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Cohesion Policy support for Sustainable Energy

Use of Structural Funds in the area of energy efficiency and housing

Brussels, 27 November 2012

Maud SKÄRINGER

European Commission

Directorate-General for Regional and Urban Policy│ 1

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1. Cohesion Policy support for Sustainable Energy 2007-2013

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Cohesion Policy 07-13

(€ 347 billion)

European RegionalDevelopment Fund

(ERDF)Cohesion Fund European Social Fund

(ESF)

DG REGIO DG EMPLOYMENT

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Cohesion Policy allocations to Sustainable Energy 2007-2013: EUR 10 billion

• Energy efficiency: EUR 5.1 billion

• Renewable energy: EUR 4.9 billion

• Biomass: EUR 1.8 billion• Solar: EUR 1.2 billion

• Hydroelectric, geothermal, other: EUR 1.2 billion

• Wind: EUR 0.6 billion

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Allocations to Energy Sector as % of total allocations per MS 2007-2013

(2009 figures)

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Planned Cohesion Policy

allocations to Energy

Efficiency 2007-2013:

EUR 5.1 billion (increased

from EUR 4.2 billion

at the outset)

71.5 % allocated to specific

projects (including revolving

funds) by end 2011

M SEU Allocated decided

amount (€)(B)

Total projects selected (2011 AIR)

EU Amount (€)(C)

Rate of selection %

(C) / (B)

AT 6,156,013 17,383,781 282.4%

BE 18,976,147 9,675,338 51.0%

BG 258,104,621 74,144,427 28.7%

CY

CZ 942,214,473 342,658,632 36.4%

DE 373,182,646 307,047,003 82.3%

DK

EE 28,760,241 27,844,967 96.8%

ES 110,048,101 33,326,165 30.3%

FI 24,243,917 6,926,847 28.6%

FR 289,167,688 177,008,914 61.2%

GR 71,170,000 492,363,482 691.8%

HU 328,531,227 163,856,263 49.9%

IE 19,000,000 22,346,186 117.6%

IT 838,592,232 417,305,116 49.8%

LT 370,508,149 439,300,937 118.6%

LU 504,873 1,744,838 345.6%

LV 60,220,000 106,078,878 176.2%

MT 12,550,000 3,096,758 24.7%

NL 34,250,000 19,917,049 58.2%

PL 499,012,133 389,379,855 78.0%

PT 74,200,883 49,599,067 66.8%

RO 253,241,727 60,131,969 23.7%

SE 9,173,788 1,057,737 11.5%

SI 105,700,000 73,707,906 69.7%

SK 78,584,184 64,760,737 82.4%

UK 150,657,204 167,360,699 111.1%

CB 119,642,025 164,027,992 137.1%

EU27 + cross-border

5,076,392,272 3,632,051,543 71.5%

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Energy Efficiency in the "Recovery Package"

• Amendment to ERDF regulation (May 2009)

• Up to 4% of the national ERDF allocation can go to energy efficiency and renewable energy in housing

• Member States define eligible categories of existing housing, to support social cohesion

• Further regulatory amendment to facilitate the use of innovative financial instruments in this area (June 2010)

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Why focus Cohesion Policy support on Sustainable Energy in Buildings?

A WIN-WIN-WIN OPPORTUNITY:Regional Development/Social Cohesion/Energy Savings

• Creating new and sustainable jobs;

• Building local and regional capacities;

• Creating local opportunities for R&D and innovation;

• Lowering energy consumption and improving security of energy supply;

• Reducing energy costs and alleviating energy poverty (in the case of residential buildings);

• Improving the quality of residential/public/ commercial buildings;

• Reducing greenhouse gas emissions and improving the local environment.

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Energy Performance of Buildings Directive

• Setting the framework for investments through:

• Minimum energy performance requirements (EPRs) for new buildings and buildings undergoing major renovation

• Cost-optimal methodology requiring minimum EPRs to be set at cost-optimal levels

• Energy performance certification of buildings and inspections for heating and air-conditioning systems

• System requirements for new, replacement and upgrading of technical building systems at least for heating, hot water, air conditioning and ventilation

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… while ensuring an integrated approach!

• Importance of energy efficiency of buildings, but linking to – and ensuring coherence with –general elements which ensure the investments' sustainability (with respect to occupation and obsolescence)

• Importance of the other investments which determine the environment of buildings or houses: public spaces, shopping areas, schools, accessibility of transport and services, etc.

• Modernising houses and buildings is a "necessary but not sufficient" condition to guarantee the quality of life in cities

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Refurbishment of social housing France

� Refurbish most energy consuming social housing units

� Be exemplary and trigger a multiplier effect

� Affect a large number of dwellings (some 110 000 foreseen)

� Early results show creation / maintenance of local jobs, mainly in SMEs, and heating fees reduced by 40% on average

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Revolving fund for energy efficiency in housing Estonia

• Switch from grants to a revolving fund

• KredEx (Credit and Export Guarantee Fund of the State) supports this

• Innovative scheme, help from KfW

• Started 06/2009

• 03/2011: 231 contracts with multi-apartment buildings, total € 18,4 million (average € 81.100, saving 33%)

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Revolving fund for energy efficiency in housing Estonia

KredEx (Fund)

EUR 49 Million(+ 15% self-financing,

total 57 mn €)

ERDF

EUR 17 Million

Development Bank (CEB)EUR 29 Million

Swedbank SEB

3. Favorable funding to the commercial banks, intrest 4% to end-beneficiaries

Apartment BuildingApartment Building

Apartment Building

Apartment BuildingApartment Building

Apartment Building

1. ERDF to equity of the fund

2. Additional funding up to 50% of total

4. Loan to theapartment associations. Commercial Banktakes the risk of the lenders

State guarantee

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JESSICA fund in Lithuania• JESSICA Holding Fund amounts to € 227 million:

• € 127 million ERDF • € 100 million national co-financing• Expected later: some funds by commercial bank

• Implementation started June 2010

• Number of eligible apartment blocks: 24 000

• Estimated cost to renovate one apartment block (60 apartments @ 50 m2): 290 000 Euro

• After the modernization, one house would halve energy consumption and save 125 MWh a year

• This example:• 45 apartment multi-family building• Insulated external walls and roofWindows replaced

• Glazing of balconies• Modernization of heating substation & heating systems

• Energy efficiency improvement of 60 %

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Further assistance/experience• Number of innovative projects demonstrated under ELENA Facility and Intelligent Energy Europe (IEE) Programme, e.g. "FRESH" on social housing (http://www.fresh-project.eu/)

• Guidelines for Cohesion Policy Managing Authorities (MAs) on evaluation of EE projects in buildings under development (available in 2013)

• EIB-EPEC is on awareness-rising tour for MAs

• Specific action on capacity building of MAs foreseen in the IEE WP 2012

• Build-up skills: Potential for expansion through the ESF (MS roadmaps for workforce qualification)

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2. Commission proposal for Cohesion Policy 2014-2020 – Aspects related

to Sustainable Energy

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Cohesion Policy 2014-2020• Adoption of Commission proposal in October 2011

• Mission:

• Reduce disparities between Europe's regions strengthening economic, social and terrritorial cohesion

• Contribute to the Europe 2020 Strategy for smart, sustainable and inclusive growth

• Need to increase the performance and impactof the funds:

• Ex-ante conditionalities

• Thematic concentration of funds: 11 thematic objectives linked to the Europe 2020 Strategy

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Europe 2020

Europe 2020

inclusive

sustainable

smart

Cohesion Policy

Thematic Objectives1. Research and innovation

2. Information and Communication Technologies

3. Competitiveness of Small and Medium-Sized Enterprises (SME)

4. Shift to a low-carbon economy

5. Climate change adaptation and risk management and prevention

6. Environmental protection and resource efficiency

7. Sustainable transport 8. Employment and support for labour mobility

9. Social inclusion and poverty reduction

10. Education, skills and lifelong learning

11. Increased institutional capacity and effectiveness of public administration

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Less developed regionsDeveloped regions & transition regions

60% 20%

6%

44%

Concentration of ERDFConcentration of ERDFResearch and Innovation Energy efficiency and

renewable energySMEs competitiveness

No more ceiling for investing in EE in housing (currently maximum 4% of ERDF)

⇒ Potential minimum € 17 bn for EE & RES in 2014-2020

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Investments in Sustainable Energy in 2014-2020 Cohesion Policy

Supporting the shift towards a low-carbon economy in all sectors – 5 investment priorities proposed:a) Promoting the production and distribution of RES

b) Promoting EE and RES use in SMEs

c) Supporting EE and RES use in public infrastructures and in the housing sector (only ERDF)

d) Developing smart distribution systems at low voltage levels

e) Promoting low-carbon strategies for urban areas

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Key actions for Investments• Innovative renewable energy technologies, in particular

technologies mentioned in the SET-Plan and in the Energy Roadmap 2050, along with 2nd and 3rd generation biofuels

• Supporting marine-based renewable energy production

• Investment in the wider use of Energy Performance Contracting in the public buildings and housing sectors

• Energy efficiency and renewable heating and cooling in public buildings, in particular demonstration of zero-emission and positive-energy buildings, and deep renovation of existing buildings to beyond cost-optimal levels

• EE and RES in SMEs, including information campaigns

• Integrated low-carbon strategies and sustaianble energy action plans for urban areas, including public lighting systems and smart grids

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Implementation Principles – Energy

• Mainly private sector investment. Ensure that public funding complements private investment, leveraging it and not crowding it out

• EE: Consider creating value for energy savings through market mechanisms before public funding (ESCOs…)

• Financial instruments to be used where potential for private revenue or cost savings is large

• For physical investment, grants to be used primarily:

• to address market failures

• to support innovative technologies

• to support investments beyond cost-optimal EE performance: ensure energy savings and GHG emission reductions above "business as usual"!

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Innovation for Sustainable Growth

• Smart & Sustainable = 2 sides of same coin

• Future Cohesion Policy: Ex-ante conditionality on 'National or regional research and innovation strategies for smart specalisation'

• Research & Innovation (R&I) needed in the area of sustainable energy

• A number of MS and regions expected to include energy R&I in forthcoming strategies

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• Guide issued in November 2012

• How to integrate eco-innovation, RES, EE… in the Research & Innovation Strategies for Smart Specialisation (RIS3)

• Why it makes sense

• What authorities & stakeholders can do

• Collection of good practices

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Sustainable Urban Development

• Aim = Support integrated actions to tackle the economic, environmental, climate and social challenges affecting urban areas

• ERDF = Increased focus on sustainable urban development:

• To be achieved through earmarking of a minimum of 5% of national ERDF resources for Sustainable Urban Development

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Investments insustainable energy

for socio-economic development through Cohesion Policy (CP)

Research & InnovationRegional / National R&I Strategies for Smart Specialisation Specific CP

funding on sustainable energy

Integrated Sustainable

Urban Development

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Common Strategic

Framework

PartnershipAgreement

Operational Programmes

Projects

Regulations Proposed by Commission

Annex I to CPRCommission delegated act

Prepared by MS in dialogue with Commission, approval if Commission observations taken into account

Drawn up by MS in cooperation with partners

MS, except major projects, where documentation submitted to Commission, approval needed

Increasing M

S competence

Thematic objectives contribute to EU 2020

Translates objectives and targets of EU 2020 into indicative actions of high EU added value

Alignment with EU 2020: evaluation, results expected, indicative allocation by thematic objective

Strategy consistent with ESF, thematic objectives, investment priorities, etc.

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More information

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Cohesion Policy Project Examples:http://ec.europa.eu/regional_policy/projects/stories/index_en.cfm

Policy Learning Database:http://ec.europa.eu/regional_policy/cooperation/interregional/ecochange/studies_en.cfm?nmenu=5

Expert Evaluation Network reports on RES and EE in housing:http://ec.europa.eu/regional_policy/information/evaluations/index_en.cfm#1

COCOF technical meeting on sustainable energy March 2011:http://ec.europa.eu/regional_policy/conferences/energy2011/index_en.cfm

Regions for Economic Change Conference May 2010 Ene rgy efficiency workshop (2A):http://ec.europa.eu/regional_policy/conferences/sustainable-growth/programme_en.cfm?nmenu=4

Commission proposals for Cohesion Policy 2014-2020:http://ec.europa.eu/regional_policy/what/future/proposals_2014_2020_en.cfm

List of Cohesion Policy funds Managing Authorities:http://ec.europa.eu/regional_policy/manage/authority/authority_en.cfm

Practical Guide to EU funding opportunities for Res earch and Innovation:http://cordis.europa.eu/eu-funding-guide/home_en.html

Smart specialisation platform:http://s3platform.jrc.ec.europa.eu/home

ICT-specific guide on energy efficiency:http://ec.europa.eu/information_society/activities/sustainable_growth/ict4ee_wiki/index_en.htm