KfW-Research. Economic Observer. No. 11, December 2008.

Transcription

1 KfW-Research. Economic Observer. No. 11, December 2008.

2 CONTENTS. Introduction. 4 PROMOTION OF ENERGY EFFICIENCY IN THE SME SECTOR. Background. 7 KfW Survey on Corporate Energy Efficiency. 8 Sonderfonds Energy Efficiency in SMEs. 9 Impacts. 11 ENERGY EFFICIENCY IN THE HOUSING AND BUILDING SECTOR. Background. 13 CO 2 Building Rehabilitation Programme. 13 Impacts. 15 Approach to measure CO 2 Reduction. 17 3

3 INTRODUCTION. Protecting the climate, securing the energy supply and limiting the impact of increasing energy costs on households as well as on the competitive - ness of enterprises are central tasks for the future and a priority of European and German policy. Since the Kyoto Protocol entered into force, industrialized nations have the legally binding obligation to reduce their collective emissions of six greenhouse gases (GHG). Between 2008 and 2012 the collective GHG have to be reduced by 5.2% compared to the year Some states and communities of states have made greater commitments: The European Union will reduce greenhouse gas emissions by 8%. This reduction commitment will not be realised by all European member states at the same level. Within the European Burden-Sharing-Agreement Germany agreed to reduce the average emission of the GHG between 2008 and 2012 by 21% compared to the years 1990 resp In November 2008 the Commission emphasised the need for action to increase energy efficiency in the European Union. 2 Even if the full range of already adopted measures will be properly implemented by the EU member states the energy savings could only reach about 13% by 2020 and this falls far short of what is needed. The Commission proposes different actions. In this regard the Commission underlines the importance of an encouraging financing framework for energy efficiency projects targeted especially for households and small and medium-sized companies and mentions KfW s broad scale programmes in the housing sector as an 1 Two different reference years with respect to different GHGs. 2 Communication from the Commission, Energy efficiency: delivering the 20% target, Brussels (COM(2008)772 final) and MEMO/08/699, Brussels 13 November already existing best-practice example. In addition to the reduction in CO 2 emissions KfW s financing schemes provide for thousands of jobs, mainly in the construction industry. The reduction of GHG emissions requires contributions from all parties: private households, enterprises, power plants and from the transportation sector. Examples of actions to be taken are heat insulation through build - ing refurbishments, more efficient heating, higher use of renewable energies and the modernisation of existing power plants. Climate protection is a primary objective that extends across all KfW s fields of activity. Yet promotional measures targeting environmental and climate protection are top priorities not only for Germany: currently KfW is investing 20% of its entire financing volume in national and international environmental projects. And in developing countries, KfW Entwicklungsbank has become one of the largest investors in renewable energies. KfW applies various instruments to contribute to the reduction of GHG emissions. Such instruments include the financing of housing, of small and medium sized enterprises (SMEs), of large projects for example biogas plants or wind parks as well as the KfW Carbon Fund. In the first two quarters of 2008 KfW Bankengruppe committed a financing volume for environmental and climate protection of approx. EUR 9.5 billion (2007: 16.6 billion, of which EUR 6.2 billion was for energy efficiency and EUR 4.4 billion for renewable energies). KfW s activities in Germany are unique in the European Union. Therefore KfW gives - in addition to the financing activities - impulses for technical, economical and institutional innovations in 4 5

4 PROMOTION OF ENERGY EFFICIENCY IN THE SME SECTOR. Europe and worldwide. For example for the design of promotional programmes KfW provides advisory services in Eastern Europe and in new member states to the European Union. Figure 1: KfW commitments for environmental and climate protection at mid-year 2008 Promotional bank/sme bank IPEX-Bank BACKGROUND. Energy experts hope that the corporate sector will significantly contribute to reaching the energy savings goal. A very obvious incentive for the cor - porate sector is that corresponding investments are often profitable. Con - siderable returns can be achieved if targeted investments in energy saving technologies are made. But especially small and medium sized enterprises are very often not aware of the potential implied in energy saving mea Development bank DEG sures. At present, energy-efficiency measures are primarily implemented by larger enterprises or enterprises in energy-intensive sectors. The following graph gives an overview of energy saving measures accomplished by enterprises in Germany. 3 Total commitment volume: million EUR Figure 2: Accomplished Energy Saving Measures This edition of the Economic Observer will have a closer look at the backgrounds, the key characteristics and impacts of two KfW programmes supporting energy efficiency measures in Germany: one targeted at small and medium sized enterprises (SMEs) and one targeted at the housing sector for the rehabilitation of existing buildings. share of enterprises 50% 49% 46% 45% 43% 41% 40% 37% 35% 35% 30% 28% 27% 25% 26% 24% 20% 15% 10% 5% 0% heat generation illumination compressed air rules of conduct air conditioning energy management heat recovery heat insulation process technology engines 3 Source: Frauenhofer Institut für System und Innovationsforschung (ISI), Marktstudie für Energieeffizienz in Industrie und Gewerbe, Bericht im Auftrag der KfW, September

5 Although SMEs are known to be highly innovative and creative they have fewer personnel when compared to large corporations to focus on identifying their energy guzzlers. In view of rising energy prices and Europe s heavy dependency on energy imports, efficient energy use will play an increasingly important role for the competitiveness of the European industry. Greater efforts should therefore be made to harness the unexploited economic energy efficiency potential. This will also necessitate the effort to mobilize innovations in energy-efficient products and services, thus raising the competitiveness of European suppliers on world markets, and to develop new future markets. Especially in the light of the current negative economic outlook increased competitiveness is of utmost importance. Investments to increase the energy efficiency of an enterprise should not be put on the back burner. This also goes for compliance with general climate goals. KFW SURVEY ON CORPORATE ENERGY EFFICIENCY. A business survey carried out by KfW in on the priority attached to energy reduction or energy efficiency in German enterprises has been the catalyst for a new promotional instrument. The respondents were largely small and medium-sized enterprises in the manufacturing and service sector in Germany. The survey revealed what factors can hamper or facilitate the implementation of corporate energy efficiency measures. The main outcomes of the survey are that financial constraints and lack of information are of 4 cf. KfW Survey on Disabling and Enabling Factors in Corporate Energy Efficiency, Publication of the Economics Department, January particular importance. Shortage of capital for investment measures and the competition with other necessary investments make the financing of corporate energy efficiency measures difficult. Many enterprises are unaware of ways they can save energy and often lack the personnel and/or time to address the issue in more detail. Despite keen interest, SMEs often underestimate the scope for energy savings. SONDERFONDS ENERGY EFFICIENCY IN SMES. In order to tackle the factors hindering SMEs to invest more in energy saving measures, namely the knowledge gap and financial constraints, KfW together with the German government introduced a new broad-scale financing scheme to promote energy efficiency investments in SMEs. Since mid-february of this year KfW offers the Sonderfonds Energy Efficiency in SMEs which consists of an advisory component (energy efficiency advice) and a financing component (ERP-Energy Efficiency Programme 5 ). Financial aid and stepping up the promotion of independent energy consultancy services are the key elements of the energy efficiency initiative. With the combination of advice plus financing the programme can contribute to a lasting improvement in corporate energy efficiency. The advisory component, funded by grants, is offered to the companies in a two-step-approach: Initially the energy consultant provides the SME within a one or two day on-site visit with a rough and quick overview on potential energy savings. If energy savings have been identified or the enterprise already has its 5 New programme name as of January 2009: ERP-Environmental and Energy Efficiency Programme. 8 9

6 own ideas, the SME can apply for an in-depth analysis. In this second step the expert will provide a detailed analysis of (a) measures and investments, (b) the savings potential they offer and (c) the cost effectiveness. be financed, for example: facility and energy technology incl. heating, air conditioning, lighting, ventilation, hot water outer structure of building (insulation, windows) In preparation for this programme Frauenhofer ISI has analysed the reasons and influencing factors for energy consulting: 6 machines (electrical drive mechanisms, pressurised air, pumps) process cooling / process heat heat recovery / waste heat utilisation Figure 3: Reasons and Influencing Factors for Energy Consulting 70% 69% process control equipment information and communication technology share of enterprises 60% 50% 40% 30% 20% 10% 47% 45% 19% 15% 14% The ERP Energy Efficiency Programme can be used to fund up to 100% of eligible investments and a maximum amount of EUR 10 million. It is a precondition that replacement investments have to achieve at least 20% of energy savings compared with the average consumption in the past 3 0% high energy costs operational changes modernisation recommendation of colleagues operational problems public promotion years. New investments have to achieve at least 15% of energy savings in comparison with the industry average. IMPACTS. The SME can decide to go for the advisory component, the financing component or both. However, it is recommended to use the advisory component before applying for the financing component. The financing component (ERP-Energy Efficiency Programme) consists of a loan featuring a low, subsidised interest rate to finance energy efficiency investments. Measures resulting in considerable energy savings can 6 See footnote 3. From mid-february until end-october 2008 KfW agreed to respond to 2,500 applications for advisory services and committed a loan volume of EUR 280 million. In terms of demand this pretty much meets expectations as for 2008 KfW had expected a total financing volume of EUR 350 million. The applicant notifies KfW of the energy and CO 2 savings of potential investments promoted by the ERP Energy Efficiency Programme. This information has to be confirmed by an authorised expert

7 ENERGY EFFICIENCY IN THE HOUSING AND BUILDING SECTOR. On the basis of these statements it is possible to calculate the CO 2 reduction of investments in energy efficiency. A permanent yearly reduction of approx. 27,000 tons can be assigned to investments financed by the ERP Energy Efficiency Programme until the end of October Therefore this new programme which only started a few months ago already provides for a significant contribution to reaching the climate goals in Germany. Moreover the SMEs strengthen their competitiveness through a reduction in energy costs which usually make up a significant part of the operational expenses. BACKGROUND. There is still a huge potential to save energy especially in the housing sector and therein notably in the field of room heating. This sector is characterized by numerous starting points (approx. 18 million buildings and 40 million apartments in Germany), a large number of actors (house owners and occupants) and a broad variety of energy saving measures. KfW has been offering promotional financing programmes to support energy efficiency investments and CO 2 reduction in the housing sector since The currently available schemes include programmes for new and existing buildings: Ecological Construction offering long-term low-interest financing for the construction of new Energy-Efficient Houses, CO 2 Building Rehabilitation Programme offering generous promotion for extensive energy-saving investments and Solar Power Generation offering low-interest loans for photovoltaic systems. CO 2 BUILDING REHABILITATION PROGRAMME. Within these financing programmes the CO 2 Building Rehabilitation Programme has been holding a key position. Since 2001 it forms part of the German national climate protection programme. In one-sub scheme of the CO 2 Building Rehabilitation Programme, the house owner can choose between different predefined investment pack - ages which he or she can finance through a promotional loan. All packages contain predefined energy efficiency measures to substantially reduce CO 2 emissions

8 Figure 4: Overview on Predefined Measure Packages Measures Thermal insulation roof Thermal insulation outer walls Thermal insulation cellar ceiling New windows New heater Packages X X X X X X X X X X X X X X What has made this programme so attractive? While funding for this programme stems from capital markets, the German government has subsidized the interest rates significantly thereby offering an important incentive to home owners to invest in energy efficiency. The measure packages as described above have been a successful tool to promote the refurbishment of existing buildings. In an environment with a generally rather low level of modernisation it can easily be implemented with little administrative expenses. With KfW s promotional programmes a lot has been achieved in Germany and today many existing One package (number 3) for example consists of the thermal insulation of the outer walls, new windows and a new heating system. The packages are defined in a way that the buildings reduce their energy consumption to nearly reach the level of a new building, the standard of which is defined by German Law. Through the definition of such packages an energy audit becomes obsolete. The outline of the programme contains very specific technical requirements to assure that relevant measures are implemented properly. The loan applicant has to specify these measures in the loan buildings have already been modernised in one or the other way. In order to further motivate houseowners to accomplish modernisation measures, KfW further develops its promotional programme and supports also indi - vidual measures reaching defined standards. This is possible due to a sophisticated regulatory framework for new buildings which can serve as a reference for existing buildings. However, promotion which is based upon the implementation of single measures requires the verification of an energy consultant. application. As an additional requirement to achieve the objective of substantial CO 2 reductions, the buildings have to be constructed before IMPACTS The organisational, economical and technical regulations and requirements of the programme have been revised from time to time in order to be up-to-date and to meet the requirements of the market. What has made this programme so easy to handle and implement? It is the fact that the investment packages the borrower can choose from are based on well defined technical specifications, making energy audits obsolete. From 1990 until 2007 KfW committed a loan volume in the housing sector of more than EUR 45 billion. This volume could be realized using a comparably small amount of state budget for the interest subsidy. During the same period efficiency measures in approximately 2.7 million homes (units) have been financed. Thereof far more than 1 million were apartments in prefabricated panel buildings in eastern Germany

9 In 2008 demand for the KfW programme has increased significantly against the background of a greater and growing awareness of the necessity to save CO 2 emissions and rising energy prices. As a consequence EUR 3.1 billion in loans have been committed until July 2008 which is a growth of 80% compared to the same period in Through these commitments in the first 6 months of 2008, more than 120,000 homes (unit) have been energetically modernised and 16,000 KfW low-energy houses have been built. EUR 2.2 billion out of EUR 3.1 billion have been agreed alone for the financing of energy savings and for investments to reduce CO 2 emissions of existing buildings. Households have saved a total of EUR 500 million of heating costs through investments in energy saving measures promoted by the CO 2 Building Rehabilitation Programme between 2005 and This means that the modernisation of buildings has resulted not only in a more efficient use of energy but also in energy savings: energy consumption has almost been cut by half. The energy savings reach up to EUR 6 billion in the course of the average lifetime of 30 years of these measures. This equals approx. 80% of the investment costs. Due to the reduction of heating costs APPROACH TO MEASURE CO 2 REDUCTION. KfW and the Federal Ministry for Transport, Building and Urban Affairs (BMVBS) asked a consortium of scientists under the leadership of the Bremer Energie Institut (BEI) to evaluate the CO 2 Building Rehabilitation Programme. For the data collection the recipients of loans and grants under this programme receive a written questionnaire and are kindly asked to provide further details of their building and the modernisation measures. For each individual case the thermal resistance is calculated using a geometric model. The basis for the calculations are borrower s specifica - tions like e.g. year of construction, location, living space, number of levels, style of roof, construction method, basement or attic space extension. The values of energy demand and resulting CO 2 emissions are calculated before and after the refurbishment of a building. On behalf of KfW s promotional statistics it is possible to extrapolate the detailed results calculated on the basis of the questionnaire to all promotional loans of one year. Finally the extrapolation results are verified. investments in the rehabilitation of old buildings nearly pay for themselves. Lower energy consumption means lower CO 2 emissions: The investments financed between 2005 and 2007 achieved a permanent reduction of more than 1.37 million tons per annum in CO 2 emissions. But how can energy savings and resulting CO 2 reductions of modernisations be quantified? 16 17

10 KfW Bankengruppe Secretariat of Domestic Credit Affairs Palmengartenstraße 5 9, Frankfurt am Main Phone , Fax Infocenter KfW Mittelstandsbank Phone , Fax infocenter@kfw.de Infocenter KfW Förderbank Phone , Fax infocenter@kfw.de