Intersection of the global climate agenda with regional development: Unequal distribution of energy efficiency-based renovation subsidies for apartment buildings

Abstract

The residential sector is an important target area for achieving Europe's 2020 energy saving aims. There is virtually no evidence, however, of how incentives for attaining energy efficiency interact with countries' regional development aims. This article presents recent experiences from Estonia, where an energy renovation subsidy programme financed with carbon emission trading funds was carried out between 2010 and 2014. We show that despite equal access to subsidies for residents living in various places, a regionally unequal distribution of subsidies occurred. Empirical analyses confirm that low-performing regions acquire less public subsidy, thus adding another layer of regional inequality to existing socio-economic differences. Findings suggest that renovation subsidy distribution is related to regional socio-economic indicators and that real estate value explains 40% of subsidy distribution variations between regions. Although the energy policy goal of carbon conservation is important, ignoring the location and organisational capacity of local communities results in missed opportunities to mitigate growing regional disparities.