© OECD/IEA 2017

Buildings investment and the

policies that drive it

Brian Motherway

@BrianRMotherway

© OECD/IEA 2017

Energy efficiency investment is growing

Energy efficiency investment grew 9% in 2016, with grow strongest in China.

The buildings sector continues to dominate global investment

0

50

100

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2015 2016

USD billionsBy region

China Europe North America Other

58%

16%

26%

By sector

USD 231 billion

BuildingsTransport

Industry

Energy efficiency investment by region and sector

© OECD/IEA 2017

Over the past three years, energy efficiency investment in the buildings sector increased steadily,

growing by 8% in 2015 and 12% in 2016

Incremental energy efficiency investment in buildings,

2015-2016

Building investment has seen big growth in recent years

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Envelope HVAC Lighting Appliances

USD billions

2015

2016

© OECD/IEA 2017

Green bond issuance is experiencing rapid growth

Certified green bond issuance, 2011-2017

Green bonds

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140

2011 2012 2013 2014 2015 2016 2017

US

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illio

ns

Renewable energy andother low carbon projects

Energy efficiency

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France and China lead green bond issuance for energy efficiency

Certified green bond issuance for energy efficiency, 2011-2017

Green bonds for energy efficiency

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Billions

© OECD/IEA 2017

ESCO growth is driven by policy

ESCO revenue by region, 2016

Energy Service Company (ESCO) Development

6.6

2.7

15.1

0.3

1.9United States

European Union

China

India

Other

26.8 Billion

© OECD/IEA 2017

Chinese ESCO and investment incentives

• Strong targets

- National 5-year plan (2011-2015)

energy efficiency target of 16%

reduction in energy intensity

• Direct financial awards and tax

incentives

- Dedicated Energy Savings Funds (ESF)

• Established frameworks

- Directives for ESCOs

- Favorable accounting system

Chinese ESCO revenue , 2011-2016

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2011 2012 2013 2014 2015 2016

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© OECD/IEA 2017

Targeting subsidies to maximise impact

Comparison of annual expenses by households and Mexican government with analogue television and decoder

versus digital television

The Mexican government is providing 14 million LED TVs to low-income households. The USD 102.4 million cost is expected to be recovered through avoided consumption and reduced subsidies

© OECD/IEA 2017

Buildings energy efficiency in Western Balkans (REEP Plus)

• The objective of REEP Plus is to create a sustainable market for energy efficiency in

the Western Balkans

• Grants and direct funding of approximately EUR 50 million is provided for

municipalities from development banks (EBRD, KfW) and governments (Austrian

Federal Ministry of Finance)

• Financing facilities via local banks established a dedicated credit line

• Specific measures are dedicated for ESCO support and policy development

• Overall REEP implementation led to a large increase in projects delivered/planned

© OECD/IEA 2017

ESCOs in South Korea

• Extensive government support in the form of policy and finance

- Tax credits, review of existing policy, long-term and low interest loans

• Established implementing agency (KEMCO, now KEA) to review and evaluate

proposed projects

• In 2012 approx. USD 502 million in funding was provided

• Resulted in a savings of 550 kilo tons of oil equivalent (11 kWh saved per USD spent)

Number of registered

ESCOs, South Korea

© OECD/IEA 2017

Impact of Refrigerator Standards on Energy Consumption in the US

ACEEE, 2017. Energy-Saving States of America: How Every State Benefits from National Appliance Standards

© OECD/IEA 2017

The broad policy agenda

• Orienting incentives and removing barriers

• Addressing the diffuse investments

• Mobilizing supply and demand of solutions

• Actively working to build markets

• Valuing the full benefits

© OECD/IEA 2017

Concluding points

• There are many types of energy efficiency investments, requiring many types of

policy interventions

• There often remains a ‘language barrier’ between sources of capital and EE

opportunities

• Public sector leadership is key to mobilise private sector finance

© OECD/IEA 2017

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