Financial Engineering 2007-2013_ Framework_ Joint Initiatives and

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Financial Engineering 2007-2013_ Framework_ Joint Initiatives and Powered By Docstoc
					  Financial instruments for 
 energy efficiency in housing 
 Cohesion Policy experiences & outlook 2014­2020

                   Bjoern Gabriel, Policy Analyst
DG Regional Policy – Unit D.3: ‘Financial engineering, major projects’

•   Financial Engineering Instruments 2007­2013
•   The JESSICA initiative
•   FEIs  for EE & RES overall – State of play
•   FEIs  for EE in housing – Experiences
•   Outlook: financial instruments 2014­2020

         Financial Engineering 2007­2013
•   Financial Engineering in Cohesion Policy:  Innovative way of delivering 
    CP support through revolving financing instruments (using new structures 
    and processes), complementary to traditional non­repayable public 
    support through grants
•   Article 44 of the GR enables support through  FEIs  in three thematic 
     – Art 44 (a): SMEs , including micro enterprises
     – Art 44 (b): Sustainable urban development
     – Art 44 (c): EE & RES in the building sector, including existing housing
     FEIs  are e.g. referred to as venture capital funds, guarantee funds and 
        loan funds
•   FEIs  represents a new approach to CP support, resulting in
     – different implementation structures as compared to grants,
     – new partnerships in promoting and delivering this form of CP support,
     – the need to offer assistance to our stakeholders in the design and 
        implementation of  .
Background: FEI implementation structure

     Managing Authority
     Managing Authority
                          Grant support
                          •   Ex-post reimbursement
                          •   For projects or project
                              components without
                              revenue-generating capacity
                          •   One-off support


 Background: FEI implementation structure
   Operational Programme / public policies / resources             Implementation phases
                                                                   § Evaluation & design
                 Managing Authority
                 Managing Authority                                § Implementation: Selection of HF
                                                                     (optional) > Funds / Financial
                                 SF                                  Intermediaries > final recipients for
                                                                     actual investments / disbursements
CoFin                                                 Additional
                  Holding Fund (HF)
                  Holding Fund (HF)                   resources    Key features of FEIs
                            SF           SF
                                                                   § Providing loans, equity or guarantees
                                                                     for revenue-generating (parts) of
        Fund // Financial
        Fund Financial           Fund // Financial
                                 Fund Financial                    § Revolving scheme > budgetary
           Intermediary            Intermediary
                                    Intermediary                     efficiency
                                                                   § Possible leverage from public or
                                                                     private sector partners (all levels)
           Financial                  Financial
           products                   products                     § Provide finance to final recipients
                                                                     before actual project expenditure
         Final recipients
         Final recipients          Final recipients
                                   Final recipients
                                                                   § Offer a high degree of flexibility >
                                                                     tailor-made support & delivery
                                                                   § Can be combined with grants
 Market situation & appropriate promotional instruments                                                 5
JESSICA – Support to CP stakeholders (1)
§ Joint European Support for Sustainable Investment in City
  Areas - joint initiative of EC’s DG for Regional Policy,
  developed in co-operation with EIB and CEB, to support
  sustainable urban development and regeneration through
  financial engineering mechanisms.
   Ü Promote the use of financial engineering instruments for
     sustainable urban development in Cohesion Policy
   Ü Develop partnerships with regions, cities, national and
     regional financial institutions and other investors
   Ü Assist Member States in designing and implementing these
     revolving instruments

   Ü MAs may mandate EIB to act as HF manager (GR)
JESSICA - Support to CP stakeholders (2)
Ü 65 JESSICA OP-specific Evaluation Studies         commissioned in 22 Member
  States ; 55 studies finalised ( ; )
Ü 2 Horizontal Studies published:    HF Handbook, UDF Typologies and
  Governance Structures), and
   6 Horizontal Studies underway, incl. UDF Handbook; Energy-focused Urban
   Development Funds; Methodologies for Assessing Social and Economic
   Performance in JESSICA; Housing in JESSICA Operations; JESSICA for
   Smart and Sustainable Cities ; Marketing, Communication and Knowledge
   Dissemination Strategies for JESSICA Operations
Ü JESSICA Networking Platform (JNP) established in 2009 by the EC, EIB
  and CEB as a forum for exchange of information, experiences and best
   – JNP events: Two Networking Platforms & Annual Conference per year
   – Thematic JESSICA Working Groups , initiated and co-ordinated by
      stakeholders to provide recommendations to EC and its partners
      (JESSICA & Housing; Lessons learned by Financial Intermediaries)

   FEIs  for EE & RES overall – State of play
FEIs under Art 44 (b): Sustainable urban development
Ü EUR 1.89 bn legally committed to 22 JESSICA operations in 11 MS
    § Of these 22 JESSICA operations, ten have an     energy component amounting to a
      maximum of EUR 1,008 billion of possible investments in energy efficiency
      measures and renewable energies infrastructure in cities
    § Wide scope of EE & RES interventions at project level    , ranging from sustainable
      urban infrastructure developments (e.g. London Green Fund) to the retrofitting of
      housing stock (Estonia, Lithuania).
    § 15 UDFs operational by 30 June 2011; up to 30 expected to be active early 2012
    § First project investments undertaken in Estonia, Brandenburg, Poland and

FEIs under Art 44 (c): EE & RES in buildings,              incl existing housing
Ü So far, one instrument reported in Greece (“Eksikonomo kat’ oikon” – EE
  for private housing in Greece): HF structure (EUR 241 million)

    FEIs  for EE in housing ­ Experiences
§   EE interventions suitable for repayable investments from       FEIs as energy
    savings & related cost savings serve as revenue-basis
§   However, shift from grant culture to repayable investments is not self-evident
    (change of paradigm, financing capacity of final recipients, etc.)
§   Success factors:
     Ü Combination of FEIs and grants essential
         § Financial incentives, such interest rate subsidies or grants to cover the self-
           financing share of final recipients
         § Performance incentives, such as incremental capital rebates or interest rates
           related to EE gains / categories reached
         § Technical assistance & project preparation, such as energy audits, planning
           documents, etc.
     Ü Campaigning: Awareness-raising and promotion
     Ü Stakeholder co-operation & integration of existing programmes or actors
     Ü Need for relevant expertise in the market (easy access; sufficient capacities)
     Ü Dove-tailing / One-stop shop: technical project preparation & access to finance in
       one package
     Ü Involvement and development of ESCO sector (large potential)
     Ü EE intervention as part of holistic / multi-thematic upgrading approach         9
Outlook: Financial instruments 2014­2020 (1)
 Ü Background: Increased importance of financial instruments in 
   implementing EU budget resources in future (MFF 2014­2020)
 Ü CP Financial Instruments 2014-2020 to
      §   provide a clear set of rules, building on existing guidance and interpretations
      §   capture synergies with other forms of support such as grants, and to
      §   ensure compatibility with financial instruments at EU level

 Ü Key provisions of legislative COM proposal 2014-2020:
      Ü   Scope: Expansion to all thematic areas covered by     OPs
      Ü   Ex-ante assessment prior to establishing FIs
      Ü   More implementation options:
            I.   Support to FIs set-up at EU level (direct management)
            II. Support to FIs set-up at national/regional level, managed by MAs
                 (shared management)
                   a.   Already existing or newly created instruments (tailored)
                   b. Standardised instruments for which terms & conditions are laid
                        down in Commission Acts; ready-to-use
Outlook: Financial instruments 2014­2020 (2)
 Ü   Key provisions of legislative COM proposal 2014-2020 (continued):
      4.   Easier mobilisation of national co-financing:
             §    Payment applications to include total of support paid and expected to be paid
                  to FIs over a period of max. two years (phased contributions);
             §    Additional incentive: EU co-financing share to increase by 10% if whole
                  priority axis is implemented through FIs
      5.   Clearer rules concerning the financial management of        EU contributions
             §    Interest on EU contributions prior to investments
             §    Capital resources paid back from investments
             §    Gains/earnings/yields generated by investments
      6.   Use of legacy resources in line with OP for at least ten years after closure
      7.   Better monitoring & reporting concerning financial instruments
      8.   Strengthening the combination of FIs and other forms of support

     Thank you for your attention!
   For further information:


DG Regional Policy – Unit D3 – Financial engineering, major projects


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