New Fund Aims to Cut Balkan Carbon Footprint

A new fund has been set to support energy efficiency projects and reduce carbon emissions in the Balkans and Turkey

The Southeast Europe Energy Efficiency Fund, SE4F has been established by the European Investment Bank EIB, Kreditanstalt fur Wiederaufbau, KfW, the European Commission and the European Bank for Reconstruction and Development, EBRD.The EIB, KfW and the EBRD are each investing 25 million euro and the Commission is providing close to 20 million euro. The founding institutions eventually aim to increase the fund’s size to 400 million euro by attracting additional funds from public and private investors.
The Southeast Europe Energy Efficiency Fund will be set up in Luxembourg and its mission is to contribute to the development of a robust energy efficiency and sustainable energy market in the Western Balkan region and Turkey, predominantly by expanding and strengthening the provision of loans to finance Energy Efficiency projects through local financial institutions.
The complementary nature of SE4F’s activities with existing EBRD facilities will result in a larger volume of sustainable energy financing available to the region, helping reach a sufficient mass to begin the long-term transformation of the lending market in this sector. The project is also expected to transfer and build additional expertise related to sustainable energy investment among banks, particularly in the area of assessing the risk and creditworthiness of clients for energy efficiency loans.
SE4F will invest in energy efficiency and renewable energy projects especially undertaken by small and medium-sized enterprises and households in Albania, Bosnia, Croatia, Macedonia, Montenegro, Serbia and Turkey, helping the region cut its energy intensity and boosting energy security.

Sources of transition impact
• Broadening access to sustainable energy finance. The facility will significantly increase the availability, and therefore access to sustainable energy finance in the region, creating new products that allow actors to make small, uncomplicated energy efficiency investments that will contribute to reduced pollution, climate change mitigation, reduced energy bills, and increased energy security and comfort levels.
• Demonstration effects of improved energy efficiency among Sub-borrowers.The Project will generate transition impact by demonstrating the benefits of energy conservation and promoting the expansion of energy efficiency and renewable energy lending in the energy inefficient Western Balkan economies and Turkey. The project will demonstrate the effects of rational energy utilization for improving competitiveness in the light of the rising energy costs in the region.

The Fund’s financing will be provided mainly through loans to financial institutions, which will on-lend to businesses and residential customers.
A part of the SE4F’s funds will be also available for direct investment in specialist energy service companies, energy efficiency service and supply companies, and renewable energy projects.

Environmental impact
The project offers significant environmental opportunities as it will contribute to the reduction of greenhouse gases. The Fund will be required to comply with the EBRD’s Performance Requirements 2 and 9. Investments financed by the Fund will be required to comply with national requirements for environment, health and safety and labor standards. The Fund will provide the Bank with an annual report on environmental and social matters.
The complementary nature of SE4F’s activities with existing EBRD facilities will result in a larger volume of sustainable energy financing available to the region, helping reach a sufficient mass to begin the long-term transformation of the lending market in this sector. The project is also expected to transfer and build additional expertise related to sustainable energy investment among banks, particularly in the area of assessing the risk and creditworthiness of clients for energy efficiency loans.
Technical cooperation will be provided to the on-lending local financial institutions and beneficiary companies. The TC will be funded by donor sources. The specific scope of the TC will be defined following the launch of the Fund.

Sourse: EBRD