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Energy efficiency in buildings and funding options

Energy efficiency in buildings and funding options. 29 November 2011. Paul Hodson DG Energy Energy Efficiency. Overview. What are EU objectives? Which is the relevant EU legislation? What is the financing challenge? What centrally managed financial instruments are available?

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Energy efficiency in buildings and funding options

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  1. Energy efficiency in buildings and funding options 29 November 2011 Paul Hodson DG Energy Energy Efficiency

  2. Overview • What are EU objectives? • Which is the relevant EU legislation? • What is the financing challenge? • What centrally managed financial instruments are available? • What role do we see for cohesion funds?

  3. The EU 20-20-20 targets by 2020 Reduce greenhousegas emissions by 20% Increase share of renewables to 20% Reduce energyconsumption by 20% 100% Current trend to 2020 Current trend to 2020 -20% -10% Current trend to 2020 20%

  4. Energy 2020 - European Strategy for Energy • Published in November 2010 as a strategy for a competitive, safe and sustainable energy • Energy efficiency is priority number 1 • Key messages for buildings: • Focus on two sectors with biggest savings potential; transport and buildings; • Assistance for property owners and local governments for promoting energy savings measures; • Public sector to include energy efficiency as a parameter when buying services, products, etc.

  5. Why this focus on buildings? • Buildings are responsible for: • ~40% of EU-Energy use • ~36% CO2-emissions • 9% of EU 27 GDP • 8% of EU-workforce EU 27 total EU- Buildings sector 40% 36% Energy use CO2-emmissions

  6. Legislation for energy efficiency in buildings • Energy performance of buildings Directive (2002/91/EC and 2010/31/EU) • Ecodesign and Energy Labelling Directives (2009/125/EC and 2010/30/EU) • Commission proposal for a new Energy Efficiency Directive (COM(2011)370): • National energy efficiency obligation scheme for utilities or alternative approaches • 3 % annual refurbishment target for buildings owned by public bodies • More systemic use of energy performance contracting • Obligation for individual energy meters reflecting actual energy consumption & information on actual time of use

  7. What is the financial challenge? • The energy savings potential in the building sector is estimated to be 65 Mtoe • This corresponds to an investment need of around 587 billion € for the period 2011-2020, i.e. 60 billion € per year • Realising these savings would bridge about a third of the gap towards meeting the 2020 energy efficiency target • Also strong effect on job creation

  8. Financial support measures at EU level • Intelligent Energy – Europe II Programme (2007-2013): 735 MEUR for ‘soft’ EE/RES projects • ELENA: since 2009 technical assistance facility for EE/RES investments on regional and local level; • EEE-F: New European Energy Efficiency Facility:265 MEUR for investments into mature bankable EE/RES projects, associated TA; • Analysis of the appropriateness of EU funding for the EPBD as requested by the EPBD

  9. Intelligent Energy – Europe • One of three pillars of the Competitiveness and Innovation Framework Programme (CIP) • Contributes to secure sustainable and competitively priced energy for Europe and the 20-20-20 targets by: • Creating favourable market conditions • Preparing grounds for investment • Informing stakeholders and fostering commitment • Support to policy development and implementation • Building capacity and skills • EUR 735 million for the period 2007-2013, mostly used for grants (75% funding rate)

  10. Technical assistance facilities under the IEE ELENA-EIB Large scale investments Direct contracts with EIB Open call, no deadline Leverage 20 All IEE MS >Є50m MLEI Small-scale investments Direct contracts with EACI IEE call, standard deadline Leverage 15 IEE MS > Є6m ELENA-KfW Mid-size programmes Intermediated via PFIs Open call, no deadline Leverage 20 All IEE MS < Є50m TA for Project Development Services ELENA-EBRD Mid-size investments Direct contracts with EBRD Open call, no deadline Leverage 20 IEE/EBRD MS < Є50m ELENA-CEB Mid-size programmes Direct contracts with CEB or Intermediated via PFIs Open call, no deadline Leverage 20 IEE/CEB MS < Є50m 07/01/2020

  11. ELENA - EIB preliminary indicators for signed and approved projects • ELENA EIB projects as of 31/10/2011: 12 signed, 3 approved • ELENA contribution: EUR 27,341,336 • Expected investment: up to EUR 1.9bn • Energy savings: 1009,13 GWh during ELENA funding period • The production of energy from renewable sources: 501,54 GWh for the same period • The total emissions of CO2 avoided: 550.994 tons annually over the ELENA project duration • Direct and indirect jobs created during the implementation and life time of the investment programmes, if fully achieved, could be estimated at 32,500 person-years • 33% of projects focus on buildings sector

  12. ELENA added value • Replication of best practices demonstrated in other European locations e.g. ESCOs; and high potential replication of approaches developed by ELENA projects in other regions/countries • Scaling up and bundling EE & RE investments • Larger scale, better efficiency, economies of scale, reduced transaction costs • Increased capacity building within local authorities • Encouragement to improve planning and coordination • Improvement of bankability of projects • Support provided through ELENA improves access to finance • Support to the implementation of measures and programmes identified in SEAPs

  13. European Energy Efficiency Fund • EPPR amended regulation 2010 • 265 M€ (EC, EIB, CDP, DB), launched 1st July 2011 • Objective: addressing financial needs of commercially viable EE and RES projects • Scope: 70%EE, 20% RES, 10% Clean urban Transport • Final Beneficiaries: local/regional public authorities • Tailor made financing: Senior/junior loans, convertible debt, equity participation, forfeiting loans • Technical assistance (20M€ in grant) • Typical project size: up to 25M€

  14. Role of the EEE-F in mobilising private finance • EEE F objective: enhance viable EE and RES investments at local/regional level within multiannual strategies to mitigate CC • Address market failures (information/ awareness, TA…) • Address lack of access to capital (specific financial products…) • Confidence building around EE investment • Develop and spread ESCO/EPC models • Offer innovative financing

  15. Role for future Cohesion funding • Positive approach towards EE/RES – ring-fencing of ERDF for low carbon economy across the EU • Cohesion policy funding as a trigger to leverage private funding to address the investment gap in buildings – a key opportunity for growth and jobs • Intelligent blending of private and public funding is essential • Future financial instruments need to enable both access to affordable capital and technical assistance • ERDF are major/optimal financing sources for massive market uptake of sustainable energy solutions (Major potential (for EE in buildings) lies in regions and cities: 441 SEAPs of Covenant of Mayors’ Signatories identified the buildings - related EE investment potential of €11.7bn (35% of total), with 47% of total annual energy savings potential (TWh 34.6/y) and 16.8M tons of CO2 reduction/year) Close to 1/5 of measures are low-cost investments)

  16. Thank you for your attention Paul Hodson Email: paul.hodson@ec.europa.eu

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