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How a revolutionary new renovation scheme will rebuild Italy’s shattered economy

By Pauline Pelous
May 29, 2020

An inspirational new scheme to boost energy-efficient building renovation in Italy should be replicated across Europe to help other countries rebuild their post-pandemic economies, says Knauf Insulation.

The Italian ‘Super Ecobonus’ scheme effectively pays homeowners to make their house or apartment more energy efficient by funding 110% of renovation costs.

The scheme covers the funding of wall and roof insulation and its installation; the installation of energy-efficient heating and cooling systems; structural improvements to make buildings more earthquake-resilient and for photovoltaic systems with storage systems and electric car charging points.

The government provides a fiscal credit for 110% of the cost of the work which can be either deducted against taxes directly by homeowners, transferred to a bank and exchanged for the required finance or transferred to a construction company that carries out the renovation and either claims the tax benefit for itself or transfers the credit to a bank.1

Scheme expected to create 100,000 jobs

Knauf Insulation’s Managing Director for Italy, Paolo Curati, said: “The Ecobonus scheme provides the ambitious vision that Italy desperately needs to tackle the economic devastation that has been caused by COVID-19 and it should be a model for other countries.

The provision of 110% as a fiscal credit is a bold and exciting incentive that instantly gives everyone in the country a unique and unmissable opportunity to improve their home for free.
Paolo Curati, Knauf Insulation’s Managing Director for Italy

Economic modelling by ANCE, the Italian Association of Construction Companies, states that the new scheme will generate €6 billion in construction work and leverage total economic benefits of €21 billion across Italy, create 100,000 new jobs in the process and improve living conditions for millions while putting energy savings back in their pockets.

“Many buildings in Italy were built before 1976, before any energy laws were passed and can be uncomfortable in summer and winter as well as being expensive to heat or cool,” says Paolo.

“Of course, homeowners wanted to improve their house or apartment but finding the money to pay for this was always a challenge. This is no longer the case. For homeowners this is the opportunity to fully and deeply renovate their property and revalue it on the property market.”

Half of Italy’s workforce lost income in lockdown

This year Italy’s public debt will be almost 160% of GDP and its economy will shrink by a tenth — a cruel blow for a country which is still coming to terms with 230,000 COVID-19 cases and over 33,000 deaths.

When the lockdown began, 11.5 million Italians — or half the official workforce — lost their income and applied for state aid. Now two months later, requests for help from Italy’s largest food bank Banco Alimentare have increased by 40%.

“Many other countries across Europe have been hit hard by the crisis and are now looking for ways to inspire an economic recovery that everyone can believe in. A recovery that will benefit society and those in need as well as create jobs and pump energy savings back into the economy. They could learn a lot from the Italian initiative,” says Paolo.

‘Renovation is a win-win for everyone’

On Wednesday, the European Commission unveiled its ‘Next Generation EU’ proposal for Europe’s economic recovery backed by €1.85 trillion of “financial firepower”. European Commission President Ursula von der Leyen said the recovery plan transformed the immense challenges facing Member States into an opportunity “not only supporting the recovery by also by investing in our future”. 

Key to this recovery strategy is the ‘European Green Deal’ which aims to transform Europe into the first zero carbon continent by 2050 and highlights the importance of “a massive renovation wave of our buildings and infrastructure”.

Paolo added: “Renovation must become a pillar of recovery for the rest of Europe. Renovation improves society, the environment and the economy. It is a win-win for everyone.”

How does the Italian Super Ecobonus scheme work?

• The government provides a 110% fiscal incentive to meet the cost of the renovation of a house or apartment covering insulation installation (up to a cost of €60,000), A-class heating and cooling systems (up to €30,000). New windows can also be bought and installed, but only if new heating/cooling systems and insulation are in place first.

• The energy efficiency rating of a building must be improved by two energy classes and audited accordingly with an Energy Performance Certificate by an independent third party to qualify for the funding while products have to be independently-certified as low-environmental impact, for example, using a high percentage of recycled material.

• There are three key ways to gain the 110% incentive. One, receive a credit against taxes paid. For example, over five years on a €100,000 renovation, claim an annual deduction of €22,000. Two, transfer the credit to the bank in return for the cost of the renovation and, three, work with a construction company that claims the credit against their taxes.

• The scheme will run from July 1 this year for 18 months.