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the development of an industry of excellence which would boost EU exports to globally expanding
energy efficiency markets, which would also benefit energy efficient strategic programs in
residential buildings.
4. 3 years time horizon
4
It is estimated that €120bn of potential projects are already financially viable in the EU . The level of
readiness of member states may vary among them, but operations could be launched in most EU
MS within a year. A dedicated task force will provide technical, legal and financial advice to some
countries, so that operations
could be started the following year.
5. Leverage
The financial mechanisms proposed are conceived in order to maximize leverage, with private
financing benefiting from the EU guarantee: banks first ; followed by institutional investors after
securitization.
6. Scalability
Between Y+4 and Y+10, there will be around 60 Bn€ of BAU and financially viable project still available.
Besides, according to the study, there should still be +240 Bn€ of non financially viable projects, that
could aim at more ambitious energy and CO2 reduction targets. In globo for 420 Bn€ on 10 years
(120 Bn€ in 3 years, then +60 €Bn + 420 €Bn), energy as well as CO2 reduction would reach -40%
on these buildings. The minimum IRR would then be slightly negative at -3%.
II. A French proposal for an EU economic recovery plan
1. Financial, industrial and political tools
At the core of the scheme, the program will provide a high-quality guarantee (counter-guaranteed
5
by the European Union) for dedicated loans by commercial banks. Given the intrinsic low-level of
projects risk, the EU’s guarantee will be a risk sharing participation mechanism (junior capped
guarantee at 10% of the loan). The implementation will be entrusted to the EIB by means of
indirect management. The EU’s guarantee (with
payment of a commission fee by banks) is necessary in order to improve the investment climate and
enable the creation of a new market of green securitised assets. The level of guarantee should
decrease in the medium term, with an improving appraisal of the low level of intrinsic risk by financial
markets and rating agencies.
Simple, transparent and safe securitisation will enable the refinancing of these very long-term
loans, high- quality “green bond” infrastructure assets, by the EIB and by institutional investors.
2. Energy Performance Contracting (EPC) as a key public policy tool
EPC is perfectly adapted to investment in the energy renovation of public buildings. It is based on a
contractual commitment to achieve a given energy-efficiency target, subject to actual and systematic
ex post monitoring. The program proposes several adaptations to EPC that will increase its integrity
and enable to justify European and national investment through demanding impact assessments.
Moreover, EPC benefits from strong European support ("EPC Campaign" of DG Energy, Energy
Efficiency Directive, IEE, JRC work on the ESCOs market, EESI 2020, etc.). In a nutshell, the
French proposal represents a shift from tailor-made to standardised, ready-made EPC projects, for
wide-scale use with the help of the EU guarantee.
3. A massive impact without increasing the public debt
The program will benefit from: (1) an off-balance sheet EU guarantee and (2) the funding of projects
under EPC partnerships (PPP-EPCs) that really transfer a significant level of risk to private operators
or semi-public companies. This program needs for a technically limited evolution of the European
accounting framework so as to better adapt it to energy-efficiency improvement projects: the
accounting of PPP-EPCs outside the scope of public debt is paramount to bringing about a change of
scale in Europe.
4 Estimate based on France case study: €20bn of financially viable projects in 2014, for a €1bn BAU. Factor 6 multiplier for
EU/France.
5
See the PF4EE (Private Financing for Energy Efficiency instrument) initiative.
energy efficiency markets, which would also benefit energy efficient strategic programs in
residential buildings.
4. 3 years time horizon
4
It is estimated that €120bn of potential projects are already financially viable in the EU . The level of
readiness of member states may vary among them, but operations could be launched in most EU
MS within a year. A dedicated task force will provide technical, legal and financial advice to some
countries, so that operations
could be started the following year.
5. Leverage
The financial mechanisms proposed are conceived in order to maximize leverage, with private
financing benefiting from the EU guarantee: banks first ; followed by institutional investors after
securitization.
6. Scalability
Between Y+4 and Y+10, there will be around 60 Bn€ of BAU and financially viable project still available.
Besides, according to the study, there should still be +240 Bn€ of non financially viable projects, that
could aim at more ambitious energy and CO2 reduction targets. In globo for 420 Bn€ on 10 years
(120 Bn€ in 3 years, then +60 €Bn + 420 €Bn), energy as well as CO2 reduction would reach -40%
on these buildings. The minimum IRR would then be slightly negative at -3%.
II. A French proposal for an EU economic recovery plan
1. Financial, industrial and political tools
At the core of the scheme, the program will provide a high-quality guarantee (counter-guaranteed
5
by the European Union) for dedicated loans by commercial banks. Given the intrinsic low-level of
projects risk, the EU’s guarantee will be a risk sharing participation mechanism (junior capped
guarantee at 10% of the loan). The implementation will be entrusted to the EIB by means of
indirect management. The EU’s guarantee (with
payment of a commission fee by banks) is necessary in order to improve the investment climate and
enable the creation of a new market of green securitised assets. The level of guarantee should
decrease in the medium term, with an improving appraisal of the low level of intrinsic risk by financial
markets and rating agencies.
Simple, transparent and safe securitisation will enable the refinancing of these very long-term
loans, high- quality “green bond” infrastructure assets, by the EIB and by institutional investors.
2. Energy Performance Contracting (EPC) as a key public policy tool
EPC is perfectly adapted to investment in the energy renovation of public buildings. It is based on a
contractual commitment to achieve a given energy-efficiency target, subject to actual and systematic
ex post monitoring. The program proposes several adaptations to EPC that will increase its integrity
and enable to justify European and national investment through demanding impact assessments.
Moreover, EPC benefits from strong European support ("EPC Campaign" of DG Energy, Energy
Efficiency Directive, IEE, JRC work on the ESCOs market, EESI 2020, etc.). In a nutshell, the
French proposal represents a shift from tailor-made to standardised, ready-made EPC projects, for
wide-scale use with the help of the EU guarantee.
3. A massive impact without increasing the public debt
The program will benefit from: (1) an off-balance sheet EU guarantee and (2) the funding of projects
under EPC partnerships (PPP-EPCs) that really transfer a significant level of risk to private operators
or semi-public companies. This program needs for a technically limited evolution of the European
accounting framework so as to better adapt it to energy-efficiency improvement projects: the
accounting of PPP-EPCs outside the scope of public debt is paramount to bringing about a change of
scale in Europe.
4 Estimate based on France case study: €20bn of financially viable projects in 2014, for a €1bn BAU. Factor 6 multiplier for
EU/France.
5
See the PF4EE (Private Financing for Energy Efficiency instrument) initiative.
