SOFIA (Bulgaria), December 19 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) plans to strengthen its support for the renewables and energy efficiency push across Southeast Europe (SEE) with the launch of four Sustainable Energy Efficiency Financing Facilities (SEFFs) in 2012, senior EBRD officials said.
“The EBRD operates 15 SEFFs in 16 countries across the bank's region from Poland to Kazakhstan. There are 12 of them in Central and Eastern Europe [CEE], including a regional one in the Western Balkans, two in Bulgaria and as many in Romania. We have plans to expand the SEFF family in 2012 with at least five to six new facilities of which four new facilities are currently under preparation in the SEE,” energy efficiency analyst at the EBRD Daniela Diedrich-Ristic told SeeNews in an emailed interview.
Since the launch of its Sustainable Energy Initiative (SEI) in 2006, the EBRD has made available a total of almost 2.0 billion euro ($2.6 billion) of sustainable energy financing for the SEE region, representing 24% of total SEI expenditure during this period.
In 2011 alone - as of the end of the third quarter, the EBRD has committed 463.1 million euro to the SEE region or 22.2% of the bank’s overall SEI expenditure. This covers the whole range of EBRD’s Sustainable Energy Activities, ranging from stand-alone industrial energy efficiency projects – for example, energy efficiency improvements valued at 15 million euro at a zinc and lead smelter in Bulgaria, to small-scale residential energy efficiency improvements.
The biggest offenders among the SEE industries when it comes to energy inefficiency are definitely the coal-based power sector, heavy industries like metallurgy and cement production, but also the real estate sector, where the largest energy saving opportunities lie although they are extremely difficult to address due to high transaction costs and strong fragmentation alongside a number of other barriers, Aleksandar Hadzhiivanov, principal manager at the bank’s energy efficiency and climate change department, told SeeNews in the same emailed interview.
The energy intensity of the SEE countries is still three to four times higher than the EU27 average - and up to five times if compared with the very advanced economies, but Hadzhiivanov noted those levels have seen a clear improvement thanks to the restructuring of the economies with an increase of the GDP contribution from the services sector and relative decrease of that of the manufacturing industries and a shift to higher value added products and enhanced sustainability due to better resource efficiency, including energy efficiency and the use of renewable energy.
Although Croatia, due to join the European Union in 2013, is the only country in the Western Balkans due to soon face binding renewables and energy efficiency targets, the two experts insist that all states in the region stand to benefit from aligning their energy policy with that of the 27-nation bloc.
Diedrich-Ristic noted that the EBRD is combining financing, technical assistance and grants for incentive payments with policy dialogue with the respective national authorities to improve the investment environment for renewable energy and energy efficiency and this approach has proved to be extremely successful in some SEE countries. “In Moldova for example, the bank has worked intensively on supporting the government to put in place primary and secondary legislation for transposing the EU directive on the Energy Performance of Buildings.”
Some progress has been made in Bulgaria, Romania and Croatia to put in place a regulatory environment that promotes energy efficiency initiatives in the residential sector but still further work is needed in the rest of the region, Hadzhiivanov said, adding that – with the exception of Slovenia, it generally lags behind in this area CEE pace-setters like Slovakia, the Czech Republic and Poland.
The potential for energy efficiency savings in the SEE region is largest in the residential sector but it is also probably the most difficult to address, he said.
“We all know that with a relatively simple and easy to implement technical measures - like insulation of the building envelope, higher efficiency heating systems, solar thermal installations and other, we could reduce energy use by half. The question is how to make this happen, how to convince the millions of home owners to invest in energy-saving measures.”
When it comes to large apartment buildings, banks participating in energy efficiency funding schemes potentially face multiple counterparties - the individual homeowners, the housing associations and the estate management companies. “This is the area were housing regulations in many SEE countries are very weak and do not provide housing associations with enough legal power to make them creditworthy for the banks while the housing management market is still in its infancy,” Hadzhiivanov said.
This leaves the national governments in the region with a lot of work ahead to improve the legal framework but they could bring in the EBRD to assist with both putting in place financing mechanisms as well as helping to improve the legislation by making use of lessons learned from countries where it works like Slovakia, for example.
The progress that has been made by Bulgaria in this respect has allowed the multilateral lender to modify substantially its Residential Energy Efficiency Credit Line (REECL) thus including housing associations as eligible borrowers, expanding the list of projects to be supported and refocusing the scope of technical assistance provided by the project consultant.
In addition to general technical advise, the experts in the REECL team are available for legal advise on how to register a housing association and how to assign decision-making procedures and responsibilities among apartment owners in compliance with Bulgaria's housing legislation.
Hadzhiivanov said the legislative amendments adopted in Bulgaria have allowed loans for approximately 1.0 million euro to be disbursed on a monthly basis under REECL and since July 2011, when the second operational period of the programme was launched, more than 1,800 small projects have been financed.
He added that the support extended by Bulgaria’s economy ministry has made possible the launch of the second operational period of the REECL programme which spans 2011-2014.
The Bulgarian lenders participating in the REECL programme are ProCredit Bank and Raiffeisenbank.
($=0.7584 euro)
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