Environmental Tax Policy Review of Romania

Annex B. Detailed case studies in the residential building sector

This annex presents selected case studies from Italy and France in the domain of tax policies targeting GHG emissions and air pollution from energy use in the residential building sector.

Table A B.1. The Ecobonus: A tax deduction scheme for energy efficiency in Italy

Instrument type	Tax credit
Description	The Italian Ecobonus tax benefit recognises expenses for thermo-modernisation of buildings with an income tax deduction to the extent of 50%-85% of expenses incurred for the reduction of energy demand and thermal improvement of the building on units used as main residences.
Legal Statute	Introduced by Law 296/2006, last amended in Official Gazette no. 305 of 31.12.2024
Introduction	In force since 2007
Objective	Energy efficiency upgrades
Policy package	Part of the implementation of Article 7 of the EED and the Italian Integrated National Plan for Energy and Climate
Jurisdiction level	National authority (Italy)
Administrating authority	National authority (Italy)
Beneficiary(ies)	Residential homeowners, including from apartment blocks, companies
Tax incentive: Limit	The tax relief rate changes according to the eligible action considered : - 50% of expenses like for solar shading, biomass boilers - 65% of expenses for Class A condensation boilers and PV - 70-85% of expenses for energy improvements of the common parts of apartments
Social component	No income specific targeting.
Governance and implementation	Implementation and monitoring executed by the Italian National Agency for New Technologies, the Energy and Sustainable Economic Development Agency (ENEA) is responsible for collecting the applications to access the incentive mechanism
Eligible renovations	General energy renovation of existing building stock Replacing windows and shutters Installing solar shading Replacing heating systems with at least class A energy-efficient condensation boilers Replacing heating systems with at least class A energy-efficient condensation boilers and installing an advanced thermoregulation system with efficiency classes V, VI, or VIII Installing solar panels Energy efficiency actions on the building block Actions combined with anti-seismic interventions Building envelope insulation
Mitigation effects	The cumulated contribution of tax reliefs (Ecobonus and tax reliefs for refurbishment, Bonus Casa) to Italys 2030 targets is estimated to be around 18.15 Mtoe (Martini, 2023[1]). In 2023, a measured 0.558 Mtoe (2% of annual energy demand) could be saved (ENEA, 2025). The Ecobonus incentive plays a key role to enhance energy efficiency in the residential sector (Martini, 2023[1]). The Italian National Energy and Climate Plan (NECP) confirms that the results obtained through Ecobonus have been significant until now and that the incentive scheme will remain associated with a high saving potential in the next years: Italy is expected to come close to meeting its 2030 energy saving target. Earlier assessments by Alberini et al. 2013 found for windows/doors replacements that the policy is generally associated with a 30% or stronger increase in the renovation rates and number of renovations but find substantial free riding on the subsidy for heating system replacements. Adoption rates across the country vary, in Northern Italy where there is one standard deviation increase in heating degree days, adoption was higher (Alberini, Bigano and Boeri, 2013[2]). Another study finds that each EUR 100 incentive sum might raise the likelihood of boiler replacement by 3% in citizen arguably unaffected by free riding (Alberini and Bigano, 2015[3]). However, among the small sample size of survey respondents that received the Ecobonus, 70% stated they would have invested either way.
Mitigation co-benefits	Analysis shows lower access to the scheme in Southern Italy (where energy poverty is higher, but also temperatures higher). Although a tax credit transfer was introduced, this persisited, yet improved slightly between 2016-2018. Martini (2023[1]) describes that in addition to the allocation of resources, it would be necessary to strengthen training, information, dissemination and awareness-raising activities in order to facilitate access to this incentive for energy-poor households. Ecobonus, in its current form, has a regressive distributive effect on households and could more effectively support energy poverty eradication (Martini, 2023[1]). Furthermore, impacts of reducing the Ecobonus and similar extensive interventions like the Superbonus on the local industry are unclear.

Source: Author’s elaboration based on the referenced sources.

Table A B.2. French carbon tax: A component of excise taxation

Instrument type	Tax
Description	Incorporates a carbon component into domestic taxes on consumption of energy products (within the Domestic Consumption Tax on Energy Products, as well as within the Domestic Consumption Tax on Natural Gas and the Domestic Consumption Tax on Coal)
Legal Statute	Budget law No. 2013-1278 and Art. 1 of the National Law on Energy Transition for Green Growth
Introduction	2014
Objective	Steer consumption towards less emission intensive energy fuels, guide investment and strengthen the economic competitiveness of enterprises
Jurisdiction level	National authority
Administrating authority	Ministry of Ecological Transition (France)
Revenue beneficiary(ies)	Initially purely financing the French tax credit for competitiveness and employment, since 2017 a share is allocated to the special account for the energy transition
Tax payer(s)	Supplier of the fuel and energy product
Tax base	Energy fuel consumption in tonnes, litres or Gj
Intensity	The carbon tax increased from EUR 7 per tonne of CO2 in 2014 to EUR 30.5 per tonne of CO2 in 2017. The price of EUR 44.6 per tonne of CO2 remains unchanged since 2018
Social component	The tax is equal across regulated agents. In the future, revenue recycling might be considered as a social component of the tax, now it still regressive (Douenne, 2020[1]). In the future, revenue recycling might be considered as a social component of the tax, now it still regressive (Douenne, 2020[4]).
Governance and implementation	Values per tonne CO2 are based on the carbon benchmark established by the Centre for Strategic Analysis
Mitigation effects	The 2018 carbon tax rate reduced manufacturing CO2 emissions in 2018 by 5% or 3.6 Mt of CO2 compared to a no-tax scenario (Dussaux, 2020[5]). Ex-ante analysis suggests a wide range of emission reductions in France 10 years after the introduction of the tax, at -2.37% to -11.90%, depending on the economies flexibility to adjust consumption and foreign competition (Guéret et al., 2025[6]).
Mitigation co-benefits	A social uprise of Gilet Jaunes caused the price to freeze since 2018 (Bourgeois, Giraudet and Quirion, 2019[7]). Berry (2019[8]) shows with a microsimulation of the French carbon component that it can increase energy poverty, by a share of 6% at the 2017 effective carbon price.

Source: Author’s elaboration based on the referenced sources.

References

[3] Alberini, A. and A. Bigano (2015), “How effective are energy-efficiency incentive programs? Evidence from Italian homeowners”, Energy Economics, https://doi.org/10.1016/j.eneco.2015.08.021.

[2] Alberini, A., A. Bigano and M. Boeri (2013), “Looking for Free-Riding: Energy Efficiency Incentives and Italian Homeowners”, FEEM Working, Vol. 24, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2243427.

[8] Berry, A. (2019), “The distributional effects of a carbon tax and its impact on fuel poverty: A microsimulation study in the French context”, Energy Policy, Vol. 124, pp. 81-94, https://doi.org/10.1016/j.enpol.2018.09.021.

[7] Bourgeois, C., L. Giraudet and P. Quirion (2019), “Social-environmental-economic trade-offs associated with carbon-tax revenue recycling”, Eceee Summer Study Proceedings, https://enpc.hal.science/hal-02073964v1/file/20190603_CarbonTax_HAL.pdf.

[4] Douenne, T. (2020), “The vertical and horizontal distributive effects of energy taxes: A case study of a french policy”, The Energy Journal, Vol. 41/3, pp. 231-254.

[5] Dussaux, D. (2020), “The joint effects of energy prices and carbon taxes on environmental and economic performance: Evidence from the French manufacturing sector”, OECD Environment Working Papers, No. 154, OECD Publishing, Paris, https://doi.org/10.1787/b84b1b7d-en.

[6] Guéret, A. et al. (2025), “Investigating the economic and environmental effects of a carbon tax in a quantitative macroeconomic framework”, https://doi.org/10.2139/ssrn.5477416.

[1] Martini, C. (2023), “Assessing ecobonus as energy poverty mitigation policy: is energy efficiency for all?”, Vulnerable Households in the Energy Transition: Energy Poverty, Demographics and Policies, pp. 207-233.