Energy efficiency is a key investment area for the shift to a low-carbon economy. A Technical Working Group has been convened to develop eligibility criteria for the certification of energy efficiency related bonds under the Climate Bonds Standard.
The first meeting, via teleconference, was held on 20 July 2012.
This Working Group is focusing on the built environment; a separate Working Group will be convened to look at industrial and manufacturing energy efficiency.
Members include representatives from the International Energy Agency, the European Bank of Reconstruction and Development, US Green Building Council, Low-Carbon Australia and the Office of the State Treasurer of California.
Climate Bonds Chair Sean Kidney said. “For the moment there is only a modest market of bonds linked to energy efficiency; but large-scale improvements in energy usage are essential for a transition to a low-carbon economy, both to quickly reduce emissions and to buy time while we transition to clean energy. They can also be very profitable, paid for with savings made on energy bills.
"We expect to see a large energy efficiency bond market emerge in coming years; certification under the Climate Bonds Standard will provide investors with assurance about the environmental benefits of specific projects."
According to Kirsten Spalding at the Ceres Investor Network for Climate Risk, Investor interest on energy efficiency in buildings has been stymied by: "First, the absence of aggregation mechanisms for energy efficiency investment in residential and commercial buildings. Second is the need to make bonds investment-grade for interested investors such as pension funds, and finally the need for models such as PACE [Property Assessed Clean Energy] to be used in the municipal and community space that can scale up adoption."
Members of the working group are derived from multi-stakeholder groups of investors; environmental NGOs; academia, industry, and international finance institutions. The group will develop draft criteria and discussion paper for public consultation before providing recommendations to the Climate Bond Standards Board for adoption.
The inaugural members are:
- Bart Adams, DNV KEMA
- Thomas Boermans, Ecofys
- Asari Efiong, European Bank of Reconstruction and Development
- Matthew Deegan, Low Carbon Australia
- Hilary Elliott, Centre for Carbon Measurement, National Physics Laboratory UK
- Jason Hartke, US Green Building Council
- Katrina Managan, Institute for Building Efficiency at Johnson Controls
- Niall McCarthy, Investor Group on Climate Change (Australia)
- Jonathan Pressman, Markit Environmental
- Oliver Rapf, Buildings Performance Institute Europe
- Bettina Redway, Deputy State Treasurer of California
- Brian Rice, CalSTRS, the California State Teachers Retirement System
- Dr. Lisa Ryan, International Energy Agency
- Peter Sweatman, Climate Strategy & Partners
- Climate Bonds Secretariat: Sean Kidney and Padraig Oliver
Eligibility criteria are expected to be made available by the end of 2012.