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Residential Buildings - Residential Buildings - challenges challenges and opportunities for energy and opportunities for energy
efficiencyefficiency
Budapest, 28 June 2010Budapest, 28 June 2010
Gabor KissAlexander Hadzhiivanov
European Bank for Reconstruction and Development
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Buildings – the global hidden culprit of Climate Change
SOURCE: 1- EU EEAP, 2006; 2- IEA, WEO 2007 & ETP 2008
• The largest end-use energy consumer: 41 % of all energy use in EU1
(even larger, i.e. 50% < in some countries in the region);
• The largest energy saving potential: 41 % of all the potential in EU1 up to 2020 (even larger, i.e. 50% < in some countries in the region - Russia);
• Buildings are among the major contributors to CO2 emissions globally: 20% of direct global CO2 emissions;
• If nothing done the direct and up-stream carbon footprint of buildings will grow from 8.7 G t to 20.1 G t CO2 globally2 , and
• Political commitment (i.e. EU 20% EE target 2020) can not be met without addressing the building sector;
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Buildings – largest and most cost effective carbon abatement opportunities
SOURCE: 1- McKinsey Global Institute, 2007
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Buildings – where to go?
SOURCE: 1- World Business Council for Sustainable Development
• EU building sector need to be at least 4 energy classes better than today by 20501 ;
• Aggressive regulatory is introduced: EPBD, ISO EN standards, timeframe for zero-carbon buildings, energy certification, certificates of sustainability (BREEAM, LEED);
Sustainable development
“Business as usual”
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Buildings – how the Bank responds?
• Building EE as one of new priority areas under SEI, Phase 2;
• Support of Projects with the best energy performance;
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• Technical assistance: professional consultants, development of corporate policies, training and capacity building TCs;
• Maintaining Policy Dialogue (policy®ulatory barriers);
• Low energy properties – a driver toward capacity building and expanding market for EE techniques in the building sector;
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Barriers to sustainable energy financing for banksBarriers to sustainable energy financing for banks
The same in all the countries in the region:
▪ Uncertainties about market demand for EE financing
▪ High transaction costs due to fragmentation of the residential sector (variety
of stakeholders and their lack of organisation)
▪ Liability of stakeholders
▪ Legal enforcement in the property and residential sector
▪ Lack of technical expertise for appraisal and risk assessment
▪ Information asymmetries and misconceptions about the technical risks and
financial benefits of energy efficiency
▪ Lack of specific structures for implementation
▪ No specific marketing tools or budget allocated for such activities
▪ Tenors needed longer than those of commercial business lending
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Institutional and regulatory barriersInstitutional and regulatory barriers
• Insufficiencies of housing legislation:
▪ Legal statute of associations of apartment owners;
▪ Responsibilities and legal liabilities of Associations;
▪ Management of Associations
▪ Decision making procedures
▪ Relationship with management companies and utilities
• Insufficiencies of building regulatory
▪ Lack of energy performance classification
▪ Lack of energy certification scheme
▪ Structure and complexity of energy efficiency requirements
▪ Lack of institutionalised energy assessment procedures
▪ Insufficient institutional framework supporting energy performance
assessment
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EBRD integrated approach EBRD integrated approach
• Tailor made financing vehicles reflecting country and market specifics:
▪ REECL-type (Bulgaria);
▪ SlovSEFF type (Slovakia)
• Capacity building: local banks, technical consultants & engineers, local authorities
• Awareness raising: general public, project stakeholders, authorities
• Corporate sector: technology and service providers, utilities, project developers;
• Policy dialogue: assistance on development/upgrade of supportive legal and regulatory
framework:
▪ Law on Energy efficiency of buildings (Moldova, Kyrgyzstan)
▪ Secondary legislations: technical reglaments, ministerial decree/ordinances (Russia,
Ukraine, Moldova, Kyrgyzstan);
▪ Tertiary legislation: technical rules and standards (Moldova, Kyrgyzstan);
• High leverage of national (Donor funded) support programs;
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Financing mechanisms (1)Financing mechanisms (1)
REECL – type: addressing dwelling level EE (apartments, family houses)
EBRD
Participating Banks
Sub-Borrower
Project Consultant
€Credit Line
€Loan AgreementConfirmsSub-Project compliance;Verifies implementation
Support ProgramFunded Contract
TrainingAnd Marketing
Support
• Financing disbursed: € 43 million (Oct. ‘05–Jan.’10) • Leverage of technical assistance to total investments is 31.6
• Leverage of incentives to total investments is 5.9
• Number of projects: 28,125 (ab. 7,000 per year)
• Number of residents affected with improved housing conditions: 69,100
• Financial revenues from energy savings: € 10.6 million per year
•Energy savings: 124.3 GWh per year
• Energy generation capacity substituted: 19.1 MW
• Carbon reductions: 170,530 tons CO2 per year
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Financing mechanisms (3): REECL market penetration rate Financing mechanisms (3): REECL market penetration rate
High performing (eligible) technologies 2004 2010
Share funded by REECL
EE Windows; Close to zero => 4% 30%
High grade insulation (roof, wall, floor); Close to zero => 3% 18%
Efficient Gas boilers and associated heating systems; Close to 45% => 78% 13%
Biomass Boilers and Stoves Close to 30% =>40% 6%
Solar Water Heaters Close to 8% => 14% 34%
Heat Pump Heating (air-to-air) Close to 5% => 25% 18%
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Financing mechanisms (4)Financing mechanisms (4)
REECL 2 – type: addressing both dwelling as well as building level EE (groups of residents, informal associations, associations as legal entities, ESCOs, management companies, construction companies)
• Accent on promotion and support of Housing Associations:▪ Legal advise;▪ Standard set of institutional/management documentations▪ Conceptual design for complex building refurbishment;▪ Attendance on General Meetings when decisions on refurbishment made;
• Wider spectre of eligible techniques (gasification, photovoltaics, heat recovery mechanical ventilation in addition);
• No incentives for participating banks;
• High performance requirements of eligible techniques;
• Variable incentives for different categories of Borrowers and per type of projects
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Financing mechanisms (5)Financing mechanisms (5)
SlovSEFF – type: addressing complex building refurbishment through financing housing associations (adequate housing legislation required)
EBRD
Participating Bank
Sub-Borrower
Independent Energy ExpertConsultant
€Credit Line
€Loan AgreementTechnical AssistanceEnergy Audits
Implementation Verification
TrainingAnd Marketing
Support
EBRD
Participating Bank
Sub-Borrower
Independent Energy ExpertConsultant
€Credit Line
€Loan AgreementTechnical AssistanceEnergy Audits
Implementation Verification
TrainingAnd Marketing
Support
Support ProgramFunded Contract
Support ProgramFunded Contract
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SlovSEFF resultsSlovSEFF results
• Financing disbursed: € 38 million (2008-2009) • Leverage of technical assistance to total investments is 32
• Leverage of incentives to total investments is 7.4
• Number of projects: 218 apartment buildings (12,000 apartments)
• Number of residents affected with improved housing conditions: 25,000
• Financial revenues from energy savings: ab. € 3.2 million per year
•Energy savings: 55 GWh per year
• Carbon reductions: 28,400 tons CO2 per year
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Conclusions▪ High level support on financing EE is present at EBRD;
▪ Policy dialogue between EBRD and the national Governments needs to result in concrete outputs;
▪ Resources, experience and mechanisms of financing EE available at EBRD;
Thank you!