 Energy Efficiency funding and the EU Cohesion Policy Energy Cities – Open Days 2011 Energy & Territory: from multilevel governance to local agreements Dr. Tudor Constantinescu European Commission Directorate-General for Energy 1

Energy strategy 2020 – Five priorities  Efficient use of energy Integrated energy market Secure, safe and affordable energy for consumers Technological leadership Strong international partnership 2

Meeting our “20-20-20 by 2020” goals   Meeting our “20-20-20 by 2020” goals Reduce greenhouse gas levels by 20% Increase share of renewables to 20% Reduce energy consumption by 20% 100% Current trend to 2020 Current trend to 2020 -20% -10% Current trend to 2020 20% [ Energy networks, diversifying energy sources and increasing energy efficiency ] 3 3

European funding mobilised Financial support European funding mobilised Structural funds/ERDF (incl. JESSICA) Intelligent Energy – Europe Programme ELENA Facility European Energy Efficiency Fund (EEE F) Smart cities (within the 7th Framework programme for Research) Public Private Partnerships 4

Cohesion Policy 2007-2013 Cohesion Policy 07-13 European Regional (€ 347 billion) European Regional Development Fund (ERDF) Cohesion Fund European Social Fund (ESF) DG REGIO DG EMPLOYMENT

Cohesion Policy Convergence objective: regions with GDP per capita under 75% of the EU average. 81.5% of the funds are spent on this objective. Regional competitiveness and employment objective.

Functioning of Cohesion Policy European Commission & Member States negotiated / agreed National Strategic Reference Framework (NSRF) and Operational Programmes (OPs) at national and/or regional level for 2007-2013. Member States alone select and implement the projects in line with priorities of the OPs (principle of ‘shared management’). Major Projects: Investments of more than € 50 million are submitted and approved by the Commission.

Functioning of Cohesion Policy Co-financing rate of 50% (competitiveness regions) or 75/85% (convergence regions) at programme level. Different rate for ‘revenue-generating’ projects (possibility also to use revolving financing instruments for such projects) EU funds always completed by national, regional, EIB funds. Programmes managed by “Managing Authorities” (MAs) at national/regional level. Often national or regional Ministry for finance/economy/regional development.

“Green economy” investments 2007-2013 Renewables €4.8 bilion Energy Efficiency €4.4 billion = €105 billion 30% of Cohesion Policy funding

Cohesion Policy allocations to Energy Petroleum products 2% Natural gas 6% Electricity (TEN-E) 3% Electricity Natural gas (TEN-E) Wind 7% Solar 10% Biomass 17% Hydroelectric, geothermal and other Energy efficiency, co- generation, energy management 39% 2007-2013 total = € 11 billion (3 % of total) € 9.2 billion EE & RES plus € 1.8 billion traditional energies & interconnectors.

Energy Efficiency in the “Recovery Package” Amendment to ERDF regulation (May 2009) Up to 4% of the national ERDF allocation can go to energy efficiency and renewable energy in housing, potentially € 8 billion Member States define eligible categories of existing housing, to support social cohesion June 2010: Further regulatory amendment to facilitate the use of innovative financial instruments in this area, in addition to JEREMIE and JESSICA (JESSICA initiative also delivering EE & RES investments in the urban context)

Uptake of the regulatory amendments According to first qualitative assessment by DG REGIO in autumn 2010, activities in this area triggered by the regulatory amendments in BE, BG, EL, FR, IT, LT, MT, NL, PL, PT, UK. In addition, EE and LV active in this area already from the outset of the period. Some further MS show interest and could take advantage of this new opportunity (DE, ES, HU,…?).

Uptake of the regulatory amendments Only EL making immediate use of the new financial engineering opportunity by establishing a revolving fund of EUR 300 million to provide repayable assistance for energy efficiency in housing. However, it seems like the amendment has triggered further MS interest, as the set-up of additional financial engineering instruments with an energy efficiency and/or renewable energies component is currently considered in BG, DE, HU, SK, UK. Also eight JESSICA funds with energy component set up in seven MS: EE, LT, ES, IT, PL, PT, UK.

Refurbishment of social housing (FR) Investments of € 320 M of ERDF in whole country Average support by ERDF = € 2,886 per dwelling (14% of total needs) Impacts: generated over € 1 billion in investment in energy performance in social housing in FR helped to create and maintain 15,000 local jobs & potentially 31,000 with measures in the pipeline 50,000 households with modest incomes supported to fight energy poverty (heating costs reduced on average by 40%) 14

Revolving fund example Estonia Switch from grants to a revolving fund KredEx (Credit and Export Guarantee Fund of the State) supports this Why revolving fund? Opportunity for re-usage of the funds Funds stay in state Loan is needed for reconstruction anyway Easier to administer, lower administrative costs End-beneficiary is used to take loan Innovative scheme, help from kfW Started 06/2009 March 2010: 70 contracts with multi-apartment buildings, total 5,1 mn € (average 74 400 €, 2035 apartments, saving 33%) 15

JESSICA fund in Lithuania JESSICA Holding Fund amounts to € 227 million: € 127 million ERDF € 100 million National co-financing Expected later: some funds by commercial bank Implementation started June 2010 Planned to modernize 24.000 houses, by the year 2020 This example: 45 apartment multi family building Insulated external walls and roof Windows replaced Glazing of balconies Modernization of heating substation & heating systems Energy efficiency improvement of 60 % 16

European Local Energy Assistance (ELENA) facility – ELENA EIB ELENA is a technical assistance facility, providing grants to cities, provinces, regions and entities acting on their behalf, of up-to 90% of eligible costs, for development of bankable sustainable energy investment programmes/projects at their territories. Minimum leverage factor - 25, as of 2011 - 20 ELENA is financed through the IEE Programme, no call deadlines Applications sent directly to EIB

ELENA projects until 31/3/2011 -6 signed, 6 approved ELENA contribution: EUR 21,877,929 – Expected investment: EUR 1.6bn Project name Beneficiary Location Sector REDIBA Province of Barcelona (E) over 300 small and medium municipalities EE &RE CHP/DH City of Purmerend (NL) 1 medium-size municipality RE & Local infrastructure EE Milan Covenant of Mayors Province of Milan (I) 100 small municipalities EE & MADEV City of Madrid (E) 1 large municipality Transport EE Ecoles Paris City of Paris (F) EE Vila Nova de Gaia Sustainable Programme City of VN de Gaia (P) EE & transport Development of smart grid infrastructure in autonomous islands of the Aegean Sea DAFNI (GR) 5 Islands, 10 small-size municipalities Local infrastructure & RE RE-FIT Greater London Authority (UK) Several London Boroughs Electrobus: EE efficient bus network for Barcelona City of Barcelona 1 large municipality to large cities SPIS – Sparvagnar I Skane City of Malmö (S) 3 medium London – Decentralised Energy Minimum of 15 DE projects Local infrastructure ELENA - MODENA Province of Modena (IT) Municipalities in the province PV, buildings, public lighting

 Other EU funding ELENA facility: technical assistance for municipalities since 2009 New European Energy Efficiency Fund (EEE F) 265 million Launched 1st July 2011 (EUR 146 million EERP, + financing from EIB, CDP and DB). Beneficiaries: Local & regional Public authorities, but PPPs are possible. Financing in form of loans, guarantees, forfeiting schemes (to finance ESCO)… Technical assistance (grant) is available to structure projects. Also ongoing: DG ENER Impact Assessment on the best financing instruments for energy efficiency (also with a view to new EU Financial Framework 2014-2020) as well as an analysis of the appropriateness of EU funding for the EPBD as requested by the EPBD Directive

“Factories of the future” PPP initiative The 3 Public Private Partnerships (PPP’s) Part of the European Economic Recovery Plan Adopted by the EC on 26 Nov 2008 Endorsed by the EU Council on 11-12 Dec 2008 “Factories of the future” PPP initiative € 1.2 billion in 4 years “Energy-efficient buildings” PPP initiative € 1 billion in 4 years “Green cars” PPP initiative

Support measures and networks  Support measures and networks Committees Concerted Actions: EPBD , ESD CEN EPBD standards ESD & EPBD implementation support Cohesion policy funds ELENA EEE F Possibilities for State Aid VAT reduced rates IEE programme Research FP Financial & fiscal instruments Sustainable Energy Europe Campaign ManagEnergy network Networks

Thank you for your attention!!! tudor.constantinescu@ec.europa.eu