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Financial incentives for ecological construction

Building energy optimization and financial incentives in Portugal 

In Portugal, there are many financial incentives to finance renovation projects that promote the building energy optimization.

Energy Efficiency Fund (Fundo de Eficiência Energética – FEE)

financial incentive portugal -FEE - building energy optimizationThe Energy Efficiency Fund is a financial instrument that aims to finance the measures identified in the National Action Plan for Energy Efficiency. It can also support projects not provided for in the Action Plan but which contribute to energy efficiency. Several calls for projects are published each year. Individuals or company can submit an application. This fund supports projects in the construction sector in particular. For example, the fund has already launched two calls for tenders to support the installation of solar thermal panels for DHW (Domestic Hot Water) installations, the installation of high-performance windows and better thermal insulation solutions.

financial-incentive-casa-eficiente-portugal-aides-financièresThis program provides loans on favorable terms for any measure to improve the environmental performance of existing private housing. It focuses on energy and water efficiency and urban waste management.

The following measures are taken into account in particular: application of thermal insulation materials, installation of high-performance windows, use of home automation to manage energy consumption, installation of heat recovery systems, installation of rainwater reuse systems, use of household appliances with better energy performance. Interventions must be carried out by authorized companies, registered in the database of the program site.

IFFRU 2020 Program

financial-incentive-iffru-portugalIFFRU is a financing instrument to support investment in the renovation of buildings and the improvement of the energy performance of buildings. This program offers loans with more advantageous terms than those available on the market. These loans can cover up to 100% of the investment. Energy efficiency measures include, among others, thermal insulation of the opaque building envelope, installation of high-performance windows, installation of shading devices, installation of solar panels for domestic hot water, installation of ventilation systems, etc.

Portuguese municipalities may in some cases set a reduction in the municipal property tax (IMI) rate. The buildings must then meet one of the following criteria:

  • Energy class equal to or greater than A (15% reduction for 5 years)
  • Buildings that have seen their energy class increase by at least two levels following a renovation (15% reduction over 5 years)
  • Use of treated wastewater or rainwater
  • Urban buildings with energy production from renewable sources (50% reduction)

Building energy performance and financial incentives in Europe 

The European Union has increased the amount of public funds available for energy efficiency. However, it is estimated that an additional €177 billion per year will be needed over the period 2021-2030 to meet the EU’s energy and climate objectives for 2030. For example, the European Commission has launched the Smart Finance for Smart Buildings initiative. It aims to encourage private investors to invest in energy efficiency projects in the residential building sector. It is estimated that this instrument could help 3.2 million European families to recover from fuel poverty.

What about the Passivhaus standard?

Regarding the Passivhaus standard, several countries are beginning to set up mechanisms to promote its application. It is the case for instance in Italy in the municipality of Muzzan. Passivhaus certified buildings are entitled to a 60% reduction in building permit fees with a maximum reduction of €20,000 for each building.

IMI’s tax benefit in Portugal could apply to passive buildings since they correspond to an energy class A or A+.