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With  climate   change happening earlier and more rapidly  than expected, e n e r g y – e ff i c i e n c y  investments represent both an urgent need and a significant opportunity. The recently published IPCC Report on Global Warming estimates that more than US$ 2 trillion are needed annually to limit global warming to 1.5 degrees – a significant part of this coming from energy efficiency and clean technology investments.

Some of the greatest opportunities for such investments lie in the EBRD regions, which include Central and Eastern Europe, Central Asia, North Africa and the Middle East. Owing to a legacy of industry-heavy economies with ageing and carbon-intensive infrastructure, the region is four times as energy-intensive and five times as carbon-intensive as the EU average.

With a deep understanding of the opportunities and challenges facing the EBRD countries, we have developed a unique business model to mainstream energy efficiency across all

sectors of the economy. Our approach combines energy-efficiency investments with technical support as well as donor-funded concessional finance, as needed, to overcome market barriers.

In addition, we work with governments and the private sector to create business environments that promote investments in energy efficiency.

Over the past decade, we have invested €22 billion in energy efficiency projects throughout the EBRD regions. Ranging from large corporations and small-and medium-sized enterprises (SMEs) to cities and local governments, our clients are as diverse as the projects they undertake.

ENERGY EFFICIENCY IMPROVEMENTS IN THE CORPORATE SECTOR

Last year,    we financed energy-efficiency  upgrades at Ukraine’s largest agricultural holding, Astarta. Through a US$ 25 million loan and donor-funded technical support we helped the company identify

opportunities to improve energy and resource efficiency, including various energy-saving measures at operational level and modern silos to replace old floor storages. Combined, these measures are reducing natural gas consumption by 750,000 m3, greenhouse gas emissions by 1,600 tonnes and grain losses by 3,500 tonnes a year.

This project represents a milestone in the company’s modernisation and sustainability efforts. In 2008, the EBRD funded Astarta’s first energy-efficiency programme, which reduced gas and coal consumption by 30 and 20 per cent, respectively. This project allowed the company to sign two carbon-credit   agreements   worth €1 million with the Multilateral Carbon Credits Fund. More energy efficiency investments followed, making the company the most competitive sugar producer in Ukraine today.

BIG ENERGY SAVINGS FOR SMALL AND MEDIUM-SIZED BUSINESSES

The EBRD has also developed an innovative approach to supporting energy-efficiency projects by SMEs, which form the backbone of the economies in most countries where we invest. Through our Green Economy Financing Facilities (GEFFs), we are providing credit lines to local partner banks who, in turn, on-lend the funds to small businesses and households for energy-efficiency investments. As part of the programme, we help partner banks develop financial products, train bank staff and assist loan officers and their clients to identify energy-efficiency investment opportunities.

An  example   of   a GEFF energy-efficiency project is a medium-sized company in Poland that produces tools, customised machine parts and plastic welding for the automotive sector. Recently, the firm invested in a

€90.000 computer numerical control (CNC) machine, which helps optimise energy use by

automating processes. The project resulted in energy savings of 39.3 MWh per year and annual CO2 emissions reductions of 12.4 tonnes.

The first Polish GEFF was launched in 2011 and has been extended several times since. The scope of the programme has also been extended to the residential sector and leasing companies. Currently, we are engaging with partner banks to develop capital market products with a focus on energy efficiency in buildings, industry and the commercial sector. These transactions are bringing Polish banks one step closer to issuing their first green bonds.

IMPROVING ENERGY EFFICIENCY IN CITIES

In the municipal sector, we have developed the EBRD Green Cities programme, a holistic and comprehensive approach to help cities identify, prioritise and connect their environmental challenges with sustainable investments and policy measures. Whilst the programme also supports renewable energy, waste reduction and climate resilience projects, a significant part of the funding is used for energy-efficiency projects in water and waste water, urban transport, district heating, buildings and solid-waste management.

In a recent EBRD Green Cities transaction, the Bank provided €10 million to the government of Bosnia and Herzegovina to fund energy efficiency improvements at the Zenica cantonal hospital. The investment will finance improvements to the building, the installation of energy-efficient, gas-fired boilers, the rehabilitation of the heat distribution system and the introduction of adequate central ventilation and cooling systems. The works will also include the construction of a 2,800m2, energy efficient extension to provide adequate space for all hospital departments. The project is expected to reduce CO2 emissions by an estimated 5,818 tonnes per year.

TRANSITIONING TO A GREENER FUTURE

In coming years, energy-efficiency investments will remain a priority for the EBRD under its Green Economy Transition (GET) approach. Launched in 2015, the GET approach seeks to increase EBRD green financing from 24 to 40 per cent of annual business volume by 2020. We are well on track, which does not mean we can rest on our laurels. As the IPCC report made it absolutely clear : Urgent action is needed now.

By Josué TANAKA,Managing Director, Operational Strategy and Planning, Energy Efficiency and Climate Change

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