Balancing the Interests of Various Community Groups in Local Government Policy on the Energy Performance of Buildings

Abstract

EU legislation provides the implementation of most building energy performance measures at a subnational level. This obligation is causing a lot of completely new dilemmas that are challenging for local governments (LGs), requiring a radical re-evaluation of the prioritization of LGs’ traditional tasks and the ranking of new responsibilities. The attitude of local population and businesses towards the solutions to dilemmas, which are set by LGs decisions, vary widely. Separate groups actively lobby for their mutually contradictory interests, questioning decisions and fighting against them during the decision-drafting and -making process, significantly hindering the work of LGs and prolonging decision-making. The authors’ suggested solution to the problem is to make municipal decisions based on verifiable data and facts, thus preventing the manifestations of populism and demagogy, and reducing the possibilities for interest group advocacy. To obtain objective information for balanced decision-making about the benefits and costs of heating system retrofitting projects without carrying out the labor-intensive, time-consuming, and costly design of various options, an express methodology and an easy-to-use tool for project feasibility studies have been developed. The methodology utilizes a limited number of open indicators to streamline the evaluation process, and does not require specific knowledge in thermal physics, economics, or construction.

1. Introduction

The promotion of building energy performance, like other Green Deal (GD) initiatives, faces the challenge of competing interests. Although citizens across EU member states expressed strong support for global green policies—including those aimed at improving building energy efficiency—during the 2024 European Parliament elections [1], the priorities of countries, municipalities, industries, households, and other stakeholders often diverge and conflict.

“Local and regional governments are vital for the success and realization of green policies across Europe” [2]. Amendments to EU directives under the Fit for 55 (FF55) legislative package [3,4,5] have assigned key energy efficiency responsibilities to subnational governments. The European Charter of Local Self-Government [6] has standardized the systems of local governance across Europe and defined their relationships with national governments and citizens. As a result, differences in how local governments (LGs) approach building energy performance within GD initiatives are less influenced by institutional structures and more by contextual factors such as energy supply, climate, historical construction practices, and, importantly, the habits and often contradictory attitudes of local communities.

In the area of building energy performance, the FF55 directives have imposed entirely new and unfamiliar obligations on municipalities. While most energy efficiency measures must be implemented at the subnational level, the EU does not provide sufficient funding to cover the full cost of these projects. Instead, entrepreneurs and households are expected to bear much of the financial burden. As with the GD as a whole, building energy performance programs “can only work if they allow local businesses and civil society to lead the way” [7]. The role of LGs as intermediaries is therefore essential [8] in persuading building owners to invest in retrofitting projects that may have long payback periods.

The initial plans of the GD have been significantly disrupted by the Russian invasion of Ukraine, prompting a reassessment of strategic priorities across Europe. The EU as a whole and many countries have shifted their focus toward enhancing national defense capabilities. This general trend includes increasingly new settings and measures [9]. EU citizens support both implementing common defense and security policies and reinforcing EU capacity to produce military equipment. Ukraine’s experience illustrates that, in the event of military conflict, municipalities may become direct targets of missile and drone attacks—posing serious challenges for civil protection systems tasked with maintaining safety and basic services, even amid damaged energy infrastructure.

In the Baltic Sea region, the prevailing approach is to hope for the best but prepare for the worst. In Latvia, civil protection has become an autonomous responsibility of municipalities as part of the national security system. LGs are now expected to provide comprehensive support for both national defense and civilian resilience. This includes (but is not limited to) preparing information systems for residents, establishing civil protection units, maintaining bomb shelters, and organizing the means and resources for the controlled evacuation or accommodation of residents and refugees in the event of war or military threat.

The new, high-stakes obligations—arising both from the FF55 settings on building energy efficiency and the urgent realities of national security—necessitate a re-evaluation of how LGs prioritize their traditional responsibilities, such as education, healthcare, social services, territorial planning, business development, etc. At the same time, LGs must re-rank and integrate emerging responsibilities into their strategic agendas.

The ongoing geopolitical tensions have contributed to global polarization [10], which, in turn, has led to increasing societal fragmentation at the national level and growing social stratification within local communities. This environment has heightened contradictions and intolerance between different social groups [11].

Despite these challenges, local communities want improvement in the quality of life and alignment with shared societal ideals, and progress towards economic and energy sustainability in the area, including a reduction in the burden of heat costs on household budgets (in 2024, 9.2% of the EU27 population reported struggling to keep their homes warm [12]).

However, residents’ preferences vary significantly. In organized civil society, interest groups—including business organizations and climate activists—actively lobby public authorities to shape socioeconomic development, legislation, and other issues at all levels of governance. Even passive citizens influence decision-making, as building energy performance policies are often debated in public discourse and social communication.

Given this complex internal and external environment, LGs must now more than ever ensure their decisions align with EU and national strategies while also considering the diverse interests of local communities and business stakeholders. The decision-making process needs to be both faster and more deliberate. Only carefully considered, balanced, and data- and fact-driven decisions should be adopted. Such an approach helps limit the ability of interest groups to unduly influence policy in their favor, ensuring a fairer balance among the various interests represented within the population.

The influence of interest groups on forming climate policy has been studied extensively, particularly in the context of national lobbying efforts and policy positioning [13,14,15,16,17]. These also reflects the opposition towards renewable energy issues from local communities [18,19,20,21,22,23]. However, research on how local interests affect climate and environmental policies is fragmented across themes, such as whether public participation leads to the more ambitious, transformative local governance of climate policy [24,25,26,27] and various another green issues [28,29,30,31]. It should be noted that there is also a contradictory position regarding many other LG policy issues (e.g., [32,33,34]). However, the authors have found no study examining the influence of interest representation on LGs’ autonomous decisions in GD related issues.

A more effective approach is to study current and potential interactions between municipalities and interest groups within a specific national context. Latvia, with its moderate level of local government decentralization compared to other EU27 countries [35], presents a suitable environment for examining autonomous decision-making processes at the municipal level.

2. Materials and Methods

LGs act in the interest of their residents by fulfilling both delegated responsibilities (as agents) and autonomous functions (as owners). In the areas of delegated authority, LGs have limited flexibility, as they are bound by EU regulations, transposed directives, and national policy documents (Figure 1) [6]. For example, municipalities typically support GD initiatives funded by the EU or national governments, as these projects often boost local employment and welfare in the short term. However, when additional local resources are required, LGs tend to conduct more comprehensive evaluations, which may include consultations with interest groups such as business associations, residents’ councils, and NGOs.

In the areas of autonomous competence, local governments (LGs) also apply regulations adopted at the municipal level. Local priorities are shaped by a combination of EU, national, and local interests, many of which are in conflict. LGs typically analyze policy options by weighing the potential benefits for supporting groups against the possible disadvantages for opposing ones. Increasingly, municipalities are expected to implement actions that benefit certain stakeholders while also offering proportional compensation or mitigation to those negatively affected.

The perspectives of the active members of organized civil society are considered through structured dialogues with various interest groups. When balancing competing preferences, LGs seek to clarify key interests, assess their relevance to building energy performance measures, and evaluate expected outcomes against public expectations. The positions of less active or disengaged citizens are also significant; through public discourse—especially on social media—they can voice strong opposition to initiatives they feel do not reflect their needs or values. These collective assessments inform the development of municipal policy and action plans.

To better understand the types of interests that must be balanced in building energy performance decisions, the authors analyzed publicly available records from discussions on national drafts of the Climate Law [36] and the Transport Energy Law [37], both of which transpose relevant EU directives. The reviews and opinions submitted during these discussions—by ministries, public agencies, business associations, trade unions, municipal associations, and individual activists (e.g., entrepreneurs and environmental advocates)—generally reflect the stance of organized civil society on GD initiatives in the geopolitical context of 2024 (Figure 2).

Interest groups participating in national policy debates primarily aim to align GD-related issues with their economic, security, and social objectives. Values-based or ideological motivations are evident primarily among climate activists and related organizations. It is reasonable to assume that similar dynamics are at play at the local level. This is underscored by the rhetoric of many political parties ahead of the 2025 local elections, where the green agenda is frequently criticized as disproportionate, unrealistic, and overly costly.

When implementing building energy performance tasks, LGs often face complex dilemmas in drafting rational and equitable decisions. In a broader sense, rational decisions may be guided by both values and material or other interests. In addition to evaluating the diverse benefits for specific stakeholder groups, LGs can also employ sociological tools—such as surveys or referendums—as direct democracy methods to gauge public sentiment. The higher the degree of pluralism within a community, the more diverse the values, which must be considered.

The dilemmas that may arise across more than one hundred thousand European municipalities [35] vary greatly in content and context. Conflicts can emerge from nearly any of the 20 recommended GD action lines [8], each of which interest groups attempt to influence, some advocating for more radical approaches, others opposing the initiatives altogether. Examples of such dilemmas include (but are not limited to) the following:

• Limited municipal budgets are already stretched thin by mandatory functions such as education, social programs, and other legal obligations. Both new demands—enhancing resilience to security threats and improving building energy efficiency—will inevitably compete for the same financial resources.
• Renovation costs for energy-poor households in apartment buildings (typically around 10% of households) cannot be covered without informing and involving other households. Targeted funding from EU programs and/or from national funds will be used to fight energy poverty, while other households will be pressed to take out long-term bank loans. LGs should offer financial instruments that internalize energy cost savings for loan repayments [2].
• The EU and national financial resources are insufficient to fully eliminate household energy poverty. Redirecting municipal funds toward urgent renovations for the most vulnerable could delay the implementation of other development programs, thus impacting broader socioeconomic progress within the municipality.
• Each renovated building, as well as individuals or local energy communities who seek to optimize their own centralized heat consumption, lessens the load on the district heating (DH) network. However, since network heat losses remain constant, reduced consumption increases the unit cost for other network users.
• Building energy performance is increasingly associated with limiting biomass combustion for heating in favor of emission-free technologies. Renewable woody biomass has been and remains economically beneficial both in individual buildings and in DH systems (woody biomass was the primary resource for 63% of the centrally produced heat in Latvia in 2023), reducing heating costs.
• Linking building energy performance upgrades with the development of electric mobility infrastructure—such as the installation of charging points—poses a challenge for the effective allocation of retrofitting budgets.

Dilemmas such as these, brought about by stringent building energy performance requirements, fall outside the traditional scope of municipal governance. These are not the kinds of decisions LGs have faced in the past. Consequently, new frameworks, approaches, and methods are essential to navigate the evolving landscape of responsibilities.

Elected local politicians, as individuals, participate in collective decision-making within LGs, often acting—consciously or not—according to the principles of rational choice theory (e.g., [38]). This theory suggests that if each actor behaves rationally based on their own understanding, collective decision-making can result in balanced outcomes. These outcomes aim to maximize benefits for supporting groups while minimizing harm to opposing ones, achieving the greatest possible advantage within existing constraints. Although this approach has been criticized for its oversimplification [39], it remains a useful framework for explaining causal relationships in many decision-making scenarios.

Naturally, each decision-maker’s choices are influenced by their own subjective interests. In this context, local government members are elected officials, many of whom seek re-election. As the green transformation shifts from a political slogan to a central element of EU and national policy, it increasingly faces skepticism from segments of the electorate who view it as costly and unnecessarily disruptive to their daily lives. According to a 2024 survey [2], 67% of voters indicated that the regulatory framework surrounding the green transition will influence their choices in upcoming municipal and national elections. This voter sentiment inevitably impacts the positions and decisions of LG officials.

The persistent tensions among political, economic, and social interest groups, which are intensified by the current geopolitical climate, make balanced decision-making more critical than ever. Any shift favoring one group over another may lead to long-term consequences, including instability within the municipality. To formulate rational policies, calculations must be made to determine how to achieve the best possible outcomes for the community, while also acknowledging the personal and political interests of decision-makers.

Rational actors make decisions based on the information and calculations available to them [39]. However, public opinion and group stances are shaped not only by objective data but also by other influential sources, such as media messaging, political advocacy, and propaganda, as well as by the general level of information literacy.

The availability of high-quality information is the first and most critical requirement for rational decision-making: “To make decisions, expert stakeholders need to incorporate both research-based and economic information for effective decision-making” [22]. A lack of information is the greatest obstacle to rational choice. In the case of building energy performance, to find optimal solutions in the complex combination of interests of various groups, a quantitative assessment of the retrofitting projects’ benefits is necessary for the following: (1) decision-drafting by LG’s administrative staff, (2) informed decision-making by elected local politicians, (3) evidence-based dialogue with interest groups, and (4) persuading residents and businesses to invest in building renovation.

Numerous methodologies and tools have been proposed for evaluating retrofitting scenarios. The renovation of individual buildings is the most studied issue. These methodologies are based on various approaches, predominantly but not exclusively addressing economic (e.g., [40]), sustainable (e.g., [41]), architectural (e.g., [42]), and environmental (e.g., [43]) aspects and benefits. Research in this area includes both theoretical and experience-based studies (e.g., [44]).

Methodologies have also been developed for the large-scale retrofitting of building blocks [45] and for buildings with centralized or local energy sources [46,47]. Along with the calculators from pipe manufacturers [48], the integration of the heating system’s reconstruction with the transition to the 4G district heating (DH) system [49] and the projected impact of global warming on heat consumption [50] has also been studied. An urban model based on energy prosumption within building blocks has been described [51].

However, the proposed methodologies are poorly usable for pre-design modelling and for evaluating the specific benefits of projects from the dual perspective of the following: (1) the LGs’ interests in the sustainable socioeconomic development of their territories, and (2) the interests of the residents and entrepreneurs in reducing heating costs.

To address this gap, an express methodology and a user-friendly tool have been developed to ensure that objective, accessible information about heating system retrofitting projects is available to all stakeholders. This tool provides the following benefits: (1) enables rapid and, at the same time, sufficiently accurate and objective analysis at the pre-design stage of the potential benefits and costs of the various heating system renovation projects’ variants in a given area, (2) compares project variants according to their efficiency, (3) uses a limited number of open indicators to speed up the data gathering process, and (4) does not require specialized knowledge in thermal physics, economics, IT, and/or construction, making it practical for use by LG staff and elected officials alike.

3. Results

The obligation to identify optimal solutions within a complex landscape of competing interests, and the need to persuade residents and businesses to invest in building renovations highlights the critical importance for local governments (LGs) to assess the efficiency of diverse heating system retrofitting projects and their alternatives already at the feasibility study stage. Given the significant energy efficiency potential of integrated urban heating systems, the developed methodology and tool were designed not only for evaluating individual building energy performance projects, but also for complex and scalable solutions, such as the retrofitting of district and neighborhood-based heating systems.

3.1. Methodology

The developed methodology enables the flexible, rapid, and sufficiently accurate and objective simulation of potential outcomes and benefits from various reconstruction projects and their variants at the pre-design stage [52]. This tool is designed as an innovation sandbox, which is intended for the simulation, evaluation, and comparison of various renovation/modernization project versions of the overall heating system (including heated buildings, district heating network, and heat sources) for the composition of the application/project that meets the specific funding or project tender conditions to maximize the following key aspects of its efficiency:

• Achievable savings in heat consumption and primary energy resources;
• The reduction in dominant CO₂ emissions;
• Required investments;
• Changes in heating tariffs and costs.

The methodology includes entering and processing key thermal, constructive, structural, and financial data related to the specific elements of the project components. By modifying the values of the indicators associated with these elements, users can generate multiple versions of the reconstruction project. This allows for comparative analysis and identification of the most efficient and cost-effective solutions.

3.2. Defining Key Performance Indicators

The methodology’s algorithm calculates the heat consumption savings ΔQ directly, focusing only on aspects influenced by the retrofitting process while ignoring those that remain unaffected [52]. This algorithm was selected due to its efficiency. When developing a functional model of a heating system for retrofitting, a critical prerequisite for the tool’s broad and effective use was the reduction in the number of indicators used to characterize the system elements; this was achieved through the definition of key performance indicators (KPIs). This was carried out in two stages.

Aspects that remain constant and could be excluded from the calculations were identified in the first stage:

• The geographical orientation of the building, i.e., also the solar gains;
• The functionality of the building, i.e., also the internal heat gains (equipment and facilities, building occupants, etc.) and hot water consumption;
• The structural dimensions of the building, i.e., the dimensions of the windows, roof, exterior doors, etc.;
• The internal heating pipe network within the building;
• The topography of the DH pipe network;
• The efficiency of the specific primary energy resource utilization;
• The fixed costs of operating the heat sources.

Before classifying these aspects as constants, their impact on the system’s heat balance was rigorously assessed. The exclusion of internal and solar heat gains from the building’s heat balance was particularly significant, given that these gains can account for 20–50% of total heat consumption, as demonstrated by energy certificate data from the State Construction Control Bureau.

Due to the inaccuracies of current methods in fully calculating these gains, we progressed beyond thermal transmittance calculations and conducted empirical tests on the specific heat capacity of various building materials. This included assessing changes in thermal mass following wall insulation [53]. The test results confirmed that the influence of insulation material on a building’s overall thermal mass did not exceed 1%, which justified treating both internal and solar gains as constants for our purposes.

In the second stage, certain simplifications were applied to facilitate calculations while maintaining an acceptable level of accuracy. The methodology for the selection of less important entities included the per-element modelling of heat losses and subsequent expert assessment of the entities’ fixed values. Only the KPIs remained necessary as independent variables for their use in calculations of the elements’ models while heat loss ΔQ was the dependent variable of the models in all cases. The following key assumptions and generalizations were applied; those for building elements are shown in Figure 3.

The thermal conductivity (lambda value), expressed in W/(m∗K), of the widely used insulating materials varies only slightly, allowing for a fixed value of 0.04 W/(m∗K) to be assumed. For example, mineral wool typically ranges between 0.034–0.042 W/(m∗K), expanded polystyrene (EPS) falls within 0.032–0.038 W/(m∗K), and extruded polystyrene (XPS) varies between 0.030–0.038 W/(m∗K). This approximation is supported by data from material manufacturers, standard values in building energy efficiency guidelines, and research overview articles [54,55,56]. Additionally, various correction factors, such as the influence of temperature and moisture content, marginally increase the lambda values [57]. Similarly, thermal bridges—such as mounting brackets or the installation details of window frames — also can be considered as an increase in the effective lambda value for calculations [58]. The insulation thickness is the only independent variable in the model.

The windows thermal transmittance (U-value), expressed in W/(m²∗K), depends mainly on the glazing type. A modern double-glazed window typically exhibits a U-value in the range of 1.3–1.7 W/(m²∗K), while a triple-glazed window exhibits a U-value as low as 0.6–0.9 W/(m²∗K). This approach aligns with standard practices outlined in EN ISO 10077−1 and research papers [59,60,61]. For modelling purposes, fixed representative U-values of 1.6 W/(m²∗K) and 0.8 W/(m²∗K) accordingly were used, based on the prevalent window types (which remain the single independent variable), which also considers the effects of installing a thermal bridge [58].

Replacing old, non-airtight windows with modern ones significantly reduces convective heat losses. Older, poorly sealed, and often mechanically deformed windows contribute to higher air infiltration rates, increasing heat losses due to uncontrolled ventilation. Studies [62,63,64] indicate that replacing outdated windows with tight-sealing and double or triple glazing can reduce air leakage by up to 20%, leading to a notable decrease in the overall convective heat losses. To quantify the reduction in air leakage, blower door tests are commonly employed [65]. For modelling, infiltration heat losses were reduced by 20% in cases involving the replacement of old wooden windows, and by 10% when replacing existing PVC windows.

Replacing a natural ventilation system with a mechanical one with heat recovery can significantly reduce convective heat losses by ΔQvent. Depending on the type of heat recovery system used (an independent variable), ventilation-related heat losses can be reduced by 80% in the case of a central air handling unit [66,67]. The installation of decentralized mechanical systems can be incorporated into heat balance modes with an effective heat recovery rate of 50% for long operation cycles [68]. This improvement is highly effective in colder climates, where uncontrolled ventilation leads to significant energy losses.

Interactions between multiple renovation measures must also be considered. The reduction in heat demand resulting from the renovation of building envelope structures and the installation of a mechanical ventilation system can be assessed separately. However, when multiple energy efficiency measures are implemented simultaneously, the total reduction in heat consumption is not an arithmetic sum of the individual savings due to their interdependencies (a non-additive effect) [69].

The mathematical modelling of various building types, incorporating multiple energy efficiency measures in different combinations, enables the estimation of an empirical impact reduction factor (fr). This factor accounts for the interdependence between measures and depends on both the number and type of improvements applied, as follows:

• When a single measure is implemented, fr = 1;
• When multiple building envelope components are renovated without improvements to the ventilation system, fr = 0.85 (range 0.79–0.92);
• When multiple building envelope components are renovated, including a mechanical ventilation system, fr = 0.75 (range 0.70–0.81).

Although the actual value of fr may vary depending on the building type, climate, existing conditions, and specific combinations of the measures, these generalized factors serve as useful modelling guidelines.

Modernization of the building’s technical systems (smart sensors for data acquisition on the temperature, humidity, air pressure, CO₂ and VOC concentrations, as well as equipment for the remote control of heating and ventilation in each specific room) was evaluated critically by examining the recommendations of Latvian and foreign specialists (e.g., [70]). A maximum of 10% of the post-renovation heat energy consumption was included in the calculations as a heat savings ΔQtech value from the modernization carried out.

Simulating DH networks is overly complicated and time-consuming. The number of parameters of different natures should be used to accurately define DH networks and perform the modelling of processes by using algorithms commonly used in the design of heat networks [71,72]:

• The length and internal (nominal) diameter of the pipes of each DH network section;
• Pipelines’ thermal insulation thickness and thermal conductivity;
• Temperatures of the heat carrier in the supply and return pipes and the ambient temperature;
• The heat load and heat energy consumption of all heat energy users connected to the DH network;
• Local and linear hydraulic resistances, optimal flow rate of the heat carrier, and the required pressure drop at the farthest consumer.

A reduction in heat consumption results in a decrease in the heat mass transfer and flow rate of the heat carrier through the DH pipelines, which affects hydraulic processes, but has a negligible effect on thermal conductivity and heat loss. Assuming that only pre-insulated pipes are used in the DH networks, it is possible to create a simplified calculation model for each specific section of the DH network. This was used to perform an approximate but sufficiently accurate assessment of the impact of the heat energy demand reduction on DH network sections as a result of implementing measures to increase the energy efficiency of buildings.

To simplify the DH network modelling algorithm, two complex indexes were developed for each pipe size used in the network. Dimensions of the pipes are standardized, and the thermal modes of the DH networks are similar in the country (ΔT ≈ 40 °C); therefore, the values of both indexes could be generalized nationwide. The nominal pipe diameter was used as the determining KPI (independent variable) in the simplified model.

Specific heat loss from the pipeline (W/m) was designed to simulate the amount of heat loss at each section of the DH network. In general, this index depends on the structural and thermal characteristics of the DH pipes, as well as the temperatures of the heat carrier and the environment. For a high-precision analytical calculation of heat loss, the formulas included heat transfer through the steel pipe, insulation layer, and casing pipe.

For practical calculations, depending on the required degree of accuracy, the calculation formula can be simplified by omitting the parameters that have a smaller impact on the results [73]. The influence of the heat transfer coefficients from the outer surface of the pipe and especially from the heat carrier to the inner surface of the pipe is negligible compared to the influence of the thermal insulation layer of the pipeline. Therefore, the calculation of the heat loss index was based on technical data from the product catalogue of pre-insulated pipeline manufacturers [74,75] and the assumptions about the average practical performance of the DH network operating mode [76,77].

Maximum heat load (MW) was used to evaluate the threshold at which a reduction in heat demand justified replacing a specific DH network section with a smaller-diameter pipe. This is the only effective means of reducing heat loss in the affected section.

While the selection of the pipeline diameter usually requires complex hydraulic calculations, the simplified assessment method relies on average values for temperature differentials and flow velocity, as recommended in DH design guidelines [75,76,77]. To account for uncertainties, these values are conservatively set at 80% of their theoretical maximums.

The thermal efficiency of heat sources (HS) was assumed to be in line with today’s standards. The HS should be properly maintained and operated, and then the efficiency of using a specific primary energy resource can be equalized. The primary energy resource used, or a proportional combination of different resources became the KPI of the HS in the context of the variable costs. The amount of heat energy produced by HS and consequently CO₂ emissions is decreasing due to the renovation of buildings and the reconstruction of the DH system. Another green option is the use of primary energy resources with lower emissions. The methodology envisaged the use of both options. A change in primary energy resources entails replacing HS equipment and requires corresponding investments.

The identified KPIs for all heating system elements are summarized in Figure 4. All of them are available in existing documents—in the building’s energy certificate and attached documents, and in documents registering the operation of DH networks and heat sources. The municipal-level indicators used in the methodology are available in normative documents or published by the heat provider—average and minimum temperatures during the heating period, as well as constructive and operational data of the DH system. The methodology algorithm, including models of the elements, is detailed in [52] and does not require any specialized or proprietary data, making it accessible and broadly applicable.

3.3. Usability of the Tool

The system was designed as an online platform (cloud-based service) and supports three user types: system administrator, consumer administrators, and end users (Figure 5). A single system administrator (DG) manages the universal system-level data applicable to all users—such as standard pipe diameters and the thermal transmittance of glass units. The system administrator is also responsible for creating new consumer profiles and assigning consumer administrator (A) rights.

Consumer administrators manage thermal efficiency projects (Prm) and register individual users (Uk), granting them access to the platform for executing heating system projects. These projects may include components such as buildings (Bn), heat suppliers, and inlet pipes. After data entry, users can begin developing project versions within the innovation sandbox and identify the optimal configuration.

The innovation sandbox functionality is illustrated using the partial result sets for renovation projects targeting apartment buildings from Series No. 316 (Figure 6a) and Series No. 602 (Figure 6b), prepared at the request of the Ministry of Economy. The red data points and trendlines represent the achievable performance thresholds for building renovation.

The Series No. 316 buildings, constructed from silicate bricks in the 1960s and 1970s, were found to meet structural safety requirements but exhibited poor thermal efficiency. For the specifically analyzed case, most windows had already been replaced with double-glazed units, reducing the specific heat consumption to 126 kWh/m².

The Series No. 602 buildings, constructed with large concrete panels in the late 1970s, were also considered structurally sound. Approximately 44% of the external wall surface was insulated with 10 cm insulation, and over 80% of the windows had been replaced with double-glazed units, bringing the current specific heat consumption to 107 kWh/m².

In both cases, the scope of the presented renovation versions consisted of possible combinations of the following: (1) one wall insulation variant (d = 15 cm (W15)), (2) one basement coating variant with a 10 cm thick insulation layer (B10), (3) one 20 cm roof insulation variant (R20), (4) replacement of the unchanged windows with double-glazing (W1.6) or all windows with triple-glazed (W0.8) models, and (5) the installation of either a central (VentC) or local (VentL) mechanical ventilation system (Figure 6). Of course, by using several insulation layers, installation of the technical systems, and replacement of the inlet pipes, a broader range of renovation versions could be achieved.

Figure 6 shows the limit, as f{ΔQ; ΔQ/cost}, that can be achieved by implementing the renovation measures of the concrete building. The choice of the optimal version was determined by the settings of the relevant project (

Table 1. Compositions of the achievable optimal versions. Developed by the authors.

Point (Figure 6)	Series No. 316		Series No. 602
	Project Task	Composition	Project Task	Composition
1	ΔQ → max	W15 + B10 + R20 + + W0.8 + VentC	ΔQ → max	W15 + B10 + R20 + W0.8 + VentC
2	ΔQ > 80%	W15 + B10 + R20 + + W0.8 + VentL	ΔQ > 60%	W15 + B10 + R20 + W0.8 + VentL
3	ΔQ/cost → max	W15 + B10 + W1.6	ΔQ/cost → max	B10

). The optimal compositions of renovation measures for the most typical project settings were shown to achieve the following: (point 1) maximum heat savings (ΔQ), (point 2) heat savings above the specified threshold at maximum achievable project efficiency (ΔQ > ΔQ_min), and (point 3) maximum project efficiency (ΔQ/cost).

4. Discussion

The third global wave of democracy, a 70-year period of relatively stable sustainable human development and globalization, has ensured unprecedentedly rapid growth in the quality of life of all humanity. The swift victory over the profoundly serious COVID-19 pandemic very well illustrated the possibilities provided by global cooperation and solidarity. Unfortunately, it also marked the end of the period of prosperity.

Currently, it has already been replaced by the following: (1) autocratic tendencies in many countries instead of democracy, (2) growing turbulence and its transition to direct military conflicts in many regions of the world instead of respectful relations between countries, and (3) destroyed supply and trade chains and created national isolationism instead of the global division of labor and cooperation. World powers are returning to the principles of 18th century power politics. National governments and diplomatic services face difficult and challenging tasks ahead. The peaceful life of a diplomat has been replaced by quick, responsible decision making that ask for high-level professionals.

These strategic shifts inevitably generate social tensions, as different societal groups respond differently to new political and economic directions. These conflicts often extend to the municipal level, where local interest groups vie to protect their specific agendas. Local positions, like “wind power generators are definitely needed, but just not in my backyard” [78], are immensely popular.

The NATO setting on allocating 5% of GDP to defense means a reduction in LGs’ resources too, significantly affecting the ability to provide already accustomed services to residents (social programs, education, and other mandatory functions that must be performed in the quality prescribed by normative acts); the question arises on priorities. There is a part of the local community who is confident that Russia will not attack a NATO Member State. As such, civil protection does not seem so important to them.

In the current geopolitical situation, it will be difficult to implement the full scope of the ambitious GD plans. Unfortunately, the EC has not made decisions on reducing and/or extending specific programs, creating friction among separate stakeholder groups. For example, local woody biomass as a primary energy resource plays a huge role in heating buildings in Latvia in accordance with the Kyoto Protocol [79]. The restructuring of the energy sector in EU countries, which began in 2022, led to a rapid increase in heating costs, which immediately affected energy-poor households (Figure 7). However, in Latvia, these increases were more moderate due to extensive biomass use. The orientation to electricity in the short term is associated with a considerable risk of repeated significant increases in heating costs. The recent massive blackout that affected the Iberian Peninsula on 28 April 2025, as well as a series of blackouts in the Americas, show that relying solely on electricity as the only source of heating is not safe. Nevertheless, high-income households often advocate for this shift.

These examples highlight the need for data- and fact-driven, carefully thought-out, well-balanced, rational municipal decision-making, not just for effective regulation, but also for promoting social stability in increasingly strained environments. Although local issues often diverge from international agendas, to enhance building energy performance, LGs must apply diplomatic skills to align EU and national legislation with local realities.

The issue at hand involves reconciling the priorities of local communities at the municipal level with global goals. The elected decision-makers in the municipality are the closest authority to the public: they are best informed about the relations between local interest groups, and therefore they are primarily responsible for implementing the EC principle “nobody will be left behind” in the local territory. The success of LGs depends on their ability to address arising dilemmas by balancing expectations across diverse interest groups.

Every LG decision creates both winners and losers. Providing compensation for those negatively affected by it can also be considered an ethical principle. For example, according to the Kaldor–Hicks compensation principle, in addition to direct compensation to those who lose, theoretical compensation could also be provided by winners to losers in certain scenarios [80,81,82]. Thus, it can be recommended that the increase in DH network tariffs, which occurs when some consumers are reducing heat consumption in buildings, should be compensated for all network consumers from the achieved benefits, thus not only eliminating the formation of opposition among residents against individual energy efficiency solutions, but also encouraging other consumers to seek solutions that are beneficial to them.

The proposed tool is specially designed for simple and fast, but at the same time, sufficiently accurate evaluation of the efficiency of specific building heating system repair project options. Computational testing of the methodology confirms that calculation deviations using the proposed simplified methodology for the renovation projects of buildings to be renovated typically remain within 10%, with 60–70% of deviations below 5% (Figure 8). Variations in computed heat loss values for pipes are similarly minor, not exceeding 7–8%. This level of accuracy is entirely acceptable for feasibility studies, an opinion confirmed by field specialists reviewing the prototype.

Figure 6 illustrates the outcomes to be obtained and the options for choice according to the project rules set. Wall insulation was the decisive process for Series No. 316; without it (d = 0), the achieved heat reduction ΔQ did not exceed 40%, and the efficiency (ΔQ/cost) remained low, except in cases involving basement insulation (B10). Optimal results required wall insulation (W15). In contrast, the Series No. 602 building did not exhibit a dominant effect from wall insulation, with a lower achievable heat reduction ΔQ percentage and overall lower efficiency of the versions due to an already existing partial wall insulation. These findings indicated that renovating series No. 316 buildings yielded greater benefits with lower investment. These buildings should be prioritized in the municipality’s renovation programs, albeit with case-by-case verification.

5. Conclusions

Improving the energy efficiency of buildings is one of the GD’s key programs, to which the attitude of various groups of residents and businesses is far from unambiguous, and in which the role of the municipality is the most challenging. LGs meet a lot of dilemmas including (but not limited to) the following:

• Ongoing uncertainty in various aspects of the EU green policy due to growing military threats, which gives local interest groups wide opportunities to interpret the situation in their own interests;
• The conflicting opinions of various interest groups, which are short- and medium-term beneficiaries or losers from the implementation of the EU recommendations;
• Diplomacy, needed for the possible rapprochement of these opinions, for balancing decisions to respect all opinions (of course, partially) and avoiding risks arising from an unequal approach and a unilateral choice in the decisions made;
• Prioritizing and concentrating municipal resources, when EU building energy efficiency policy is competing with traditional and local societal challenges in areas such as education, health, and social care, etc., where group interests have become balanced over time;
• A shortage of resources to compensate community groups adversely affected by retrofitting projects for the urban heating system;
• Convincing residents and businesses as building owners to make long-term investments in building energy efficiency projects under conditions of high uncertainty.

Any uncertainty in relation to external conditions, especially in the regulatory environment, is a direct basis for various community groups to actively lobby for their subjective interests. The ongoing adaptation of the regulatory environment in accordance with the rapidly changing geopolitical and tense regional situation is the function of the national government, which contacts the EC if necessary. This will significantly reduce the opportunities for various interest groups to use differently interpretable situations in their own interests.

A second source of uncertainty is associated with the lack of sufficiently high-quality data for objective LG decisions on the implementation of urban heating system retrofitting projects. The absence of data and/or calculation inaccuracies are sufficient to cause the estimated project benefits and costs to deviate from the true values, which is an obstacle to the adoption of optimal project options. Only data- and facts-driven decisions can reduce the opportunities for interest groups to question them and even fight against them during the decision-drafting and -making process.

LG administrative employees are preparing decisions on heating system retrofitting projects, and elected LG decision-making body members are adopting them. They are all usually not experts in thermal physics, construction, and IT, and cannot professionally evaluate the projects. A methodology and a user-friendly tool have been developed to support them in objective decisions on the renovation of a single building or the reconstruction of the DH system.

The developed methodology enables the following: (1) manages all components of the overall urban heating system, (2) is designed to meet the requirements of relevant projects and available funding options, (3) allows for the combination of multiple individual projects, (4) provides objective and sufficiently accurate results for the initial simulation and evaluation of project variants, (5) does not require specific knowledge in thermal physics, economics, or construction, ensuring user-friendliness, and (6) utilizes a limited number of indicators to streamline the simulation process. This tool provides insights into (1) achievable heat consumption and primary energy savings, (2) the reduction in dominant CO₂ emissions, (3) changes in heating tariffs and costs, and (4) required investments.

Field experts of the Latvian Association of Local and Regional Governments and municipalities have evaluated this tool as useful for municipalities to streamline the sustainable planning and management of heating system projects in their territory, facilitating the prioritization and balancing of decisions and actions.

It should be mentioned that the methodology was developed in accordance with the regulatory environment and heat supply practice of Latvia. To use this methodology and tool in other countries, it will be necessary to further develop the methodology in accordance with the regulatory environment of these countries.

These are our recommendations:

• Given that public sentiment is most accurately understood at the municipal level, LGs should not only be consulted but also actively be involved in national-level decision-making.
• LGs should strengthen partnerships with private-sector stakeholders through effective guidance, collaborative planning, and the coordination of decisions aimed at improving building energy performance.