Cohesion Policy support for Sustainable Energy – The ERDF Amendment

Cohesion Policy support for Sustainable Energy –The ERDF Amendment Focal Point of Housing Workshop 24 June 2009 Beth Masterson Policy Analyst DG Regional Policy – Thematic Coordination and Innovation

How do energy investments contribute to Cohesion Policy goals? • Increasing support for sustainable energy – the ERDF amendment • From policy into practice…

Energy investments advancing Cohesion Policy goals Energy efficiency and renewables investments bring economic, social and environment benefit to regions: • Competitiveness, job creation • Security of energy supply • Improve and protect the environment • Reducing energy costs and alleviating energy poverty EU RES target = 2.8 M jobs EU EE target = €220 bn savings/ year

Why target the building sector? • Approx. 40 % of EU final energy consumption & 36% of EU CO² emissions • Residential buildings consume c.2/3 energy consumed by buildings sector • Single most cost-effective sector for energy reduction: savings up to 30% by 2020 • New buildings represent only 1% of total stock – ERDF focus existing buildings

Responding to energy needs in the residential sector in EU27 • Amendment ERDF art. 7 – extend eligibility for RES & EE investments in existing housing (adopted 6 May). • Allocation to EE and RES investments in residential sector cannot exceed 4% of the total ERDF allocation to the MS for 2007-13. • MS shall define categories of eligible housing in national rules with objective of supporting social cohesion. • No requirement to modify OPs. MS choice.

Additional provisions for EU12 • In addition to the 4% allowance for EE and RES investments, other investments – not supporting EE or RES - in housing will still be eligible up to 2% of total ERDF allocation or 3% of individual OP. • Activities already undertaken under previous eligibility rules are not affected by the amendment (esp re ERDF Regulation Art 7 para 2. and art.47 Commission Regulation).

Innovative finance – making ERDF funds go further • Investment needs huge – need better leverage of grant support • Investments generate savings – relatively short payback period • Funding conditional on energy efficiency improvement – guarantee energy saving • Revolving funds allow funds to be re-used

Mobilise technical assistance for action • Need to move beyond studies → enabling effective investment • Strengthen & involve national intermediaries (Energy Agencies) • Capacity building & training (public authorities, home owners, SMEs) • Learn from existing good practice Energy agencies set up under IEE (2004 - )

Revolving ERDF loan scheme Development Bank/Fund Energy agency/advice service Revolving loan fund Fund management Interest earnings at the capital market Global loan FI Funding agreement Public funds ERDF Government On-lending bank On-lending bank Owners of multi-family buildings

… with grant elements Development Bank/Fund Energy agency/advice service Revolving loan fund Fund management Interest earnings at the capital market Global loan FI Funding agreement Public funds ERDF ERDF TA for institutional capacity / energy audits Government ERDF TA for capacity building to increase understanding of potential risks of loan scheme, energy savings, marketing needs. On-lending bank On-lending bank ERDF TA for training civil servants ERDF grants for lowest income households could further reduce loan cost. Owners of multi-family buildings

Success Factors • Need for awareness raising, training, energy advisors, aggregating demand • Involve the local community, market actors & industry; tailor schemes • Guarantee energy savings in line with EPBD • Plan for monitoring and enforcement • Exploit public-private synergies; do not crowd out • Complementary support to renewables for remaining energy demand

Cohesion Policy support for Sustainable Energy – The ERDF Amendment