A resilient EU economy must be built on strong local communities

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By Dirk Vansintjan president of the European Federation of Renewable Energy Cooperatives, REScoop.eu.

The article was published here

 

The political and economic measures taken to revive our economy following the Corona crisis need to ensure long-term resilience of the system. Strengthening local communities will be the key to achieving this objective, says Dirk Vansintjan.

Over the coming weeks, EU leaders will be working on a plan to help rebuild the economy after the crisis brought about by the Corona virus. In a meeting among Heads of State last week, European Council President Charles Michel emphasised the need to “come up with a proposal to ensure we are able to cope with this crisis and to ensure the stability of the EU”.

The current situation is putting our society to a vital test: Are we equipped to develop responses to this crisis that will ensure the long-term stability of our societies?

I strongly believe that the answer can be yes. But this can only be the case if we ensure that the measures taken make our economies and societies more resilient in the long term. Whilst it is crucial to develop solutions that will revitalise our economy following this crisis in the short and medium term, we must not lose sight of other existing threats to our economies and our citizens.

Several experts have pointed out over the past weeks that human health and the state of the environment are inextricably linked – be it through the increased exposure to wildlife, or the threat air pollution poses to our health.

Corona crisis aside, we know that climate change is one of the most severe and urgent systemic threats to our global community. Unless we start integrating the environment into our economic decisions, all we are doing is putting a band-aid on the wound without treating the cause – and hence inevitably setting ourselves up for more crises of this sort.

One promising thing that has come out of the current situation is the evidence that it is possible for governments to allocate resources to solve urgent situations, where they were previously stuck in political disagreements. Our leaders must leverage this newly found level of cooperation to tackle issues such as climate change heads-on, so we won’t have to do it in crisis mode.

The measures taken after the economic crisis in 2008 mainly bailed out the big financial institutions without tackling some of the underlying flaws of our economic system, namely consumerism and the environmental destruction that goes with it, wealth concentration, and lack of democratic control at the local level. It left many citizens disempowered at the time, and once again today, those suffering the most from the economic crisis ahead will likely be the small businesses in our neighbourhoods. The solutions proposed today need to safeguard the livelihoods of European citizens.

A new balance between globalisation and the local economy

One very concrete way to move towards such a society will be to strengthen the growth of energy communities in Europe.

By investing in and operating clean energy technologies and measures, energy communities have been known to strengthen the social and economic welfare of their community whilst taking measures to reduce CO2 emissions and preserve the environment. They hence provide an economically sound model that tackles the exact challenges we need to solve to build a sustainable future for ourselves.

Don’t just take my word for it, let the examples speak for themselves:

For Belgium, researchers estimated that the energy transition will require investment between €300 and €400 billion up to 2050. But Belgian citizens together have about €278 billion of sleeping savings in banks, which could be invested locally. Such investment could create between 20,000 and 60,000 jobs, and save the Belgian economy up to €20 billion a year by avoiding the import of gas, oil, coal and uranium.

A German study reveals the return for the local economy and communities is up to 8 times higher if these renewable production facilities are owned by local citizens, local energy communities, and other SME’s. In particular, income from local renewable energy production can provide an indispensable basis to make the necessary investments in energy efficiency in buildings, and empowers citizens to get involved – thus strengthening not only our economy, but also our European democratic model.

In 1988, the small Austrian town Güssing had no significant industry or trade business. It is now thriving thanks to a consequent transition to local renewable resources. Instead of high unemployment, more than 1,000 jobs were created. An annual bill of €6 million for imported fossil fuels was turned into a revenue of €14 million from local renewable energy production.

Leading by example, the municipality reduced its energy expenditure by almost 50% through energy efficiency, and the citizens and businesses followed. Following Güssing’s example, more than 15 regions in Austria are now energy independent with regard to electricity, heating, and/or transportation.

How can the EU help strengthen energy communities?

The potential of local communities has already been recognised by EU leaders in the Clean Energy Package through the concepts of citizen and renewable energy communities.

As the EU works on developing follow-up legislation in the coming years, it must ensure to truly empower local communities. This can be done for instance by facilitating access to larger funding sources such as the EFSI investment tool and other EIB tools (such as ELENA or guarantees).

Citizens across Europe stand ready to contribute to and lead the societal transformation needed in our communities. We urge our elected representatives to make smart and courageous decisions that will enable humanity to move to a truly sustainable, healthy, and resilient way of life.

If we are to build a truly sustainable society for the long term and for future generations, we need to make these changes now. Let’s stay in the cooperative mode. There is no other way.

#StayAtHome and Europe’s housing crisis

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Housing Europe: a position paper: The COVID-19 pandemic exposes the shortcomings of our housing policies

Public, cooperative and social housing providers are mobilising to protect vulnerable people and the local economy in this time of crisis. Strong public support for essential services; housing, health, education, transport from governments and international bodies now more vital than ever.

#StayAtHome, #ZuHauseBleiben, #ResterChezVous, #RestateACasa, #QuédateEnCasa #MenoumeSpiti… the language is not so important, but the message is clear. Citizens around the globe are ordered, requested or recommended to stay at home- depending on the level of the measures taken by each government- contributing thus to the universal effort to flatten the curve of the COVID-19 spread. Confinement and social distancing are considered by most national authorities and by the EU Institutions as an effective way in getting this extraordinary global health crisis under control. Such a decision to implement a lockdown, keeping people at home, surely has multiple consequences but also brings to the  surface, once again, Europe’s housing crisis.

Concretely, #StayAtHome is easier said than done for a very large part of the EU population:

Housing Europe President, Cédric Van Styvendael stresses that:

“Anyone can easily understand that within this housing crisis that Europe has been confronted with for many years now, asking people to stay at home is far from than simple for many of them. We are proud that our sector plays the role of a much-needed safety net during this pandemic, while we also add our voice to international calls to stop evictions anywhere for any reason. More than ever, we are mobilized to make access to decent and affordable housing an essential right. We strongly believe that Europe’s Green Deal must be a social one and must imperatively integrate the challenge of reviving the production of social housing to accompany the unprecedented crisis we are facing.”

The UN Special Rapporteur on Adequate Housing, Leilani Farha urged on March 18th governments around the world not to allow any evictions, anywhere for any reason as “housing is the front line defence against the COVID-19 outbreak”.

COVID-19 and the public, cooperative & social housing sector

Within this new global reality that impacts directly and hits hard the everyday work of public, cooperative and social housing providers, they are the safety net that millions of people around Europe desperately need at the moment. Below, we put together an overview of the actions taken so far to deal with these tough circumstances:

GdW, the Federal Association of Housing and Real Estate Companies, the umbrella organization of the relevant sectors in Germany along with their real estate sector partners issued a joint statement, stressing how coordinated partnerships are now more vital than ever. They have also called together with the Tenants’ Union for the introduction of “Secure housing funds” in times of crisis. Tenants who are not able to pay their rent or part of it due to COVID-19, should be eligible to apply for support on this new online platform that will be set up.

The Italian Cooperative Housing sector proposed exceptional preventative measures to support low income families paying their rent. In this difficult moment Legacoop Abitanti, one of the Italian Associations of Housing Cooperatives, expressed solidarity towards the most affected people and gratitude to those offering their commitment, including the Social Cooperation sector that has been close to the most vulnerable also during this state of emergency.

The Inhabitants Cooperation is playing its role at the service of the members, keeping some essential services and activating new forms of community resilience, which represents a distinctive sign of our history. #IoRestoaCasa (#WeStayAtHome) truly underlines the HOME question, and the need to re-think it. From an economic point of view, Legacoop Abitanti believes that the impact of the COVID-19 crisis will lead to further difficulties for vulnerable families to pay the rent, causing a very negative social effect in the medium term.

Legacoop Abitanti, through its President Rossana Zaccaria, expresses a positive evaluation about the effort of the Italian Decree “Cura Italia”, in order to face the public health emergency and to preserve both families’ and workers’ safety. However, concerning the Home question, the Decree provided measures referring exclusively to the mortgages (Art. 54) and the suspension of evictions until 30 June 2020 (Art 103, Paragraph 6). Legacoop Abitanti, together with the Alliance of Italian Cooperatives – Housing sector, proposes exceptional measures to support low-income tenants who will struggle in paying rents. Concretely, with an amendment to Art. 54 at the “Cura Italia” decree, they propose an increase of 50 million Euros of the existing “Fondo per morosità incolpevole” (Fund for tenants arrears – due to loss of income ) for year 2020: this can be done with a specific additional spending chapter, with an extension of the pool of the beneficiaries, including families renting both social housing and cooperative undivided property dwellings, since these perform a welfare function allowing the access to the renting market. This provision shall be a preventative measure, using the same operating procedures as for the management of the Fund, therefore with the immediate disbursement of the contribution directly to the landlords in order to avoid eviction procedures – a condition provided by the current mechanisms – for a maximum period of 6 months and covering 70% of the total amount of the rent and related costs. Legacoop truly believes that now the containment of the increase of social fragility is necessary, maintaining access to housing as an essential hub of welfare and community resilience.

Community Housing Cymru in Wales published a guide for housing associations coping with Coronavirus (COVID-19), which is continuously updated. From advice on managing availability of supplies to essential services to flexibility in grant & funding processes.

Union Sociale pour l’ Habitat in France issued a statement on the introduction of organizational measures to allow the seamless continuity of the service, announcing to examine the personal situations of tenants and delivery of customized support, likewise rental evictions are postponed. They have also published a Crisis Management Coronavirus Dossier for their members briefing on how to stay informed and communicate and continue support and care activities.

The National Housing Federation in England stressed in their press statement that ‘’No one should lose their home because of coronavirus’’

The Austrian Federation of Limited-Profit Housing Associations (GBV) urges members to follow a full stop on evictions and rent arrears.

Our Swedish cooperative member HSB shared their own coronavirus-related recommendations calling for coordination between housing associations and state responses.

Guidance and advice for the members of the Irish Council for Social Housing (ICSH) includes an extensive list of related resources.

Both in Ireland, according to the ICSH, and in Spain, according to AVS, rents will be adapted automatically based on income.

AVS believes that, now more than ever, having a large stock of public, social, and affordable housing, with professional and specialized providers, will be key to prevent thousands of families from being at risk of losing their homes. AVS sends a message of tranquility to the thousands of families who live for rent in the houses of the public park. Its members are taking measures in favour of tenants who have had a significant reduction in their income, due to the state of emergency in Spain.

In the Netherlands, the Association of Dutch Social Housing Companies, Aedes advised its members (managing more than 1/3 of the total housing stock in the country) to seek solutions for tenants who experience payment difficulties as a result of the corona crisis, to avoid evictions and to allow construction and maintenance activities to continue as much as possible, but only if health is guaranteed.

Macroeconomic responses and the housing dimension

The European Central Bank has announced a €750bn bond-buying programme. The central bank said all the extra asset purchases would be carried out this year and cover both sovereign bonds and corporate debt. This so-called Pandemic Emergency Purchase Programme will last until the coronavirus crisis is judged to be over. For the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks. The Governing Council of the ECB committed to support all citizens of the euro area through this extremely challenging time, ensuring that all sectors of the economy can benefit from supportive financing conditions that enable them to absorb this shock. This applies equally to families, firms, banks and governments.

The European Commission agreed to loosen the State Aid rules, enabling Member States to be more flexible and effective in their support measures. The new Temporary Framework will enable Member States to (i) set up schemes direct grants (or tax advantages) up to €500,000 to a company, (ii) give subsidised State guarantees on bank loans, (iii) enable public and private loans with subsidised interest rates. Finally (iv), the new Temporary Framework will recognise the important role of the banking sector to deal with the economic effects of the COVID-19 outbreak, namely to channel aid to final customers, in particular small and medium-sized enterprises. The Temporary Framework makes clear that such aid is direct aid to the banks’ customers, not to the banks themselves. And it gives guidance on how to minimise any undue residual aid to the banks in line with EU rules.

Finally, the Eurogroup (ministers of the euro area member states) acknowledged in its statement the need for flexibility in the Stability and Growth Pact “to cater for unusual events outside the control of governments”.

This newly introduced flexibility is welcomed but must be extended to essential services such as housing providers whose value to society is clearer than ever at this time of crisis.

Hope for cooperative SMEs: EU Adopts Coronavirus Response Investment Initiative to combat COVID-19

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On the 30th of March, the Coronavirus Response Investment Initiative has been adopted to ease Member States’ economic effort in the fight against COVID-19 outbreak. Cohesion funds can help SMEs, including industrial and service cooperatives.

European citizens are facing an unprecedented situation characterised by loss and suffering due to the outbreak of the new Coronavirus pandemic. While Italy and Spain seem to be the most affected countries in the EU and are facing the dire consequences of healthcare systems saturation and higher number of deaths, all Member States face severe public health distress and threats.

Most Governments have taken steps to limit the citizens’ ability to circulate and work, through social distancing strategies going from recommendations to mandatory self-isolation since the virus is still largely unknown to medical experts and a vaccine remains to be developed.

The economic consequences of this fight to protect public health are critical. For this reason, the European Union adopted two regulations that will allow Member States to quickly release funding from the EU budget for tackling the COVID-19 crisis. One of the acts amends the rules of the structural and investment funds, while the other widens the scope of the EU Solidarity Fund.

The Coronavirus Response Investment Initiative (CRII) will allow Member States to use EUR 37 billion of cohesion money to strengthen healthcare systems, as well as support small and medium-sized enterprises, short-term working schemes, and community-based services.

Funds from CRII can be used by Member States to support working capital of SMEs.

About €8 billion of the total amount will come from unspent 2019 cohesion money. “The new measure allows member states to spend unused money to mitigate the impact of the pandemic instead of returning it to the EU budget. Another €29 billion will be disbursed early from allocations which would have been due later this year”, the Council affirms.

All expenditure will be retroactive as of 1 February 2020 to cover costs already incurred.

The Council also amended the scope of the EU Solidarity Fund to include public health emergencies in addition to natural disasters.