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May 9, 2017
of building or renovating existing structures and processes to make them more energy efficient does not have the halo of innova- tion that accompanies many investments deemed worthwhile.
The lack of appeal to consumers of nega- watts – as energy efficiency has been dubbed – has even prompted economists to coin a term, namely the energy efficiency gap, for
Carpenter says, adding that the GET contains new elements compared to the previous pol- icy, such as a focus on investments in envi- ronmental standards, energy efficiency in public buildings and technology transfer to pilot and scale up technologies that do not have a significant market share yet.
The approach is beginning to show re- sults. Up until 2006, investments in environ-
“It is a conundrum why people do not invest in it on a wider scale”
Energy efficiency may not be sexy, but it's necessary
people's failure to invest in energy efficiency even when it makes financial sense for them to do so. Meanwhile, commercial banks have been slow to jump at the opportunity to finance small-scale energy efficiency pro- jects, particularly residential home retrofits, because the return on investment for them tends to be low.
EBRD and energy efficiency
To counteract some of the barriers to the adoption and financing of energy efficiency, the EBRD has been an important driver of finance for this in the CEE region for more than a decade.
The lender launched its sustainable en- ergy initiative (SEI) in 2006, six years before the EU passed its Energy Efficiency Directive aiming to help the bloc cut energy consump- tion by 20% by 2020. "Energy efficiency is con- sidered to be the poor cousin of renewable energy. It is a conundrum why people do not invest in it on a wider scale, particularly since it has a payback time," Harry Boyd Carpen- ter, Director of Power and Energy Utilities at EBRD, tells bne IntelliNews in an interview.
The SEI gradually evolved into a broader resource efficiency agenda that also en- compasses waste minimisation and water efficiency, and culminated in a more com- prehensive Green Economy Transition (GET) policy launched in 2016.
"Market transition is at the core of what the EBRD does. And the GET is an explicit recognition of the fact that a well-function- ing market economy has to use its resources sustainably and protect the environment (...)"
mental projects represented approximately 12% of the EBRD's investment portfolio. The proportion of such investments has increased to a third of the total financing in 2016 and the goal, under GET, is to reach 40% by 2020.
Furthermore, under the GET, the projects that the EBRD has helped finance represent savings of 85mn tonnes of CO2 equivalent, 70mn cubic metres (cm) of water and 2mn tonnes of waste per year. Because the EBRD was an early advocate of energy efficiency, this area continues to account for a large share of its investments in clean energy – namely two thirds of the €22bn the bank has invested in sustainable energy projects to date. However, that is not to say that EBRD is prioritising energy efficiency over renew- able energy. In fact, starting in 2014, invest- ments in the latter have exceeded those in energy efficiency.
Both Carpenter and Terry McCallion, Director for Energy Efficiency and Climate Change at EBRD, agree that energy effi- ciency is an important piece of the puzzle that is the energy transition in CEE. "There is still significant potential for energy effi- ciency gains and high-return investments to be made in this area in CEE. The barriers to making such investments is access to in- formation and finance," McCallion believes. Carpenter adds that refurbishing old pub- lic buildings has great potential for energy savings. "There are a lot of publicly-owned buildings in CEE and in neighbouring coun- tries that need to be refurbished to mini- mum performance standards".
Carmen Valache
Europeans spend up to 90% of their time in- doors, and heating and cooling buildings are responsible for 40% of the energy consump- tion in the EU. Making buildings and industry more energy efficient has been at the core of the EU's energy policy and climate change mitigation agenda since 2012. But despite compelling statistics and Brussels' efforts, consumers and banks have been slow to warm up to the idea of energy efficiency in Central and Eastern Europe.
A factor that helps explain its lack of ap- peal is the fact that energy efficiency is not a concrete – or novel – technology like wind or solar power, but rather a goal to reduce energy wastage on both the consumption and production sides in industry, residences, public buildings, power generation and many other areas. Few energy saving technologies are cutting edge; the majority, such as tight building envelopes and fuel-efficient boilers, are tried and tested solutions. So the practice