Loan Program to Retrofit Buildings: Seoul

Enable consumers to retrofit existing buildings through access to financing

Overview

Seoul implemented a loan program for commercial and residential building retrofits. The scheme offers loans for up to 100% of the cost of eligible energy efficiency measures with preferential terms, at low interest rates repayable over eight years (rates are 0% in 2021, down from 0.9% in 2020). The program is open to building owners and tenants, contractors and energy service companies. Eligible measures include installation of efficient lighting, insulation for windows and walls, energy efficient HVAC and waste heat recovery.

Impact

The Seoul metropolitan government leveraged data effectively to support the building retrofit program. The city analyzed energy consumption patterns of energy-intensive commercial buildings and disclosed this data to enable monitoring of the impact of measures. It also started with a focus on social welfare facilities and schools.

Jobs: Seoul combined a low-cost loan scheme with partnerships across the construction sector, helping to boost local jobs. Partnerships with energy service and construction material suppliers also helped expand opportunities. The program is expected to add 205 new direct jobs by 2026.

Emissions: Energy use was cut 7-10% per year in buildings benefitting from the loans. This helped lower building emissions in the city.

Health: Better-insulated properties can be less prone to moisture, keep residents warmer and reduce noise pollution.

Opportunity

Buildings are often the largest source of emissions in cities due to their high use of energy for power, heating and cooling. Improving them en masse often requires policy support to accelerate their decarbonization. Loan programs can help lower barriers to the rollout of energy efficiency retrofits across residential and commercial buildings, including upfront costs. Efforts to green the building stock should prioritize energy efficiency to lower overall energy demand and be combined with measures to directly cut emissions such as swapping to lower-carbon heat sources.

Source

BloombergNEF and C40 report, Building on Cities to Deliver a Green and Just Recovery