Energy Financing energy efficiency in buildings Roman Doubrava Directorate-General for Energy Energy Efficiency

Energy Mind the gap! 1678 Mtoe -20% objective status today 1842 Mtoe business as usual 1474 Mtoe Projections from 2007 Projections from % Energy saving objective *Gross inland consumption minus non-energy uses Primary energy consumption* (Mtoe) GAP

Energy Benefits of meeting the 20% efficiency target are enormous 3 Barrels of oil we do not have to import per year Money saved at conservative 73 EUR/barrel per year Primary energy savings in 2020 = 368 Mtoe = 2.6 billion 193 billion EUR fewer coal power plants = GDP of Portugal in current prices (2010) or

Energy Costs of not filling in the gap are too high Imports of 1,4 billion barrels of oil result in EUR 107 billion being 'exported' Construction of 550 coal power plants and accompanying infrastructure EU GDP will lose the net positive impact of energy efficiency of at least EUR 34 billion jobs will not be created 4

Energy 5 EU 27 total Energy use CO 2 - emmissions EU- Buildings sector 40%36% Buildings are responsible for about: –40% of EU final energy use –36% CO 2 emissions –210 M households, conditioned floor area: 15000km 2 – residential, 6000km 2 - commercial –Construction sector: 9% of EU GDP, 8% of EU-workforce, € 2 trillion annual turnover - hardest hit by the crisis Benefits: –Considerable savings possibilities –Positive employment impact: up to 2 million jobs created/retained –Lower energy bills + better living conditions –Investments in energy efficiency trigger economic activity Source: IA recast EPBD, SEC(2008) 2864, Annex 5; IA for Ecodesign/Energy Labeling; Ecorys 2010; Eurostat Why focus on buildings?

Energy 6 What is the ‘investment’ need? Energy savings potential across sectors requires investment of around 850 billion € ( ) Around 85 billion € per year Buildings take the lion’s share of around 60 billion € per year

Energy 7 What to do (1) – getting the regulatory framework right Energy performance of buildings Directive Minimum energy performance requirements Nearly zero-energy buildings Certification and inspections Eco-design and Energy Labelling Directives Minimum performance requirements Labelling Energy Services and Cogeneration Directives

Energy 8 Energy Efficiency Directive Public sector to lead the market transformation (renovation target, energy efficiency criteria in public purchase) Energy efficiency obligation schemes or alternative approaches to be set by MS to ensure measures are realised Encouragement of energy performance contracting Accurate and frequent individual metering and billing to inform consumers Mandatory energy audits for large companies and promotion of audits for households and SMEs Heat and cooling demand plans Strong obligations for uptake of cogeneration and promotion of district heating and cooling

Energy EED – direct and avoided costs

Energy 10

Energy 11 What to do (2) – Getting the financial framework right What is currently available at EU level? Cohesion policy funds ( ): 4,6 billion € for energy efficiency 4% of ERDF can be re-allocated to housing Intelligent Energy Europe Programme ( ): 735 million € for ‘soft’ energy efficiency/renewables projects ELENA Facility: 97 million € for technical assistance to mobilise investments European Energy Efficiency Fund (EEE-F): 265 million € for investments into mature, bankable efficiency/renewables projects 20 million € for technical assistance

Energy Experience with financial instruments and Public Private Partnerships is growing 11 member states have used part of the ERDF allocation for setting up JESSICA urban development funds and holding funds 297 specific funds created by Member states under the JEREMIE initiative focusing on SMEs Note: EBRD provided financing only in EU-9(BG, EE, HU, LT, LV, PL, RO, SK, SI)

Energy What will be available at EU level? Next Multi-Annual Financial Framework ( ) proposals: Cohesion funding to allocate some €17 billion to energy efficiency and renewable energy (doubling current allocations) Horizon 2020: €6.5 billion is to be allocated to research and innovation in "Secure, clean and efficient energy", including cca €1 billion for the IEE successor

Energy Funding is not the main problem, the question is how we use it € 4.6 billion has so far been allocated to energy efficiency (52% of total budget appropriations) But significant scope for better uptake

Energy And can even return money to the state KfW “energy efficient building and renovation” programmes in Germany Every Euro invested returned 2-5 Euros to state coffers, mainly through job creation! Year Credit volume (mEUR) Promoted investment (mEUR) Promoted jobs Source: Impact on public budgets of KfW promotional programmes in the field of "energy-efficient building and rehabilitation", Research Centre Jülich, October 2011

Energy And can even return money to the state SEAI Home Energy Saving (HES) scheme Over homes since 2009 Net benefit for society between €106 million to €518 million (depending on CO 2 and energy prices) Support for 3000 full-time jobs in 2010 Household savings average €450 per year Every Euro spent delivers a net benefit of 5 Euro to society! Source: Economic analysis of residential and Small-business energy efficiency improvements, Sustainable Energy Authority of Ireland, September 2011

Energy Energy saving obligations Currently existing in 5 Member States: UK, FR, IT, DK, BE/Flanders Mobilise around €2 billion per year to deliver energy savings Representing a significant percentage of the target set under the Energy Services Directive: More than 50% in the case of Flanders 41% in the UK more than 70% in Italy (combined with subsidies)

Energy Energy saving obligations Cost of delivered savings significantly lower than price of energy If energy savings obligations are introduced in the EU in line with the provisions of the Energy Efficiency Directive they will bring between around €18 billion additional investment in energy efficiency per year

Energy Energy performance contracting Berlin has made use of energy performance contracting since 1996 Over 1300 public buildings have been upgraded Cost savings of about 10,5 million € - i.e. a quarter of the energy cost of the buildings involved

Energy Focus on building renovation In France the reallocation of 4% ERDF funding to social housing will lead to: EUR 320 million ERDF finance triggering investment of up to EUR 2,2 billion, affecting households Creation of jobs 40% average decrease of heating costs of affected households (EUR 30 – 90/month) Annual increase of purchasing power of EUR 360 – 1000 per household

Energy Conclusions Energy efficiency is not a cost weighing on national budgets but a huge investment opportunity returning money to state coffers EU-level funding will continue to be available but stronger involvement of private capital is needed A strong regulatory framework is imperative