Promoting Energy Efficiency Investments for Climate Change Mitigation and Sustainable Development (2012-2014)
Increasing interest in energy efficiency
In recent years, both developed and developing countries have paid greater attention to improving energy efficiency (EE) because of the rising prices of electricity and the growing demand for finite and diminishing fossil fuel resources. Improved energy efficiency is one of the most cost-effective ways to reduce global greenhouse gas emissions. It also enhances energy security of the countries by reducing energy demand. To date, energy efficiency has become one of the priority fields in the energy, economic and climate change policies of many countries globally. Notably, an overview of the energy efficiency market in the UN Regional Commissions (RCs) shows that it is mature in developed economies across the RCs (e.g., Japan, Western European countries, Canada, and the US). In these countries, the energy efficiency market is dominated by energy-efficient technologies and sustainable energy efficiency services (supply and demand) because of the specific energy efficiency policy and regulatory instruments developed and implemented. These instruments include awareness raising and information campaigns, and capacity building for energy efficiency experts, financial institutions staff and government officials.
Energy efficiency improvements are badly needed, also because this is the only self-financing method of reducing GHG (greenhouse gases) emissions. However, at present, financing energy efficiency in all Regions is still a niche industry. Projects may have high internal rates of return (IRR), but do not capture the attention of investors or commercial banks because most projects are small and unfamiliar to local lending institutions. Even high IRRs cannot compensate for the high transaction costs banks incur to undertake the due diligence for small projects and to establish political, financial and institutional support for them. In addition, many national experts know the technical fixes needed to improve energy efficiency in their municipalities, power stations or factories but they do not know how to formulate investment projects so that they meet banks rules, standards and criteria. Bearing in mind the lack of specific incentives in most of the developing countries to introduce the relevant regulatory, policy and institutional reforms in the energy sector, all these barriers represent a forbidding environment for realizing energy efficiency investments.
Moreover, the current policy and regulatory framework in place fosters the development and introduction of more efficient technologies. Furthermore, economies in transition (particularly Eastern European countries, most of the countries in Asia and in Latin America) have established an energy efficiency market which is growing because the governments of these countries have coupled their national initiatives with sub-regional, regional and international cooperation initiatives in the field of energy efficiency. However, in many countries, the regulatory and policy framework for energy efficiency market formation has not been developed and/or implemented yet. For example, many countries do not have dedicated energy efficiency legislation. These countries need to take appropriate actions, with the technical support of international community in order to create the conditions conducive to energy efficiency market development.
Towards worldwide cooperation
A number of countries worldwide have expressed their interest in adopting energy efficiency measures in sectors with high carbon dioxide emission levels. For this project, each United Nations Regional Commission would select pilot countries that are (i) giving priority to energy efficiency in their national policies and services, and (ii) seeking to participate in the project (these will be the countries with developing energy efficiency markets and products). A regional approach to the project will optimize resources, create synergies and enable the building the partnership among regional and international experts. Additional resources would have to be leveraged to replicate this project in other countries in different parts of the world. Cooperation among all UN RCs and with UN-Energy is essential.
The proposed project will be led by the UNECE and jointly implemented with other United Nations Regional Commissions, United Nations Industrial Development Organization and the Department of Economic and Social Affairs within the UN-Energy framework.
The main objective of the project is capacity building for development of energy efficiency (EE) investment projects. It will assist UN Regional Commissions (RCs) to strengthen capacities of their member states to attract investments in energy efficiency projects in the context of climate change mitigation and sustainable development.
UNECE experience combines technical assistance in design and implementation of investment projects, advice on policy and institutional reforms, and direct links with financial institutions (e.g. banks and investment funds) in order to establish mechanisms, which are able to fast-track the development of self-sustained markets for energy efficiency.
The project will:
The project will provide case studies on the experience of policy reforms, regional trainings, workshops and seminars focusing on policy reforms and investment projects development.
The project builds on the UN experience and recommendations in the area of sustainable energy development and follows the work undertaken under the Financing Energy Efficiency Investments (FEEI) for Climate Change Mitigation project and other projects of the Energy Efficiency 21 (EE21) Programme.
Project duration period:
3 years (2012-2014)
UNECE Energy Efficiency team:
Mr. Viktor Badaker, project manager, email@example.com
Mr. Oleg Dzioubinski, EE21 program manager