The Consultation will run until 12 March 2018.
The Energy Efficient Mortgages Action Plan (EeMAP) is aimed at delivering a standardised European framework and data collection process for energy efficient mortgages, with favourable financing conditions for energy efficient buildings and energy saving renovations.
The Energy Efficient Mortgage Process, as shown above in the picture, is designed to provide the necessary scope for lending institutions to adapt the process to their internal practices and national market and legislative context. * B (renovation planning), E, F & G are only relevant in the case of renovation. An audit could involve the issuing of a new Energy Performance Certificate for a residential property, although more comprehensive audits might be considered for commercial properties.
EeMAP not only offers a concrete response to the call for immediate market action on climate, particularly in relation to finance, at December 2017’s ‘One Planet Summit’ in Paris, but will also provide a solid evidence base to support the European Commission’s analysis of the risk profile of energy efficient mortgages, as recently highlighted in the Final Report of the High-Level Expert Group on Sustainable Finance.
In the context of the ongoing work of the EU to create a Capital Markets Union, EeMAP will create a solid, new asset class, which can be used for the purpose of energy efficient bond or covered bond funding. The innovation of the initiative is the delivery of a win-win process, with a mechanism to incentivise property owners to improve the energy performance of their buildings and a focus specifically on those aspects of the energy performance of buildings that correlate with key risks metrics used by banks, such as probability of default and loss given default.
The consultation aims at collecting market views on three sets of high-level EeMAP guidelines which set out a European blueprint for the forthcoming pilot scheme at national level:
- Implementation Guidelines for Lending Institutions
- Building Performance Assessment Criteria
- Valuation and Energy Efficiency Checklist
The input collected during the public consultation will help to shape the final energy efficient mortgage framework, as will feedback collected during a series of national expert events across the EU to examine and strengthen the proposed guidelines. The final guidelines will be formally presented on 14 June 2018 at an Energy Efficient Mortgages event in Windsor, UK, which will also mark the official start of the pilot scheme.
The objective of the pilot scheme is to test the energy efficient mortgage product blueprint at national level with key stakeholders such as banks, property valuers, Green Building Councils and energy utilities. Crucially the pilot will also involve collecting and analysing loan data over time to substantiate the correlation between energy efficiency and reduced levels of risk. A large group of pioneer lenders, including major banks, medium size players and local, specialised lenders in Europe have already signalled their interest in being involved in the pilot.
To understand the development of the high-level guidelines, you may wish to review the following reports which the EeMAP Consortium has released:
- White Paper: Creating a Green Mortgage for Europe
- Review of the State of Play of Green Finance
- Review of the State of Play on Building Performance Indicators that Impact Mortgage Credit Risk
- Review of the State of Play on Mortgage Lending Valuation and the Impact of Energy Efficiency Value
- Review of the Impact of Energy Efficiency on the Probability of Default
- Consumer Research Insights