Columnists: Clare Taylor, Sustainable Energy Investment Forums

Published at: 21 Mar 2017

Money talks: financing Europe’s low carbon transition

Accelerating investment in sustainable energy is key to meet the objectives of the Energy Union and support the transition to a clean energy system. This is particularly important in the building sector where the large-scale mobilisation of private financing is necessary to speed-up the renovation of the EU building stock, which represents 40% of the EU energy consumption and 36% of CO2 emissions. Over the next three years, a series of Sustainable Energy Investment Forums (SEI Forums) will take place across Europe, aimed at boosting boost large-scale investment and financing for energy efficiency at the national level.

As a pillar of the Energy Union Framework Strategy, energy efficiency plays a key role in the recently published 'Clean Energy for All Europeans' package, in which the European Commission proposes to raise the ambition level: a binding EU level target of 30% by 2030. It is estimated that reaching the 30% target will create about 400,000 new jobs, save €70 billion in fossil fuel import bills, and reduce health damage costs by up to €8.3 billion per year. Most Member States have committed to reaching ambitious energy efficiency targets for 2020, and put in place many energy efficiency programmes and measures.

To support Member States in mobilising private financing for energy efficiency investments and accelerate the renovation of buildings, the European Commission launched a European initiative on "Smart Finance for Smart Buildings". This initiative aims at creating an enabling framework to unlock investment in buildings. It will support the more effective use of public funds, it will help project developers bring good project ideas to maturity and it will make energy efficiency investments more trusted and attractive for project promoters, financiers and investors.

As part of this initiative, the European Commission’s Executive Agency for Small and Medium-sized Enterprises (EASME) is deploying a series of Sustainable Energy Investment Forums (SEI Forums) in the form of public events and roundtables on energy efficiency financing. These events bring together the main players in the movement for sustainable energy financing. With events planned to cover most EU Member States, the forums come at a critical time in Europe’s low carbon transition.

Recent years have seen a flurry of activity around sustainable energy financing, particularly in relation to energy efficiency in buildings, which account for 40% of energy consumption. Launched in 2011, the Renovate Europe campaign calls for the reduction in energy demand of the EU building stock by 80% by 2050 (compared to 2005 levels). The International Energy Agency has done invaluable work in quantifying the multiple benefits of energy efficiency, and operational frontrunners such as KfW are evidencing the business case for energy efficiency retrofit, with up to EUR 5 returned to the public purse for every EUR 1 invested.

More recently, the Energy Efficiency Financial Institutions Group has pulled together policymakers and heavy hitters from the financial world including EIB, EBRD, Deutsche Bank, ING, Allianz, BNP Paribas and Siemens Financial Services, to identify the barriers to the long-term financing for energy efficiency and propose policy and market solutions to them. The Investor Confidence Project (ICP) with funding from the EU's Horizon 2020 programme has developed protocols to standardise how energy efficiency projects are developed, maintained and measured, with a big ambition: “helping energy efficiency become a standardised product and, thus, an indispensable part of every institutional investor's portfolio,” according to ICP’s senior advisor Steve Fawkes.  

These initiatives along with stalwarts of the energy efficiency scene such as the UN Environment Programme – Finance Initiative (UNEP FI), the World Green Building Council, and the Covenant of Mayors for Climate & Energy are represented on the SEI Forums advisory group. This body of experience will inform the SEI Forums -convened public conferences, and national roundtables of public and private experts on sustainable energy finance in the targeted countries. SEI Forums will provide the basis for long-term cooperation and provide roadmaps to improve access to sustainable energy finance in each country, as well as creating a platform for proposing changes to policy and regulatory frameworks.

SEI Forums events to date include a regional conference on financing energy efficiency in the Baltic States, and an energy efficiency finance marketplace in Brussels earlier this year, which saw some 350 people discussing solutions to energy efficiency finance and sharing good practices.

The next event on 30 March in Brussels will present results from projects across Europe that are successfully demonstrating that energy efficiency can be financed at a large scale through the mobilisation of private financing. Further events are planned on 27 April in Prague, 23 May in Copenhagen and 15 June in Madrid.

The SEI Forums will bring a renewed focus on, and ways of, enabling private sector investment in energy efficiency in buildings, to accelerate the growing momentum for energy efficiency financing. Will these forums provide the tipping point for mass-scale investment in Europe’s buildings?  Watch this space.


Other columns by Clare Taylor