Green recovery for Denmark: a new renovation scheme for the social housing sector
Updated: May 14
The government proposes to allocate DKK 30 billion (4 billion €) for green renovations in the social housing sector as a first step towards a green recovery of Denmark.
On the 1st of May, Denmark's Social Democratic Prime Minister, Mette Frederiksen, made a crucial announcement that relieved many public housing companies in Denmark: a proposal to activate 30 billion DKK from the Landsbyggefonden (the National Building Fund) to renovation of social housing during 2020-2026. Of these, 18.4 billion DKK (2.4 billion €) will be used to renovate the 72,000-social housing in the fund's support queue. The remaining 11.6 billion DKK (1.5 billion €) will serve future renovations until 2026, with the focus on the green transition.
The money in the Landsbyggefonden are financed by the tenants over the rent, but the financial framework of the fund is set in political agreements every 4 years. Many tenants have waited for up to 10 years for renovations, since the yearly renovation need has been bigger than the yearly financial framework set out politically. Now they will finally get them – by the look of the recent proposal that basically allows the tenants to spend their own money on much needed renovations.
The public housing sector is a cornerstone of Danish society. According to the Danish Ministry of Transport and Housing, there are about 540,000 public housing units and approximately 1 million Danes live in a public housing. The renovation of the housing stock has become a latent need in Denmark. A total of 453 approved renovation projects spread across the country are currently on the waiting list at the Landsbyggefonden - 72,000 public homes that are outdated, harmful to residents’ health and heavy on the energy barometer.
The announcement also comes in a time when Denmark, like many other European countries, is facing a hit in the economy due to the COVID19 pandemic. Many thousands of construction workers have lost their jobs because of the corona crisis and are now unemployed.
Now, a major and sustainable modernisation of the country's public housing must be seriously pushed to simultaneously push the economy in after the corona crisis and ensure a social energy transition.
“It is the largest total housing agreement ever, which the government is putting up here. In the short term, 72,000 homes on the waiting list will be renovated. At the same time, the initiative makes a significant contribution to holding hands during employment in the difficult situation of the Danish economy as a result of the corona crisis" stated Minister of Housing Kaare Dybvad Bek in a press release from the Ministry of Transport and Housing.
A renovation scheme with a three-fold objective
The Danish proposal for a green recovery implies important CO2 savings, reduced energy bills and job creation in the construction sector.
According to the Ministry of Transport and Housing, 2/3 of the projects in the renovation queue relate to climate proofing (facades, roofs and windows) and will thus reduce heat consumption and increase energy savings. In this line, the agreement is estimated to result in a reduction of up to 50,000 tonnes of CO2 and is expected to reduce energy consumption by approximately 500 gigawatts hour, which corresponds to the heat consumption of 40,000 apartments.
According to BL, lifting the properties of older date with a non-contemporary energy standard to a current energy standard, implementing the EED and the EPBD, there can be heat savings of about 30-40 %. There can thus be an important reduction on the energy bill by renovating the buildings climate screen. For example, by insulating exterior walls, roofs and ceilings and replacing old windows for energy windows. If effectively implemented, the proposal can have the potential to really increase housing affordability and reduce energy poverty in the thousands of public homes in the queue for renovation.
Furthermore, due to economies of scale the renovations often facilitate creation of accessible homes for the elderly or disabled people to 1/3 third of the price that it would cost to build these homes from scratch. Since 2003, the social housing sector in Denmark has delivered 15.700 accessible homes.
By 2020, the proposal is estimated to provide 3,300 full-time jobs in the construction sector and 7,800 in 2021.
Although the current renovation proposal gives priority today to those renovation projects in most urgent need, in the future, urgent and green initiatives must go hand in hand and it is estimated that 85 - 90% of new projects will contain green initiatives.
“We have a unique opportunity to combine the recovery of Denmark with our green ambitions. With this proposal we take the first step in that direction. We open investment for 30 billion DKK around the whole country, it is now possible to replace windows, better insulate or replace the oil fired. It will benefit tenants, employment and not least the climate. The renovations provide better indoor climate, lower heating bills for the tenants, more orders in the order books at the companies and less CO2” says Climate, Energy and Supply Minister Dan Jørgensen about the proposal.
Today more than ever a long-term perspective is needed to move towards a sustainable future. Looking beyond the immediate health crisis, government efforts to support economic recovery are essential but should not undermine action to reduce the impact that the construction sector has on the environment and housing affordability. Recovery efforts will give countries a chance to make much-needed environmental and social improvements an integral part of the economic recovery.
“The timing could not have been better. Housing has historically been part of rebuilding of any society post-crisis and in the Danish social housing sector was part of post tuberculosis breakout – we’re back at the beginning in the position where we belong: investment, welfare, economic growth and stability” says Natalia Rogaczewska, Head of Public Affairs Department at B.L, Denmark's Social Housing federation. “Our most important job is now to keep that position – social housing decreases inequalities in our societies, and therefore it benefits us all”.
The parties are currently negotiating the upcoming housing agreement, which will discuss, among other things, the upcoming renovation framework.