In the EBRD regions, there is a legacy of buildings with poor energy efficiency, and high electricity and heat consumption, as well as the widespread use of fossil fuels for electricity and heat generation. For instance, nearly half of the housing stock in central and eastern European countries was constructed between 1960 and 1990. During this time, new housing construction was primarily pre-fabricated, large-scale, multi-family housing blocks built with little or no consideration of energy efficiency. Furthermore, the use of solid fuels for heating remains common in some cities in the EBRD regions and this has also been a major source of local air pollution.
These environmental challenges are linked to several structural problems and shortcomings. Partly, these challenges are linked to the legacy of low electricity and heat prices and the lack of consumption-based billing, all of which limit incentives to reduce heat consumption or to invest in energy-efficient buildings. They are also partly linked to low administrative and financial capacity in the cities, which hampers the ability to invest in, regulate and promote energy efficiency measures or renewable energy generation at the city level. The financial constraints are often further increased by a lack of creditworthiness and by limited access to financing for local public and private entities in the EBRD regions.
There is an increasing awareness of and a growing effort to achieve an energy-efficient building stock and a decarbonised energy sector following both national and local commitments to the Sustainable Development Goals and the Paris Agreement. Among the policy efforts to reduce GHGs and pollution from urban electricity and heating consumption are (i) ways to encourage investment in energy-efficient buildings, (ii) ways to ensure more energy-conscious consumption patterns, and (iii) ways to decarbonise the provision of heat and electricity.