Assessment of Socio-Economic and Environmental Impacts of Energy Efficiency Improvements in Multi-Apartment Buildings: Case Study of Lithuania

Abstract

This research aims to assess the socio-economic and environmental impacts of the Lithuanian long-term renovation strategy, focusing on improvements in the energy performance of renovated multi-apartment buildings in the country. The methodology used in the study is centred on the CleanProd general equilibrium model, which is based on publicly available data from the FIGARO database and Eurostat’s non-financial transaction statistics. The four renovation financing scenarios analysed are represented in the model by changes in the demand for energy resources and construction and other transactions related to the renovation programme. To reflect the dynamic nature of the renovation programme, counterfactual equilibria are sought for each year of the renovation programme. The results revealed that renovation of multi-apartment buildings brings net benefits, including long-term increases in gross domestic products (GDPs) and employment, as well as a decrease in economy-wide greenhouse gas (GHG) emissions, and is aligned with the binding European Union’s energy efficiency target to reduce energy consumption at least by 11.7% in 2030 (in comparison to 2020). The Increase in Taxes on Products scenario is modelled as the most favourable scenario. It assures annual GDP growth by 0.37%, employment growth by 2170 jobs a year, including 606 jobs for young people, and an annual decrease in GHG emissions by 929–1043 ktCO_2eq. It is found that the most considerable benefits are received during the renovation of medium-size buildings when construction demand increases by EUR 600,000–800,000 per year and natural gas and district heating demand are reduced by EUR 59,000–187,000 per year. Other scenarios demonstrating different building renovation and energy efficiency support practices, including Costless, Reallocation of Governmental Expenditure, and Governmental Loan, show relevant but slightly lower benefits.

1. Introduction

Despite their long-recognised low energy efficiency, many old multi-apartment buildings have not been renovated. This issue challenges every Member State (MS) of the European Union (EU). Lithuania, in particular, is notable for its high number of multi-apartment buildings that perform poorly in terms of energy efficiency. Improving energy efficiency in buildings is highly linked with the broader European sustainability vision. It is reflected in the broader goals of the European Green Deal, which are achieving climate neutrality, reducing energy consumption, decreasing energy poverty, and fostering economic growth through sustainable innovations. Research into Lithuania’s case will set a baseline for evaluating the importance of energy efficiency in buildings in all the countries where the European Green Deal will be implemented.

Many scientists have focused on energy efficiency in buildings, showing the pros and cons of renovation, including the financial challenges, the economic impact, the potential cost savings, and various environmental benefits. For example, Liao et al. [1] comprehensively reviewed the economic barriers to building renovation, focusing on how modernising older structures can lower energy consumption and greenhouse gas (GHG) emissions. Their research findings indicate that achieving the benefits of building renovation requires addressing obstacles such as outdated waste recycling and the need for technology to extend building life cycles [1]. In addition, several studies highlight the uneven socio-economic impacts of energy efficiency across different income groups and regions. Figus et al. [2] analysed energy efficiency improvements in the UK’s residential sector, finding that low-income households experienced more significant increases in disposable income under scenarios where energy efficiency measures were applied across all income groups. In contrast, limiting energy efficiency measures to low-income households alone resulted in less economic benefit. Furthermore, De Macedo et al. [3] analysed the direct and rebound effects of energy efficiency programmes on employment and value-added in North Macedonia’s industrial enterprises. Their findings highlighted that energy efficiency improvements positively influenced net employment. Still, the magnitude of the impact on value-added losses depended on whether the energy savings were used domestically or for foreign purchases. Purchasing foreign goods led to a fourteen-fold decrease in employment impact, and value-added losses were observed if energy savings were retained as profit rather than reinvested into production. This study emphasises reinvesting energy efficiency savings into domestic production to maximise economic benefits.

Regarding residential sectors, energy efficiency investments have proven to generate economic and environmental benefits. In their research, Choi et al. [4] demonstrated that energy efficiency investments in attic insulation and furnace upgrades in Ohio led to a significant economic output of USD 17.9 million and created over one thousand jobs. However, they also found that prioritising the least energy-efficient homes may not always be logical because of the complexity of implementing energy efficiency interventions across diverse housing. Similarly, Garrido-Soriano et al. [5] assessed the energy savings potential in Catalonia, finding that national-level energy efficiency scenarios yielded 29% of energy savings compared to 14.3% at the regional level. Nevertheless, tailored policies that consider the diversity of housing types and regional conditions are needed due to the investment required for divergent houses. Bataille and Melton [6] focused on the historical impact of energy efficiency improvements on gross domestic products (GDPs) and employment in Canada. The findings showed that energy efficiency improvements contributed to GDP growth (0.19% per year).

In addition, energy efficiency improvements provide numerous socio-economic advantages beyond energy savings. These include enhanced economic growth, job creation, reduced energy poverty, improved health and well-being, and environmental protection [7,8,9]. In the scientific literature, we can see the debates on these benefits. From one perspective, energy efficiency measures stimulate economic activity and potentially lead to budget savings [8]. On the other hand, energy savings may be lower than projected due to rebound effects [10]. The impact of energy efficiency highly depends on the general state of the country’s economy. For example, in developing countries, energy efficiency investments can mitigate tensions between economic growth and sustainable development while addressing challenges such as energy subsidies and unreliable power supply [11].

In addition, there are advantages and disadvantages to specific energy efficiency practices. For example, the impacts of energy efficiency measures offer solutions that provide environmental benefits but potentially adverse economic effects [12]. For this reason, a comprehensive evaluation of energy, financial, ecological, and social impacts is crucial for effective policymaking [12,13].

Like in all the EU MS, building renovation has significant socio-economic impacts, particularly in multi-apartment buildings in Lithuania. Renovations in Lithuania have been closely linked to the energy transformation goals outlined by the EU, particularly in the context of the Green New Deal [14]. A study by Chomać-Pierzecka et al. [15] found that the energy transformation process, heavily influenced by the EU’s environmental policies, has had economic and ecological dimensions. It is important to mention that developing Lithuania’s energy efficiency and renewable energy sector has been essential to reducing energy dependency and providing long-term financial benefits. It is observed that energy efficiency improvements through renovation can lead to substantial reductions in thermal energy consumption, with savings of up to 50.59% observed in some cases [16] and potential reductions in carbon dioxide (CO₂) emissions of 12–48% [17]. Nevertheless, the building renovation process has been slowed due to financial barriers, organisational issues, and social factors [18,19]. Besides all the benefits, Štreimikienė et al. [20] highlighted households’ economic barriers to adopting renewable energy technologies, including building renovation. The research shows that although Lithuanian households are willing to adopt these technologies, financial constraints and a lack of adequate infrastructure hinder the full realisation of potential economic benefits. While building renovations present significant economic and ecological opportunities in Lithuania, targeted financial support and policy interventions are needed to overcome the limiting barriers.

In response to policy objectives related to building renovation and building on ongoing research in this area, the paper examines the support mechanisms for building renovation and their alternatives in Lithuania. This study aims to assess the socio-economic and environmental impacts of energy efficiency measures and their support implemented in multi-apartment buildings to justify the rationale behind recent political ambitions in Lithuania.

Despite many studies focusing on the general impact of energy efficiency and building renovation, this study fills the scientific literature gap about adopting a computable general equilibrium model to solve the problem of impact assessment of multi-apartment buildings’ renovation and tailoring different energy efficiency in multi-apartment building support practices in Lithuania. In this study, four scenarios are analysed, including (1) The Reallocation of Governmental Expenditure for Enhancing Building Renovation and Energy Efficiency, (2) Increase in Taxes on Products, (3) Governmental Loans, and (4) Costless. Given the limited literature on the socio-economic and environmental impacts of building renovation support in Lithuania, this study offers several important contributions. First, it develops a socio-economic and environmental impact assessment framework that analyses scenarios at varying levels of detail. Second, the economy-wide analysis provides a more comprehensive understanding of the effects of environmentally friendly solutions on society beyond individual economic sectors. Third, the focus on Lithuania, a country with a pressing need for building renovation in the context of the EU, makes this analysis relevant for other nations, including developing economies. Lastly, the socio-economic and environmental impact assessment relies heavily on the most recent publicly available data, with additional detailed breakdowns, and focuses on key scenarios related to building renovation support, making the findings especially pertinent for policymaking.

To achieve this, the paper has four main goals: (1) to tailor the computable general equilibrium model CleanProdLT to solve the problem of impact assessment of multi-apartment buildings’ renovation; (2) to assess the socio-economic and environmental impacts of various forms of Government support; (3) to estimate the effects of these measures on job creation, including youth employment; (4) to conduct a comparative analysis of the proposed building renovation support practices; and (5) to provide relevant insights for policymakers in the formation and implementation of related policies.

For this purpose, the study employs the CleanProdLT general equilibrium model, a suitable tool for analysing the socio-economic and environmental impacts of different strategies. It focuses on key policy criteria such as economic growth, employment, and GHG emissions.

The structure of the paper is as follows: Section 2 outlines the research steps, methods, and data used. It then presents the renovation scenarios based on Lithuania’s Long-Term Renovation Strategy and a detailed analysis of the current state of multi-apartment buildings. Section 3 presents the research results, Section 4 discusses them, and Section 5 concludes the paper.

2. Materials and Methods

This paper analyses building renovation support practices and their profound economic ramifications. It employs a specialised modelling framework, with the CleanProdLT general economic equilibrium model taking centre stage for modelling and data disaggregation (Figure 1). We are using the general equilibrium model as it offers a more comprehensive framework for analysing the impact on the economic systems compared to partial equilibrium or input–output models. While input–output (IO) models are useful for examining sectoral linkages and static interdependencies, they often fail to capture the feedback effects. Partial equilibrium models, on the other hand, focus narrowly on specific markets, ignoring broader system-wide interactions.

2.1. The CleanProdLT Model

CleanProdLT is used as a tool to evaluate socio-economic and environmental impacts. This model is defined in detail in the study Socioeconomic Impacts of Sustainability Practices in the Production and Use of Carrier Bags [21]. The model relies on the Social Accounting Matrix (SAM) constructed using Lithuanian data from 2019. This choice of data is made due to its representation of a stable economic situation compared to the latest available data for 2021. CleanProdLT integrates IO quantity and price models but progresses beyond conventional IO analysis by endogenising final consumption within the budget constraints of representative agents. Achieving general equilibrium within the model involves combining the outcomes of price and quantity models through iterative computations to establish equilibrium across all markets. Among the advantages of this model are its level of detail (the basic version covers 64 commodity groups), its relatively simple structure, and the fact that it uses the most up-to-date information available in the public domain (the FIGARO database [22] and the Eurostat non-financial transactions statistics [23] are used to construct the SAM). For this study, the SAM is further disaggregated by energy product (individual energy products are identified instead of the aggregated D35 category), allowing the model to reflect energy efficiency measures and assess the broader economic impacts associated with the application of these measures. This study analyses the wide-economy implications for general and youth employment, GDPs, and GHG emissions. The impact on total employment and youth employment separately was chosen because it is an issue in Lithuania. According to the Lithuanian Ministry of Social Security and Labor (2024) [24], only one third of young people are employed in the country, and in the context of the EU, youth unemployment in Lithuania is higher than the EU average [25]. Therefore, the search for opportunities to increase youth employment is relevant for the country. The impact on GDPs was chosen because it is the most common indicator of economic growth. Finally, the impact on GHG was chosen as it represents the environmental sustainability and efficiency of building renovations.

2.2. Scenarios

Four scenarios are developed to analyse the socio-economic and environmental impacts of energy efficiency in multi-apartment buildings. The scenarios have in common the socio-economic and environmental impact modelling initiates changes in the SAM in the households, the Governmental, the construction, and the financial intermediary sectors, as well as the fuel and energy production industry (Figure 2).

Figure 2 represents this by the rectangular boxes connected by a grey elbow, double elbow, and line arrow. Specifically, the households are at the centre of change. They do not use their own monetary savings during the multi-apartment building renovation. On the contrary, the renovation is carried out with a soft loan and a Governmental subsidy to pay for the specified renovation activities. The households pay the construction sector for services while renovating multi-apartment buildings. After the renovation, the households benefitted from energy savings and paid less to energy and fuel-producing and -supplying companies. The differences in the scenarios arise when considering how the Government chooses to finance the support for renovation. This corresponds to the red line arrow in Figure 2. Under the Increase in Taxes on Products scenario, the Government supports the renovation by increasing product taxes. The Reallocation of the Governmental Expenditure scenario envisages redistributing the Governmental spending favouring the multi-apartment building renovation, reducing expenditure on State functions such as education, treatment, culture, etc. The Governmental Loan scenario considers loan financing received from domestic financial intermediaries, and the Costless scenario assumes non-repayable aid from the foreign sector. The mapping of the scenarios in the general equilibrium model is carried out based on the resource flows associated with the efficiency improvement process, following the methodological principles used in the impact analysis of scenarios of energy policy developments [26].

2.3. Assumptions

The scenarios for improving energy efficiency in multi-apartment buildings are developed based on policy documents and a detailed analysis of the existing situation in multi-apartment buildings [27,28]. Specifically, the data for the establishment of assumptions are collected from the Long-term Renovation Strategy of Lithuania [28] and summarised in

Table 1. Key multi-apartment buildings renovation indicators and their values [28].

Indicators	<1000 m2	1000–5000 m2	>5000 m2	Total
Primary fuel and energy savings from D class and lower to C, kWh/m2/year	143	112	88
Number of multi-apartment buildings of class from D and lower, thousand units	18.30	11.44	1.39	31.14
Total area of multi-apartment buildings of class from D and lower, million m2	6.63	26.85	8.75	42.24
Investment, EUR/m2	323	249	186

.

In detail, it is assumed that the multi-apartment buildings of energy class <= D to energy class C will be renovated from 2021 to 2050. This includes a total of 31,140 multi-apartment buildings, the total area of which is 42.24 million m², from which the small-size multi-apartment buildings (of less than 1000 m²) account for 16%, the medium-size buildings (of 1000–5000 m²) for 64%, and the large-size buildings (of more than 5000 m²) for 21%. The worst multi-apartment buildings are renovated first, taking into account the criteria of fuel and energy savings. From 2021 to 2038, the small-size buildings are renovated, as they have the largest primary fuel and energy-saving potential (143 kWh/m² a year), followed by the medium-size buildings by 2049 and the large-size buildings by 2050. The Order on Financing Rules for Multi-Apartment Building Renovation [29] explains estimates of fuel and energy savings. It says that minimum mandatory building energy efficiency requirements are applied for multi-apartment buildings. In detail, after renovation, it is mandatory to achieve a building energy efficiency class of at least C and to reduce heat energy consumption by at least 40% compared to consumption before the implementation of the renovation project. To achieve these savings, energy-efficiency-enhancing measures such as ventilation and recuperation system reorganisation, roof and external wall insulation, heating and hot water systems reorganisation or replacement, glazing or replacement of windows in balconies, common rooms, elevator renovation, etc., should be implemented [30]. In previous research [31], we assumed that the validity period of energy efficiency measures enabling fixed energy savings is 30 years, after which energy performance of the multi-apartment building achieves its primarily poor status; therefore, energy savings are no longer modelled, and the impact estimates end in 2079. In this research, we refer to the latest studies [32,33,34] demonstrating that energy performance drops in the buildings over a long period due to aging and degradation of various building components. Energy consumption is shown to increase by 10% to 40% over 20 years. Based on the scientific literature findings, we consider that the primary energy consumption (kWh/m²) in the renovated multi-apartment buildings increases by 12% each year after 5 years from the renovation, by 13% each year after 10 years, by 16% each year after 15 years, by 17% each year after 20 years, and by 18% each year after that until 2079, resulting in a reduction in total energy savings. An assumption is taken that energy and fuel savings will have the structure of the energy and fuel mix for 2019. Specifically, DH savings will account for 79%, biofuel—14%, gas–2%, hard coal–3%, and electricity–2% of total energy savings [35]. Figure 3 presents changes in total energy savings in Lithuanian multi-apartment buildings.

As shown in Figure 3, as the renovation accelerates, the volume of total energy savings increases significantly until 2050 and hides those buildings’ drops in energy performance. Only from 2050 will a drop in the energy performance of multi-apartment buildings become apparent. Total fuel and energy savings will be reduced by 0.5% annually from 2050 to 2079. Accumulated fuel and energy savings are 147 TWh. District heat (DH) is saved the most (116 TWh), followed by biofuels (21 TWh), fossil fuels (7 TWh), and electricity (3 TWh).

Investment is requested to achieve the aforementioned total fuel and energy savings. Small-size multi-apartment buildings need the highest investment (323 EUR/m²). Its demand decreases in larger size multi-apartment buildings. Investment requirements in large multi-apartment buildings are twice as low as in small buildings, i.e., 186 EUR/m². Investment is financed via a Governmental subsidy and a soft loan. The Government covers up to 40% of the investment, and the financial intermediaries provide loans equivalent to 60% of the investment. Households receive a soft loan for 20 years with an interest rate of 3% [36] and repay it annually using the annuity method.

Figure 4 presents the schedules and amounts of Government subsidy payments, households’ repayment of soft loans, and injections in the construction sector for renovation activities carried out.

As shown in Figure 4, the need for construction services is staggered. As long as small-size multi-apartment buildings are being renovated, the demand for construction is relatively small (on average, EUR 127 million each year). After renovating medium-sized multi-apartment buildings, payments to the construction sector increased five-fold to EUR 633 million per year. Finally, the renovation of large-size multi-apartment buildings requires the most investment. EUR 1216 million will be paid to the construction sector in 2050. To accelerate the renovation processes and support investment decisions, the Government allocates a subsidy annually until 2050. Households receive soft loans. Soft loans for renovating large buildings in 2050 will be fully repaid in 2069.

Following the global trends, we observe that fuel and energy prices are predicted to increase in Lithuania [37]. It is assumed that they will rise at the rate of inflation, which is predicted to be 2% each year. It is a moderate inflation that stimulates the economy to grow. Electricity will be the most expensive energy source. Its price will increase from 0.12 EUR/kWh in 2020 to 0.40 EUR/kWh in 2079. The price of hard coal will gradually increase from EUR 0.06 to 0.19 EUR/kWh over the same period. The cost of natural gas will grow from 0.02 EUR/kWh to 0.07 EUR/kWh. Biofuels will remain the cheapest fuels. Their price will increase from 0.02 EUR/kWh in 2020 to 0.04 EUR/kWh in 2079.

Changes in fuel and energy prices, alongside total energy savings, influence households’ expenditure for fuel and energy consumption as well as the income of the fuel and energy-producing industry. In Figure 5, expected reductions in households’ expenditure for fuel and energy consumption are given.

As shown in Figure 5, households increasingly benefit from renovating multi-apartment buildings in terms of fuel and energy consumption expenditure, which are predicted to reduce. From 2021 to 2079, the renovation made it possible to reduce household expenditure by a total of EUR 10.8 billion. Household expenditures for DH and natural gas consumption were reduced by a total of EUR 9.4 billion, for coal—by EUR 0.5 billion, for electricity—by EUR 0.5 billion, and for biofuels—by EUR 0.4 billion.

The socio-economic and environmental impacts were modelled under the defined assumptions, and established. Figure 3, Figure 4 and Figure 5 explain the breaking points in the socio-economic and environmental effects. Estimates of relevant impacts are presented in Section 3.

3. Results

3.1. Changes in Real GDP

Under all scenarios, positive changes in real GDP are estimated, suggesting that the economy will grow by 0.2–0.5% (EUR 193.2–464.0 million) a year in the long term due to the renovation of multi-apartment buildings (Figure 6).

As shown in Figure 6, the Costless scenario is the most promising scenario for the country, as real GDP increases by 0.48% a year, equivalent to EUR 464.0 million a year. Under the Costless scenario, gratuitous financial injections from the foreign sector to finance energy efficiency measures in Lithuania are crucial. They create great conditions for financing the increased demand for the construction sector, benefitting the households in terms of fuel and energy savings, and create interest in financial intermediaries. The benefits counterbalance the reduced household possibilities of purchasing goods and services during a soft loan repayment period and the reduced fuel and energy-producing industry revenue. Under the Increase in Taxes on Products scenario, the impact is estimated at 0.36% or EUR 347.2 million a year. Compared to the Costless scenario, it is reduced because household demands for products decrease since taxes on products have been imposed and products have become expensive. Under the Reallocation of Governmental Expenditure scenario, the real GDP grows by 0.23% (EUR 222.5 million) annually. The Government supports energy efficiency measures from internal sources by reducing expenditure to implement its other functions in the areas of education, health, culture, etc., which are domestic. However, from a long-term perspective, this is better than taking a loan from a financial intermediary. Under the Governmental Loan scenario, real GDP improves only by 0.20% (EUR 193.2 million) annually. The Government repays a loan in decreasing amounts until 2070. After 2070, the economy grows only because of fuel and energy savings, which increase till the end of the period.

3.2. Changes in Employment

The results of the scenario modelling demonstrate that employment increases by 0.11–0.2% per year in the long term due to the renovation of multi-apartment buildings. This is equivalent to, on average, 1560 to 4410 new jobs yearly (Figure 7).

As shown in Figure 7, the Costless scenario ensures the most significant improvements in employment. Every year, 4410 new jobs could be created in Lithuania. New jobs are mainly created during the renovation, especially during the renovation of medium- and large multi-apartment buildings. The Governmental Loan scenario is among the best scenarios during the renovation period, but it generates a negative impact after 2050 when the Government repays its loan. Overall, employment increases by only 0.11% or 1560 jobs annually. The effect of the Increase in Taxes on Products scenario is estimated to be, on average, 2170 jobs per year. The Reallocation of Governmental Expenditure scenario provides the lowest employment opportunities, i.e., 1560 jobs annually.

3.3. Changes in Youth (Age 15–24) Employment

Research on the impact of renovating multi-apartment buildings on increasing youth employment provides various estimates (Figure 8).

As shown in Figure 8, youth is sensitive to Government decisions in the short term. Under the Increase in Taxes on Products scenario, when products are expensive to customers, and they are likely to be more intensively engaged in the search for jobs, young people are pushed out of the labour market, although the need for labour, especially in the construction sector (Figure 6), increases. An increase in product taxes is estimated to reduce youth employment by 41 jobs a year during the renovation of multi-apartment buildings. Similarly, the reallocation of Governmental expenditure to support the implementation of energy efficiency measures decreases youth employment by seven jobs a year. After the renovation of multi-apartment buildings, youth employment has increased. It improves equally well under the Increase in Taxes on Products scenario, the Relocation of Governmental Expenditure scenario, and the Costless scenario. At the end of the period, the scenarios above offer 606 new jobs for young people. In the long term, an increase in youth employment comprises 5–12.6% of the total increase in employment.

3.4. Changes in GHG Emissions

The renovation of multi-apartment buildings allows for reducing GHG emissions in Lithuania (Figure 9).

As shown in Figure 9, reductions in GHG emissions increase over the period from 900 ktCO_2eq. in 2021 to 1130 ktCO_2eq. in 2079. Overall, there are no significant differences in GHG emission reductions between scenarios. However, more obvious distinctions in GHG emissions development occur when medium- and large-size multi-apartment buildings are renovated from 2039 to 2050. During this period, the most favourable option is to increase taxes on products, as it allows for the reduction in GHG emissions from 949 ktCO_2eq. in 2039 to 1080 ktCO_2eq. in 2050. If the implementation of energy efficiency measures in multi-apartment buildings is financed with non-refundable money from the foreign sector, the impact on reduction in GHG emissions is the smallest, i.e., from 910 ktCO_2eq. in 2021 to 1013 ktCO_2eq. in 2021, as the results of the Costless scenario demonstrate, and if energy efficiency measures are financed by relocating the Governmental expenditure or by receiving the Governmental loan, the reductions in GHG emissions are found in between ones achieved by the Increase in Taxes on Products scenario and the Costless scenario, i.e., 929 ktCO_2eq. in 2021 and 1043 ktCO_2eq. in 2050. In the case of the best scenario, which is the Increase in Taxes on Products scenario, the most significant decreases are estimated in electricity, gas, and steam (1142 ktCO_2eq.), land transport services (7.4 ktCO_2eq.), and chemicals and chemical products (4.3 ktCO_2eq.) industries. The most significant increases in GHG emissions are estimated in the agricultural industry (24.6 ktCO_2eq.) and the manufacture of coke and refined petroleum products industry (3.5 ktCO_2eq.) in 2079.

4. Discussion

The study evaluates the long-term economic, employment, and environmental impacts of renovating multi-apartment buildings under different financial scenarios in Lithuania. The results indicate consistent positive effects on GDPs, employment, and GHG emission reductions, with variations depending on the financing approach used to encourage renovation.

Our research was based on the findings of Bartolucci et al. [38] and Uddin et al. [39]. Bartolucci et al. [38] presented the systematic literature review results on the criteria underlying the retrofitting of historical buildings. They were assigned to one or several PESTEL domains representing Political, Economic, Social, Technological, Environmental, and Legislative aspects for the energy retrofit of historical buildings. They found that the legislative domain was the most investigated in the scientific literature, but the political and social domains were the least studied. Although the interest in the economic domain slightly decreased over time, it remained one of the most exciting areas studied within a group of social, technological, and environmental domains. This called for a multidisciplinary approach to a comprehensive assessment. Uddin et al. [39] argued that the linkages between energy efficiency and social sustainability remained largely unexplored. Therefore, social, economic, and environmental domains were addressed in our research. Furthermore, Bartolucci et al. [38] stated that no unique calculation or impact assessment methods were used in the scientific literature. This aligns with the findings of Baatz [40], who observed that studies lack transparency when reporting the benefits and methodologies to calculate them. Thus, our research responded to the literature’s shortcomings.

Thus, the results of our research contribute to the literature that develops a methodological framework and quantifies the short-to-long-term benefits of energy efficiency improvements in the residential sector from the sustainability point of view and the context of the Green New Deal. These actions support activities to manage the climate crisis while ensuring job creation and economic growth. Therefore, these indicators were addressed in our research.

Table 2. Comparison of Lithuanian studies to global ones.

Author (Year)	Country	Period of Analysis	Method	Level of Energy Efficiency Implementation	Results
Our study	Lithuania	2021–2079	CleanProdLT CGE model	Multi-apartment buildings	GDPs 0.23–0.48% a year Employment 0.11–0.32% a year Youth employment 0.15–0.33% a year GHG emissions −0.05% a year
Figus et al. [2]	United Kingdom (UK)	_	UK-ENVI CGE model	Residential	GDPs 0.03–0.16% CPI 0.21–0.32% Employment 0.05–0.13%
Choi et al. [4]	Hamilton County	_	IMPLAN	Residential heating	6% of heating energy reduction Attic insulation: 47 jobs; 8.8 million USD economic output Furnace upgrades 57 jobs; 9.7 million USD economic output
Celani de Macedo et al. [3]	North Macedonia	-	IO	Industry	Net employment 43–897 jobs a year Value added −206 to 386 million MKD
Mirasgedis et al. [41]	Greek		IO analysis and the adjusted earnings gain approach	Buildings by energy efficiency measures	Replacement of old diesel boilers 24 full-time equivalent (FTE) jobs per EUR 1 million investment Insulation of external walls and roofs 21.1 FTE jobs Installation of double or triple-glazed windows 13.8 FTE jobs
Bataille and Melton [6]	Canada	2002–2012	Regional General Equilibrium Energy Models	Country (region)	Energy expenditure −0.6% a year GDPs 0.19% a year (0.55% in oil and gas sectors; −(0.5–1.2) % in refining, natural gas, and hydroelectricity sectors) Employment 2.5% a year Household welfare 1.5% a year
Pollitt et al. [42]	EU28	Up to 2030	E3ME	Energy efficiency target is increased from 27% to 30–40%: EU and MS levels	GDPs 0.4–4.1% Employment 0.2–2.1% Health-related cost savings of 28.3–77.0 billion EUR GHG emissions reduced by 40.7–47.2% from 1990 level
Li et al. [43]	BRICS countries	1990 to 2020	CS-ARDL approach	Regional	1% increase in energy efficiency could lead to an increase in economic growth of about 0.260 units in the short term and 0.319 units in the long term
Popescu et al. [44]	Romania		Survey	Old residential buildings	Thermal retrofitting increased their price by 2–3%, and 60% of investment in thermal retrofitting could be recovered during property transactions.
Phadkantha and Tansuchat [45]	Thailand	1990–2019	Markov Switching ADRL model	Country level	Energy efficiency, economic growth, and renewable energy consumption nonlinearly impact carbon emissions.
Liu et al. [46]	Gävleborg region (Sweden)	By 2050	Two simulation tools BV2 2010 and IDA ICE 4.0 Life Cycle Cost	Multi-apartment buildings	43% primary energy reduction and 48% CO2 emissions reduction

summarises a comparison of Lithuanian studies to global ones.

In the global scientific literature, this Lithuanian case study demonstrates the first attempt at developing a methodological framework to capture the broad impacts of energy efficiency improvements in multi-apartment buildings through renovation actions. The framework uses the computable general equilibrium model CleanProdLT, covering 64 productive sectors, and is calibrated on the Lithuanian SAM for 2019. Similarly, Figus et al. [2] applied the computable general equilibrium model UK-ENVI. They calibrated it on the UK SAM 2015 to assess the impacts of energy efficiency in the residential sector by disaggregating households into five income quintiles, which were not investigated in our research. Choi et al. [4] integrated IO analysis with detailed local data using the IMPLAN model to study the impacts of energy efficiency in residential buildings, while Celani de Macedo et al. [3] applied IO tables to study the effects of energy efficiency improvements in the industry. Pollitt et al. [42] adapted the E3ME macroeconomic model to assess the effects of increasing the EU’s 2030 energy efficiency target beyond 27% to 30–40%. The survey method was used by Popescu et al. [44] to clarify the impact of old residential building retrofitting on the price of the building. Similarly, econometric techniques were tailored to define relationships between energy efficiency and socio-economic variables. The literature on understanding these relationships is rich. In detail, Oyewole et al. [47] constructed the quantile regression model to clarify the link between energy efficiency and economic growth, employment, and human development across income groups. Li et al. [43] applied the CS-ARDL approach to analyse the factors enabling and hindering sustainable economic growth. Thus, it becomes evident that our research results are difficult to compare from the point of view of the methods selected in global research and a variety of application areas.

The results of the Lithuanian study substantiate that energy efficiency improvements in multi-apartment buildings contribute to sustainable development in terms of economic growth, employment, including youth employment, as well as GHG emissions, and in such a way, contribute to achieving key goals of the European Green Deal. In detail, it is assessed that by renovating old multi-apartment buildings in Lithuania, the GDPs could grow by 0.23% a year under the Relocation of Governmental Expenditure scenario to 0.48% a year under the Costless scenario, when in the most desirable Increase in Taxes on Products scenario the economy would grow by 0.36% a year. Similarly, employment could increase too, but slower than the GDP growth. The results of the Governmental Loan scenario revealed that employment could increase by 0.11% a year and by 0.32% a year under the Costless scenario, while under the Increase in Taxes on Products scenario, it is expected to grow by 0.16% a year. In contrast, Bataille and Melton estimated that in Canada, the impact of energy efficiency on employment was more significant than on GDPs. The environment would also benefit from reducing GHG emissions by 0.05% annually. In this context, Croucher’s [48] results are worth mentioning. By analysing the impact of energy efficiency standards, they stated that job creation via an energy efficiency standard tends to happen in relatively low-paid sectors such as retail and services. Still, it reduces in higher-paid sectors such as the utility sector. Furthermore, the savings in electricity expenditure were identified as the most essential estimation. Our research found that savings in DH expenditure were crucial, as they accounted for EUR 9.3 billion, followed by savings in electricity expenditure (0.5 billion EUR). Our research results are in line with the estimates of Pollitt et al. [42], Figus et al. [2], Bataille and Melton [6], and Li et al. [43], who assessed the positive impacts of energy efficiency improvements on the macroeconomy and environment. However, the scope of the latter researchers was broader. It included the residential sector or all sectors of the national economy and estimated other relevant positive impacts, such as health, energy security, or competitiveness. In our study’s context, the research results of Pollitt et al. [42] are essential, as they investigated the impact of the enlargement of the energy efficiency target from 27% to 30% and beyond in the EU and each MS. They found that by increasing the energy efficiency target, GDPs could grow by 0.7% to 2.7% and employment by 0.3% to 3.2% in 2030 in Lithuania, depending on the size of the target. This is among the highest increases in EU MS. They also estimated that energy security will improve in Lithuania as energy import as a share of GDPs will decrease and health cost savings of EUR 339–939 million will be achieved. Lithuania can achieve international energy efficiency improvement obligations and targets from this perspective while experiencing socio-economic and environmental benefits. The value of Celani de Macedo et al.’s [3] work lies in showing how added value could change depending on the use of saved energy costs. Scientists revealed that value-added benefits could be achieved only if energy cost savings were used to purchase goods in the local economy, but losses would be achieved if they were used to import goods. It is likely that if we had assumed in our modelling that the energy cost savings were used to purchase goods and services only within the country, the economic benefit would have been modelled to be higher. We believe that by allowing access to imports and the domestic market, we avoided the negative economic impact of energy efficiency improvements. The results of the quantile regression model developed by Oyewole et al. [47] are worth mentioning too. Scientists estimated that advanced economies benefit the most from energy efficiency improvements, experiencing economic growth and human development, but generally suffer from employment losses. Our modelling results demonstrated that advanced economies could achieve employment, including youth employment, benefits from energy efficiency improvements if the financing methods of support measures are appropriately selected. This Lithuanian case study revealed that a negative impact on employment is expected shortly after renovation is finished and that there will be no increase in construction demand and subsidising. Our research considered aggregated energy savings, and does not detail measures of achieving defined energy savings. In contrast, Mirasgedis et al. [41] researched the employment impacts of implementing particular energy efficiency measures. Specifically, they estimated that replacing old diesel boilers provides the largest employment opportunities, followed by insulation of external walls and roofs and installation of double or triple-glazed windows. Total employment impacts were estimated as the largest for the insulation of external walls and roofs, followed by replacing old diesel boilers and installing new windows. Liu et al. [46] researched energy use reductions, primary energy savings, and CO₂ impacts of packages of energy efficiency measures in multi-apartment buildings and found that the potential to reduce energy use in multi-apartment buildings was more than 50%, which in turn contributes to a 43% primary energy reduction and a 48% CO₂ emissions reduction. The research aspects noted by Földváry et al. [49] were found to be interesting. Scientists discovered that indoor air quality was better before renovating multi-apartment buildings in Slovakia and that the concentrations of formaldehyde and other VOCs increased after renovation. They concluded that building renovation efforts should include improving ventilation in multi-apartment buildings. These all contribute to our study by specifying the areas to consider when forming energy efficiency packages and making investments.

The methodological limitations of this study are mainly related to the general limitations of CGE models. As they focus on the analysis of structural relationships in the economy, these models do not provide a comprehensive picture of dynamics and are not designed for forecasting. In this study, we are looking at multi-apartment buildings renovation processes, which have two important dynamic aspects: the evolution of the programmes themselves over time (each year of the programme provides support and buildings are renovated), and the effects of energy improvements achieved during the renovation process, which are visible long after the renovation. Therefore, the CleanProd static model has been adapted to reflect these process characteristics. The general equilibrium modelling sequence presented in this paper is limited to a detailed assessment of the impact of the retrofitting programme and does not include other economic development factors. On the one hand, this can be seen as a limitation of the study, as the refurbishment scenarios are analysed without taking into account future changes in the energy and economic structure, but on the other hand, it allows to extract the socio-economic impacts of the refurbishment in particular, by distancing from the uncertainties related to energy and economic development. Several relevant research assumptions were established, but with certain limitations. Specifically, in this paper, time-varying energy savings over the time horizon up to the year 2079 were considered instead of fixed energy savings during the validity period (30 years) of energy efficiency measures, which was studied by [29]. The latest change in assumption resulted in GDP growth to 0.2–0.5% a year, while previous assumption demonstrated increase in GDPs by a lower rate, i.e., 0.2–0.4% a year. Similarly, current assumptions allow for an increase in employment by 0.11–0.2% a year, while previous assumptions guaranteed higher employment growth, i.e., by 0.1–0.3% a year. An assumption was taken that fuel and energy prices will increase by 2% a year. Given stronger growth rates in fuel prices from 2021 to 2022 than assumed, especially for natural gas and DH, we could expect real GDP growth by 0.6–0.9% a year, increase in employment by 0.4–0.6%, increase in a share of youth employment from total increase in employment to 5.1–9.5%, and reductions in GHG emissions by 1437 ktCO₂ in 2079. Overall, the findings underscore the transformative potential of energy efficiency improvements in multi-apartment buildings to drive sustainable development, aligning economic growth, social well-being, and environmental benefits with the objectives of the European Green Deal and global sustainability commitments.

5. Conclusions and Recommendations

In this research, the socio-economic and environmental impact assessment of multi-apartment building renovation was carried out by tailoring the CleanProdLT computable general equilibrium model to solve the specified problem. Based on the research results, the following conclusions have been drawn and recommendations suggested:

1. The CleanProdLT computable general equilibrium model can solve the scientific problem of the socio-economic and environmental impact assessment of renovation of multi-apartment buildings in Lithuania. This was carried out by identifying the sectors and activities affected by the renovation efforts, delineating the links between them, forming scenarios, and integrating relevant data-driven assumptions in the model. In this regard, the existing CleanProdLT model was enhanced with a user-friendly environment, consisting of a Scenario Table where its user identifies sectors and activities affected by energy efficiency improvements in multi-apartment buildings, defines scenarios, and submits an analysis period, and supplemented with a detailed sheet for Assumptions Determination for a submitted analysis period and a sheet for Formal Analysis of considered scenarios.

2. The results of the formal analysis of the Costless scenario, the Increase in Taxes on Products scenario, the Reallocation of Governmental Expenditures scenario, and the Governmental loan scenario showed that the costless financing of energy efficiency measures in Lithuanian multi-apartment buildings is the most promising in long-term, although is unrealistic. It generates more significant socio-economic benefits than other means of financing. Still, increasing taxes on products is the most favourable and realistic method of financing energy efficiency support measures for multi-apartment buildings renovation in Lithuania, as it increases GDPs and employment but reduces GHG emissions the most. Under the Increase in Taxes on Products scenario, GDPs improve by 0.36% (EUR 347.2 million) and employment—by 0.16% (2170 jobs) a year, but GHG emissions decrease by 0.047% yearly. Although there are no obvious scenario advantages for increasing youth employment, it has to be recognised that reallocating Government expenditure can provide more significant youth employment opportunities (by 0.17% a year) than other means. In contrast, the increase in taxes on products and the Governmental borrowing assures youth employment growth by 0.15% annually. Based on the research findings, we recommend prioritising the Increase in Taxes on Products scenario to finance energy efficiency measures in multi-apartment buildings. This approach ensures balanced outcomes by boosting GDPs by 0.36% (347.2 million EUR annually), creating 2170 new jobs each year, and achieving the highest reductions in GHG emissions (0.047% annually). To mitigate potential negative effects on households, complementary measures such as targeted subsidies or tax rebates for vulnerable groups should be implemented. This strategy aligns with long-term sustainability goals while maintaining economic and social benefits.

3. To increase energy efficiency in Lithuanian multi-apartment buildings, policymakers should consider the results of our research, which demonstrate the advantage of fiscal measures over various financing means used to finance energy efficiency support measures in the country. While the Increase in Taxes on Products scenario demonstrates strong outcomes for GHG emissions reduction and moderate economic growth, it negatively impacts youth employment in the short term. To mitigate this, consider complementary policies, such as targeted subsidies for low-income households or job creation programmes for youth, to offset increased living costs. In addition, reallocating governmental expenditures towards energy efficiency measures ensures steady economic and employment benefits while maintaining public services’ sustainability.

4. To reduce as much GHG as possible, policymakers should prioritise energy efficiency renovation measures (including, reorganisation of ventilation and recuperation system, roof and external wall insulation, heating and hot water systems reorganisation or replacement, glazing or replacement of windows in balconies, common rooms, elevator renovation, etc.) in multi-apartment buildings, particularly scenarios like the Increase in Taxes on Products, as this scenario demonstrates the most significant reduction in GHG emissions, decreasing from 949 ktCO_2eq. in 2039 to 1080 ktCO_2eq. in 2050. While this approach has the potential to reduce emissions in key sectors such as electricity, gas, steam, and land transport services, it is essential to implement complementary policies to address potential emission increases in agriculture and manufacturing, as highlighted in the text. In order to obtain greater reductions in GHG emissions, it is appropriate to supplement the package of energy efficiency measures with the installation of heat pumps and solar photovoltaics in multi-apartment buildings. This strategy will align with Lithuania’s long-term climate objectives and its commitments to reducing GHG emissions. In addition, strategy will support economic growth and employment growth targets in Lithuania too, as will impact on economic growth by 0.36% a year and employment increase by 0.16% a year. However, in the context of increasing youth employment, the Reallocation of Governmental Expenditure to support energy efficiency related investment should be more relevant for policymakers; Increase in Taxes on Products will increase youth employment, but to a significantly lower extent, so it should only be considered when other alternatives cannot be considered. The Governmental borrowing (the Governmental Loan scenario) for the purpose of implementing the energy efficiency policy in multi-apartment buildings does not have a significant effect on economic growth and increasing employment, including youth employment, although it allows the achievement of environmental goals as contributes to reductions in GHG emissions. Due to its payments to financial intermediaries, Governmental borrowing should not be aspirational for policymakers.