Insight, Just Transition
Greece has €4.77 billion to make vulnerable households warmer and more mobile. The evidence says the poorest households in the worst homes will get comfort rather than savings, which is a real benefit and not the one the programme is being funded to deliver.
The European Commission has endorsed Greece's €4.77 billion Social Climate Plan, directed at vulnerable households, transport users and micro-enterprises, covering building efficiency, clean heating and cooling, renewable energy integration and low and zero emission mobility, funded partly from carbon pricing revenues.
This is the just transition moving from principle into several million individual interventions, and it is the largest natural experiment in distributional climate policy that Europe has ever run. It deserves to be evaluated properly, which means being clear in advance about what would count as success.
Counting renovations will not.
Programmes of this kind report what they can count: homes renovated, heat pumps installed, boilers replaced, vehicles subsidised, households reached, euros disbursed. These are outputs. They are auditable, they are honest, and they answer a question about delivery rather than about effect.
The question the fund exists to answer is different. It is whether a vulnerable household is materially better off, and whether it stays better off.
Between those two things sits a chain of conditions, each of which can break without any of the outputs looking wrong.
Access, meaning whether the household can find out about the scheme and qualify for it. Uptake, whether it applies and completes. Affordability, whether it can cover any co-payment and the running costs afterwards. Lived benefit, whether the intervention improves something the household actually experiences. Persistence, whether that survives three years, a tenancy change and a tariff revision. And distribution, whether the households that gained are the ones the fund was designed for.
Every one of those is measurable. None is measured by an installation count.
Amartya Sen's distinction between resources and capabilities is the right instrument here, and it is not a philosophical flourish.
A heat pump is a resource. What matters is whether the household can convert that resource into a functioning, which in this case is a warm home it can afford to keep warm. Sen's conversion factors are the things that determine the exchange rate between the two, and they vary enormously across exactly the population this fund targets.
Income. A heat pump running on electricity priced above the gas or oil it replaced converts poorly for a household that cannot absorb a higher standing charge, whatever the efficiency gain.
Tenure. A tenant cannot authorise the work, may not benefit from it, and may not be there in three years.
Building fabric. An efficient heat source in an uninsulated building converts badly, and the sequencing of fabric before plant is the most common technical failure in retrofit programmes.
Skill and information. Heat pumps are unforgiving of the operating habits people learned from gas boilers, and a system run on the wrong control strategy can cost more than what it replaced.
Household composition and health. An elderly household at home all day has a completely different conversion function from a working household out for ten hours.
The programme distributes resources. The evaluation should measure functionings. Almost none of them do, and the gap between the two is where the money goes.
There is a specific, empirically established phenomenon that will affect this programme more than any other, and it is not widely enough known outside building physics.
Sunikka-Blank and Galvin analysed 3,400 German homes, comparing calculated energy performance ratings against actual measured consumption. They found that occupants consumed on average 30 per cent less heating energy than the calculated rating predicted, and named this the prebound effect. Crucially, the gap widens as the rating worsens: a dwelling rated at 300 kilowatt hours per square metre per year was likely to be consuming around 40 per cent below its calculated value, with the gap reaching roughly 60 per cent at the worst ratings.
The reason is not mysterious. People in cold, leaky homes do not heat them to twenty one degrees. They cannot afford to, so they heat one room, or heat for four hours, or wear coats indoors.
The consequence for a retrofit programme is severe and arithmetically unavoidable. A retrofit cannot save energy that was never being consumed. Savings projections built from energy performance ratings systematically overestimate the financial benefit, underestimate payback periods, and do so most for the worst homes, which are occupied by the poorest households, which are precisely the target population of a Social Climate Fund.
What actually happens after such a retrofit is that the household heats the whole house, or heats it all day, and is much warmer. That is a real and substantial welfare gain. It is a health outcome, a dignity outcome and very often a life expectancy outcome.
It is not a bill reduction. And a fund that was justified partly on the grounds of protecting vulnerable households from rising heating costs will have delivered comfort where it promised affordability, and will report a savings figure that was never going to materialise.
There is a structural feature of the Social Climate Fund that evaluation designs tend to treat as background and which is central to whether any household ends up better off.
The fund is financed substantially from carbon pricing revenues, and the extension of emissions trading to buildings and road transport raises the price of heating fuel and motor fuel for the same households the fund is designed to protect. The money being distributed and the cost being imposed reach the same doorstep.
That makes the honest question a net one. Did this household's total position improve, counting the subsidy received, the running cost of whatever was installed, and the increase in the price of the fuel it still buys.
That is a household level incidence question. It cannot be answered from programme records, because programme records contain the transfer and not the cost. It requires knowing what a specific household spends across all fuels, before and after, alongside households that did not participate.
Nobody is currently set up to answer it, and it is the question that will be asked loudly in about four years.
A meaningful share of Greek households rent, and the rental stock is disproportionately older and less efficient. Retrofit programmes interact badly with rented housing in a way that is well documented and consistently under-planned.
The split incentive. The landlord pays for the work, the tenant receives the lower bill. Absent a mechanism, the landlord has no reason to act, so the worst stock is renovated last.
Value capture through rent. Where the landlord does act, the improvement is capitalised into the rent. The tenant may end up paying more in total, with a warmer home and less money, and the programme records a completed renovation.
Tenure churn. A tenant who moves before or shortly after the work receives nothing at all, and the benefit accrues entirely to the owner and the next occupant, who may not be vulnerable.
A programme that measures renovations completed will score all three of these as successes. A programme that measures whether vulnerable households became better off will score two of them as failures, and would have known to design against them.
The instruments that address this exist. Rent stabilisation conditions attached to the subsidy, minimum tenancy guarantees, split benefit contracts, or targeting the subsidy at the tenant rather than the property. Which of them Greece uses will do more to determine distributional outcomes than the technology mix will.
A household level panel, not a programme dataset. Several hundred participating and comparable non-participating households, visited repeatedly across at least three years. Expensive relative to an audit and trivial relative to €4.77 billion.
Total energy spend across all fuels, not the retrofitted one. Households substitute. A saving on heating that becomes a cost on electricity is not a saving.
Comfort and health as reported outcomes in their own right. If warmth is what the programme actually delivers, that should be claimed and measured honestly rather than dressed as a financial saving. Indoor temperature, hours heated, rooms heated, self reported cold, and health service use are all obtainable.
Who did not participate, and why. The distributional question lives entirely in the non-participants. Every subsidy scheme with an application process selects for administrative capability, and the households furthest from the system are the ones the fund names as its priority. This is the discovery function that no results framework requests.
Persistence, at three years and five. Whether the heat pump is still in use and correctly operated, whether the tenant is still there, whether the tariff has moved.
Greece is not doing anything wrong here. It has produced a serious plan and the Commission has endorsed it. The point is that the evaluation architecture is being fixed now, while the plan is being detailed, and the difference between counting installations and measuring household outcomes is a decision taken in the next few months by people writing monitoring frameworks.
The Lab works on this through impact measurement and monitoring and evaluation, and the affordability questions here are recognisably the ones we work on in energy access elsewhere. Whether a household can convert a subsidised technology into a benefit it can sustain is the same question in Athens and in Nairobi, and the measurement of what a payment costs a household transfers directly between them.
If you are designing the monitoring framework for a Social Climate Plan and want it to answer the question that will be asked in 2030, tell us what you need to know.
This is an independent insight piece by Transitions Lab. For the Lab's applied work, see Impact Measurement, Monitoring, Evaluation & Dissemination and Energy Access & Off-Grid Systems. See also Benefits Nobody Looked For on measuring the effects programmes were not designed to detect, What the Bond Secures on the household-side cost of an intervention, and The Municipality Is the Instrument on the small council that a European adaptation scheme has to be delivered through. To discuss a study, see Contact.