How subsidies can accelerate decarbonization in real estate
How subsidies can accelerate decarbonization in real estate
Energy use in buildings is both a challenge and an opportunity. The built environment accounts for around 40% of EU energy consumption and 36% of CO₂ emissions, yet it also offers some of the fastest and most predictable savings. Targeted decarbonization measures reduce emissions while lowering operating costs.
Regulatory pressure is increasing. Updates to the Energy Performance of Buildings Directive (EPBD) and national climate regulations will require building owners to improve energy performance. Delaying action raises the risk of higher retrofit costs, reduced asset value, and fewer cost‑effective pathways for future upgrades. Energy efficiency and decarbonization are therefore business‑critical decisions, not only optional sustainability initiatives.
Despite this, many organizations hesitate due to upfront investment needs and the absence of a clear decarbonization roadmap. This does not need to be the case. Tax allowances and subsidy schemes can support both the development and implementation of CO₂ reduction plans. This article explains how these instruments work and how BDO can support organizations throughout the process.
The first step is establishing a baseline to understand where emissions originate and how energy is used. Based on this insight, organizations identify technical measures that reduce Scope 1 and/or 2 emissions. For real estate, these typically focus on energy usage and electrification, such as insulation and airtightness improvements, high‑efficiency heating, ventilation and air‑conditioning (HVAC) systems with smart controls, and Energy Management Systems.
A well‑crafted reduction plan quantifies the CO₂ impact of each measure, outlines investments, defines sequencing, and sets a realistic timeline. This enables efficient emission reductions while supporting long‑term operational performance and asset value.
Many of the technical measures resulting from the CO2 reduction plan are eligible under the EIA including CO2 reducing processes. The EIA can be strategically combined with the Environmental Investment Allowance (Milieu Investerings Aftrek; MIA). Examples include investments in green roofs and walls, circular buildings or sustainability certifications. Combining these schemes can help optimize sustainable building investments and enhance overall environmental performance.
Moreover, the EIA can be strategically leveraged in combination with relevant subsidies, to further support Scope 1 and/or 2 emission reductions. Additional sustainability measures — such as the purchase of electric or hydrogen vehicles or net congestion measures such as the installation of a battery system.
In close collaboration with our subsidy specialists, we assess eligibility, verify reduction thresholds, and support the application process by aligning technical and regulatory documentation. This integrated approach not only delivers a robust and actionable reduction plan, but also ensures that organizations fully capture available tax allowances and subsidies—significantly lowering investment costs, improving returns, and strengthening the financial case for decarbonization from the outset.
Regulatory pressure is increasing. Updates to the Energy Performance of Buildings Directive (EPBD) and national climate regulations will require building owners to improve energy performance. Delaying action raises the risk of higher retrofit costs, reduced asset value, and fewer cost‑effective pathways for future upgrades. Energy efficiency and decarbonization are therefore business‑critical decisions, not only optional sustainability initiatives.
Despite this, many organizations hesitate due to upfront investment needs and the absence of a clear decarbonization roadmap. This does not need to be the case. Tax allowances and subsidy schemes can support both the development and implementation of CO₂ reduction plans. This article explains how these instruments work and how BDO can support organizations throughout the process.
Understanding reduction plans: The key to unlocking funding and impact
A reduction plan is a structured approach to systematically lowering greenhouse gas emissions within an organization. Rather than implementing measures prematurely, it begins with a clear assessment of what is feasible, practical, and impactful.The first step is establishing a baseline to understand where emissions originate and how energy is used. Based on this insight, organizations identify technical measures that reduce Scope 1 and/or 2 emissions. For real estate, these typically focus on energy usage and electrification, such as insulation and airtightness improvements, high‑efficiency heating, ventilation and air‑conditioning (HVAC) systems with smart controls, and Energy Management Systems.
A well‑crafted reduction plan quantifies the CO₂ impact of each measure, outlines investments, defines sequencing, and sets a realistic timeline. This enables efficient emission reductions while supporting long‑term operational performance and asset value.
Turning plans into funded projects: Combining tax benefits and subsidies
The Energy Investment Allowance (EIA) supports a tax deduction for the preparation of CO₂ reduction plans for existing buildings, provided that the measures included achieve a combined minimum 20% reduction in Scope 1 and/or 2 emissions compared to a 2020 baseline. In practice, this means that a well‑designed CO₂ reduction plan can unlock added fiscal benefits while guiding informed investment decisions.Many of the technical measures resulting from the CO2 reduction plan are eligible under the EIA including CO2 reducing processes. The EIA can be strategically combined with the Environmental Investment Allowance (Milieu Investerings Aftrek; MIA). Examples include investments in green roofs and walls, circular buildings or sustainability certifications. Combining these schemes can help optimize sustainable building investments and enhance overall environmental performance.
Moreover, the EIA can be strategically leveraged in combination with relevant subsidies, to further support Scope 1 and/or 2 emission reductions. Additional sustainability measures — such as the purchase of electric or hydrogen vehicles or net congestion measures such as the installation of a battery system.
Where BDO fits in: From insight to funded implementation
BDO supports organizations in moving from intention to execution. We identify emission sources, assess technical hotspots, and determine the most effective measures for Scope 1 and 2 reductions. These insights are translated into a clear, compliant reduction pathway with baseline calculations, quantified CO₂ impacts, and a substantiated reduction plan.In close collaboration with our subsidy specialists, we assess eligibility, verify reduction thresholds, and support the application process by aligning technical and regulatory documentation. This integrated approach not only delivers a robust and actionable reduction plan, but also ensures that organizations fully capture available tax allowances and subsidies—significantly lowering investment costs, improving returns, and strengthening the financial case for decarbonization from the outset.
