Russia’s invasion of Ukraine is today devastating lives for millions of Ukrainians and it will very likely have a long lasting effect on the economy and energy policies of the Union. Energy independence of the European Union is resurfacing again as an urgent priority. With it comes the necessity to invest significantly to improve the energy efficiency of the Union. Energy independence without energy efficiency will not be easy or quick to achieve, and delays could prolog our social and economic issues beyond necessary.
In practical terms, this means that the EU will have to continue by maintaining parallel focus on a number of important areas – humanitarian and economic support to Ukraine, COVID-19 recovery and above all climate action. We have to remember that climate action aims to prevent further global warning and divert humanity from the looming catastrophe that will follow if global temperatures continue to rise.
The push towards an energy independent and energy efficient EU can help us remain focused on all of the priorities and successfully mitigate negative effects of the war in Ukraine on our economies, support partner countries more effectively, recover from COVID-19 faster and finally ensure we can all continue to create jobs for our citizens, develop and grow.
Accelerating climate action on all levels in the European Union
Improving energy efficiency of buildings is one area where we can do a lot for the success of climate action, speed of COVID-19 recovery and long-term social and economic outlooks. Buildings generate nearly 40 per cent of the annual global CO2 emissions. The buildings also consume some 40 per cent of all energy generated in the Union and they are responsible for 36 per cent of emitted greenhouse gases. This means that even relatively low reductions on energy consumption of buildings can have significant positive effects on our climate action.
The EIB as the EU climate bank and one of the largest financiers of climate investments in the world, has begun financing projects aiming to reduce energy waste across the EU, supporting the European Commission, national governments, local and regional authorities, financial institutions, public and private sector alike. We have developed financial products and services that support energy efficiency on all of these levels – from specialised financial products with more affordable, long-term financing to dedicated advisory support in drafting sound, bankable projects. We want to ensure everyone can contribute to the climate action.
Creating jobs and a sustainable future for Europe
Energy efficiency has a strong social component too. Today, nearly 34 million Europeans report they cannot afford to heat their homes properly. This means that improving energy efficiency can mean a great deal to a lot of our neighbours as we could make it cheaper and more affordable to heat a home. For the governments the multi-million savings from reduced energy waste mean the money can go to other areas such as education, defence or healthcare.
Energy efficiency investments create and sustain long- and short-term jobs in construction industry and its related sectors making them an important source of employment. In Hungary alone, the energy efficiency industry maintains some 55,000 jobs, in the Czech Republic around 75,000 and in Poland some 250,000 people go to work every day thanks to our push to make our buildings energy efficient. Finally, energy efficiency has a positive impact on public health by reducing air and noise pollution.
Our goal is an higher energy efficient and energy independent EU
The positive economic effects of investing more in energy efficiency of buildings in the EU could be significant. These investments can lead to more jobs, more revenues and help us achieve our carbon neutral Europe goal faster. The size of the energy efficiency market is impressive and staggering as well. Currently, some 75 per cent of buildings in the EU have an energy efficiency well below their technical and economic potential. Only one per cent of buildings in the EU undergoing energy-efficient renovation every year. Tapping into this market presents a huge opportunity for economic growth and sustainable development.
More affordable, long-term financing and valuable advisory support for energy efficiency projects
With our long-term financing, like the loan we have signed with the Government of Hungary in December 2021, the bank is extending its support down to individual households and businesses. This green framework loan from the EIB unlocked 300 million euros for Hungary’s national home renovation programme. We expect to follow up with additional 150 million euros to the program, possibly in 2022. For the EIB this was the first green loan we signed in Central and Eastern Europe that is in accordance with the green loan principles of the Loan Market Association.
Hungary’s Home Renovation Programme co-finances investments in residential buildings, including energy efficiency retrofit and installation of domestic renewable energy generation systems. The Programme covers up to half of the costs, capped at approximately 8,500 euros per household. Programs like these are crucial for achieving national energy saving targets faster and the EIB is ready to support similar programs of national Governments throughout the EU.
Complementing long-term finance with advisory support
The EIB has in place products and services to supports energy efficiency measures on municipal level too. In Romania, the Bank has been working since 2016 with the City of Bucharest on a substantial program to support the energy efficiency rehabilitation of residential buildings. To date, the EIB has provided more than 200 million euros under six individual loans that have financed the energy efficiency refurbishment of some 1370 residential buildings in the city.
On the private sector side, the EIB also has financial solutions for larger companies interested to reduce their energy consumption. This includes financing for energy efficiency retrofitting of their production processes, their production facilities and offices, as well as support for companies which design energy efficiency solutions for public and private buildings.
The EIB has ambitious plans to support climate action with 1 trillion euros to be mobilised by the end of the decade. Energy efficiency in general and energy efficiency of buildings in particular will receive a substantial part of these funds.
High-quality energy efficiency projects for a globally competitive EU economy
Finding financing for energy efficient retrofitting of buildings is not a big obstacle today. In some of the CEE countries the problem is in developing sound, bankable projects. This issue is particularly relevant for the public sector – municipalities, regions and national governments, as well as public companies.
To address the need for scaling up and accelerating investment in energy efficiency, the European Commission and EIB partnered to create the European Local Energy Assistance (ELENA) facility. Over the last 12 years, more than 225 million euros of grant from this technical assistance facility has been supporting EU Member States, government organisations, regional, local and municipal authorities, public corporations and financial institutions. The funds allowed preparation and implementation support for over 7.4 billion euros of energy efficiency and renewable energy investments targeting buildings and innovative urban transport. ELENA is already is working in many CEE countries looking for new opportunities for cooperation and support.
Looking ahead at challenging times for the European Union and the planet the European Investment Bank is looks forward being an integral and proactive part of the solution. Together with our partners on all level we are confident we can deliver long-term sustainable and green future for Europe and a save our planet for the generations to come.