CIS municipalities are adopting long-term, pro-growth strategies
By Eva Pawlowski
It is the primary contention of the Stern Review on the Economics of Climate Change (published in 2006) that pro-growth economic strategies are not at odds with strategies to avert climate change. The review argues, in fact, that tackling climate change is a longer-term, pro-growth strategy, and that this applies to both rich and poor countries. Energy efficiency is one proven way of reducing greenhouse gas (GHG) emissions without crippling economic growth, and is therefore one of the most effective and cost-efficient ways to improve air quality.
Despite enormous potential for cost-effective energy savings, investment in energy efficiency has been slow to find its way to the Commonwealth of Independent States (CIS), mostly because of policy barriers, lack of awareness, weak economic incentives and damaged business reputations. However, CIS local governments taking on more statutory obligations and gaining fiscal autonomy are becoming more accountable for the provision of utility services; and there is growing demand for information on replicable methods for improving municipal services within limited budgets. To address this need, the Alliance to Save Energy, a Washington D.C.-based NGO, conducted Financing Municipal Energy Efficiency in the Commonwealth of Independent States, an international forum in Moscow, with funding from the Renewable Energy and Energy Efficiency Partnership (REEEP).
Participants included organisations and companies from 11 countries, such as Russia-based Center-Invest Bank, EnEffect Consult from Bulgaria, the International Finance Corporation, Nordic Finance Corporation (NEFCO), United Nations Economic Commission for Europe (UNECE) and USAID, as well as local and national governments from Armenia, Moldova and Ukraine.
Making the most of opportunities
The forum's target audience was local governments and local financing institutions that can work together to take advantage of the financial and social benefits of projects that improve energy efficiency in heating, public lighting, water supply and wastewater treatment.
To realise its objectives, REEEP's work is organised within two major themes. The first is to ensure that government policies and regulation encourage the integration of renewable energy sources in energy supply portfolios, promote the efficient end-use of energy and to create a favourable climate for investment in the sustainable energy sector. The second is to attract a wider cross-section of investors into emerging sustainable energy markets and the rapidly evolving carbon market.
There is no lack of funds for energy efficiency in the CIS, according to financial experts at the forum, but legal hurdles, bureaucratic red tape, difficulties in obtaining loans and poor understanding of existing financing mechanisms often prevent project initiators from accessing available funding.
In order to lower the barriers to energy efficiency in the region, REEEP is funding a research and awareness-raising projected implemented by the Alliance to Save Energy on the existing and potential mechanisms for financing municipal energy efficacy projects in the CIS. The knowledge and experience shared at the forum will be presented in a guidebook and case studies that can be used as a starting point for local governments, NGOs, consultants and utilities looking for answers on how to obtain project funding.
Drawing from experience
In addition to examining existing attitudes and financing mechanisms related to municipal energy efficiency projects in the CIS, forum participants also explored similar conditions in Hungary, Latvia and Lithuania. Overall, the forum called for several recommendations that can serve to stimulate the development and adoption of local level financing mechanisms, among which are: harmonisation of fiscal and energy efficiency legislation; increased transparency and accountability of the financial sector and energy management schemes; created of municipal energy management programmes; development and proper implementation of robust energy efficiency standards and building codes; improvement of local investment climates to attract private direct investments in the municipal energy sector; and creation of a unified data bank containing details about financing mechanisms and experiences.
