A digital “Renovation Wave” and a modernised construction sector

• By 2025, Europe should have saved 26 billion tonnes of CO₂ emissions by digitalising resource-intensive sectors. According to estimates, 15,8 billion tonnes can be saved from the electricity sector, 9,9 billion tonnes from the logistics sector, and 540 million tonnes from the automotive sector alone.
• By 2025, 15 per cent of all the material used in the economy should be recovered and re-used. Today it is only the case for 11,7 per cent.

One particular sector that will greatly benefit from digital investments is the construction sector, as acknowledged by the Commission in its “Renovation Wave”, which aims to upgrade Europe’s buildings with digital energy-saving solutions.

On average, people spend 80 per cent of their lives inside a building. Construction is an essential sector, yet it requires substantial spending to fabricate, maintain and renovate buildings. Digital technologies such as the Internet of Things (IoT) and AI will radically change the way we monitor and manage our building stock.

The construction sector is also a pillar of the EU economy. It provides 18 million direct jobs and contributes to about 9 per cent of the EU’s GDP. Yet buildings generate about 40 per cent of the EU’s energy consumption and 36 per cent of its greenhouse gas emissions.

Around three quarters of greenhouse gases emitted by buildings are caused by their heating and cooling systems. The main reason for this large carbon footprint is that the energy performance of our buildings remains far too low. Newer buildings must be constructed according to minimum requirements, but older buildings still represent the majority of the building stock. There is therefore huge potential to reduce emissions, create comfortable and healthy living spaces, and improve citizens’ quality of life by digitally upgrading the existing stock of buildings.

Through a network of sensors, smart meters, edge computing and energy management systems, management of heating, cooling and ventilation systems can be optimised to ensure maximum efficiency. Similar projects have seen reductions of energy needs of over 15 per cent, as well as improving quality of life for citizens (see, for example, Panasonic’s “Future Living Berlin”).

The public sector must lead by example. Many Member States have not yet presented their long-term renovation strategies under the revised Energy Performance of Buildings Directive. While required budgets will be large, there is great potential for the mobilisation of private investments. The Recovery Fund will be instrumental in allocating extra spending to retrofit older, publicly-owned buildings such as social housing, schools, hospitals and town halls. Digital public-private partnerships should be a key pillar in such renovation strategies.

Beyond the environmental benefits, these investments will create jobs for a wide range of skilled workers, from architects, designers, installers, construction workers to data engineers and other technicians, both in cities and rural areas.

Digitally upgrading buildings will also save money for national and local authorities in the long-term thanks to lower energy bills. Studies also suggest that public investments in “deep renovations” of this kind could trigger three to four times as much investment from the private sector.