Financing Energy Efficient Buildings….

1. Financing Energy Efficient Buildings…. What is needed for a transition and a market transformation? Eng. Bernard CORNUT - ADEME IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

2. Building… a favourable context… • The main parameters are the energy bills… • So the key is tariffs of energy & power applied… • in so many climatic & socioeconomic contexts. • But the complex links between the building quality, the behaviour, the appliances and the energy bills & comfort are not easily understood by the users, or architect, or «engineer»… civil, electrical, mechanical. • What about all others: banker, city planner, contractor, real estate agent, rental broker? IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

3. Building for the climate (s), 4 seasons, 24 hours IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

4. Climatic zones: dilemma on the borders… • Turkey has 4 climatic zones for compulsory Insulation Standard of new buildings… • But the zoning was made on basis of mean temperature during winter only (heating). • South-East & North-West both in climatic zone 2 are very different in summer! Look at map of yearly mean air humidity ! Good design at Istanbul might be bad at Urfa. • The zoning is under revision. Recommendations will be made for improving summer comfort…to avoid A/C! IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

5. Facing diversity in building types & housing modes IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

6. Facing diversity in building types & housing modes • New construction vs. Stock of various ages • Owners vs. Tenants (one vs. many owners) • Rent indexed? on what? typical duration of rent? • Private owners vs. corporations-banks-public org. • Single house vs. multi-storey buildings • Cadastral, architectural, civil & urban patterns: strict compliance or jungle? • Strong or vague joint ownership law? • How are the powers balanced: state, municipality, local associations, capital? IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

7. Key issues, but often neglected by the energy expert • Who decides the building coefficients? • How is the built area defined? • with/without balconies, common areas, outside wall perimeter or inside external insulation. • What exactly says the law on decision making process for renovation works in joint ownership? • What if the owner refuses to pay his share? • What are the details of the mortgage law, if any? IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

8. New buildings : Design> Construction> Control > Operation > EvaluationBasic requirements to get an EE building • Interactive dialogue between architect & thermal engineer, to avoid mistakes, like excess openings to the west, lack of cross ventilation, lack of technical gallery... • Experienced site engineer & manpower for construction details of insulation (avoiding thermal bridges, condensation…), plastering, material compatibility, reservations… • Qualified & honest controllers to check compliance • Well equipped specialists for audit & certification IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

9. Training Training Training • For architects & designers: refreshing short courses are a must, as practical simulation tools were not common 20 years ago! • Vocational training must be modernised, demonstrating the best available techniques. • Demonstrative, innovative & monitored buildings should be widely publicised among professional and general audiences. • Even the politicians should know about the energy saving potentials of new & existing buildings, to be encouraged to tackle the energy tariffs issues IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

10. New & Old, transition or market transformation: financing needs confidence. • Promoting EE for new buildings: making the hidden visible, with labels, stars, solar • Facilitating audit, cost estimate... & decision • Standard quality chart, and some guarantee of results, to please the banker! • Energy efficiency means a lower operation cost, less risk for a loan, rare default. • Investment made helps to raise the sale/resale value. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

11. Back to Energy and Power • Quantitative understanding of the sources of energy consumption (mainly kWh and gas) per use and of the load curves (both seasonal & hourly) is a must. • Monitoring campaigns for a stratified sample of households are helpful to derive this knowledge. • Focus also on uses during critical periods (evening peak, seasonal shortage) • Practical research is needed on behaviours with home appliances and comfort conditions. • Manufacturers, distributors& installers of appliances for homes & commercial buildings must be mobilised for promoting EE appliances. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

12. Energy at home & offices: Behaviours & Climate incidence • Knowledge of kWh consumption per appliance or per use in households sector, every hour, every season, is essential. • Monitoring campaigns for selected samples of households & commercial buildings are the best way. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

13. Looking at constraints, true costs of energy, & trends • What are the key problems in power? • Recovery of bills ? • Too low tariffs for irrigation or public lighting? • Seasonal and/or evening peaks? • Capital Cost for extending gas distribution networks? • CO2 future constraints? • Weak control of buildings? • All problems together + ?? IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

14. Energy Tariffs : a global jungle. From Price of Oil Barrel to diesel & kWh prices, all taxes included IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

15. What needs co-financing? • Pre-investment: audits, cost estimates, feasibility studies • At what level?: building, block, quarter • Investment: key components contributing to EE (double glazing, insulation material, efficient compressor, solar flat collectors etc), as easily surveyed in quantity, or the whole works? • But also training packages; reform of regulations & tariffs; monitoring campaigns on energy per use in buildings ; R&D on energy in building for components, systems, softwares; awareness campaigns; evaluation of policies & measures… IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

16. Sources & modes of co-financing • Key : expected savings & added value, clearly depending on tariffs (kWh, kVA, gas..), previous situation, effective payment of due bills... • Normal banking system provides loans • if risk is low & identified; • if arrangements among owners and tenants are clear & manageable; • if there are standard reference documents • Initial contribution (10-30%) from cash saving & saving accounts of owners and possibly tenants. • Local & National sources of co-financing are definitely the main source. Innovations possible! IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

17. Adapting an existing financing tool:saving, then loan + premium • PEL in France: a 40 years old housing financing scheme: Plan Epargne Logement (Saving Plan for Housing). • 1st Step: Flexible saving account for 2-5 years; • 2nd Step: Loan up to 20 years with reasonable conditions, on the basis of accrued interests from past savings and on reimbursement capacity, proven by the past savings. • Parameters are defined at national level, by decree, in consultation with the Association of banks. • Procedures are standard & well publicised by all banks. Competition only for promotion. • Largest financing scheme for the French building sector! IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

18. Saving scheme, then loan +EEpremium a robust & non inflation financing tool 2/2 • State gives a premium on top of the private bank loan, also related to the accrued interest of the saving phase. It is capped, at # 1500 € • Nearly no default as bank knows the borrower’s monthly saving and reimbursement capacity. • The premium could easily be related to the target EE level, for new & rehabilitation. • Extra premium could be financed by a small environmental tax on energy. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

19. International Financing opportunities & procedures • A normal Bank should be able to channel soft loans for new EE buildings & EE rehabilitation, if an International Financial Institution refinances at a rate softened due to specific concern for environmental protection (for instance EIB: -2%); • FFEM : 1-3 M€ grants for GHG mitigation projects. www.ffem.net • GEF: from Project identification to preparation & implementation, grants 20 K$ to 20 M$ www.gefweb.orgwww.undp.org/gef • Clean Development Mechanisms… but…. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

20. In 50 days, from Aug.8 till Sept.27 • A drop from 79 down to 59 $/barrel • That is a global market drop of 800M$ per day ! • After a rise from 20 to 60 $/barrel in 2 years • Does it compare with the resources of International Financial Institutions for EE? • And… • Are your retail tariffs indexed to international oil and gas prices?? • Are the prices of diesel, petrol, kWh, gas same all over the world, all taxes included??? IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

21. Think Global, borrow local, act local • Combine the short & long terms... • reform energy tariffs, to be sustainable • promote indexation on the energy prices • reform fiscal policy to be environmentally driven • promote normal banking loans with EE & renewables premium • A multifaceted approach to support actual implementation of Energy Efficiency, • this seems the way to facilitate a transition. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

22. Towards a decentralized and balanced financing-funding • Transition to more EE needs financing, but… • Financing needs a stable source of funding… Recommendation: • A small environmental tax on all energies, with adequately tuned parameters… • Feeding environmental funds at national, regional and obviously municipal levels… • which could finance, with partsubsidy, all what is needed to move towards more sustainable buildings, better planning & sustainable mobility. IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

23. Under the shade of the wisdom tree… • Sorry if my views & recommendations did not meet your expectations… IEA – INDIA BEE Workshop Bernard CORNUT, ADEME

24. Energy Efficiency in Buildings • Thanks you for your attention • Your comments are welcome here today or later cornutb@eie.gov.tr or cornut.bernard@wanadoo.fr IEA – INDIA BEE Workshop Bernard CORNUT, ADEME