GREEN BUILDING

INVESTMENTS
Green buildings represent a major global investment
opportunity, with buildings making up the largest
segment of the US$ 231 billion energy efficiency
market. In the EBRD’s countries of operations,
buildings also represent a challenge. Currently, building
renovation rates and practices in these countries are
far below Paris Agreement targets. Furthermore, most
of these efforts are not cost-optimal due to capacity
and supply-chain limitations, as well as regulatory
and policy constraints. Combining a decade of green
finance experience with technical assistance and policy
dialogue, the EBRD’s Green Economy Transition (GET)
approach aims to turn green building challenges into
solid investment opportunities with clear economic,
environmental and social benefits.
 GREEN BUILDINGS IN TRANSITION ECONOMIES:
CHALLENGES AND OPPORTUNITIES

In developing countries and transition economies, GREEN BUILDING RENOVATIONS VITAL

rising populations and increased purchasing TO MEETING PARIS AGREEMENT TARGETS
power are expected to drive considerable growth in
Although many new buildings in the EBRD’s countries
construction and real estate. As building investments
of operations are three to four times as energy
grow, energy consumption and CO2 emissions will also
efficient as existing ones, a high proportion of existing
rise: buildings currently account for over a quarter
buildings will still be standing in 2050. To reach
of global CO2 emissions and more than a third of the
minimum targets defined in the Paris Agreement,
world’s energy consumption. With the global building
rates of basic green renovations of existing buildings
area likely to double by 2050, energy consumption in
in these countries must reach 6 to 8 per cent by
buildings is expected to increase by 50 per cent.
2040 (to exceed these standards and achieve nearly
To keep international climate goals on track,
zero carbon performance, rates of advanced, deep
substantial and advanced green building investments
renovations would need to reach 1.5 per cent by 2025
are needed in the EBRD’s countries of operations,
and 2 per cent by 2040). However, these countries
along with significant changes to building policies,
are far behind renovation targets: only 1 per cent
standards and technologies.
of existing buildings have been renovated to meet
minimum standards, and renovation efforts typically
AN URGENT NEED fail to exploit the full potential of energy efficiency.
In recent years, countries in which the EBRD invests
have taken important steps to curb CO2 emissions INVESTING IN PEOPLE AND PLANET
and environmental degradation. Despite these
Undertaking green renovations and ensuring high
efforts, they still lag significantly behind the EU-28,
green building standards for new builds can reduce
with four times the average energy consumption
energy consumption and decrease greenhouse gas
per unit of GDP and five times the average carbon
(GHG) emissions. They can also help limit climate-
intensity. This is largely due to the prevalence of fossil
related risks that buildings face, such as extreme
fuels and historic subsidies in these countries, which
weather events, heat stress and reduced water
have generated artificially low prices for electricity and
availability. Green building investments are not just
heat. However, the social and environmental costs
about mitigating climate change, however; they also
have been high: with 9 of the 10 fastest-warming
yield important socioeconomic benefits.
cities in the world located in the EBRD region,
In 2015 the building renovation market in the
these areas are extremely vulnerable to the effects
EU-28 was valued at nearly €109 billion and was
of climate change. Particulate emissions in many
responsible for 882,900 direct and indirect jobs. The
cities far exceed levels considered safe for human
installation of energy efficient technologies is labour-
health, while water pollution and other forms of
intensive, so green building investments help drive
environmental damage remain major problems.
local employment growth in the EBRD region. By 2020
investments in energy efficiency in the European
THE EBRD’S GREEN ECONOMY green buildings sector are expected to deliver around
TRANSITION (GET) APPROACH 19 net jobs for each €1 million invested.
Green buildings also have an important health
Preserving and improving the
dimension. Better insulation and more effective
environment are central features
heating systems help ensure adequate warmth in cold
of a modern, well-functioning
climates, while extra daylight and better ventilation
market economy and therefore key
are associated with further health benefits. According
goals of the transition process that
to an EU study, standard energy efficiency renovations
the EBRD was set up to promote.
could yield health cost savings of €33-€73 billion per
Building on a decade of green
year by 2020. With high-efficiency renovations, this
finance experience, the EBRD
figure increases to €64-€140 billion.
launched the GET approach in
2015 to put investments that bring
environmental and climate benefits A 2016 survey by the World Green Building
at the heart of the Bank’s mandate. GET combines innovative green Council found that social impact was a main
finance with technical assistance and policy dialogue to promote the driver for green building investments throughout
growth of the green economy in its countries of operations. Through Europe. This was particularly evident in Poland,
GET, the EBRD intends to increase its volume of green financing where nearly three quarters of respondents
from an average of 24 per cent of annual business volume over the cited socioeconomic benefits – including worker
previous 10 years, to 40 per cent by 2020. productivity and supporting domestic economies –
as their top reasons for investing in green buildings.
These benefits were also considered important by
a large percentage of other EU respondents.

2 GREEN BUILDING INVESTMENTS

GREEN BUILDING TOOLBOX

Green buildings are often difficult to finance at TECHNICAL ASSISTANCE

scale due to the fragmented nature of the market,
The GET approach offers technical assistance to
capacity constraints, information asymmetries, and
overcome market barriers, provide know-how and
split incentives between building owners and those
ensure the successful planning and implementation
in control of public assets and energy budgeting.
of green building projects, including:
Combining innovative green financing with technical
assistance and policy dialogue, the GET approach
• assistance in structuring transactions that will
helps overcome these challenges and create
benefit from carbon finance
alignment to exploit the full potential of green-
• market analysis
building investments.
• resource efficiency audits, feasibility and pre-
feasibility studies of specific technologies and
GREEN FINANCING INSTRUMENTS investments
• training (for example, on energy management
The GET approach enables both direct and indirect
and internationally recognised sustainability
green building investments through a range of
certification)
innovative channels and financial instruments,
• awareness raising and/or green marketing
including:
and promotion.
• direct finance, including debt, equity or quasi-
equity financing with a focus on green investments POLICY DIALOGUE
and use of advanced resource-efficiency
Policy dialogue is an integral part of the Bank’s
techniques
business model for implementing GET. Through
• intermediated finance through local financial
policy dialogue, the Bank works with governments
institutions or through non-financial
and other stakeholders to remove institutional and
intermediators, such as utilities, energy service
market barriers to green building investments. The
companies (ESCOs) and supply chain
EBRD deploys effective policy tools that complement
• large-scale public-private partnership (PPP)
and support its innovative financial instruments to
framework programmes (greenfield and
incentivise the sustainable use of resources.
brownfield public buildings)
• sustainable property funds (commercial and
Please see table “Policy tools for green building
private residential buildings)
investments” overleaf.
• performance-based finance and other market-
based climate finance products that provide
additional revenues for EBRD clients
€15 BILLION OF GREEN BUILDING INVESTMENTS
• green-labelled property bonds (commercial/
ENABLED UNDER GET APPROACH
public buildings)
• structured financing: EPC/ESCOs/forfeiting Under the GET approach, the EBRD has financed
(residential, public buildings). more than 200 large-scale projects for the
development, upgrade and refurbishment of more
If market barriers are very high, donor-funded than 62,000 building assets, with the overall
concessional elements, grants and incentives are building area exceeding 25 million square metres.
available to help early movers implement selected These investments enabled €15 billion of green
measures. The EBRD’s Finance and Technology building investments, including €2 billion from
Transfer Centre for Climate Change (FINTECC) the EBRD. Investments in building assets under
supports the implementation of advanced climate the GET approach vary from a few thousand euros
technologies with low market penetration rates. to over €100 million in larger, structured finance
projects. The EBRD can fund 30 to 100 per cent
of investment costs. The Bank’s green building
investments include commercial, public and
residential buildings and yield aggregate lifetime
(15-25 years) savings of 71,000 GWh of energy
and 335 million tonnes of CO2. Finance is available
through different direct and intermediate channels.

GREEN BUILDING INVESTMENTS 3

 POLICY TOOLS FOR GREEN BUILDING INVESTMENTS

BARRIER TO EXAMPLE POLICY

GREEN BUILDING TOOLS TO ADDRESS
INVESTMENTS THE BARRIER DESCRIPTION OF MAIN POLICY TOOLS

Building owners do not Minimum energy Introduction of legislation, regulations and modifying building codes
consider lifecycle cost performance to mandate minimum energy performance requirements for buildings
and split incentives requirements for (for example, transposition of EPBD Art. 4 & 5), based on local climatic
buildings conditions and costs.
Limited information Energy Performance Energy Performance Certification (for example, transposition of EPBD
suppresses demand Certification Art. 11) gives information on building performance – ensuring that it is
communicated in a clear and consistent way – and associated support
for data management and IT systems.
Up-front cost, Mandatory public Mandatory renovation programmes covering 3% of floor area per year
constrained budgets renovation programmes of sizeable public buildings (for example, EED Art. 5) helps allocate
government budget to green building investments.
Lack of technical Public procurement of Government acts as a first-mover through public procurement of high
capacity in the market high energy efficiency energy efficient buildings (for example, EED Art. 6) stimulates the market
buildings and helps develop local technical capacity.
Dispersed actors and Energy efficiency Energy efficiency obligation schemes (for example, EED Art. 7) engage
transaction costs obligation (EEO) energy distributors and/or retail energy sales companies to help customers
schemes save energy.
Lack of overarching National Energy National Energy Efficiency Action Plans (NEEAPs) (for example, EED Art.
strategic framework Efficiency Action Plans 24) set out estimated energy consumption and planned energy efficiency
(NEEAPs) measures, providing a strategic framework.
Existing legal Legislative and ESCO market assessments to identify potential barriers for ESCOs.
frameworks limit regulatory reform Amendments and / or introduction of primary law and secondary
effectiveness of ESCO for ESCOs / Energy regulation(s) to enable ESCO business models through Energy Performance
business models Performance Contracts Contracts.
Lack of information Information and Website development, workshops, targeted information campaigns.
awareness raising
Low government Support for voluntary, LEED and BREEAM certification.
capacity industry-led green
building certification

Over the last decade, the EBRD has worked with

many of its partners to introduce such policy tools.
With EBRD assistance, the governments of the Kyrgyz
Republic, Ukraine and several Western Balkans
countries have established laws and regulations
for minimum energy performance and certification
in buildings. By setting up public energy efficiency
guidelines, codes and procurement policies, the
governments of Montenegro and Serbia have
achieved first-mover status in their countries’
green building markets. In Bosnia and Herzegovina,
Montenegro and Serbia, EBRD support contributed to
regulatory and policy reform to better enable ESCOs
to undertake energy efficiency projects. Meanwhile
Albania, Georgia and Turkey have prepared NEEAPs,
which include a wide range of sector-based measures
aimed at achieving national energy efficiency targets.

4 GREEN BUILDING INVESTMENTS

EBRD GREEN BUILDING
FINANCE HIGHLIGHTS

MAKING CITIES GREENER SUPPORTING URBAN REGENERATION

Cities are a major driver of climate change and The EBRD provides financing and technical support
environmental impact. Globally, cities account for to municipalities and private companies undertaking
up to 70 per cent of energy use and 80 per cent of urban regeneration projects. Many cities have been
greenhouse gas (GHG) emissions – figures which left with dilapidated brownfield sites consisting of
are set to rise over time. Cities also host most of the former industrial or residential estates – sometimes
infrastructure exposed to risk from climate change, close to, or directly in, their downtown areas. Some
requiring them to invest in resilience as well. Further, of these brownfield sites are contaminated, so
energy and resource use in cities creates major environmental remediation is needed before any
environmental concerns ranging from the quality of air, further development work can begin.
to pressure on water resources and loss of green areas Urban regeneration can be turned into a
due to land use change. Urban activities and how they commercially attractive opportunity with significant
are organised are a key determinant of GHG emissions, social and environmental benefits, but only with
resilience and wider environmental health, and deeply cooperation among public and municipal landlords,
affect the overall quality of life of urban populations. commercial entities and local communities. In addition
The EBRD is taking up the challenge of supporting cities to providing debt and equity financing, the EBRD helps
in their climate and environmental actions through the foster alignment among interested parties by providing
development of its Green Cities Framework. donor-funded technical support for master planning,
The EBRD’s Green Cities Framework was environmental risk assessment, policy dialogue,
developed to systematically and comprehensively inclusion and resource efficiency. Recent EBRD urban
address the common environmental and climate regeneration projects have taken place in Egypt,
change challenges that cities face. Eligible cities must: Jordan and Ukraine.

• have a population of at least 100,000

• undertake an initial project in urban infrastructure CASE STUDY
with meaningful climate or environmental benefits REGENERATION OF DOWNTOWN CAIRO
• commit to develop a Green City Action Plan (GCAP)
to help municipal authorities and key urban areas. In 2016 the EBRD signed a loan of up to EGP
145 million (€6.9 million equivalent) with Al
The Framework is helping the Bank to scale up Ismaelia for Real Estate Investment to finance the
investments in the municipal sector. Since November refurbishment of a number of buildings located in
2016, four projects have been signed under this the historic area of downtown Cairo. The project
Framework in Batumi, Belgrade, Chisinau and Sarajevo. aims to revitalise the centre of the capital city of
Six more projects are in the immediate pipeline. Egypt by preserving its architectural grandeur,
The Framework’s key tool is the GCAP. This helps while restoring and upgrading the buildings to suit
municipal authorities and key urban stakeholders to contemporary requirements for commercial and
identify, benchmark, prioritise and guide green city entertainment uses.
actions. Importantly, the GCAP leads to a prioritised The Bank also mobilised technical assistance
green investment plan for the city – a necessary funds from the government of Austria to support
condition for addressing the pressing the regeneration of downtown Cairo through a
environmental challenges faced by strategic implementation plan, energy audits and
all cities in the EBRD’s countries policy dialogue in the field of sustainable urban
of operations. regeneration. The sustainability assessment
The EBRD has completed two method was tailor-made for cultural heritage in
GCAPs to date in Tbilisi and Yerevan. In collaboration with the Egyptian Green Building
the case of Yerevan, many of the GCAP Council and will be used for further projects
actions and investments relating to air across the country.
pollution, water quality, energy efficiency
in buildings and climate change are
being integrated into the city’s five-year
capital expenditure plan. This lays the
foundation for a strategic approach to
future green investments there.
The successes in Yerevan and Tbilisi
Yerevan’s Green City are being rolled out to other cities. A
Action Plan was approved GCAP is currently being prepared for
on 12 September 2017 by Tirana and a further six GCAPs are
the Council of the Elders
scheduled to be initiated by June 2018.

GREEN BUILDING INVESTMENTS 5

 FINANCING GREEN BUILDING INVESTMENTS
THROUGH LOCAL FINANCIAL INSTITUTIONS CASE STUDY
RESIDENTIAL ENERGY EFFICIENCY CREDIT
Local financial institutions play a key role in growing LINE, BULGARIA
the green economy in the EBRD’s countries of
operations, but are often reluctant to invest in The first residential GEFF was the Residential
green building projects due to insufficient scale, Energy Efficiency Credit Line (REECL) in Bulgaria.
experience, expertise and know-how. Under the GET REECL provides loans to Bulgarian banks to on-
approach, Green Energy Finance Facilities (GEFFs) lend to individuals, homeowners’ associations,
help stimulate green economy growth by providing utility companies and energy service companies
credit lines to local partner financial institutions (PFIs) for energy efficiency and renewable energy
for on-lending to small and medium-sized enterprises improvements in residential buildings. The
and homeowners wishing to undertake green credit line of over €100 million is the result of
building projects. Credit lines are complemented cooperation between the EBRD, the Bulgarian
with technical assistance for PFI capacity-raising government and the Kozloduy International
and project assessments, and occasionally with Decommissioning Support Fund. Launched in
low-intensity grants to reward and offset the cost of 2005, REECL has achieved significant outcomes
adopting advanced technologies. in Bulgaria’s carbon-intensive and fragmented
The GEFF programme operates through a network residential sector, including annual cost savings of
of more than 120 local financial institutions across €19 million, energy savings of 240,132 MWh and
24 countries, targeting the industrial, commercial, reductions of 249,680 tonnes of CO2 equivalent.
residential and municipal sectors. To date, GEFFs have Among the innovative features of REECL is
facilitated the refurbishment of 60,832 buildings. implementation of the demand-side measures
Interestingly, the design of dedicated residential by service providers, such as construction and
facilities allows the processing of tens of thousands heating companies. Service providers can reach
of applications for recognised technologies that meet thousands of dwellings with a comprehensive
minimum energy performance requirements. refurbishment delivering higher efficiency and
savings. Veolia Energy Bulgaria is one successful
example: together with REECL, the private heating
KEY STATS 2006-16 company is implementing a project in more than
500 apartment buildings in Varna, Bulgaria.
New heating systems, hot and cold water pipes,
60,832 1,148,243 724,321 water circulation systems, individual water and
Buildings refurbished Total budget (€, million) EBRD loan (€, million) heat consumption radio meters, and rooftop
photovoltaic units have yielded significant benefits
for both the residents and the environment.
463,854 926,309 325,535 Construction companies implementing
GET investment in Primary energy savings CO2 emissions reduction
building upgrades to energy efficiency class B+
buildings (€, million) (MWh/year) (tonnes/year) and higher under REECL are issued with energy
performance certificates. This approach kick-
starts the EPC culture in the country, leading
FACILITATING PUBLIC-PRIVATE PARTNERSHIPS the market towards low carbon buildings and
preparing Bulgaria for nearly zero carbon
Specific products have been developed to finance buildings after 2020, as required by the EU
public buildings under public-private partnership Building Directive.
(PPP) arrangements between public authorities and
private concessionaires. The EBRD has introduced
a PPP framework for the development, construction
and operation of public hospitals under long-term,
concessional agreements with private operators
in Turkey. In 2014, Turkey’s Ministry of Health PPP REGION Bulgaria
programme launched with total investments of €12
EBRD FINANCE Senior loans of an aggregate of
billion to deliver more than 60 new hospitals with
SUMMARY over €100 million allocated to
more than 50,000 beds. The EBRD offered financing banks in Bulgaria.
on commercial terms under its A/B financing structure
to interested concessionaires upon conclusion of FINANCIAL RESULTS Over €99 million signed with banks;
specific hospital PPP tenders. over €84 million disbursed by
The EBRD also provided the Turkish health banks to 53,389 borrowers.
ministry with technical assistance for value-for-
ENERGY SAVINGS 240,132 MWh per year.
money analysis on PPP structures, as well as
contract support to train a dedicated PPP unit CO2 SAVINGS 249,680 tonnes of CO2 equivalent
inside the ministry for monitoring. As part of the per year.
EBRD engagement, the Bank assisted the ministry
in establishing advanced technical requirements COST SAVINGS €19 million a year (according to
the average electricity tariffs for
at levels of best industry practice. These include
households in 2015 as set up by the
advanced thermal protection; efficient mechanical State Energy and Water Regulatory
and electrical services; on-site trigeneration; use of Commission Committee).
renewables; advanced, open-protocol, integrated

6 GREEN BUILDING INVESTMENTS

building and energy management systems; water- RAISING STANDARDS THROUGH
saving techniques and other sustainable measures, SUSTAINABLE PROPERTY FUNDS
leading to state-of-the-art environmental performance
Sustainable property funds are based on a set of
and ultimately to lower operation costs.
criteria encompassing all aspects of sustainability and
By mid-2017 the EBRD had invested more than
resource efficiency that are applicable to a portfolio of
€762 million under the hospital PPP framework,
buildings. After an initial sustainability assessment,
including €570 million of climate and resource
a plan for sustainability-focused upgrades is
efficiency investments. Following the success of
established, along with measurable objectives that
several hospital projects, the EBRD is currently
align with and exceed national targets. Sustainability
working with national authorities to replicate the
performance assessment is conducted by an
hospital PPP framework in other countries of
independent and accredited third party.
operations, including Croatia, Kazakhstan and
Building occupants are involved and contribute
Romania, and will also consider extending the
to the resulting environmental performance
approach to other types of public buildings.
improvements in a number of ways, depending on
the type of building. Examples include the use of
MAKING RETAIL MORE SUSTAINABLE green leases in buildings with commercial tenants,
community engagement plans for student or other
Retail is one of the most energy-intensive building
accommodation assets, and awareness-raising
sectors, with high levels of energy consumption
activities in the hotel and lodging sector. In addition,
year-round for air conditioning, heating, ventilation,
a resource-efficiency facility management contract
lighting and food refrigeration. In the countries where
can ensure that a committed and professional
the EBRD operates, energy performance benchmarks
management team makes optimal use of building
show that energy use in retail is four times higher
infrastructure during the operational stage.
than in other building sectors (such as residential and
office), and almost twice as high as retail buildings in
developed markets.
CASE STUDY
The EBRD was the first international financial
HINES POLAND SUSTAINABLE INCOME FUND
institution to develop a dedicated approach to
promoting energy efficiency in retail buildings. As of
In 2014 the EBRD assisted Hines Poland – a
mid-2017 the EBRD had provided €550 million for
privately owned Polish real estate investment
green retail investments in 15 corporate projects in
firm with a presence in 19 countries – in the
its countries of operations.
development of the first green property fund in
In addition to financing, the EBRD provides
the Bank’s central and eastern European region.
technical assistance for retail projects, including
With a capital commitment of €50 million, the
identification and assessment of green investment
EBRD is one of the largest partners of the Hines
plans, capital appraisal and development of
Poland Sustainable Income Fund, which was
smart-retail store concepts that incorporate best
valued at €155 million at final closing. The fund
international practices. All aspects of the building
aims to raise standards of business conduct
that are important for higher environmental
through sustainability improvements to its
performance are considered, including the design
acquired assets. Requirements include: (i) making
and quality of building infrastructure, professional
sustainability improvements to existing buildings,
facility management and engagement with building
taking into account best international practice;
occupants (commercial tenants, residents and so on).
(ii) introducing sustainability-focused facility
To facilitate green investments in retail, the
management at asset and fund level; (iii) targeting
Bank introduced the Sustainable Enterprise and
opportunities for more efficient and less resource-
Environmental Diagnostic (SEED) toolkit in 2015,
intensive use of buildings by their occupants;
which provides quick screening and benchmarking of
and (iv) documenting fund achievements with
retailers in EBRD countries of operations. The Bank
internationally recognised certification, following
offers further assistance by conducting feasibility/
LEED or BREEAM schemes. Fund activities are
pre-feasibility studies of specific technologies (for
expected to result in the emergence of new
example, efficient mechanical and electrical services,
policies (such as green leases, sustainable facility
energy management systems, logistic management
management) and standards in the Polish market.
tools, water and waste management techniques)
The concept is also expected to be replicated
and establishing key performance indicators for
throughout central and eastern Europe.
resource efficiency. The Bank has assessed dozens
of retailers, including large, multinational chains
with hypermarket, supermarket or convenience
store formats, as well as smaller local chains with
convenience or discount stores. Areas of improvement
include: advanced energy efficiency in stores and
warehouses, modern logistic infrastructure, resource
efficiency in the supply chains, energy and water
management, environmental management, carbon
footprint reporting and so on.

GREEN BUILDING INVESTMENTS 7

PROMOTING GREEN ECONOMY AND CAPITAL Other important aggregators for financing energy
MARKET GROWTH THROUGH GREEN-LABELLED efficiency investments in the building sector include
PROPERTY BONDS private energy service companies (ESCOs). The EBRD
recruits private ESCOs to design, fund, maintain and
The EBRD has been a leading issuer of Green
operate energy efficiency improvements for public
Bonds since 2010. The proceeds of Green Bonds
beneficiaries. These investments are repaid from
are earmarked to support projects in energy
the resulting savings, often through a performance-
efficiency, renewable energy, water management,
based contract. Since savings are realised over a long
waste management and environmental services
period, the ESCO can on-sell expected receivables (a
and sustainable public transport. In 2017 the
stream of future energy savings) and refinance itself
EBRD’s Green Project Portfolio included more than
for future investments.
388 projects worth €3.8 billion. The EBRD’s largest
The EBRD also seeks to promote demand-side
green issue of US$ 650 million three-year bonds
energy efficiency financing through utilities. Launched
came in July 2016.
in 2015 and expected to run until 2018, the DESIREE
The Bank also supports capital market
GAS project aims to support the transition from
transactions by purchasing green-labelled and climate
carbon-intensive electricity to natural gas in Bulgarian
bonds issued by clients. In late 2016 the EBRD
households. With the goal of achieving energy savings
backed a €288 million bond issued by Rönesans
of 142,000 MWh per year, this project provides
Holding to finance a state-of-the-art PPP hospital in
funding, grants and technical assistance to support
Elazig, Turkey, making it the country’s first greenfield
gas installations, high-efficiency gas water heaters
infrastructure project bond. To enhance credit for
and space heating in single-family and multi-family
the corporate client, the Bank pledged to provide
homes. Furthermore, the project is expected to
€89 million as interim liquidity to mitigate the risks
achieve additional yearly energy savings of 70,000
associated with construction and operation.
MWh by switching from coal, biomass and oil to
Drawing on these experiences, the EBRD is
natural gas, resulting in higher combustion efficiency.
actively supporting green capital market development
in its countries of operations by offering corporate
clients valuable assistance, knowledge and guidance CASE STUDY
to turn their normal bonds into green and/or climate LATVIAN BALTIC ENERGY EFFICIENCY FACILITY
bonds. The Bank is also working with the Climate
Bond Initiative, participating in technical working The Latvian Baltic Energy Efficiency Facility
groups, including one specifically for buildings, and (LABEEF) is a fund supported by the EBRD
discussing standards and requirements for green- that was established to purchase receivables
labelled bonds in different sectors. (a stream of future revenues) from completed
and certified ESCO projects. This model allows
TARGETING GREEN BUILDING AGGREGATORS resident associations and managers of public
WITH STRUCTURED FINANCE PRODUCTS buildings to engage with ESCOs to carry out
energy efficiency upgrades, for which ESCOs can
The EBRD endorses a wide range of structured access financing. The fund’s approach enables
finance products through non-financial aggregators sustainable financing for energy efficiency
to unlock the considerable potential of energy projects without relying on grant funding, and
efficiency in the fragmented building sector. In 2016, does not place a financial burden on homeowners
the Bank extended a loan of up to €50 million to the and/or occupants. It is worth noting that
Lithuanian Public Investment Development Agency to 70 per cent of Latvians reside in Soviet-era
finance demand-side energy efficiency investments buildings with heat losses of over 50 per cent.
in residential apartment buildings. This project aims Under LABEEF’s model, residents do not have
to reduce energy waste and CO2 emissions by about to make extra payments for refurbishment and
40 per cent. insulation works, as these costs are covered from
the reduction in their energy bills. In most cases,
these energy efficiency upgrades are combined
with structural repairs designed to extend the life
of buildings, hence improving their value.