The Role of Non-Energy Impact Assessment in Boosting Energy Efficiency and Urban Regeneration Projects: The RenOnBill Project and Experiences from Liguria Region

Abstract

Buildings play a significant role in terms of energy consumption and polluting emissions production across Europe and this huge contribution to consumption and environmental impact becomes even more alarming when attention is switched from single buildings to entire urban systems. Although great efforts have been made to support energy efficiency investments, distrust and suspicion are shared attitudes among private investors (and stakeholders in general) towards large-scale implementation of these kinds of projects. Within this framework, on-bill schemes were implemented in the United States more than 30 years ago. In particular, on-bill energy efficiency is a method of financing energy efficiency improvements that uses the utility bill as the repayment vehicle. A detailed analysis of on-bill schemes is currently addressed by the H2020 RenOnBill project, which focuses on these schemes to enhance and support large-scale investments for energy efficiency and deep residential stock renovation. In this study, firstly, the authors focus on assessment methodologies for non-energy benefits of retrofitting projects; then, a case study of the Liguria region (Italy) is examined in depth for its interesting legal framework regarding energy efficiency-led urban regeneration projects. The results deriving from the initial analysis of projects and the case study lead the authors to reiterate that, even today, projects based on energy efficiency usually focus exclusively on energy impacts and that energy performances and urban quality are addressed in separate ways.

1. Introduction

Buildings play a significant role in terms of energy consumption and polluting emissions production across Europe along their entire life-cycle: recent building-related energy consumption data reveal that 37.5% of final energy consumption is due to buildings (primarily for heating and cooling systems and domestic water production), resulting in the production of 843 CO₂ millions of tons for heating and cooling needs (only), despite the growing use of renewable energy [1,2,3].

This huge share in consumption and environmental impact becomes even more alarming when attention is switched from single buildings to entire urban systems: progressive urbanization processes on European and global scales have made this issue extremely concerning; nowadays 80% of European citizens and 50% of the global population live in urban areas and these numbers are predicted to increase constantly, with 75% of the global population being expected to live in urban areas before 2050, according to recent studies [4]. This is only one of several reasons why urban and metropolitan areas are held responsible for 80% of global energy consumption and it is clear that they must be considered the starting point for energy efficiency interventions.

Despite the relevant role of this sector, EU legislation does not define specifical targets, except for the EU Energy Performance in Buildings Directive (EPBD-2010/31/EU)—a prescription that new buildings built from 31 December 2020 on have to be designed to be nearly zero-energy (so-called n-ZEB). Nevertheless, looking at yearly renovation rates of European housing stock, which spans from 0.4–1.2% depending on the country, it must be said that the majority of 2050′s building stock will consist of buildings already in existence [5], so that it appears to be necessary to focus on energy efficiency and renewal interventions on existing buildings, as well as on heating system de-carbonization.

Even if the EU legal framework relating to this topic remains limited, the EU has promoted financial solutions to support energy efficiency projects for decades (e.g., through the promotion of the Energy Performance Contract register or the creation of Smart Finance for Smart Buildings (SFSB) and European Local Energy Assistance (ELENA) initiatives).

Great efforts have been made to support energy efficiency investments; nevertheless, distrust and suspicion are shared attitudes among private investors (and stakeholders in general) towards the large-scale implementation of these kinds of projects: many reasons can be found to justify this common disposition. In primis, Ferrante et al. [6] highlight inadequate strategies and policies sustaining deep renovation processes, in addition to concerns over markets and investment instability. Several studies have found that the main barriers can be represented by high initial investment costs [7] and long periods for returns on investments, along with property fragmentation [8], which hinders the extension of projects and the lack of a clear framework for incentive attribution and decisional toolkits.

Facing this substantial stagnation of energy efficiency initiatives, national and local administrations have promoted specific policies supporting private investments (as direct contributions, tax incentives, etc.), although it is clear that these solutions can only cover limited shares of investments. This is the reason why private sector involvement initiatives have been implemented. Financial institutions’ engagement has in any case faced many obstacles linked with these kinds of investments: project fragmentation, lack of standardization and difficulties in assessing investment impacts and externalities, which are directly connected to risk level evaluation.

Within this framework, on-bill schemes were first introduced in the United States more than 30 years ago. On-bill energy efficiency is a method of financing energy efficiency improvements that uses the utility bill as the repayment vehicle. These schemes can involve different mechanisms depending on the source of financing (the utility can be the investor, as in so-called on-bill financing, or the lender could be a private third party with the utility acting as a repayment intermediary, as in so-called on-bill repayment) as well as property meters and underwriting methodologies.

A detailed analysis of on-bill schemes is currently being carried out by the H2020 RenOnBill project which focuses on these schemes to enhance and support large-scale investments for energy efficiency and deep residential stock renovation. Detailed analyses and the development of business models are underway in three EU countries, namely, Italy, Spain and Lithuania.

Similar barriers and obstacles hinder the large-scale implementation of urban regeneration projects as part of energy efficiency and renovation initiatives for single buildings.

It is clear how the climate change challenge and the need to develop effective and timely adaptation plans for urban areas around Europe represent extremely urgent issues. Given this emergency, it has become crucial to investigate energy and non-energy benefits that can derive from these kinds of interventions to understand whether an on-bill schemes methodology can be extended to urban regeneration projects, too.

The Liguria region (Italy) can furnish a significant case study, since in the last few years (from 2018 on) it has implemented a legal framework for urban regeneration, integrating energy efficiency and polluting emissions reduction targets, through the definition of a complex incentive system to support similar interventions.

Regarding research on this topic reported in the literature, it is apparent that there is a significant lack of studies and projects on this issue: two lines have been mainly followed until now: (1) the implementation of online tools including non-energy benefits in impact assessment procedures and (2) financial mechanisms designed to enhance investment for the upscaling of EE interventions, which usually consider energy benefits uniquely. To overcome this gap, the RenOnBill project aims to define on-bill mechanisms and thus implement a non-energy benefits calculation methodology as well.

To fully understand the consequences of this gap, in the following sections an initial framework for urban regeneration and EE interventions will be provided, which will be later integrated through the investigation of three case studies—two cases of online-tool projects for non-energy impact calculations, which will be considered in order to deepen their methodological approaches, and a third case represented by the RenOnBill project, which combines this feature with the aim of defining financial tools in order to support EE intervention upscaling.

In detail, following the initial recognition of the problem, the authors analyze the state of the art in Italy for urban regeneration and energy efficiency interventions in Section 2, while assessment methodologies for the non-energy benefits of retrofitting projects are specifically focused on in Section 3, in which the three previously mentioned case studies are introduced. In Section 4, the Ligurian case is further discussed and the legal framework regarding energy efficiency-led urban regeneration projects is deepened. Finally, further steps towards a more complex methodological approach intended to promote the upscaling of projects are outlined in Section 5.

2. Urban Regeneration and Energy Efficiency in Italy: The State of the Art

2.1. Urban Regeneration Project Evolution in Italy

Progressive urbanization led initially to the uncontrolled expansion of urban environments: growing neighborhoods were built around urban centers to meet rising house demands without concern for quality standards; frequently, these neighborhoods became plain commuter areas lacking fundamental facilities, characterized by poor architectural features and consequent low comfort levels—the process being commonly referred to as urban sprawl.

Following this expansion period, there was a stagnation of urbanization processes due to the de-industrialization and economic crisis of the main European (and over) cities. Entire production sectors declined (steel-making and heavy industry, in particular) and this held back urban spread, bringing attention to urban voids that were emerging—not ruins and holes such as the ones that followed WWII, but abandoned districts deprived of their original productive functions—witnesses of an outdated development model.

Hence the need to redesign and rethink the functions of urban areas, not simply in terms of architectural renovation or revitalization, but to develop a new approach to their future development—a real regeneration. This new approach to urban interventions differs from previous ones in terms of its operational and functional nature. Roberts and Sykes [9] define urban regeneration as a way to solve urban problems through a mix of strategic and integrated vision and actions that aims to achieve lasting improvements in the economic, physical, social and environmental conditions of selected areas. This kind of urban action is not associated with a specific operational methodology but it is a starting point, an urban problem to be solved, with a target to aim for: a lasting improvement in the economic, physical, social and environmental conditions.

It is clear from the outset that there is a strong connection between urban regeneration projects and the will to shape a sustainable future for cities, starting from critical contexts. As the economic sustainability of regeneration projects declined, fresh perspectives were sought for the 21st century. These included large urban projects aimed at the organization of great international events or the construction of iconic architectures to boost economic development in declining cities.

This first period (in the case of Italy, this can be set as the years following the approval of National Law 179/1992, when the so-called Programmi Complessi—PRU, PRIU, PRUSST—were introduced) left some issues unsolved: this market-oriented approach favored the regeneration of the most appealing districts but hindered interventions in fragile social contexts that generally appeared less attractive for private investment. These kinds of projects often led to gentrification processes that simply moved urban problems to less appealing areas.

Later on, a second generation of projects focused on the socially disadvantaged areas that were marginalized with respect to urban redesign processes because of their poor appeal to investors [10]. These actions aimed at promoting new development models for critical urban areas, thus engaging local communities in rethinking built and un-built, private and public spaces: this involvement was supported by specific instruments, such as Contratti di Quartiere and Living Labs. Generally speaking, these regeneration projects led to fewer iconic initiatives and insead targeted mending urban fabrics and recovering local community connections through the regeneration of individual and collective spaces. Local identity and community represent the key factors in shaping a new future for urban marginalized areas [11].

In the following years, a new urgent issue came to overlap this social involvement approach: the need to face the climate change emergency.

An environmental perspective requires looking at urban areas as the principal actors in energy consumption and polluting emissions production: cities must be the starting point in implementing impact-mitigation strategies and actions to enhance global resilience.

Mitigation and adaptation strategies become necessary to face and hold back the consequences of climate change: these are the cornerstones of the EU’s actions, as we can see from the Sustainable Energy and Climate Action Plan initiative, supported by the Covenant of Mayors. The innovative approach is to match the environmental impact reduction of urban centers with project interventions aimed at improving urban response to the extreme climate events that are becoming more and more frequent because of climate change.

According to these needs, urban regeneration projects have mainstreamed environmental goals and have become echo chambers for energy efficiency interventions on single buildings.

2.2. Enhancing Resilience through the Upscaling of Energy Efficiency Interventions

As previously mentioned, urban expansion generally went together with low construction quality levels, this being dramatically evident when looking at social housing projects. Insufficient attention paid to building technologies and the use of poor-quality materials has led to discomfort issues: damp, moisture problems and inadequate (where not absent) thermal insulation systems.

These are not the only problems affecting individuals living in these buildings. According to the massive urbanization process that took place in Europe after WWII and reached a peak in the 1980s and 1990s, the main share of the current housing stock is made up of these kinds of buildings. Looking at the building stock renovation rate in Europe (which is very small compared to other Western contexts, particularly the USA), it is reasonable to say that this segment will constitute the bulk of urban scenery in the coming decades. In the case of Italy, according to Eurostat data reported in 2016 [5], 19% of local housing stock was built after 1990, with only 10% built after the year 2000.

It was for this reason that energy efficiency interventions on existing building became urgently necessary, as highlighted and estimated by Bianco and Marmori [12].

Nonetheless, the EU legal framework regarding building energy performances firstly focused on new constructions. Article 9 of the EU Energy Performance in Buildings Directive (2010/31/EU)—a document which has been updated many times over the years, the last update having been made in 2021—defined the following requirements: Member States shall ensure: that every new building is nearly zero-energy by the end of 2020 and that new buildings occupied and owned by public authorities built after the end of 2018 are also nearly zero-energy. Member States at the same time should define national plans for increasing the number of nZEBs. These national plans may identify different targets for different categories of buildings. Concerning existing buildings, Member States must define minimum energy performances according to local conditions.

A further focus on the whole of the housing stock can be found in the EPBD 2021 Update [13], where the aim is to define a long-term renovation strategy: each Member State should identify a long-term renovation strategy to support national stock renovation (both residential and non-residential buildings, public and private) to achieve high energy efficiency and decarbonization standards by 2050, thus enhancing cost-effective interventions. In order to address these targets, the EPBD identified several initiatives at the EU and national levels to boost energy efficiency interventions through public funding while enabling and supporting private investments, too, thus promoting the aggregation of projects and reducing the perceived risk of EE operations for investors.

Despite a long debate at the EU and national levels, energy efficiency projects for existing housing stock became essential to reduce the environmental impacts of constructions and several issues remained unsolved.

Speaking of energy efficiency projects, many actions can be considered [14]: from envelope interventions, such as thermal walls insulation and fixtures replacement, to HVAC plant renovations that can be associated with renewable energy systems (photovoltaic, solar heating, etc.).

Depending on the typical features of the buildings that need to be retrofitted and the urban context, according to historical and urban restrictions and obligations [15,16] (which can be very strict and particular, as is characteristic of the historical urban fabrics present in many EU countries, Italy above all), the implementation of these kinds of actions succeeds in achieving higher energy performance levels in terms of consumption, polluting emissions production and internal comfort.

Referring to the EPBD 2021 update, it is necessary to focus on two main issues closely linked with energy efficiency interventions on existing housing stock.

First of all, the EPBD highlights the need to implement financial incentives to overcome market barriers so as to enable private investments and reduce risk perception: this can be read as a way of reacting to the common distrust and to the obstacles hindering EE interventions. The perceived risk that Member States must minimize can be linked to the lack of standardization of these projects, which have to be tailored according to local needs, to difficult impact and benefit assessments, to an inadequate regulatory framework and to project fragmentation.

Subsequently, EPBD pinpoints project aggregation as an effective means of supporting the mobilization of investments. In order to enable investor access as well as offer packaged solutions for potential clients, it is recommended to scale-up EE projects from single buildings to wider complexes.

Similar circumstances have led to the development of the Zero Energy District (ZED) and Positive Energy District (PED) concepts, extending nZEB principles from single buildings to housing complexes to entire urban districts [17]. According to this approach, by using the same technologies aimed at enhancing energy performance, minimizing energy demands and introducing renewable energy systems, larger environmental, economic and social benefits can be achieved, enabling private investment on a wider scale [18].

Acting on a broader scale requires considering project districts not simply as a sum of buildings but as part of an urban fabric, too, extending EE principles to collective spaces, public lighting and mobility, thus including the urban environment as a whole [19].

Energy efficiency projects can represent opportunities to redesign disadvantaged contexts and, starting from energy performance improvements, to amplify project benefits, thus enhancing urban resilience: adaptation measures can follow mitigation interventions on an urban scale [20].

The need to make these kinds of investments frequent and common due to climate change challenges nevertheless requires the identification of clear procedures to assess the benefits deriving from interventions in order to reduce risk perception and favor the standardization of procedures.

3. Assessing Non-Energy Benefits: Case Studies

Scaling up projects from single buildings to urban districts requires changing the ways of defining intervention goals and related impacts and externalities [21].

Considering only energy benefits appears reductive when speaking of single building projects [22], but on a district scale it is not possible not to assess non-energy benefits: economical, environmental and social impacts on local communities represent the real nature of these initiatives and cannot be ignored [23].

Several studies have focused on methodologies for assessing energy benefits [24,25], while non-energy benefits deriving from deep retrofit interventions are generally less frequent.

A literature review has revealed that many methodologies have been implemented to assess non-energy benefits (NEBs) and impacts (NEIs—this concept has been introduced to make it explicit that there can be negative externalities, too, deriving from EE interventions). Currently, two main research lines have been followed: the development of specific frameworks aimed at monetary quantification of NEBs [26] and the definition of assessment methodologies where qualitative considerations prevail, in order to weigh different impacts in a relative way [27].

Following the first approach could help investors reduce risk perception and uncertainties, while the second could help policymakers, program implementers, utility companies, property owners and residents assess further EE interventions [28,29].

Nevertheless, when financial mechanisms to support the upscaling of EE interventions are implemented, they have usually been developed from the narrow assessment of energy benefits. The RenOnBill project aims to include non-energy benefits, too, in defining on-bill schemes in order to overcome this critical gap and adopt a more extensive impact evaluation approach.

To deepen knowledge about different approaches to NEI assessment methodologies, two case studies (briefly introduced in

Table 1. Case studies description. Source: authors’ elaboration.

Project	Description
C40 Global Network—Benefits of deep retrofits	A calculation tool is developed to assess several non-energy benefits of deep retrofit interventions, defining different approaches according to building use and functions (residential, offices, schools). In particular, some issues are targeted: GHG emissions, job creation, NPV, energy poverty, cold mortality and mould asthma. Three case studies are presented (New York, Milan and Copenhagen).
COMBI Project (Calculating and Operationalising the Multiple Benefits of Energy Efficiency in Europe)	An online assessment tool is implemented to evaluate multiple benefits of energy efficiency in order to quantify and monetize non-energy benefits, leading to the elaboration of a cost–benefit analysis. According to the selected country and to the features of EE interventions, more than 35 impacts are considered and assessed. The investigated fields are human health; ecosystems; polluting emissions; material footprints/resources impact; energy cost saving/available income effect; productivity; gross employment/GDP; public budgets; energy security and energy systems.
RenOnBill Project	The RenOnBill project includes the development of an energy renovation tool for the valuation of energy efficiency investments. This tool represents a particularly innovative element since it approaches the estimation of energy savings and financial profitability with a probabilistic approach that enables assessment of non-energy benefits, too. The considered methodology uses a scoring system to quantify the willingness to pay back investments in energy renovations.

) will later be investigated, while the third sub-section will focus on the RenOnBill experience.

Under the following sub-headings, project features and characteristics will be described and examined in depth.

3.1. C40 Global Network—Benefits of Deep Retrofits

An interesting example is the work of the C40 Global Network [30] on EE project benefits, where further considerations are made about data availability and single benefits according to different functions of the building.

Energy and carbon savings are included as typical parameters to assess mitigation interventions; as far as these benefits are concerned, calculation methodologies and data collection are quite consolidated.

Looking at non-energy benefits, referring to economic, environmental and social impacts, several parameters are considered:

• New jobs: This benefit can be calculated by applying multipliers to the overall capital investments made for the retrofit. Multipliers are available for both direct, indirect and induced jobs. Overall job creation ranges between 13 and 28 jobs per EUR 1 million invested;
• Asset value: This parameter represents sale and rent premiums associated with energy-efficient buildings. In some cases, a cost premium has been linked to an increase in energy label;
• GVA: The literature has shown relationships that support estimates of increases in GDP per million invested or per number of jobs created. In addition, fiscal multipliers are identified that show the relationship between GDP increase and increase in public budget;
• NPV: Operational and maintenance cost savings can be calculated based on energy savings as well as components such as lifetime and replacement needs. Productivity gains can be included in net present value calculations based on staff costs;
• Energy poverty: The reduction in the number of households in energy poverty conditions can be estimated using data on energy savings, fuel costs and household incomes;
• Health conditions, in terms of:

  (a)

  Thermal comfort: Risk multipliers linking decrease in indoor temperature to increase in mortality due to cardiovascular diseases;

  (b)

  Indoor Air Quality: The literature review identified asthma as a risk factor in mouldy and damp houses. A relationship is identified linking mould and dampness improvements after the retrofit to reductions in the incidence of asthma;

  (c)

  Noise: Epidemiological relationships linking noise levels and population exposure to CVD morbidity;

• Productivity: The literature showed productivity increases for various improvements of building environment characteristics;
• Outdoor Air Quality: When large portions of the building stock are retrofitted, paying particular attention to heating systems, outdoor air quality improves, and calculating methodologies have already been implemented.

These kinds of benefits can assume greater or lesser relevance according to building functions (as

Table 2. Benefits of deep retrofits according to different uses. Source: C40 Global Network.

	Residential	Offices	Schools
GHG	X	X	X
Jobs	X	X	X
NPV *	X	X	X
Energy Poverty	X
Cold Mortality	X
Mould Asthma	X

* Including operational and maintenance cost reduction and productivity scenarios.

briefly shows), e.g., residential constructions, offices or schools, so that impacts can be prioritised.

It is clear that, unlike energy benefits, which are generally quantifiable and measurable, assessing non-energy impacts can be more complicated in terms of externalities calculation and data availability.

The present study, moreover, defines an operative tool leading from data collection to NEB evaluation for three different pilot cases: New York, Milan and Copenhagen.

Necessary data were collected for each case by means of the following scheme:

• City context: city name, country, currency, currency symbol and year that the project started.
• Demographic data: city population data. If available, collect data for population by gender and age.
• Action data: Define your action: building typology, number of buildings/households retrofitted, population in retrofitted buildings, average number of people per building/household, floor area of retrofitted buildings (heated), time horizon for energy savings, time lag between investment and operation start, capital investment. Select the retrofit components of your action by selecting Yes or No for each retrofit category (i.e., envelope, glazing, HVAC, lighting, controls) or specify it if the retrofit component is not listed.
• Fuel consumption data: Collect data on fuel consumption pre- and post-action and define the performance gap and rebound effect (i.e., use default values or input local energy savings reduction factors).
• Fuel data: If future fuel data are not available, prices may be assumed to be constant over time or proxy data may be used, provided that the assumptions are transparently communicated when discussing outcomes. Input current and future fuel prices (i.e., natural gas, electricity, biomass, coal, oil prices) and input GHG emission factors (i.e., natural gas, electricity, biomass, coal, oil).
• Jobs data: Collect jobs multipliers to calculate total full-time equivalent (FTE) jobs created per million invested (i.e., lower, median and upper bound values) and define the proportion of direct, indirect and induced jobs created for your city.
• NPV set-up data: Identify the project discount rates and carry out a sensitivity analysis, testing at least two different scenarios. According to the European Union Cost Optimal Regulation (2012), the analyzed discount rate should be 3%. Define your economic framework (i.e., if the city will use ESCO companies to finance the programme, define the ESCO duration, the percentage of capital investment covered by ESCO, the percentage of savings going to ESCO, the percentage passed on to the consumer, the percentage of savings going to the owner) and define whether the programme will have an impact on building lifetime extension (i.e., define the value of one extra year of building lifetime and the increase in building lifetime due to the retrofit). The NPV calculation follows the typical financial formula used to evaluate the difference between the present monetary value of the project and future cash flows.
• Retrofit economic incentives: Define whether the programme is benefitting from any capital (i.e., define whether the city is benefitting from grants and whether the grant is determined as a percentage of CAPEX or a specific value and express it accordingly) or operational incentives (i.e., define incentive value and incentive duration).
• Maintenance data: In a simplified scenario, collect current maintenance costs and maintenance cost reduction post-action. In a detailed scenario, for each retrofit category, collect frequency of maintenance data pre- and post-action and the average maintenance cost of one building/household.
• Productivity data (office and school only): Define the total productivity increase (as a percentage) and the productivity value (i.e., staff cost expressed per year).
• Income distribution data (residential only): Define the income distribution for the retrofitted building’s population (i.e., the number of households in the lower and upper income bounds).
• Cold temperature-mortality input data (residential only): Collect temperature data (i.e., expected indoor average temperature increase due to the action); collect health data (i.e., baseline mortality rate and mortality by age and gender); and define the local cold temperature-mortality multiplier.
• Mould/damp–asthma input data (residential only): Based on a survey of the city or assumptions, define mould and damp data (i.e., the percentage of the population living in mouldy homes within retrofitted buildings and the effectiveness of retrofits to reduce mould/damp); collect asthma prevalence rate and define the relation between prevalence of asthma and the presence of mould/dampness (i.e., mould/damp–asthma risk ration).

Once city data had been collected according to the above scheme, specifical multipliers were applied to define connections between outputs (EE intervention), outcomes (increased energy efficiency) and impacts (GHG emissions reduction, etc.). In particular, the following multipliers were introduced:

• Job multipliers;
• Cold mortality multipliers; and
• Mould–asthma risk ratios.

The multiplier application followed the following flow chart (see Figure 1, Figure 2, Figure 3, Figure 4, Figure 5 and Figure 6) in order to lead to NEI quantification.

Eventually this process led to the assessment of NEI for three EE interventions in the three pilot contexts:

• New York focused on 23 public schools with particularly high emissions where the following retrofitting interventions have been implemented: glazing, insulation, HVAC, lighting, controls, solar PV and building management systems. In

  Table 3. NEI for New York EE intervention on public schools. Source: C40.

  Category	Benefit	Pre-Retrofit	Post-Retrofit	%Change
  GHG Emissions	Kg CO2eq per year	24,638,257	14,166,998	42.50%
  	Kg CO2eq over project lifetime	739,147,710	425,009,940	42.50%
  Job Creation	Total jobs	-	1334	-
  Energy Cost Savings (USD)	Owner costs (per annum)	7,659,495	4,404,210	42.50%
  Additional Cost Savings (USD)	Total maintenance cost savings	750,000	675,000	10.00%
  	Improved workers performance	-	8,625,000	-
  NPV (USD)	3% discount rate	-	21,661,673	-

  one can find a single benefits quantification.
• Milan sought to model the benefits of retrofitting five multi-family residential buildings. The five residential buildings are predominantly privately owned and are historic in nature. The planned energy retrofits vary per buildings but include improvements to the building envelopes, glazing, HVAC, lighting, energy controls and PV panels. A benefits quantification is presented in

  Table 4. NEI for Milan EE intervention on residential buildings. Source: C40.

  Category	Benefit	Pre-Retrofit	Post-Retrofit	%Change
  GHG Emissions	Kg CO2eq per year	1,397,898	920,232	34.17%
  	Kg CO2eq over project lifetime	41,936,932	27,606,957	34.17%
  Job Creation	Total	-	59	-
  Energy Cost Savings (Euro)	Consumer costs per household (per annum)	382,512	291,643	23.76%
  Additional Cost Savings (Euro)	Total maintenance cost savings	246,949	172,864	30.00%
  NPV (Euro)	3% discount rate	-	594,542	-
  Energy Poverty	No. of households	-	3	-
  Cold Mortality	Premature deaths	-	0.0003	-
  CVD	People affected by asthma	-	0.78	-

  .
• For the pilot study, Copenhagen focused on the deep energy retrofitting of five schools among 80 city-run schools. The planned energy retrofit includes improvements to the building envelopes, glazing, HVAC and lighting.

  Table 5. NEI for Copenhagen EE intervention on city-run schools. Source: C40.

  Category	Benefit	Pre-Retrofit	Post-Retrofit	%Change
  GHG Emissions	Kg CO2eq per year	855,332	696,233	18.60%
  	Kg CO2eq over project lifetime	42,766,600	34,811,650	18.60%
  Job Opportunities	Total	-	34	-
  Energy Cost Savings (DKK)	Consumer costs per household (per annum)	5,577,234	4,514,570	19.05%
  Additional Cost Savings (DKK)	Total maintenance cost savings	-	6,148,560	-
  NPV (DKK)	3% discount rate	-	141,384,044	-

  shows a benefits quantification in terms of GHG emissions, job opportunities, energy and additional cost savings and NPV.

Identifying and assessing these benefits could represent an effective way to reduce the degree of uncertainty (closely linked to perceived risk for potential investors) that hinders extended energy efficiency project implementation.

3.2. COMBI Project: Calculating and Operationalising the Multiple Benefits of Energy Efficiency in Europe

Another interesting approach is the one at the basis of the COMBI Project online tool. This EU project aims at “Calculating and Operationalising the Multiple Benefits of Energy Efficiency” in Europe and has led to the implementation of a specific tool whereby non-energy impacts are assessed and monetized (when possible) in order to develop cost–benefit analyses of EE interventions [31].

Evaluations can be made through the definition of impacts to be considered and countries where the EE interventions take place.

More than 35 impacts are considered, classified into the following categories:

• Human health;
• Ecosystems (acidification, eutrophication, ozone exposure, crop loss);
• Air pollution emissions;
• Avoided GHG emissions;
• Material footprint/resources impact;
• Energy cost savings/available income effect;
• Productivity;
• Gross employment/GDP;
• Public budget;
• Energy security;
• Energy system: value of lost load.

Starting from impact definition, the COMBI methodology follows several steps (which are summed up in the flow chart in Figure 7):

• Identify the impacts and root causes of the impacts explicitly;
• Identify the causal effects of an impact, i.e., whether the impact results in another impact;
• Choose significant end-points;
• Quantify incremental impacts in physical units;
• Monetize physical values;
• Aggregate impacts;
• Incorporate the monetized value in a decision-making analysis, such as a cost–benefit analysis (CBA) and/or a marginal abatement cost curve (MCA)

When impacts are selected (which can be assessed physically or else monetized), a reference country must be inserted and the typology of the EE intervention must be defined (see Figure 8).

Successively, by following the flow chart, impacts are evaluated and graphical and numerical data can be downloaded and lead to a further cost–benefit analysis (see Figure 9 and Figure 10). In doing this here, it was possible to monetize more than half of all sub-indicators were possible to monetize, but not all monetized impacts could automatically be included in a cost–benefit analysis (CBA) because of the possibility of overlap. The COMBI Project, as explicitly stated on the website, follows the impact pathway approach developed by the ExternE project to identify possibly overlaps. Where the research team identified some, impacts were excluded from the CBA: this probably led to an underestimation of total impacts.

Selected NEIs are quantified through the use of models and scenarios developed specially for the purpose or derived from international studies and institutions, as follows in

Table 6. Considered NEI within COMBI Project.

Sector	Impact Indicators
Air Pollution	Human health
	Eco-system acidification
	Eco-system eutrophication
	Air pollution: emissions
Resource	Material footprint (sum of fossil fuels, minerals, biotics, unused extraction)
	Life cycle-wide fossil fuel consumption
	Minerals
	Biotic raw materials
	Unused extraction
	Direct carbon emissions
	Carbon footprint (GWP, life-cycle emissions, including direct emissions)
Social Welfare	Excess winter mortality attributable to inadequate housing
	Indoor dampness/asthma
	Active days (impact through health—asthma, allergy, cardiovascular diseases, cold and flu, traffic time saved)
	Workforce performance
Macro-Economic Impacts	Temporary (business-cycle) aggregate demand
	Temporary (business-cycle) employment
	Temporary (business-cycle) budget effect
	Fossil fuel price effects
	ETS price effect
	Terms of trade effect
	Sectoral shifts
Energy Security	Energy intensity
	Import dependency
	Aggregated energy security
	Avoided electric power output and investment costs
	Derated reserve capacity rate

:

The recognition of these two methodologies allows us to understand how the NEI assessment framework can vary according to the considered impacts and to the selected models and scenarios, so that eventually cost–benefit analysis represents a useful, though not univocal, instrument to support investors’ choices.

To balance this complex framework regarding NEI-assessing methodologies and to overcome general distrust towards EE interventions and enable deep retrofits on a district scale, many financial instruments and mechanisms have gradually been introduced:

• Subsidies and grants;
• Energy performance contracting (EPC);
• Energy services agreements;
• National/municipal loan programmes;
• Energy utility obligations;
• Mortgage-backed financing;
• Preferential taxes or mortgage rates;
• Utility on-bill financing, such as PAYS (pay as you save);
• Revolving guarantee funds;
• Green banks and climate funds.

Several EU Projects, some of which are listed in Figure 10, aim at defining advantageous conditions for EE interventions investments and thus decline proposals according to local contexts and stakeholder involvement.

3.3. The RenOnBill Project

In this direction, an interesting reference is the RenOnBill Project. The objective of the RenOnBill project is the development of energy renovation projects by leveraging on-bill schemes. On-bill schemes are a method of financing energy renovation investments in buildings based on the utilization of the utility bills as repayment vehicles. This method has been in place in the USA for more than 30 years and has supported the implementation of many renovation projects.

A pivotal role in the implementation of on-bill schemes is taken by the energy utilities that are the originators of the schemes and manage their implementation. Utilities are the aggregators of many small investments by their clients and this allows the avoidance of the fragmentation which usually characterizes energy efficiency investment.

According to the on-bill scheme, utilities, with the possible cooperation of financial institutions, provide the upfront capital for the renovation, which is, in turn, repaid by clients through energy bills in a specific amount of time. More details can be found in Bianco and Sonvilla [7] and Bianco et al. [27].

The RenOnBill project also included the development of an energy renovation tool for the valuation of energy efficiency investments. The tool is innovative since it approaches the estimation of energy savings and financial profitability with a probabilistic approach, as illustrated in Abd Alla et al. [32]. Furthermore, the tool also allows quantification of the non-energy benefits linked to an energy renovation. For this, a quali-quantitative methodology is implemented, as suggested by Popescu et al. [33]. The considered methodology uses a scoring method to quantify the willingness to pay back investments in energy renovations. The following equation is applied:

$$\mathrm{\Delta }\mathrm{V}=\mathsf{\alpha }·\mathrm{I}$$

(1)

where ΔV is the increase in value before, after and throughout the renovation period; α is a weighting coefficient; and I is the investment cost of the renovation.

To apply Equation (1), it is necessary to estimate α. A procedure based on the answer to a set of statements, representative of an evaluative dimension, as shown in

Table 7. Statements for determining the market coefficient α.

Statements
Energy expenses represent an important part of household income.
The market reflects higher prices for energy-efficient buildings.
Energy is promoted by mass media and in legislation.
Energy prices increase fast.
Penalties/restrictions (e.g., higher tax rates) are applied for non-energy-efficient properties.
The considered property achieves the Passive House standard.
The increase in comfort is related to the energy efficiency of the property.

, is defined and, according to the level of agreement, between 0 and 100%, a rate is assigned to each statement. Then, all rates are averaged, different weights for the statements being possible, and the weighted average gives the value of α, between 0% and 100%, namely, the amount of the investment cost to be reflected in the increased value of the renovated dwelling.

4. Focus on the Ligurian Case

Following the recognition of the state of the art in terms of urban regeneration and EE intervention projects and the literature review, as well as the main works in terms of NEI calculation methodologies, to deepen connections between urban regeneration and energy efficiency interventions, as well as instruments and mechanisms to sustain large-scale project implementation, it can be useful to consider the Liguria region as a case-study.

The Ligurian regulatory reference on urban regeneration is Regional Law 23/2018. This quite recent law has delivered an original way to approach regeneration projects.

First of all, accordingly to general definitions previously introduced [9], urban regeneration is defined as an integrated and complex project methodology that aims at environmental, landscape, architectural and social quality improvement for urban fabrics as well as an alternative strategy to soil consumption for disadvantaged urban areas.

Disadvantaged urban areas can be defined by a lack of essential urban facilities and from the presence of abandoned or outdated buildings (for structural, technological, energy or functional reasons). Urban districts can be affected by economic and social marginality or environmental issues.

Referring to eligible interventions and the main targets that must be achieved, three key points emerge:

• The realisation of new green and permeable areas;
• Hydraulic, hydrogeological risk reduction, as well as vulnerability mitigation (concerning seismic risk, too);
• The use of sustainable technologies to build energy-efficient constructions (for example, cogeneration plants are recommended).

Ligurian Regional Law looks at urban regeneration as a primary tool to implement mitigation and adaptation strategies for urban areas to face climate change in order to minimize the environmental impacts of urban housing stock (in terms of energy consumption and consequent polluting emissions production) as well as to enhance local resilience.

Urban-scale interventions can be seen as a way to “amplify” energy efficiency benefits for single buildings, not only through extension to a larger number of constructions, but through the realisation of complementary actions in the local urban context.

The implementation of specific actions in the urban context can be remarkable, looking at non-energy benefits. While energy benefit extension can be seen as the simple sum of single intervention outputs, among which actions on a broader scale (mobility, public lighting, etc.) are not included, on an economic, social and environmental level, scaling-up impacts can boost new development models.

It is easy to understand how non-energy benefits can lead to new jobs creation, increasing asset values and GVA and boosting productivity. Air quality and thermal comfort improvement can vary substantially depending on the scale of intervention, whether it be on a single building or extended to an entire urban district.

Moreover, Ligurian regional law on urban regeneration has introduced a comprehensive system of financial and economic incentives to support project implementation. This kind of solution can be extremely important when facing those issues and obstacles that hinder urban regeneration initiative scaling-up and EE interventions due to the above-mentioned criticalities.

Incentive initiatives can be shaped differently:

• Regional strategic funds provision can be made to financially support enterprises and infrastructural investments; alternatively,
• Construction-related tax reductions or exemptions (referring to building permission contributions) may be granted.

Following the allocation of national public funds for urban regeneration projects and energy transition by National Law 145/2018 (Bilancio di previsione dello Stato per l’anno finanziario 2019 e bilancio pluriennale per il triennio 2019–2021) and later on for urban regeneration projects to face social marginalisation issues and enhance urban fabric quality by National Law 160/2019 (Bilancio di previsione dello Stato per l’anno finanziario 2020 e bilancio pluriennale per il triennio 2020–2022), the Liguria region instituted a specific regional commission to define an Urban Regeneration Regional Strategy that led to the creation of an Urban Regeneration Regional Program (PRRU) [34] and the related Interventions Plan to define the projects eligible for public funding.

A new procedure was introduced to select and finance regional regeneration projects:

• Municipalities (one or more of them), provinces and metropolitan areas can apply for the inclusion of their respective regeneration districts in the Urban Regeneration Regional Program (PRUU), which is updated yearly;
• Once the regeneration districts are included in the PRRU list, municipalities (one of more of them) can apply for their further inclusion in the Interventions Plan (ex lege 145/2018) to obtain public funding.

Each municipality can have one project financed (two projects if more municipalities are involved) with amounts up to EUR 200,000 for smaller urban areas (less than 10,000 inhabitants) and up to EUR 300,000 for larger communities (over 10,000 inhabitants).

Public funding can be provided by:

• National Law 145/2018 Funds;
• Regional Strategical Funds;
• Recovery Plan resources;
• EU 2021–2027 resources;
• Other national and EU funds.

5. Discussion and Conclusions

As previously illustrated, energy retrofitting and urban regeneration interventions are key challenges for European urban environments in order to make cities more resilient, sustainable and smart. These challenges are closely linked, since energy efficiency can represent one of the main goals when urban districts undergo regeneration processes (PED experiences can point the way towards high standard performances). Nevertheless, only a few projects aim at both achieving better energy performances and higher quality urban and architectural standards in a comprehensive way.

This critical point can be explained by the absence of a clear regulatory framework and the difficulties in implementing these kinds of projects, financially and economically.

Private investments are undoubtedly necessary to promote and sustain energy efficiency and urban regeneration projects, but it is clear as well that such actions can be seen as too risky and uncertain to attract the resources that are needed.

The energy efficiency sector has tried to overcome this financial hurdle through on-bill schemes directly involving utilities and financial institutions and ensuring their return on investments by using utility bills as the repayment vehicle.

Given all of this, the Liguria region (Italy) can represent an interesting case study regarding the extension of these kinds of mechanisms to urban regeneration interventions. The local regulatory scheme represents, in fact, an already favourable framework, according to which urban regeneration projects are defined as privileged opportunities to implement environmental impact-mitigation actions.

As previously described, Ligurian Regional Law 23/2018 on Urban Regeneration took a further step: a new comprehensive system of financial and economic incentives was set up to support project implementation. These incentives could reduce the need for high initial investments that often hampers private investor intervention but also the possibility of public administrations supporting costly regeneration projects. In the context of retrofitting-led regeneration projects, it would be particularly interesting to involve utilities inside this incentive framework in order to implement further on-bill solutions in order to reduce high risk perception along the entire pay-back period. For example, beside energy utilities, water or municipal waste utilities could also be involved through on-bill schemes to contribute to urban regeneration projects. An example could be the introduction of water-saving measures, i.e., there can be an exact parallel with EE.

This could represent a significant advantage for utilities, thus requiring a play-maker role for public administrations. This mechanism could, in fact, be implemented through substantial public involvement; nevertheless, this engagement can be reached through different solutions:

-

Enabler: A public administration acts to ensure that supply and demand is met in order to define and support effective and sustainable projects. Calls for tenders could be implemented in two steps to gradually design intervention criteria and features;

-

Repayment Forerunner: In this case, a public administration acts as a temporary debt-solver in place of private stakeholders during the initial repayment period. This solution requires a direct financial effort on the part of the public administration, temporarily though, and could represent a more advantageous and appealing alternative for private stakeholders who benefit from lighter taxation and incentives to sustain energy efficiency interventions and, moreover, on-bill reductions after the retrofitting is complete.

The direct involvement of public administrations does not have to be seen as a further burden for public sectors aimed at easing private initiative. Regeneration projects being necessary for local administrations to fight urban decay and improve urban resilience towards climate change, on-bill schemes could be an effective solution to implement extended regeneration projects thanks to the direct link with energy efficiency retrofitting, which is clearly marked, even at a regulatory level, in the Ligurian context.

Regeneration projects are usually difficult to realize on a broader scale because of their “extensive” value; their effects and externalities require complex, qualitative assessment, while quantitative evaluations usually fail to estimate social and environmental contributions in terms of inclusion, accessibility, liveability and resilience.

The possibility of quantifying the energy and non-energy benefits of retrofitting-associated interventions could allow this critical obstacle to be overcome and the development of an integrated approach for sharing risk and the cost of investments, thus giving public administrations an effective tool to recover critical urban areas and rethink a more sustainable, resilient and contemporary urban space.

The main challenges are related to non-energy impact estimation, as few experiences have been implemented in this direction (C40, COMBI and RenOnBill Projects represent exceptions among energy efficiency-led projects, which usually focus uniquely on energy impacts) and online tool algorithms are not openly shared, thus hampering the possibility of identifying homogenous procedures.

Consequently, several approaches have been implemented that focus, for example, on building functions—the C40 Project considers different impacts for residential buildings, schools and offices—or sectors and intervention typology, the COMBI Project defining multiple assessment algorithms according to single actions on a country basis.

Another hurdle is represented by financial mechanisms for project implementation and the RenOnBill Project tries to make important contributions in this regard in order to make projects sustainable and more appealing from investors’ and owners’ points of view.

Finally, a clear gap must be filled in terms of research and project studies in order to match non-energy impact estimation and financial mechanism implementation, since these represent complementary upscaling challenges in EE intervention.

Currently, these two issues are addressed in a separate way: online tools are implemented to include NEIs in impact assessment procedures and economic and financial instruments are developed to boost EE interventions on a larger scale, on the basis of energy benefit calculations only. Even EU initiatives, recalling the pivotal importance of including social and environmental benefits in impact calculations, usually operatively exclude them.

In the end, it must be clearly said that, for the development of a shared and open framework for extensive impact assessment, it is a necessary pre-condition to support coherent and robust financial procedures that can favour large and significant investments to boost urban regeneration processes.