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Energy efficiency in buildings: how to accelerate investments?

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This conference, which took place on 11 December 2017, was co-organised by the European Commission and the French Ministry of Ecological & Solidary Transition, in partnership with UN Environment Finance Initiative (UNEPFI), the Energy Efficiency Financial Institutions Group (EEFIG), the Global Alliance for Buildings and Construction (GABC), the International Partnership for Energy Efficiency Cooperation (IPEEC) and the Clean Energy Ministerial. It was a side event of the One Planet Summit organised by the Office of the President of the French Republic in Paris on 12 December and represented a key milestone of the Clean Energy Ministerial campaign on Nearly Zero Energy Buildings co-led by France and the European Commission. The conference was part of the “Smart Finance for Smart Buildings” initiative launched by the European Commission to further unlock private financing for energy efficiency investments in buildings.

Energy efficiency is one of the most cost-effective ways to reach the objectives of the Paris Climate Agreement and the European Union’s climate and energy objectives. In particular, investing in energy efficient buildings, whether through new-build or deep renovation of the existing building stock, has great, as yet unexploited, potential – for jobs, growth and the transition to a low carbon society. The needed acceleration of investments in buildings energy efficiency can only be reached through the mobilisation of private finance, which requires adapted policy frameworks. Delegates and speakers at the conference reflected on the progress made since the COP 21 which saw significant commitments taken by banks and investors on energy efficiency.

At European level, “energy efficiency first” is a core principle of the Energy Union strategy, and central to the recent Clean Energy for All Europeans legislative package presented by the European Commission in November 2016. In particular, the Energy Performance of Buildings Directive (EPBD), includes long-term strategic planning to ensure an energy efficient building stock in Europe, and providing the incentives to renovate through accurate data. In order to finance these plans, the EPBD requires that Member States commit to delivering accessible, transparent and simple financing tools, to help bring money to the market. At national level, France’s renovation plan (Plan Climat) aims at 500,000 renovations per year, with accompanying initiatives aimed at developing the role of private finance.

Globally, energy efficiency investment grew 9% in 2016, despite lower energy prices, pointing towards policy as a key driver. The role of the public sector is key in building confidence in markets and showing that government is willing to be hands-on and work with market action. However, despite potential for cost-effective emissions reduction, the buildings sector is not emphasized enough in the majority of countries’ Nationally Determined Contributions (NDCs).

Increasingly, public and private financial institutions are investing in energy efficiency. The European Investment Bank (EIB) lending for energy efficiency is now over €3 billion per year, and real estate investors see that investing in green buildings is a way to increase revenue. Tools such as the G20 Energy Efficiency Investment Toolkit and the EEFIG Underwriting Toolkit help financial institutions to scale up energy efficiency lending through better understanding and evaluation of the value and risks of investments. Developing new financial products, and closer cooperation between the public and private sectors are key to scaling up energy efficiency investments.