Focus on financing energy efficiency

When we are discussing the EU’s energy efficiency strategy, the elephant in the room is money: where does the funding come from and will there be enough to meet investment needs. On the one hand, most energy efficiency measures are considered to be cost effective and thus it is in the interest of consumers to take such action. However, energy efficiency investments can often have a high up-front cost, making it difficult to justify such expenditure in a fragile economic situation.

The European Commission and the UNEP Finance Initiative set up a group of experts to address that elephant in the room, knowing that the elephant would not go away until there was a sustainable way forward. That group has now produced a major report that goes a long way to address this need.

The Energy Efficiency Financial Institutions Group (EEFIG) has just launched its final report “Energy Efficiency – the first fuel for the EU Economy: How to drive new finance for energy efficiency investments”. The interim report focusing on the buildings sector was published in April 2014.

The EEFIG report identifies the critical success factors, policies, market instruments and financing solutions to increase energy efficiency investments in Europe in the buildings and industry sectors with a special emphasis on small and medium-sized enterprises (SMEs). The study is the result of 16 months of work of more than 120 active participants representing finance, policy makers, the buildings sector, industry, SMEs and energy efficiency market participants.

EEFIG’s report states that energy efficiency investment is the most cost effective manner to reduce the EU’s reliance, and expenditure, on energy imports costing over €400 billion a year. Today, this makes energy efficiency investments strategically important due to high levels of energy imports, energy price instability and the need for Europe to transition to a competitive low carbon and resilient economy. EEFIG’s members see energy efficiency investing as having a fundamental and beneficial role to play in the transition towards a more competitive, secure and sustainable energy system with an internal energy market at its core.

EEFIG participants believe that the European Fund for Strategic Investments (EFSI) should put energy efficiency first and that it is essential in the context of the Energy Union to reframe the role that energy efficiency plays in how Europe plans for, finances, and constructs its energy system.

The report stresses that Member States have a clear role to play in pursuing the necessary structural reforms, exercise fiscal responsibility, provide regulatory certainty and boost investment in support of jobs and growth. In this context, energy efficiency is the first fuel because it is competitive, cost effective to produce; it is widely available and delivers multiple benefits to project hosts and national economies. For these reasons, EEFIG considers that the Investment Plan should include a clear focus on improving the energy productivity of Europe as a key driver of growth. In doing this, Europe can unlock the multiple benefits of energy efficiency investments including energy security, competitiveness, social and territorial cohesion, job creation, well-being and greenhouse gas emissions reductions.

EiD was pleased to be a member of EEFIG through its partnership with Energy Efficiency in Industrial Processes (EEIP).

The report is available on the Commission website.