Funding mechanisms for Energy Efficiency

2014-2020

An engine for growth and jobs: EU funds for Energy EfficiencyBudapest, 6th November 2013

Ágnes KelemenKlimapolitika

Cohesion policy 2014-2020*

*Slides 3-6 and 8-9 courtesy of European Commission DG REGIO

Allocation of funding for European regions

68,7%

11,6%

15,8%

0

10

20

30

40

50

60

70

80

90

100

119.2

72.4

307.1

0

50

100

150

200

250

300

350

400

450

500Less developed regions/MSTransition regions

More developed regions

Thematic objectives

1. Research and innovation2. Information and Communication Technologies3. Competitiveness of Small and Medium-Sized Enterprises (SME)4. Shift to a low-carbon economy5. Climate change adaptation and risk management & prevention6. Environmental protection and resource efficiency7. Promoting sustainable transport & removing bottlenecks in key

network infrastructures8. Employment and support for labour mobility9. Social inclusion and poverty reduction10. Education, skills and lifelong learning11. Increased institutional capacity and effectiveness of public

administration

Less developed regionsDeveloped regions

60% 20%

6%

44%

Concentration of ERDF for 2014-2020*

Research and Innovation Low-carbon economy(Energy efficiency and renewable energy)SMEs competitiveness

No more ceiling for investing in EE in housing (currently maximum 4% of ERDF)

60% 20%

Transition regions

ICT

15%60% 20% 45 % 38%

12%

*Current state of the trilogue negotiations

Investments in the low carbon economy

– Promoting the production and distribution of RES

– Promoting EE and RES use in enterprises

– Supporting EE, smart energy management and RES use in public infrastructures, including in public buildings, and in the housing sector

– Developing and implementing smart distribution systems at low and medium voltage levels ("smart grids")

– promoting low-carbon strategies for all types of territories, in particular for urban areas, including the promotion of sustainable multi-modal urban mobility and mitigation relevant adaptation measures

– promoting research in, innovation in and adoption of low-carbon technologies (ERDF only)

– promoting the use of high-efficiency co-generation of heat and power based on useful heat demand

Integrated sustainable urban development

• Minimum 5% of ERDF funding, synergies with ESF should be sought• Management and implementation at city level• Indicative list of cities in Partnership Agreement• Urban Development Platform comprising 300 European cities• Delivered through Integrated Territorial Investment to combine funding

from several OPs or priority axes to support integrated investment• Integrated strategies to address economic, environmental, climate and

social challenges• urban-specific sectoral investment priorities:

– promote low-carbon strategies for urban areas, – improve the urban environment,– promote sustainable urban mobility,– promote social inclusion through supporting the physical and economic

regeneration of deprived urban areas

Implementation principles

• Ensure that public funding complements private investments, leveraging it and not crowding it out

• Consider creating value for energy savings through market mechanisms before public funding (energy saving obligations, energy service companies (ESCO)…)

• Financial instruments - to be used where potential for private revenue or cost savings is large

• For physical investment, grants to be used primarily:– to address market failures– to support innovative technologies– to support investments beyond cost-optimal EE performance

Financial instruments

• "Off the shelf“ (standardised) instruments: under development in EC– Provide standard terms & conditions for set of predefined

financial instruments– 4 potential instruments, including on "loan for energy efficiency

and renewable energies in the residential building sector” (renovation loan)

• "Renovation loan":– Financial intermediary = public or private financial institution

(including IFIs), to contribute with its own private fund for a minimum of 15% (at market conditions)

– Follow professional best practice– Have appropriate management capacity & track record in

financing operations in energy/construction sector• Financial instruments may also be developed by the Member

State

Energy efficiency in the PAs and OPs of MS

PAs of MS submitted so far

– High allocation to climate change, often above required amount, but difficult to see where funding will go (EE, RE, sustainable transport?)

– EE main focus on SMEs and buildings, sometimes transport

– Energy efficiency is often weak at level of targets (e.g. targets for RE and GHGs mentioned, but not for EE)

– Low carbon economy often features as cross-cutting priority in TOs 1, 3, 5, 6, 7, 8, 9, 10 and 11, but integration is often insufficient, especially in the proposed investment priorities and there is further scope to integrate TOs and coordinate funds

– Strong integration with TOs 1, 3 and 10 more typical of countries with more developed regions

PAs of MS submitted so far

– Indicators, monitoring and target setting is weak

– Tracking of climate related expenditure not mentioned

– Weak integration of the sustainable development principle in general and of climate change specifically

– Sustainable urban development usually also focuses on climate mitigation

Energy efficiency in the PA and OPs of Hungary

Hungarian draft Partnership Agreement

Strengths

–Energy Efficiency Fund planned

–Separate Environment and Energy Efficiency OP foreseen

Weaknesses

–Low financial allocation to TO4

–Weak integration with planned investments in SMEs and competitiveness (TO3)

–Weak integration with social inclusion and poverty (TO9)

–Weak on indicators and on the contribution of ESIF to national targets related to EE and RE

Hungarian draft OPs (1)

Human Resources OP (EFOP)

–No mention of training and education in the field of energy in the OP

Economic Development and Innovation OP (GINOP)

–Investment in EE in buildings owned by SMEs, energy systems in declining industrial regions, EE investment in natural and cultural heritage, contribution of ICT to EE

–Financial instrument for EE investment by SMEs and municipalities

–Contains targets related to the LCE, reference to 20-20-20 targets

–Acknowledges contribution of EE to growth and employment

Hungarian draft OPs (2)

Regional and Urban Development OP (TOP)

–Low carbon economy features among the thematic objectives

–Investment priorities include energy efficiency in public buildings and in social housing, investments in public transport, cycling and walking, preparation of low carbon development strategies, complex programmes aimed at utilizing local energy potentials

–Financial instruments for energy efficiency planned

–Indicators relating to energy efficiency in buildings

–Focus on small scale local community based solutions

–CLLD with a focus on EE

Hungarian draft OPs (3)

Competitive Central Hungary OP (VEKOP)

–Investment in EE in public infrastructure including public buildings and social housing, EE in SMEs, EE in public transport

–Financial instrument for EE

–Indicators related to EE

Integrated Transport Development OP (EFOP)

–Energy efficiency investments in shipping and suburban and regional railroad, awareness raising for sustainable urban transport,

–EE indicators for transport

Environment and Energy Efficiency OP (KEHOP) is not yet published for public consultation

Thank you for your attention!

agnes.kelemen@klimapolitika.com