Almost all Dutch homeowners able to finance climate measures

These findings follow from a study conducted by De Nederlandsche Bank (DNB). 

Making homes more climate-friendly is an important part of the transition to a climate-neutral economy and will also reduce homeowners' energy bills. And there will be less need for the government to take costly measures, such as an energy price cap, to compensate households in the event of another sharp rise in energy prices. The progress of making homes more climate-friendly has increased significantly since the energy crisis but is still too slow to meet the set targets of having 2.5 million insulated homes by 2030. This is why we investigated whether Dutch households still experience an incentive to take measures and reduce energy consumption, and whether homeowners have sufficient financial resources to do so.

More than half of all households have permanently reduced their energy consumption

We asked households about their energy consumption in a survey. More than half say they have permanently reduced their energy consumption since the start of the energy crisis. In 2023 households made significantly more investments in making their homes more climate-friendly than the year before. One-fifth of the homeowners who reduced their energy consumption made a major investment, for example by installing cavity wall insulation. That is an increase of 25% compared to a year earlier.

The vast majority of homeowners can finance climate measures

Access to finance is an important factor in the effort to make homes more climate-friendly. According to estimates based on microdata from Statistics Netherlands, 95% of homeowners can afford the costs of making their homes more climate-friendly (i.e. upgrading home insulation to energy label B and installing an electric heat pump) using either savings or a loan under the maximum borrowing standards while keeping a financial buffer of €10,000. Most homeowners (66%) have sufficient savings to make their homes more climate-friendly. Almost all other homeowners (29%) could take out a loan within the maximum borrowing standards, or (3%) could take out an Energy Savings Loan (EBL) from the National Heat Fund. Even the vast majority of homeowners in the lowest income group (96%) could finance sustainability measures using their savings, a loan under the maximum borrowing standards or the EBL.

In 2023, we estimated, based on 2020 data, that 86% of homeowners could afford to take sustainability measures by using their savings or a loan within the maximum borrowing standards. This figure rose to 95% by 2023. This increase is mainly due to the growth in household savings since the start of the COVID-19 pandemic. Of course, the fact that almost all homeowners can finance sustainability measures does not mean that they do so. After all, many homeowners may want to use some of their savings for other purposes.

Homeowners' financing options to make homes more climate-friendly (2023)
Percentage of Dutch homeowners; gross household income; including the Renewable Energy and Energy Saving Investment Subsidy (ISDE)

This analysis is based on the cost of insulating a home to energy label B and installing an electric heat pump. 

Uncertainty about payback time and unfamiliarity with loan options hinder sustainability efforts

In addition to analysing microdata, we asked homeowners in a survey about their efforts to make their homes more climate-friendly. This shows that homeowners are still financing the investment mainly with their own savings (82%), and only seldom with loans from a bank (7%) or from a government fund (5%), see Figure 2. The low number of loans is probably related in part to the administrative fees associated with taking out a bank loan for sustainability purposes. Such fees do not apply to loans taken out from the National Heat Fund, but this option is also relatively little used, according to our survey. It would seem that few homeowners are familiar with this type of loan.

What is keeping homeowners from investing in climate measures?

Another factor holding homeowners back from investing in making their homes more climate-friendly is cost. Over a quarter of Dutch homeowners who have not taken any climate measures in the past ten years cite the long payback period as the reason, while one-fifth cite high installation costs and almost one-sixth say they are unsure about costs and benefits. Also, the amount homeowners are willing to pay to make their homes more climate-friendly is still remarkably low. At the same time, according to the Dutch Authority for the Financial Markets (AFM), most homeowners who have considered but not implemented climate measures (70%) are not familiar with the opportunities offered by the ISDE or EBL.

Provide homeowners with better information

With almost all homeowners able to finance climate measures, affordability no longer seems to be a major obstacle. Insufficient awareness of favourable loan options and the ISDE, and uncertainty about the payback period play a more important role. Government policies should therefore focus more on providing homeowners with better information. Offering homeowners a single point of information where they can get energy information and advice and apply for various subsidies and loans would be a great improvement.

What if finance and better information provide insufficient incentive?

If progress is not fast enough despite enhanced information provision, the government may consider tightening climate policies for the built environment further. The main policy instruments available to the government are setting norms, setting prices and awarding subsidies. However, energy taxes are already at relatively high levels for energy use by households. Also, many climate subsidies are already available. Furthermore, European rules already oblige homeowners who substantially renovate their homes to take climate measures, such as installing heat pumps or solar panels. The Netherlands currently applies energy labelling norms for office buildings, and similar norms will apply to rented housing from 2030 onwards.

If the progress of climate efforts in the built environment still lags behind the set targets, the government could consider introducing the obligation to make a newly purchased home more climate-friendly. This would involve setting a norm for a home’s minimum energy performance within a certain period after its purchase. A similar climate obligation was previously proposed in the Interdepartmental Policy Study (IBO) on Climate and a recent joint report by ING, ABN AMRO, and Rabobank. When introducing an obligation, consideration must be given to the perspective of homebuyers regarding their course of action – they must be given enough time to make the required investments. The current tight labour market also necessitates this. Lastly, the support currently available in the form of favourable loans and subsidies must remain available to homeowners struggling to afford this type of investment and for investments that are not (yet) profitable.

Also read our previous articles on making homes more climate-friendly

• Target sustainability measures at financially vulnerable households (14 February 2023)
• Encourage homeowners to make their homes more sustainable (8 February 2022)