eib support for low carbon - european...

EIB support for low carbon

Christopher Knowles

Head of Climate Change & Environment Division

EIB

Brussels, 8th November 2011

EPEC Private Sector Forum

PPP for Energy Efficiency & Environment

© European Investment Bank, 2011. All rights reserved.

2

1. EIB General

2. Structured Debt Funds

3. Carbon Funds

4. Equity Funds

5. TA/Advisory

6. EE Examples & Issues

3

The European Investment Bank (EIB)

European priority objectives

Within the Union:

– Cohesion and convergence

– Small and medium-sized enterprises (SMEs)

– Environmental sustainability

– Knowledge Economy

– Trans-European Networks (TENs)

– Sustainable, competitive and secure energy

EIB General

4

Climate Change > 25% of overall lending;

RE > 20% of total energy

Current EIB Framework for Climate Action

EIB’s corporate objectives, targets, principles and standards :

Mainstream climate change considerations across Bank operations -

building up staff awareness, capacity, and expertise.

Ensure that sector lending policies emphasise reduced GHG emissions

Mobilise & leverage private investment for developing LICs and MICs - incl.

reinforcing the carbon markets and related mechanisms beyond 2012.

Accelerate development & diffusion of low-carbon technologies, including

those mitigating emissions from fossil fuel technologies e.g. CCS, engines

Scale up financing and TA for urgent adaptation e.g. water;

EIB COP KPI

Aligned with the EU and international evolving climate policy

5

Climate Change Action – 25% target

The EIB‘s climate action focuses on:

– low-carbon investments that mitigate greenhouse gas

emissions

– climate-resilient projects that improve adaptation to

climate change impacts.

Loans of EUR 20.5bn in 2010 for:

– energy

– transport

– water, wastewater, solid waste

– forestry

– research, development and innovation (RDI)

Total loans of EUR 37.4bn since 2009

6

EIB Climate Action

Climate change is a growing course of action for EIB in four major sectors of

activity:

0

5,000

10,000

15,000

20,000

25,000

2008 2009 2010

OPSB

Other

RD & I

Energy efficiency

Renewable Energy

Sustainable transport

• Renewable Energy

• Energy Efficiency

• Sustainable transport

• RD&I

7

Support grown rapidly in recent years… EIB RE Lending 2006-2010 (mEUR)

8

Financing Instruments

• EIB’s traditional loan products

• New financial instruments for low carbon

–Equity Platforms

–Structured Debt Funds

–Carbon Finance platforms

• Funds also for forestry, soil decontamination,

energy efficiency – in future, biodiversity, water,

waste

• Technical Advisory – ELENA, JASPERS, JESSICA

EIB General

9

EIB & Fund Products

A Different Kind of Institutional Investor

Where EIB is different:

• Very selective

• Policy driven

(i.e. primary focus on the underlying assets in terms of fit with EIB COP

Objectives and economic benefit)

• Compliance with EU procurement, environment and social standards

• Can invest time to work with a fund manager from concept stage

• Can go into segments not quite mainstream yet

(e.g. bio-diversity, land decontamination)

• Can support start-up teams and new concepts

(e.g. Aviva Hadrian‘s Wall)

• Can assume different roles: cornerstone investor (e.g. DIF, Meridiam) /

sponsor (e.g. Marguerite, European Energy Efficiency Fund)

Funds

10

A Different Kind of Institutional

Investor (continued)

• EIB Value Added:

– ―Seal of Approval‖

– Catalytic effect on the fund raising

– Best practice in governance

– Experienced investment team with direct

private equity expertise

– Extensive industry knowledge in nearly

all sectors through its economists and

engineers in EIB‘s Projects Directorate

– Early involvement

– Ability to move fast

– Neither ―easy to convince‖ nor ―cheap‖ money

Funds

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1. EIB General


3. Carbon Funds

4. Equity Funds

5. TA/Advisory


12

Structured Debt Fund - generic

• Layered Fund

– Utilize EC and 3rd party capital

– 1st loss piece is issued by the EC and/or Sovereign Donors; EIB leverages off this by going into the 2nd loss piece

– GIFA provides the framework for this Special Activity

• Capital Structure

Junior - C Shares

Mezzanine - B Shares

Senior – A Shares

Notes

Donors

IFIs

Private investors

Private investors, IFIs

Structured Debt Funds

13

I. EEEF

European Energy Efficiency Fund

II. GGF

Green for Growth Fund

Structured Debt Funds - actual


14

European Energy Efficiency Fund

(EEEF) - Introduction

What is EEEF?

Why EEEF?

Objective

— EEEF aims to provide market based financing for commercially viable public energy efficiency (EE) and renewable energy (RE) projects within the European Union

— It contributes with a layered risk/return structure to enhance

EE and foster RE in the form of a targeted private public partnership, primarily through the provision of dedicated financing via direct finance and partnering with financial institutions

— … amendment of the European Energy Program for Recovery Regulation (a)

— … commitment of the EU member states to achieve the 20/20/20 goals, cutting GHG emissions by 20%, increasing RE usage by 20%, and cutting energy consumption through improved EE by 20%

— … substantial potential for EE and small scale RE in the European public sector

(a) Regulation (EU) No 1233/2010 of the European Parliament and of the Council amended the European Energy Program for Recovery

Regulation (EC) No 663/2009 establishing a program to aid economic recovery by granting Community financial assistance to projects in the

field of energy. Uncommitted funds will be used for the creation of the EEEF.


15

EEEF (2)

Overall scope activities

• The Fund will be an investment fund (SICAF-SIF) registered in Luxembourg

• The initial capitalization of the Fund totaling in €265mn is provided by:

European Commission: €125mn

European Investment Bank: €75mn

Deutsche Bank: €5mn

Cassa de Depositie: €60m

• Additional commitments are expected from Development Finance Institutions and the private sector resulting in a targeted fund size of approx. €800mn

• Geographical focus on EU 27 member states

• Target beneficiaries are: municipal, local and regional

authorities

public and private entities acting on behalf of those authorities such as utilities, public transportation providers, social housing associations, ESCOs etc.

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•Key data of EEEF •Primary target countries

Austria, Belgium, Bulgaria, Cyprus, Czech Republic,

Denmark, Estonia, Finland, France, Germany, Greece,

Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg,

Malta, Netherlands, Poland, Portugal, Romania,

Slovakia, Slovenia, Spain, Sweden, United Kingdom


16

EEEF (3)

Portfolio strategy and eligibility criteria

•Portfolio strategy by category

70%

20%

10% EEProjects

REProjects

— Taking into account the main focus of the Fund on EE the spilt as shown below is targeted mid-term

Energy saving and EE investments:

— Public and private buildings incorporating RE and/or EE solutions including those based on the usage of Information and Communication Technologies (ICT),

— Investments in high energy efficient combined heat and power

(CHP), including micro-cogeneration, and district heating/cooling networks, in particular from RE sources,

— Local infrastructure, including efficient lighting of outdoor public infrastructure such as street and traffic lighting, electricity storage solutions, smart metering, and smart grids, that make full usage of ICT and

— Energy efficiency and renewable energy technologies with innovation and economic potential using the best available procedures

Investments in RE sources:

— Distributed generation from local RE sources, to medium and low voltage (110kV and lower) distribution networks,

— Smart-grids enabling higher RE sources uptake,

— Energy storage to allow storing part of the energy produced from intermittent sources during low-consumption hours and feeding this energy back at times of peak-demand

— Decentralised energy sources can also be the injecting of locally produced biogas into the natural gas network and

— Microgeneration from RE sources meaning distributed energy from RE, typically providing below 50kW output, that is concerned with heat and/or power production technology aimed at the individual domestic households, houses of multiple occupancy, multiple dwellings, and light commercial sectors. The technologies include but are not limited to photovoltaics, micro-wind power, micro-hydro power, ground - , water - and air source heat pumps, solar heating, solid biomass/biogas heating, and micro CHP using renewable energy sources

Investments in clean urban transport:

— Clean urban transport to support increased EE and integration of RE sources, with an emphasis on public transport, electric and hydrogen vehicles and reduced greenhouse gas emissions. The projects will support a progressive substitution of oil by alternative fuels and the development of vehicles which consume less energy and generate fewer pollutant emissions


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• Investments must achieve at least 20 % primary energy savings for EE projects, except for the building sector where a higher percentage is required and 20 % reduction of CO2 emissions for transport

• Specific criteria e.g. in the context of economic viability may apply for some technologies

• Public authorities requesting financing for eligible projects should have concrete objectives in place to mitigate climate change (i.e. increasing EE or use of energy from RE through e.g. the Covenant of Mayors Initiative (b) ) as well as multi-annual strategies in doing that

• The Fund will only consider proven technologies (see eligible EE/RE projects as defined on page 3)

• Fund should endeavor to invest in projects which can provide synergies with Structural and Cohesion Funds as well as projects which will enhance the use of ESCOs providing guaranteed energy savings

• Investments made by the Fund should be aligned with relevant EU legislation

• Especially for RE projects using biomass, it is essential that there is compliance with the Renewable Directive 2009/28/EC

EEEF (4)

Portfolio strategy and eligibility (continued)

•Project selection criteria

(b) The Covenant of Mayors is a commitment by more than 2000 signatory towns and cities to go beyond the objectives of EU energy policy in terms of

reduction in CO2 emissions through enhanced EE and cleaner energy production and use. Fore more information please go to:

http://www.eumayors.eu/home_en.htm


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GGF (1)

Introduction

The mission of the Fund is to contribute, in the form of a

public private partnership with a layered risk/return structure,

to enhancing energy efficiency and fostering renewable

energies in the Southeast Europe region including Turkey,

predominantly through the provision of dedicated financing to

businesses and households via partnering with financial

institutions and direct financing.

Initiators: European Investment Bank and KfW

Entwicklungsbank, supported by the European Commission

Domicile: Luxembourg SICAV-SIF

First closing: December 17 2009


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GGF (2)

Current target partners

Albania

Bosnia and Herzegovina

Croatia

FYR of Macedonia

Montenegro

Serbia

Kosovo1

Turkey

1under UNSCR 124/99


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Objectives

• Broadening the financing

base of energy efficiency

and renewable energy

investments in the region

• Increasing awareness and

deepening the financial

sector servicing those

development needs

• Harmonize and coordinate

donor initiatives

GGF (3)

Objectives and instruments

Instruments

• Medium to long-term

senior loans

• Subordinated loans

• Letters of credit

• Guarantees

• Mezzanine debt

instruments

• Local debt securities

• Equity

• Technical Assistance

support


21

GGF (4)

Structure

Investment Test

Is the fund a sound investment proposition?

Issuance of different share tranches (A, B, C and later Notes)‏

Offering investors different risk-return profiles


22

GGF (5)

Investors and Donors

Initiating Shareholders

Current Shareholders TA Facility Donors

Committed Capital: ≈ EUR 130 million


23

What?

Minimum 20% reduction in energy consumption

Minimum 20% reduction in CO2 emissions

Promotion of renewable energy

Where?

Candidate and Potential Candidate Countries of South East Europe

To Whom?

Financial Institutions

Non-Financial Institutions

How?

Loans & guarantees

Mezzanine financing

Equity

GGF (6)

Investment objectives

Households

Homeowner Associations

Companies, including ESCOs and

RE companies

Municipal & public entities


24

Investments through Financial Institutions

GGF (7)

Eligibility criteria

Standard Non-

standard

SME/Industrial/

Muni

Recipient Households,

SME

HOA, SME Businesses,

Municipalities,

Public Sector

Min sub-loan N/A N/A €500k

Max sub-loan €500k €500k €10 million

Eligible

Measures

Building envelope, heat

source & distribution, lighting,

renewable utilization,

combined heat/power

EE and RE projects

*Subject to strict limitations


25

Investments through Non-Financial Institutions

GGF (8)

Eligibility criteria

To/through ESCOs Energy service/supply

Recipient Public sector, industrial EE/RE service or

equipment companies

Min loan €100k N/A

Max loan €10 million €10 million

Eligible

Measures

Energy efficiency,

renewable energy,

energy performance

contracts, energy supply

contracts

EE/RE producers or

vendors, service

companies


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• Availability of well tailored technical assistance for

capacity building of partner institutions

• Assistance in setting up energy efficiency and renewable

energy lending operations

• Support in the form of energy audits

• Help with EE and RE project implementation

Technical Assistance Facility

GGF (9)

Non-financial services


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• Development of EE/RE loan products

• Staff training

• Marketing and supply chain development

• Impact measurements

• Monitoring and reporting

Capacity development of Financial PIs


Which activities are eligible for

TA support?

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• Support financial and technical feasibility studies prepare

bankable documents for potential investors

• Training and consulting in supply chain development,

product development, refining contractual arrangements

(e.g. for ESCOs), defining procurement standards

• Targeted technical advice to address problem areas in an

EE/RE company that is a client to the Fund

Capacity development for Non-Financial Institutions

Which activities are eligible for

TA support?


29

1. EIB General


3. Carbon Funds

4. Equity Funds

5. TA/Advisory


30

EIB Involvement

EIB Approach: Filling in the Gaps

• Focus on regions and market segments where can add most

value, e.g.: JI, GIS, post-2012, Programme of Activities,

incoming forest carbon

• Take balance sheet at risk

• Try to work with private sector, while leveraging balance sheet

• Compliance buyers: Sovereign, private utilities, SMEs

• Sponsors/Investors: team up with IBRD, EBRD, KfW, ICO,

NIB, CDC

6 carbon funds ~ EUR 600m capital committed

• Some funds advised/managed by private carbon fund

management companies

Carbon Funds

31

Fund (launch) Partner(s)

Total Capital

Committed

EUR m

EIB

commitme

nt EUR m

Fund commitment

to date

EUR m

MCCF (12/2006) EBRD 208.5 0 70.2

CFE (3/2007) IBRD 50.0 0 20.7

EIB-KfW Carbon

Purchase Programme I

(8/2007)

KfW 79.3 39.7 75.9

Post 2012 (3/2008) CDC, ICO,

KfW, NIB 125.0 50.0 103.3

Fonds Capital Carbon

Maroc (12/2008) CDC, CDG 26.0 6.5 2.4

EIB-KfW Carbon

Purchase Programme II

(12/2009)

KfW 100.0 50.0 39.4

TOTAL 588.8 146.2 311.9

Carbon Portfolio – Overview

• 65% capital committed by EU compliance buyers directly

Around 25% capital committed by EIB (purchases/guarantees), the

rest by the partners

Carbon Funds

32

Portfolio – Sectoral breakdown

Renew able

energy

47%

Energy eff iciency

25%

Other

28%

– Over 70% of ERPA commitments for Renewable Energy and Energy Efficiency projects

– The share of industrial processes which is the most important CDM sector worldwide (more than 40%) is very limited in EIB portfolio

MCCF CFE EIB-KfW I P2012 FCCM EIB-KfW II

Renewable energy 50% 57% 59% 50% 100% 23%

Energy efficiency 21% - 11% 21% - 77%

Other (fuel switching, waste

management, capture of fugitive

emissions, avoidance of landfill gas or

coal-mine methane projects etc.)

29% 43% 30% 29% - -

Carbon Funds

33

Carbon Funds

Global reach of EIB action in climate change

Carbon Funds (ERPAs)

China

29%

India

15%

Russia

11%

Other CEE

11%

Other

South Asia

9%

Other

Central Asia

10%

FEMIP

4%

Brazil 5%

Other

LATAM 6%

AFRICA

1%

Carbon Funds

34

• Carbon Finance Revenue should be

paramount to projects so as to get

CDM/JI registration (financial

additionality)

Carbon Fund Conclusions

Source: World Bank

• The Ratio “NPV of ERPA future flows /

Total Project Cost” measures carbon

finance contribution to the project cost

• This Ratio is estimated to be around 10%

for the EIB carbon funds 10x leverage

for the funds or 40x leverage for the EIB

participation in the carbon market

Relative weight of carbon cash flows in overall

project financing

ERPA PV/Total investment

Source: First Climate

Carbon Funds

35

1. EIB General


3. Carbon Funds

4. Equity Funds

5. TA/Advisory


36

Equity Fund Portfolio (1)

• The Portfolio as of EOY 2010* – 21 infrastructure fund investments (19 inside the EU, 2 outside)

– EUR 683m of EIB commitments (o/w EUR 284m drawn as of EOY 2010 )

– EUR 8.8bn of total targeted commitments

– Some funds already showing payback reflows (2009: EUR 0.9m / 2010: EUR 3.3m)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2008 2009 2010

EUR'000

EIB Drawdowns EIB Commitments

Total Commitments Total Target Commitments

Project (debt and equity) Total Fund Commitments

Total Fund Commitments EIB CommitmentsME = x

Project leverage = 4x

Catalytic Effect = 13x (upon achievement of target size) /

9.4x (actual fundraising result to date)

Multiplier Effect = 52x (upon achievement of target size)/

38x (actual fundraising result to date)

*Please note that the Annual Report is based on 30/09/2010 figures

ME = Project leverage x Catalytic Effect x Instrument leverage

Equity Funds

37


Geographical Balance – Number of Investments per Country

* Emerging Europe Convergence Fund II and Mid Europa Fund III are holding company participations, hence big investment amount

** Including Bite Latvia

*** Representing the value of development rights, with the effective investment to be made later

CountryNo. of

projects

Average size

of projects

(EUR m)

Austria* 2 85.95

Belgium 1 2.34

Croatia* 2 13.91

Cyprus 1 3.50

Czech Republic* 6 58.99

Denmark 1 2.63

Estonia 1 5.45

Finland 1 13.91

France 30 3.83

Germany 26 5.16

Greece 1 1.10

Hungary* 1 168.95

Ireland 4 9.11

Italy 18 2.63

Latvia 1 0.57

Lithuania*/** 1 131.00

Netherlands 2 9.93

Poland 8 55.38

Portugal 5 6.63

Romania 1 9.36

Serbia* 1 64.00

Slovakia* 4 31.27

Spain 13 6.18

Sweden*** 1 0.10

United Kingdom 61 8.00

Turkey 1 25.00

Equity Funds

38

Number of projects by subsector

51

34

28

22

15

10

10

55 5 4 2 2 1 1

Wind Parks

Hospitals / Health

Schools / Education

Solar

Roads

Public Buildings

Telecom / Media

Forestry

Leisure

Other

Light Rail

Biomass

Emergency Services

Manufacturing

Natural Resources


Sector Breakdown

Equity Funds

39

Equity Fund Conclusions

• Overall good performance at the portfolio level

– still early stage portfolio – most funds still in the investment period

– given EIB‘s focus on greenfield, many assets are still under construction

– 1.16x TVPI multiple

– 1% cash yield in 2010, while 49% of investment period elapsed and 52% of total commitments

invested

– 3-5% annual cash yield expected in 2011-2013

LEVERAGE EFFECT OF EIB INVESTMENT

Catalytic Effect: 13x (upon achievement of target size) /

9.4x (actual fundraising result to date)

Multiplier Effect: 52x (upon achievement of target size) /

38x (actual fundraising result to date)

Note: A more detailed leverage calculation taking into account donor first loss pieces (instrument

leverage) and removing double counting from donors will be provided at a later stage

• Going forward

– an improved geographical balance of the portfolio; exploring potential investments in Central and Eastern Europe

– innovative and traditional funds for climate action, innovation and sustainable development

– development of innovative fund concepts (such as layered funds, various debt fund structures

and carbon funds)

– general greenfield infrastructure funds

Equity Funds

40

1. EIB General


3. Carbon Funds

4. Equity Funds

5. TA/Advisory – JESSICA & ELENA


41

JESSICA (Joint European Support for Sustainable

Investment in City Areas)

Offering Member States (MS) and Managing Authorities

(MAs) the possibility to lever grants from Operational

Programmes (OP) into revolving, sustainable financial

capacity for urban renewal and development projects.

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• Member States (MS) and Managing Authorities (MA)

have the possibility to allocate and contribute resources

from OPs, to:

- Urban Development Funds (UDF);

- Holding Funds (HF);Urban Development Funds

investing in

- PPPs or projects included in Integrated Urban

Development Plans (IUDP);

- Holding Funds investing in several UDFs.

43

JESSICA

HF Manager

European Commission

ERDF – DG Regio

Managing Authority

EU

Leve

l

Nat

iona

l /or

regi

onal

Lev

el

Holding Fund (« HF »)

Urban Development

Funds

Nat

iona

l/reg

iona

l

/Loc

al L

evel

R

egio

nal /

Loca

l

Leve

l

Projects Sustainable Urban

Development

Structure investments, select

Urban Development Funds

Administer, monitor & report on

investments

Attract other investors

Closely collaborate with

national/regional authorities

Role of the HF Manager: € € € €

€ € € €

Disbursement:

Up front

Irreversible

Holding Fund:

Greater delegation to Local Authorities

Owned by National Authority

Management/administration are outsourced to HF Mgr.

THE MANAGER IS SELECTED

BY MEMBER STATE / REGION

Programming Authority

€

(In tranches

if required)

44

Why JESSICA?

• Use innovative financing and loan schemes for sustainable urban development, not aggravating public finance and debt.

• Involve technical, financial, managerial capacity and expertise of IFIs, banks, private sector, for sustainable urban investment.

• Increasing investment needs for sustainable cities and towns. Available public funds are scarce- need private and banking sector contribution.

• Existing administrative and technical capacity within Urban authorities often does not correspond to investment needs.

45

European Local ENergy

Assistance -- ELENA – EC-EIB cooperation to support local and regional

authorities to reach 20-20-20 targets;

– Grant facility: managed by EIB; funded by EU budget

(CIP/IEE programme).

– Application to Energy Efficiency; local renewables;

clean transport.

– Market replication focus;

– investment leverage required (ratio 25).

– Budget 2009: 15 Mio €

– Budget 2010: 15 Mio €

– envisaged Budget 2011: 19 Mio € (leverage reduced

to 20)

46

• INVESTMENT PROGRAMMES/PROJECT

• EE and RES investment in public and private buildings, including social housing and street and traffic lighting;

• Urban transport to support increased energy efficiency and integration of renewable energy sources;

• Local energy infrastructure to support developments in previous sectors including smart grids,

ICT, etc.

European Local Energy

Assistance -- ELENA

ELENA (Project Development Services)

Support to Final Beneficiaries with:

• Additional technical staff • additional Technical studies

• additional Feasibility studies

• Procurement/tendering

• Financial structuring

47 47 European Investment Bank / ELENA Facility

Non-eligible investments

– Investments connected with industry, reductions of greenhouse gas emissions due to industrial relocation

– Pilot projects or demonstration projects

– R&D

48

ELENA current projects

ELENA contribution: EUR 27,3 Mio

Expected investment: over EUR 1.9 bn

Fair distribution between sectors

Support to small & large cities

Replication of best practices

15 signed and approved projects


Example of EE in municipal

buildings • Provincial support structure

• Objective:

Assistance for small or medium-sized municipalities in carrying out projects

• Preparatory activities:

Identifying buildings with potential for EE improvement through simplified

energy audits

• Support required from ELENA

– Setting up a support unit

– Selection of procedure for implementation of investments, normally via

ESCOs, building lots

– Preparation of calls for tender and negotiations with bidders


Example of hybrid buses • Beneficiary: City

• Objective: replacing public buses with more energy efficient ones

• Preparatory activities: identifying replacement needs and type of buses

• Support required from ELENA:

– Additional analyses, in particular of operational risks associated with hybrid buses

– Selection of procedure implementation of investments

– Preparation of calls for tender and negotiations with bidders

51

Other TA initiatives

• JASPERS

• EPEC

52

1. EIB General


3. Carbon Funds

4. Equity Funds

5. TA/Advisory


53

ENERGY EFFICIENCY:

INDUSTRIAL PROJECTS

• Modernisation of critical equipment

- e.g. replacement of boilers in Pulp & Paper industry,

10-20% gains in EE.

• Replacement (and expansion) of existing capacity

- e.g. process improvements in the chemical sector allowing

15-30% gains in EE

• Use of residues (biomass) for power generation

- e.g. food industry

• R&D aimed at product / process improvement

- e.g. automotive sector, 3-5 % EE gains

54

ENERGY EFFICIENCY: BUILDINGS

AND ACCOMMODATION

Construction & refurbishment of buildings:

• Global loan for small / medium sized projects in housing modernisation (Germany)

- 5-10% gains in EE achievable through insulation, boiler replacement etc

• Direct loans for modernisation of schools and hospitals (Various countries):

- 10-20% of EE gains achievable through heat insulation, energy efficient lighting, utilisation of solar energy

55

Certification

Post-construction

56

ENERGY EFFICIENCY: PPP PROJECTS

• UK Schools and Hospital PPPs usually include managed energy service

• Risk allocation based on principle of ‗who best manages the risk‘

• Conventionally:

- Public sector takes tariff risk

- Private sector takes volume risk (subject to change mechanic)

• Baseline consumption based on either energy norms or period

of early operations

• Some road PPP projects included innovative congestion

element to payment mechanism

57

ENERGY EFFICIENCY

POLICY ISSUES

Information and incentives:

• Low energy prices and energy metering

- support tariff reforms

• Poor information about energy efficiency possibilities

- Technical Advice funds when available

• High implicit discount rates for energy savings

- combining grants and loans or risk sharing instruments

• Develop public transport and integration of energy considerations in urban development:

- significant lending prospects in this area, including through PPP structures

58

ENERGY EFFICIENCY

CREDIT ISSUES

• Development of ESCOs:

- limited possibilities at present

• Renovation of District Heating:

- creditworthness of the municipalities

• Energy efficient investment are generally small:

- finance smaller projects, grouping several projects or credit lines

59

Contact

EUROPEAN INVESTMENT BANK

Climate Change and Environment :

Christopher Knowles, [email protected]

mailto:[email protected]

eib support for low carbon - european...

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