Financing energy efficiency programmes for buildings - ESCWA
13 December 2021

Beirut time


Financing energy efficiency programmes for buildings

  • Online

ESCWA and the Islamic Development Bank are organizing a webinar on Financing the upscaling of building energy efficiency programmes in the Arab Region”. Hosting main stakeholders and speakers from international organizations, the event aims to raise awareness on effective financing instruments for investment in national energy efficiency programmes in the building sector, and on integrating related projects and programmes into national development plans. The webinar highlights strategies to address the barriers to upscaling energy efficiency in the Arab region.

Outcome document

Key messages from the webinar - Financing the Upscaling of Building Energy Efficiency Programs in the Arab Region

  • A large-scale dissemination programme of EE measures, targeting end- users, requires a comprehensive approach in order to ensure its sustainability.
  • Enforcement of regulation and policies should be a pre-requisite for presenting bankable projects.
  • Need to link energy upgrades to home financing (energy efficient mortgages), to ensure risks and benefits are owned
  • Programmes should mobilise all potential stakeholders within an organisational framework that engages them in a clearly defined set of formal relationships.
  • Private investors will need derisking tools especially at the initial phase.
  • Transaction enablers are critical to get deal flow – focus on bridging the development gap.
  • Blended finance models can demonstrate the market and build capacity within the finance sector.
  • The balance between public and private capital, and the importance of the different elements will vary according to local and regional needs.
  • Developing business models for centralised procurement in order to standardise, de-risk and minimise overheads.
  • Raising awareness by providing assistance for homeowners and ensuring dedicated communication channels (energy platforms) that informs inhabitants on how to reduce energy consumption.
  • Provide subsidies for EE measures based on most practical and efficient solutions

The moderated panel discussed a wide range of topics within the context of EE financing. Panellists shared examples from Tunisia, the Netherlands and Algeria and emphasised the importance of putting in place regulatory and institutional frameworks to facilitate the whole programme. The financing of EE in buildings is a very diverse market, meaning that there is no one size fits all, and solutions need to be tailored, including those for residential, commercial, and services, as well as the existing building stock and those yet to be built. Panellists also alluded to the importance of leveraging funds dedicated to sustainable energy to create incentives and undertaking full assessment of the cost of measures and payback periods. Experiences from the Netherlands also shed light on developing the entire value chain, overcoming any obstacles and ensuring that incentives across the value chain are aligned, so that all parties benefit. In some parts of the region, communication remains a major hurdle undermining the value of EE.

Several questions were raised on demographics and the need to have national or multiple EE programmes. Panelists alluded to a geographic approach and the importance of working with stakeholders and local authorities as well as utilising existing funds to support the most vulnerable and remote, namely those in rural areas. There was a clear recognition that at the national level, some countries are familiar with the interventions needed in EE but lack the financing whilst others have the funding mechanisms but need to be provided with the implementable mechanisms. International financial institutions, for example, are developing masterplans that outline the type of intervention as well as how to encourage greater involvement of the private sector.

The opening presentation provided a brief overview of the benefits of energy efficiency (EE), from reducing costs to consumers and lowering emissions to the wider health benefits. The speaker shed light on the roles of financing instruments in addressing SDGs, building capacities and helping to ‘crowd’ private sector investments. The presentation covered some of the key elements required amongst which are included providing upfront capital, derisking tools and transaction enablers. Some successful examples from KfW and the EU were shared to highlight case studies on methods of intervention and scale of work. The speaker concluded with lessons learnt, emphasising the importance of promoting standards and building capacities.

The presentation broke down the key components needed for large-scale dissemination programmes of EE measures. What is important is to identify the end-use with regards to the targeted population, the energy requirements and the ease of deployment in order to adopt the right EE measure. A thorough assessment of the market is also necessary in order to develop a suite of available and technically feasible measures. At the same time, it is also critical to identify existing barriers to the development of the programme and thus identify the different actions required to overcome them in the future, from financial schemes to awareness campaigns and setting the right legal frameworks and policies.

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