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  
COM(2013) 225 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Financial support for energy efficiency in buildings 

(Text with EEA relevance) 

{SWD(2013) 143 final} 

EN 

   EN 

 
 
 
 
  
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Financial support for energy efficiency in buildings 

(Text with EEA relevance) 

EN 

2 

   EN 

 
TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

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

Buildings in Europe...................................................................................................... 3 

EU financial support for energy efficiency in buildings.............................................. 3 

Funding for energy efficiency in buildings by international financial institutions 
(IFIs)............................................................................................................................. 6 

Funding for energy efficiency in buildings by national programmes .......................... 6 

Private sector funding for energy efficiency in buildings............................................ 7 

What could be done to stimulate more and more effective investments?.................... 7 

Conclusions ................................................................................................................ 10 

EN 

3 

   EN 

 
1. 

WHY THIS REPORT? 

Buildings  are  central  to  EU  energy  efficiency  policy,  as  nearly  40%  of  final  energy 
consumption  (and  36%  of  greenhouse  gas  emissions)  is  in  houses,  offices,  shops  and  other 
buildings.  Moreover,  the  sector  provides  the  second  largest  untapped  and  cost-effective 
potential for energy savings after the energy sector itself. There are also important co-benefits 
from making buildings more energy efficient, including job creation, fuel poverty alleviation, 
health improvements, and better energy security and industrial competitiveness. 

The  objectives  of  this  Report  are  twofold.  First,  under  Article  10(5)  of  the  Energy 
Performance  of  Buildings  Directive  recast  (2010/31/EU1;  hereafter  the 
'EPBD')  the 
Commission is required to present an analysis on the effectiveness of EU funding, funds from 
the  EIB  and  other  public  finance  institutions,  and  the  coordination  of  Union  and  national 
funding. This Report presents the main results of this analysis. 
Second,  the  new  Energy  Efficiency  Directive  (2012/27/EU2;  hereafter  the  'EED')  requires 
Member States to establish, by April 2014, a long-term strategy for mobilising investment in 
the renovation of the national building stock. The EED also stipulates that the Commission is 
to  assist  Member  States  in  setting  up  financing  facilities  with  the  aim  of  increasing  energy 
efficiency.  Therefore,  this  Report  also  aims  to  indicate  how  financial  support  for  energy 
efficiency in buildings can be improved. 

This  Report  is  accompanied  by  a  Staff  Working  Document  providing  more  detail  on  the 
European  building  stock  and  the  financial  support  instruments  in  place  at  EU  and  national 
level. 

2. 

BUILDINGS IN EUROPE 

An analysis of the European building stock shows that its characteristics differ significantly 
between  Member  States  in  terms  of  age,  type,  ownership,  renovation  rates  and  energy 
performance.  Therefore,  while  national  policies  and  regulatory  frameworks  share  common 
themes,  measures  to  improve  the  building  stock  will  have  to  take  into  account  these 
differences. 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 financial support programmes. The table below gives 
an overview of the main instruments and available funding: 

1 
2 

OJ L 153, 18.6.2010, p.13 
OJ L315 of 14.11.2012, p.1 

EN 

4 

   EN 

 
                                                 
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) 

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

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

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

European Energy Efficiency Fund 
(EEE F) 

€ 265 million 

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

Approximately € 730 million 
for each programme 

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 

3
Table 1: Funding for energy efficiency under the current Multiannual Financial Framework (2007-2013)

The following sections give further details about these instruments. 

3.1. 

Cohesion policy funding 

In  the  current  2007-2013  programming  period  about  €  10.1  billion  has  been  planned  for 
sustainable energy investments across the EU, of which aproximately € 5.5 billion for energy 
efficiency.  Relative  shares  allocated  to  energy  efficiency  differ  between  Member  States, 
depending  on  the  total  volume  of  funds  available,  national  needs  and  priorities  set  by  each 
Member  State.  Up  to  the  end  of  2011,  almost  €  3.8  billion  had  been  allocated  to  specific 
energy efficiency projects, including revolving funds, representing an implementation rate of 
68%. 

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. However, there is no comprehensive data on the impact of 
this funding in terms of energy savings in the building sector. 

3.2. 

Research funding 

Under  the  current  EU  Research  &  Development  Framework  Programme  2007-2013,  €  290 
million  has  been  allocated  to  energy  efficiency.  Two  research  projects  have  specifically 
focused on the building sector: 

•  The 'Energy-efficient Buildings' Public-Private Partnership was provided with € 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  CONCERTO  initiative  aimed  at  demonstrating  that  the  optimisation  of  the  building 
sector  of  whole  communities  is  more  efficient  and  cheaper  than  optimisation  of  each 
building individually. Since 2005 the initiative has co-funded, with around € 180 million, 
projects in 58 communities, resulting in savings of around 310,000 tonnes of CO2 per year 
in their building sectors and the reduction of total electricity consumption by 20%. 

3 

Note  that  it  has  typically  not  been  possible  to  identify  the  specific  share  of  this  funding  allocated  to 
building-related measures. 

EN 

5 

   EN 

 
 
 
                                                 
3.3. 

Enlargement funding through IFI facilities 

A  number  of  EU  financing  programmes  are  implemented  in  co-operation  with  International 
Financial  Institutions  (IFIs).  These  intermediated  financial  facilities4  were  established  under 
the PHARE instrument and blend EU grants with IFI funding. Of the total EU allocation of 
approximately  €  550  million,  around  one  third  has  been  earmarked  for  energy  efficiency 
related projects in the industry and building sectors.  

The energy efficiency programmes became fully established in 2010 and have made notable 
progress with investments of € 518 million leve raged from € 112 million of EU grant support. 
As  the  individual  projects  vary  considerably,  a  comprehensive  overview  of  the  impact  of 
these facilities is not available. 

3.4. 

EEE-F 

The European Energy Efficiency Fund (EEE-F) was established in 2011 with a volume of € 
265 million, with funding coming from the European Union5, the European Investment Bank, 
the Italian Cassa dei Depositi e Presititi and Deutsche Bank. The fund provides debt, equity 
and  guarantee  instruments,  as  well  as  technical  assistance  grants  to  support  project 
development. Around 70% of the funding is intended for energy efficiency projects, with the 
remainder allocated to renewable energy and clean urban transport. The fund aims at bringing 
already well-proven technologies to the mainstream, and at strengthening the 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  effectiveness  of  the  fund  will  be  subject  to 
evaluation in 2013. 

3.5. 

Intelligent Energy Europe II (IEE II) 

The  IEE  II  programme  aims  at  overcoming  non-technological  barriers  to  the  innovation, 
uptake,  implementation  and  dissemination  of  solutions  that  contribute  to  sustainable,  secure 
and competitively priced energy for Europe. Of the total budget of € 730 million, around 50% 
has been allocated to energy efficiency. 

As  regards  its  effectiveness,  projects  selected  in  2009-2011  are  estimated  to  have  triggered 
cumulative  investment  in  sustainable  energy  of  more  than  €  1500  million.  The  estimated 
fossil fuel energy savings and 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 year. 

The  European  Local  Energy  Assistance  (ELENA)  Facility,  which  is  financed  under  IEE  II, 
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  and  covers  up  to  90%  of  costs  incurred  for  technical  support.  From  its  launch 
until the end of 2012 the facility had provided a total of € 31  million in project development 
contributions. 

An  analysis  of  the  performance  of  the  ELENA  -  EIB  facility  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  €  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. 

4 

5 

The  Energy  Efficiency  Finance  Facility  (EEFF),  the  Municipal  Finance  Facility  (MFF)  and  the  SME 
Finance Facility (SMEFF). 
The  EU  budget  conferred  to  the  Fund  the  amount  of  €  125  million  +  €  20  million  for  Technical 
Assistance and € 1.3 million fo r awareness raising activities. 

EN 

6 

   EN 

 
                                                 
3.6. 

Information and Communications Technologies Policy Support Programme 

The  Information  and  Communications  Technologies  Policy  Support  Programme  (ICT  PSP), 
with a budget of € 730 million, aims at stimulat ing 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 € 74 million was allo cated to actions in the area of energy 
efficiency and sustainability, resulting in 35 pilots and 5 thematic networks. Projects covering 
buildings have shown reductions in energy consumption and CO2 emissions of up to 20%. 

4. 

FUNDING  FOR  ENERGY  EFFICIENCY  IN  BUILDINGS  BY  INTERNATIONAL  FINANCIAL 
INSTITUTIONS (IFIS) 

Besides  their  role  in  implementing  EU  funding  programmes  (see  above),  the  European  IFIs 
operate their own investment instruments for energy efficiency in buildings.  

From 2008 until the end of 2011, the European Investment Bank (EIB) mainstreamed energy 
efficiency into its operations, resulting in a total funding volume of € 4.8 billion in the EU, of 
which  €  1.7  billion  in  the  building  sector.  As  regards  the  effectiveness  of  these  funds,  it  is 
estimated  that  the  annual  emission  reductions  a  result  of  the  energy  efficiency  projects  are 
3523 ktCO2e (or 1005 ktCO2e when prorated to EIB financing) in 2010 and 679 ktCO2e (or 
379 ktCO2e when prorated to EIB financing) in 2011. 

Since  2002,  the  European  Bank  for  Reconstruction  and  Development  (EBRD)  has  provided 
loans and equity to 104 energy efficiency projects in the EU, amounting to € 1.8 billion. The 
total  funding  mobilised  on  the  market  during  this  period  amounts  to  €  14.9  billion  (i.e.  a 
leverage  of  approximately  1:7).  As  regards  their  effectiveness,  these  investments  are 
estimated to have delivered emission reductions of 5 million tonnes of CO2 per year. Energy 
savings are estimated at 1.8 Mtoe per year. 

Since  2002,  the  Council  of  Europe  Development  Bank  (CEB)  has  approved  a  total  of 
approximately  €  2.4  billion  in  favour  of  proj ects  at  least  partially  concerning  energy 
efficiency,  with  more  than  €  1.9  billion  being  de voted  solely  to  energy  efficiency.  No  data 
about the effectiveness 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. 
Many  of  the  existing  measures  have  been  reported  to  the  Commission  through  the  National 
Energy  Efficiency  Action  Plans  (NEEAPs)6  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). Over three quarters of 
the  reported  measures  are  grants  and  'soft'  loan  schemes,  followed  by  tax  incentives. 
Instruments such as energy performance contracting, the use of assigned amount units under 
the Kyoto Protocol and energy suppliers' obligations are also used. 

However,  few  Member  States  have  provided  details  of  the  effectiveness  of  national  support 
measures, making it difficult to obtain a good overview of their impact. This is largely due to 
the  lack  of  ex-ante  energy  efficiency  objectives,  monitoring  requirements  and/or  ex-post 
evaluation.  Moreover,  if  ex-ante  or  ex-post  evaluations  do  take  place,  they  are  difficult  to 

6 

EN 

NEEAPs  are  a  reporting  obligation  under  Directive  2006/32/EC  on  energy  end-use  efficiency  and 
energy 
found  on: 
http://ec.europa.eu/energy/efficiency/end-use_en.htm 

services.  All  NEEAPs 

in  English)  can  be 

translation 

their 

(and 

7 

   EN 

 
                                                 
compare due to the use of different indicators, measurement methodologies and scope of the 
instruments. 

As  regards  the  link  with  EU  funding,  many  Member  States  reported  the  use  of  cohesion 
policy  funding  for  energy  efficiency  investments  in  their  NEEAPs  and  the  existing  good 
practice  examples  indicate  that  EU  funds  can  trigger  additional  national  public  as  well  as 
private investments. However, experience has shown a need for further capacity building to 
design the investments in an optimal way. 

An  analysis  of  25  financial  support  schemes  for  energy  efficiency  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 simple administrative procedures, information to 
citizens and flexibility in funding conditions. 

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  also  showing  interest  in  this  sector  even  though  the  level  of 
commercial financing is still relatively low. 

However, as a result of the large number of relatively small-scale and widely differing size of 
investments  by  private  property  owners,  there  is  no  comprehensive  overview  of  the  funds 
being allocated to energy efficiency improvements in buildings. Although investments tend to 
be larger in the non-residential sector, also here robust data about the scale of investments into 
energy efficiency are absent. 

7. 

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

The following sections outline the actions and initiatives that are and could be undertaken to 
improve  the  situation  as  outlined  above.  This  also  integrates  the  views  of  stakeholders  in 
response to a public consultation which ran between February and May 20127. 

7.1. 

Strengthening the regulatory framework 

With the recently adopted Energy Efficiency Directive, the recast of the Energy Performance 
of Buildings Directive and the relevant measures under the Ecodesign and Energy Labelling 
Directives, a comprehensive regulatory framework for energy efficiency in buildings is now 
in place. 

Many  respondents  to  the  public  consultation  consider  that  further  EU  regulation  is  not 
immediately  necessary,  while  stressing  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 the existing legislation by the Member States was 
seen by many stakeholders as key. 

Other  suggestions  included  allowing  the  use  of  VAT  and  the  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. 

7 

EN 

consultation  questions, 

The 
http://ec.europa.eu/energy/efficiency/consultations/20120518_eeb_financial_support_en.htm 

and  overview  of 

responses 

can  be 

results 

found  on: 

8 

   EN 

 
                                                 
The Commission will closely monitor Member State implementation and take all necessary 
steps to ensure full compliance with the relevant EU regulatory framework. The Commission 
will also continue to facilitate exchange of best practices between the Member States through 
Concerted Actions for the implementation of the EPBD and the EED.  

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  EED  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/EC8.  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  EU 
methodology  to  express  the  energy  performance  of  non-residential  buildings.  This  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 

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 instruments at EU level, 
while decrying the complexity and bureaucracy of the application procedures, and pointing to 
a lack of awareness about funding opportunities, especially at local level. 

Improvement  suggestions  included  more  flexibility  in  the  use  of  cohesion  funding  (e.g.  by 
blending  loans  with  grants),  greater  bundling  opportunities  for  smaller  projects  and  more 
guidance for (especially local) policymakers on how to make better use of ERDF funding. 

Stakeholders also advocated the use of public funds to provide technical assistance, to ensure 
the  provision  of  loans  on  attractive  terms,  and  to  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. 

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. 

Furthermore,  the  Commission  will  develop  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. 

8 

OJ L134 of 30.4.2004, p. 114 

EN 

9 

   EN 

 
                                                 
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.  

To assist the Member States, the Commission will, during 2013, develop guidelines for the 
selection  and  evaluation  of  energy  efficiency  projects  in  the  context  of  cohesion  policy 
funding, also to establish a more standardised approach. 

The 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, and to facilitate the establishment 
of  financing  facilities  for  energy  efficiency  improvement  measures  to  maximise  the 
benefits of multiple streams of financing. 

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

The  Commission  aims  to  incentivise  industry  to  invest  in  new  research  and  innovation  for 
solutions fitting  public service needs by providing support  for pre-commercial and first-
commercial public procurement of innovation under Horizon 2020. 

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.  A  large  majority  of  the  respondents  to  the  public  consultation  considered  that 
financial  barriers  are  the  most  urgent  to  address,  in  particular  regarding  high  upfront 
investment  costs  and  limited  access  to  credit,  too  long  payback  times  and  credit  risks,  and 
split incentives between owners and tenant and problems in multi-apartment buildings. 

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

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, next to the need for education and training, and standardised monitoring of 
energy savings. 

With  respect  to  market  barriers,  the  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,  and  the  use  of  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, the Commission will 
investigate whether the information provided at EU level could be improved (mainly through 
the Build UP web portal: www.buildup.eu). 

EN 

10 

   EN 

 
The  Commission  will  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. 

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 energy efficiency measures, 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  (i.e.  an  energy 
service company or ESCO) delivers energy efficiency improvements by financing the upfront 
investment  costs  and  refinancing  this  through  the  savings  achieved.  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 client. 

Several stakeholders identified the need for stronger support for the ESCO/EPC market e.g. 
by  setting  up  more  loan  guarantee  systems,  by  establishing  a  more  robust  certification 
framework and by improving the trust in the EPC concept. 

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: 

•  The situation differs significantly between Member States in terms of their building stock, 

the financial support measures in place and the relevant market barriers; 

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

EN 

11 

   EN 

 
•  Important barriers that hamper further uptake of energy efficiency investments in buildings 
continue  to  be  in  place,  including  a  lack  of  awareness  and  expertise  regarding  energy 
efficiency  financing  on  the  part  of  all  actors;  high  initial  costs,  relatively  long  pay-back 
periods  and  (perceived)  credit  risk  associated  with  energy  efficiency  investments;  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  many  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 take place. 

Moreover, the importance of a tailor-made approach to energy efficiency financing means that 
close  cooperation  between  public  authorities,  finance  providers  and  the  building  sector  is 
essential. 

Last but not least, building 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 as regards 
improved comfort and increased property value. This 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  strong  and  targeted  incentives  and  awareness  raising 
efforts to change attitudes will be necessary. The building renovation roadmaps that Member 
States have to establish under the new energy efficiency Directive is a key tool in this context 
and should explicitly address these issues. 

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. 

EN 

12 

   EN