Accelerating decarbonisation of current and future affordable housing in Europe

Overview of the Report

The Urban Land Institute (ULI) presents “Accelerating decarbonisation of current and future affordable housing in Europe,” a research report released in 2025. Authored by a multidisciplinary team including Sara Candiracci, Sara Dethier, Gabriella Bachiller, Alice Charles, Becci Taylor, Alex Phillips, Alejandro Gutierrez, and Jorn Verbeeck, the study leverages ULI’s long‑standing expertise in real‑estate systems change. It aims to identify systemic barriers that hinder low‑carbon, affordable housing and to propose high‑impact interventions across the European housing value chain.

Key Findings on Housing Stock

Europe’s building stock is overwhelmingly energy‑inefficient: more than 75 % of buildings are classified as such, and up to 85 % of today’s homes are expected to remain in use through 2050. Residential buildings account for roughly three‑quarters of the EU’s total floor area, making them a dominant source of emissions. Operational energy use contributes about 36 % of EU greenhouse‑gas emissions, while embodied carbon from materials can represent up to 50 % of a building’s life‑cycle emissions. Around 15 million Europeans face housing unaffordability, and one million experience homelessness, underscoring the intertwined nature of climate and social challenges.

Systemic Barriers Identified

The report maps twelve systemic barriers, including inadequate land access, disjointed planning between housing and infrastructure, policy volatility, limited public‑private collaboration, public opposition, poor understanding of affordability performance, short‑term business cases, and inadequate financial risk‑sharing mechanisms. For example, more than 30 million EU dwellings are vacant or under‑occupied, while new construction continues on peripheral greenfield sites that increase transport and infrastructure costs. Fragmented governance and siloed data impede integrated planning, leading to higher retrofit costs and delayed decarbonisation.

High‑Impact Intervention Areas

Ten intervention areas are proposed to overcome these barriers:

1. Optimising strategic land assembly
2. Mainstreaming integrated planning
3. Establishing universal definitions and measurement
4. Enhancing public‑private‑civic collaboration
5. Fostering community and resident collaboration
6. Redefining the business case for low‑carbon housing
7. Unlocking innovative financial solutions
8. Aligning investment with long‑term community needs
9. Diversifying delivery, tenure, and reuse models
10. Leveraging low‑carbon innovation Each area targets specific leverage points, such as using land‑value capture to fund affordable units, creating shared‑savings financing models, and developing digital tools for data‑driven planning.

Case Studies Illustrating Success

The report includes numerous pan‑European case studies. In Milan, the “Piano Straordinario della Casa” leverages municipal land to deliver 10 000 regulated‑rent homes near transit hubs. Barcelona’s “Superblocks” demonstrate compact, mixed‑use development that reduces car dependency and improves livability. Copenhagen’s heat‑network policies and Oslo’s “Zero Bills” neighbourhood showcase how coordinated infrastructure and performance‑based contracts can deliver low‑energy housing without rent spikes. The UK’s “Homes England” initiatives and Germany’s “PATRIZIA‑Revive” joint venture illustrate public‑private partnerships that combine land assembly, financing, and sustainability standards.

Financial Landscape and Innovation

Financing remains a critical gap. The European Investment Bank has earmarked €35 billion for low‑carbon affordable housing, a fraction of the €270 billion annual investment needed. Innovative instruments such as sustainability bonds (e.g., ABZ’s bond for 660 low‑carbon homes in Zurich), blended‑finance platforms, and long‑term ground‑lease models are emerging to de‑risk projects and attract institutional capital. However, most financing still relies on conventional bank debt with short payback horizons, limiting large‑scale retrofits.

Expected Impact and Next Steps

By aligning land policy, integrated planning, and innovative financing, the report argues that Europe can achieve substantial emissions reductions while expanding affordable housing supply. Targeted interventions could accelerate retrofit rates toward the 3 % annual pace needed to meet net‑zero goals. The authors call for coordinated action among policymakers, developers, investors, and civic groups to implement the identified interventions, monitor outcomes through shared data platforms, and scale successful pilots across the continent.