The Food Land-use report from Capgemini shows European Union’s Aim, Net-Zero Emissions from Farm to Fork. A description of projects to cut down emissions by -20% in 2030 and -50% in 2050. Projects for livestock promoting alternatives to meat and dairy products. projects for crops to use less emission-intensive fertilizers
Six projects summarized in a nutshell to take away a glance at farming future
Las relaciones entre las ESCOs y el BEI parecen prometedoras en el futuro
Ralf Goldmann, asesor senior del Banco Europeo de Inversiones BEI en el sector de la eficiencia energética ha confirmado en una entrevista concedida a Engerati el interés de la institución por seguir financiando proyectos de las ESCOs.
La clave radica en garantizar el logro efectivo de los ahorros planeados. Goldmann incluso propone el recurso a compañías aseguradoras. También incide en el desarrollo de modelos de contrato específicos, aspecto en el que coincide con las tendencias en EEUU para aplicar el modelo ESCO más allá del sector MUSH.
Los interesados en esta materia pueden consultar el Energy Lending Criteria del BEI en el que se establecen las condiciones y parámetros para acceder a la financiación de proyectos energéticos.
MUY IMPORTANTE, para saber “de dónde sopla el viento”, hay que estar al tanto de las contribuciones individualizadas al documento del BEI de los principales agentes europeos en esta materia. Estamos hablando de:
EEFIG, created in late 2013, describes existing and emerging financial instruments for energy efficiency investments.
It is about “Credit Lines”, “Risk Sharing Facilities” as Guarantee Funds and First-Loss Facilities, “Equity Investments in Real Estate”; it also is about “On Bill Repayments” and “Green Bonds” for Green buildings.
EEFIG affirms that barriers to private-public financial cooperation require to be overcome:
“Priority and appropriate use of EU Structural and Investment Funds and ETS revenues through public-private financial instruments from 2014-2020 will boost energy efficiency investment volumes and help accelerate the engagement of private sector finance through scaled risk-sharing: The scale of finance needed to upgrade the building stock means this cannot be achieved by the private sector alone… In this way opportunities for private finance to supplement public sector finance activity can be secured to maximize impact in terms of a number of buildings refurbished and increasing the private funds leveraged for every euro of public money invested.”
Obviously, it is a matter of public-private partnership culture. One of the main barriers for ESCOs in Spain for energy efficiency investments in MUSH sector.
In the EU, there´s a wide line of thought that, when referred to energy matters without any other consideration, imagines Europe as the “Green Camelot” of the industrialized world –with the exception of realistic countries such as Sweden, France, or Britain-. Many times, this is the deep essence of critical reviews on the United States and China policies.
Actually, the European position is not as crystal clear as it pretends to be. There are a few contradictions:
First contradiction: Energy Supply Security. Europe has no energy resources, with the exception of Scotland-UK and Norway; these must be imported. But, in times of conflict, the peaceful EU supply depends on the US international means –Central Asia, Arabian Gulf, Mediterranean South-. What is the cost of this dependence? And the risk?
Second contradiction: Energy Affordability. Of course, a logical option for Europe is renewable energy because it provides autonomous and green power. But, there´s a problem: currently, renewables are far from grid parity with the exception of wind power.
Energy affordability is higher in countries with a reasonable share of renewables. According to WEC 2012 Index data, France, the United Kingdom, Sweden, or Finland pay between 0.16 and 0.22 USD per kWh, while in the opposite side Germany pays 0.32 and Denmark 0.36. Comparing these data with North America, we have to know that US citizens pay 0.12 USD per kWh while Canadians only pay 0.09 USD.
Intensive green policies are available for rich countries like Denmark, but it is a social problem for the poorer. In fact, in January 2014, because of the pressure of public opinion, Spanish electricity suppliers have shown how the real cost of power paid by consumers is only the 38% of the total bill; the residual 62% are taxes and levies that end up in government coffers.
Also, there is a similar scenario when drivers refuel their cars with gasoline –petrol- or diesel. Most Europeans pay taxes between 3 to 4 USD per gallon –this is taxation from 50 to 60%-; Americans only pay 0.5 USD -source: New York Times NYT-. The different price between Brent Crude and West Texas Intermediate hasn´t to do with such different taxation; it is a simple matter: it is a hidden financing source for European governments. But, what will be when most cars become electric vehicles? How will be compensated this loss of governmental income?
The extreme-renewable policy is inconsistent with energy affordability; so, it has a negative social impact. Environment protection is a praiseworthy aim, but it has an economic cost that´s mirrored by the energy bill beyond the regular taxes as VAT. Someone has to pay it.
Third contradiction: Energy Impact on Health and Environment. In Europe, there is a wide popular sensibility against energy technological progress because of its potential environmental risk or its immediate impact. This sensibility is against nuclear power, shale gas, and even against hydro-power or wind-power.
The point is that mostly this rejection is against the “concept itself”. To claim a good guarantee –for example, with respect to fracking technology- is logical, but it isn´t the case. It seems to be a matter of distrust, ultra-eco-ideology, and ignorance of real data. How many Europeans know that shale gas is very similar to conventional natural gas with less than half-life cycle greenhouse gas emissions than those of coal-fired electricity generation? –see 2012 “Natural Gas and the Transformation of the US Energy Sector: Electricity” National Renewable Energy Laboratory NREL with the cooperation of experts from the University of Colorado-Boulder, the Colorado School of Mines, the Colorado State University, the Massachusetts Institute of Technology, and Stanford University-.
From an environmental point of view, national governments are conscious that high energy consumption rates are incompatible with fossil fuel technologies, but sometimes, due to electoral reasons, policymakers are too sensible to public pressure –Germany case, as a reaction to the 2011 earthquake and tsunami that devastated Fukushima with the consequence of the incident at its old technology nuclear plants-. Does anyone remember how many deaths or diseases have been caused by the Fukushima nuclear incident?
Without any doubt, environmental risk must be under control within reasonable ratios. However, it is convenient to remember the known Roosevelt’s thought: “Only thing we have to fear is fear itself”. It is because this irrational fear to a potential impact on health and the environment stops progress and makes to last longer the worst scenario: the current one.
As everybody knows, the China ESCO market has huge potential. China is the world’s biggest energy consumer and its energy efficiency technology in residential, commercial, and industrial installations is highly inefficient.
A 2013 Master´s Thesis by Ding Ma, Aalto University School of Economics, offers a detailed vision of the Chinese energy services companies. When it describes the barriers and drivers of China’s ESCO market the immediate conclusion is that ESCO model barriers are universal.
China ESCO market issues
Ding Ma identifies as problems: the lack of financial solutions, expertise, clear technical standards, and trust. The Chinese legal framework doesn´t help.
“Erratic and incalculable legislation can block ESCO markets”
“The lack of official and/or generally accepted ESCO definition and/or certification scheme and/or standards hinders the ESCO market”
On the other hand, the same authors P.Bertoldi, B. Boza-Kiss, S. Panev, and N. Labanca with T. Serrenho and C. Cahill in the ESCO Market Report For Non European Countries 2013 have a positive vision of the Chinese Government attitude front the energy efficiency issues. With respect to the China ESCO market obstacles, they literally say:
“Two major barriers to ESCO market development in China are represented by the low energy prices and by a low level of market integrity (Pengcheng et al., 2011). Low energy prices, partly due to energy subsidies applied by the government to foster the economic development of the country, discourage companies and energy end-users in general, to invest in energy efficiency, whereas the low level of market integrity can be partly associated with a situation of scarce awareness among the energy end-users about the ESCO concept. This situation is determined both by a lack in the provision of information to energy end-users and by a lack of skills and technical competencies often registered within companies acting as ESCOs.
The latter aspect has probably to be considered as the most important obstacle to the provision of proper information, as competency and expertise on the supply side are the first pre-requisite to make people aware of the ESCO business and related opportunities. Barriers related to lack of information and technical competence combine then with the absence of standardized procedures for energy audits and measurement and verification (M&V) of energy savings in China. All together, these obstacles create a situation of mistrust in ESCO business among potential clients. This situation is then worsened by a lack of laws and regulations guaranteeing the application of the clauses included in EPCs in case expected energy performances are not achieved by projects implemented by ESCOs”.
We found the key points of the ESCO business model in a research report that the British «Department of Energy and Climate Change», DECC, commissioned to Carbon Trust and SPA Future Thinking.
«Exploring the design of policies to increase the efficiency of electricity use within the industrial and commercial sectors”, dated in November 2012, had to build an evidence base on a system of incentives to stimulate efficiency solutions in the ESCO business environment.
That happens because the Department of Energy and Climate Change pushes the project Electricity Demand Reduction, EDR. This project aims to ensure the effectiveness of efficiency measures and that potential energy and cost savings are actually realized.
Two key points in the ESCO Business Model
The researchers interviewed end-users and ESCOs. Opinions revealed that there´s no unanimity about the best payback period, but, on the other hand, there´s consensus about two key points in this business model:
Trust in ESCO model. Literally:
End users: ‘No upfront cost’ offer is ‘too good to be true’
ESCOs : “The biggest barrier for ESCOs is selling and getting the concept accepted”
Efficiency project size. A single large project is easier to finance than a lot of small projects.
“If [the banks are] going to lend you something, they want to lend you £1m shall we say rather than £10,000.”
The ESCO business model has a particular characteristic. At the risk of one of the contracting parties, benefits for both parties are obtained. Despite this peculiar feature, some barriers in the ESCO business model break a faster development.
In July 2011, the Environmental Defense Fund, EDF for short, published a report titled Show Me The Money, Energy Efficiency Financing Barriers and Opportunitiesort that goes thru barriers in the ESCO business model.
We want to share with you the summary I made for myself.
The financial dimension of barriers in the ESCO Business model.
Universal Barriers to MUSH , Commercial and Industrial sectors.
High upfront capital cost.
Uncertainty of savings and perceptions of risk. A matter of confidence and reliability
Budgets do not prioritize energy efficiency: Maximizing energy efficiency is not generally part of the core mission statement of an institution.
Lack of secondary markets.
Municipalities, Universities, Schools, and Hospitals (MUSH) Barriers
Policies that fail to incentivize investments.
Limited capacity and staff resources to pursue energy efficiency.
Commercial Property and Industrial Facility Barriers
High development costs. Protection from risk requires higher overall development costs that in MUSH sector.
Long payback periods vs. corporate focus on short-term profits.
Mortgage lender limitations on external financing of equipment and systems because are considered part of the assets securing the original mortgage.
Limited external financing products available.
Landlord and tenant split incentives problem. The landlord has to pay the buildings´ efficiency upgrading. The tenant is responsible for paying the energy bill.
It makes obvious that the enlargement of the real ESCO market has to do with the development of new contracting models tailor-made around the needs of each customer. New contracts have to offer specific solutions to specific financial and risk perception problems.
CEOs and energy experts collect 200 ideas. America drives clean energy.
The Center for the New Energy Economy (CNEE) at Colorado State University has released a report. The report title is «Powering Forward: Presidential and Executive Agency Actions to Drive Clean Energy in America». 100 CEOs and energy experts developed it last year. Report`s aim is to help President Obama to Curb Climate Change with a Clean Energy Economy. America drives clean energy with this initiative.
Some of these ideas are:
Update regulations related to clean energy technologies. Today’s regulations complicate wind energy and rooftop solar systems at American’s homes. Today’s new energy technologies are 10 years ahead of utilities. Utilities are 10 years ahead of regulations,
Empower state leadership.
Create new opportunities for clean energy investments by the private sector.
Issue even more aggressive goals for the government’s use of third-party financing for energy efficiency and renewable energy improvements in federal operations. This financing tool allows the government to have guaranteed savings on its energy bills at no cost to taxpayers.
Resume reporting the number of green jobs in the economy.
Encourage early adoption of new energy efficiency and renewable energy measures.
Explain how reduce greenhouse gas emissions from existing fossil-fuel power plants.
Issue rulings and interpretations of the tax code to increase incentives for private investors to capitalize clean energy technologies.
Require that oil and gas companies use bestpractices on federal lands on natural gas production.