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First Learning Event, 13th of September 2021. Summary of presentations
EU update on the Green Deal and the new regulations, support schemes on green financing and initiatives like SEI Forums
Mr. Hadrien Michel,
Energy Efficiency Finance team, EU Commission
Key messages and learning
Mr. Hadrien Michel started to explain EU’s Climate Target Plan under the heading of ‘fit for 55’ including a package to help EU delivering the transformational change needed in a fair, cost-efficient and competitive manner. It is a complex challenge because it goes across numerous sectors and there has been a need to strengthen the regulations. Part of this is to strengthen the Building Directive (EPBD) and Energy Efficiency Directives (EED) and the ‘Renovation Wave’ initiative is to help the transition towards the doubling of the renovation rate by 2030 and support the renovation of 35 million buildings in the EU.
The financial support to the development can be divided in 1) direct co-financing of investments like under Recovery and Cohesion Funds, 2) to mobilise and leverage investments like under the InvestEU and ELENA Facility, 3) to support technology development, research & innovation like under Horizon Europe and the Innovation Fund and 4) To address market barriers and provide capacity building, as it will be done under the Clean Energy Transition sub-programme of the new LIFE programme.
Among the key initiatives are the Energy Efficiency Financial Institutions Group/EEFIG that was established in 2013 by the European Commission and UNEP FI. Since 2018 EEFIG work is based on working groups covering different aspects in terms of sustainable energy finance and there has been elaborated important material like the Underwriting toolkit. Another initiative is the De-risking Energy Efficiency Platform/DEEP that serve an open-source database for energy efficiency investments performance monitoring and benchmarking by providing an improved understanding of the real risks and benefits of energy efficiency investments. It includes 17,000+ energy efficiency projects in buildings and industry from 30 data providers. deep.eefig.eu
What’s the learning and follow-up prospects:
RoundBaltic draws the following observations:
- The RoundBaltic intervention takes point of departure in transforming the EU and associated national policies into actions on the ground. This includes that the project’s interaction can give feedback to the decision-making level as how the investment framework is to be designed as well as paving way for specific sustainable energy finance initiatives.
Intervention strategies on how energy efficiency finance is promoted in Poland, Latvia and Denmark under the RoundBaltic project
Mr. Andrzej Rajkiewicz, Vice-President of the Board, SAPE
Key messages and learning
Intervention strategies on how energy efficiency finance is promoted in Poland under the RoundBaltic project. The presentation reviewed the progress of energy efficiency finance in Poland and how this process is supported by the RoundBaltic intervention managed by the SAPE organisation. A key driver is the Long-term renovation strategy that is subject to a dual scenario of 1) a mass replacement of heat sources combined with shallow thermal modernization by 2030 and 2) a gradual increase in the scale of deep thermal modernization to the level of approx. 3% annually in the upcoming years. It also came across some of the key financial instruments to support energy efficiency investments and how financing institutions are engaged in this process. The intervention of RoundBaltic targets 7 out of the 16 regions in Poland by organising roundtables and undertaking follow-up actions like aiming to put in place one-stop-shops.
Mr. Raimonds Svanks, Energy Efficiency Project Developer, Latvian Environmental Investment Fund
Key messages and learning
The presentation reviewed the RoundBaltic intervention in Latvia managed by the Latvian Environmental Investment Fund. A first National Roundtable was organised 6-7 May 2021 with a total of 120 participants, incl. 70 companies and state institutions. The main focus is on the public, housing and SME sector and for each sector was reported the key ideas and recommendations to boost energy efficiency finance as well as generic recommendations across the sectors. It has been followed by a Regional Roundtable, 29 Sept. 2021, dedicated to challenges within energy renovations of multi-apartment buildings.
EC Network, Denmark
Key messages and learning
The RoundBaltic intervention in Denmark, managed by EC Network and Gate 21, links up to the national policy goal of achieving 70% CO2 reduction by 2030 and CO2 neutrality by 2050. It aims to help implementing the national policies on regional/local level by enabling actions in interaction with stakeholders and being instrumental for making financial tools work in practice. The key focus is on energy efficiency of private housing and social housing as well as the SME sector and the presentation came around the key recommendations for each sector according to the roundtables and other stakeholder consultations so far in the project.
Presentation of how BNP Paribas helps finance energy renovation of buildings in Poland
Mr Adam Hirny
Director of the Office for Sustainable Development Programme
Key messages and learning
BNP Paribas Bank Poland has taken initiative to improve its capabilities in energy efficiency finance. Via a grant from the EU ELENA Facility it has built a concept of integrated home renovation services to reach out to multi-family buildings (housing associations) in Poland as part of the initiative Energy Efficiency Finance Facility for Residential Buildings/EEFFRB. The housing associations often have limited awareness concerning possible EE savings and EEFFRB help them getting aware of the potential benefits and to prepare the energy audit and investment plan that are required to succeed with energy renovation of the buildings. Thetype of investments to be supported comprise comprehensive energy refurbishment like thermal isulation of the building envelope as well as integration of renevable energy sources like solar PV installations into the buildings.
The ELENA grant has allowed BNP Paribas Bank to increase its internal capacity, incl. energy experts to operate in all regions of Poland. It has also allowed to build an external capacity in form of a team of energy engineers to provide support to housing associations like energy audits and complex technical design documentation.
The financial scheme consists of dedicated investment loans for the housing associations in combination with a grant support from the Polish Development Bank/BGK (grant up to 21% of the investment). To this has been added a risk sharing instrument/PF4EE, an instrument provided by EIB and the European Commision under the Programme for Environment and Climate Action (LIFE Programme) that imply supplementary benefits for the housing associations in form of reduced requirements for own contribution and decreased cost of funding.
The level of energy renovations under EEFFRB has seen a steady growth since its start in 2019 despite COVID-19 lock-down, though the pendemic has affected its dynamics. Mr. Hirny showed a case study where a multifamily building with 100 apartments and 269 inhabitants had installed energy renovation measures like roof isolation, exchange of windows and thermal isulation of the building envelope. It is expected that the facility will help mobilising minimum 800 projects worth 78 MEUR until September 2022 that correspond to annual total CO2 emission reductions of 47 900 t CO2 eq. The expertises gained by BNP Paribas Bank will enable it to further expand green financing after EEFFRB expires.
What’s the learning and follow-up prospects
RoundBaltic draws the following observations:
- First of all, it is interesting to see the merits when a bank gets directly engaged in energy renovations of buildings in the sense that it both upgrades the bank internally to deal with these type of investments as well as involving internal staff on the core energy aspects. In this connection the ELENA Programme has proved its value to support such development.
- As part of the follow-up it can be explored how BNP Paribas Bank established a national network of in-house and external experts and what can be learned from that process. There can also be made an assessment of the risk sharing instrument PF4EE and its impact in terms of helping through the investments.
- The proactive approach of BNP Paribas Bank with setting up and running EEFFRB is an example worth following. Of the 92 participants in the learning event were 37 from the financial sector who were introduced to the example. Through its interventions RoundBaltic aims to inspire banks to get entrepreneurs or in other ways get actively engaged in energy renovations of buildings
Tools for energy performance of building certificates from a financial perspective
Cláudia Monteiro, ADENE, representing the H2020 X-tendo project
Key messages and learning
X-Tendo intends to develop a toolbox with 10 functionalities for updating the next generation of energy performance certificates, to provide public authorities with compliance, reliability, usability and convergence in the assessment and certification of energy performance of next generation buildings.
Cláudia Monteiro presented the tool of X-tendo on methodology in terms of financing options, encompassing learning from previous cases, how to link energy performance of building certificates (EPC) to financing as well as how to communicate the financial aspects. IFRRU 2020 is a financial instrument operating in Portugal designed to support investments in building renovations all around the country. The associated financial products are loans with maturities of up to 20 years and low interest rates as well as guarantees where required. Cláudia explained the flow of activity among actors in the IFFRU 2020.
The presentation also came around how X-tendo builds modules to fit EPC into operations of one-stop-shops. In Portugal is running the one-stop-shop initiative casA+ that provide information about public funding and calls/applications and where financing institutions have access to owner needs & contacts and can promote their financial products within energy efficiency and rehabilitation. Casper Thielsen from the Danish Energy Agency supplemented with information on the Danish public subsidy programme. The sub-program for all residential buildings support measures like insulation, windows and doors, conversion to heat pump and building operation and where the application is to be based on EPC data.
What’s the learning and follow-up prospects
RoundBaltic draws the following observations:
- As said in the take-away EPC data is key to evaluate needs, support application process and monitor financing programs. Moreover, linking the buildings performance and “traditional” renovation is a win-win situation due to the role of the EPC. This is in accordance with the experiences under RoundBaltic, where we had sessions on how to motivate the houseowners and where is required more incentives than the energy savings alone.
- One-stop-shop can serve aggregator of energy renovations by addressing both owner and financing institutions’ needs, namely helping promoting green financing (e.g. access to information, close the gap between demand and supply, etc.). The tools developed under X-tendo can be used in the efforts of establishing one-stop-shop under RoundBaltic and in other fora.
Session for the Banking associations - the Danish, Polish and Latvian bank associations give a pitch on their key activities to support green funding
Ms. Sandie Wrona, Economic Consultant, Finance Denmark
Key messages and learning
Ms. Sandie Wrona from Finance Denmark said that in 2020 the Danish financial sector’s contribution to the green transition passed the EUR 60 bn mark, aiming at EUR 90 bn in 2030. Finance Denmark has taken a range of initiatives in recent years to support the development, as reviewed in its Sustainability Report 2020. One initiative has been the establishment of a Forum for Sustainable Finance. This Forum published 20 recommendations, incl. intensifying efforts to develop and offer loans that incentivise homeowners and business property owners to improve energy efficiency in their properties.
Danish homeowners overestimate the energy performance of their houses, meaning there is needed more awareness, where the financial sector plays an important role. In 2020 Finance Denmark launched a home energy renovation campaign with the Danish Energy Agency under the slogan ”Build it better – renovate for the climate”. This was linked with developing a series of tools to be used by financial advisers when engaging in dialogue with customers on energy improvements and capacity building of financial advisers.
Mr. Boleslaw Meluch, Expert, Polish Bank Association
Key messages and learning
Mr. Boleslaw Meluch from the Polish Bank Association said the Polish Bank Association, on behalf of the banking community, officially joined the Partnership for the implementation of the Sustainable Development Goals. The banking sector sees the goals of sustainable development as an opportunity to create a new economic reality, opening new development paths for business, including banks, based on the principles of transparency and building the image of Poland as a reliable economic partner.
The Polish Bank Association has declared its interest to participate in the Green Investments Plan (GIP). GIP is a package of programs for the development of clean heat, energy, water, transport and innovation in the energy sector and energy efficiency that also require the mobilization of private funds and capital from financial markets. Hence, the involvement of the banking sector in Poland is a key success factor for both the Green Investments Plan and the horizontal transformation process of the Polish economy. One component of the GIP is the Clean Air Program system that provide support to sustainable energy housing and where the Polish Bank Association work together with 30 public and private institutions.
Moreover, the Polish Bank Association represents the banking sector in consultative bodies for the distribution of EU funds or co-financing of clients’ EU projects for low-carbon purposes. Banks will be able to participate in the new programs as systemic financial intermediaries or co-financing projects commercially. This includes the Private Finance for Energy Efficiency (PF4EE) instrument as implemented from the LIFE Program by BNP Paribas Bank Polska SA (cf. presentation of Mr. Hirny).
Mr. Jānis Ozoliņš, Sustainable Finance working group, Finance Latvia Association
Key messages and learning
Mr. Jānis Ozoliņš from the Finance Latvia Association started by stressing the importance of sustainable finance due to the investment needs in the public and private sector and a market in growth, but with need for further stimulation.
The Finance Latvia Association follows a 15-point plan to promote green financing 2021-2022. One group of actions concern lending, incl. launching of new products to finance the green transition and enhancement of state aid programmes. Another group is about development of capital markets, incl. enabling regulations and guidelines for broader investments of pension fund assets. A third group concerns financial literacy that comprises the creation of a sustainable financing platform in cooperation with the Financial and Capital Market Commission. A fourth group has the heading of sustainable finance and comprises actions like a coordinated public and private sector policy for assessing sustainability.
Finance Latvia Association has, together with the Financial and Capital Market Commission, the Bank of Latvia, Nasdaq Riga, the Latvian Leasing Association and the Latvian Insurers Association, agreed to collaborate to promote public understanding of the meaning and principles behind sustainability and sustainable finances, as well as to promote the implementation of this in business and daily life. This entails the establishment of a sustainability financing platform to support the process.
What’s the learning and follow-up prospects for the 3 presentations:
RoundBaltic draws the following observations:
- The presentations of the bank associations in Denmark, Poland and Latvia shows the transition the financial sector is undergoing towards sustainable finance. All three associations have made clear commitments on how to lead the respective financial sectors in that direction.
- Part of these commitments – the ones associated with the building and SME sector – match the objectives of the RoundBaltic project and hence the intention is to interact with a view to transform the intentions into real actions on the ground. Good examples of this are where Finance Denmark aim to promote home energy renovations, where the Polish Bank Association support sustainable energy housing and where the Finance Latvia Association aim to strengthen the sustainability financing framework.