Energy efficiency at what cost? Unjust burden-sharing of rent increases in extensive energy retrofitting projects in Sweden

Abstract

Although renovation costs can lead to rent increases in energy retrofitting, it is often assumed that reductions in energy costs will counterbalance the rent increase. In Swedish multifamily housing, energy costs for heating are however generally included as a fixed component in the monthly rent, meaning that the rent increase after energy retrofitting corresponds to the net change in rent level as well as energy costs for heating. This makes Sweden a methodologically advantageous setting for studying tenants' cost burden of energy retrofitting. The aim of this study was thus to investigate how energy performance improvement has affected rent increases in Swedish renovation projects between 2013 and 2019. Utilising a national database of multifamily housing, it was found that energy retrofitting entailed a cost relief for tenants in renovation projects with smaller investments. However, in renovation projects with larger investments, energy retrofitting entailed a cost burden for tenants. Moreover, public housing companies had conducted a high share of the extensive energy retrofits, leading to low-income tenant groups being disproportionately subjected to cost burdens of energy retrofitting. On the contrary, light energy retrofits with a cost relief for energy efficiency had been rather evenly distributed across income groups. These results indicate ongoing conflicts with the ability-to-pay principle in the energy transition of Swedish multifamily housing, and suggest that if low-investment energy retrofits are not sufficient for upcoming objectives and requirements, subsidies could be needed to compensate low-income tenants for the cost burden of extensive energy retrofitting.