Reflections on the recent 2020 EEFIG plenary

Reflections on the recent 2020 EEFIG plenary

On February 18th, the Energy Efficiency Financial Institutions Group (EEFIG) held its annual plenary session in Brussels .EEFIG was established in 2013 by the European Commission Directorate-General for Energy (DG Energy) and the United Nations Environment Programme Finance Initiative (UNEP FI) as an effort to create an open dialogue and work platform. Founders believed that the creation of EEFIG represents the first time such a dialogue and work platform has been established between the Commission and the financial sector on the topic of energy efficiency finance.

The plenary was designed to provide participants with a combination of keynote speeches on the most recent policy and market developments, high-level panel discussions on current issues in energy efficiency finance and updates on on-going and planned EEFIG activities.

This is the third phase of EEFIG since 2013. The first phase ended with the delivery of a report that provided recommendations to EU institutions, governments and the financial industry about how to move forward to ensure there is sufficient funding for energy efficiency, to ensure that the financial sector is better capacitated to assess and support energy efficiency measures and to overcome barriers anywhere in the project cycle that frustrate necessary investments. Those recommendations from 2015 are still reviewed and form the basis for the work programme.

The second phase drew on some of the recommendations to primarily support financial institutions through the creation of an open source database for energy efficiency investments performance monitoring and benchmarking (the EEFIG De-risking Energy Efficiency Platform or 'DEEP'). There was also the development of common, accepted and standardised underwriting and investment framework for energy efficiency investing (the EEFIG Underwriting Guidance - Value and risk appraisal framework for energy efficiency finance and investments).

Now with the third phase, the objectives have expanded in large part because the EU’s long-term energy efficiency objectives have become more ambitious. Such ambition requires actions at many levels to ensure there are sufficient measures funded and implemented. Now with the European Green Deal, there will be all the greater need for all stakeholders to ramp up their commitment to greater energy efficiency.

Everyone attending the plenary knew the context is changing and that they would have to look inward to what their own organisation can do to support the overall effort. If they were not convinced when they entered the room, they should have been when they left.

Welcoming messages from Claudia Canevari from DG Energy and Eric Usher from UNEP FI were followed by two important keynote speakers.

Hans Van Steen, Acting Director of Renewables, Research and Innovation, Energy Efficiency in DG Energy set the scene by explaining that the Green Deal is now on the table and that it establishes clear objectives of carbon neutrality. He emphasised that this is a transition. The challenge for the energy efficiency community is that Europe’s energy consumption needs to be halved and significant investment – approximately €250 billion per year) – is needed. This means that investing in energy efficiency needs to be mainstreamed and he explained some of the support available through the European Union. Finally, he stressed that the Green Deal is a societal transformation. This cannot be stressed enough.

The second keynote speaker was Andrew McDowell, Vice President of the European Investment Bank. The bank has been going through its own transition and has positioned itself as the EU Climate Bank. Mr. McDowell explained how the bank developed a new energy lending policy in 2019 with a major commitment to energy efficiency first. He left the participants with six forward-looking observations:

1. Cheap debt is not enough, we need strong policy framework (carbon pricing and building standards;
2. We need to find more efficient ways to blend grants with debt in particular for homeowners;
3. We need to grow the ESCO market and this needs political support including in the ministries of finance;
4. We need energy efficiency champions within all financial institutions;
5. We need well-resourced advisory support; and
6. We need to reopen the securitization market in Europe, in particular for green mortgages (GRMBS).

There were two panel sessions. The first one, moderated by Peter Sweatman, rapporteur of EEFIG, related to the on-going and planned work of EEFIG working groups. These groups include taxonomy and green tagging, financial best practices, multiple benefits and asset-level energy performance indicators. There were short presentations on all of them. Most of the work, other than for taxonomy, are just at the early stages. The activities of the working group on industry were not included in the plenary since it was in the early stages of implementation. The results of all the working groups will be used by EU institutions, financial institutions and other stakeholders to strengthen their way forward.

The second panel, moderated by Carel Cronenberg of the EBRD, concerned the role of energy efficiency in the context of the FIs’ actions to decarbonise their portfolios. The panel included representatives of four financial institutions:

• Karen Degouve of Natixis,
• Murray Birt of DWS Asset Management,
• Sasja Beslik of J. Sofra Sarasin Asset Management and
• Itske Lulof of Triodos Bank.

While details will be provided to EEFIG members, one point really stands out. Sasja Beslik mentioned that in a survey they did of 3000 companies in the EU, only 170 were aligned with the Paris Climate Agreement. That gives an indication of the challenge ahead. The panellists, however, also explained what their institution is doing and how they can scale up.

Peter Sweatman, rapporteur of EEFIG, presented the results of a survey of EEFIG members undertaken last autumn. The survey showed the level of interest of members and the results are being used by the Commission, in particular, as it recommends new activities and working groups under EEFIG.

Diana Barglazan, team leader of the energy efficiency and policy unit in DG Energy closed the meeting, expressing the appreciation for all the speakers and all the interventions by participants.

As the meeting closed, as usual, many had to rush to other meetings. Yes, it is Brussels. But it was encouraging to see the many who stayed, and in various sized groups, continued to reflect on points they had heard. The dialogue platform started seven years ago has shown that it is needed more than ever if we are to take on the challenge of the European Green Deal.

Rod Janssen is President of Energy Efficiency in Industrial Processes, a member of EEFIG, and part of the Consortium implementing the third phase of EEFIG