Energy efficiency is the best strategy against climate change

Energy efficiency

Although the EU has a clear agenda towards the reduction of energy use, the amount of investment in the crucial area of energy efficiency is nowhere near similar to the efforts put into, for example, the funding for renewable energy.

Until recently, policy has largely ignored the fact that energy efficiency is the most cost effective and rational way to reduce CO2 emissions.

This was clearly demonstrated during the first ever “buildings day” during the COP21 conference – a momentous opportunity to generate greater collaboration for the promotion of energy efficiency. The event acted as a great platform to align various initiatives already aiming at this goal and looking to increase their pace and scale of impact. And rightly so, when you consider that nearly half of the CO2 emissions are actually generated by the existing building infrastructure.

The Paris conference was the accelerator of a movement, which started at the beginning of the year with a study from the Energy Efficiency Financial Institutions group (EEFIG), exploring ways to drive new finance in energy efficiency.

One of the main challenges is to develop a single, coherent financing framework – something that has proven difficult within the existing rigid structures of the traditional financial institutions.

In effect, the range of sectors where energy efficiency is applicable is much wider then what is covered by traditional lending categories and product groups: Existing buildings, infrastructure, energy, even public health, all those are examples where energy savings are possible and applicable. Despite this huge potential, the diversity of projects has prevented the emergence of a single financing business case for energy efficiency.

Which brings us back to the importance of collaboration. The introduction of the EU energy efficiency directive in 2012 and the launch of its Energy Union Framework Strategy this year represent great opportunities; and collaboration is the key to unlock this potential.

To generate a significant volume of investment there needs to be close cooperation between private sector finance, the development banks and policy makers. There are encouraging early signs in this regard, as project promoters and policy makers are starting to work together and develop adequate conversations.

One factor holding back investments in energy efficiency until now has been the lack of confidence in the profitability of those projects, as well as the lack of instruments to assess their viability. An initiative to remedy this issue is the European equivalent of the “Investor confidence project”, a project developed by the Environment Defense Fund in the US. This initiative aims to build a marketof “investor-ready-projects”. It could well represent the tipping point for investments in energy efficiency.

The approach described above is completely aligned with ECrowd!’s sustainable lending model. One of our main aims is to contribute to the transition to a low carbon future through sustainable collaborative transactions. We are absolutely convinced that the best way to achieve this is through crowdlending and collaborative financing of energy saving and energy efficiency projects.

In the coming years, companies are bound to invest ever more into energy efficiency, both to reduce their energy consumption cost and their carbon footprint, opening up a substantial opportunity from a financial investment standpoint. Energy efficiency will hence be able to fulfil its full potential towards a more competitive, secure and sustainable energy system. The recent Paris agreement confirms we are on the right track.

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