Boosting energy efficiency through innovative financing
How can EU funding help hotels in Spain or small companies in the Czech Republic save on energy bills and cut greenhouse gas emissions? One answer is Private Finance for Energy Efficiency, a new initiative that supports energy efficiency improvements by businesses, individuals and public bodies across Europe.
Launched under the EU's LIFE programme and managed by the European Investment Bank, the Private Finance for Energy Efficiency (PF4EE) funding programme supports commercial banks that lend money to energy efficiency projects by small businesses (SMEs), private individuals, and municipalities or other public bodies.
Miguel Arias Cañete, Commissioner for Climate Action and Energy
The programme provides long-term loansto commercial banks that on-lend smaller loans to the final beneficiaries. This money can be used, for example, to upgrade heating systems in schools or offices, help businesses buy energy-efficient equipment, or improve insulation in residential and commercial buildings. The loans typically range from €40 000 to €5 million.
In addition to long-term loans, the programme supports the intermediary banks with a risk-sharing facility enabling better financing conditions and an expert support facility to help banks assess projects more effectively and propose financial products adapted to financing energy efficiency investments.
Money where it matters
Backed by €80 million from the LIFE programme during 2014-2017, the PF4EE initially set out to leverage total investment of €480 million. However, following widespread interest, the EIB has raised the target to €1 billion of new investments in energy efficiency.
The first programmes at national level have already begun. The Czech Republic's Komerční bankaaims to finance small-scale investments totalling €75 million, with a focus on energy-efficiency measures in SMEs, such as improving insulation, heating and lighting in buildings, reusing waste energy in production, and increasing renewable energy use.
In France, Crédit Coopératif will invest up to €75 million in building renovation and insulation work, while in Spain, Santander bank is financing investments of €50 million to improve energy efficiency in hotels and other tourist accommodation.
By encouraging private-sector investment in energy efficiency, the funding programme contributes to meeting the EU's climate and energy targets of cutting greenhouse gas emissions by at least 40 % and increasing energy efficiency by at least of 27 % by 2030, compared to 1990.
Private Finance for Energy Efficiency is one of two new LIFE financial instruments – the other being the Natural Capital Finance Facility.
Climate Action and Energy Commissioner Miguel Arias Cañete said: "With these new financial instruments, we are putting the money where it matters. This is a contribution to protecting the climate, saving energy for our citizens and making Europe less dependent on imported energy."