Finance & Economics

The EU aims to produce and import 20 million tonnes of renewable hydrogen by 2030 to achieve climate targets. The European Hydrogen Bank, integral to REPowerEU, supports this via subsidies and market integration. Investments in hydrogen technologies foster innovation, job creation, and international cooperation, enhancing energy security and global leadership in clean energy transitions.

The Global AI Infrastructure Investment Partnership, with $30 billion from Microsoft, BlackRock, and others, aims to build AI data centers and related energy infrastructure, addressing the high energy demands of AI. Other initiatives like Google's AI Opportunity Fund and IndiaAI Mission support AI infrastructure development, focusing on sustainability and international cooperation to ensure global economic and technological advancement.

Energy audits are becoming vital for SMEs in Europe, offering detailed analysis of energy usage and efficiency, highlighting cost-saving measures. They notably influence investment decisions in energy-efficient technologies, with smaller firms and innovative companies benefitting the most. However, financial constraints remain a barrier to implementing energy-saving opportunities.

SMEs overlook 10-30% energy savings due to incomplete audits and complex consumption patterns. Adopting EMS offers cost reduction, improved productivity, regulatory compliance, and enhanced reputation. Barriers such as perceived costs, resource constraints, and lack of commitment hinder EMS implementation. Technology aids effective energy management, with smart meters and IoT enabling real-time data tracking. Best practices include starting with energy audits, setting reduction goals, and engaging employees. Successful EMS adoption in SMEs contributes to carbon emission reduction and energy transition goals, aligning with EU support for SME recovery and innovation.

The Rassemblement National's 2024 program prioritizes nationalistic policies, with an emphasis on nuclear power, potentially hindering renewable energy development. The program's focus on traditional energy sources may lead to regulatory changes, affecting investor confidence and France's alignment with EU goals. This could result in tensions with the EU, reduced funding, and a slowed energy transition.

AI accelerates the global energy transition by optimizing grid operation, predictive maintenance, and energy efficiency, advancing R&D, and enhancing energy trading strategies, attracting investment and job creation, with associated financial opportunities and risks.

This article discusses institutional investors' perspective on energy efficiency and how metered efficiency could spur investment. It addresses financial institutions' growing interest in energy efficiency due to market potential, risk mitigation, carbon emission reduction, and regulatory pressure. Barriers like small project scale, heterogeneity, data scarcity, and performance risk inhibit investment. The concept of metered efficiency, akin to Power Purchase Agreements, is presented as a solution to align payment with actual energy savings, enhancing investability and quality assurance in energy efficiency projects.

We need to triple global energy efficiency investment to meet COP28 goals. ESCO contracts can bridge the development gap by managing both technical and financial risks, fostering demand, and increasing financing capacity. Innovations like Super ESCOs, CaaS, LaaS, and standardized contract forms like EPCs can accelerate growth, but require policymakers, professionals, and financiers to align efforts for broad market scaling.

The DEESME project, under EU's Horizon 2020, aids SMEs in energy efficiency endeavours, countering technical, financial, and awareness barriers. It provides a multi-layered approach to align SMEs with EU goals, offering policy recommendations and strategies to effectively implement Article 11 of the Energy Efficiency Directive.