

Article
Renovations or Energy Efficiency: How Can We Decarbonize the Residential Sector?
Renovations or Energy Efficiency: How Can We Decarbonize the Residential Sector?
Introduction
The decarbonization of the building sector is gradually taking shape in France. With the RE2020, a cornerstone has been laid for the decarbonization of new construction over the next decade. However, emissions from the building sector are not limited to materials used in new buildings. In fact, the building stock in 2050 will already consist mainly (75%[1]) and 67% of the building's current emissions come from its use[2] (primarily energy consumption for heating). The residential sector accounts for 60% of emissions, compared with the commercial and institutional sector (40%). Renovating existing housing is therefore essential to reducing the sector’s overall emissions.

The goal set by the SNBC[3] is to achieve 370,000 renovations to a “Low-Energy Building” (BBC) standard—that is, the equivalent of energy efficiency ratings A or B— each year through 2030, then 700,000 per year through 2050. The underlying goal is for the entire housing stock to be renovated to the BBC standard by 2050. Where does the renovation sector currently stand? What regulations and financial incentives are in place, and what are their limitations? How should the sector and its jobs evolve? How should housing be utilized to ensure that national climate goals are met?
Several stakeholders have identified the barriers and levers needed to effectively decarbonize both the energy consumed in homes and the building materials used. This article provides an overview of the obstacles to be overcome and the levers to be activated in terms of financing, employment, and training—as well as usage—to ensure that France meets its decarbonization goals for the residential sector. In particular, it highlights the key recommendations made by the Court of Auditors, the Council for Economic Analysis (CAE), the Institute for Sustainable Finance, and the Shift Project.
1. Regulations, Funding, and Tax Incentives
Several obstacles continue to hinder the acceleration of comprehensive, energy-efficient renovations.
Given the current market barriers, renovation is cost-effective for households in only 5% of cases, according to the Economic Analysis Council[4]. Over the past decade or so, several funding programs have been introduced to encourage homeowners to renovate their homes: the CITE[5], the EWCs[6], the “Habiter Mieux Sérénité” grant from ANAH[7], MaPrimeRénov’. Public spending on these subsidies doubled between 2015 and 2022. Nevertheless, the results are still very mixed and difficult to track due to a lack of data. The majority of projects are still “single-measure” in nature—that is, focused solely on a single heating or insulation component—and do not sufficiently reduce GHG emissions. Feedback shows that only comprehensive renovations (i.e., those that improve a property’s overall energy performance by carrying out work on multiple elements at the same time, or successively in coordinated stages) are effective enough to achieve a level equivalent to “low-energy building” (BBC) standards, but these accounted for only 3% of the renovated floor area in 2020[8].
However, in all scenarios that examine achieving carbon neutrality by 2050[9], it is essential to scale up energy-efficient renovations, with priority given to renovating all energy-inefficient buildings[10].

In the residential sector, energy-efficiency renovations are primarily governed by the Climate and Resilience Act, adopted in 2021. This law has implemented several enforcement measures to encourage landlords to renovate their least energy-efficient properties (a rent freeze on F- and G-rated properties starting in 2022, a ban on renting out G-rated properties starting in 2025, F-rated properties as of 2028, and E-rated properties as of 2034). However, comprehensive renovations are rare, largely due to the cost of the work and the return on investment, which is often considered too long. Furthermore, these measures do not apply to owner-occupiers.
In addition to households looking to renovate their individual homes, condominium associations and landlords are the other two types of entities undertaking residential building renovation projects. Condominium associations, which account for more than a quarter of all housing units in France, face specific challenges related to the complexity of collective decision-making (choices regarding energy audits, construction work, quotes, and contractors) and the difficulty of securing financing.[11]. With these additional barriers, renovations by condominium associations remain limited (5% of homes receiving assistance from MaPrimeRénov’ in 2022)[12]. In contrast, thanks to economies of scale, their administrative and financial capacity, and their teams specializing in renovation projects, public housing providers have taken the lead in renovation efforts. As for private landlords, initiatives are emerging to strengthen ties between tenants and landlords in order to accelerate decarbonization, but these remain limited in the residential sector and are more prevalent in the commercial sector (such as Icade’s “climate-committed lease”[13]).
In late 2023, the government sought to raise the bar and increase the resources allocated to reach 200,000 comprehensive renovations per year, through a reform of energy-efficiency renovation subsidies. However, in March 2024, amid the real estate crisis, the rules governing access to financing were eased and made more flexible, notably to allow for single-step renovations once again.
In the face of inflation and economic insecurity, the current consensus is moving toward expanding financial support for households to facilitate comprehensive renovation projects. According to the Shift Project, this support should take the form of a reduction in out-of-pocket costs[14] for homeowners with the lowest incomes (ranging from €10,000 to €16,000 for renovations costing an average of €40,000, including tax)[15], and through easier access to zero-interest loans and credit. It should be noted that local public agencies can also provide valuable supplements to national aid by offering financial support to condominium associations and individuals to reduce their share of the costs.
According to the CAE, the France Renov’ program should go further by creating a strategic pillar that would identify priority housing units and pilot an active approach that “reaches out to” homeowners and co-owners. It also calls on the government to set aside a multi-year budget of 8 billion euros per year to ensure the long-term sustainability of energy renovation subsidies. This is in line with the recommendation made by the Court of Auditors as early as July 2022[16] to clarify the various mechanisms, strengthen national oversight, and estimate national and local financial commitments in light of the expected benefits.
But then, how should we balance the demands to reduce the public debt deficit—which requires a more or less drastic cut in public spending, depending on one’s point of view—with the need to support a project as crucial as urban renewal? Some have attempted to answer this question, such as I4CE (Climate and Taxation: Three Scenarios to Break the Deadlock[17]), the High Council for Climate (Act on the Emergency, Mobilize Resources[18]) and Alain Grandjean (How to Finance the Decarbonization of Public Buildings?[19]). And initiatives are being launched to raise funds from private companies. This is the case with Pouget and ADEME, which are leading the “Rénovation de Fonction” project[20] who wants to test the implementation of a new employer-provided benefit designed to encourage employees to make energy-efficiency upgrades to their homes.
It should be noted that adaptation challenges related to heat waves, flooding, and the shrinkage and swelling of clay soils are largely overlooked by most public aid programs, as noted by the Court of Auditors in March 2024. Only the Union sociale pour l’habitat (USH) has implemented a specific funding program for large-scale renovations, called “Seconde Vie,” which incorporates summer comfort criteria. However, it seems essential that energy-efficiency renovations carried out today anticipate tomorrow’s climate risks—particularly heat waves—in order to reduce vulnerability and the potential rebound effects associated with air conditioning.
2. Employment and Restructuring of the Industry
Given the need to renovate the existing housing stock, a major restructuring of the sector is expected. In fact, according to the CAE, the limited availability of qualified and certified contractors represents a “bottleneck in energy-efficient renovation.” The scarcity of skilled labor (professionals with “Recognized Environmental Guarantor” status will account for only 11% of construction firms by 2022) is also one of the top factors cited by households as a barrier to renovating their homes.[21]
Le Shift has estimated a need for approximately 110,000 additional FTE by 2040 to carry out the necessary energy-efficiency renovations. Therefore, the focus must be on expanding the workforce and potentially shifting FTE from new construction to renovation. This applies to all trades, from tradespeople and technicians to engineers and project managers.
Beyond this new workforce, it is essential to enhance the skills of all stakeholders in the value chain. These are skills that must be developed and strengthened to ensure reliable energy audits, install energy-efficient equipment, and coordinate renovation projects. Training is therefore crucial to meeting the growing demand for skills and ensuring the quality of the work. Specialized training programs, such as those offered by Apprentice Training Centers (CFA), vocational high schools, and continuing education organizations, are essential for training a skilled workforce.
In the renovation sector, the “Reconnu garant de l’environnement” (RGE) certification for professionals has become necessary so that homeowners can benefit from France Rénov’ grants. The CAE recommends simplifying the certification process to increase the number of certified professionals and limit the inflationary effects observed. To improve the quality of work and provide households with a guarantee, the CAE recommends establishing a public service for ex-post quality control, a function currently performed by companies. This body could impose stricter penalties in cases of proven quality defects.
In addition to renovation professionals, the development and relocation of upstream supply chains to provide construction sites with building materials is a major challenge in achieving climate goals. Indeed, the carbon footprint of materials remains very significant. Depending on the type of renovation (energy-only renovation vs. major rehabilitation), it can range from 50% to 100% of that of an equivalent new building, or between 350 kgCO2e/m2 and 700 kgCO2e/m2.
To reduce this impact, in addition to the need to optimize and reuse existing materials on-site during renovations, local authorities can (re)develop bio-based material supply chains (wood, earth, straw) and promote the circular economy by establishing reuse networks. Finally, to limit the consumption and replacement of materials, it seems essential to strengthen and expand jobs related to maintenance and repair, in order to ensure that buildings have the longest possible lifespan.
To track developments in the sector, it is necessary to structure and systematize the collection of data from each renovation project, including before-and-after environmental assessments, in order to determine the associated carbon savings and impacts.
3. Austerity measures: energy, real estate, land
For the residential sector to achieve its decarbonization goals, all available solutions must be implemented. Among these, issues related to energy efficiency are central, yet they are still rarely discussed.
The term “sobriety” often refers primarily to energy efficiency, a concept that has become more widespread in recent years, particularly with the national goal of reducing energy consumption by 10% between 2019 and 2024. The winter of 2022 showed that most residents had adopted energy-saving habits, primarily due to rising energy prices. Beyond the well-known eco-friendly habits and the “turn it down, turn it off, schedule it” approach promoted by the 2022 campaigns, other types of energy conservation must be implemented to decarbonize the building sector.
It is in this context that real estate efficiency is a key lever. This type of efficiency aims to optimize the use of the existing built environment—that is, to reduce unoccupied or underutilized spaces. It could help limit new construction and the associated carbon emissions, while curbing land conversion (land efficiency) and its impact on biodiversity.
And the pool of available housing appears to be significant: in 2023, vacant housing units (3 million) accounted for 8% of France’s residential housing stock, while 10% of second homes and occasional residences were recorded[22]. These strategies for meeting housing needs through means other than new construction are all the more important given that, according to the report *Accelerating and Sustaining Energy Efficiency in Residential Buildings*[23], changing lifestyles, an aging population, and remote work are driving up demand for housing. As a result, over the past thirty years, living space per person has increased from 23 to 40 m², driven by a reduction in household size (from an average of 2.6 to 2.1 occupants per primary residence).[24].
Furthermore, to make better use of the existing housing stock, strategies for sustainable real estate must take into account the diversity of occupants (needs change depending on life stages) and regions (certain geographic considerations must be factored into the equation: the majority of second homes are located on the coasts and in mountainous regions, while vacant homes are found in the “diagonale du vide”)[25].
Modular housing and shared living arrangements—beyond simply meeting new needs (such as remote work, changing household structures, and a greater number of life stages)—are avenues worth exploring to rethink the ways we live and maximize the use of existing spaces. Housing must also be redesigned and adapted for older adults, to enable them to remain in their homes for as long as possible (in line with the shift toward home-based care aimed at capping the number of nursing homes).
The regulatory framework also has a role to play in changing practices and promoting energy-efficient housing. Numerous proposals are emerging to simplify the legal status of hybrid homeowners and tenants, as well as to develop shared home ownership by structuring the market for the resale of real estate shares.
To ensure energy, building, and land efficiency, the involvement of occupants and owners is essential.
The Report: Accelerating and Sustaining Energy Efficiency in Residential Buildings[26] highlights the importance of user involvement and provides an overview of the strategies to facilitate it (tailored communication, landlord-tenant relationships, data-collection tools, and individualized energy billing). This involvement is crucial for changing habits and reducing energy consumption. It also helps occupants and owners take ownership of the buildings, thereby promoting the implementation of renovations. To this end, The Shift Project proposes introducing a renovation leave similar to the moving leave provisions found in certain collective bargaining agreements.
Developing local expertise and strengthening local networks (stakeholders, resources, materials) could, by granting autonomy to these regions, make them more resilient in the face of increasingly frequent climate-related hazards.
Self-consumption is one example. Installing solar panels not only promotes low-carbon energy but also empowers residents, reduces the risk of skyrocketing energy prices, and helps them develop new skills through interaction with professional installers. However, this must be part of a broader national strategy so that the power grids can accommodate these new sources of energy production on a large scale.
Conclusion
The residential sector faces numerous challenges in decarbonizing its existing buildings. To scale up energy-efficient renovations, simplifying and increasing financial assistance appears essential. The entire sector must restructure itself, with new local supply chains to be developed. For renovations to be effective in both winter and summer, they must anticipate and adapt to climate change. Alongside improvements to the built environment, building practices must shift toward greater energy efficiency—both to reduce the demand for new construction and to lower per-capita energy consumption. These changes can only be achieved if they are supported by trained professionals who are valued by civil society.
1.
Calculations based on data from the Reference Scenario for the French Energy and Climate Strategy (March 2019 version)
2.
Roadmap for Decarbonizing the Building Sector, Ministry of Ecological Transition and Territorial Cohesion
3.
National Low-Carbon Strategy
4.
Energy Efficiency in Housing: Reforming Public Policy, Economic Analysis Council
5.
CITE: Energy Transition Tax Credit
6.
EEC: Energy Efficiency Certificates
7.
Anah: National Housing Agency
10.
Homes considered energy-inefficient correspond to energy efficiency labels G and F on the Energy Performance Certificate (EPC)
11.
Sector-Specific Barriers and Drivers to Financing the Green Transition: The Case of Decarbonizing the Building Sector, Institute for Sustainable Finance
12.
Support, finance, renovate, Anah Key Figures 2022
14.
Since MaPrimeRénov grants do not cover 100% of the cost of the work, homeowners must contribute the remaining amount; this is known as the out-of-pocket expense.
15.
Sector-Specific Barriers and Drivers to Financing the Green Transition: The Case of Decarbonizing the Building Sector, Institute for Sustainable Finance
17.
18.
2023 Annual Report – “Addressing the Emergency, Mobilizing Resources”, High Council for Climate
21.
Sector-Specific Barriers and Drivers to Financing the Green Transition: The Case of Decarbonizing the Building Sector, Institute for Sustainable Finance
23.
Ensuring the Long-Term Sustainability of Energy Efficiency in Housing, Ministry of Ecological Transition and Territorial Cohesion
24.
25.
Toward a Sustainable and Inclusive Real Estate Sector, Ways to Make Better Use of the Building Stock (2022, group "Reflections on Responsible Buildings and Regions" (RBR-T) from the Sustainable Building Plan)
26.
Ensuring the Long-Term Sustainability of Energy Efficiency in Housing, Ministry of Ecological Transition and Territorial Cohesion




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