Action and innovation are needed to achieve the EU climate goal of full, societywide decarbonisation by 2050. The EU is committed to a 55% reduction of greenhouse-gas emissions by 2030.1 The 2022 REPowerEU plan puts increased emphasis on decarbonisation, notably through reducing energy demand and futureproofing European infrastructure. There is significant potential for decarbonisation and energy reductions in the existing European building stock to contribute to all these pressing goals, but new techniques are needed.

To enable innovation in the renovation sector, policymakers at EU, national and local level must collaborate and implement complementary measures. Innovation is particularly required to increase
the rate and depth of renovations, as progress on the ground has been slow despite a flurry of policy
initiatives. Using prefabricated building components produced at an industrial scale (a process known as industrial prefabrication) is one promising solution. Beyond delivering carbon emission savings,
industrial prefabrication has the potential to drive innovation in the construction sector. It prepares
actors across the value chain to integrate digital solutions and optimise the renovation process in
ways that are also useful for traditional renovation and construction solutions.

Nevertheless, the regulatory and incentive framework does not yet enable successful industrialised renovation at scale, and existing policy gaps must be addressed to realise its potential.

Direct action is required to:

• Address regulatory barriers and include guidance in national and regional planning to encourage industrial prefabrication solutions.
• Create conditions to stimulate supply stability by fostering project aggregation.
• Increase digitalisation of the construction sector (e.g., through building information modelling and digital building logbooks).
• Foster trust in industrially prefabricated renovation through energy performance remuneration legislation, energy performance guarantees and quality labels.
• Design tailored financial tools to establish research and development, pilots, and investment support.

European, national and local policy action is needed, as well as involvement from private investors, banks, housing associations and industry. This policy brief presents concrete policy levers for four key themes, and details how EU, national and local policymakers can accelerate the uptake of industrially prefabricated renovation solutions.