Launch of €70m Energy Efficiency Fund and NEEAP2

letsgogreen

Published in letsgogreen.ie

February 28, 2013

Remarks by Minister Pat Rabbitte – Launch of €70m Energy Efficiency Fund and NEEAP2

Ladies and Gentlemen,

The second National Energy Efficiency Action Plan, which I am publishing today, reaffirms Ireland’s commitment to a 20% energy savings target in 2020. This is equivalent to nearly 32,000 Gigawatt hours (GWh) or a reduction in annual CO2 emissions of around 7.7 Mega tonnes (Mt). Put another way this means a potential reduction in energy spend of approximately €2.4 billion across all sectors of our economy. A very significant element of this will be Exchequer savings in the public sector. Re-invested elsewhere, this money could be well spent on sustainable employment and meeting our Presidency goals of stability, growth and jobs.

The actions outlined in the Plan are projected to realise 34,000GWh of energy savings in 2020, equivalent to a 21% saving on the baseline period. While that would be a significant achievement, it will require sustained commitment by all, including public sector bodies, energy service companies and the private sector.

Furthermore, the new Energy Efficiency Directive places challenging targets on energy suppliers, who will be expected to play a central role into the future. In short, energy efficiency policy delivery is not simply the preserve of my Department – we all have a responsibility to put our shoulder to the wheel.

The updated Plan contains 97 actions, each of which will help secure a more sustainable energy future for Ireland. Of these, I want to briefly highlight five which will play an integral role in meeting the national target:

In the Public sector, we will introduce a series of obligations on public sector bodies to address consumption, procurement and reporting of energy use. Current public sector spending on energy is between €600 million and €800 million per annum. This is unsustainable and the public sector must be a leader in our drive to reduce energy costs. We will be an exemplar in effective energy management.

We will introduce an appropriate Pay-As-You-Save (PAYS) model for Ireland to replace existing exchequer supports for domestic and non-domestic energy efficiency upgrade measures. Work on the design is substantially underway by our PAYS project team.

The delivery of PAYS for the non-domestic sector is already well advanced. Next month we will publish a national Energy Performance Contracting (EPC) policy framework to deliver innovative financing models of energy efficiency measures in the commercial and public sectors. This Framework will standardise energy performance contracting in Ireland and provide a robust process for nurturing investment-ready projects. The Framework will be underpinned by an Energy Efficiency Fund. Let us be clear that it is only by tackling the energy performance of buildings and facilities that we will harvest the deep retrofit savings required to meet our ambitious targets.

The Better Energy programme will deliver energy efficiency improvements across a number of sectors including energy saving targets for energy suppliers. I commend those companies who have already signed Voluntary Agreements with the SEAI to deliver on their commitments.

A Cross-Departmental Implementation Group will ensure that the actions contained in this Plan are delivered. It will report regularly to Government on progress towards our 20% national target.
We all acknowledge that the construction sector has borne the brunt of unemployment and redundancies in recent years. However sometimes out of adversity comes opportunity. I firmly believe there are a significant proportion of construction workers who, with a little investment in re-training, could become the foundation for a customer-focused, quality driven workforce in energy services deployment. We are beginning to see a market shift with respect to building energy rating and consumer awareness of the impact a good or bad rating has on utility costs. A professional, skilled workforce will be critical to that delivery and I call on the industry organisations to front up in facilitating that transition.

I am also mindful of our responsibilities to those in severe economic hardship who are struggling to keep their homes warm. Energy efficiency can help those in energy poverty but again it cannot and should not be someone else’s problem to take ownership for meeting our responsibilities. We owe a duty of care to those less fortunate especially in these difficult times.

Last week, the Taoiseach launched the 2013 Action Plan for Jobs. The Energy Efficiency Fund is one initiative contained within the Plan that will help deliver jobs, not just this year but also in future years. Let me take a couple of moments to outline in more detail how the Fund will work.

The Fund will be established with the aim of providing at least €70m to finance energy efficiency initiatives in the public and private sectors. Government has already committed €35 million as seed capital. Matching funding, in excess of €35m is being sought from private investors.

Investments by the Fund have the potential to create significant employment across a broad range of construction-related sectors. Experience from the existing grant schemes suggests that based on induced labour spend almost 450 jobs are directly supported for a year for every €10 million of expenditure, rising to 675 when indirect jobs are included. This is before competitiveness impacts due to reduced energy costs are taken into account.

NewEra has been asked by Government to facilitate the creation of the Fund, and has been actively meeting with potential investors and Fund managers over the past few months. We are confident that there is appetite within the financial community to get on board and back this initiative which could potentially open up much larger investment opportunities.

Moreover, the Government’s Green International Financial Services Centre initiative is also working with my Department in this endeavour. Firstly, Green IFSC is assisting in identifying possible international co-investors into the new Fund. Secondly, and to ensure Ireland has one of the most resource efficient international financial service centres in the world, Green IFSC will be coordinating a number of IFSC based firms in applying to the Fund to undertake retrofit activities. So from local to global, Green IFSC is accelerating the continued growth of Ireland’s green finance sector, a role Government places considerable value on.

The State is investing in the Fund for a number of reasons. Firstly, there is a well-established shortage of finance in the market. In an ideal world Government should not have to intervene but the reality is that without stimulus the necessary finance is not being provided at the levels required to meet the demand. The Fund will be set up to bridge this gap. Secondly, where finance is available, the process by which monies are lent can be extremely complicated; partially due to the nature of the projects but also due to a lack energy efficiency project expertise within the financial sector. Flow of credit to the real economy is and remains a government concern. The Fund will redress this scenario through the development of an expertise in financing energy efficiency; ideally becoming the lender of choice for such projects. I anticipate that the Fund will lend to all sectors of the economy.

To kick start this process I am announcing a call for exemplar projects that will test the Framework this year and ensure that we bring forward a pipeline of projects through the development phase. We want to prove the concept at scale utilising about 20 pilot projects in 2013. These projects will be provided with technical assistance to help them become investment ready. By introducing this discipline to the market we will instill confidence in project promoters, energy service companies and most importantly the banking industry who underwrite them.

By facilitating the development of the market in line with the direction of European policy, energy efficiency activity will have multiplier effects to drive economic recovery, restore competitiveness and create sustainable business opportunities.

I will conclude by thanking the Master of the Rotunda, Dr Sam Coulter-Smith for hosting us here this morning and Dr. Brian Motherway for the ongoing partnership with my Department in delivering on our energy mandate.

 

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