Economic and regional spillovers of energy efficiency investments in buildings

•Public grants for energy renovation of buildings induce economic benefits.•Renovations stimulate local construction,industry, trade and transport firms.•Climate conditions and regional economic structure determine intensity of benefits.•Benefits are the highest in regions producing energy-efficient building materials. This paper explores whether the policy of mitigating climate change through energy-efficient retrofitting supports more balanced development or increases regional disparities. The issue is explored through the estimation of the socioeconomic effects of energy-efficient renovation across Croatian regions. The regional input–output model is applied to identify direct, indirect, and induced effects of building retrofit investments on gross value added and employment. In the Croatian case, over three-quarters of the total economic effects of energy-efficient retrofitting is distributed to the more developed region of Continental Croatia. Economic activity in the Adriatic region is strongly dependent on tourism with insufficient local production of the manufacturing products required in energy renovation projects, and a certain proportion of spillover effect of the investment is transferred to Continental Croatia. The positive economic effects induced by retrofit investments are most present in construction, manufacturing, trade, and transport. Results suggest that climatic conditions and regional economic specialisation have an impact on the dispersion of the economic effects of retrofit measures in different regions.