COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Financial support for energy efficiency in buildings
Date: 2013-04-18
Institutions: European Commission
Subjects: EU financing, building, building insulation, energy consumption, energy saving

EUROPEAN 
COMMISSION 

Brussels, 18.4.2013  
SWD(2013) 143 final 

COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL  

Financial support for energy efficiency in buildings 

{COM(2013) 225 final} 

EN 

   EN 

 
 
 
 
  
 
 
Table of Contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

Why this report?........................................................................................................... 3 

Buildings in Europe ..................................................................................................... 4 

The construction sector ................................................................................................ 4 

The European building stock ....................................................................................... 4 

Energy performance of the European building stock................................................... 6 

EU financial support for energy efficiency in buildings.............................................. 7 

Cohesion policy funding .............................................................................................. 8 

Research funding........................................................................................................ 11 

3.2.1. 

'Energy-efficient Buildings' Public-Private Partnership ............................................ 11 

3.2.2.  CONCERTO .............................................................................................................. 12 

3.3. 

3.4. 

3.5. 

Enlargement funding through IFI facilities................................................................ 12 

EEE-F......................................................................................................................... 13 

Intelligent Energy Europe II....................................................................................... 14 

3.5.1.  ELENA Facility ......................................................................................................... 15 

3.6. 

Information and Communications Technologies Policy Support Programme .......... 15 

4. 

4.1. 

4.2. 

4.3. 

5. 

6. 

7. 

7.1. 

7.2. 

7.3. 

7.4. 

8. 

Funding for energy efficiency in buildings by international financial institutions.... 16 

EIB funding................................................................................................................ 16 

EBRD funding............................................................................................................ 17 

CEB funding .............................................................................................................. 17 

Funding for energy efficiency in buildings by national programmes ........................ 17 

Private sector funding for energy efficiency in buildings.......................................... 21 

What could be done to stimulate more and more effective investments?.................. 22 

Strengthening the regulatory framework ................................................................... 23 

Improving access to financing ................................................................................... 24 

Addressing market failures ........................................................................................ 26 

Strengthening the energy services market.................................................................. 27 

Conclusions ................................................................................................................ 28 

 
 
 
1. 

WHY THIS REPORT? 

Buildings  are  central  to  the  EU's  energy  efficiency  policy,  as  nearly  40%1  of  final  energy 
consumption  (and  36%  of  greenhouse  gas  emissions)  is  in  houses,  offices,  shops  and  other 
buildings.  Moreover,  the  building  sector  (including  both  residential  and  non-residential 
buildings)  provides  the  second  largest  untapped  and  cost-effective  potential  for  energy 
savings  after  the  energy  sector  itself2.  There  are  also  important  co-benefits  from  making 
buildings  more  energy  efficient,  including  job  creation  and  retention,  health  improvements, 
better energy security and industrial competitiveness3 and fuel poverty alleviation (the latter 
being particularly relevant in the current financial and economic situation, where the number 
of vulnerable customers facing energy poverty is increasing). 

The  objectives  of  the  report  and  this  Staff  Working  Document  are  twofold.  Firstly,  under 
Article  10(5)  of  the  Energy  Performance  of  Buildings  Directive  recast  (2010/31/EU4; 
hereafter  called  the  "EPBD")  the  Commission  is  requested  "to  present  an  analysis  on,  in 
particular; 

(a) 

(b) 

(c) 

the  effectiveness,  the  appropriateness  of  the  level,  and  the  actual  amount  used,  of 
structural  funds  and  framework  programmes  that  were  used  for  increasing  energy 
efficiency in buildings, especially in housing; 

the  effectiveness  of  the  use  of  funds  from  the  EIB  and  other  public  finance 
institutions; 

the coordination of Union and national funding and other forms of support that can 
act as a leverage for stimulating investments in energy efficiency and the adequacy 
of such funds for achieving Union objectives." 

The  report  and  this  Staff  Working  Document  present  the  main  results  of  this  analysis  and 
draw conclusions as to how EU-level funding, funds from the European Investment Bank and 
other  public  finance  institutions  together  with  national  support  programmes  could  be  better 
employed for increasing energy efficiency in buildings in the future. 

Second,  the  new  Energy  Efficiency  Directive5 (hereafter  called the  'EED') requires Member 
States to facilitate the establishment of financing facilities or use of existing ones for energy 
efficiency improvement measures to maximise the benefits of multiple streams of financing. 
More  specifically  for  buildings,  by  April  2014,  Member  States  must  establish  a  long-term 
strategy for mobilising investment in the renovation of the national building stock, including 
policies and measures to stimulate cost-effective deep renovations.  

1 

2 

3 

4 
5 

In 2010. See "EU Energy in figures, 2012", European Commission 

Eichhammer,  W.  et  al.:  Study  on  the  Energy  Savings  Potentials  in  EU  Member  States,  Candidate 
Countries and EEA Countries. 2009;  

Wesselink,  B.  et  al.:  Energy  Savings  2020  –  How  to  triple  the  impact  of  energy  saving  policies  in 
Europe. Report to the European Climate Foundation, 2010 

Multiple  benefits  of  investing  in  energy  efficient  renovation  of  buildings.  Impact  on  Public  Finances 
Copenhagen Economics, October 2012 (http://www.renovate-europe.eu/Multiple-Benefits-Study) 
OJ L 153, 18.6.2010, p.13 

Directive  2012/27/EU  of  the  European  Parliament  and  of  the  Council  of  25  October  2012  on  energy 
efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 
2006/32/EC (OJ L315 of 14.11.2012, p.1) 

3 

 
                                                 
 
The  EED  also  stipulates  that  the  Commission  shall,  where  appropriate,  directly  or  via  the 
European  financial  institutions,  assist  Member  States  in  setting  up  financing  facilities  and 
technical support schemes with the aim of increasing energy efficiency in different sectors. 

Therefore,  the  report  and  this  Staff  Working  Document  also  aim  to  indicate  how  financial 
support at European level for energy efficiency in buildings can be improved. As such, they 
complement 
the  sustainable 
competitiveness  of  the  construction  sector  and  its  enterprises"6,  published  on  31  July  2012, 
which strongly advocates increased investments in the sector with a focus on the renovation 
and maintenance of buildings as a driving force in the creation of jobs. 

the  Commission  Communication  on  a  "Strategy  for 

2. 

BUILDINGS IN EUROPE 

2.1. 

The construction sector 

The construction industry is an important economic sector, generating almost 10% of GDP in 
the EU in 2011 and representing 51.5% of Gross Fixed Capital Formation. With close to 15 
million employees it represents 7% of total employment and 30.7% of industrial employment 
in the EU. The sector includes 3.1 million enterprises of which around 95% have fewer than 
20 employees. 

Buildings-related  construction  activities  represent  by  far  the  largest  part  of  the  sector,  with 
non-residential  being responsible  for 33%, rehabilitation and maintenance for 25% and new 
home building for 19% in 2011 (the remaining 22% being civil engineering works)7. 

2.2. 

The European building stock 

The Buildings Performance Institute Europe (BPIE) undertook a large survey of the European 
building stock in 2010. The study8 estimated that there are 25 billion m2 of useful floor space 
in the EU27, Switzerland and Norway, roughly equivalent to the land area of Belgium (30 528 
km2). A quarter of the European building stock consists of non-residential buildings, around 
50% of which are offices, wholesale and retail buildings. 

It is estimated that public sector buildings constitute just over 10% of the total building stock 
in the EU9. A specific category of public sector buildings is that of buildings owned by the 
EU  defence  forces.  The  European  Defence  Agency  estimates  that  this  covers,  collectively, 
infrastructure of a total estimated surface of about 200 million square metres10.  

Regarding residential buildings, in 2009 42% of the EU-27 population lived in flats, 34% in 
detached  houses  and  23%  in  semi-detached/terraced  houses,  although  there  are  large 
differences between countries (see figure 1). 

6 
7 
8 

9 

10 

COM(2012) 433 final 
Data for 2011. Construction activity in Europe. European Construction Industry Federation. June 2012 
Europe's  buildings  under  the  microscope.  A  country-by-country  review  of  the  energy  performance  of 
buildings. Buildings Performance Institute of Europe, October 2011. 
Impact  assessment  accompanying  the  document  "Directive  of  the  European  Parliament  and  of  the 
Council  on  energy  efficiency  and  amending  and  subsequently  repealing  Directives  2004/8/EC  and 
2006/32/EC and annexes (SEC(2011)779) 
European  Armed  Forces  Go  Green,  European  Defence  Agency  (for  more  information  see: 
http://www.eda.europa.eu/docs/documents/V3-Go_green_Factsheet_150312_CS5_vert) 

4 

 
                                                 
Figure 1: Distribution of population by dwelling type (% of population), 2009. Source: Eurostat (online data code: ilc_lvho01) 

In 2009, 73.5% of the EU-27 population owned their own homes, and 37% of the owners had 
a mortgage or a housing loan. In all countries at least half of the population owned their own 
homes, with figures ranging from 57.5% in Austria to 96.5% in Romania (see figure 2). 

Figure 2: Distribution of population by tenure status (% of population), 2009. Source: Eurostat (online data code: ilc_lvho02) 

As  regards  the  age  of  Europe's  building  stock,  close  to  40%  of  residential  buildings  were 
constructed before the 1960s and less than 20% during the last 20 years, although  there  are 
some differences between the different regions and countries in the EU (see figure 3). 

5 

 
 
 
Figure 3: Age categorisation of housing stock in Europe. Source: BPIE 

2.3. 

Energy performance of the European building stock  

Buildings  consumed  41%  of  total  final  energy  consumption  in  Europe  in  2010.  This  is  the 
largest  end-use  sector,  followed  by  transport  (32%)  and  industry  (25%).  Average  annual 
energy consumption was around 220 kWh/m2 in  2009,  with  a large gap between residential 
(around 200 kWh/m2) and non-residential buildings (around 300 kWh/m2)11 

The average energy consumption of the building sector has increased by around 1% per year 
since 1990, with non-residential buildings representing a 1.5% per year increase compared to 
0.6% per year for residential buildings. This development is characterised by two main trends 
(see figure 4): a significant increase in the use of gas and electricity (by around 50%) and a 
strong decline in the use of solid fuels and oil (by 75% and 27% respectively). 

Figure 4: Historical final energy consumption in the household sector. Source: BPIE 

In  terms  of  CO2  emissions  from  buildings,  there  are  large  differences  between  countries 
which are largely due to the energy mix and climatic conditions, and to a lesser extent to the 
deployment of renewable energy in buildings and the use of district heating and co-generation 
(see figure 5). 

11 

Energy Efficiency Trends in Buildings in the EU, Lessons from the ODYSSEE/MURE project, 2012 

6 

 
 
 
                                                 
Figure 5: CO2 emission per useful floor area. Source: BPIE 

Concerning the renovation rates of the building stock, there are little consistent data available 
about  the  number  of  renovations,  their  depth  or  developments  over  time.  Most  sources 
indicate a renovation rate between 1% and 2% per year as an average for the EU, while some 
individual  countries  have  reported  higher  rates  often  as  a  result  of  specific  renovation 
programmes in a given period12. 

The above data show that the characteristics of the building stock differ significantly between 
Member States in terms of age, type, ownership and energy performance13. As a result, while 
policy and regulatory frameworks share common themes among countries, specific measures 
to improve the building stock will have to take into account these differences and a 'one-size-
fits-all' approach is not appropriate. 

3. 

EU FINANCIAL SUPPORT FOR ENERGY EFFICIENCY IN BUILDINGS 

The  European  Union  has  been  supporting  the  improvement  of  the  energy  performance  of 
buildings  for  many  years  with  a  range  of  legislative  and  financing  mechanisms  and 
instruments. The table below gives an overview of the main instruments and available funding 
in this context: 

12 

13 

Europe's  buildings  under  the  microscope.  A  country-by-country  review  of  the  energy  performance  of 
buildings. Buildings Performance Institute of Europe, October 2011. 
Note that the figures for the energy performance of the building stock are based on an aggregation of 
the  energy  consumption  figures  for  the  residential  and  commercial  sectors  and  also  include  non-
building related consumption (e.g. electricity used for appliances such as televisions and refrigerators). 

7 

 
 
                                                 
Funding Source 
Cohesion Policy 
Funding 

Research Funding 

Enlargement Policy 
Funding 

Programme for 
European Energy 
Recovery (EEPR) 
Competitiveness and 
Innovation Funding 
(CIP) 

Instruments/mechanisms 
Operational Programmes incl. 
financial instruments  
(e.g. JESSICA) 
FP 7  
(e.g. Concerto, E2B PPP, Smart 
Cities) 
IFI facilities  
(SMEFF, MFF, EEFF) 

European Energy Efficiency Fund 
(EEE F) 

Intelligent Energy Europe 
Programme  
(including ELENA) 
Information and Communication 
Technologies Policy Support 
Programme (ICT PSP) 

Total funding available  
EUR 10.1 billion  
planned for sustainable energy 
(RES & EE) 
EUR 2.35 billion  
for Energy research 

Funding for EE 
EUR 5.5 billion planned for 
EE, co-generation and 
energy management 
EUR 290 million 
for energy efficiency 

EUR 552,3 million (381,5 
+117,8 +53 respectively) 

EUR 265 million14 

Approximately EUR 730 
million for each 
programme15 

About one third of total 
funding for projects in 
industry and buildings 
70% of funding to be 
dedicated to energy 
efficiency 
About 50% of the funding 
was dedicated to energy 
efficiency in all sectors 

Table 1: Funding for energy efficiency under the current Multiannual Financial Framework (2007-2013)

16

The following sections give further details about these instruments. 

3.1. 

Cohesion policy funding 

In  the  current  2007-2013  programming  period,  within  the  Cohesion  Policy  budget17 
significant  funding  is  dedicated  to  sustainable  energy,  with  about  EUR  10.1  billion  planned 
for energy efficiency and renewable energy investments across the EU as a whole, of which 
aproximately  EUR  5.5  billion  for  energy  efficiency.  Relative  shares  allocated  to  energy 
efficiency differ between Member States, to be seen in the light of the total volume of funds 
available, national needs and priorities set by each Member State. Based on the principle of 
shared  management,  the  management  of  programmes  supported  by  these  funds  is  the 
responsibility of the Member States. Up to the end of 2011, almost EUR 3.8 billion had been 
allocated  to  specific  energy  efficiency  projects,  including  revolving  funds,  representing  an 
implementation rate of 68% (see table below). 

14 

15 

16 

17 

Note that the EU budget conferred to the Fund the amount of EUR 125 million (+EUR 20 million for 
Technical  Assistance  and  EUR  1,3  million  for  awareness  raising  activities).  The  remaining  EUR  140 
million  represents  a  contribution  from  the  other  founding  partners  of  the  Fund  and  not  from  the  EU 
budget. 
Under Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 
establishing a Competitiveness and Innovation Framework Programme (2007 to 2013), a total of EUR 
3.62 billion was made available with an indicative share of 20% for both programmes. 
Relative shares allocated to RES and EE differ among Member States and have to be interpreted in the 
light  of  total  volume  of  funds  available.  Note  that  it  has  typically  not  been  possible  to  identify  the 
specific share of this funding allocated to building-related projects. 
The European Regional Development Fund (ERDF), the Cohesion Fund (CF) and the European Social 
Fund (ESF). 

8 

 
 
 
                                                 
EU allocated decided amount

Structural Funds 
Com m unity am ount 
(€)
(A)
1,204,478,581

EU Allocated 
am ount (€)
(B)

Intensity 
of total %
(B) / (A)

Last Annual Implementation Report 
selected projects 2011

Total projects 
selected
EU Am ount (€)
(C)

Rate of 
selection %
(C) / (B)

6,156,013

0.5%

17,383,781

282.4%

Mem ber 
States

AT

BE

BG

CY

CZ

DE

DK

EE

ES

FI

FR

GR

HU

IE

IT

LT

LU

LV

MT

NL

PL

PT

RO

SE

SI

SK

UK

CB

2,063,500,766

18,976,147

0.9%

6,673,628,244

258,104,621

3.9%

612,434,992

26,539,650,285

962,852,453

3.6%

25,488,229,555

386,619,604

1.5%

509,577,239

3,403,459,881

28,760,241

0.8%

34,650,749,454

114,511,937

0.3%

1,595,966,044

24,243,917

1.5%

13,449,221,051

293,167,688

2.2%

9,675,338

74,144,427

450,120,153

307,047,003

27,844,967

33,326,165

6,926,847

225,425,306

51.0%

28.7%

46.7%

79.4%

96.8%

29.1%

28.6%

76.9%

20,210,261,445

261,075,251

1.3%

492,363,482

188.6%

24,921,148,600

328,531,227

1.3%

163,856,263

49.9%

750,724,742

15,500,000

2.1%

22,346,186

144.2%

27,955,874,054

924,104,862

3.3%

416,896,101

45.1%

6,775,492,823

370,508,149

5.5%

439,300,937

118.6%

50,487,332

504,873

1.0%

1,744,838

345.6%

4,530,447,634

60,220,000

1.3%

106,078,878

176.2%

840,123,051

12,550,000

1.5%

1,660,002,737

34,250,000

2.1%

67,185,549,244

499,012,133

0.7%

21,411,560,512

74,824,271

0.3%

19,213,036,712

403,241,727

2.1%

1,626,091,888

9,173,788

0.6%

4,101,048,636

105,700,000

2.6%

11,498,331,484

78,584,184

0.7%

3,096,758

19,917,049

389,379,855

49,599,067

60,131,969

1,057,737

73,707,906

64,760,737

24.7%

58.2%

78.0%

66.3%

14.9%

11.5%

69.7%

82.4%

9,890,937,463

150,657,204

1.5%

165,215,566

109.7%

7,905,148,128

119,762,374

1.5%

164,027,992

137.0%

EU27 + cross-
border (CB)

346,717,162,577

5,541,592,664

1.6%

3,785,375,309

68.3%

Table 2: Annual implementation of Cohesion Policy funding for Energy Efficiency up to end 2011. Source: European Commission 

As regards buildings, in the past cohesion policy financed energy efficiency investments only 
in  public  and  commercial  buildings.  Following  an  amendment  of  the  ERDF  Regulation  in 
2009,  up  to  4%  of  total  national  ERDF  allocations  may  now  be  used  for  energy  efficiency 
improvements  and  renewable  energy  investments  (that  support  social  cohesion)  in  existing 
housing in all Member States. Several Member States have taken this opportunity to invest in 
energy  efficiency  in  housing,  contributing  to  an  increase  of  the  total  planned  allocations  of 
cohesion policy funds to energy efficiency (not only in buildings) for 2007-2013 from EUR 
4.2 billion in 2008 to EUR 5.5 billion in 2013. 

Experience  over  the  last  few  years  shows  that  Member  States  are  making  increasing  use  of 
cohesion  policy  funding  for  energy  efficiency,  especially  in  buildings,  and  that  the  use  of 
financial instruments is growing. 

A  good  example  is  France,  which  allocated  its  maximum  envelope  of  EUR  320  million  for 
energy  investments  in  social  housing  in  accordance  with  the  revised  ERDF  Regulation.  A 

9 

 
  
mid-term  assessment  of  the  programme  found  that  EUR  200  million  allocated  to  projects 
generated  over  EUR  1  billion  of  investment  and  created  around  15  000  jobs  with  the 
renovation  of  more  than  50  000  dwellings.  The  estimated  average  reduction  of  energy 
consumption amounted to 40%18. 

The  ERDF  regulation  allows  Member  States  to  set  up  financial  instruments  with  their 
allocations  for  energy  efficiency  and  renewable  energy.  When  working  towards  urban 
development they can do so under Article 44(b) of the General Regulation, with support from 
the JESSICA initiative. 

At the end of 2011, financial engineering instruments (FEIs) for urban development supported 
through  cohesion  policy  constituted  EUR  1  533  million  of  Operational  Programmes' 
contributions in ten Member States with most of the support channelled through 18 holding 
funds (which may comprise support to energy-related components of projects which are part 
of integrated plans for sustainable urban development).  

Cohesion policy also supported FEls specifically for energy efficiency and renewable energy 
sources, which constituted EUR 345 million of operational programmes contributions in five 
Member States.  

Financial  instruments  can  contribute  to  making  cohesion  policies  more  effective  and 
sustainable,  thus  helping  regions  to  face  their  long-term  challenges  and  increasing  the  long 
term impact of the policy. Experience has shown that more clear rules and more guidance are 
necessary to ensure sound financial management of financial instruments. In many respects, 
the management of financial instruments has already improved on the basis of guidance given 
and as a result of the regulatory amendments introduced. 

Moreover, building on  the  implementation experiences with financial instruments in current 
and  past  cohesion  policy  cycles  and  reflecting  the  importance  attached  to  them  in  the 
multiannual  financial  framework  2014-2020,  the  European  Commission  proposes  to  further 
expand and strengthen the use of such instruments in the next programming period as a more 
efficient and sustainable alternative to complement traditional grant-based financing.  

One good practice example is the KredEx facility in Estonia which provides low interest rate 
loans for building refurbishments through a revolving fund. Since it started in mid-2009 until 
the  end  of  2012,  493  buildings  with  18,281  apartments  have  been  upgraded  involving  the 
renovation of 1,189 398 m2 with an average expected energy reduction of 38%.19 

Specifically  with  respect  to  the  use  of  cohesion  policy  funding  for  energy  efficiency  in 
buildings, a recent special report of the European Court of Auditors20, based on audits of four 
operational  programmes  including  a  sample  of  24  energy  efficiency  investment  projects  in 
public buildings, found that the audited projects in public buildings did not generate a good 
ratio  between  energy  savings  and  the  corresponding  investment  cost.  The  average  planned 
payback  period  for  the  investments  was  around  50  years,  although  in  18  out  of  24  audited 
projects  actual  energy  savings  could  not  be  verified  since  they  had  not  been  reliably 
measured.  

18 

19 
20 

European Economic Recovery Plan COM(2008) 800 Final Measure n°6: Improving energy efficiency 
in  buildings  Reprogramming  regional  Structural  Fund  operational  programmes  to  prioritise  social 
housing. 2009-2011 MID-TERM ASSESSMENT - FRANCE 
Source: KredEx 
Cost-effectiveness of Cohesion Policy Investments in Energy Efficiency. Special Report No 21 2012. 
European Court of Auditors 

10 

 
                                                 
While  some  of  the  audited  projects  may  indeed  have  been  less  efficient  in  terms  of  the 
relation between cost and energy savings, several of them were designed before the current, 
stronger  legislative  framework  was  in  place  and  carried  out  by  public  authorities  with  little 
experience  in  energy  efficiency  measures.  Moreover,  the  multi-objective  nature  of  cohesion 
policy,  contributing  to  economic,  social  and  territorial  cohesion,  requires  an  integrated 
approach and should be used in support of the deep renovation of buildings in order to meet 
the  energy  efficiency  targets  for  2020  and  beyond.  As  such,  the  sole  focus  on  a  simple 
payback period is not appropriate in the context of long term energy efficiency investments.  

Rather, the aim should be to encourage deep renovations leading to significant (typically more 
than  60%)  efficiency  improvements.  This  can  be  supported  with  a  combination  of  both 
market-based instruments (loans, guarantees, Energy Performance Contracting schemes, etc.) 
for  measures  with  a  shorter  payback  time  and  grants  for  capital  intensive  measures  with  a 
longer payback time. 

3.2. 

Research funding 

Under  the  current  EU  Research  &  Development  Framework  Programme  (FP7  2007-2013), 
two research projects have been established focusing specifically on the building sector: 

3.2.1. 

'Energy-efficient Buildings' Public-Private Partnership 

As  part  of  the  European  Economic  Recovery  Plan,  adopted  in  November  2008,  the 
Commission  launched  in  2009  three  Public-Private  Partnerships  (PPPs),  to  tackle  the 
consequences  of  the  global  economic  downturn.  The  aim  of  the  three  PPPs  was  to  fund 
research  and  innovation  in  three  key  industrial  sectors  -  manufacturing,  construction  and 
automotive  -  in  order  to  boost  competitiveness  and  support  employment,  while  at  the  same 
time significantly contribute towards a more green and sustainable economy.  

The  construction  sector  PPP,  which  focuses  on  ‘Energy-efficient  Buildings'  (EeB)  has  been 
allocated  EUR  1  billion  to  promote  green  technologies  and  the  development  of  energy 
efficient systems and materials in new and renovated buildings (including historic buildings) 
to radically reduce their energy consumption and CO2 emissions. The programme is financed 
jointly by industry and the European Commission under the Seventh Framework Programme 
for  Research  (FP7)  and  is  implemented  through  coordinated  calls  for  research  proposals. 
While the PPPs are still on-going, some preliminary conclusions can be drawn: 

• 

• 

• 

The  strategic  alignment  of  private  and  public  research  objectives  has  facilitated 
the  European  R&D  efforts  (industrial 
increased 
participation in the PPP is as high as 55%, with SMEs receiving more than 20% of 
the total funding); 

industrial  participation 

in 

A  number  of  projects  have  already  filed  patent  applications  (with  more  expected), 
and  results  and  exploitation  plans  are  becoming  more  tangible,  with  target  markets 
more clearly defined to enable market uptake of the new technologies; 

However,  bridging  the  gap  to  the  market  remains  one  of  the  main  challenges,  with 
most of the obstacles to industrial uptake of results being of a non-technical nature 
(e.g.  the  lack  of  appropriate  business  models  and  financing  mechanisms  for  the 
exploitation of new technologies). 

11 

 
3.2.2.  CONCERTO 

CONCERTO is a European Commission initiative within the European Research Framework 
Programme  (FP6  and  FP7)  which  aims  to  demonstrate  that  the  optimisation  of  the  building 
sector of whole communities is more efficient and cheaper than optimisation of each building 
individually, by elaborating a common measurement methodology and a common set of key 
performance indicators on energy efficiency improvements for all their projects. Since 2005 
the initiative has co-funded, with around EUR 180 million, 58 communities in 22 projects in 
23 countries, with the following results21: 

• 

• 

• 

CONCERTO  communities  have  halved  the  CO2  emissions  in  their  building  sector, 
saving together around 310,000 tonnes of CO2 per year;  

1,830 million m2 of building floor area have been built or renovated; 

The total electricity consumption of the CONCERTO communities has been reduced 
by  20%  and  the  share  of  renewable  energy  in  the  electricity  has  increased 
significantly.  150  GWh  of  electricity  and  250  GWh  of  heat  are  now  produced 
annually from renewable energy. 

The CONCERTO Initiative is continuously monitored and data are made accessible through a 
technical  monitoring  data  base  (TMD),  permitting  to  assess  the  performances  of  different 
technology  mixes  as  a  decision-support  tool  for  urban  energy  planning.  As  such  it  supports 
more  accurate  and  standardised  information  on  the  savings  and  economic  performance  of 
improvement  measures  and  energy  efficiency  projects  (e.g.  through  a  standard  evaluation 
tool), and a wider sharing of successful practices.  

3.3. 

Enlargement funding through IFI facilities 

The European Union has a number of financing programmes in place which it implements in 
co-operation  with  International  Financial  Institutions  (IFIs):  the  European  Investment  Bank 
(EIB),  the  European  Bank  for  Reconstruction  and  Development  (EBRD),  the  Council  of 
Europe Development Bank (CEB) and the Kreditanstalt für Wiederaufbau (KfW).  

These  intermediated  financial  facilities  were  established  under  the  PHARE  instrument  and 
blend  EU  grants  with  IFI  funding.  Of  the  total  EU  allocation  of  approximately  EUR  550 
million, around one third has been earmarked for energy efficiency related projects targeting 
both  the  industry  and  buildings  sectors.  Through  these  facilities,  the  IFIs  leverage  their 
relationships  with  local  banks,  reaching  smaller  projects  to  which  they  otherwise  could  not 
lend directly.  

Each credit line is supported by a substantial and complex technical assistance package that 
builds capacity in the local market and helps investors and local banks overcome some of the 
barriers  that  hinder  the  implementation  of  these  energy  efficiency  investments.  The 
programme is delivered through three main facilities: 

• 

21 

The  Energy  Efficiency  Finance  Facility  (EEFF):  The  EEFF  aims  at  increasing 
investments  in  energy  efficiency  in  order  to  improve  the  energy  performance  of 
buildings and the industrial sector in Romania, Bulgaria, Croatia, and Turkey.  

CONCERTO Technical Monitoring Database 

12 

 
                                                 
• 

• 

The Municipal Finance Facility (MFF): The objective of the MFF is to develop and 
stimulate  commercial  bank  lending  to  small  and  medium-sized  municipalities  in 
most  of  the  EU12  countries  and  in  certain  applicant  countries.  Following  early 
indications from the EEFF, this facility was recently extended to include a specific 
energy efficiency finance window. 

The  SME  Finance  Facility  (SMEFF):  The  objective  of  the  SMEFF  is  to  encourage 
banks,  leasing  companies  and  investment  funds  to  expand  and  maintain  long-term 
financing of SME operations in the EU12 countries and certain applicant countries. 
Following early indications from the EEFF, this facility was also recently extended 
to include a specific energy efficiency finance window. 

The  energy  efficiency  programmes  only  became  fully  established  in  2010  but  have 
nevertheless  made  notable  progress  with  investments  of  EUR  518  million  leveraged  from 
EUR  112  million  of  EU  grant  support.  A  typical  project  will  involve  EU  funded  technical 
assistance in the form of energy audits, technical advice etc. along with financial incentives, 
of typically 15% of investment costs, which are designed to overcome related market barriers 
in these countries. While the projects vary considerably, the potential impact of such facilities 
can be judged from the following two examples22: 

• 

• 

The  2006  EEFF  facility  with  the  EBRD  is  now  fully  allocated  involving  a  €100 
million  credit  line  combined  with  EUR  24  million  EU  support  for  technical 
assistance  and  incentives.  As  of  mid-2012,  approximately  80%  of  the  loan  volume 
has been utilised resulting in energy and emissions savings of ~1 GWh/y. 

Following the introduction of an energy efficiency window in the SMEFF, a number 
of  projects  have  been  agreed  such  as  RoSEFF  in  Romania.  This  project  involves  a 
EUR 60 million IFI credit line and EUR 10.5 million EU grant support. This facility 
has  benefited  from  lessons  learned  from  EEFF  in  particular  and  involves  smaller 
projects with simplified energy audits, lists of eligible measures and potential ESCO 
support. While only approved one year ago, the project indicates a rapid uptake and 
forecast energy savings of ~1.5 GWh/y. 

3.4. 

EEE-F 

The  European  Energy  Efficiency  Fund  (EEE-F)  was  established  in  2011  with  a  volume  of 
EUR  265  million,  with  funding  coming  from  the  European  Union  (through  the  European 
Economic Recovery Plan23), the European Investment Bank, the Italian public bank Cassa dei 
Depositi  e  Presititi  and  Deutsche  Bank.  The  fund  provides  debt,  equity  and  guarantee 
instruments for commercially viable projects, as well as technical assistance grants to support 
project development (legal, financing and technical structure of the project). Around 70% of 
the funding is intended for energy efficiency projects, with the remainder going to renewable 
energy  and  clean  urban  transport  actions.  Beneficiaries  are  local  and  regional  public 
authorities  or  private  entities  acting  on  their  behalf.  Projects  must  achieve  at  least  20% 
savings in primary energy demand, with requirements for buildings being stricter as they must 
achieve  a  performance  improvement  of  at  least  two  categories  related  to  the  energy 
performance certificate. The fund does not target pilots for new technologies but is focused on 
bringing  already  well-proven  technologies  to  the  mainstream,  as  well  as  strengthening  the 

22 
23 

Source: EBRD 
The EU budget conferred to the Fund the amount of EUR 125 million + EUR 20 million for Technical 
Assistance and EUR 1,3 million for awareness raising activities. 

13 

 
                                                 
European  ESCO  market  and  the  use  of  energy  performance  contracting.  At  present  there  is 
one project signed with 39 more projects in the pipeline. 

The projects co-financed under this fund can serve as a generator of ideas for the next round 
of cohesion policy funding (2014-2020), for which the European Commission has proposed a 
significant  increase  of  the  funds  allocated  specifically  to  energy  efficiency  and  renewable 
energies,  also  aiming  for  a  much  more  intensive  use  of  Financial  Instruments  (public  funds 
leveraging the private capital) instead of relying mainly on grants.  

The effectiveness of the fund will be subject to evaluation in 2013. 

3.5. 

Intelligent Energy Europe II  

On 24 October 2006, the European Parliament and the Council approved the establishment of 
a  EUR  3.6  billion  Competitiveness  and  Innovation  Framework  Programme  (CIP)  (2007- 
2013). The Intelligent Energy Europe II (IEE II) programme was included in this framework 
programme (with a budget of EUR 730 million) to contribute to achieving the objectives of 
EU  energy  policy  and  to  implementing  the  Lisbon  Agenda.  More  specifically,  IEE  II's 
objective is to support the overcoming of non-technological barriers to the innovation, uptake, 
implementation  and  dissemination  of  solutions  that  contribute  to  sustainable,  secure  and 
competitively priced energy for Europe. 

Between  2007  and  2011,  IEE  II  supported  more  than  300  promotion  and  dissemination 
projects, representing more than EUR 300 million, allocated as follows: 

•  INTEGRATED (projects addressing both energy efficiency and renewable energy): 27% 

•  STEER (energy efficiency in transport): 17% 

•  SAVE (energy efficiency in buildings, products and industry): 25% 

•  ALTERNER (renewable energy sources): 31% 

As  regards  its  effectiveness,  projects  selected  in  2009-2011  are  estimated  to  have  triggered 
cumulative  investment  by  European  stakeholders  in  sustainable  energy  of  more  than  EUR 
1500  million.  This  is  mainly  due  to  IEE  projects  preparing  the  ground  for  investment  by 
increasing  skills,  publishing  information  for  investors,  supporting  policy  implementation, 
mobilising decision makers, and funding technical assistance. The estimated fossil fuel energy 
savings and greenhouse gas emissions reductions for all those projects were at least 350 000 
tonnes of oil equivalent per year and 1 200 000 tonnes of CO2 equivalent per year24. 

Nearly a quarter of IEE II projects have targeted the building sector. 

An  evaluation  of  the  programme  in  201125  concluded  that  "the  programme  is  relevant  and 
useful as it replies to the evolving needs, problems and barriers related to sustainable energy 
issues that Europe is facing. The combination of the actions which covers a wide spectrum of 
priorities, the involvement of different type of actors … and in particular the combination of 

24 

25 

Plan 
Annual  Management 
http://ec.europa.eu/atwork/synthesis/amp/doc/ener_mp_en.pdf  
Final  Evaluation  of  the  Intelligent  Energy-Europe  II  Programme  within  the  Competitiveness  and 
Innovation Framework Programme. June 2011. Deloitte 

Directorate 

General 

Energy: 

2012 

the 

for 

of 

14 

 
                                                 
market solution oriented projects and projects targeting policy adaptation … contribute to the 
effectiveness of the programme." 

Moreover, the evaluation stated: "The assessment of the effectiveness of the actions supported, 
and  taken  individually,  demonstrates  that  the  activities  co-funded/funded  by  the  programme 
are likely to reach their objectives and to achieve expected results and lasting effects." 

3.5.1.  ELENA Facility 

The  European  Local  Energy  Assistance  (ELENA)  Facility,  which  is  financed  under  IEE, 
provides  grants  to  local  and  regional  public  authorities  for  developing,  structuring  and 
launching investments in energy efficiency and renewable energy. The facility is implemented 
through  IFIs  (EIB,  KfW,  CEB  and  EBRD),  and  covers  up  to  90%  of  costs  incurred  for 
technical  support  needed  for  feasibility  and  market  studies,  programme  structuring,  energy 
audits  and  the  preparation/launch  of  tendering  procedures.  From  its  launch  until  the  end  of 
2012 the facility had the following budget allocations (in EUR million): 

EIB 

KfW  

CEB  

EBRD  

Total  

2009  

2010  

2011  

2012  

Total  

15  

15  

19  

22  

71 

0  

0  

8  

8  

16  

0  

0  

3  

2 

5  

0  

0  

0  

5  

5  

15  

15  

30  

37  

97  

Table 3: IEE II budget contributions to the ELENA Facility windows  

An analysis of the performance of the ELENA - EIB facility26 shows that the leverage effect for 
current  projects  is  54,  i.e.  more  than  double  the  required  level  of  20,  potentially  leading  to 
investments of over EUR 1.5 billion. It is estimated that energy savings from signed and approved 
projects  could  reach  919  GWh  per  year,  with  total  avoided  CO2  emissions  reaching  588,357 
tonnes per year. 

3.6. 

Information and Communications Technologies Policy Support Programme 

Another  component  of  the  Competitiveness  and  Innovation  Programme  (CIP)  is  the 
Information and Communications Technologies Policy Support Programme (ICT PSP), with a 
budget of EUR 730 million. 

The ICT PSP aims at stimulating smart and inclusive growth by accelerating the wider uptake 
and  best  use  of  innovative  digital  technologies  and  content  by  citizens,  governments  and 
businesses. Between 2007 and 2013 more than EUR 74 million was allocated to actions in the 
area  of  energy  efficiency  and  sustainability,  resulting  in  35  pilots  and  5  thematic  networks. 
Projects  covering  residential  and  non-residential  buildings  (including  social  housing  and 
public buildings) have built common methodologies to calculate energy savings via ICT and 

26 

Technical  assistance  support  provided  for  project  development  services  European  Local  Energy 
Assistance  –  ELENA  and  Mobilising  Local  Energy  Investments  –  MLEI.  Information  to  the  IEE 
Management Committee, May 2012 

15 

 
 
                                                 
the results are showing significant reductions in energy consumption and CO2 emissions of up 
to 20%.  

Experience also shows that there are certain barriers to the uptake of ICT solutions, often not 
of  a  technical  but  organisational  nature,  including  lack  of  access  of  third  parties  to  gas  or 
electricity  meters  for  gathering  energy  consumption  data  and  increased  cost  for  energy 
management  services  if  additional  meters  would  have  to  be  installed.  These  barriers  can  be 
overcome  through  direct  involvement  of  responsible  grid  operators  and  utilities  in  the 
development and operation of the ICT based solutions/services. 

4. 

FUNDING  FOR  ENERGY  EFFICIENCY  IN  BUILDINGS  BY  INTERNATIONAL  FINANCIAL 
INSTITUTIONS 

Besides  their  role  in  implementing  EU  funding  programmes  (see  above),  the  European 
international  financial  institutions  operate  their  own  investment  instruments  for  energy 
efficiency in buildings. The sections below provide insight into these instruments. 

4.1. 

EIB funding 

From  2008  onwards,  the  European  Investment  Bank  (EIB)  has  “mainstreamed”  energy 
efficiency into its operations, based on the following criteria: 

(a) 

(b) 

(c) 

Investments where energy cost savings can justify at least 50% of the investment cost 
or investments resulting in energy savings of at least 20% compared to the baseline 
energy consumption; 

Investments  aimed  at  reducing  the  energy  consumption  towards  cost-optimum 
refurbishment levels in existing buildings. For new buildings, the (incremental) part 
of the investment cost in relation to the minimum standard considered in the national 
legislation, in application of the relevant EU Directive. 

Investments  in  high  efficient  cogeneration  (CHP)  and  small  scale  cogeneration  and 
micro-generation, meeting the criteria of the relevant EU Directive, and investment 
in sustainable district heating/cooling networks.  

This has resulted in the following funding volume per sector in the EU (in EUR million): 

Year 

Buildings 

CHP 

DH 

Industry 

Multi-sector 

Total 

2008 

2009 

2010 

2011 

68.3 

473.9 

759.2 

424.4 

218.5 

546.5 

60.0 

125.0 

116.0 

391.0 

205.1 

95.0 

50.5 

392.5 

447.5 

226.8 

263.8 

679.2 

1528.0 

1618.0 

1038.8 

Total 

1725.8 

1095.1 

211.0 

501.5 

1330.7 

4864.0 

Table 4: EIB Funding to energy efficiency projects the EU (2008 – 2011). Source: EIB 

As  regards  the  effectiveness  of  these  funds,  the  EIB  has  developed  a  carbon  footprint 
methodology  over the  period  of 2009-2011. Although the methodology does not capture  all 

16 

 
 
 
 
energy efficiency lending, it is estimated that the annual greenhouse gas emissions avoided as 
a result of the energy efficiency projects are 3523 ktCO2e (or 1005 ktCO2e if prorated to EIB 
financing) in 2010 and 679 ktCO2e (or 379 ktCO2e when prorated to EIB financing) in 2011. 

4.2. 

EBRD funding 

Since  2002,  the  European  Bank  for  Reconstruction  and  Development  (EBRD)  has  invested 
EUR 2.3 billion in 153 energy efficiency projects in its EU countries of operations, including 
Bulgaria,  Czech  Republic  (which  stopped  receiving  EBRD  financing  as  of  31  December 
2007), Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia, and Estonia. 

EE Investments 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011  Total 

EUR (million) 

184 

50 

197 

352 

223 

158 

98 

191 

470 

400 

2,321 

Table 5: EBRD Funding to energy efficiency projects the EU (2002 – 2011). Source: EBRD 

EU  funding  in  support  of  these  investments  amounted  to  approximately  EUR  463  million 
since  2002  through  various  sources.  These  funds  are  typically  used  to  fund  Technical 
Assistance (TA) and grants. 

Since 2002, the EBRD has provided loans and equity to 104 energy efficiency projects in the 
EU,  amounting  to  EUR  1.8  billion.  The  total  funding  mobilised  on  the  market  during  this 
period amounts to EUR 14.9 billion which indicates a leverage of approximately 1:7. 

As regards the effectiveness of these investments, the loans disbursed and equity issued in the 
amount of EUR 1.8 billion in the EU since 2002 have delivered estimated emission reductions 
of 5 million tonnes of CO2 per year. Energy savings are estimated at 1.8 mtoe per year. 

4.3. 

CEB funding 

Since  2002,  the  Council  of  Europe  Development  Bank  (CEB)  has  approved  a  total  of 
approximately  EUR  2.4  billion  in  favour  of  projects  wholly  or  partially  concerning  energy 
efficiency.  Out  of  this  total,  more  than  EUR  1.9  billion  (i.e.  more  than  75%)  was  devoted 
solely to energy efficiency. 

EU funding in support of these investments amount to approximately EUR 181 million since 
2002 through various sources. No data about the impact of this funding are available. 

5. 

FUNDING FOR ENERGY EFFICIENCY IN BUILDINGS BY NATIONAL PROGRAMMES 

National  governments  also  use  their  own  budgets  to  support  energy  efficiency  in  buildings. 
All EU Member States have financial support measures for this purpose, ranging from fiscal 
incentives  and  grants  to  loan  and  guarantee  schemes.  Many  of  these  measures  have  been 
reported  to  the  Commission  through  National  Energy  Efficiency  Action  Plans  (NEEAPs)27 
and under the EPBD. 

These reports show that building-related measures represent a very high share of the reported 
energy savings (e.g. 58% for Italy, 63% for Ireland, 71% for Slovenia and 77% for Austria). 

27 

NEEAPs  are  a  reporting  obligation  under  Directive  2006/32/EC  on  energy  end-use  efficiency  and 
energy  services.  All  NEEAPs  (and  if  relevant  their  translation  in  English)  can  be  found  on: 
http://ec.europa.eu/energy/efficiency/end-use_en.htm 

17 

 
                                                 
Further analysis of these instruments shows that the vast majority are grants, followed by 'soft' 
loan schemes and tax incentives (see figure below). Instruments such as energy performance 
contracting,  the  use  of  assigned  amount  units  (AAUs)  under  the  Kyoto  Protocol,  tax 
incentives (e.g. property taxes) and energy suppliers' obligations are also being used. 

Member 
State 

Grants 

Soft loans 

Tax 
incentives 

Sale of AAUs 
to finance EE 

AT 
BE 
BG 
CY 
CZ 
DK 
EE 
FI 
FR 
DE 
GR 
HU 
IE 
IT 
LV 
LT 
LU 
MT 
PL 
PT 
RO 
SK 
SI 
ES 
SE 
NL 
UK 

x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 
x 

x 
x 
x 
x 
x 

x 
x 
x 
x 
x 
x 

x 
x 
x 
x 
x 
x 

x 
x 
x 
x 

x 
x 

x 
x 

x 
x 
x 
x 
x 
x 
x 

x 
x 
x 
x 
x 
x 

x 
x 
x 
x 
x 
x 
x 
x 

x 

x 

x 

x 
x 

x 

x 

Energy 
Performance 
Contracting 
x 
x 
x 

x 

x 
x 

x 
x 
x 
x 

x 
x 
x 
x 

x 
x 
x 
x 
x 

EU Structural 
and Cohesion 
Funds 

x 

x 

x 

x 

x 
x 

x 
x 
x 

x 
x 
x 
x 
x 
x 

x 

Table  6:  Financing  tools  reported  by  Member  States  in  their  second  NEEAPs  (note  that  as  regards  the  use  of  Structural  and 

Cohesion Funds the situation may have changed since the NEEAP was submitted) 

In terms of the numbers of programmes in place, over three quarters are grants and loans, with 
tax  incentives  making  up  the  remainder28.  Further  analysis  by  the  International  Energy 
Agency (IEA) shows that in buildings, financial tools (in particular grants and tax relief) are 
most  often  used  to  encourage  the  installation  of  individual  energy-efficient  components  in 
buildings  (leading  to  reductions  of  10-30%  in  energy  consumption  in  the  buildings 
addressed), rather than the more comprehensive retrofits (delivering improvements in the 50-
80% range) which are needed29. 

Few Member States have provided details of the effectiveness of national support measures, 
making it difficult to obtain a good overview of their impact. Studies that have looked at the 
use of financial instruments by governments303132 confirm this finding and indicate that this is 

28 

29 

30 

Energy efficiency policies in buildings – the use of financial instruments at Member State level. BPIE, 
August 2012 
Mobilising  investment  in  energy  efficiency:  economic  instruments  for  low-energy  buildings,  IEA 
Insights paper, OECD/IEA, 2012, Paris 
Ibid 21, 22 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
largely  due  to  the  lack  of  ex-ante  energy  efficiency  objectives,  monitoring  requirements 
and/or  ex-post  evaluation.  This  is  compounded  by  the  fact  that  if  ex-ante  or  ex-post 
evaluations do take place, they are difficult to compare due to the use of different indicators, 
measurement methodologies and scope of the instruments. 

Of those Member States that do report on effectiveness, the key performance indicators most 
used  are  energy  and  CO2  savings  (both  ex-ante  and  ex-post),  and  number  of  applications 
(mostly ex-post). 

Figure  6:  Number  of  programmes  that  reported  (i.e.  37  out  of  100)  ex-ante  and/or  ex-post  impacts  by  different  key  performance 

indicators. Source: BPIE 

As regards the link with EU funding, 16 Member States reported the use of cohesion policy 
funding for energy efficiency investments in their NEEAPs and there are some good practice 
examples  of  the  use  of  EU  funds  to  support  energy  efficiency  in  buildings  at  national  level 
(see  above).  These  and  other  good  practice  examples  indicate  that  EU  funds  can  trigger 
additional national public as well as private investments, although experience has shown that 
there is a need for further capacity building and development of relevant expertise in this area 
in order to design the investments in an optimal way. 

A  good  example  of  blending  cohesion  policy  funding  with  national  funds,  is  the  Jessica 
Holding Fund in Lithuania. The fund offers long term loans, through two Lithuanian banks, 
with  fixed  interest  rate  (3%)  for  the  improvement  of  energy  efficiency  in  multifamily 
buildings. 15% of the loan can be deducted from taxes if a certain energy efficiency level has 
been achieved upon completion. For applicants/families with a low income, up to 100% of the 
loan  can  be  converted  into  a  grant,  allowing  the  programme  to  mitigate  against  the  risk  of 
energy poverty. 

31 

32 

Making money work for buildings. Financial and fiscal instruments for energy efficiency in buildings. 
EuroACE, September 2010 
Lead Market Initiative - Assessing the impact of national recovery measures on construction in the EU-
27, ECORYS et al. November 2012 

19 

 
 
                                                                                                                                                         
The  experience  with  these  and  other  similar  programmes  shows  that  it  is  important  for 
Member  States  to  plan  for  the  combination  of  cohesion  policy  and  national  funds  well  in 
advance and design their operational programmes appropriately. 

A study for the Commission looking at 25 financial support schemes for energy efficiency33, 
with the aim to identify best practices and bottlenecks in their implementation, concluded that 
most successful programmes are based on preferential loans, often complemented with a grant 
and/or technical assistance package, but that their success depends on more factors than just 
the financial terms and conditions, including: 

• 

• 

• 

• 

• 

A  simplified,  possibly  one-stop-shop,  administrative  procedure  to  reduce  entry 
barriers and bureaucracy; 

Inclusion  of  local  actors  (e.g.  municipality,  banks,  companies)  to  build  trust  and 
capacity; 

Information to citizens to enhance demand and remove fear and perceived risks; 

Flexibility  in  (European)  funding  conditions  to  adapt  the  national/local  schemes  to 
the specific barriers and opportunities in that region; 

Imposing minimum performance thresholds for eligibility to create incentives. 

A good example of a national model for financing energy efficiency in buildings that follows 
many  of  these  recommendations  are  KfWs  Energy  efficient  Refurbishment  Programmes  in 
Germany. Through this programme, KFW (a government-owned development bank) provides 
soft  loans  to  local  banks,  which  on-lend  these  funds  to:  private  homeowners,  homeowners’ 
associations  and  housing  companies.  The  programme  applies  a  mixture  of  soft  loans  and 
grants, and the more efficient the house becomes after refurbishment, the less of the loan the 
building owner has to repay. 

33 

Local investments options in energy efficiency in the built environment – Identifying best practices in 
the EU. Ecorys, November 2012 

20 

 
 
                                                 
Between  2006  and  2012,  these  programmes  had  a  total  volume  of  close  to  EUR  51  billion 
(covering more than 1.1 million loans and grants), resulting in an accumulated GHG reduction 
of roughly 6 million tonnes of CO2 equivalent. 

As regards the effectiveness of this funding, KfW commissioned a study in 2011 to look at the 
impacts  of  the  programmes  targeted  at  energy  efficiency  in  buildings,  which  showed 
significant benefits not only in terms of energy saved but also with respect to wider societal 
gains mainly in the form of jobs created and/or maintained. The study estimated that for every 
euro invested in these programmes 2 to 5 euros were flowing back to state coffers mainly due 
to increased tax revenues and reduced unemployment benefit payments. 

6. 

PRIVATE SECTOR FUNDING FOR ENERGY EFFICIENCY IN BUILDINGS 

The  private  sector  provides  the  majority  of  financing  for  energy  efficiency  projects  in 
buildings. Next to building owners and occupiers who invest in upgrading their properties and 
homes, commercial banks are increasingly also showing interest in this sector even though the 
level of commercial financing is still relatively low. 

A good example of a private sector scheme, albeit one imposed by government, is the energy 
supplier  obligations  scheme  in  the  UK.  Under  this  scheme,  energy  suppliers  are  obliged  to 
meet CO2 reduction targets by encouraging households to voluntarily take-up energy saving 
measures. Energy suppliers are free to decide how to achieve their targets, but have typically 
promoted  the  most  cost-effective  measures  such  as  cavity  wall  and  loft  insulation.  The 
households eventually pay for the suppliers’ investments via higher energy prices.  

As such, the utilities act similarly to ESCOs by paying the upfront costs and recouping their 
investments  through  monthly  bills,  while  guaranteeing  an  overall  cost  reduction  for  their 
clients.  The  programme  is  expected  to  result  in  EUR  6.25  billion  of  energy  efficiency 
investments  over  the  whole  project  period  (2008-2012).  The  investments  are  completely 
covered by the energy supply companies and the programme requires no public funding. 

However, as a result of the large number of relatively small-scale and widely differing size of 
investments by private home owners, there is no comprehensive overview of the funds being 
allocated  to  energy  efficiency  improvements  in  dwellings.  Although  investments  tend  to  be 
larger  in  the  non-residential  sector,  given  the  wide  variety  in  the  type  of  non-residential 
buildings  (ranging  from  hospitals  to  offices  and  from  swimming  pools  to  shops)  also  here 
robust data about the scale of investments into energy efficiency are absent. 

21 

 
 
More  generally,  in  its  World  Energy  Outlook  201234  the  International  Energy  Agency 
estimates that global investment in projects aimed principally at improving energy efficiency 
amounted  to  EUR  150  billion  in  2011  in  all  sectors.  Investment  in  the  European  Union 
reached approximately EUR 55 billion.  

However, as the IEA indicates in its report: "Investments in energy efficiency (whether by the 
public or private sector) are seldom tracked systematically and no comprehensive estimate is 
available of current global investment in energy efficiency. This is due to the fact that energy 
efficiency  investments  are  undertaken  by  a  multitude  of  agents,  households  and  firms,  often 
using  their  own  funds.  Moreover,  there  is  no  standard  definition  for  what  constitutes  an 
energy efficiency investment." 

7. 

WHAT COULD BE DONE TO STIMULATE MORE AND MORE EFFECTIVE INVESTMENTS? 

The  picture  that  is  emerging  from  the  examination  of  the  European  building  stock,  the 
existing financial support measures for building renovation and the different market barriers, 
shows that: 

– 

– 

– 

The situation differs significantly between Member States in terms of their building 
stock (e.g. age, energy performance, tenure, etc.), the financial support measures in 
place (e.g. amount of funding, types of measures, effectiveness, etc.) and the relevant 
market  barriers  (e.g.  capacity  and  awareness,  support  structures,  regulatory 
framework, etc.); 

While  the  investments  in  building  energy  efficiency  are  increasing  and  there  are 
many best-practice examples of existing instruments that are delivering cost-effective 
energy savings, there is only limited information on the effectiveness of the different 
financial  support  measures  for  energy  efficiency  in  buildings,  both  at  EU  and 
national levels; 

There  continue  to  be  important  barriers  that  hamper  further  uptake  of  energy 
efficiency  investments  in  buildings,  including  a  lack  of  awareness  and  expertise 
regarding  energy  efficiency  financing  on  the  part  of  all  actors  (e.g.  authorities, 
construction companies, local banks and end borrowers); high initial costs, relatively 
long pay-back periods and (perceived) credit risk associated with  energy efficiency 
investments; limited availability of funding due to overall deleveraging by banks and 
increasing  capital  adequacy  requirements;  and  competing  priorities  for  final 
beneficiaries. 

This  picture  was  broadly  confirmed  by  the  views  of  stakeholders  submitted  to  the 
Commission  in  response  to  a  public  consultation  which  ran  between  February  and  May 
201235. During this period, a total of 116 responses were received, with around 40% coming 
from  European  organisations  (mainly  trade  associations  and  NGOs).  Of  the  remaining  69 
responses,  most  (53)  came  from  the  five  most  populous  EU  Member  States  (i.e.  Germany, 
France, United Kingdom, Italy and Spain).  

The following sections outline the actions and initiatives that are and could be undertaken to 
improve the current situation, integrating stakeholders' comments. 

34 
35 

International Energy Agency. World Energy Outlook 2012. November 2012 
The 
http://ec.europa.eu/energy/efficiency/consultations/20120518_eeb_financial_support_en.htm 

consultation  questions, 

and  overview  of 

responses 

can  be 

results 

found  on: 

22 

 
                                                 
7.1. 

Strengthening the regulatory framework 

With  the  recently  adopted  Energy  Efficiency  Directive  (EED),  the  recast  of  the  Energy 
Performance  of  Buildings  Directive  and  the  relevant  implementing  measures  under  the 
Ecodesign  and  Energy  Labelling  Directives  (e.g.  for  boilers  and  lighting),  a  comprehensive 
regulatory framework for energy efficiency in buildings is now in place at the EU level.  

Many stakeholders responding to the public consultation consider that there is no immediate 
need  for  further  EU  regulation,  although  they  stressed  the  need  for  a  long-term  vision  and 
commitment to energy efficiency, with some arguing for binding targets. Rather, an ambitious 
implementation and strict enforcement of existing European energy efficiency legislation by 
the Member States (in particular requirements related to renovation roadmaps, addressing the 
existing  market  failures  and  barriers,  ensuring  a  qualified  and  well-trained  workforce,  and 
how  to  make  best  use  of  EU  funding  and  financial  instruments),  was  seen  by  many 
respondents as a key precondition for success. This was confirmed by a recent global survey 
of  over  400  executives  in  the  building  sector  by  the  Economist  Intelligence  Unit36,  which 
shows that 75% of respondents believe that a lack of enforcement is the main obstacle to full 
implementation of energy efficiency regulations. 

Moreover,  the  need  for  a  better  coordination  between  different  policy  areas  (e.g.  energy 
efficiency  and  regional  policy)  and  among  policy  makers  was  raised  (e.g.  link  between 
ministries in charge of energy efficiency and SCF Managing Authorities). Other suggestions 
included  allowing  the  use  of  the  VAT  and  broader  taxation  regime  to  promote  energy 
efficiency  measures  and  services,  changing  the  public  procurement  and  state  aid  rules  to 
promote  energy  efficiency,  and  adopting  a  single  EU-wide  calculation  and  certification 
scheme for energy efficiency in buildings. 

The Commission will closely monitor Member State implementation and take all necessary 
steps  to  ensure  full  compliance  with  the  relevant  EU  regulatory  framework,  including  the 
EPBD,  the  EED,  the  Ecodesign  and  energy  labelling  Directives,  the  Commission 
Recommendation  on  preparations  for  the  roll-out  of  smart  metering  systems,  etc.).  The 
Commission will also continue to facilitate exchange of best practices between the Member 
States through dedicated Concerted Actions for the implementation of the EPBD and the 
EED.  

As regards state aid control, the Commission is reviewing whether the rules for state aid as 
applying  to  energy  efficiency  need  to  be  adapted  in  light  of  the  provisions  of  the  EED  to 
maintain a clear framework for allowing financial support for energy efficiency measures. 

As  regards  public  procurement,  the  new  Energy  Efficiency  Directive  already  requires 
Member  States  to  ensure  that  central  governments  purchase  (under  certain  conditions) 
only  products,  services  and  buildings  with  a  high  energy-efficiency  performance,  as 
applicable to contracts above the thresholds laid down in Article 7 of Directive 2004/18/EC37. 
Moreover, public bodies at regional and local levels are to be encouraged to do the same. 

The  Commission  is  developing  a  common  EU-wide  certification  scheme  for  the  energy 
performance of non-residential buildings, with the aim to define a common methodology to 

36 

37 

Energy  efficiency  and  energy  savings.  A  view  from  the  building  sector.  Economist  Intelligence  Unit 
Ltd. 2012 
Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public 
supply contracts and public service contracts (OJ L134 of 30.4.2004, p. 114) 

23 

 
                                                 
express the energy performance of non-residential buildings at European Union level in order 
to enhance the transparency of the Union's non-residential property market. The development 
of  a  common  EU  calculation  method  will  be  based  on  a  revised  set  of  EPBD-related  CEN 
standards,  which  represents  a  unique  opportunity  to  harmonise  the  energy  performance 
certification of buildings across Europe on a voluntary basis.  

7.2. 

Improving access to financing 

As the analysis of EU funding and the link with national instruments in the previous chapters 
has shown, despite many positive experiences, there is still significant scope to improve the 
uptake and effectiveness of EU financial support. This was confirmed by the responses to the 
public consultation which were overwhelmingly positive about the available financial tools at 
EU  level  (including  the  Cohesion  Fund,  ERDF  (including  financial  instruments  for  urban 
development set up with the support of the JESSICA initiative), ELENA, MLEI, EEE-F and 
the  IEE  programme),  while  decrying  the  complexity  and  bureaucracy  of  the  application 
procedures,  and  pointing  to  a  lack  of  awareness  about  funding  opportunities,  especially  at 
local level. 

Suggestions  to  improve  this  situation  included  building  in  more  flexibility  in  how  cohesion 
funding is used (e.g. by blending loans with grants) so that solutions can be better targeted to 
individual Member States' needs, greater bundling opportunities for smaller projects and the 
establishment  of  national  or  regional  funds  or  financing  schemes  with  EU  funding  that 
provide  loans  to  the  owners  or  end-users  of  buildings  for  investments  in  energy  efficiency. 
More  guidance  for  policymakers  (especially  at  local  level)  on  how  to  make  better  use  of 
ERDF funding, including information about best practices in other Member States, was also 
seen as important. 

One of the main barriers to scaling up investment in energy efficient building is insufficient 
demand for such investment from building owners. Identifying and developing a pipeline of 
financially attractive projects is a key challenge that Member States must work to address. In 
pursuit  of  this  aim,  stakeholders  advocated  the  use  of  public  funds  to  provide  technical 
assistance, ensure the provision of loans on attractive terms (through subsidies or guarantees). 
Public funds can also stimulate the ESCO/EPC market, for example, by providing a source of 
finance for measures installed in public sector buildings. 

Moreover,  the  need  to  provide  investors  with  more  objective,  reliable  and  standardised 
information on loan performance (e.g. payback periods, Return on Investment, default rates) 
was cited as being key to scaling up private sector interest in this area.  

As  regards  national  financial  instruments  more  generally,  stakeholders  reported  a  need  for 
more  stable  support  measures,  and  a  better  use  of  taxation  (e.g.  reduced  property  taxes  or 
stamp  duties  for  more  energy  efficient  buildings),  state  aid  and  public  procurement 
mechanisms to create sustained demand. 

The Commission is working to ensure greater availability of EU funding to support scaled-up 
investment  in  energy  efficiency.  In  its  proposals  for  the  next  Multi-Annual  Financial 
Framework  (MFF),  the Commission  has  proposed  to  increase  cohesion  policy  funding  for 
low  carbon  economy  measures  (mainly  through  the  ring-fencing  of  20%  of  the  ERDF  for 
energy efficiency and renewable energy in more developed and transition regions and 6% in 
less developed regions), to expand the use of financial instruments and to remove the 4% 
limit on support for sustainable energy investments in housing. 

24 

 
Furthermore,  the  Commission  will  develop  further  technical  guidelines  on  the  use  of 
innovative  financial  instruments  during  the  first  half  of  2013  to  facilitate  a  wider  uptake, 
and a better coordination and implementation of such instruments. 

Member  States  now  have  to  ensure  that  the  operational  programmes  elaborated  under 
the  new  MFF  are  designed  to  make  optimal  use  of  cohesion  policy  funding  for 
investments  in  energy  efficiency,  in  combination  with  national  (and  possibly  IFI)  funding 
and financial instruments. 

The  new  EED  creates  an  opportunity  for  Member  States  to  introduce  a  step-change  in  the 
levels  of  investment  into  energy  efficient  buildings,  as  it  requires  the  Member  States  to 
establish by April 2014 a long-term strategy for mobilising investment in the renovation 
of  the  national  stock  of  residential  and commercial  buildings,  both  public  and  private. 
Such a strategy will have to encompass; 

(a) 

(b) 

(c) 

(d) 

an  overview  of  the  national  building  stock  based,  as  appropriate,  on  statistical 
sampling;  

identification  of  cost-effective  approaches  to  renovations  relevant  to  the  building 
type and climatic zone;  

policies  and  measures  to  stimulate  cost-effective  deep  renovations  of  buildings, 
including staged deep renovations;  

a  forward-looking  perspective  to  guide  investment  decisions  of  individuals,  the 
construction industry and financial institutions; 

(e) 

an evidence-based estimate of expected energy savings and wider benefits. 

Moreover,  the  EED  requires  Member  States  to  facilitate  the  establishment  of  financing 
facilities, or use of existing ones, for energy efficiency improvement measures to maximise 
the benefits of multiple streams of financing. Such a strategy should make optimal use of the 
financial  resources  available  at  EU  level  and  should  also  systematically  explore  the  role  of 
fiscal instruments and public procurement in stimulating energy efficiency in buildings. 

To support the Member States with this task, the Commission intends to establish a specific 
support  and  capacity-building  initiative,  possibly  in  the  mould  of  the  IEE  II  Build-UP 
Skills initiative. 

To improve information about the effectiveness of existing and planned financial instruments 
and  projects,  ex-ante  and  ex-post  evaluations,  and  on-going  monitoring  of  their  impacts, 
should  systematically  be  undertaken.  To  assist  the  Member  States  with  this  task,  the 
Commission  will,  during  2013,  develop  guidelines  for  the  selection  and  evaluation  of 
energy  efficiency  projects  in  the  context  of  cohesion  policy  funding,  with  the  aim  to 
establish  a  more  standardised  approach.  This  will  also  seek  to  develop  a  harmonised  set  of 
performance  indicators  for  energy  efficiency  improvements  (possibly  including  a  wider 
resource efficiency and life cycle approach) which Member States can use in their respective 
programmes/projects  as  appropriate  and  that  build  on  state-of-the-art  knowledge,  including 
from EU funded research projects. 

Moreover,  the  Commission  intends  to  continue  its  support  for  project  development 
assistance in this area through the continuation of the ELENA Facility under Horizon 2020. 

25 

 
The next edition of this assistance will be open to a wider range of beneficiaries, both from 
public  and  private  sectors,  to  support  the  development  and  launch  of  innovative  sustainable 
energy  financing  schemes.  In  parallel,  the  Commission  will  establish  a  monitoring  and 
evaluation  framework  to  facilitate  the  standardisation  of  energy  efficiency  investments  thus 
enabling benchmarking of supported investment projects. 

Finally,  by  providing  support  for  pre-commercial  and  first-commercial  public 
procurement  of  innovation  under  Horizon  2020,  the  Commission  aims  to  incentivise 
industry to invest in new research and innovation for solutions fitting public service needs, or 
to  invest  in  adapting  the  outcome  of  such  research  to  meet  larger  market  price/quality 
requirements from the public sector. 

7.3. 

Addressing market failures 

There  are  many  market  failures  preventing  improvements  to  the  energy  performance  of 
buildings,  ranging  from  technical  and  financial  barriers  to  informational  and  behavioural 
hurdles (for an overview of the main ones, see EC, 2012). 

A  large  majority  of  the  respondents  to  the  public  consultation  considered  that  financial 
barriers are the most urgent to address, particularly: 

• 

• 

• 

High upfront investment costs and limited access to credit; 

Too long payback times and credit risks; 

Split  incentives  between  owners  and  tenant  and  problems  in  multi-apartment 
buildings. 

Nevertheless,  several  responses  stressed  that  the  relative  importance  of  the  various  barriers 
will differ per Member States and per sector (e.g. residential, commercial, public). 

Moreover,  stakeholders  identified  a  need  for  a  more  robust  certification  framework  and 
support for energy service providers, such as ESCOs and auditors, to increase the quality of 
their services and improve trust in the energy performance contracting concept. 

Furthermore,  the  lack  of  appropriate  and  trustworthy  information  about  energy  savings, 
efficiency  measures  and  financial  support  instruments  (for  building  owners,  building 
professionals and the financial sector) was seen by many respondents as the most urgent other 
barrier to address.  

Finally, stakeholders also identified education and training, as well as standardised monitoring 
of energy savings as important areas for further improvement. 

With  respect  to  market  barriers,  the  new  EED  requires  Member  States  to  evaluate  and  take 
appropriate measures to remove regulatory and non-regulatory barriers to energy efficiency, 
in particular as regards: 

• 

"the  split  of incentives between the owner  and the tenant  of  a  building  or  among 
owners,  with  a  view  to  ensuring  that  these  parties  are  not  deterred  from  making 
efficiency-improving  investments  that  they  would  otherwise  have  made  by  the  fact 
that they will not individually obtain the full benefits or by the absence of rules for 

26 

 
dividing the costs and benefits between them, including national rules and measures 
regulating decision-making processes in multi-owner properties; and 

• 

legal  and  regulatory  provisions,  and  administrative  practices,  regarding  public 
purchasing  and  annual  budgeting  and  accounting,  with  a  view  to  ensuring  that 
individual  public  bodies  are  not  deterred  from  making  investments  in  improving 
energy  efficiency  and  minimising  expected  life-cycle  costs  and  from  using  energy 
performance  contracting  and  other  third-party  financing  mechanisms  on  a  long-
term contractual basis." 

While the provision of tailored advice regarding financial support instruments and technical 
solutions  for  energy  efficiency  in  buildings  (especially  towards  home-owners  and  SMEs) 
should  preferably  be  organised  at  national,  regional  and/or  local  level  (e.g.  through  the 
creation  of  'one-stop-shop'  services  which  exist  already  in  several  Member  States),  the 
Commission will investigate whether the information provided at EU level could be improved 
(mainly through the Build UP web portal: www.buildup.eu). 

The Commission will also launch a study in 2013 to obtain a comprehensive overview of the 
financial support for energy efficiency in the Member States, inter alia addressing the lack 
of information on the impact of financial measures on the energy performance of buildings. 

Within the next Multi-annual Financial Framework, the Commission has proposed to continue 
its support for tackling non-technological barriers through the Horizon 2020 programme, 
under which €6.1 billion would be allocated to re search and innovation under "Secure, clean 
and  efficient  energy"  in  2014-2020.  A  significant  share  of  this  budget  would  focus  on  non-
technology  aspects  and  removal  of  existing  regulatory,  financial,  market  and  behavioural 
barriers,  under  the  'Market  uptake  of  energy  innovation'  priority,  continuing  the  positive 
experience with the Intelligent Energy Europe Programme. 

Member  States  should  also  make  progress  with  the  implementation  of  Commission 
Recommendation of 9 March 2012 on preparations for the roll-out of smart metering systems 
(2012/148/EU). 

7.4. 

Strengthening the energy services market 

The  further  development  of  the  energy  services  market  is  often  seen  as  one  of  the  most 
effective  ways  of  triggering  measures  to  reap  the  cost-effective  potential  on  the  energy 
demand side, particularly in public buildings and industry. The business model in this market 
is  based  on  the  delivery  of  energy  services  (i.e.  the  rational  use  of  energy  rather  than  the 
delivery of energy per se) often through so-called Energy Performance Contracting (EPC)  

Under  an  EPC  the  service  provider  delivers  energy  efficiency  improvements,  accepting 
financial  risk  by  financing  –  or  facilitating  the  financing  -  upfront  investment  costs  and 
refinancing this through the savings achieved. The payment for the services delivered is based 
on meeting agreed performance criteria, including a level of energy performance and resulting 
energy  and  cost  savings.  Energy  performance  contracting  can  thus  be  seen  as  a  financial 
instrument for improving energy efficiency without up-front capital cost to be invested by the 
public or industrial client.  

The  new  Energy  Efficiency  Directive  recognises  the  important  role  that  EPCs  can  play  and 
requires Member States to remove barriers to using energy performance contracting and other 
third-party financing mechanisms on a long-term contractual basis. It provides the following 
definition  for  energy  performance  contracting;  "a  contractual  arrangement  between  the 

27 

 
beneficiary  and  the  provider  of  an  energy  efficiency  improvement  measure….  where 
investments in that measure are paid for in relation to a contractually agreed level of energy 
efficiency improvement…". 

An  energy  service  provider  (often  referred  to  as  an  energy  service  company  or  ESCO)  is 
subsequently  defined  as  "a  natural  or  legal  person  that  delivers  energy  services  or  other 
energy efficiency improvement measures in a final customer's facility or premises".  

Typically,  the  ESCO  offers  its  technical  expertise  to  provide  a  comprehensive  suite  of 
retrofitting  measures,  which  can  range  from  energy  efficiency  alone  to  the  inclusion  of 
renewables,  water  and  operational  efficiency.  The  ESCO  carries  out  an  assessment  of  the 
potential  energy  savings,  site  audits,  measurement  and  verification  (M&V),  design  and 
engineering, installation, and follow-up evaluation and intervention where energy savings are 
not achieved. The ESCO thus assumes the technical and performance risk for the project in 
the form of a long-term performance guarantee ensuring the savings. 

Assessing  the  size  of  the  ESCO  market  in  the  EU  is  difficult,  mainly  due  to  the  highly 
individualised nature of Member State markets and to the fact that the concept of an 'ESCO' is 
understood differently in different Member States38. Nevertheless, the Impact Assessment for 
the Energy Efficiency Directive39 gives a rough estimate for turnover in the ESCO market of 
between EUR 5bn to EUR 10bn. It also notes that this is "well behind its estimated potential 
to reach a turnover of EUR 25bn per year which would translate into additional hundreds of 
projects all over Europe". 

Several  stakeholders  identified  the  need  for  stronger  support  for  the  ESCO/EPC  market  by 
setting  up  more  loan  guarantee  systems  (including  for  the  provision  of  EPC  by  small  size 
contractors) to allow financial institutions to see EPC as secured lending, possibly using EU 
funds as a guarantee. Another possibility to open the market of EPC to small size contractors 
could be the development of specific insurance products40. In the public sector, the potential 
for  off-balance  sheet  financing  has  been  identified  as  driver  for  investment  in  public 
buildings, particularly in light of obligations to renovate 3% of central government buildings 
per annum. 

To  facilitate  the  further  development  of  the  ESCO/EPC  market,  the  Commission  will 
progressively  implement  its  campaign  to  promote  and  build  capacity  for  energy 
performance  contracting  and  ESCOs  throughout  Europe.  The  campaign  is  being 
implemented  mainly  through  capacity  building  workshops,  organised  by  three  partners 
including  the  EIB's  European  Public-Private  Partnership  Expertise  Centre  (EPEC)  targeting 
central governments, the ManagEnergy initiative targeting regional actors, and the Covenant 
of Mayors initiative targeting local actors.  

8. 

CONCLUSIONS 

The  picture  that  is  emerging  from  the  examination  of  the  European  building  stock,  the 
existing financial support measures for energy efficiency in buildings and the different market 
barriers, shows that: 

38 
39 
40  

Energy Service Companies Market in Europe, Status Report, JRC, 2010 
Ibid 9 
The  ELIOS  pilot  project  (http://www.elios-ec.eu/en/introduction)  is  investigating  the  scope  for 
deploying  insurance  schemes  that  could  cover  contractual  performance  guarantees  and  cross-border 
services, especially for small building contractors. 

28 

 
                                                 
– 

– 

– 

The situation differs significantly between Member States in terms of their building 
stock (e.g. age, energy performance, tenure, etc.), the financial support measures in 
place (e.g. amount of funding, types of measures, effectiveness, etc.) and the relevant 
market  barriers  (e.g.  capacity  and  awareness,  support  structures,  regulatory 
framework, etc.); 

While  the  investments  in  building  energy  efficiency  are  increasing  and  there  are 
many best-practice examples of existing instruments that are delivering cost-effective 
energy savings, there is only limited information on the effectiveness of the different 
financial  support  measures  for  energy  efficiency  in  buildings,  both  at  EU  and 
national levels; 

There  continue  to  be  important  barriers  that  hamper  further  uptake  of  energy 
efficiency  investments  in  buildings,  including  a  lack  of  awareness  and  expertise 
regarding  energy  efficiency  financing  on  the  part  of  all  actors  (e.g.  authorities, 
construction companies, local banks and end borrowers); high initial costs, relatively 
long pay-back periods and (perceived) credit risk associated with  energy efficiency 
investments; limited availability of funding due to overall deleveraging by banks and 
increasing  capital  adequacy  requirements;  and  competing  priorities  for  final 
beneficiaries. 

If  the  EU  is  to  meet  its  2020  energy  efficiency  target  and  its  ambitions  for  further  savings 
towards  2050,  it  is  imperative  to  improve  the  financial  support  for  energy  efficiency  in 
buildings.  For  this  to  happen  it  is  necessary  to  ensure  that  the  regulatory  framework  is 
properly implemented, more financing is made available and key barriers are addressed. 

As  outlined  above,  the  Commission  is  engaged  in  a  variety  of  initiatives  and  activities  to 
support these objectives. However, given the nature of the building stock and sector, and their 
responsibility  for  implementing  the  relevant  legislation  and  addressing  national  market 
barriers,  the  Member  States  are  in  the  driving  seat  to  ensure  that  more  cost-effective 
investments in building renovation take place. 

Moreover, the importance of a tailor-made approach to energy efficiency financing and of a 
building sector able to deliver high-quality renovations means that close cooperation between 
public  authorities  (at  national,  regional  or  local  level),  finance  providers  (e.g.  IFIs,  banks, 
institutional  investors,  obligated  companies  under  an  energy  savings  obligation  scheme, 
ESCOs)  and  the  building  sector  (e.g.  construction  companies,  equipment  providers, 
architects) is essential. 

Last  but  not  least,  building  owners  (whether  companies,  public  authorities  or  private  home 
owners)  will  have  to  be  convinced  of  the  benefits  of  making  their  properties  more  energy 
efficient,  not  only  in  terms  of  a  lower  energy  bill  but  also  improved  comfort  and  property 
value.  This  has  not  been  made  easier  by  the  current  economic  and  financial  crisis  and  may 
well  be  one  of  the  most  important  hurdles  to  overcome  in  making  Europe's  buildings  more 
energy  efficient.  However,  the  macroeconomic  case  for  doing  this  is  strong41  and  targeted 
incentives and awareness raising efforts to changing attitudes will be necessary. The building 
renovation  roadmaps  that  Member  States  will  have  to  establish  under  the  new  energy 
efficiency Directive should explicitly address these issues. 

41 

Non-paper of the services of the European Commission on the Energy Efficiency Directive. Presented 
at the Informal Energy Council, 19-20 April 2012, European Commission. The Paper can be found on: 
http://ec.europa.eu/energy/efficiency/eed/doc/20120424_energy_council_non_paper_efficiency_en.pdf 

29 

 
                                                 
Going  forward  the  Commission  will  continue  to  engage  with  Member  States  and  relevant 
stakeholders on how barriers to energy efficiency investments in buildings can be overcome 
and how financial support for energy efficiency in buildings could be further improved. 

30