Financing a sustainable future – the EBRD invests €2.6 billion in sustainable energy in 2011
9 February 2012 | Alan Bouquet | Energy, Finance & The Green Economy, Asia, Europe
Financing sustainability projects is not an easy proposition. First there must be an appropriate source of money from a financial institution, and then there must be evidence that the project can payback the loan. In the current financial climate many parts of Europe have very low levels of available finance, and further, the uncertainty surrounding the region means costs of loans are high.
The European Bank for Reconstruction and Development (EBRD) is one way that sustainability projects can go beyond the planning stage and achieve real results. The bank invested €2.6 Billion in sustainable energy projects for example in 2011.
One of the latest schemes involves €75 million to modernise and increase energy efficiency of heating systems in the Far East of Russia. The region can have winter temperatures as low as -50C and as such, energy efficient solutions to heating will make significant monetary and emissions savings. The 16 year programme will focus on Yakutia - a region the size of India, with only one million people. It has however, the highest heating costs in Russia and fuel and transport account for 75% of the regions operational costs. It therefore makes economic, as well as environmental sense, to carry out such a project in the region.
The Bank is essentially aimed at the private sector, and energy efficiency projects are one important way to bridge the gap of understanding which often exists around private business and environmental awareness. If the company cans see the increase in profitability, which is obvious with energy efficiency schemes, then there is a greater incentive to adopt sustainable strategies.
There are several other important development banks around the world as well. The Inter-American Development Bank, the main source of development funding for the Americas region, has a climate change drive, along with other important sustainability issues at its core such as education, poverty reduction and water and sanitation.
The African Development Bank, based in Tunis, is largely focussed on infrastructure projects. One of particular consequence is the battle against HIV/AIDS, to which the Bank has invested around $500 million. Other notable institutions include the Asian Development Bank and the World Bank. World governments may also provide financial assistance to various environmental schemes, which range from insulating homes, to feed-in-tariffs for micro-generation of renewable energy, to legislation encouraging green industry, like the switch to energy saving light-bulbs. This change was largely down to government legislation, rather than consumer demand or prevailing economic conditions.
Green project finance is extremely important if the green economy is to grow worldwide in future. Multiple sources, types and availability of finance are absolutely vital to growing the sector.