The European Bank for Reconstruction and Development was set up in 1991 to help regenerate former central and eastern Europe. Part of its work today is involved in improving energy efficiency, particularly in the context of the Paris Climate agreements.
In a new report EBRD says that to reach minimum targets defined in the Paris Agreement, rates of basic green renovations of existing buildings in these countries must reach 6 to 8 % by 2040 (to exceed these standards and achieve nearly zero carbon performance, rates of advanced, deep renovations would need to reach 1.5 % by 2025 and 2 % by 2040).
However, these countries are far behind renovation targets: only 1% of existing buildings have been renovated to meet minimum standards, and renovation efforts typically fail to exploit the full potential of energy efficiency.
Although many new buildings in the EBRD’s countries of operations are three to four times as energy efficient as existing ones, a high proportion of existing buildings are not and will still be standing in 2050.
This illustrates the potential but also the challenge as renovations and new buildings will cost billions: For example, in 2015 the building renovation market in the European Union was valued at €109 billion alone, according to the EBRD paper.
Green buildings represent a major global investment opportunity the report finds. The potential is particularly large in the Bank’s countries of operations where a high proportion of existing buildings is still behind modern standards in energy efficiency.
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.
Under the GET approach, the EBRD has financed more than 200 large-scale projects for the development, upgrade and refurbishment of more than 62,000 building assets, with overall building area exceeding 25 million square metres. These investments have enabled €15 billion of green building investments, including €2 billion from the EBRD. GET investments in buildings vary from a few thousand euros to over €100 million according to the overall project size.
The EBRD launched the Green Economy Transition (GET) approach in 2015 to put investments that bring environmental benefits at the heart of our mandate.
Preserving and improving the environment are central features of a modern, well-functioning market economy and therefore key goals of the transition process that the EBRD was set up to promote.
Building on a decade of successful green investments, the GET approach seeks to increase the volume of green financing from an average of 24 % of EBRD annual business investment in the 10 years up to 2016 to 40 % by 2020.
EBRD sustainable investments mitigate and/or build resilience to the effects of climate change and other forms of environmental degradation. Expanding its initial focus on energy efficiency and renewable energy projects, the EBRD has already moved into the areas of water and materials efficiency and climate adaptation.
The GET approach further expands on this experience.
The GET uses the full range of the EBRD’s financial instruments, including direct EBRD financing and syndication in the form of private, non-sovereign and sovereign guaranteed loans, direct equity, equity funds and Green Economy Finance facilities (GEFFs).
The approach builds on a tried and tested business model of combining investments with technical assistance and policy dialogue. Technical assistance can include market analysis and resource audits as well as training and awareness-raising.
As part of its policy dialogue activities, the EBRD works with governments to support the development of strong institutional and regulatory frameworks, a prerequisite for sustainable investments.
“The EBRD’s GET approach offers a unique blend of finance, as well as policy and technical support, to help generate growth in the green building sector. We are looking forward to the discussions in Warsaw and learning about the latest developments in the growing green building sector,” said Terry McCallion.
The GET approach seeks to increase the volume of green financing from an average of 24 per cent of EBRD Annual Business Investment in the 10 years up to 2016 to 40 per cent by 2020. A central part of this investment will be in green buildings.