The Buildings Performance Institute Europe (BPIE) published the analysis of the funding streams directed to energy efficiency in buildings in Central, Eastern and South-East Europe (CESEE).
The study shows which funds available in the region are allocated to upgrading the building stock. Both EU and non-EU funding streams were included in the analysis:
- Cohesion Policy Funds (Structural Funds, Cohesion Fund, European Social Fund)
- European Fund for Strategic Investments (EFSI)
- Energy projects to aid economic recovery (EERP)
- The EU Emissions Trading System (EU ETS)
- Instrument for Pre-accession Assistance (IPA)
- Neighbourhood Investment Facility (NIF)
- Western Balkans Investment Framework (WBIF)
- Regional Energy Efficiency Programme for the Western Balkans (REEP)
- The World Bank
- Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW)
- The Green for Growth Fund Southeast Europe (GGF)
- The European Investment Bank (EIB)
- Eastern Europe Energy Efficiency and Environmental Partnership (E5P)
The analysis revealed that less than 3% of the funds that could be used to support energy efficiency investments in the region is dedicated to upgrading buildings. Within EU funding streams, only 4.35% of the region’s Cohesion Policy Funds is allocated to demand side infrastructure, amounting to €3.96 Billion. The European Fund for Strategic Investments (EFSI) has very little impact in the region, with only two energy projects active (including a gas project). The international financial institutions included in the analysis allocate only 1.7% of their total committed investments to demand-side infrastructure.
The study shows that, despite their critical role in reducing energy dependency, buildings are not perceived as a critical infrastructure and the opportunities for investments in demand-side infrastructure are not fully exploited. The current system fails to leverage sufficient private or institutional investment to upgrade the building stock.
The report addresses several challenges and suggests potential measures to overcome the lack of investments in demand-side infrastructure. According to BPIE, building technical capacity in the region is of utmost importance. BPIE suggests the creation of a regional energy efficiency financing platform that integrates capacity building, investment facilitation and project aggregation to create effective financing instruments and investment opportunities for demand-side energy efficiency. This would encourage private and institutional investment and result in a high investment leverage factor. Adopting an “efficiency-first” approach and promoting building renovation would be a viable alternative to increasing supply investments. Reducing uncertainty to spur private investments was also one of the challenges identified by BPIE, due to perceived high risks for investing in residential projects. That is why, stakeholder facilitation is one of the central aspects to our REELIH project, which you can learn more about here.
For this reason, BPIE suggests to set out comprehensive long-term national strategies for decarbonizing the building stock and guiding public and private investments, as well as to set up an independent non-political body, responsible for handling financial streams, in order to increase market confidence.
According to Oliver Rapf, Executive Director of BPIE, “The majority of buildings in the region urgently need deep renovation to reduce health and security risks, providing business opportunities and a stable return on investment. This debate becomes all the more relevant with the forthcoming negotiations on the next EU Multiannual Financial Framework (MFF). It should increase funding and support for demand-side efficiency investment and give up its bias for energy-supply infrastructure” (see BPIE press release here). BPIE proposes specific solutions that can be taken both at the EU and country level to increase the impact and reach of available funding for building renovation.