OVERVIEW | Covenant of Mayors Investment Forum – 2020 edition

The Covenant of Mayors Investment Forum – Energy Efficiency Finance Market Place, has become an important annual landmark, gathering this year over 600 experts in the fields of sustainable energy and financing from more than 36 countries. The 2020 edition of the event recently took place in Brussels in mid-February and its aim was to share, network and learn about the implementation of more than 45 showcased local-scale projects contributing to a clean energy transition and a decarbonized society.

To date, more than 10,000 municipalities around Europe, with responsibility for around 320 million citizens, have committed to the implementation of their respective Sustainable Energy and Climate Action Plan (SECAP) in the framework of the initiative of the Covenant of Mayors launched in 2008, committing to more stringent voluntary targets for sustainable energy.

Organised by the European Commission’s Executive Agency for Small and Medium-sized Enterprises (EASME) and the Directorate-Generals for Energy and for Climate Action in co-operation with the Covenant of Mayors’ secretariat, the event intends to reflect on what has been developed and accomplished during the past year. For this year’s edition, the interest and motivation are increasing as are the concrete practices taking place on the ground. Presenters mentioned emergency and climate crisis several times as well as the ambitions of the Clean Energy for All Europeans Package, the National Energy and Climate Plans for 2030, and the recently announced European Green Deal meant to support and promote the kind of projects being put forward in the event.

Alongside the presentations of projects addressing infrastructure and services management, ecosystems and mobility, many of the sessions were dedicated to the energy efficiency of the building sector. Here we present an overview of different approaches to this subject.

Specifically seeking to increase the decarbonisation investment in the real estate and asset management domains, the H2020 funded Carbon Risk Real Estate Monitor project (CRREM) does so by integrating the down-side-financial risk of climate change in investment decisions. The project provides investors with ad-hoc management and monitoring tools allowing to scientifically set up carbon reduction pathways.

Likewise, the LIFE co-funded EconomisE project promotes the decarbonisation of the building stock by influencing financial flows, aiming to unlock the potential of profitable energy efficiency investments. To put it into Katja Lähdesmäki-Josefsson’s words, the coordinator of the project from WWF Finland: “The EconomisE Platform will be allowing coordinated multi-stakeholder action to achieve accelerated energy decarbonisation and resilience in Finnish buildings”.

 

 

Financing Home Renovation

Specifically addressing the housing sector and the large scale unlocking of finance through a Green Mortgages/Green Homes scheme, the SMARTER Finance for Families project was named at the opening session by Julien Guerrier, Director of EASME, along with EeMAP and ManagEnergy, as particularly successful initiatives that have been flourishing over the last year.

The H2020 funding for SMARTER is allowing for scaling up and replicating an already successful programme emerging from Romania into 11 new countries. Reflecting on this experience, project coordinator Steven Borncamp underlined how the so-called co-benefits of green and energy-efficient construction are the real benefits (comfort, value, etc…) and drivers for investment. Pat Berry from IrishGBC, a SMARTER partner, shared their local experience in getting people into a Quality Assurance process when dealing with building renovations, through the use of building passports/roadmaps, the training of assessors and the accreditation of construction professionals.

Other projects shared their experience and approach on the Home Renovation strand:

• the INNOVATE project, confirming the key approach of one-stop-shops to supporting homeowners in the whole retrofitting process, coordinating public authorities and all the stakeholders involved. Jana Cicmanova from EnergyCities shared how tools based on their piloting experiences across Europe are available for replication.
• the City of Vienna’s H2020 RenoBooster project has also gone along this one-stop-shop service path, aiming to respond to people’s needs and going for a holistic approach to tackle the renovation challenge, as shared by Stephan Hartmann.
• the Integrated Renovation Energy Services programme launched in 2015 by the French public service  PUCA  (Plan Urbanisme Construction Architecture), also responds to the one-stop-shop concept and their experience has allowed them to coordinate and support local authorities in the implementation of comprehensive home renovation programmes and also to feedback into national-level frameworks and policies, as shared by Françoise Réfabert. The practical and successful implementation of the programme in the Picardie region (PSEE) was presented in detail by Alice Morcrette. In this region, over the last 5 years, more than 1000 apartments and 600 houses have been renovated, and subjected to quality control and monitoring after completion of the works.

Financing renovation and energy efficiency is not a one-size-fits-all solution. Interesting complementary approaches to different investment challenges were also shared in the Home Renovation strand.

• The RenOnBill project, coordinated by Creara, is being implemented in Germany, Italy, Lithuania, and Spain and aims to foster deep renovation of residential buildings through on-bill schemes (OBS), thus structuring cooperation between energy utilities and financial institutions. This approach allows some flexibility and progressive small-scale interventions.
• The EuroPACE project, led by GNE Finance, aims at an intermediate scale of energy efficiency or renewable energy upgrades to homes and buildings, combining people-centric technical assistance with affordable financing based on an on-tax financing model, building upon this relationship municipalities have with their citizens through the property tax system.
• Yet another approach to financing buildings decarbonization was presented by Adam Hirny, from BNP Paribas Poland, where the scheme of the Energy Efficiency Finance Facility for Residential Buildings EEFFRB project was implemented in cooperation with the European Investment Bank under the ELENA project, funded by the EIB through the Horizon 2020 Programme. Here the target is multifamily buildings through the interaction with housing associations in Poland. The EEFFRB offers a package of different services including technical assistance and financial products and grants. The financial institution seeks to make this programme self-sustainable and has also provided a dedicated team of experts in the field within their staff.

Innovative Sustainable Energy Planning / Financing Energy Efficiency

For several projects in the fields of planning and financing Energy Efficiency, buildings and their users are key components.

Regarding the access to affordable energy and energy efficiency, the SOCIALWATT project, tackling the implementation of Article 7 of the European Energy Efficiency directive, presented the schemes and tools being developed to help ease the interaction between energy companies and social services. It is being piloted in Spain, with partners also working in Croatia, France, Greece, Ireland, Italy, Latvia and Romania and embracing an overall European implementation.

The Horizon 2020 funded project PRODESA assists seven major municipalities in the Athens Metropolitan Area to launch energy efficiency and renewable energy projects. This is being accomplished by utilising innovative financial tools and attracting private investments, in particular through energy performance contracts (EPCs) signed with energy service companies (ESCOs). Similarly, the implementation of the Initiative for Energy Performance and Energy Supply Contracting in public buildings (InEECo) allows for municipalities and public administrators of the German state of Baden-Württemberg to carry out building retrofits at low cost with energy contracting. InEEco acts as an innovative one-stop-shop for public authorities and supports them from A to Z in the identification and implementation of energy efficiency solutions in the public building stock.

Other examples of the use of Energy Performance Contracting were presented in the sessions of the LAUNCH, QualitEE and AmBIENCe projects. The LAUNCH project aims to grow the Sustainable Energy Assets market by presenting investors with standardised risk assessment protocols, and a roadmap for project developers as well as value-propositions for their end-clients. The approach of the QualitEE project for increasing the investment in energy efficiency services in the building sector is by developing quality assessment criteria and implementing quality assurance schemes. The types of energy efficiency services being considered are Energy Performance Contracting, Energy Supply Contracting, and Operational Contracting. The Actively Managed Buildings with Energy Performance Contracting (AmBIENCe) project aims to extend this contracting concept to buildings producing surplus renewable energy with new concepts and business models for performance guarantees. Savings from energy efficiency measures are combined with those of operation and earnings being optimised through active Demand-Response regulation. Comfort, security or maintenance services may also be integrated into the monitoring and regulation schemes.

For the REScoop MECISE project, the objective is to foster sustainable and decentralised energy systems engaging municipalities and citizens. While their focus is in the promotion of renewable energy cooperatives, the question of energy-efficiency and the comfort of homes is coherently included in their approach. In this sense, the Belgian project partner cooperative Ecopower developed a cost-covering service Ecotraject to help its members with deep energy renovations in their homes, through audits and assistance in choosing interventions and contractors. Karel Derveaux underlined the great potential of waste heat recovery and district heating systems in the framework of this project.

In the case of the CitizEE project that was launched in May 2019, the way to support public authorities in the task of scaling up investments in energy efficiency in buildings is by setting up Citizen Investment Platforms. These platforms, integrating financing schemes such as crowdfunding and cooperative models bringing together all market players, will be piloted and backed up by the European Fund for Strategic Investments (EFSI) and other Public Financing Instruments (PFIs) in four European regions in Portugal, Belgium, Croatia and Lithuania.

Plenary sessions

The Directorate-Generals for Energy, for Climate Action and for Financial Stability as well as the EASME Agency, offered the institutional framework to the event alongside debates with presentations from Covenant of Mayors’ stakeholders sharing hands-on experience.

The role and significant potential of the building sector to contribute to the reduction of CO2 emissions and the energy transition were often underlined, as well as the ambitions and framework of the European Green Deal. Ditte Juul Jørgensen, from DG Energy, referring to the provisions of this policy initiative aiming to make Europe climate neutral by 2050, pointed out the importance of the renovation wave as the energy efficiency flagship project, local-scale oriented and currently under preparation. In this sense, and reaching out to all stakeholders, it is foreseen to foster an open platform gathering local authorities, professional experts and construction sector stakeholders to identify and address the barriers to these objectives. Clara De La Torre, from DG Climate Action, also referring to this policy’s proposal for a fair and profound transformation of our economy, underlined how this will impact the way we live, the way we move, the way we consume and how it will require the reinforcement of our climate targets for 2030 as well as the European resilience and adaptation to climate change.

The Blending Public and Private Funds panel gathered various stakeholders. Reinhard Six, from the European Investment Bank, shared how, according to the new energy lending policy of EIB, there will no longer be finance for fossil fuel infrastructure, and how provisions are made for substantially increasing the climate action and environmental sustainability financing. Elia Trippel, from DG FISMA, as policy-making actor explained the goals to mobilise private investments for the transition to a sustainable economy and for energy efficiency, mainly through the implementation of the 1st ever Sustainable Finance Action Plan adopted in 2018. She stressed the importance of the Taxonomy Regulation legislation emerging late 2019 from this process. Peter Sweatman, CEO of Climate Strategy & Partners, who has closely followed the evolution of these investment forums also mentioned the efforts in the field of Taxonomy and Green Tagging in helping to bridge energy efficiency project terms into financial procedural frameworks and  policies. This is part of the ongoing work coordinated by the European Energy Efficiency Financial Institutions Group (EEFIG), alongside its DEEP database and the H2020 funded EeMAP platform.

The panel, moderated by Andy Deacon, director of strategy and operation for the Global Covenant of Mayors for Climate and Energy, sought insights about what the characteristics of a successful investment proposal are from the perspectives of financial institutions and investors. Murray Birt, from Deutsche Asset Management DWS, explained how besides reliable technology and standardised project models allowing volume upscaling, it is important for an individual proposal to innovate and seek to combine funding options, not to be limited to a grant approach, and to look for de-risking in the whole life-cycle of the project. Reinhard Six, from the experience of EIB, shared as an example of a concrete and real-green investment portfolio, the financing of building energy retrofits at the moment when the people are contracting loans for acquisition and renovation works.

In terms of tangible and successful experiences of energy efficiency policy, planning and management at the municipal scale, representatives from the city of Leuven, Belgium, were invited in the plenary sessions to share the implementation of the ELENA funded L.E.U.V.E.N. project and the interesting experience of governance and participatory democracy being put forward. The diverse city of Leuven is committed to a sustainable future and received, the European Green Leaf Award 2018 from the European Commission for the cooperation lead in the framework of Leuven Klimaatneutraal 2030 programme/formal legal organisation. Under this framework more than 500 companies, organizations and citizens unite to achieve the goal of turning the city into a sustainable and CO2-neutral zone by the year 2030. Mohamed Ridouani, mayor of the city, shared how a Horizontal Collaboration Model has been key to their proven success; Collaborative and respectful partnerships with a common mission and under a systemic structure (instead of a top-down imposed strategy or a bottom-up one without leadership) does allow for reaching the goal of creating green and just European cities and communities.

Closing words and the launch of the European City Facility

The closing high note of the event was reserved for the formal launch of the European City Facility (EUCF) addressing the potential of the municipal scale to realise the European sustainable energy transition. Local authorities are key to deliver the Clean Energy Transition and, to implement their sustainable energy projects, more funding and more technical and legal capacities are needed, in particular, for small and medium-sized municipalities. The idea of creating a facility service to address this issue inspired a dedicated H2020 call that was awarded to the proposal conceived by the consortium led by EnergyCities.

The EUCF seeks to provide tailored project development assistance and help cities and municipalities to create investment concepts to bridge the gap between local action plans and sustainable energy investment projects. The lump sum of up to €60,000 offered by the EUCF to local authorities will trigger a number of investment concepts that can be picked up by financing institutions and will ultimately accelerate the project pipeline across Europe. A first call is planned to open in May 2020.

Hence, through targeted financial, technical, legal and capacity-building support, the EUCF facility aims to overcome critical barriers and triggering up to €320 million of public and private sustainable energy investments. It would mobilise “at least 225 credible and scalable investment concepts and at least 450 public authority staff members of around 9000 cities and communities”.

The networking and sharing of experiences within the Covenant of Mayors Investment Forum -Energy Efficiency Finance Market Place event contributes in a real way to upscale solutions for building a sustainable future. Vincent Berrutto, Head of the Energy Unit at EASME concluded the conference with a call to participants to replicate and scale up these good practice solutions across Europe.