Households Wince at the Rising Price of Going Green

Clean-energy rules carry new taxes and stiff penalties; in Paris, flunking an efficiency check exacts hefty costs in the property market

By Stacy Meichtry, Bertrand Benoit and Phred Dvorak of The WSJ. Excerpts:

"When postal manager José Belloso put his Paris apartment up for sale this year he was required to have an inspector grade the home for energy efficiency under strict rules designed to fight climate change.

Belloso’s building was built in the early 1900s from millstone, a porous sedimentary rock that was popular among architects of France’s Belle Époque. His apartment flunked the inspection—and under a regulation that came into force this year, the property was barred from the rental market until costly renovations are made. 

Belloso was ultimately forced to knock 50,000 euros, equivalent to $54,000, off his asking price to find a buyer."

"Governments that were among the earliest in the world to adopt climate legislation tried to take the sting out of the transition by motivating consumers with subsidies. Now, however, the same capitals are cash-strapped and many are passing the bill to the consumer. Subsidies are being scaled back, taxes tied to carbon emissions are being phased in, and rules requiring expensive renovations are starting to bite. 

Many consumers, including those who broadly support the energy transition, are unwilling to pay up. Farmers have laid siege to Paris and other European capitals over plans to remove diesel-fuel subsidies. German households have rebelled against requirements to replace polluting gas boilers. In California, homeowners and small businesses seeking to install solar panels are running up against new metering rules that cut by roughly three-quarters the amount of money they can get for selling electricity back into the grid.

Governments lined up a slew of climate measures years ago when interest rates were low and energy supplies seemed abundant. Now those changes are coming into force, and governments are facing a new calculus. Wars in Ukraine and Gaza are forcing Western governments to spend more on defense while grappling with higher energy costs and inflation."

"French President Emmanuel Macron has suggested Europe might require a “regulatory pause”"

"energy-transition fatigue is setting in. Three-quarters of energy consumers say they have already done as much as they can to be sustainable"

"The energy transition is falling “on the shoulders of the low- and mid-income-level people in a disproportionate way,” said Fatih Birol, chief of the Paris-based International Energy Agency"

"Germany, the continent’s economic powerhouse, began to sputter as its energy-hungry manufacturers confronted soaring electricity and gas bills. 

Then Germany’s constitutional court ruled that Berlin couldn’t tap unused funds left in pandemic-era special-purpose vehicles to fund the transition, forcing the government to cut spending by about €60 billion."

"Scores of incentives designed to encourage lower carbon emissions were suddenly doomed."

"France passed climate legislation in 2021 that, as of this year, began barring homes from the rental market if they scored low on energy-efficiency inspections.

Belloso’s apartment wasn’t drafty, so he was surprised when the inspector deemed it a “thermal colander,” an official designation for apartments that don’t retain enough heat. He was docked for having an outdated heating system and windows. What really did him in, however, were the millstone walls.

The only way to insulate his apartment without affecting the building’s historic exterior was to add layers of thick insulation to the interior walls. Belloso, 61 years old, estimated the total renovation would cost him €25,000. Plus, the need for thickened walls would end up cutting into the square-footage of his apartment, further affecting its value. Rather than oversee the renovations himself, he decided to sell the apartment at the reduced price of €220,000."