):
Fiscal
In the regime of communities of owners (LPH).
Financing of refurbishment activity.
THE CONTENT OF THE LAW: A SINGLE TITLE TO BRING TOGETHER ALL THE LEGAL PROVISIONS.
Firstly, it is worth highlighting the personal income tax deductions:
There will be a deduction of 20% of the total to be paid when 7% or more of the demand for heating and cooling of the main residence is reduced.
- There will be a 40% deduction if the consumption of non-renewable (primary) energies in the main residence is reduced by 30% or more.
- A deduction of 60% will be made if 30% or more of the consumption of non-renewable (primary) energy is reduced in residential buildings.
Tax exemptions will be granted for renovation grants (an important aspect that allows for exponentially higher and faster growth in renovation activity).
A line of guarantees of a maximum of 1.1 billion is established by the Instituto de Crédito Oficial (from now on, ICO). The first Additional Provision of the Law on Urgent Measures sets this amount as the limit.
Secondly, moving the magnifying glass to the Horizontal Property Law, it establishes the obligation to set up a reserve fund for certain actions, including energy refurbishment. It also establishes the consequences of non-payment of the individual quota corresponding to the reserve, seeking real compliance with this obligation, which helps not only in the energy aspect, but also in other crucial aspects such as the architectural adaptation of the building for use by people with functional diversity.
Regarding the financing of the renovation activity:
In the amendment of the Law on Land and Urban Rehabilitation, the entities listed in art.9.4 (A.P., public entities, communities of owners…) are enabled to carry out two new activities (9.5.a and 9.5.h)
- To act with full legal capacity in the market in activities such as rehabilitation.
- To apply for or grant credits for the performance of activities such as rehabilitation.
There is a fundamental principle that must be respected by the entities involved in the processing activity: not to cause significant damage to the environment. This, rather than acting as an incentive to attract so-called “green investors”, acts as a logical part of the process: if in order to achieve the rehabilitation objective of reducing emissions and expenditure, we damage the environment, in a weighing of benefits – sacrifices, the “collateral damage” cannot be high, or the activity would be counterproductive and, by taking one step forward, we would be forced to take two steps backwards.
CONCLUSION: THE USEFULNESS OF EMERGENCY MEASURES, ESPECIALLY IN THE TAX FIELD
The first measure to be highlighted is the exemption from taxation of rehabilitation aid.
This is a large amount that would be deducted from the total amount provided if it were to be taxed. This is a smart move on the part of public bodies; after all, the only thing they would achieve by taxing aid for renovation activity is to recover part of the total amount they themselves had paid out.
Secondly, the ICO’s funding of 1.1 billion euros is powerful.
Although a higher amount in aid or (similar contributions) is always beneficial, it is an important push towards the real renovation of the housing stock, which, as has already been mentioned several times, is excessively old and, therefore, has energy consumption methods that are much more harmful to the individual and the environment.
Is Spain really complying with the guidelines adopted by the EU?
Are we prepared to meet the EU’s sustainable development commitments? Some European Union bodies have already “given us the thumbs up” on aspects such as:
– Speculation on essential goods (such as food).
– Proposed methods of controlling the property market (particularly for housing use).
– The % of net annual income that citizens are obliged to spend on housing, whether it be mortgage payments or rent (the OECD itself has emphasised this in some of its reports).
– Passivity when it comes to transposing certain regulations or directives or applying them in areas such as urban planning.
As for another of the big questions,
whether the EU really offers a viable sustainable development plan for all States,
It should be noted that some countries with buoyant economies (mainly in northern Europe) which, although they do not have the best resources in terms of raw materials or training of their human capital, sometimes have a higher volume of income and can therefore afford to adapt their infrastructure to this objective, are questionably committed to this sustainable development, such as some regions in the southern countries (for example, Extremadura, with the implementation of a sustainable development plan in the EU), Extremadura, for example, with the installation of solar panels to adapt its energy consumption to less aggressive energy sources, renewables) which, although their conditions are more precarious in many ways (such as at the digital level), are adapting more to the new environmental needs, offering production adapted in many cases to sustainable development when it comes to the transformation of raw materials, for example.
The paradox in this case is the following: the European areas with the least economic means are the most committed and, in some cases, receive the least support (for example, the transport network in the southern regions of Spain is more precarious and obsolete, which is an almost insurmountable obstacle when it comes to offering good communication with the rest of the regions, but they remain committed to caring for the natural environment, with a process of transformation of food, textiles, etc. that adheres to the needs of the environment and respects Planet Earth).
The conclusion that can be inferred from the above can already be glimpsed in this part of the dissertation, but it should be pointed out that it is not only possible to contemplate a project that has concrete tools that have a direct impact on helping citizens and their relationship with the environment: there is a direct impact reflected, for example, in the increase of work through the concessions of rehabilitation works, which will increase the fabric of companies that offer affordable work for a large part of the population and allow them to subsist.
This creates a potential perfect circle in which, through this Recovery, Transformation and Resilience plan, sustainable development is sustained firstly, the housing environment is improved at the individual and community level secondly, and finally, access to employment is facilitated as a primary livelihood need for the population.
Therefore, a perfect symbiosis would be achieved between the different objectives that would make it possible to improve the living conditions of both urban and rural populations, always respecting community premises and mitigating the effects of a large-scale production economy that constantly damages the urban and natural environment and goes against the aforementioned principle of sustainable development that is gradually being established at a global level and which, with plans such as decarbonisation (2050), seeks to achieve harmony between urban development and respect and care for planet Earth.
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