Socio-economic impacts of large-scale deep energy retrofits in Finnish apartment buildings

Abstract

Energy use in buildings is a major source of carbon dioxide (CO2) emissions in Europe. Energy use is a major expense for building owners, but also a source of tax revenue for the government. Deep energy retrofitting of buildings can significantly reduce the energy consumption and CO2 emissions of buildings. However, the environmental benefits are linked to the CO2 emissions of the national energy grid. Deep retrofits have a significant cost and are not always cost-effective for building owners. On the other hand, they require a lot of investments and labor, which provides employment for citizens and tax revenue for governments. This study examines the environmental and economic impacts of large-scale deep energy retrofitting in the Finnish apartment building stock continuing until 2050. Low and high impact retrofit configurations were obtained from a previous study, which utilized simulation-based multi-objective optimization to find cost-effective solutions. Four archetypes of apartment buildings from time periods of different building codes were used to form the building stock. A building stock model based on Finnish statistics was used to estimate the future changes in the building stock. The study combines optimized energy retrofitting configurations and the building stock model to estimate the energy consumption development in the building stock undergoing large-scale retrofitting. Three retrofitting timelines were tested to show the effect of immediate and delayed retrofitting action. Then, a new socio-economic model was used to calculate the impact of energy retrofitting on the CO2 emissions, life cycle cost, tax revenue, employment and foreign fossil fuel imports. The effect of energy grid decarbonization and long-term scheduling of the retrofits were also examined. The results show that by 2050, the CO2 emissions of the building stock were reduced by 12–30% compared to the reference scenario with energy grid decarbonization, but no building energy retrofitting. A million euros invested into retrofitting created 15–17 jobs. Economic viability for the building owners was inversely correlated with the changes in tax revenues for the government. Cost-effective retrofitting reduced energy-based tax revenues more than it created new tax revenues through direct employment, thus providing a funding challenge for governments desiring to advance building retrofitting. However, more money would be left in the local economy due to reduced fossil fuel imports, but induced economic effects were not analyzed in this study.