Can tax credit schemes support energy efficiency measures in residential buildings? A case study for Greece

Alongside subsidies and grants, a standard policy instrument for supporting building energy efficiency upgrades is tax credits. In this study, we assess the case of Greece, which uses both subsidies and tax credits for energy efficiency improvement interventions in residential buildings. We conducted both a socio-economic and a cost–benefit analysis including environmental, multiple benefits, macroeconomic, and private perspectives. Drawing upon data from the Hellenic Statistical Authority including the Households Budget Survey, Eurostat and the Greek National Energy and Climate Plan (NECP), we built a model that evaluates how different tax credits scenarios interact with households’ characteristics. This way, we divided households using a clustering method, based on income, size, and energy use patterns. We explored how clusters and tax credits interact within a baseline, a low macroeconomic return and a high macroeconomic return scenario. The paper concludes that the optimal tax credit rate for middle and high-income households ranges from 40 to 52%, depending on economic and budgetary conditions. We recommend, however, that vulnerable households (below the €1,100 monthly income threshold) receive direct support such as grants, zero-interest loans, or refundable tax credits. This study informs suitable and fair policies adapted to the Greek context and aligned with the building renovation goals set by the Greek NECP.