Revolving EU structural fund means to promote energy efficiency in housing - the Estonian example Workshop on energetic building rehabilitation in Jelgava,

2 KfW Bankengruppe in brief ● Promotional bank of the Federal Republic of Germany ● Founded in 1948 ● Shareholders: Federal Republic of Germany (80%), German federal states (20%) ● Headquarters: Frankfurt am Main; branch offices: Berlin and Bonn ● Representative offices: around 50 offices and representations worldwide ● Balance-sheet total at the end of 2008: EUR 395 billion ● Financing volume 2008: EUR 70,6 billion ● employees in 2008 ● Rating: AAA/Aaa/AAA

3 KfW Bankengruppe Environmental and climate protection Environmental and climate protection is a major promotional priority! ● Total commitments in this sector in 2008: EUR 19.5 bn  Förderbank and Mittelstandsbank EUR 14.5 bn  KfW Entwicklungsbank EUR 1.7 bn  KfW IPEX-BankEUR 2.6 bn  DEG EUR 0.7 bn ● Commitments in 2008 for:  renewables EUR 5.3 bn  energy efficiency EUR 8.1 bn KfW Bankengruppe is one of the world's biggest financing institution for energy efficiency and renewable energy

4 In the 1990s Implementation of the TRANSFORM Programme on behalf of the German Government 1 Since 1991 Support of CEE governments regarding the set up of national promotional banks and support of promotional banks and other partner banks in the design of promotional financial instruments e.g. for SMEs and energy efficiency in housing Since 1995 Funding of promotional loan programmes issued by promotional and commercial banks in Europe  Total commitments in Europe (outside Germany) since 1995: 14 billion Euro Since 1998 KfW IPEX-Bank committed about EUR 3 bn to TEN financing in Europe, frequently in cooperation with EIB KfW‘s experience in Europe/CEE Since 2000 Since 2005 Since 2007 EU mandates together with CEB: 1 A German technical assistance programme for the benefit of institutions and enterprises in CEE EU SME Finance Facility EU Municipal Finance Facility Energy Efficiency Finance Facility since 2007

5 Promotion of energy efficiency in the housing sector: KfW-Efficiency House Standard and financing schemes in Germany Abbreviations: NL = New Building Level according EnCO (German law) Primary Energy Demand ca kWh/a ca kWh/a ca kWh/a = 100% of NL = 85 % of NL = 115 % of NL = 130 % of NL = 70 % of NL ca kWh/a ca kWh/a KfW-130 KfW-100 KfW-115 KfW-85 KfW-70 Better conditions of financial schemes Promotional financing schemes: Subsidized loans, partial debt relief, grants

6 Promotion of energy efficiency in the housing sector: Results of KfW‘s housing schemes in Germany Commitments From 1990 until 2008 a loan volume of more than 51 billion EUR was committed; efficiency measures in app. 2.9 million homes were financed Effects regarding CO 2 -reduction The investments financed from 2006 until 2008 achieved a permanent reduction of 2,4 million tons per annum in CO 2 emissions 1 Effects on the labour market In 2008 about 221,000 jobs could be safeguarded for at least one year, especially in the construction industry

7 Promotional Institution On-lending bank Long term loans Low interest rates Fund management Revolving loan fund Funding agreement On-lending bank Government Global loan Broad scale financing scheme for building renovation – Project idea

8 Loan programme with a revolving fund versus grants to promote energy efficiency investments ● The substance of the fund remains for future investments (money flows back to the fund) ● Structural fund means invested into financial instruments count as “disbursed” ● Development of the “loan market” (e.g. maturity) ● One-stop finance  Complete financing of the planned investment  Possibility of stable long term financing conditions  Usage of favourable refinancing conditions of promotional banks  Possibility of risk takeover  Possibility of a partial dept relief which combines the incentives of a grant and a promotional loan without the disadvantages of a grant

9 Broad scale financing scheme for building renovation – Best-case model from Estonia KredEx 2 On-lending bank Long term loans Low interest rates Fund management Revolving loan fund Funding agreement On-lending bank Government CEB 1 Global loan EUR 29 Mio. EUR 17 Mio. EUR 3 Mio. Objective: At least 20-30% of energy savings Energy audit is obligatory Renovation according to the audit Loan Maturity up to 20 years 1 Council of Europe Development Bank 2 Estonian promotional institution