The EeMAP Finance & Banking Committee, together with the EeMAP Advisory Council and the EeMAP Energy Efficiency Committee, met in Venice on Thursday 28 September 2017 to discuss the next steps for moving the EeMAP Initiative forward.
The final Agenda for the meetings can be accessed here.
To view the different PowerPoint presentations presented by the speakers during the Joint Meeting please press here.
The Energy efficient Mortgages Action Plan (EeMAP) Initiative is being presented at a Kick-Off Stakeholder Meeting with over 100 participants and panellists, representing a cross sector of key market players such as European and international investors, issuers, lenders, property valuers, academics, energy suppliers, buildings experts and SMEs.
Together with the European Parliament, the European Commission and local authorities, these market participants will discuss the potential to channel private capital into energy efficiency investments, supporting EU property owners in the renovation of their residential and commercial properties and helping the EU institutions to bridge the investment gap to deliver on its energy savings targets. The designing of common best practices for energy efficient mortgages at European level will free up cross border private sector capital, generating significant fiscal relief for Member States.
With more than 210 million units (equal to 89%) of the EU´s residential building stock, for example, having been built before the year 2001, substantial efforts are required to channel private capital into bringing energy inefficient homes in line with new energy standards. From a savings perspective, a renovated house that moves from an ‘E’ to a ‘B’ grade in its energy performance certificate (EPC) will save a family an estimated EUR 24,000 over 30 years, according to an analysis of 365,000 house sales in Denmark last year.
Recent market research conducted by the EMF-ECBC reveals a strong willingness among financial institutions to enter the energy efficiency finance market.
The EeMAP Initiative is market-led and first of its kind, and aims at the design and delivery of an “energy efficient mortgage”, intended to incentivise the acquisition of energy efficient properties or the improvement of the energy efficiency of existing properties by way of preferential financing conditions linked to the mortgage.
At the heart of the Initiative is the assumption that energy efficiency has a risk mitigation effect for banks as a result of its impact on a borrower’s ability to service their loan and on the value of the property. This means that energy efficient mortgages will represent a lower risk on the balance sheet of banks and could, therefore, qualify for a better capital treatment. Lower capital requirements deliver a strong incentive for banks to enter the market and, as a result, drive a broader incentive chain, in which all stakeholders, including EU citizens, issuers, investors and society as a whole, derive a concrete benefit.
More broadly, the EeMAP Initiative delivers the following outcomes:
- Energy Efficiency: The EeMAP Initiative fits well within the European Commission’s own framework for climate and energy policies, which aims to encourage investments and boost private finance for EE investments/buildings. Particularly it is worth highlighting that to reach the 20% energy saving target by 2020, the EE Directive’s Article 4 includes a requirement for Member States to establish and periodically update “a long-term strategy for mobilising investment in the renovation of the national stock of residential and commercial buildings”.
- Jobs & Growth: The EeMAP boosts private investment in energy efficiency improvements, largely through retrofitting, which will in turn boost SME activity in the retrofitting sector, thereby contributing to the European Commission’s growth and jobs agenda.
- Financial Stability: This pan-European market-led Project will trigger market due diligence for borrowers, issuers and investors, reduce probability of borrower default, facilitate de-risking of banks’ balance sheets and management of non-performing loans, as well as enhance transparency and pricing in the market by adding a green factor to real estate.
Luca Bertalot, EeMAP Coordinator & EMF-ECBC Secretary General, said: “In the context of the European Commission’s Capital Markets Union Mid-Term Review published yesterday, the EeMAP Initiative represents a concrete step towards a clear cross-sectoral roadmap for the private financing of energy efficiency and, as such, a strong, market response to the challenge presented by climate change, underlining the foresight and proactivity of the stakeholders involved. The Initiative will encourage the energy efficient renovation of the EU’s building stock, in support of the EU’s ambitious energy savings targets and its commitment to the COP 21 Agreement and is therefore of strategic importance from an environmental, financial, and economic perspective.”
For more information about the EeMAP Initiative, please visit the EeMAP Website: www.energyefficientmortgages.eu
Today, the European Mortgage Federation – European Covered Bond Council (EMF-ECBC) is honoured to welcome Jyrki Katainen, European Commission Vice-President responsible for Jobs, Growth, Investment and Competitiveness to deliver a Keynote Speech at its Second Stakeholder Meeting on Energy Efficient Mortgages in Brussels. The event will be opened by Paul Hodson, Head of Unit for Energy Efficiency at European Commission’s Directorate-General for Energy.
The Energy Efficient Mortgages Initiative, launched by the EMF-ECBC and its partners in September 2016, explores ways to mobilise private mortgage financing to boost energy efficient building renovation in Europe. The aim of the project is to create a suitable framework for a standardised Energy Efficient Mortgage product, which mortgage lenders in Europe can offer to borrowers seeking to purchase and retrofit an energy efficient property.
Supporting Energy Union, Growth and Jobs
The Energy Efficient Mortgages Initiative responds to the European Commission’s Energy Union agenda, which places energy and resource efficiency at the heart of achieving the EU’s energy and climate goals. In the EU, buildings are responsible for 40% of total energy consumption and 36% of CO2 emissions. By improving the energy efficiency of buildings, the EU’s total energy consumption could be reduced by 5-6% and CO2 emissions by 5%.
Furthermore, the Initiative has significance for the larger growth and jobs agenda in Europe, as more funding to boost energy renovation rates can lead to a significant increase in jobs in the building sector.
For banks and investors, a lower risk profile of green mortgages and a potential increase of value linked to more energy efficient properties can bring about tangible benefits, such as mitigation of risk and therefore a better capital treatment of banks’ green assets and protection against ‘brown discount’ of loan and investment portfolios. To this end, the Energy Efficient Mortgages Initiative seeks to develop a better understanding of how to differentiate between ‘green’ and ‘conventional’ funding and how to capture energy efficiency within financial institutions’ lending practices.
Today’s meeting brings together stakeholders from major banks and mortgage lenders, as well as from businesses and organisations from the building, valuation and energy industries across Europe to discuss the first results of the Energy Efficient Mortgages Initiative and its way forward. During the event, the EMF-ECBC will present its preliminary analysis of its recent survey on banks’ green lending practices in Europe.
Luca Bertalot, EMF-ECBC Secretary General said:
“We recognise that we have an ambitious task ahead of us; our work on Energy Efficient Mortgages has now gained clear support from market participants and in particular from the European Commission. Indeed, stakeholder consensus and institutional coordination are essential pre-conditions to enable us to move forward. We believe this Initiative to be crucial to help bridge the gap in investment needed to improve the energy efficient renovation of buildings in Europe.
The feedback from our survey on banks’ ‘green’ lending practices reveals a strong interest in further developing the green market and underlines the importance of standardisation for energy efficient mortgages. We look forward to working together with our partners across the key sectors in developing solutions to meet these needs.”
Partners of the Energy Efficient Mortgages Initiative are the Ca’Foscari University of Venice, RICS, European Regional Network of Green Building Councils, E.ON, and SAFE Goethe University Frankfurt. Today’s Meeting is supported by European DataWareHouse, a key stakeholder of the project.
More information about the Energy Efficient Mortgages Initiative, including the preliminary survey analysis report and the agenda of the Second Stakeholder Meeting, can be found here.
Notes to the Editor:
- Considering that the building stock constitutes the largest single energy consumer in the EU, and that the value of the European mortgage market is equal to 53% of EU’s GDP, there is huge potential to unlock the benefits of mortgage financing to support Energy Efficiency to the benefit of all.
- Established in 1967, the European Mortgage Federation (EMF) is the voice of the European mortgage industry, representing the interests of mortgage lenders and covered bond issuers at European level. The EMF provides data and information on European mortgage markets, which were worth over 7.0 trillion EUR at the end of 2015. The EMF currently has 17 members across 14 EU Member States as well as a number of observer members.
- In 2004 the EMF founded the European Covered Bond Council (ECBC), a platform bringing together covered bond issuers, analysts, investment bankers, rating agencies and a wide range of interested stakeholders. The ECBC currently has over 110 members across more than 30 active covered bond jurisdictions and many different market segments. ECBC members represent over 95% of covered bonds outstanding, which were worth nearly 2.5 trillion EUR at the end of 2015.
- For the latest updates from the EMF-ECBC, follow us on Twitter, LinkedIn and YouTube or visit the EMF-ECBC blog.
EeMAP Initiative Coordinator