Programmes and Projects: EBRD and the SEI - Sustainable Energy Initiative

Further information: www.ebrd.com/sei/

Industrial Energy Efficiency Investments: www.ebrd.com/country/sector/energyef/indust.htm

The EBRD has had an environmental mandate since its inception. This commits the Bank to finance projects that are environmentally sound and sustainable, including promoting the efficient use of energy from central Europe to central Asia. The EBRD's Energy efficiency and climate change team works to develop energy efficiency and renewable energy credit lines, to promote energy efficiency in public buildings and industries and to build a carbon credit market in the countries of operations.

The Sustainable Energy Initiative (SEI) is the EBRD's specific contribution to address the climate change challenge, with a particular focus on energy efficiency. Phase 1 of the SEI has been successfully completed with results significantly exceeding its original targets.

The EBRD is further accelerating its action in climate change mitigation and adaptation by launching the next phase of the SEI - Phase 2 (2009-11). Objectives include:

• financing target range of €3-5 billion for total project value of €9-15 billion
• carbon emissions reduction range of €25-30 million tonnes per annum
• technical assistance grant funding target of €100 million and investment grant funding target of €250 million.

The SEI focuses on scaling up sustainable energy investments in the following areas:

• Industrial energy efficiency: Energy efficiency investments in highly energy-intensive industrial processes such as steel manufacturing, aluminium smelting, cement and glass production.
• Sustainable energy financing facilities: Financing facilities through local banks in the countries of operations to support energy efficiency in industrial small and medium-sized enterprises, small scale renewable energy and building energy efficiency projects.
• Power sector energy efficiency: Supplying energy efficiency investment for thermal power stations which generate the majority of energy in the region. The ageing energy infrastructure includes a large number of plants with low generation efficiency, high running costs, excessive pollution and GHG emissions. Ageing transmission networks also result in significant energy loss.
• Renewable energy: Renewable energy technology has developed slowly in the transition region and there is significant potential for both new renewable energy sources, such as wind, and for hydropower. The institutional and regulatory framework for renewable energy remains weak.
• Municipal infrastructure energy efficiency: Upgrading neglected municipal infrastructure to provide efficient district heating, public transport networks and water supply systems is central to the EBRD's mission. Greater energy efficiency can be achieved when the issues of ageing infrastructure and high energy consumption are addressed.
• Carbon market development: While the development of the carbon market could support the financing of low carbon projects, carbon market activity in the region has remained limited. The development of this market requires the creation of new institutions, clear regulatory frameworks and a critical mass of investments.

One way EBRD promotes energy efficiency improvements is through Energy Service Companies (ESCOs). An ESCO is normally a private company which assesses the potential for energy savings in a public or private client€s facilities and subsequently designs and implements energy-saving measures. ESCO guarantees energy savings; its remuneration is directly tied to the energy savings achieved. It may finance or assist in arranging financing for the operation of an energy system by providing a savings guarantee. ESCOs operate under an energy performance contracting (EPC) arrangement, whereby the ESCO implements a project to deliver energy efficiency, or a renewable energy project, and uses the stream of income from the cost savings, or the renewable energy produced, to repay the costs of the project. The EBRD takes a broad definition of an ESCO and can finance projects that may deviate from the classical definition.

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Advice: Carbon Market : CDM : Cement Industry : Ceramics, Glass and Brick Industries : Construction : District Heating and Cooling : EU ETS : Energy Efficiency in Buildings : Energy Efficient Technologies : Energy Service Companies : Funds & Finance : Heat Generation, Recovery and Use : Hydropower : JI : Power Generation and Use : Renewable Energy Technologies : Steel and Iron Industries : Wind

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