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Investing in energy efficiency makes economic sense

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September 16, 2015

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Published:

September 16, 2015

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Seventy financial institutions from over 20 countries – ranging from regional and microfinance institutions to national and global banks – have vowed to step up financing for energy efficiency and develop business strategies that save energy and reduce carbon emissions, the European Bank for Reconstruction and Development said on its website.

They made their pledge in Istanbul at a two-day conference named ‘Building a Global Energy Efficiency Financing Alliance’, held by EBRD and the United Nations Environment Programme Finance Initiative (UNEP FI) in the run up to the G20 summit and COP21 climate talks in Paris, with the support from Turkey’s Garanti Bank, the Climate Investment Funds and MWH Global, a water and natural resources firm.

The event was designed specifically to engage the financial industry in energy efficiency opportunities. Participating institutions have also endorsed a declaration pledging to engage further in financing the sector. Opening the conference, Josué Tanaka, managing director for energy efficiency and climate change at the EBRD, said: „Investing in energy efficiency makes economic sense and the current financing gap represents a huge business opportunity. The financial sector is uniquely placed to channel finance to energy-saving opportunities and address the current investment gap. Our aim is to make sure the financial community can tap into this potential by forging links with the most up-to-date expertise and technology.”

Eric Usher, acting head of UNEP FI, added: „Mobilising the private finance sector to tackle the investment gap means working with financial institutions not only to address their internal barriers but also involving policy makers in an open dialogue on how external barriers can be overcome.”

Energy efficiency has been recognised as one of the most economically effective means of combatting climate change. According to scenarios from the International Energy Agency, more than 40% of the greenhouse gas emission reductions required to limit increases in the global average temperature within two degrees Celsius by the end of the century will have to come from increases in energy efficiency. At the same time, according to the Global Tracking Framework, the financing needed to achieve the efficiency objectives, already pledged by major economies, accounts to USD 560 billion (EUR 491.5 billion). Energy efficiency investment needs to increase fourfold from current levels.

EBRD’s Sustainable Energy Finance Facilities (SEFFs) – especially designed to support financial institutions fund energy efficiency in corporate, municipal and residential sectors – have been successfully implemented in 22 countries and attract significant levels of demand, the article said. Today the EBRD works with over 100 banks, leasing companies and microfinance institutions, reaching over 1,000 enterprises and 15,000 households annually.  Since the launch of EBRD’s Sustainable Energy Initiative in 2006, over EUR 3 billion has been committed to SEFFs, resulting in over 80,000 loans. These credit lines are being supported by 16 donors including the EU and the Austrian government. Over the past 10 years, the EBRD  has invested a total of EUR 13 billion in energy efficiency both through direct deals and in partnership with commercial banks, encouraging third party investment for projects worth a total of EUR 84 billion and estimated to reduce greenhouse gas emissions by over 60 million tonnes of carbon dioxide per year.

UNEP FI works with its members to scale up investment and raise the visibility of energy efficiency. This includes being the partner of countries and policy makers to enable a constructive dialogue with the financial sector. This was successfully initiated with the European Commission and now with the G20 Energy Efficiency Finance Task Group.

EBRD’s Josué Tanaka told Anadolu Agency his institution has been financing Turkish banks in offering loans for energy efficiency measures since 2010. Overall, the international financing institution allocated close to EUR 2.63 billion in energy projects in the country, resulting in EUR 613.4 million in savings, he underscored ahead of the Istanbul event.

The percentage of EBRD’s financing volume for sustainable energy grew from 15% in 2005 to 34% in 2014, said Nandita Parshad, the director of the international bank’s power and energy utilities team, in an interview for Balkan Green Energy News in June.

EBRD plans to increase its investments in Turkey, country director Jean-Patrick Marquet said recently. The bank is channeling EUR 300 million to EUR 400 million into that market this year, including acquiring stakes in Borsa Istanbul and renewable energy company Gama Enerji, he added. The bank’s Turkish portfolio primarily consists of renewable energy projects, including wind farms and geothermal plants. EBRD has recently announced a EUR 180 million funding program for Turkish renewable energy projects through Garanti Bank AŞ and Yapı ve Kredi Bankası AŞ.

 

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