European Commission Welcomes First Banks in Energy Efficiency Alliance

The European Energy Efficiency Financing Coalition has signed 49 private and public financial institutions including some of the biggest banks in Europe as members.

“As a first step, these new members signed the statement of intent for financial institutions and are now expected to participate in all 3 levels of cooperation of the Coalition: the General Assembly, the Expert Platform, and the National Hubs”, the European Commission, which launched the alliance April 22, 2024, said in a statement.

“This subsequent integration of financial institutions into the initiative represents a crucial step in establishing the Coalition’s trilateral framework encompassing EU countries, financial institutions and the Commission”, added the statement on the Commission’s website. The 27 European Union countries immediately became members on December 19, 2023, when they inked a joint declaration to establish the coalition.

Part of the REPowerEU plan to phase out Russian fossil fuels and the EU’s broader climate goal, the coalition aims to increase investments in energy efficiency projects. The legal basis of the coalition, the Energy Efficiency Directive, was adopted last year.

The financial institutions that have signed up include banks, bank associations, development financiers and investment firms. Among these are Allianz SE, Banco Santander SA, BNP Paribas Bank Polska SA, Cassa Depositi e Prestiti SpA, Commerzbank AG, Council of Europe Development Bank, Deutsche Bank AG, the Dutch Banking Association, the European Banking Federation, ING Group, the Institutional Investors Group on Climate Change, Nordea Bank Abp and Swedbank AB.

“The selected financial institutions will now be engaging directly with the Commission and EU countries, and will be involved in the co-creation of the work program of the Coalition”, the Commission said.

Seventy-three institutions applied under the initial call, which was open June–September this year. “Looking ahead, a second call for membership for financial institutions, along with a call for expressions of interest from other relevant entities in the field of energy efficiency financing, is likely to be launched in early 2025”, the Commission said.

Launching the coalition last April, EU Energy Commissioner Kadri Simson said the national hubs component “would help to deliver on important breakthroughs for the market”. 

In October 2023 the EU Energy Efficiency Directive took effect, mandating the bloc’s 27 member countries to curb energy consumption by 11.7 percent by 2030 relative to projections for 2020. 

The directive aims for a final energy consumption of up to 763 million metric tons of oil equivalent (MMtoe) by the end of the decade, compared to the EU 2020 projection of 868.8 MMtoe. Final energy consumption by the definition of the directive means "all energy supplied to industry, to transport, including energy consumption in international aviation, to households, to public and private services, to agriculture, to forestry, to fishing and to other end-use sectors, excluding energy consumption in international maritime bunkers, ambient energy and deliveries to the transformation sector and to the energy sector, and losses due to transmission and distribution". 

From the previous obligation of 0.8 percent, energy savings are set at 1.3 percent for 2024–25, 1.5 percent for 2026–27 and 1.9 percent for 2028–30. 

"Member States shall implement energy efficiency obligation schemes, alternative policy measures, or a combination of both, or programs or measures financed under a national energy efficiency fund, as a priority among, but not limited to, people affected by energy poverty, vulnerable customers, people in low-income households and, where applicable, people living in social housing", the directive states.  

The directive also mandates EU states to migrate their district heating and cooling systems to 100 percent renewable energy, waste heat or a combination of the two by 2050. In the nearer term, by 2028, district heating and cooling systems should use "at least 50 percent renewable energy, 50 percent waste heat, 50 percent renewable energy and waste heat, 80 percent of high-efficiency cogenerated heat or at least a combination of such thermal energy going into the network where the share of renewable energy is at least 5 percent and the total share of renewable energy, waste heat or high-efficiency cogenerated heat is at least 50 percent". 

District heating and cooling systems that are built or substantially refurbished for a lifespan till 2030 should not use fossil fuels except gas, according to the directive. 

EU states have two years to adopt most of the measures contained in the directive into their national laws.

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